GeneDx Holdings Corp. (WGS) came out with quarterly earnings of $0.04 per share, beating the Zacks Consensus Estimate of a loss of $0.19 per share. This compares to loss of $0.82 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 121.05%. A quarter ago, it was expected that this company would post a loss of $0.26 per share when it actually produced a loss of $0.11, delivering a surprise of 57.69%.Over the last four quarters, the ...

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Financial Data and Key Metrics Changes - Revenues for Q2 2024 reached $68.9 million, a 52% increase year-over-year and a 12% increase sequentially from Q1 2024 [21][31] - Adjusted gross profit was $42.8 million, up 153% compared to Q2 2023, with an adjusted gross margin of 62%, up from 37% a year ago [24][25] - Total adjusted operating expenses were $45 million, a reduction of 24% year-over-year [29] - Adjusted net loss narrowed to $2.7 million, improving 93% year-over-year and 68% sequentially [31] - Cash burn for Q2 2024 was $6.1 million, improving 89% year-over-year [31] Business Line Data and Key Metrics Changes - Exome and genome revenues grew 77% year-over-year, contributing $50 million to total revenue [21] - Exome and genome tests accounted for over 74% of total revenue, with over 18,000 tests delivered, a 52% increase year-over-year [11][22] Market Data and Key Metrics Changes - The average reimbursement rate for exome and genome testing increased to approximately $2,800, up from $2,600 in Q1 2024 [25][56] - 14 states now cover rapid genome sequencing, with North Carolina recently announcing added coverage [16][27] Company Strategy and Development Direction - The company is focused on pediatric patients and aims to enhance whole genome sequencing capabilities [8][13] - A partnership with Epic was announced to integrate services into health system workflows, improving provider and patient experiences [13][46] - The company is committed to expanding access to genetic testing through legislative support and partnerships with biopharma companies [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability by 2025, with a focus on maintaining operational efficiency while investing in growth [34][127] - The company is optimistic about the impact of new biomarker legislation and Medicaid coverage expansions on revenue growth [15][87] Other Important Information - A one-time litigation charge of approximately $13 million was noted, related to a class action lawsuit [30] - The company raised its revenue guidance for 2024 to between $255 million and $265 million [34] Q&A Session Summary Question: What is the expected average reimbursement rate moving forward? - Management indicated that the $2,800 reimbursement rate is a good baseline for future quarters [41] Question: How does the revenue guidance split for this year compare to previous years? - The guidance suggests a more balanced revenue split between the first and second halves of the year, indicating confidence in maintaining revenue levels [42] Question: Can you discuss the momentum in biopharma partnerships? - Management highlighted the addition of new programs and the importance of connecting biopharma partners with eligible patients for clinical trials [43] Question: What are the expectations for the Epic partnership? - The partnership is expected to enhance patient access and utilization of services, particularly in the NICU [46][48] Question: How does the company plan to manage operating expenses while investing in growth? - Management emphasized a disciplined approach to investments, ensuring that operational efficiencies are maintained [114] Question: What is the current status of whole genome testing within the company's offerings? - Whole genome testing is still a small but rapidly growing segment, with expectations for increased focus and revenue in 2025 [108][109]

Company Performance - GENEDX HOLDINGS reported revenues of $70.51 million for the quarter ended June 2024, exceeding the Zacks Consensus Estimate by 19.72% and showing a year-over-year increase from $48.71 million [2] - The company has surpassed consensus revenue estimates three times in the last four quarters [2] - The stock has increased approximately 1125.1% since the beginning of the year, significantly outperforming the S&P 500's gain of 14.5% [3] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is -$0.19 on revenues of $60.1 million, and for the current fiscal year, it is -$0.92 on revenues of $240.9 million [5] - The estimate revisions trend for GENEDX HOLDINGS is favorable, leading to a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [12] Industry Context - The Medical Services industry, to which GENEDX HOLDINGS belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [13] - Co-Diagnostics, Inc., another company in the same industry, is expected to report revenues of $0.4 million for the quarter ended June 2024, reflecting a 100% increase from the previous year [7]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%2E%20Financial%20Information) This section presents unaudited financial statements, management's analysis, market risk, and internal controls [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) These unaudited statements detail the company's financial position, operations, equity, and cash flows for Q2 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $389.1 million by June 30, 2024, due to reduced cash, with liabilities up and equity down Condensed Consolidated Balance Sheets (in thousands) | Account | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $56,076 | $99,681 | | Total current assets | $162,167 | $182,339 | | Total assets | $389,100 | $418,756 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $68,270 | $58,818 | | Total liabilities | $195,057 | $190,739 | | Total stockholders' equity | $194,043 | $228,017 | | Total liabilities and stockholders' equity | $389,100 | $418,756 | [Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20%28Unaudited%29) Q2 2024 revenue grew 45% to $70.5 million, gross profit surged 129%, and net loss significantly narrowed Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $70,514 | $48,706 | $132,936 | $91,845 | | Gross Profit | $42,952 | $18,757 | $80,363 | $33,993 | | Loss from Operations | ($10,579) | ($51,622) | ($24,239) | ($111,986) | | Net Loss | ($29,173) | ($46,719) | ($49,412) | ($107,708) | | Basic and Diluted Net Loss per Share | ($1.10) | ($1.84) | ($1.88) | ($4.73) | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Unaudited%29) Stockholders' equity decreased to $194.0 million by June 30, 2024, mainly due to the $49.4 million net loss - Stockholders' equity declined to **$194.0 million** at June 30, 2024, from **$228.0 million** at the end of 2023, mainly due to the net loss of **$49.4 million** incurred during the first six months of 2024[15](index=15&type=chunk) - During the six months ended June 30, 2024, the company issued **645,414 shares** of Class A common stock upon the cashless exercise of the Perceptive warrant, contributing **$12.6 million** to additional paid-in capital[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) Net cash used in operations significantly reduced to $20.9 million, with total cash and equivalents decreasing Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,918) | ($109,061) | | Net cash used in investing activities | ($21,858) | ($11,733) | | Net cash (used in) provided by financing activities | ($829) | $140,046 | | **Net (decrease) increase in cash** | **($43,605)** | **$19,252** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's genomics business, accounting policies, revenue, fair value, debt, legal, and segment reporting - The company is a leading genomics company focused on pediatric and rare diseases, delivering health insights to inform diagnosis and treatment, serving healthcare professionals and billing third-party payors across the U.S.[42](index=42&type=chunk) Disaggregated Revenue by Segment (Six Months Ended June 30, in thousands) | Segment | 2024 | 2023 | | :--- | :--- | :--- | | GeneDx | $130,385 | $85,919 | | Legacy Sema4 | $2,551 | $5,926 | | **Total** | **$132,936** | **$91,845** | - The company reached an agreement in principle to settle a shareholder class action lawsuit for approximately **$21 million**, with about **$10 million** expected to be covered by insurance[178](index=178&type=chunk) - The company has a senior secured term loan facility with Perceptive Credit Holdings for up to **$75.0 million**, with an initial **$50.0 million** tranche funded in October 2023[63](index=63&type=chunk)[331](index=331&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses improved financial performance from GeneDx focus, increased revenue, reduced expenses, and sufficient liquidity [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q2 2024 revenue grew 45% to $70.5 million, gross profit increased 129%, and operating expenses significantly decreased Q2 2024 vs Q2 2023 Performance (in thousands) | Metric | Q2 2024 | Q2 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $70,514 | $48,706 | $21,808 | 45% | | Gross Profit | $42,952 | $18,757 | $24,195 | 129% | | R&D Expense | $10,902 | $17,138 | ($6,236) | (36)% | | G&A Expense | $25,170 | $37,341 | ($12,171) | (33)% | | Loss from Operations | ($10,579) | ($51,622) | $41,043 | (80)% | - The increase in diagnostic test revenue for Q2 2024 was primarily driven by a **$22.0 million (77%)** increase in whole exome and genome sequencing revenues, resulting from a **52%** increase in test volumes and higher average reimbursement rates[207](index=207&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures, including Adjusted Gross Profit and Net Loss, offer a clearer view of operating performance by excluding certain items Reconciliation of Net Loss to Adjusted Net Loss (in thousands) | | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net loss | ($29,173) | ($46,719) | | Adjustments (Depreciation, Stock Comp, etc.) | $26,433 | $5,872 | | **Adjusted net loss** | **($2,740)** | **($41,847)** | Reconciliation of Gross Profit to Adjusted Gross Profit (in thousands) | | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Gross profit | $42,952 | $18,757 | | Adjustments (Depreciation, Stock Comp, etc.) | $894 | $1,497 | | **Adjusted gross profit** | **$43,846** | **$20,254** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains $106.9 million in cash and marketable securities, providing sufficient liquidity for at least the next twelve months - Management believes that existing cash, cash equivalents, and marketable securities of **$106.9 million** provide sufficient liquidity for at least twelve months from the filing date[248](index=248&type=chunk)[249](index=249&type=chunk) - The company established an at-the-market (ATM) offering to sell up to **$75.0 million** in Class A common stock, with no shares sold as of June 30, 2024[247](index=247&type=chunk) - Net cash used in operating activities for the first six months of 2024 was reduced to **$20.9 million** from **$109.1 million** in the prior-year period, reflecting improved profitability and cost savings[281](index=281&type=chunk)[251](index=251&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to interest rates, affecting its cash and variable rate debt, with no material impact from rate changes - The company is exposed to interest rate risk on its cash and marketable securities portfolio (**$107.8 million** at June 30, 2024) and its variable rate debt from the Perceptive term loan facility[287](index=287&type=chunk)[259](index=259&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to an ITGC material weakness, though financial statements are fairly stated - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2024[288](index=288&type=chunk) - The ineffectiveness is due to a material weakness in ITGCs related to system access and change management, which has not yet been fully remediated[290](index=290&type=chunk)[291](index=291&type=chunk) - Notwithstanding the material weakness, management concluded that the condensed consolidated financial statements are fairly stated in all material respects in accordance with U.S. GAAP[289](index=289&type=chunk) [Part II. Other Information](index=37&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, updated risk factors, equity sales, other disclosures, and exhibits [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 for legal proceedings, including a shareholder class action lawsuit settlement for $21 million - Information on legal proceedings is detailed in Note 9 of the financial statements[314](index=314&type=chunk) - The company has reached an agreement in principle to settle a shareholder class action lawsuit for **~$21 million**, which is expected to be partially funded by **~$10 million** from insurance[178](index=178&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company highlights increased compliance costs from losing 'smaller reporting company' status and risks from new FDA regulations on LDTs - The company will no longer qualify as a 'smaller reporting company' starting with its Q1 2025 report, leading to increased compliance costs[293](index=293&type=chunk)[316](index=316&type=chunk) - A new FDA final rule, effective May 2025, will phase out enforcement discretion for LDTs over four years, which could subject the company's tests to more significant regulatory requirements and costs[317](index=317&type=chunk)[318](index=318&type=chunk) - A lawsuit has been filed by the American Clinical Laboratory Association challenging the FDA's authority to regulate LDTs, the outcome of which is uncertain[296](index=296&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) No unregistered equity sales, use of proceeds, or issuer purchases of equity securities were reported for the period - None reported for the period[298](index=298&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) The company provided a supplemental disclosure updating information on the 'Information Blocking Prohibition' - A final rule establishing disincentives for healthcare providers violating 'information blocking' regulations became effective July 31, 2024[322](index=322&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including CEO/CFO certifications and XBRL data - The report includes required CEO/CFO certifications and XBRL financial data files as exhibits[323](index=323&type=chunk)

[Executive Summary & Q2 2024 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202024%20Highlights) GeneDx reported strong Q2 2024 results, with significant revenue growth, narrowed adjusted net loss, and raised full-year guidance, targeting profitability and whole genome sequencing investment [Q2 2024 Financial Performance Overview](index=1&type=section&id=Q2%202024%20Financial%20Performance%20Overview) GeneDx achieved substantial financial improvements in Q2 2024, including a 52% year-over-year increase in revenues from continuing operations and a 93% reduction in adjusted net loss, driven by strong exome and genome test revenue growth and expanded gross margins Q2 2024 Key Financial Highlights | Metric | Q2 2024 Result ($ millions) | YoY Growth | Sequential Growth | | :----------------------------------------- | :-------------------------- | :--------- | :---------------- | | Revenue from continuing operations | $68.9 | 52% | 12% | | Exome and genome test revenue | $50.7 | 77% | 15% | | Exome and genome test results volume | 18,017 | 52% | 9% | | Adjusted gross margin from continuing ops | 62% | Up from 37% (Q2 2023) | Up from 61% (Q1 2024) | | Adjusted total operating expenses | $45.0 | (24%) | (1%) | | Adjusted net loss | $2.7 | (93%) | (68%) | - GeneDx's CEO, Katherine Stueland, expressed confidence in the strong Q2 results, leading to **raised full-year 2024 revenue guidance** and reiterating the expectation to reach **profitability in the next several quarters**, with a focus on extending leadership from whole exome to whole genome sequencing[2](index=2&type=chunk) [Cash Position and Use](index=3&type=section&id=Cash%20Position%20and%20Use) The company significantly improved its cash management in Q2 2024, reducing net cash use by 89% year-over-year and maintaining a strong cash, cash equivalents, marketable securities, and restricted cash balance of $107.8 million Q2 2024 Cash Metrics | Metric | Q2 2024 Result ($ millions) | YoY Improvement | Sequential Improvement | | :------------------------------------------------------------------ | :-------------------------- | :-------------- | :--------------------- | | Total net use of cash | $6.1 | 89% | 65% | | Cash, cash equivalents, marketable securities and restricted cash (as of June 30, 2024) | $107.8 | N/A | N/A | [Second Quarter 2024 Business Highlights](index=3&type=section&id=Second%20Quarter%202024%20Business%20Highlights) GeneDx expanded its market reach and enhanced its service offerings through strategic collaborations, patient access programs, and increased Medicaid coverage for genomic sequencing, alongside reinvestments in rapid and standard whole genome sequencing products to improve turnaround times and sample collection methods - Announced collaboration with Epic Aura to expand access to rapid whole genome sequencing (rWGS) services for pediatric and neonatal patients, enhancing commercial footprint within leading health systems[14](index=14&type=chunk) - Launched first-of-its-kind Patient Access Program with biopharma partners to expand exome testing for pediatric epilepsy patients, growing biopharma partner programs to **32**[14](index=14&type=chunk) - North Carolina Medicaid expanded coverage of outpatient whole exome sequencing (WES) to include family comparator samples (effective June 1, 2024), and total states covering rapid whole genome in acute care settings reached **14**, including new coverage in North Carolina (June 2024), Tennessee (July 2024), and Connecticut (July 2024)[14](index=14&type=chunk) - Reinvestment in rapid and standard whole genome sequencing products enables **faster turnaround time for rWGS (as fast as 5 days)**, buccal samples for easier collection, and expanded coverage of repeat expansions to increase diagnostic yield[14](index=14&type=chunk) [Full Year 2024 Guidance](index=3&type=section&id=GeneDx%20Full%20Year%202024%20Guidance) GeneDx updated its full-year 2024 guidance, raising revenue expectations and improving cash use projections, while maintaining its target for adjusted gross margin and reiterating the path to profitability in 2025 Full Year 2024 Guidance Update | Metric | New Guidance (FY 2024) ($ millions) | Previous Guidance (FY 2024) ($ millions) | Change | | :-------------------------- | :---------------------------------- | :--------------------------------------- | :-------- | | Revenues | $255 - $265 | $235 - $245 | Raised | | Adjusted gross margin profile | At least 60% | At least 60% | No change | | Net cash use | $65 - $70 | $70 - $80 | Improved | | Profitability | In 2025 | In 2025 | No change | [Company Information](index=4&type=section&id=Company%20Information) This section provides details on how to access the conference call, important disclaimers regarding forward-looking statements, a brief overview of GeneDx's mission, and contact information for investor relations and media [Webcast and Conference Call Details](index=4&type=section&id=Webcast%20and%20Conference%20Call%20Details) GeneDx hosted a conference call on July 30, 2024, at 4:30 p.m. ET, with registration required for investors and a live/archived webcast available on their investor relations website - GeneDx hosted a conference call on July 30, 2024, at 4:30 p.m. Eastern Time, with registration required for investors. A live and archived webcast is available on https://ir.genedx.com/[17](index=17&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements regarding future performance, market opportunity, and financial guidance, which are subject to risks and uncertainties, and readers are cautioned not to place undue reliance on them - This press release contains forward-looking statements regarding future performance, market opportunity, and financial guidance (e.g., **2024 revenue, gross margin, cash use, and 2025 profitability**)[18](index=18&type=chunk) - These statements are subject to risks and uncertainties, including the ability to implement business plans, regulatory changes, market size, strategic direction, and AI tool enhancement, as detailed in the company's SEC filings[18](index=18&type=chunk) [About GeneDx](index=4&type=section&id=About%20GeneDx) GeneDx is a leader in genomic insights, providing AI-driven exome and genome tests that translate complex genomic data into clinical answers for personalized medical care, drug discovery, and health system efficiency, leveraging one of the world's largest rare disease data sets - GeneDx (Nasdaq: WGS) aims to provide personalized, targeted medical care through genetic diagnosis, leveraging one of the **world's largest rare disease data sets**[30](index=30&type=chunk) - The company's industry-leading exome and genome tests translate complex genomic data into clinical answers, facilitating personalized health plans, accelerating drug discovery, and improving health system efficiencies[30](index=30&type=chunk) [Contacts](index=4&type=section&id=Contacts) Contact information for investor relations and media inquiries is provided - Investor Relations Contact: Investors@GeneDx.com[20](index=20&type=chunk) - Media Contact: Press@GeneDx.com[31](index=31&type=chunk) [Financial Tables](index=5&type=section&id=Financial%20Tables) This section presents detailed unaudited financial information, including volume and revenue trends, select financial data, GAAP to Non-GAAP reconciliations, condensed consolidated balance sheets, statements of operations, and cash flows for various periods [Volume and Revenue Trends](index=5&type=section&id=Volume%20and%20Revenue%20Trends) The tables illustrate the historical trends in test volumes and corresponding revenues across different categories, showing consistent growth in whole exome and whole genome testing Volume and Revenue Trends (2Q23 - 2Q24) | Metric | 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 |\n| 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 | $45.2 | [Unaudited Select Financial Information](index=5&type=section&id=Unaudited%20Select%20Financial%20Information) This section provides a breakdown of revenue, adjusted cost of services, adjusted gross profit, and adjusted gross margin percentage for GeneDx and Legacy Sema4, both for the current and comparative periods Unaudited Select Financial Information (Q2 2024 vs Q1 2024) | Metric | GeneDx (Q2 2024) ($ thousands) | Legacy Sema4 (Q2 2024) ($ thousands) | Total (Q2 2024) ($ thousands) | GeneDx (Q1 2024) ($ thousands) | Legacy Sema4 (Q1 2024) ($ thousands) | Total (Q1 2024) ($ thousands) | | :----------------------------------- | :----------------------------- | :----------------------------------- | :---------------------------- | :----------------------------- | :----------------------------------- | :---------------------------- | | 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 | $38,323 | | Adjusted gross margin % | 61.5% | 90.9% | 62.2% | 60.8% | 100.0% | 61.4% | Unaudited Select Financial Information (Q2 2023) | Metric | GeneDx (Q2 2023) ($ thousands) | Legacy Sema4 (Q2 2023) ($ thousands) | Total (Q2 2023) ($ thousands) | | :----------------------------------- | :----------------------------- | :----------------------------------- | :---------------------------- | | Revenue | $45,226 | $3,480 | $48,706 | | Adjusted cost of services | 28,452 | — | 28,452 | | Adjusted gross profit (loss) | $16,774 | $3,480 | $20,254 | | Adjusted gross margin % | 37.1% | 100.0% | 41.6% | [GAAP to Non-GAAP Reconciliation](index=6&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) This section provides detailed reconciliations of GAAP financial measures to non-GAAP adjusted figures for revenue, cost of services, gross profit, operating expenses, and net loss for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023 [Three Months Ended June 30, 2024](index=6&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation%20-%20June%2030,%202024) This table reconciles GAAP to non-GAAP financial metrics for Q2 2024, detailing adjustments for depreciation, stock-based compensation, and restructuring | Metric | Reported (GAAP) ($ thousands) | Adjustments (Depreciation, Stock-based comp, Restructuring, Other) ($ thousands) | Adjusted (Non-GAAP) ($ thousands) | | :--------------------------- | :---------------------------- | :------------------------------------------------------------------------------- | :-------------------------------- | | Total revenue | $70,514 | $0 | $70,514 | | Cost of services | $27,562 | $(808) (Depreciation), $(86) (Stock-based comp) | $26,668 | | Gross profit (loss) | $42,952 | $808 (Depreciation), $86 (Stock-based comp) | $43,846 | | Gross margin | 60.9% | | 62.2% | | Loss from operations | $(10,579) | $5,218 (Depreciation), $3,108 (Stock-based comp), $248 (Restructuring) | $(2,005) | | Net loss | $(29,173) | $5,218 (Depreciation), $3,108 (Stock-based comp), $248 (Restructuring), $4,409 (FV financial liabilities), $13,450 (Business exit charges) | $(2,740) | [Three Months Ended March 31, 2024](index=7&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation%20-%20March%2031,%202024) This table reconciles GAAP to non-GAAP financial metrics for Q1 2024, detailing adjustments for depreciation, stock-based compensation, and restructuring | Metric | Reported (GAAP) ($ thousands) | Adjustments (Depreciation, Stock-based comp, Restructuring, Other) ($ thousands) | Adjusted (Non-GAAP) ($ thousands) | | :--------------------------- | :---------------------------- | :------------------------------------------------------------------------------- | :-------------------------------- | | Total revenue | $62,422 | $0 | $62,422 | | Cost of services | $25,011 | $(816) (Depreciation), $(48) (Stock-based comp), $(48) (Restructuring) | $24,099 | | Gross profit (loss) | $37,411 | $816 (Depreciation), $48 (Stock-based comp), $48 (Restructuring) | $38,323 | | Gross margin | 59.9% | | 61.4% | | Loss from operations | $(13,660) | $5,248 (Depreciation), $(451) (Stock-based comp), $843 (Restructuring) | $(8,020) | | Net loss | $(20,239) | $5,248 (Depreciation), $(451) (Stock-based comp), $843 (Restructuring), $6,101 (FV financial liabilities) | $(8,498) | [Three Months Ended June 30, 2023](index=6&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation%20-%20June%2030,%202023) This table reconciles GAAP to non-GAAP financial metrics for Q2 2023, detailing adjustments for depreciation, stock-based compensation, and restructuring | Metric | Reported (GAAP) ($ thousands) | Adjustments (Depreciation, Stock-based comp, Restructuring, Other) ($ thousands) | Adjusted (Non-GAAP) ($ thousands) | | :--------------------------- | :---------------------------- | :------------------------------------------------------------------------------- | :-------------------------------- | | Total revenue | $48,706 | $0 | $48,706 | | Cost of services | $29,949 | $(1,233) (Depreciation), $(251) (Stock-based comp), $(13) (Restructuring) | $28,452 | | Gross profit (loss) | $18,757 | $1,233 (Depreciation), $251 (Stock-based comp), $13 (Restructuring) | $20,254 | | Gross margin | 38.5% | | 41.6% | | Loss from operations | $(51,622) | $10,332 (Depreciation), $108 (Stock-based comp), $1,637 (Restructuring), $(334) (FV financial liabilities), $(3,238) (Business exit charges) | $(43,117) | | Net loss | $(46,719) | $10,332 (Depreciation), $108 (Stock-based comp), $1,637 (Restructuring), $(3,547) (FV financial liabilities), $(3,324) (Business exit charges) | $(41,847) | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet provides a snapshot of the company's assets, liabilities, and stockholders' equity as of June 30, 2024, compared to December 31, 2023, showing changes in cash, marketable securities, and overall equity Condensed Consolidated Balance Sheets (June 30, 2024 vs. December 31, 2023) | Asset/Liability/Equity | June 30, 2024 ($ thousands) | December 31, 2023 ($ thousands) | | :------------------------------------- | :-------------------------- | :------------------------------ | | **Assets:** | | | | Cash and cash equivalents | $56,076 | $99,681 | | Marketable securities | $50,784 | $30,467 | | Total current assets | $162,167 | $182,339 | | Total assets | $389,100 | $418,756 | | **Liabilities:** | | | | Total current liabilities | $68,270 | $58,818 | | Total liabilities | $195,057 | $190,739 | | **Stockholders' Equity:** | | | | Total stockholders' equity | $194,043 | $228,017 | | Total liabilities and stockholders' equity | $389,100 | $418,756 | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations detail the company's revenues, costs, and expenses, leading to net loss, for the three and six months ended June 30, 2024, and 2023, highlighting significant improvements in operating loss and net loss year-over-year Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | June 30, 2024 ($ thousands) | June 30, 2023 ($ thousands) | | :--------------------------- | :-------------------------- | :-------------------------- | | Total revenue | $70,514 | $48,706 | | Gross profit | $42,952 | $18,757 | | Research and development | $10,902 | $17,138 | | Selling and marketing | $16,585 | $15,182 | | General and administrative | $25,170 | $37,341 | | Loss from operations | $(10,579) | $(51,622) | | Net loss | $(29,173) | $(46,719) | | Basic and diluted net loss per share, Class A common stock | $(1.10) | $(1.84) | Condensed Consolidated Statements of Operations (Six Months Ended June 30) | Metric | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :--------------------------- | :------------------------------------------- | :------------------------------------------- | | Total revenue | $132,936 | $91,845 | | Gross profit | $80,363 | $33,993 | | Loss from operations | $(24,239) | $(111,986) |\ | Net loss | $(49,412) | $(107,708) |\ | Basic and diluted net loss per share, Class A common stock | $(1.88) | $(4.73) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statements detail the net cash used in operating, investing, and financing activities for the six months ended June 30, 2024, and 2023, showing a significant reduction in cash used in operating activities and changes in investing and financing strategies Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Activity | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :---------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash used in operating activities | $(20,918) | $(109,061) | | Net cash used in investing activities | $(21,858) | $(11,733) | | 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 end of period | $57,063 | $157,555 | - Cash, cash equivalents and restricted cash at June 30, 2024, excludes marketable securities of **$50.8 million**[29](index=29&type=chunk)

Core Insights - GeneDx is focusing on expanding its rapid whole genome sequencing (rWGS) services, particularly in neonatal intensive care units (NICUs), to improve patient outcomes and streamline access for health systems [5][9] - The company has experienced an 80% year-over-year increase in its rapid testing business, with 11 states now offering Medicaid coverage for these services [1][9] - GeneDx has built one of the largest proprietary genomic datasets, having sequenced over 600,000 clinical exomes and genomes, which enhances its ability to provide clinically actionable results [3][11] Business Expansion - The collaboration with Epic aims to integrate rWGS services into health systems using Epic's electronic health records (EHR), thereby increasing the commercial footprint of GeneDx [5][9] - The company is committed to ensuring access to genomic testing for all patients and is investing in understanding clinical utility across broader populations [7][11] Clinical Impact - GeneDx is involved in the SeqFirst study at the University of Washington, which examines the impact of rWGS on care for critically ill infants, promoting equitable access to genetic diagnosis [2][10] - Initial data from the GUARDIAN study indicates that 2.6% of newborns screened had true positive outcomes, suggesting the potential for widespread adoption of WGS at birth to accelerate diagnosis and treatment of rare diseases [7][11]

Core Insights - GeneDx is expanding its rapid whole genome sequencing (rWGS) services in neonatal intensive care units (NICUs) through a collaboration with Epic, enhancing its commercial strategy and improving patient care [6][9] - The company has established one of the largest proprietary genomic datasets, with over 600,000 clinical exomes and genomes sequenced, enabling faster and more definitive clinical results [2][8] - GeneDx has experienced an 80% year-over-year increase in its rapid testing business, with Medicaid coverage now available in 11 states and growing commercial payor adoption [3][10] Company Developments - GeneDx is a key collaborator in the SeqFirst study at the University of Washington, which aims to improve access to routine rWGS for critically ill infants [7] - The integration with Epic's electronic health record (EHR) system will streamline access for health systems, enhancing the provider and patient experience [9] - The company is committed to ensuring access to genomic testing for all patients and is investing in understanding clinical utility in broader populations [10] Industry Impact - The use of rWGS in neonatal care is expected to improve clinical management and outcomes for critically ill infants by enabling early genetic condition diagnosis [4] - The GUARDIAN study is exploring the utility of genomic screening in healthy newborns, with initial data indicating a 2.6% true positive screening outcome rate [10] - GeneDx's focus on precision medicine is positioned to transform healthcare by leveraging its extensive genomic data and testing capabilities [8]

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 ...

Financial Data and Key Metrics Changes - First quarter 2024 revenues from continuing operations grew to $61.5 million, an increase of 51% year-over-year and 6% sequentially [16] - Adjusted gross margin from continuing operations was 61%, up from 34% a year ago and 56% in the fourth quarter of 2023 [19] - Total adjusted operating expense was $45.4 million, a reduction of 26% year-over-year and 6% sequentially [25] - Total company adjusted net loss for the first quarter narrowed to $8.5 million, an improvement of 83% year-over-year and 52% sequentially [25] - Cash burn for the first quarter was $17.2 million, improving 71% year-over-year and 48% sequentially [27] Business Line Data and Key Metrics Changes - The company delivered more than $61 million in revenues, with 30% of tests being exome and genome, representing over 70% of total revenue [11][12] - The company performed over 16,500 whole exome and genome tests, generating $44 million in revenue from this portfolio, a 96% increase year-over-year [16] - Average reimbursement for the exome and genome portfolio was approximately $2,600, up from $2,500 in the previous quarter [21] Market Data and Key Metrics Changes - The company operates with 80% of all clinical exomes being run at GeneDx, targeting geneticists and pediatric specialists [13] - Medicaid policy is expanding, with two states adding coverage for rapid whole genome testing and New York State adding exome coverage effective April 1, 2024 [23] Company Strategy and Development Direction - The company is focused on driving exome utilization, improving average reimbursement rates, and reducing cash burn [11] - The strategy includes transitioning from single-gene testing to exome and genome testing, aiming to set a new standard in clinical care [31] - The company plans to introduce GeneDx to broader populations over time, focusing on hereditary diseases [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver profitable growth and raised annual revenue guidance to $235 million to $245 million [11][28] - The management highlighted the importance of the FDA's new LDT guidance and its potential impact on the market [84] - The company expects to turn profitable in 2025, with a commitment to improving operational efficiency [29] Other Important Information - The company has interpreted over 600,000 clinical exomes since 2012, with significant growth in the last three years [9] - The company has entered into a 5-year senior secured credit facility with Perceptive Advisors, providing up to $75 million in capacity [26] Q&A Session Summary Question: Comments on the FDA LDT guidance and its impact - Management is reviewing the 500+ page document and believes it presents a good opportunity, having prepared for this new era of FDA regulation [84] Question: Visibility in the business and improvements over the last quarters - Management noted that the team is well poised to understand effective call points and is confident in the strategy moving forward [39][40] Question: Clarification on profitability guidance for 2025 - Management reiterated the expectation of profitability in 2025, with a specific quarter expected to show that turn [49] Question: Sequential revenue growth expectations - Management indicated that consistent robust revenue growth is expected, particularly in exome testing, while cautioning about potential declines in non-exome testing lines [51] Question: Update on reimbursement and denial rates - Management confirmed that improvements in average reimbursement rates were due to reductions in denials, which remain a challenge with a denial rate just above 50% [52] Question: Success in converting accounts from Invitae - Management reported success in converting accounts, particularly in the pediatric neurology market, and expects continued conversion from panels to exomes [61] Question: Education and awareness regarding exome testing - Management emphasized the importance of data in educating clinicians and plans to focus on pediatric neurologists and specialists to drive exome utilization [66]