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Here's What Stood Out With Invitae's Q1 Results

By Keith Speights and Brian Orelli, PhD - May 13, 2021 at 6:04AM

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It wasn't just the genetics company's soaring revenue growth.

Invitae (NVTA 19.07%) recently reported impressive revenue growth with its first-quarter results. However, the medical genetics company still missed analysts' bottom-line estimates. In this Motley Fool Live video recorded on May 5, Motley Fool contributors Keith Speights and Brian Orelli discuss what especially stood out with Invitae's latest quarterly update.

Keith Speights: Another genetic testing focused company also reported its earnings yesterday. It's Invitae, the ticker there's NVTA. Brian, what really stood out to you with Invitae's Q1 results?

Brian Orelli: Revenue was up a whopping 61% year over year. Some of that was almost certainly due to the addition of ArcherDx was closed in October and some other acquisitions, but unfortunately, the company doesn't breakout organic growth.

The analysts even ask about it and they refused to give it. It's hard to know how much of that is due to the company's underlying growth and the company's underlying products and how much of it is due to the addition of new products.

Billable volume was up 72%, so that tells us the 61% revenue growth versus 72% of billable volume growth, that tells us the average cost per test is going down. But when you're adding new tests, that can be par for the course, it's not really necessarily that big of a deal.

They're still not profitable, but they are stocked with cash. They raised $434 million in January through a secondary offering that allowed them to end the quarter with $682 million. Then after the quarter, they sold $1.2 billion worth of convertible senior notes. That puts it at $1.8 billion or something, maybe almost $1.9. That's a lot of cash for the company.

It seems like the company is going to use much of that for organic growth. They're setting up a facility on the East Coast because the company's West Coast facility is bursting at the seams. I think that's what the CEO said in terms of being able to maximize their production. They're also going to use that cash for development and launching new products.

I'm sure some of it is probably going to go to acquisitions as the company has been very acquisitive in the past. I'm not inherently against it, but I'd like to see the company digest all of its recent acquisitions before making another large new one although if they were able to grab something that was cheap that was a good tuck-in acquisition, I certainly wouldn't -- I think that would be good for shareholders in the long term.

Brian Orelli, PhD has no position in any of the stocks mentioned. Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Invitae. The Motley Fool has a disclosure policy.

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