Group 1 - The article expresses the author's personal opinions and does not represent any company or investment advisory service [1][2][3] - There is a potential for profit as well as loss in investments, highlighting the inherent risks involved [2][3] - The information provided is for educational purposes and should not be construed as an offer to buy or sell securities [2][3] Group 2 - The author has no current stock or derivative positions in the companies mentioned but may initiate a long position in the near future [1] - The views expressed are subject to change without notice, indicating a dynamic market environment [2] - The article emphasizes that past performance is not indicative of future results, a common disclaimer in investment analysis [3]

Core Insights - GeneDx Holdings Corp. (WGS) shares increased by 13.2% to close at $89.61, supported by high trading volume compared to normal sessions, contrasting with a 2.5% gain over the past four weeks [1][2] Company Performance - The company is expected to report quarterly earnings of $0.20 per share, reflecting a year-over-year increase of 133.9%, with revenues projected at $81.5 million, up 41.9% from the previous year [3] - The consensus EPS estimate for GeneDx Holdings has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] Industry Context - GeneDx Holdings is part of the Zacks Medical Services industry, where Alignment Healthcare (ALHC) experienced a 3.3% decline to $11.32, with a 2.7% return over the past month [4] - Alignment Healthcare's consensus EPS estimate has also remained unchanged at -$0.18, showing a year-over-year change of 28%, and it currently holds a Zacks Rank of 4 (Sell) [5]

Core Insights - GeneDx Holdings has experienced a remarkable stock increase of 6,070% over the past year, significantly outperforming Nvidia's 2,700% return over five years [2] - The company has shifted its focus to pediatric neurologists, which could lead to further growth opportunities as it has only penetrated 12% of this market [9] Financial Performance - GeneDx reported a 44% year-over-year revenue growth in Q3, reaching $76.9 million, with genome and exome sequencing now accounting for 78% of total revenue [5] - The adjusted gross margin improved to 64.4% in Q3 from 50.7% in the previous year [5] - Despite losses on a GAAP basis, the company reported an adjusted profit of $1.2 million in Q3 after accounting for noncash expenses [6] Market Position and Guidance - Management raised the revenue guidance midpoint for the full year to $287 million from a previous estimate of $260 million [7] - Wells Fargo increased its price target for GeneDx from $34 to $75 per share, although it maintained an equal weight rating due to high valuation [7][8] Competitive Landscape - GeneDx holds an 80% share of the U.S. exome sequencing market, with newborn screening representing a $10 billion annual opportunity [10] - The diagnostics industry is highly competitive, and while GeneDx is currently successful, the entry of new competitors could impact profitability [11][12]

Financial Data and Key Metrics Changes - GeneDx reported revenues of $76.6 million for Q3 2024, a 52% increase year-over-year and an 11% sequential increase from Q2 2024 [21] - Adjusted gross profit reached $49.3 million, up 103% year-over-year, translating to a gross margin of 64%, compared to 48% a year ago [22][23] - The company achieved its first positive adjusted net income of $1.2 million since inception, with a net cash burn of $5 million, marking an 88% improvement year-over-year [28] Business Line Data and Key Metrics Changes - Exome and genome revenues grew 77% year-over-year, contributing $60 million this quarter, driven by both volume and collection performance [21] - Over 19,000 exome and genome tests were delivered in Q3 2024, a 46% increase year-over-year [24] - Exome and genome tests accounted for 33% of all tests this quarter, up from 23% a year ago [23] Market Data and Key Metrics Changes - GeneDx holds an 80% market share in the U.S. exome market, with significant growth opportunities remaining in the pediatric neurologist segment, where penetration is currently at approximately 12% [9][10] - The company has sequenced over 700,000 clinical exomes and genomes, with over 100,000 completed in the last six months [11] Company Strategy and Development Direction - GeneDx is focusing on expanding its footprint into pediatric outpatient settings and new clinical settings, aiming for sustainable growth [8] - The company is leveraging its growing data asset to deliver value to biopharma companies and enhance its commercial initiatives [13] - GeneDx is committed to revolutionizing newborn screening by integrating genomic sequencing, aiming to screen for over 450 actionable conditions [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long runway of growth ahead, balancing financial discipline with strategic investments [31] - The company anticipates continued momentum heading into Q4, despite some weather-related impacts in the Southeast [34] - Management highlighted the importance of ongoing education and collaboration with pediatric neurologists to drive testing utilization [45] Other Important Information - The average reimbursement rate for exome and genome testing increased to approximately $3,100, up from $2,600 a year ago [25] - The company raised its revenue guidance for the full year of 2024 to between $284 million and $290 million [30] Q&A Session Summary Question: Can you provide insights on the fourth quarter guidance? - Management noted that Q4 is typically the strongest seasonally, but early impacts from weather events were considered in the guidance [34] Question: What is driving the strong volume growth in exome and genome testing? - Growth is attributed to new accounts and same-store sales in the outpatient setting, with improvements in the NICU segment also contributing [37] Question: Can you elaborate on the initiatives to increase penetration with pediatric neurologists? - The company is focusing on education and collaboration with guidelines from the American Epilepsy Society to drive utilization [43] Question: What is the impact of the CMS program on Medicaid plans? - Management clarified that while the CMS guidance reinforces existing policies, it does not enforce mandatory coverage [40] Question: What are the plans for adult testing and potential studies? - The company is exploring opportunities in adult neurodegenerative conditions and plans to work with biopharma companies for future developments [64]

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 ...

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WGS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Although there are no personal account positions, SOME STOCKS MENTIONED CAN ALREADY BE PART OF THE PORTFOLIOS OF FAMILY AND ASSOCIATES and reti ...

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)

Exhibit 99.1 1 Reported second quarter 2024 revenue from continuing operations of $68.9M with 77% year-over-year growth of exome and genome test revenue 2 Narrowed second quarter 2024 adjusted net loss to $2.7M GeneDx to host conference call today at 4:30 p.m. ET "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 s ...