Natera Inc
For the period ended Dec 31, 2024. Filed Feb 28, 2025.
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FY2024 · Filed Feb 28, 2025
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Natera, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Natera, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
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| | | Product Revenue |
| Description of the Matter | | As described in Note 3 of the consolidated financial statements, product revenue is recognized in an amount equal to the total consideration expected to be received at a point in time when the genetic testing services are delivered. The Company disaggregates revenues by payor types, for which the Company recognized product revenues from insurance carriers and patients totaling $1,571.8 million and $27.9 million, respectively, during the year ended December 31, 2024. The Company uses a portfolio of relevant historical data to estimate variable consideration. Consideration expected to be received for test results is estimated based on a variety of factors, including historical and current payment trends, as well as expectations of future collections. In periods subsequent to test delivery, management monitors whether cash collections are sufficient to support revenue recognized in prior periods or whether changes to previous or current estimates of expected consideration to be received are required.Auditing the measurement of product revenue related to genetic testing services performed on behalf of patients was complex due to the nature of the procedures required to assess management’s judgment in estimating consideration expected to be received for tests where there was limited or no historical cash collection data. In such situations, management uses a variety of inputs to estimate consideration expected to be received, as applicable, including available cash collection history, current payment trends, and contractual arrangements with insurance carriers, among other factors. |
| How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls that address the risks of material misstatement relating to the measurement of revenue related to tests performed on behalf of patients. Our procedures included testing controls related to management’s review of the inputs and significant assumptions used in estimating the consideration expected to be received for tests performed on behalf of patients where there was limited or no historical collection data.We performed audit procedures that included, among others, assessing the methodologies used to estimate consideration expected to be received for tests performed on behalf of patients when sufficient historical cash collection data was not available. Specifically, we obtained an understanding of the rationale for management’s estimates. Additionally, we tested the completeness and accuracy of the underlying data used by the Company in its analysis and management’s supporting calculations. We also performed an evaluation of actual cash collections versus expectations to assess the accuracy of estimates made in prior periods. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2012.
San Jose, California
February 27, 2025
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