Organization and description of business

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and description of business

1. Organization and description of business

Invitae Corporation ("Invitae," “the Company," "we," "us," and "our") was incorporated in the State of Delaware on January 13, 2010, as Locus Development, Inc. and we changed our name to Invitae Corporation in 2012. We offer high-quality, comprehensive, affordable genetic testing across multiple clinical areas, including hereditary cancer, precision oncology, women's health, and rare diseases. Invitae operates in one segment.

Strategic realignment

On July 18, 2022, the Company initiated a strategic realignment of our operations and began implementing cost reduction programs, which was approved by the board of directors of the Company on July 16, 2022.

See Note 10, "Restructuring, impairment and other costs" for additional information regarding our strategic realignment.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) considered necessary for a fair presentation. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results expected for the full fiscal year or any other periods.

Liquidity and Going Concern

The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business and does not include any adjustments relating to the recoverability and classification of recorded asset and liability amounts that might result from the outcome of the uncertainties described below.

Pursuant to Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements — Going Concern (“ASC 205-40”), management must evaluate whether there are conditions and events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that these condensed consolidated financial statements are issued. In accordance with ASC 205-40, management’s analysis can only include the potential mitigating impact of management’s plans that have not been fully implemented as of the issuance date if (a) it is probable that management’s plans will be effectively implemented on a timely basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has generally incurred net losses since its inception and had an accumulated deficit of $6.2 billion and $4.8 billion as of September 30, 2023 and December 31, 2022, respectively. The Company had net losses of $3.1 billion, $379.0 million and $602.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company used net cash in operating activities of $493.0 million, $559.8 million and $298.5 million during the years ended December 31, 2022, 2021 and 2020, respectively. The Company had net losses of $942.1 million and $301.2 million for the three months ended September 30, 2023 and 2022, respectively, and $1.3 billion and $3.0 billion for the nine months ended September 30, 2023 and 2022, respectively. Included in the Company's net loss for the three months ended September 30, 2023 are non-cash items such as $881.2 million for impairments and losses on disposals of long-lived assets, net. Included in the Company's net loss for the three months ended September 30, 2022 are non-cash items such as $55.5 million for impairments and losses on disposals of long-lived assets, net. Included in the Company’s net loss for the nine months ended September 30, 2023 are non-cash items such as $1.0 billion for impairments and losses on disposals of long-lived assets, net. Included in the Company’s net loss for the nine months ended September 30, 2022 are non-cash items such as a $2.3 billion loss on

impairment of goodwill and in-process research and development (“IPR&D”) intangible asset and $60.3 million related to impairments and losses on disposals of long-lived assets, net. See Note 4, “Intangible assets, net” for additional information. The Company used net cash in operating activities of $156.2 million and $410.9 million for the nine months ended September 30, 2023 and 2022, respectively.

At September 30, 2023 and December 31, 2022, the Company had $254.6 million and $547.1 million, respectively, of cash, cash equivalents, and marketable securities. The Company expects to incur additional operating losses and negative operating cash flows in the near term.

As a result of losses, projected cash needs, and current liquidity level, substantial doubt exists about the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to reduce operating costs and improve the Company’s liquidity, which includes, without limitation:

•Reducing operating costs by a reduction in lab and office space through consolidation, and focusing and eliminating certain business activities and services.

•Seeking additional capital through the issuance of debt or equity securities, or the sale of assets.

While operational improvement efforts and expense control have resulted in margin expansion and stronger financial performance in the nine months ended September 30, 2023, the Company is engaging with stakeholders on a path forward and has formed a special committee of its board of directors focused on improving the Company’s capital position. The Company is exploring a number of options, including, but not limited to, raising capital, asset sales, business and research and development refocusing efforts, capital expenditure and operating expense reductions, and addressing its debt obligations.

The condensed consolidated financial statements do not include any adjustments that may result from the outcome of this going concern uncertainty.

Since inception, the Company’s operations have been financed primarily by fees collected from its customers, net proceeds from sales of its capital stock as well as borrowing from debt facilities and the issuance of convertible senior notes. The Company will need to raise additional funding to finance operations and service or repay debt obligations, however there is no assurance that it will be successful in obtaining such additional financing. If the Company raises additional capital through debt financing, the Company may be subject to covenants limiting or restricting the Company’s ability to take specific actions, such as incurring additional debt, capital expenditures or sale of assets. If the Company raises additional capital through public or private equity offerings, the ownership interest of our existing stockholders would be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the Company’s existing stockholders’ rights. There can be no assurance that additional capital will be available to the Company or, if available, would be available in sufficient amounts or on terms acceptable to us or on a timely basis. If sufficient funds on acceptable terms are not available when needed, the Company could be further required to curtail planned activities to reduce costs, which could include reductions in workforce, elimination of business operations and services, and significant reductions in operating expenses, liquidation of assets or pursuing bankruptcy proceedings. Doing so may potentially have an unfavorable effect on the Company’s ability to execute its business plan and have an adverse effect on the Company’s business, results of operations and future prospects.