NVTA Invitae Corporation

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form			10-K

☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to          

Commission File No. 001-36847

Invitae Corporation
(Exact name of the registrant as specified in its charter)

Delaware			27-1701898
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1400 16th Street, San Francisco, California 94103

(Address of principal executive offices, Zip Code)

(415) 374-7782

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.0001 par value per share

NVTA

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐

Indicate by check mark whether any of those error corrections are restatements that required recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  ☐ No  ☒

The number of shares of the registrant’s Common Stock outstanding as of February 24, 2023 was 246,235,501.

DOCUMENTS INCORPORATED BY REFERENCE

TABLE OF CONTENTS

 

						Page No.
Forward-Looking Statements						1
Summary of Risk Factors						2
PART I
Item 1.			Business			3
Item 1A.			Risk Factors			24
Item 1B.			Unresolved Staff Comments			49
Item 2.			Properties			49
Item 3.			Legal Proceedings			49
Item 4.			Mine Safety Disclosure			49
PART II
Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			50
Item 6.			[Reserved]			51
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			52
Item 7A.			Qualitative and Quantitative Disclosures About Market Risk			69
Item 8.			Consolidated Financial Statements and Supplementary Data			70
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			111
Item 9A.			Controls and Procedures			111
Item 9B.			Other Information			113
Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			113
PART III
Item 10.			Directors, Executive Officers and Corporate Governance			114
Item 11.			Executive Compensation			114
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			114
Item 13.			Certain Relationships and Related Transactions, and Director Independence			115
Item 14.			Principal Accountant Fees and Services			115
PART IV
Item 15.			Exhibit and Financial Statement Schedules			116
Item 16.			Form 10-K Summary			118
SIGNATURES

•our views regarding the future of genetic testing and its role in mainstream medical practice;

•the impact of the COVID-19 pandemic on our business and the actions we have taken or may take in response thereto;

•our mission and strategy for our business, products and technology;

•the implementation of our business model and our success of our strategic realignment efforts;

•the expected costs and benefits of our strategic realignment, including anticipated annualized cash savings, and our ability to achieve positive operating cash flow;

•the expected benefits from and our ability to integrate our acquisitions;

•our ability to obtain regulatory approvals for our tests;

•the rate and degree of market acceptance of our tests and genetic testing generally;

•our ability to scale our infrastructure and operations in a cost-effective manner;

•our expectations regarding our platform and future offerings;

•the timing and results of studies with respect to our tests;

•developments and projections relating to our competitors and our industry;

•our competitive strengths;

•the degree to which individuals will share genetic information generally, as well as share any related potential economic opportunities with us;

•our commercial plans;

•our ability to obtain and maintain adequate reimbursement for our tests;

•regulatory, political and other developments in the United States and foreign countries;

•our ability to attract and retain key scientific, sales, engineering or management personnel;

•our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

•the effects of litigation or investigations on our business;

•our ability to obtain funding for our operations and to service and repay our debt;

•our future financial performance;

•our beliefs regarding our future growth and the drivers of such growth;

•our expectations regarding environmental, social and governance matters;

•the impact of accounting pronouncements and our critical accounting policies, judgments, estimates and assumptions on our financial results;

•our expectations regarding our future revenue, cost of revenue, operating expenses and capital expenditures, and our future capital requirements;

•the impact of macroeconomic conditions, including inflation and recession, on our business; and

•the impact of tax laws on our business.

•We expect to continue incurring significant losses, and we may not successfully execute our plan to achieve or sustain profitability.

•Our inability to raise additional capital on acceptable terms in the future may limit our ability to develop and commercialize new tests and expand our operations.

•Our strategic realignment and the associated headcount reduction have and are expected to significantly change our business, result in significant expense, may not result in anticipated savings, and will disrupt our business.

•We rely on highly skilled personnel in a broad array of disciplines and, if we are unable to hire, retain or motivate these individuals, or maintain our corporate culture, we may not be able to maintain the quality of our services or grow effectively.

•We need to scale our infrastructure in advance of demand for our tests and other services, and our failure to generate sufficient demand for our tests and other services would have a negative impact on our business and our ability to attain profitability.

•The global macroeconomic environment could negatively impact our business, our financial position and our results of operations.

•We face risks related to health epidemics, including the ongoing COVID-19 pandemic, which could have a material adverse effect on our business and results of operations.

•If third-party payers, including managed care organizations, private health insurers and government health plans, do not provide adequate reimbursement for our tests or we are unable to comply with their requirements for reimbursement, our commercial success could be negatively affected.

•We face intense competition, which is likely to intensify further as existing competitors devote additional resources to, and new participants enter, the markets in which we operate. If we cannot compete successfully, we may be unable to increase our revenue or achieve and sustain profitability.

•The market for patient data software is competitive, and our business will be adversely affected if we are unable to successfully compete.

•Security breaches, privacy issues, loss of data and other incidents could compromise sensitive or personal information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.

•If we are not able to continue to generate substantial demand for our tests, our commercial success will be negatively affected.

•Our success will depend on our ability to use rapidly changing genetic data to interpret test results accurately and consistently, and our failure to do so would have an adverse effect on our operating results and business, harm our reputation and could result in substantial liabilities that exceed our resources.

•Impairment in the value of our goodwill or other intangible assets has and may in the future have a material adverse effect on our operating results and financial condition.

•We have a large amount of debt, servicing our debt requires a significant amount of cash, we may not have sufficient cash flow from our business to service our debt, and we may need to refinance all or a significant portion of our debt.

•If the U.S. Food and Drug Administration ("FDA") regulates the tests we currently offer as laboratory-developed tests ("LDTs") as medical devices, we could incur substantial costs and our business, financial condition and results of operations could be adversely affected.

•One of our competitors has alleged that our Anchored Multiplex PCR, or AMP, chemistry and products using AMP are infringing on its intellectual property, and we may be required to redesign the technology, obtain a license, cease using the AMP chemistry altogether and/or pay significant damages, among other consequences, any of which would have a material adverse effect on our business as well as our financial condition and results of operations.

PART I

We were founded on four core principles:

•Patients should own and control their own genetic information;

•Healthcare professionals are fundamental in ordering and interpreting genetic information;

•Driving down the price of genetic information will increase its clinical and personal utility; and

•Genetic information is more valuable when shared.

•Customer experience: We see customer experience for patients, providers, and partners as integral to our long-term growth strategy and as an under-utilized catalyst to move genetics into mainstream medicine. Our view is that providing great service and enabling "ease-of-use", such as efficient ordering, comprehensive choices, and reliable turnaround time, are especially important for physicians.

•Adoption: As we improve customer experience, we expect more physicians would be open and more willing to increase genetic information in their practice. This is particularly true in fostering adoption among non-genetic experts, who are often the first contact for patients in a health journey. This work will be in parallel with our efforts in producing research supporting guideline expansion and broader advocacy for the benefits of genetic testing.

•Attract partners: As we continue to gain adoption and expand our reach, our value proposition to potential partners should increase. These include patient advocacy groups, biopharma partners that utilize our data, testing, network, and services, as well as health systems that intend to implement comprehensive precision medicine.

•Insights and solutions:  In parallel with bringing new tools and products to the market, our unique capability to combine phenotypic and genotypic data, through both our genetic testing and third-party patient data, we believe produces a rich dataset that is highly attractive to biopharma partners, patient advocacy groups and more. Our services allow our partners to be more precise and move faster with their efforts, such as identifying and recruiting patients, enabling Investigational New Drug (IND) filings, structuring clinical trials, and eventually bringing new therapies to market.

•Lower cost and higher reimbursement:  As our network continues to scale, we expect to lower our costs and increase our margin, while continuing our pursuit of low prices to drive accessibility and affordability of genetic information. Our ability to sustainably lower our prices is also expected to be balanced by our success in improving reimbursements and cash collection. Through the generation of scientific evidence and proactive engagement with stakeholders, we intend to pursue better payment and additional coverage.

•Affordability and accessibility:  As we progress, we can continue to drive down prices, yielding more affordability and accessibility of our products for more patients.

•More patients served:  All of these efforts should compound upon each other, expanding our reach and increasing the value of each offering, ultimately serving more patients.

1)One patient, one test: We first launched in November 2013 with an offering of approximately 200 genes, growing the test menu over time to include more than 20,000 genes. In 2022, we processed billable volume of 1,290,000 units and generated revenue of $516.3 million compared to 1,169,000 units and $460.4 million 2021 billable volume and revenue, respectively.

2)One patient, multiple insights: We utilize digital health solutions to deliver actionable information about risk, prevention, treatment, and monitoring. With integration, connectivity, and refined go-to-market strategies, we are shifting to a scenario where each patient test provides many opportunities to deliver solutions — for them, for their families and for others in the ecosystem. Our comprehensive portfolio is expected to enable precision medicine, and provide multiple insights for patients as they engage with us across different stages in life and through different health needs. As of December 31,

3)Many patients, many solutions: Each patient engagement generates data and insights. Aggregating these into solutions for key stakeholders including patients, providers, policymakers, biopharma partners, advocacy groups and others is where we expect the next phase of transformation will occur. We are focusing our efforts on partnering with these stakeholders to advance the development and utility of our platform. Our real-world data is patient-owned and controlled; and our goal is to enable and build a data and patient network through which individuals and partners can access, aggregate, and customize genetic information to further research and create better outcomes. We expect this to allow for the collective insights from many patients to provide multiple solutions for multiple use cases and customer types.

In addition to investing in informatics solutions and infrastructure to support our data and patient network development, we have been expanding our strategic partnerships, which as of December 31, 2022 numbered more than 100 leading biopharmaceutical companies supporting improved patient diagnosis, clinical trial recruitment and other research-related initiatives.

In addition, our biopharmaceutical industry partnerships are complemented by partnerships with leading health systems, executive health programs and leading research institutions, including The Christ Hospital Health Network, the Cleveland Clinic, the Geisinger Health System, the Mayo Clinic, Memorial Sloan Kettering Cancer Center, MedCan, and Stanford Health Care, among others.

We believe the principal competitive factors in our market are:

•comprehensive content;

•quality;

•reliability;

•accessibility of results;

•turnaround time of testing results;

•price and quality of tests;

•coverage and reimbursement arrangements with third-party payers;

•ease-of-use and convenience of testing;

•brand recognition of test provider;

•additional value-added services and informatics tools;

•client service; and

•quality of website content.

•the device may not be shown safe or effective to the FDA’s satisfaction;

•the data from pre-clinical studies and/or clinical trials may be found unreliable or insufficient to support approval;

•the manufacturing process or facilities may not meet applicable requirements; and

•changes in FDA clearance or approval policies or adoption of new regulations may require additional data.

•establishment registration and device listing with the FDA;

•labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of “off-label” uses of cleared or approved products;

•medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

•correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

•the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and

•post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.

•issuance of warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

•requesting or requiring recalls, withdrawals, or administrative detention or seizure of our products;

•imposing operating restrictions or partial suspension or total shutdown of production;

•refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products;

•withdrawing 510(k) clearances or PMA approvals that have already been granted;

•refusal to grant export approvals for our products; or

•criminal prosecution.

We rely on a combination of intellectual property rights, including trade secrets, copyrights, trademarks, customary contractual protections and, to a lesser extent, patents, to protect our core technology and intellectual property. With respect to patents, we believe that the practice of patenting individual genes, along with patenting tools and methods specific to individual genes, has impeded the progress of the genetic testing industry beyond single gene tests and is antithetical to our core principle that patients should own and control their own genomic information. The U.S. Supreme Court has issued a series of unanimous (9-0) decisions setting forth limits on the patentability of natural phenomena, natural laws, abstract ideas and their applications — i.e., Mayo Collaborative v. Prometheus Laboratories (2012), or Mayo, Association for Molecular Pathology v. Myriad Genetics (2013), or Myriad, and Alice Corporation v. CLS Bank (2014), or Alice. As discussed below, we believe the Mayo, Myriad and Alice decisions bring clarity to the limits to which patents may cover specific genes, mutations of such genes, or gene-specific technology for determining a patient’s genomic information.

U.S. Supreme Court cases have clarified that naturally occurring DNA sequences are natural phenomena, which should not be patentable. On June 13, 2013, the U.S. Supreme Court decided Myriad, a case challenging the validity of patent claims held by Myriad relating to the cancer genes BRCA1 and BRCA2. The Myriad Court held that genomic DNAs that have been isolated from, or have the same sequence as, naturally occurring samples, such as the DNA constituting the BRCA1 and BRCA2 genes or fragments thereof, are not eligible for patent protection. Instead, the Myriad Court held that only those complementary DNAs (cDNAs) which have a sequence that differs from a naturally occurring fragment of genomic DNA may be patent eligible. Because it will be applied by other courts to all gene patents, the holding in Myriad also invalidates patent claims to other genes and gene variants. Prior to Myriad, on August 16, 2012, the U.S. Court of Appeals for the Federal Circuit had held that certain patent claims of Myriad directed to methods of comparing or analyzing BRCA1 and BRCA2 sequences to determine whether or not a person has a variant or mutation are unpatentable abstract processes, and Myriad did not appeal such ruling.

We do not currently have any patents or patent applications directed to the sequences of specific genes or variants of such genes, nor do we rely on any such in-licensed patent rights of any third party. We believe that correlations between specific gene variants and a person’s susceptibility to certain conditions or diseases are natural laws that are not patentable under the U.S. Supreme Court’s decision in Mayo. The Mayo case involved patent claims directed to optimizing, on a patient-specific basis, the dosage of a certain drug by measuring its metabolites in a patient. The Mayo Court determined that patent claims directed at detection of natural correlations, such as the correlation between drug metabolite levels in a patient and that drug’s optimal dosage for such patient, are not eligible for patent protection. The Mayo Court held that claims based on this type of comparison between an observed fact and an understanding of that fact’s implications represent attempts to patent a natural law and, moreover, when the processes for making the comparison are not themselves sufficiently inventive, claims to such processes are similarly patent-ineligible. On June 19, 2014, the U.S. Supreme Court decided Alice, where it amplified its Mayo and Myriad decisions and clarified the analytical framework for distinguishing between patents

that claim laws of nature, natural phenomena and abstract ideas and those that claim patent-eligible applications of such concepts. According to the Alice Court, the analysis depends on whether a patent claim directed to a law of nature, a natural phenomenon or an abstract idea contains additional elements, an “inventive concept,” that “is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself” (citing Mayo).

We believe that Mayo, Myriad and Alice not only render as unpatentable genes, gene fragments and the detection of a person’s sequence for a gene, but also have the same effect on generic applications of conventional technology to specific gene sequences. For example, we believe that generic claims to primers or probes directed to specific gene sequences and uses of such primers and probes in determining a person’s genetic information are not patentable. We do not currently have any patents or patent applications directed to such subject matter nor have we in-licensed such patents rights of any third party.

The names of our executive officers and other corporate officers, and their ages as of February 28, 2023, are as follows:

Name

Age

Position

Executive officers

Kenneth D. Knight

62

Chief Executive Officer and Director

Yafei (Roxi) Wen

50

Chief Financial Officer

Thomas R. Brida

52

General Counsel, Chief Compliance Officer and Secretary

Robert L. Nussbaum, M.D.

73

Chief Medical Officer

Robert F. Werner

49

Chief Accounting Officer

Kenneth D. Knight has served as a director and our Chief Executive Officer since July 2022. Mr. Knight also served as our Chief Operating Officer from June 2020 to July 2022. Prior to joining Invitae, he most recently served as Vice President of transportation services at Amazon.com, Inc., a multinational and diversified technology company, from December 2019 to June 2020, and as Vice President of Amazon’s global delivery services, fulfillment operations and human resources from April 2016 to December 2019. Prior to his time at Amazon, from 2012 to March 2016, Mr. Knight served as general manager of material handling and underground business division at Caterpillar Inc., a manufacturer of machinery and equipment. Prior to that, Mr. Knight served in various capacities at General Motors Company, a vehicle manufacturer, for 27 years, including as executive director of global manufacturing engineering and as manufacturing general manager. Mr. Knight holds a B.S. in Electrical Engineering from the Georgia Institute of Technology and an M.B.A. from the Massachusetts Institute of Technology.

Yafei (Roxi) Wen has served as our Chief Financial officer since June 2021. Prior to joining Invitae, from February 2019 to June 2021, she served as the Chief Financial Officer at Mozilla Corporation, an open-source software company, overseeing finance and accounting, mergers and acquisitions, business development, data and

Thomas R. Brida has served as our General Counsel since January 2017, our Chief Compliance Officer since February 2019, and our Secretary since May 2019. Mr. Brida also served as our Deputy General Counsel from January 2016 to January 2017. Prior to joining Invitae, he was Associate General Counsel at Bio-Rad Laboratories, a life science research and clinical diagnostics manufacturer, from January 2004 to January 2016. He holds a B.A. from Stanford University and a J.D. from the U.C. Berkeley School of Law.

Robert L. Nussbaum, M.D. has served as our Chief Medical Officer since August 2015. From April 2006 to August 2015, he was chief of the Division of Genomic Medicine at UCSF Health where he also held leadership roles in the Cancer Genetics and Prevention Program beginning in January 2009 and the Program in Cardiovascular Genetics beginning in July 2007. From April 2006 to August 2015, he served as a member of the UCSF Institute for Human Genetics. Prior to joining UCSF Health, Dr. Nussbaum was chief of the Genetic Disease Research Branch of the National Human Genome Research Institute, one of the National Institutes of Health, from 1994 to 2006. He is a member of the National Academy of Medicine and a fellow at the American Academy of Arts and Sciences. Dr. Nussbaum is a board-certified internist and medical geneticist who holds a B.S. in Applied Mathematics from Harvard College and an M.D. from Harvard Medical School in the Harvard-MIT joint program in Health Sciences and Technology. He completed his residency in internal medicine at Barnes-Jewish Hospital and a fellowship in medical genetics at the Baylor College of Medicine.

Robert F. Werner has served as our Chief Accounting and Principal Accounting Officer since May 2020. Prior to that, Mr. Werner served as our Corporate Controller from September 2017. Prior to joining Invitae, from February 2015 to September 2017, Mr. Werner served as Vice President of Finance and Corporate Controller of Proteus Digital Health, Inc., a digital medicine pharmaceuticals company. Prior to that, Mr. Werner served as Corporate Controller and Principal Accounting Officer of CardioDx, Inc., a molecular diagnostics company, from March 2012 to February 2015. Mr. Werner is a Certified Public Accountant in California and started his career at Ernst & Young LLP. Mr. Werner holds a B.S. in Accounting and a Master of Accountancy in Professional Accounting from Brigham Young University’s Marriott School of Management.

Our principal executive offices are located at 1400 16th Street, San Francisco, California 94103, and our telephone number is (415) 374-7782. Our website address is www.invitae.com. The information contained on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K.

On July 18, 2022, we initiated a strategic realignment of our operations and began implementing programs to reduce operating costs and drive future growth aligned with our core genetic testing and data platform and patient network. This realignment involves a significant reduction in our workforce as well as other steps to streamline our operations, including exiting our distributed products business and significantly decreasing our global footprint outside of the United States to less than a dozen countries or territories. Management currently expects that the strategic realignment will be completed in 2023 and estimates that the total costs incurred may be up to $170 million for associated employee severance and benefits, losses on asset disposals, and other restructuring costs including the write-off of prepaid assets related to the exit of certain product offerings, professional service fees and contract exit costs. Actual costs may be higher than we expect. We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our realignment efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected. For example, our divestiture activities may divert management’s attention from our core business operations, result in significant write-offs and other charges, and have an adverse effect on existing relationships with partners, customers, patients and third-party payers. We have also terminated early, changed the scope of, or may not be able to perform under certain contracts as a result of our realignment efforts, and we could incur significant liability if we do not successfully negotiate wind-down provisions or new terms. For example, we have informed certain contractual counterparties that we will not be able to perform under our companion diagnostic development agreements. Any of these or other events could adversely affect our financial condition and results of operations. In addition, we may not be able to retain qualified personnel, which may negatively affect our infrastructure and operations or result in a loss of employees and reduced productivity among remaining employees. For example, our turnaround times in returning test results increased recently. Further, the realignment may yield unintended consequences, such as attrition beyond our intended workforce reduction, reduced employee morale, loss of customers or partners, and other adverse effects on our business.

•dozens of relatively specialized competitors focused on genetics applied to healthcare, such as Ambry Genetics, a subsidiary of Realm IDx; Athena Diagnostics and Blueprint Genetics, subsidiaries of Quest Diagnostics; Baylor-Miraca Genetics Laboratories; Caris Life Sciences; Centogene AG; Color Health; Connective Tissue Gene Test, a subsidiary of Health Network Laboratories; Cooper Surgical; Emory Genetics Laboratory, a subsidiary of Eurofins Scientific; Exact Sciences; Foundation Medicine, a subsidiary of Roche Holding AG; Fulgent Genetics; GeneDx Holdings; Guardant Health; Integrated Genetics, Sequenom, Correlagen Diagnostics, and MNG Laboratories, subsidiaries of Labcorp; Myriad Genetics; Natera; NeoGenomics; Perkin Elmer; and Tempus Labs; as well as other commercial and academic laboratories;

•a few large, established general testing companies with large market share and significant channel power, such as Labcorp and Quest Diagnostics;

•a large number of clinical laboratories in an academic or healthcare provider setting that perform clinical genetic testing on behalf of their affiliated institutions and often sell and market more broadly; and

•a large number of new entrants into the market for genetic information ranging from informatics and analysis pipeline developers to focused, integrated providers of genetic tools and services for health and wellness including Illumina, which is also one of our suppliers.

•breadth and depth of content;

•quality;

•reliability;

•accessibility of results;

•turnaround time of testing results;

•price and quality of tests;

•coverage and reimbursement arrangements with third-party payers;

•convenience of testing;

•brand recognition of test provider;

•additional value-added services and informatics tools;

•client service; and

•quality of website content.

•conduct research and development;

•further develop and scale our laboratory processes; and

•further develop and scale our infrastructure to be able to analyze increasingly larger and more diverse amounts of data.

•failure of any test to perform as expected;

•lack of validation or reference data; or

•failure to demonstrate utility of a test.

•multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits and licenses;

•failure by us or our distributors to obtain regulatory approvals for the use of our tests in various countries;

•complexities and difficulties in obtaining protection and enforcing our intellectual property;

•difficulties in staffing and managing foreign operations;

•complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems;

•logistics and regulations associated with shipping samples, including infrastructure conditions, customs and transportation delays;

•limits on our ability to penetrate international markets if we do not to conduct our tests locally;

•natural disasters and outbreaks of disease, including the ongoing COVID-19 pandemic;

•political and economic instability, including wars such as the current conflict in Ukraine, terrorism and political unrest, boycotts, curtailment of trade, government sanctions and other business restrictions;

•inflationary pressures, such as those the global market is currently experiencing, which have and may increase costs for materials, supplies, and services; and

•regulatory and compliance risks that relate to maintaining accurate information and control over activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, or FCPA, its books and records provisions, or its anti-bribery provisions.

•increasing our vulnerability to general adverse economic and industry conditions;

•limiting our ability to obtain additional financial for working capital, acquisitions, research and development expenditures, and general corporate purposes;

•requiring the dedication of a substantial portion of our cash flow or our existing cash to service our indebtedness, thereby reducing the amount of our cash available for other purposes;

•limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; or

•placing us at a possible competitive disadvantage compared to less leveraged competitors and competitors that have better access to capital resources.

•HIPAA and HITECH, which set forth comprehensive federal standards with respect to the privacy and security of protected health information, breach notification requirements, and requirements for the use of certain standardized electronic transactions;

•the GDPR, which imposes strict privacy and security requirements on controllers and processors of personal data, including enhanced protections for “special categories” of personal data, including sensitive information such as health and genetic information of data subjects;

•the CCPA and other, similar state consumer privacy laws, which, among other things, regulate how subject businesses may collect, use, and disclose the personal information of consumers in the regulated state, afford rights to consumers that they may exercise against businesses that collect their information, and require implementation of reasonable security measures to safeguard personal information of consumers;

•the federal Anti-Kickback Statute, which prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for the referral of an individual, for the furnishing of or arrangement for the furnishing of any item or service for which payment may be made in whole or in part by a federal healthcare program, or the purchasing, leasing, ordering, arranging for, or recommend purchasing, leasing or ordering, any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program;

•The Eliminating Kickbacks in Recovery Act of 2018, or EKRA, which prohibits payments for referrals to recovery homes, clinical treatment facilities, and laboratories and reaches beyond federal health care programs, to include private insurance;

•the federal physician self-referral law, known as the Stark Law, which prohibits a physician from making a referral to an entity for certain designated health services covered by the Medicare program, including laboratory and pathology services, if the physician or an immediate family member has a financial relationship with the entity unless an exception applies, and prohibits an entity from billing for designated health services furnished pursuant to a prohibited referral;

•the federal false claims law, which imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the federal government;

•the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies;

•the HIPAA fraud and abuse provisions, which create new federal criminal statutes that prohibit, among other things, defrauding health care benefit programs, willfully obstructing a criminal investigation of a healthcare offense and falsifying or concealing a material fact or making any materially false statements in connection with the payment for healthcare benefits, items or services;

•other federal and state fraud and abuse laws, such as anti-kickback laws, prohibitions on self-referral, fee-splitting restrictions, insurance fraud laws, anti-markup laws, prohibitions on the provision of tests at no or discounted cost to induce physician or patient adoption, and false claims acts, which may extend to services reimbursable by any third-party payer, including private insurers;

•the 21st Century Cures Act information blocking prohibition, which prohibits covered actors from engaging in certain practices that are likely to interfere with the access, exchange, or use of electronic health information;

•the federal Physician Payments Sunshine Act, which requires reporting of certain payments and other transfers of value made by applicable manufacturers, directly or indirectly, to or on behalf of various healthcare professionals (including doctors, physician assistants, and nurse practitioners) and teaching hospitals, and requires reporting of certain ownership and investment interests held by physicians and their immediate family members as well as similar state laws that require reporting of information in addition to what is required under the federal Physician Payments Sunshine Act;

•state laws that limit or prohibit the provision of certain payments and other transfers of value to certain covered healthcare providers;

•the prohibition on reassignment of Medicare claims, which, subject to certain exceptions, precludes the reassignment of Medicare claims to any other party;

•state laws that prohibit other specified practices, such as billing clinicians for testing that they order; waiving coinsurance, copayments, deductibles and other amounts owed by patients; billing a state Medicaid program at a price that is higher than what is charged to one or more other payers; and

•similar foreign laws and regulations that apply to us in the countries in which we operate or may operate in the future.

•actual or anticipated fluctuations in our operating results;

•effects of our strategic realignment and workforce reduction and our ability to achieve the intended benefits of these activities;

•costs associated with our strategic realignment;

•competition from existing tests or new tests that may emerge;

•announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

•failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;

•issuance of new or updated research or reports by securities analysts or changed recommendations for our stock;

•our substantial leverage and market perceptions regarding the same;

•the level of short interest in our stock, and the effect of short sellers on the price of our stock;

•actual or anticipated changes in regulatory oversight of our business;

•additions or departures of key management or other personnel;

•disputes or other developments related to our intellectual property or other proprietary rights, including litigation;

•changes in reimbursement by current or potential payers;

•general economic and market conditions; and

•issuances of significant amounts of our common stock.

•authorize our board of directors to issue, without further action by the stockholders, up to 20,000,000 shares of undesignated preferred stock;

•require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

•specify that special meetings of our stockholders can be called only by our board of directors, our chair of the board or our chief executive officer;

•establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

•establish that our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms;

•provide that our directors may be removed only for cause;

•provide that vacancies on our board of directors may, except as otherwise required by law, be filled only by a majority of directors then in office, even if less than a quorum; and

•require a super-majority of votes to amend certain of the above-mentioned provisions as well as to amend our bylaws generally.

•any derivative action or proceeding brought on our behalf;

•any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders;

•any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law; or

•any action asserting a claim against us governed by the internal affairs doctrine.

Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. As of December 31, 2022, we had outstanding 245.6 million shares of our common stock, options to purchase 2.4 million shares of our common stock (of which 1.4 million were exercisable as of that date) and outstanding restricted stock units, or RSUs, representing 11.9 million shares of our common stock (which includes an estimated number of RSUs, subject to certain employees' continued service with us, or time-based RSUs, and RSUs that are performance based RSUs, or PRSUs, granted in connection with an acquisition). The foregoing does not include 8.8 million shares of common stock that may be issuable in connection with indemnification hold-backs and contingent consideration related to our acquisitions, shares that may be issuable in the future in connection with the convertible senior notes, or shares issuable pursuant to our May 2021 sales agreement with Cowen and Company, LLC under which we may offer and sell from time to time at our sole discretion shares of our common stock in an aggregate amount not to exceed $400 million. In addition, as of December 31, 2022, 5.5 million and 2.1 million shares of common stock are available for future issuance under our 2015 Stock Incentive Plan and Employee Stock Purchase Plan, respectively, and as of January 1, 2023, 9.8 million and 2.5 million additional shares of common stock became available for future issuance under our 2015 Stock Incentive Plan and our Employee Stock Purchase Plan, respectively. The sale or the availability for sale of a large number of shares of our common stock in the public market could cause the price of our common stock to decline.

ITEM 1B.    Unresolved Staff Comments

ITEM 2.    Properties

ITEM 3.    Legal Proceedings

ITEM 4.    Mine Safety Disclosure

PART II

ITEM 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(*)The above graph shows the cumulative total stockholder return of an investment of $100 in cash on December 31, 2017 through December 31, 2022 for: (i) our common stock; (ii) the S&P 500 Index; and (iii) the S&P 500 Healthcare Index. All values assume reinvestment of the full amount of all dividends. The comparisons in the table are not intended to be forecasts or indicative of future stockholder returns.

									12/31/2017						12/31/2018						12/31/2019						12/31/2020						12/31/2021						12/31/2022
Invitae Corporation									$	100.00					$	121.81					$	177.64					$	460.46					$	168.17					$	20.48
S&P 500									$	100.00					$	93.76					$	120.84					$	140.49					$	178.27					$	143.61
S&P 500 Healthcare Index									$	100.00					$	104.69					$	124.25					$	138.45					$	171.90					$	165.80

ITEM 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

•Consistently improve the client experience: efficient ordering; comprehensive choices; reliable turnaround time; easy-to use;

•Lower costs and higher reimbursement: align our cost structure with our streamlined product portfolio and implement operational discipline; reduce the costs associated with performing our genetic tests; achieve broad reimbursement coverage for our tests from third-party payers and increase the amount we receive from other types of payers; focus our efforts on testing categories that are more regularly reimbursed to avoid the process of appeals and slow or non-existing payment;

•Advance insights and solutions: optimize the amount of genetic content we offer and is used by providers across the range of healthcare platforms; deliver actionable insights through digital health solutions; develop our data services;

•Improve affordability and accessibility and serve more patients: provide affordable pricing for genetic analysis and interpretation; partner to reach underserved populations; expand call points;

•Drive adoption: increase physician and patient utilization of our platform for ordering and delivery of results; and

•Attract new partners: increasing the number of strategic partners working with us to add value for all our customer segments.

General and administrative expenses include executive, finance and accounting, billing and collections, legal and human resources functions as well as other administrative costs. These expenses include personnel-related costs; audit, accounting and legal expenses; consulting costs; allocated overhead including rent, information technology, equipment depreciation, and utilities; costs incurred in relation to our co-development agreements; and post-combination expenses incurred in relation to companies we acquire. We expect our general and administrative expenses to decrease as a result of our strategic realignment including a reduction in workforce, consolidation of underutilized facilities, digitization of workflows, elimination of duplication and streamlined processes, and rationalization of technology and external services spending.

Goodwill and IPR&D impairment expenses include the impairment loss recognized on goodwill and the IPR&D indefinite-lived intangible asset initially recognized as part of the acquisition of Singular Bio. Goodwill and indefinite-lived intangible assets are assessed for impairment on an annual basis and whenever events and circumstances indicate that these assets may be impaired. We compare the fair value of our reporting unit to its carrying value, including goodwill. If the carrying value, including goodwill, exceeds the reporting unit’s fair value, we will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value.

Restructuring and other costs includes employee severance and benefits, assets impairments and losses on asset disposals and other costs. Employee separation costs are comprised of severance, other termination benefit costs, and stock-based compensation expense for the acceleration of RSUs related to workforce reductions. Employee separation costs include one-time termination benefits that are recognized as a liability at estimated fair value, at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing termination benefits are recognized as a liability at estimated fair value when the amount of such benefits is probable and reasonably estimable. Asset impairments and losses on asset disposals include operating lease impairments, losses on disposals of property and equipment and leasehold improvements associated with exiting lines of business, consolidating lab and office space, and reducing our international footprint. Other restructuring costs include the write-off of prepayments made to certain vendors for which we will no longer benefit from those goods or services, legal and professional fees, and contract exit costs.

•Costs to obtain or fulfill a contract are expensed when incurred because the amortization period would have been one year or less, and

•No adjustments to promised consideration were made for financing as we expect, at contract inception, that the period between the transfer of a promised good or service and when the customer pays for that good or service will be one year or less.

In circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under ASC 480, Distinguishing Liabilities from Equity, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We remeasure this liability each reporting period and record changes in the fair value in change in fair value of contingent consideration in our consolidated statements of operations.

In accordance with ASC 350, Intangibles - Goodwill and Other we do not amortize goodwill or other intangible assets with indefinite lives, including in-process research and development, but rather test them for impairment. ASC 350 requires us to perform an impairment review of our goodwill balance at least annually, which we do in the fourth quarter of each year for our single consolidated reporting unit, and whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 is presented below. A discussion regarding our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 can be found under Part II, Item 7. in our Annual Report on Form 10-K for the year ended December 31, 2021.

Comparison of the Years Ended December 31, 2022 and 2021

			Year Ended December 31,												Dollar Change						% Change
			2022						2021
Revenue:
Test revenue			$	500,560					$	444,072					$	56,488					13%
Other revenue			15,743						16,377						(634)						(4)%
Total revenue			516,303						460,449						55,854						12%
Operating expenses:
Cost of revenue			417,256						348,669						68,587						20%
Research and development			402,088						416,087						(13,999)						(3)%
Selling and marketing			218,881						225,910						(7,029)						(3)%
General and administrative			192,314						248,070						(55,756)						(22)%
Goodwill and IPR&D impairment			2,313,047						—						2,313,047						100%
Restructuring and other costs			140,331						—						140,331						100%
Gain on sale of RUO kit assets			(47,354)						—						(47,354)						100%
Change in fair value of contingent consideration			(1,850)						(386,646)						384,796						100%
Total operating expenses			3,634,713						852,090						2,782,623						NM
Loss from operations			(3,118,410)						(391,641)						(2,726,769)						NM
Other income (expense), net:
Change in fair value of acquisition-related liabilities			15,906						25,196						(9,290)						(37)%
Other income, net			8,054						482						7,572						NM
Total other income, net			23,960						25,678						(1,718)						(7)%
Interest expense			(56,747)						(49,900)						(6,847)						(14)%
Net loss before taxes			(3,151,197)						(415,863)						(2,735,334)						NM
Income tax benefit			44,904						36,857						8,047						22%
Net loss			$	(3,106,293)					$	(379,006)					$	(2,727,287)					NM
NM - Not Meaningful

capital expenditures. Holders of our convertible senior notes have the right to require us to repurchase all or any portion of their notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments, which could adversely affect our liquidity. However, we only have limited ability to make those cash payments under our credit agreement and, even if the credit agreement limitations are no longer in effect, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered or to repay outstanding notes when they mature.

The following table summarizes our cash flows (in thousands):

			Year Ended December 31,
			2022						2021						2020
Cash used in operating activities			$	(492,961)					$	(559,815)					$	(298,502)
Cash used in investing activities			(174,803)						(204,080)						(400,583)
Cash provided by financing activities			1,758						1,565,940						672,993
Net (decrease) increase in cash, cash equivalents and restricted cash			$	(666,006)					$	802,045					$	(26,092)

The following table summarizes our contractual obligations, including interest, as of December 31, 2022 (in thousands):

Contractual obligations:						2023						2024 and 2025						2026 and 2027						2028 and beyond						Total
Operating leases						$	23,691					$	45,773					$	39,852					$	91,177					$	200,493
Finance leases						5,595						3,839						—						—						9,434
Convertible senior notes						—						349,996						—						1,150,000						1,499,996
2020 Term Loan						—						135,000						—						—						135,000
Purchase commitments						19,756						12,909						750						—						33,415
Total						$	49,042					$	547,517					$	40,602					$	1,241,177					$	1,878,338

Our 2020 Term Loan bears interest at an annual rate equal to three-month LIBOR, subject to a 2.00% LIBOR floor, plus a margin of 8.75% and is therefore sensitive to changes in interest rates. If three-month LIBOR can no longer be determined or if the applicable governmental authority ceases to supervise or sanction such rates, then we will endeavor to agree with the administrative agent, an alternate rate of interest that gives due consideration to the then prevailing market convention for determining interest for comparable loans in the United States; provided that until such alternative rate of interest is agreed, the 2020 Term Loan shall bear interest at the Wall Street Journal Prime Rate. We currently do not use interest rate derivative instruments to manage our exposure to interest rate fluctuations. As of December 31, 2022, a hypothetical 100 basis point increase in interest rates would have an estimated $1.4 million impact per year on our financial position and results of operations, based on the 2020 Term Loan principal outstanding through maturity. By February 28, 2023, we paid the principal balance outstanding plus interest and prepayment fees. As of December 31, 2022, the fair value of the 2020 Term Loan was $130.0 million. For additional information about the 2020 Term Loan, see Note 8, “Commitments and contingencies” and Note 16, "Subsequent events" in Notes to Consolidated Financial Statements in Part II, Item 8. of this Annual Report.

ITEM 8.    Consolidated Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

			Page
Report of independent registered public accounting firm (PCAOB ID No. 42)			71
Consolidated balance sheets			73
Consolidated statements of operations			74
Consolidated statements of comprehensive loss			75
Consolidated statements of stockholders’ equity			76
Consolidated statements of cash flows			77
Notes to consolidated financial statements			78

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

			Measurement of test revenue billed to insurance carriers
Description of the Matter			During the year ended December 31, 2022, the Company recognized test revenue billed to insurance carriers of $310.3 million. As discussed in Note 2 to the consolidated financial statements, the Company often provides price concessions for tests billed to insurance carriers, and therefore the transaction price for patient insurance-billed tests is considered variable consideration. Revenue for tests billed to insurance carriers was recognized based on an estimate of the consideration to which the Company expects to be entitled at an amount for which it is probable that a reversal of cumulative revenue recognized will not occur. Auditing the measurement of the Company’s test revenue billed to insurance carriers was complex due to the significant judgment required to determine the amount of consideration to which the Company expects to be entitled. In particular, the estimate of test revenue billed to insurance carriers was based on assumptions in payer behavior such as historical payment patterns, contract provisions and government and private insurance reimbursement policies.

How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition process. For example, we tested controls over management’s review of the significant assumptions and inputs used in the estimate of the amount to which the Company expects to be entitled. We also tested controls over the completeness and accuracy of the current and historical data used in the Company's revenue models. Our audit procedures over the Company’s test revenue billed to insurance carriers included, among others, assessing the revenue models and testing the significant assumptions and inputs used by the Company in its analysis. We agreed a sample of transactions to the payer contract terms. We compared the significant assumptions and inputs used by management to the Company’s contracted rates, government and private insurance payer collection trends, and other relevant factors. We assessed the completeness and accuracy of the historical cash collections used in the Company’s revenue models. We also assessed the completeness and accuracy of adjustments to estimates of future cash collections resulting from significant contract amendments and changes in collection trends.

			Impairment of long-lived assets
Description of the Matter			At December 31, 2022, the Company’s property and equipment, net, intangible assets, net, and operating lease assets (collectively, long-lived assets) were $108.7 million, $1,012.5 million, and $106.6 million, respectively. As discussed in Note 2 to the consolidated financial statements, long-lived assets are assessed for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When indicators of impairment exist, the Company compares the estimated future undiscounted net cash flows to the carrying amount of the asset group. If the carrying amount of the asset group exceeds the estimated future undiscounted cash flows, an impairment is measured based on the difference between the carrying amount of the asset group and its fair value. Auditing the Company’s recoverability test for long-lived assets was challenging due to subjective estimates and assumptions used by the Company to determine the undiscounted cash flows associated with the asset group. The estimate of undiscounted cash flows was subject to higher estimation uncertainty due to management’s judgments over significant assumptions, including revenue growth and revenue multiples. Changes in these significant assumptions could have a significant effect on the undiscounted cash flows and resulting recoverability of the asset group.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design, and tested the operating effectiveness, of controls over the Company’s impairment assessment for long-lived assets. For example, we tested controls over management’s review of the significant inputs and assumptions in the determination of undiscounted cash flows, specifically as it relates to revenue growth and revenue multiples. Our audit procedures over the Company’s impairment assessment for long-lived assets included, among others, assessing the reasonableness of significant assumptions, specifically revenue growth and revenue multiples, and assessing the completeness and accuracy of the underlying data used by the Company in its analyses. We evaluated whether the significant assumptions were reasonable by comparing them to the past performance of the Company, current industry data and current market forecasts, and whether such assumptions were consistent with evidence obtained in other areas of the audit. We also involved our valuation specialists to assist us in evaluating the reasonableness of the Company’s valuation methodologies and assumptions, including the revenue multiples as compared to industry and market data.

INVITAE CORPORATION

Consolidated Balance Sheets

(in thousands, except par value data)

			December 31,
			2022						2021
Assets
Current assets:
Cash and cash equivalents			$	257,489					$	923,250
Marketable securities			289,611						122,121
Accounts receivable			96,148						66,227
Inventory			30,386						33,516
Prepaid expenses and other current assets			19,496						33,691
Total current assets			693,130						1,178,805
Property and equipment, net			108,723						114,714
Operating lease assets			106,563						121,169
Restricted cash			10,030						10,275
Intangible assets, net			1,012,549						1,187,994
Goodwill			—						2,283,059
Other assets			23,121						23,551
Total assets			$	1,954,116					$	4,919,567
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			$	13,984					$	21,127
Accrued liabilities			74,388						106,453
Operating lease obligations			14,600						12,359
Finance lease obligations			5,121						4,156
Total current liabilities			108,093						144,095
Operating lease obligations, net of current portion			134,386						124,369
Finance lease obligations, net of current portion			3,780						5,683
Debt			122,333						113,391
Convertible senior notes, net			1,470,783						1,464,138
Deferred tax liability			8,130						51,696
Other long-term liabilities			4,775						37,797
Total liabilities			1,852,280						1,941,169
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value: 20,000 shares authorized; nil shares issued and outstanding as of December 31, 2022 and 2021, respectively			—						—
Common stock, $0.0001 par value: 600,000 and 400,000 shares authorized; 245,562 and 228,116 shares issued and outstanding as of December 31, 2022 and 2021, respectively			25						23
Accumulated other comprehensive loss			(80)						(7)
Additional paid-in capital			4,931,032						4,701,230
Accumulated deficit			(4,829,141)						(1,722,848)
Total stockholders’ equity			101,836						2,978,398
Total liabilities and stockholders’ equity			$	1,954,116					$	4,919,567

The accompanying notes are an integral part of these financial statements.

INVITAE CORPORATION

Consolidated Statements of Operations

(in thousands, except per share data)

			Year Ended December 31,
			2022						2021						2020
Revenue:
Test revenue			$	500,560					$	444,072					$	272,310
Other revenue			15,743						16,377						7,288
Total revenue			516,303						460,449						279,598
Operating expenses:
Cost of revenue			417,256						348,669						198,275
Research and development			402,088						416,087						240,605
Selling and marketing			218,881						225,910						168,317
General and administrative			192,314						248,070						270,029
Goodwill and IPR&D impairment			2,313,047						—						—
Restructuring and other costs			140,331						—						—
Gain on sale of RUO kit assets			(47,354)						—						—
Change in fair value of contingent consideration			(1,850)						(386,646)						54,544
Total operating expenses			3,634,713						852,090						931,770
Loss from operations			(3,118,410)						(391,641)						(652,172)
Other income (expense), net:
Change in fair value of acquisition-related liabilities			15,906						25,196						(37,527)
Other income, net			8,054						482						5,195
Total other income (expense), net			23,960						25,678						(32,332)
Interest expense			(56,747)						(49,900)						(29,766)
Net loss before taxes			(3,151,197)						(415,863)						(714,270)
Income tax benefit			44,904						36,857						112,100
Net loss			$	(3,106,293)					$	(379,006)					$	(602,170)
Net loss per share, basic and diluted			$	(13.18)					$	(1.80)					$	(4.47)
Shares used in computing net loss per share, basic and diluted			235,676						210,946						134,587

The accompanying notes are an integral part of these financial statements.

INVITAE CORPORATION

Consolidated Statements of Comprehensive Loss

(in thousands)

			Year Ended December 31,
			2022						2021						2020
Net loss			$	(3,106,293)					$	(379,006)					$	(602,170)
Other comprehensive (loss) income:
Unrealized (loss) income on available-for-sale marketable securities, net of tax			(73)						(8)						10
Comprehensive loss			$	(3,106,366)					$	(379,014)					$	(602,160)

The accompanying notes are an integral part of these financial statements.

(in thousands)

			Year Ended December 31,
			2022						2021						2020
Common stock:
Balance, beginning of period			$	23					$	19					$	10
Common stock issued			2						4						9
Balance, end of period			25						23						19
Accumulated other comprehensive (loss) income:
Balance, beginning of period			(7)						1						(9)
Unrealized (loss) income on available-for-sale marketable securities, net of tax			(73)						(8)						10
Balance, end of period			(80)						(7)						1
Additional paid-in capital:
Balance, beginning of period			4,701,230						3,337,120						1,138,316
Common stock issued in private placement, net			—						—						263,628
Common stock issued in connection with public offering, net			9,658						434,263						263,685
Common stock issued on exercise of stock options, net			643						8,984						10,730
Common stock issued pursuant to exercises of warrants			—						1,242						974
Common stock issued pursuant to employee stock purchase plan			7,513						13,550						8,871
Common stock and equity awards issued pursuant to acquisitions			15,027						805,124						1,524,227
Warrants issued pursuant to loan agreement			—						—						27,000
Stock-based compensation expense			196,961						176,435						110,076
Reclassification of equity component of convertible senior notes			—						(75,488)						—
Reclassification of stock payable liabilities			—						—						(10,387)
Balance, end of period			4,931,032						4,701,230						3,337,120
Accumulated deficit:
Balance, beginning of period			(1,722,848)						(1,360,847)						(758,677)
Cumulative effect of accounting change			—						17,005						—
Net loss			(3,106,293)						(379,006)						(602,170)
Balance, end of period			(4,829,141)						(1,722,848)						(1,360,847)
Total stockholders' equity			$	101,836					$	2,978,398					$	1,976,293

The accompanying notes are an integral part of these financial statements.

(in thousands)

			Year Ended December 31,
			2022						2021						2020
Cash flows from operating activities:
Net loss			$	(3,106,293)					$	(379,006)					$	(602,170)
Adjustments to reconcile net loss to net cash used in operating activities:
Goodwill and IPR&D impairment			2,313,047						—						—
Impairments and losses on disposals of long-lived assets			60,507						—						—
Gain on sale of RUO kit assets			(47,354)						—						—
Depreciation and amortization			142,071						80,472						39,050
Stock-based compensation			199,304						180,075						158,747
Amortization of debt discount and issuance costs			15,587						14,226						17,204
Remeasurements of liabilities associated with business combinations			(17,756)						(411,842)						92,348
Benefit from income taxes			(44,904)						(36,857)						(112,100)
Post-combination expense for acceleration of unvested equity and deferred stock compensation			8,428						9,530						91,021
Amortization of premiums and discounts on investment securities			(1,515)						6,221						1,236
Non-cash lease expense			10,240						3,496						777
Other			1,018						1,487						(588)
Changes in operating assets and liabilities, net of businesses acquired:
Accounts receivable			(29,921)						(16,696)						(2,814)
Inventory			3,130						(1,486)						(7,832)
Prepaid expenses and other current assets			14,195						(14,563)						(2,010)
Other assets			3,124						(3,274)						895
Accounts payable			(2,465)						(9,258)						10,186
Accrued expenses and other long-term liabilities			(13,404)						17,660						17,548
Net cash used in operating activities			(492,961)						(559,815)						(298,502)
Cash flows from investing activities:
Purchases of marketable securities			(892,361)						(325,957)						(280,258)
Proceeds from sales of marketable securities			—						—						12,832
Proceeds from maturities of marketable securities			726,313						425,293						277,487
Acquisition of businesses, net of cash acquired			—						(247,396)						(383,753)
Proceeds from sale of RUO kit assets			44,554						—						—
Purchases of property and equipment			(53,309)						(54,720)						(22,865)
Other			—						(1,300)						(4,026)
Net cash used in investing activities			(174,803)						(204,080)						(400,583)
Cash flows from financing activities:
Proceeds from public offerings of common stock, net			9,658						434,263						263,688
Proceeds from issuance of common stock			8,157						23,767						284,203
Proceeds from issuance of convertible senior notes, net			—						1,116,427						—
Proceeds from issuance of debt, net			—						—						129,214
Finance lease principal payments			(5,410)						(3,759)						(2,655)
Settlement of acquisition obligations			(10,647)						(4,758)						(1,457)
Net cash provided by financing activities			1,758						1,565,940						672,993
Net (decrease) increase in cash, cash equivalents and restricted cash			(666,006)						802,045						(26,092)
Cash, cash equivalents and restricted cash at beginning of period			933,525						131,480						157,572
Cash, cash equivalents and restricted cash at end of period			$	267,519					$	933,525					$	131,480
Supplemental cash flow information:
Interest paid			$	40,504					$	31,400					$	12,130
Supplemental cash flow information of non-cash investing and financing activities:
Consideration receivable for sale of RUO kit assets			$	3,000					$	—					$	—
Equipment acquired through finance leases			$	4,472					$	8,224					$	4,463
Purchases of property and equipment in accounts payable and accrued liabilities			$	820					$	13,222					$	1,869
Warrants issued pursuant to debt agreement			$	—					$	—					$	27,000
Common stock issued for acquisition of businesses			$	6,600					$	802,073					$	1,157,958
Consideration payable for acquisition of businesses			$	—					$	46,649					$	940,829
Operating lease assets obtained in exchange for lease obligations, net			$	4,495					$	88,777					$	14,058

The accompanying notes are an integral part of these financial statements.

INVITAE CORPORATION

Notes to Consolidated Financial Statements

•revenue recognition;

•inventory adjustments;

•the fair value of assets and liabilities associated with business combinations;

•the impairment assessment of goodwill and intangible assets;

•the recoverability of long-lived assets;

•our incremental borrowing rates used to calculate our lease balances;

•stock-based compensation expense and the fair value of awards and warrants issued; and

•income tax uncertainties.

Significant customers are those that represent 10% or more of our total revenue for each year presented in the consolidated statements of operations. Our revenue and accounts receivable from significant customers as a percentage of our total revenue and total accounts receivable was as follows:

			Revenue																		Accounts receivable
			Year Ended December 31,																		December 31,
			2022						2021						2020						2022						2021
Medicare			14		%				15		%				19		%				16		%				*

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (in thousands):

			December 31,
			2022						2021
Cash and cash equivalents			$	257,489					$	923,250
Restricted cash			10,030						10,275
Total cash, cash equivalents and restricted cash			$	267,519					$	933,525

We apply ASC 805, Business Combinations, which requires recognition of assets acquired, liabilities assumed, and contingent consideration at their fair value on the acquisition date with subsequent changes recognized in earnings; requires acquisition-related expenses and restructuring costs to be recognized separately from the business combination and expensed as incurred; requires in-process research and development to be capitalized at fair value as an indefinite-lived intangible asset until completion or abandonment; and requires that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for taxes.

In circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under ASC 480, Distinguishing Liabilities from Equity, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We remeasure this liability each reporting period and record changes in the fair value in change in fair value of contingent consideration in our consolidated statements of operations.