GeneDx (WGS) - 2024 Q2 - Quarterly Results

Executive Summary & Q2 2024 Highlights 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 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] Cash Position and Use 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) | $107.8 | N/A | N/A | Second Quarter 2024 Business Highlights GeneDx expanded its market reach and enhanced its service offerings through strategic collaborations, patient access programs, and increased Medicaid coverage for genomic sequencing, alongside reinvestments in rapid and standard whole genome sequencing products to improve turnaround times and sample collection methods - Announced collaboration with Epic Aura to expand access to rapid whole genome sequencing (rWGS) services for pediatric and neonatal patients, enhancing commercial footprint within leading health systems[14] - Launched first-of-its-kind Patient Access Program with biopharma partners to expand exome testing for pediatric epilepsy patients, growing biopharma partner programs to 32[14] - North Carolina Medicaid expanded coverage of outpatient whole exome sequencing (WES) to include family comparator samples (effective June 1, 2024), and total states covering rapid whole genome in acute care settings reached 14, including new coverage in North Carolina (June 2024), Tennessee (July 2024), and Connecticut (July 2024)[14] - Reinvestment in rapid and standard whole genome sequencing products enables faster turnaround time for rWGS (as fast as 5 days), buccal samples for easier collection, and expanded coverage of repeat expansions to increase diagnostic yield[14] Full Year 2024 Guidance GeneDx updated its full-year 2024 guidance, raising revenue expectations and improving cash use projections, while maintaining its target for adjusted gross margin and reiterating the path to profitability in 2025 Full Year 2024 Guidance Update | Metric | New Guidance (FY 2024) ($ 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 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 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 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] - 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] About GeneDx 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] - 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] Contacts Contact information for investor relations and media inquiries is provided - Investor Relations Contact: Investors@GeneDx.com[20] - Media Contact: Press@GeneDx.com[31] Financial Tables 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 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 | $45.2 | Unaudited Select Financial Information This section provides a breakdown of revenue, adjusted cost of services, adjusted gross profit, and adjusted gross margin percentage for GeneDx and Legacy Sema4, both for the current and comparative periods Unaudited Select Financial Information (Q2 2024 vs Q1 2024) | Metric | GeneDx (Q2 2024) ($ 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 | $20,254 | | Adjusted gross margin % | 37.1% | 100.0% | 41.6% | GAAP to Non-GAAP Reconciliation This section provides detailed reconciliations of GAAP financial measures to non-GAAP adjusted figures for revenue, cost of services, gross profit, operating expenses, and net loss for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023 Three Months Ended June 30, 2024 This table reconciles GAAP to non-GAAP financial metrics for Q2 2024, detailing adjustments for depreciation, stock-based compensation, and restructuring | Metric | Reported (GAAP) ($ 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) | $(2,740) | Three Months Ended March 31, 2024 This table reconciles GAAP to non-GAAP financial metrics for Q1 2024, detailing adjustments for depreciation, stock-based compensation, and restructuring | Metric | Reported (GAAP) ($ 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) | $(8,498) | Three Months Ended June 30, 2023 This table reconciles GAAP to non-GAAP financial metrics for Q2 2023, detailing adjustments for depreciation, stock-based compensation, and restructuring | Metric | Reported (GAAP) ($ 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) | $(41,847) | Condensed Consolidated Balance Sheets The balance sheet provides a snapshot of the company's assets, liabilities, and stockholders' equity as of June 30, 2024, compared to December 31, 2023, showing changes in cash, marketable securities, and overall equity Condensed Consolidated Balance Sheets (June 30, 2024 vs. December 31, 2023) | Asset/Liability/Equity | June 30, 2024 ($ 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 | $418,756 | Condensed Consolidated Statements of Operations The statements of operations detail the company's revenues, costs, and expenses, leading to net loss, for the three and six months ended June 30, 2024, and 2023, highlighting significant improvements in operating loss and net loss year-over-year Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | June 30, 2024 ($ 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) | $(4.73) | Condensed Consolidated Statements of Cash Flows The cash flow statements detail the net cash used in operating, investing, and financing activities for the six months ended June 30, 2024, and 2023, showing a significant reduction in cash used in operating activities and changes in investing and financing strategies Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Activity | Six Months Ended June 30, 2024 ($ 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]