What happened
Shares of Invitae (NVTA 35.00%) rose more than 20% today after the company reported second-quarter and first-half 2018 results. Investors have come to expect strong growth from the genetic testing leader, and the company didn't disappoint.
The company sold 140% more tests in the second quarter of 2018 than in the year-ago period, which led to a 160% increase in revenue in that span. As a result, management decided to raise full-year 2018 revenue guidance -- the second time it's done so this year. After previously expecting more than $130 million in annual revenue, the company is now guiding for $135 million to $140 million in sales for the entire year. Original guidance expected at least $120 million in annual revenue.
As of 10:54 a.m. EDT, the stock had settled to a 12% gain.
Image source: Getty Images.
So what
In the first half of 2018, Invitae sold over 137,000 genetic tests across its platform spanning from cancer diagnostics to reproductive health. That marks a 142% increase in volume from the first half of 2017 and demonstrates that recent acquisitions are living up to their potential. More importantly for investors, the genetic testing leader is growing gross profit at a healthy clip. While the overall business is still generating losses, that's a result of investments in expanded sales, marketing, administrative, and other activities that are helping to drive the growth of the platform.
|
Metric |
First Half 2018 |
First Half 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Test volume |
137,000 |
56,500 |
142% |
|
Test revenue |
$63.4 million |
$23.3 million |
172% |
|
Test gross profit |
$24.9 million |
$3.5 million |
617% |
|
Operating expenses |
$131.5 million |
$80.0 million |
64% |
|
Operating income |
($66.5 million) |
($55.4 million) |
N/A |
|
Net loss |
($67.8 million) |
($57.3 million) |
N/A |
Source: Press release.
Invitae exited June with $91.4 million in cash, cash equivalents, restricted cash, and marketable securities. It also has access to $20 million in additional debt, which brings the business' total available capital to $110 million. That should be adequate to fund operations for another four quarters or so, although given the current gap between revenue and operating expenses, additional capital raises seem highly likely.
Now what
The genetic testing industry is experiencing an incredible amount of growth right now thanks to advances in technology that are driving down costs, and Invitae is clearly capitalizing on the opportunity and securing a leadership position in the process. While there's quite a ways to go before the business achieves profitability, it's difficult to complain with triple-digit top-line growth. Investors might want to prepare for additional dilution as the company makes the most of its current high-growth phase.
