JPM23: As restructuring continues and revenues grow, Invitae CEO warns total recovery won't happen this year

SAN FRANCISCO—Kenneth Knight may be a relative newcomer to the medtech world, but he understood the value of Invitae’s genomic testing platform right away.

In an interview with Fierce Medtech at the J.P. Morgan Healthcare Conference in San Francisco on Monday, Knight, who was named Invitae’s CEO last year, explained how the nearly two decades he spent at General Motors, Caterpillar and Amazon prepared him to lead a genetic testing company.

“I did crazy things like working with NASA to put a humanoid robot up on the International Space Station; and I’ve led $7 billion businesses for Caterpillar; and I went to Amazon and did crazy, historic things,” he said. “And when I think about what we’re trying to do here at Invitae—if you think about our mission—our mission is to bring comprehensive genetic information into mainstream healthcare for billions of people. That's bold, audacious, and it’s our ‘why.’”

In that way, that experience doing “historic, bold things that were borderline impossible and, most times, very damn hard to do,” Knight continued, set him up perfectly to lead Invitae’s own far-reaching business.

On top of that, the new CEO highlighted his “high degree of curiosity” and “high ability to learn” as well as a pledge to give the company everything he has—and, “in exchange, I need them to give me everything that they have,” he said.

It’s a trade that seems to be faring well for Invitae as it continues to implement the restructuring plan that was announced last summer alongside Knight’s promotion from COO to CEO. The plan saw Invitae lay off more than 1,000 employees and slim down both its genetic testing offerings and its physical footprint in an attempt to cut costs—after reporting a cash burn of more than $800 million in 2021.

In preliminary financial results published Monday, Invitae calculated “less than $80 million” in cash burn for the fourth quarter of 2022, which would bring the entire year’s burn rate to around $550 million, nearly one-third lower than the previous year’s total.

And the slim-down continues: Knight said in Monday’s interview that the first of the company’s three main goals for 2023 is to plow ahead with the restructuring, “continuing the efforts to move our cost structure to a healthy place, to get our cash consumption to a point where it supports our underlying business.”

Meanwhile, after cutting out the extraneous parts of the business, Invitae is ready to get back to growth—since the goal of the realignment plan was never to “cost-cut ourselves to prosperity,” according to Knight. Instead, the incoming “execution phase” will focus on expanding the company’s top-line offerings and the adoption of those products and services.

Finally, he said, Invitae will eventually enter an “acceleration phase” as it continues to move toward becoming a cashflow-positive company.

“That won’t happen in 2023,” Knight warned. “But it has to be on track; it has to be in line with how we see the long-term health of the company.”

That slow-but-steady growth plan will get Invitae back on track after the restructuring plan severely stanched its 2022 results. In the preliminary full-year report released Monday, the company tallied $516 million in full-year revenues. While that represents a respectable 12% increase over the previous year’s take, the increase is no match for 2021’s, when Invitae grew its revenues by 65%.

Last year’s growth also fell short of the company’s initial estimates: At the beginning of 2022, it predicted that the year’s revenues would tick up to $640 million, about a 40% year-over-year jump, though it lowered that forecast to the “low double-digit” range amid the restructuring announcement in July.