GeneDx Reports Second Quarter 2024 Financial Results and Business Highlights

GeneDx Reports Second Quarter 2024 Financial Results and Business Highlights

July 30, 2024 | Last Trade: US$95.47 2.81 -2.86

Reported second quarter 2024 revenue from continuing operations¹ of $68.9M with 77% year-over-year growth of exome and genome test revenue
Expanded second quarter 2024 adjusted gross margins² from continuing operations to 62%
Narrowed second quarter 2024 adjusted net loss² to $2.7M
Raising guidance to deliver between $255M and $265M in FY 2024 revenue and reiterate path to profitability in 2025
GeneDx to host conference call today at 4:30 p.m. ET

STAMFORD, Conn. / Jul 30, 2024 / Business Wire / GeneDx Holdings Corp. (Nasdaq: WGS), a leader in delivering improved health outcomes through genomic insights, today reported its financial results for the second quarter of 2024.

“Our continued organizational focus on execution fueled our strong second quarter results, giving us confidence to raise full year 2024 revenue guidance to between $255-$265 million and reiterate our expectation to reach profitability in the next several quarters,” said Katherine Stueland, President and Chief Executive Officer at GeneDx. “The strength in our performance across all measures of the business has enabled us to begin investments in future growth opportunities for our business with a focus on extending our leadership in whole exome sequencing to whole genome sequencing to ensure we continue to lead the charge in quickly providing the most accurate and actionable genetic information to diagnose disease for as many patients and families as possible.”

Second Quarter 2024 Financial Results (Unaudited)^1,2

Revenues

Revenues from continuing operations grew to $68.9 million, an increase of 52% year-over-year and 12% sequentially.
- Total company revenues were $70.5 million.
Exome and genome test revenue grew to $50.7 million, an increase of 77% year-over-year and 15% sequentially.

Exome and genome volume

Exome and genome test results volume grew to 18,017, an increase of 52% year-over-year and 9% sequentially.
Exome and genome represented 31% of all test results, up from 22% in the second quarter of 2023 and up from 30% in the first quarter of 2024.

Gross margin

Adjusted gross margin from continuing operations expanded to 62%, up from 37% in the second quarter of 2023 and up from 61% in the first quarter of 2024.
- Total company gross margin was 61%.

Operating expenses

Adjusted total operating expenses reduced to $45.0 million, a decrease of 24% year-over-year and 1% sequentially.
- Total GAAP operating expenses were $52.7 million.

Net loss

Adjusted net loss narrowed to $2.7 million, an improvement of 93% year-over-year and 68% sequentially.
- GAAP net loss was $29.2 million, inclusive of a one-time, net litigation charge of $13 million.

Cash burn and cash position

Total net use of cash was $6.1 million in the second quarter of 2024, an improvement of 89% year-over-year and 65% sequentially.
Cash, cash equivalents, marketable securities and restricted cash was $107.8 million as of June 30, 2024.

	1.		Revenue and gross margin results from continuing operations, which we believe are representative of our ongoing business strategy exclude any revenue and cost of goods sold of the exited Legacy Sema4 diagnostic testing business for the current and all comparative periods. Total company results include GeneDx’s continuing operations and the financial impacts of exited Legacy Sema4 business activities for the current and all comparative periods.
	2.		Adjusted gross margin, adjusted total operating expenses and adjusted net loss are non-GAAP financial measures. See appendix for a reconciliation of GAAP to Non-GAAP figures presented.

GeneDx Full Year 2024 Guidance

GeneDx has updated full year 2024 guidance. Management expects GeneDx to:

Drive full year 2024 revenues¹ between $255 and $265 million (previous guidance was between $235 and $245 million);
Expand full year 2024 adjusted gross margin profile to at least 60% (no change);
Use between $65 to $70 million of net cash for full year 2024 (previous guidance was between $70 to $80 million);
Turn to profitability in 2025 (no change).

Total company results include the combination of the GeneDx diagnostic business revenues and the data and information revenues from the Legacy Sema4 business.

Second Quarter 2024 Business Highlights

Driving sustainable growth, expanding access and improving the standard of care

Announced collaboration with Epic Aura¹ to expand access to rapid whole genome sequencing (“rWGS”) services to inform diagnosis for affected pediatric and neonatal patients, enhancing GeneDx’s commercial footprint within leading health systems.
Launched first-of-its-kind Patient Access Program in collaboration with leading biopharma partners to expand access to exome testing for pediatric epilepsy patients.
Grew biopharma partner programs to 32, predominantly with biotech companies who are relying on us to find patients with a specific variant for clinical trial purposes.
North Carolina Medicaid has expanded its existing coverage of outpatient whole exome sequencing (“WES”) to include the analysis of family comparator samples, which increases the rate of diagnosis of WES, effective June 1, 2024.
State Medicaid programs continue to expand coverage of rapid genome sequencing in the neonatal intensive care unit (“NICU”), bringing total states covering rapid whole genome in the acute care setting to 14, including new coverage announced in:
- North Carolina (June 2024)
- Tennessee (July 2024)
- Connecticut (July 2024)
Announced reinvestment in rapid and standard whole genome sequencing products, enabling:
- Faster turnaround time for rWGS with a written report in as fast as 5 days
- Buccal samples (cheek swab) allowing for easier and more accessible non-invasive sample collection method for even the youngest patients
- Expanding the number of repeat expansions covered by whole genome sequencing to increase diagnostic yield and improve the provider and patient experience by decreasing the need for follow-up testing

Epic and Aura are trademarks of Epic Systems Corporation.

Webcast and Conference Call Details

GeneDx will host a conference call today, July 30, 2024, at 4:30 p.m. Eastern Time. Investors interested in listening to the conference call are required to register online. A live and archived webcast of the event will be available on the “Events” section of the GeneDx investor relations website at https://ir.genedx.com/.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding our future performance and our market opportunity, including our expected full year 2024 reported revenue guidance, our expectations regarding our adjusted gross margin profile in 2024, our use of net cash in 2024 and our turning profitable in 2025. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) our ability to implement business plans, goals and forecasts, and identify and realize additional opportunities, (ii) the risk of downturns and a changing regulatory landscape in the highly competitive healthcare industry, (iii) the size and growth of the market in which we operate, (iv) our ability to pursue our new strategic direction, and (v) our ability to enhance our artificial intelligence tools that we use in our clinical interpretation platform. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 23, 2024 and other documents filed by us from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. We do not give any assurance that we will achieve our expectations.

About GeneDx

At GeneDx (Nasdaq: WGS), we believe that everyone deserves personalized, targeted medical care—and that it all begins with a genetic diagnosis. Fueled by one of the world’s largest rare disease data sets, our industry-leading exome and genome tests translate complex genomic data into clinical answers that unlock personalized health plans, accelerate drug discovery, and improve health system efficiencies. It all starts with a single test. For more information, please visit genedx.com and connect with us on LinkedIn, X, Facebook, and Instagram.

Volume and revenue in the table below include the combination of the Legacy GeneDx diagnostic business with the data and information business of Legacy Sema4.

Volume & Revenue

	2Q24		1Q24		4Q23		3Q23		2Q23
Volumes
Whole exome, whole genome		18,017		16,592		15,663		13,216		11,855
Hereditary cancer		5,482		6,868		8,240		8,556		7,142
Other panels		34,204		31,763		33,692		35,861		35,931
Total		57,703		55,223		57,595		57,633		54,928

Revenue ($ millions)
Whole exome, whole genome	$	50.7	$	44.0	$	39.2	$	34.0	$	28.7
Hereditary cancer		3.8		5.5		5.5		4.5		3.8
Other panels		13.3		10.7		11.2		10.6		10.6
Data information		1.1		1.3		2.2		1.3		2.1
Total	$	68.9	$	61.5	$	58.1	$	50.4	$	45.2

Unaudited Select Financial Information (in thousands)

	Three months ended June 30, 2024			Three months ended March 31, 2024
	GeneDx	Legacy Sema4	Total	GeneDx	Legacy Sema4	Total
Revenue	$68,924	$1,590	$70,514	$61,461	$961	$62,422
Adjusted cost of services	26,523	145	26,668	24,099	—	24,099
Adjusted gross profit (loss)	$42,401	$1,445	$43,846	$37,362	$961	$38,323
Adjusted gross margin %	61.5%	90.9%	62.2%	60.8%	100.0%	61.4%

	Three months ended June 30, 2023
	GeneDx	Legacy Sema4	Total
Revenue	$45,226	$3,480	$48,706
Adjusted cost of services	28,452	—	28,452
Adjusted gross profit (loss)	$16,774	$3,480	$20,254
Adjusted gross margin %	37.1%	100.0%	41.6%

	Three months ended June 30, 2024
	Reported			Depreciation and amortization			Stock-based compensation expense			Restructuring costs			Change in FV of financial liabilities		Charges related to business exit		Other		Adjusted
Diagnostic test revenue	$	69,439		$	—		$	—		$	—		$	—	$	—	$	—	$	69,439
Other revenue		1,075			—			—			—			—		—		—		1,075
Total revenue		70,514			—			—			—			—		—		—		70,514
Cost of services		27,562			(808	)		(86	)		—			—		—		—		26,668
Gross profit (loss)		42,952			808			86			—			—		—		—		43,846
Gross margin		60.9	%																	62.2	%
Research and development		10,902			(211	)		(347	)		(35	)		—		—		—		10,309
Selling and marketing		16,585			(1,225	)		(368	)		(63	)		—		—		—		14,929
General and administrative		25,170			(2,974	)		(2,307	)		(150	)		—		—		—		19,739
Impairment loss		—			—			—			—			—		—		—		—
Other, net		874			—			—			—			—		—		—		874
Loss from operations		(10,579	)		5,218			3,108			248			—		—		—		(2,005	)
Interest income (expense), net		(894	)		—			—			—			—		—		—		(894	)
Other income (expense), net		(17,890	)		—			—			—			4,409		—		13,450		(31	)
Income tax benefit		190			—			—			—			—		—		—		190
Net loss	$	(29,173	)	$	5,218		$	3,108		$	248		$	4,409	$	—	$	13,450	$	(2,740	)

	Three months ended June 30, 2023
	Reported			Depreciation and amortization			Stock-based compensation expense			Restructuring costs			Change in FV of financial liabilities			Charges related to business exit			Other			Adjusted
Diagnostic test revenue	$	46,635		$	—		$	—		$	—		$	—		$	—		$	—		$	46,635
Other revenue		2,071			—			—			—			—			—			—			2,071
Total revenue		48,706			—			—			—			—			—			—			48,706
Cost of services		29,949			(1,233	)		(251	)		(13	)		—			—			—			28,452
Gross profit (loss)		18,757			1,233			251			13			—			—			—			20,254
Gross margin		38.5	%																				41.6	%
Research and development		17,138			(4,656	)		675			(815	)		—			—			—			12,342
Selling and marketing		15,182			(1,225	)		143			(326	)		—			—			—			13,774
General and administrative		37,341			(3,218	)		(675	)		(483	)		—			—			—			32,965
Impairment loss		—			—			—			—			—			—			—			—
Other, net		718			—			—			—			—			334			3,238			4,290
Loss from operations		(51,622	)		10,332			108			1,637			—			(334	)		(3,238	)		(43,117	)
Interest income (expense), net		1,074			—			—			—			—			—			—			1,074
Other income (expense), net		3,633			—			—			—			(3,547	)		—			(86	)		—
Income tax benefit		196			—			—			—			—			—			—			196
Net loss	$	(46,719	)	$	10,332		$	108		$	1,637		$	(3,547	)	$	(334	)	$	(3,324	)	$	(41,847	)

	Three months ended March 31, 2024
	Reported			Depreciation and amortization			Stock-based compensation expense			Restructuring costs			Change in FV of financial liabilities		Charges related to business exit		Other		Adjusted
Diagnostic test revenue	$	61,104		$	—		$	—		$	—		$	—	$	—	$	—	$	61,104
Other revenue		1,318			—			—			—			—		—		—		1,318
Total revenue		62,422			—			—			—			—		—		—		62,422
Cost of services		25,011			(816	)		(48	)		(48	)		—		—		—		24,099
Gross profit (loss)		37,411			816			48			48			—		—		—		38,323
Gross margin		59.9	%																	61.4	%
Research and development		11,567			(196	)		187			(103	)		—		—		—		11,455
Selling and marketing		16,085			(1,225	)		20			(400	)		—		—		—		14,480
General and administrative		22,445			(3,011	)		292			(292	)		—		—		—		19,434
Impairment loss		—			—			—			—			—		—		—		—
Other, net		974			—			—			—			—		—		—		974
Loss from operations		(13,660	)		5,248			(451	)		843			—		—		—		(8,020	)
Interest income (expense), net		(597	)		—			—			—			—		—		—		(597	)
Other income (expense), net		(6,064	)		—			—			—			6,101		—		—		37
Income tax benefit		82			—			—			—			—		—		—		82
Net loss	$	(20,239	)	$	5,248		$	(451	)	$	843		$	6,101	$	—	$	—	$	(8,498	)

GeneDx Holdings Corp. Condensed Consolidated Balance Sheets (in thousands, except share and per share amounts)

	June 30, 2024 (Unaudited)			December 31, 2023
Assets:
Current assets:
Cash and cash equivalents	$	56,076		$	99,681
Marketable securities		50,784			30,467
Accounts receivable		25,500			32,371
Due from related parties		693			445
Inventory, net		10,322			8,777
Prepaid expenses and other current assets		18,792			10,598
Total current assets		162,167			182,339
Operating lease right-of-use assets		25,624			26,900
Property and equipment, net		31,339			32,479
Intangible assets, net		165,613			172,625
Other assets ⁽¹⁾		4,357			4,413
Total assets	$	389,100		$	418,756
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable and accrued expenses	$	51,959		$	37,456
Due to related parties		1,213			1,379
Short-term lease liabilities		4,001			3,647
Other current liabilities		11,097			16,336
Total current liabilities		68,270			58,818
Long-term debt, net of current portion		52,160			52,688
Long-term lease liabilities		60,800			62,938
Other liabilities		12,660			14,735
Deferred taxes		1,167			1,560
Total liabilities		195,057			190,739
Stockholders’ Equity:
Preferred stock		—			—
Class A common stock		2			2
Additional paid-in capital		1,543,182			1,527,778
Accumulated deficit		(1,349,600	)		(1,300,188	)
Accumulated other comprehensive income		459			425
Total stockholders’ equity		194,043			228,017
Total liabilities and stockholders’ equity	$	389,100		$	418,756

(1)

Other assets includes $987 thousand of restricted cash as of both June 30, 2024 and December 31, 2023.

GeneDx Holdings Corp. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share amounts)

	June 30,						Six months ended June 30,
	2024			2023			2024			2023
Revenue
Diagnostic test revenue	$	69,439		$	46,635		$	130,543		$	88,485
Other revenue		1,075			2,071			2,393			3,360
Total revenue		70,514			48,706			132,936			91,845
Cost of services		27,562			29,949			52,573			57,852
Gross profit		42,952			18,757			80,363			33,993
Research and development		10,902			17,138			22,469			31,730
Selling and marketing		16,585			15,182			32,670			28,634
General and administrative		25,170			37,341			47,615			81,030
Impairment loss		—			—			—			2,120
Other operating expenses, net		874			718			1,848			2,465
Loss from operations		(10,579	)		(51,622	)		(24,239	)		(111,986	)

Non-operating income (expenses), net
Change in fair value of warrants and earn-out contingent liabilities		(4,409	)		3,547			(10,510	)		94
Interest expense, net		(894	)		1,074			(1,491	)		1,039
Other expense, net		(13,481	)		86			(13,444	)		2,802
Total non-operating income, net		(18,784	)		4,707			(25,445	)		3,935
Loss before income taxes		(29,363	)		(46,915	)	$	(49,684	)	$	(108,051	)
Income tax benefit		190			196			272			343
Net loss	$	(29,173	)	$	(46,719	)	$	(49,412	)	$	(107,708	)

Weighted average shares outstanding of Class A common stock		26,617,955			25,418,358			26,340,063			22,754,948
Basic and diluted net loss per share, Class A common stock	$	(1.10	)	$	(1.84	)	$	(1.88	)	$	(4.73	)

GeneDx Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)

	Six months ended June 30,
	2024			2023
Operating activities
Net loss	$	(49,412	)	$	(107,708	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		10,466			18,968
Stock-based compensation expense		2,657			156
Change in fair value of warrants and contingent liabilities		10,510			(94	)
Deferred tax benefit		(272	)		(343	)
Provision for excess and obsolete inventory		109			2,620
Legal reserves		13,450			—
Change in third party payor reserves		1,066			(4,308	)
Gain on sale of assets		—			(2,954	)
Gain on debt forgiveness		—			(2,750	)
Impairment loss		—			2,120
Other		1,738			412
Change in operating assets and liabilities:
Accounts receivable		6,871			10,174
Inventory		(1,654	)		(486	)
Accounts payable and accrued expenses		(10,359	)		(25,399	)
Other assets and liabilities		(6,088	)		531
Net cash used in operating activities		(20,918	)		(109,061	)
Investing activities
Consideration on escrow paid for GeneDx acquisition		—			(12,144	)
Purchases of property and equipment		(1,795	)		(2,762	)
Proceeds from sales of assets		—			3,634
Purchases of marketable securities		(29,381	)		—
Proceeds from sales of marketable securities		598			—
Proceeds from maturities of marketable securities		8,720			—
Development of internal-use software assets		—			(461	)
Net cash used in investing activities		(21,858	)		(11,733	)
Financing activities
Proceeds from offerings, net of issuance costs		—			143,002
Exercise of stock options		161			266
Long-term debt principal payments		—			(2,000	)
Finance lease payoff and principal payments		(990	)		(1,222	)
Net cash (used in) provided by financing activities		(829	)		140,046
Net (decrease) increase in cash, cash equivalents and restricted cash		(43,605	)		19,252
Cash, cash equivalents and restricted cash, at beginning of period		100,668			138,303
Cash, cash equivalents and restricted cash, at end of period ⁽¹⁾	$	57,063		$	157,555

Supplemental disclosures of cash flow information
Cash paid for interest	$	4,033		$	946
Cash paid for taxes	$	557		$	1,003
Stock consideration paid for purchase of business	$	—		$	6,692
Stock consideration paid pursuant to exercise of Perceptive warrant	$	12,586		$	—
Purchases of property and equipment in accounts payable and accrued expenses	$	501		$	109
Assets acquired under capital leases obligations	$	689		$	—

(1)

Cash, cash equivalents and restricted cash at June 30, 2024 excludes marketable securities of $50.8 million.

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