SoftBank-Backed Genetic Testing Invitae's Descent from $7B Valuation to Near-Bankruptcy

Invitae Corporation NVTA, backed by SoftBank Group SFTBY SFTBF, is reportedly on the brink of filing for bankruptcy in the coming weeks.

The San Francisco-based medical genetics company, grappling with a substantial $1.5 billion debt burden, is enlisting the expertise of restructuring advisers from FTI Consulting and legal counsel from Kirkland & Ellis to navigate its financial challenges.

Amidst this financial turmoil, Invitae is actively exploring various strategic options, and bankruptcy is a prominent consideration. 

The company, known for its aggressive acquisition approach in recent years, has initiated the shedding of assets and cost-cutting measures to address its precarious financial situation, the Wall Street Journal noted.

Notably, the downward trajectory of Invitae mirrors the struggles faced by its industry counterpart, 23andMe Holdings Co ME, a genetic testing company. 

23andMe’s market cap plummeted from $6 billion in 2021 to a mere $332 million, reflecting the challenges within the genetic testing sector.

Invitae’s stock, which once soared above $50, dramatically declined. The company’s market cap, previously exceeding $7 billion, has dwindled significantly over the past 12 months, experiencing an 82% loss in value.

Having invested $1.2 billion in convertible debt in 2021 to support Invitae’s asset acquisition plans, SoftBank remains a stakeholder in the beleaguered company. 

In January, Invitae sold its non-invasive prenatal and carrier screening business to Natera Inc NTRA for $10 million. The transaction includes $42.5 million in potential milestone payments, including cash and litigation-related credits.

In December 2023, Invitae divested Ciitizen’s assets and announced strategic cost cuts, including workforce reduction and other operating expense reductions, with an anticipated cash savings of approximately $90 million-100 million on an annualized basis.

Price Action: NVTA shares are down 68.80% at $0.122 on the last check Monday.

Photo via Wikimedia Commons