From genetics, health · 2020-02-19 · Share genetics on a global scale to diagnose more patients...

From genetics, healthFourth Quarter and Full Year 2019 Financial Results02 | 19 | 20

© 2020 Invitae Corporation. All Rights Reserved. | CONFIDENTIAL 2

Safe harbor statementThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the company’s financial results for the quarter and year ended December 31, 2019; the company’s beliefs regarding estimated guidance for 2020 and future financial performance; the impact of the company’s acquisitions, partnerships and product offerings; and the company’s beliefs regarding the growth of its business, its position and impact on the genetic testing industry, its success in executing on its mission and achieving its goals, and the benefits of genetic testing. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to: the actual results for the quarter and year ended December 31, 2019; the company’s ability to continue to grow its business, including internationally; the company’s history of losses; the company’s ability to compete; the company’s failure to manage growth effectively; the company’s need to scale its infrastructure in advance of demand for its tests and to increase demand for its tests; the risk that the company may not obtain or maintain sufficient levels of reimbursement for its tests; the company’s failure to successfully integrate or fully realize the anticipated benefits of acquired businesses; the company’s ability to use rapidly changing genetic data to interpret test results accurately and consistently; security breaches, loss of data and other disruptions; laws and regulations applicable to the company’s business; and the other risks set forth in the company’s Quarterly Report on Form 10-Q for the quarter ended September30, 2019. These forward-looking statements speak only as of the date hereof, and Invitae Corporation disclaims any obligation to update these forward-looking statements.

Invitae and the Invitae logo are trademarks of Invitae Corporation. All other trademarks and service marks are the property of their respective owners.


Non-GAAP financial measurementsTo supplement Invitae’s consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP), the company is providing several non-GAAP measures, including non-GAAP cost of revenue, non-GAAP operating expense, including non-GAAP research and development, non-GAAP selling and marketing and non-GAAP general and administrative, as well as non-GAAP net loss and net loss per share and non-GAAP cash burn. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies. Management believes these non-GAAP financial measures are useful to investors in evaluating the company's ongoing operating results and trends.

Management is excluding from some or all of its non-GAAP operating results (1) amortization of acquired intangible assets, (2) acquisition-related stock-based compensation related to inducement grants, (3) post-combination expense related to the acceleration of equity grants in connection with business combinations, and (4) acquisition-related income tax benefits. These non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on the reported financial results. Management accounts for this limitation by analyzing results on a GAAP basis as well as a non-GAAP basis and also by providing GAAP measures in the company's public disclosures.

Cash burn excludes (1) changes in marketable securities other than investments made in privately held companies, (2) cash received from equity financings, (3) net cash received from proceeds from term debt or convertible senior notes, and (4) cash received from exercises of warrants. Management believes cash burn is a liquidity measure that provides useful information to management and investors about the amount of cash consumed by the operations of the business. A limitation of using this non-GAAP measure is that cash burn does not represent the total change in cash, cash equivalents, and restricted cash for the period because it excludes cash provided by or used for other operating, investing or financing activities. Management accounts for this limitation by providing information about the company's operating, investing and financing activities in the statements of cash flows in the consolidated financial statements in the company's most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K and by presenting net cash provided by (used in) operating, investing and financing activities as well as the net increase or decrease in cash, cash equivalents and restricted cash in its reconciliation of cash burn.

In addition, other companies, including companies in the same industry, may not use non-GAAP cost of revenue, non-GAAP research and development, non-GAAP selling and marketing, non-GAAP general and administrative expense, non-GAAP operating expense, non-GAAP net loss and net loss per share, or cash burn or may calculate these metrics in a different manner than management or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of these non-GAAP measures as comparative measures. Because of these limitations, the company's non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the non-GAAP reconciliations provided in the tables below.

© 2020 Invitae Corporation. All Rights Reserved. | CONFIDENTIAL

Bringing genetics into mainstream medicine

4

Build partnerships with industry peers to increase utilization of genetic testing

Make acquisitions that expand test menu content and services

to open new markets

Share genetics on a global scale to diagnose more patients correctly and

bring therapies to market faster

Provide genetic information services that inform healthcare

throughout life

GENOME NETWORK

GENETIC TESTING

GENOME MANAGEMENT

Make genetic testing more affordable and more accessible

FERTILITY & PERINATAL HEALTH

PGT

PRENATALTESTING

NEONATALTESTING

PEDIATRICTESTING

CARRIER SCREENING

ADULTINHERITEDTESTING

PROACTIVE


Consistent execution as we scale

ACCESSIONED VOLUME

2014 2015 2016 2017 2018 2019

4,300

482,000

20,900

59,000

150,000

303,000

COGS

2014 2015 2016 2017 2018 2019

$1,320

$245

$790

$470

$335$264

REVENUE

2014 2015 2016 2017 2018 2019

$1.6M

$216.8M

$8.4M

$25.0M

$68.2M

$147.7M

5


2020 guidance

$25.0M

$1.6M

$216.8M

$8.4M

$68.2M

$147.7M

ACCESSIONED VOLUME

59,000

4,30020,900

150,000

303,000

482,000

>725,000

>$330.0M

2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020

6


Accessioned >482,000 samples in 2019, including ~148,000 samples in Q4

Billable volume of ~469,000 in 2019, including ~147,000 in Q4

Volume growth of nearly 60% year-over-year

7

ANNUAL ACCESSIONED VOLUME

2014 2015 2016 2017 2018 2019

4,300

482,000

20,900

59,000

150,000

303,000

Q4 ACCESSIONED VOLUME

Q2:18 Q4:19Q3:18 Q4:18 Q1:19 Q2:19 Q3:19

73,000

148,000

78,000

87,000

94,000

111,000

129,000


ANNUAL REVENUE

2014 2015 2016 2017 2018 2019

$1.6M

$216.8M

$8.4M

$25.0M

$68.2M

$147.7M

Generated revenue of $216.8M in 2019, including $66.3M in Q4

51% annual growth excluding 2018 Medicare del dup payments

Revenue growth of 47% year-over-year Q4 REVENUE

Q2:18 Q4:19Q3:18 Q4:18 Q1:19 Q2:19 Q3:19

$37.3M

$66.3M

$37.4M

$45.4M$40.6M

$53.5M

$56.5M


Reduced COGS to an average of $245 in 2019, $248 in Q4

Excluding acquisition-related costs, non-GAAP cost per sample of $236 in 2019• An 11% decrease year-over-year

Decreased COGS per sample by 7% year-over-year

ANNUAL COGS

2014 2015 2016 2017 2018 2019

$1,320

$245

$790

$470

$335$264

$243

$226

Q1:19 Q2:19 Q3:19 Q4:19Q2:18 Q4:18Q3:18

Q4 COGS$279

$252$249

$262

$248


Generated gross profit of nearly $100M in 2019, including $29.6M in Q4

Gross margin of 46% in 2019 and 45% in Q4

On a non-GAAP basis, 48% in 2019 and 48% in Q4

Targeting 50% gross margin

Increased gross profit by 46% year-over-year

ANNUAL GROSS PROFIT

2014 2015 2016 2017 2018 2019

($4.0M)

$98.7M

($8.1M)($2.8M)

$18.1M

$67.6M

Q4 GROSS PROFIT

Q2:18 Q4:19Q3:18 Q4:18 Q1:19 Q2:19 Q3:19

$16.9M

$29.6M

$16.9M

$24.2M

$19.3M

$25.5M

$24.4M


Investment in business growthAnnual GAAP operating expense, excluding cost of revenue, of $342.8M in 2019 and $108.6M in Q4

Annual non-GAAP operating expense of $293.6M in 2019 and $89.2M in Q4• Excludes $39.1M in stock-based comp

related to Singular Bio acquisition and $10.1M in other acquisition-related costs

11

Expand genome content

Improve customer

experience

Drive traffic

Attract partners

Growth

Lowercosts

Lower prices


M&A enabled by strong cash position$398.0M in cash, cash equivalents, restricted cash, and marketable securities at December 31, 2019

Net increase in cash, cash equivalents and restricted cash of $39.4M in 2019 and $315.6M in Q4

Cash burn of $278.3M in 2019 and $75.5M in Q4; ~$153M excluding various financing and acquisition-related costs

12

Expand genome content

Improve customer

experience

Drive traffic

Attract partners

Growth

Lowercosts

Lower prices


Building the industry of genetic-based healthcare

2 billion people ready to have their health changed by genetic information

100+ million diagnostic

testing patients

120 million tests healthy mom & baby each year

400 million proactive

population health

13


Q&A session


FY 2019 GAAP to Non-GAAP Reconciliation(in thousands) FY 2019 FY 2018

Cost of revenue $118,103 $80,105

Amortization of acquired intangible assets (4,435) ––

Non-GAAP cost of revenue $113,668 $80,105

(in thousands) FY 2019 FY 2018

Research and development $141,526 $63,496

Amortization of acquired intangible assets (467) (2,437)

Acquisition-related stock-based compensation (39,106) ––

Non-GAAP research and development $101,953 $61,059


Selling and marketing $122,237 $74,428

Amortization of acquired intangible assets (2,699) (2,496)

Non-GAAP selling and marketing $119,538 $71,932

(in thousands) Q4 2019 Q4 2018

General and administrative $79,070 $52,227

Amortization of acquired intangible assets (114) (114)

Acquisition-related post-combination expense (6,798) ––

Non-GAAP general and administrative $72,158 $52,113



Selling and marketing 122,237 74,428

General and administrative 79,070 52,227

Operating expense 342,833 190,151

Amortization of acquired intangible assets (3,280) (5,047)


Acquisition-related post-combination expense (6,798) ––

Non-GAAP operating expense $293,649 $185,104

(in thousands, except per share data) FY 2019 FY 2018Net loss ($241,965) ($129,355)

Amortization of acquired intangible assets 7,715 5,047

Acquisition-related stock-based compensation 39,106 ––

Acquisition-related post-combination expense 6,798 ––

Acquisition-related income tax benefit (18,450) (2,800)

Non-GAAP net loss ($206,796) ($127,108)

Non-GAAP net loss per share, basic and diluted ($2.28) ($1.90)

Shares used in computing net loss per share, based and diluted

$90,859 $66,747 15


Q4 2019 GAAP to Non-GAAP Reconciliation(in thousands) Q4 2019 Q4 2018

Cost of revenue $36,723 $21,141

Amortization of acquired intangible assets (2,038) ––

Non-GAAP cost of revenue $34,685 $21,141





Non-GAAP research and development $33,255 $15,961


Selling and marketing $34,575 $19,206


Non-GAAP selling and marketing $33,900 $18,587


General and administrative $22,744 $14,343


Acquisition-related post-combination expense (640) ––

Non-GAAP general and administrative $22,075 $14,314



Selling and marketing 34,575 19,206

General and administrative 22,744 14,343

Operating expense 108,598 50,119

Amortization of acquired intangible assets (821) (1,257)


Acquisition-related post-combination expense (640) ––

Non-GAAP operating expense $89,230 $48,862

(in thousands, except per share data) Q4 2019 Q4 2018Net loss ($76,905) ($29,841)

Amortization of acquired intangible assets 2,859 1,257

Acquisition-related stock-based compensation 17,907 ––

Acquisition-related post-combination expense 640 ––

Acquisition-related income tax benefit (5,800) (2,800)

Non-GAAP net loss ($61,299) ($31,384)

Non-GAAP net loss per share, basic and diluted ($0.63) ($0.42)

Shares used in computing net loss per share, based and diluted

$97,374 $75,092 16


Q4 & FY 2019 GAAP to Non-GAAP Reconciliation(in thousands) Q4 2019 FY 2019Net cash used in operating activities ($47,266) ($145,053)

Net cash provided by (used in) investing activities (270,698) (280,310)

Net cash provided by financing activities 2,341 464,771

Net increase (decrease) in cash, cash equivalents and restricted cash (315,623) 39,408

Adjustments:

Purchase of investments (240,136) (260,917)

Maturities of investments –– (34,500)

Proceeds from public offering of common stock, net of issuance costs –– (204,024)

Proceeds from issuance of convertible senior notes, net –– (339,900)

Proceeds from exercise of cash warrants (10) (181)

Cash burn ($75,497) ($278,280)

- Cash burn for the year ended December 31, 2019 includes $85.6 million of cash paid to settle our obligations under the 2018 Note Purchase Agreement (which includes $1.3 million of accrued interest on third quarter 2019 quarterly interest payment) and $41million paid in connection with acquisitions during 2019. 17

From genetics, health · 2020-02-19 · Share genetics on a global scale to diagnose more patients...

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