Invitae (NVTA) is a small-cap stock with huge potential in the genetic testing market. The company makes money from providing testing services that can check for rare diseases, hereditary cancer, and other conditions that someone may be susceptible to based on their genes. Its goal is to make genetic tests simpler, more efficient, and cheaper. 

The company has been achieving terrific growth in recent years, but the problem is that the rest of its financials haven't looked so great, with Invitae still nowhere near breakeven. Does the company's potential in the long run make up for that, and could Invitae be a stock that helps you retire a millionaire?

Genetic testing is still in its early stages

Invitae is in the genetic testing business and that's an area that has a lot of potential, but the caveat is that it may be a while before it gets realized. According to estimates from Fortune Business Insights, the U.S. genetic testing market was worth a modest $4 billion in 2019. By 2027, it is expected to more than double to $10.3 billion, which equates to a 13% compound annual growth rate.

The industry will continue growing beyond that, but at what rate is the big question. Genetic testing does have significant potential as it can help diagnose illnesses and in some cases lead to prevention. It can help an overburdened healthcare industry become more efficient and preventative in nature. Investing in genetic testing is clearly a long-term play, one that may take decades to prove worthwhile.

Are Invitae's financials in good shape?

While there's certainly potential for Invitae to tap into in the genetic testing market, its financials need to be strong enough for the business to be around to take advantage of those opportunities.

Invitae's business is seeing some solid improvement this year and projects a low double-digit growth rate. Last year, its sales topped $460 million, which was a 65% increase from the previous year when its sales came it at just under $280 million. Beyond 2023, the company projects that its long-run growth rate will be between 15% and 25%.

While that sounds promising, the challenge is that the company is burning through cash and its business remains unprofitable. Over the trailing 12 months, Invitae's operating loss was more than $845 million, which is 69% more than the $501 million of revenue it generated during that time frame. A big part of the reason it's so deep in the red is that Invitae spends a lot on research and development, with that area of its business accounting for $473 million worth of expenses over the past four quarters.

The good news is that with $737 million in cash and marketable securities as of the end of June and Invitae's operating cash burn totaling $623 million over the past year, the business is in OK shape, at least in the short term, to meet its financial needs.

However, this could be a concern over the long term because if its cash burn doesn't improve, Invitae may need to raise money through stock offerings, which will dilute investors. For a stock that's already down 90% in just the past year, that's a concerning prospect.

Could investing in Invitae make you a millionaire?

Invitae has an ambitious goal of making genetic tests quicker and more affordable to the public. But it has a long, challenging road ahead. There are too many concerns in terms of cash and a lack of profitability to make this a suitable investment for the long run.

If the company can significantly improve its rate of cash burn, it certainly has the potential to be a millionaire-making investment. But it's not at that point today, and it's difficult to predict if and when it will ever be there. Invitae is a high-risk, high-reward stock that could pay off, but it's still too risky today for long-term investors to consider it for their portfolios.

Unless you have a high risk tolerance, you may be better off investing in safer growth stocks instead.