GeneDx (WGS) - 2024 Q1 - Quarterly Results

Executive Summary GeneDx delivered strong Q1 2024 results, with revenue growth, expanded margins, narrowed net loss, raised 2024 guidance, and reaffirmed 2025 profitability First Quarter 2024 Highlights GeneDx achieved strong Q1 2024 results, with significant revenue growth, expanded adjusted gross margins, narrowed net loss, and raised full-year guidance towards 2025 profitability First Quarter 2024 Financial Highlights | Metric | Q1 2024 Value | YoY Change | Sequential Change | | :-------------------------------- | :---------------- | :--------- | :---------------- | | Revenue (continuing operations) | $61.5 million | +51% | +6% | | Exome & Genome Test Revenue | $44.0 million | +96% | +12% | | Adjusted Gross Margin (continuing operations) | 61% | Up from 34% | Up from 56% | | Adjusted Net Loss | $8.5 million | Narrowed by 83% | Narrowed by 52% | | Cash Burn Reduction | N/A | 71% YoY | N/A | - Raised guidance to deliver between $235 million and $245 million in FY 2024 revenue and reiterate path to profitability in 2025[1] CEO Commentary CEO Katherine Stueland highlighted successful execution in growing exome/genome revenue, increasing reimbursement, expanding access, and reducing cash burn, supporting raised 2024 guidance and 2025 profitability - CEO Katherine Stueland emphasized the company's dedication to growing exome and genome revenue, increasing average reimbursement rates, expanding access to testing, and meaningfully reducing cash burn[3] - Successful Q1 execution provides confidence to raise full year 2024 revenue guidance to $235-$245 million and reiterate the expectation to reach profitability in 2025[3] First Quarter 2024 Financial Performance GeneDx demonstrated strong Q1 2024 financial performance with significant revenue growth, expanded gross margins, reduced operating expenses, and a substantial decrease in cash burn Revenue and Gross Margin GeneDx reported strong revenue growth from continuing operations, driven by increased exome and genome test revenue and volume, leading to substantial adjusted gross margin expansion Q1 2024 Revenue and Gross Margin Metrics | Metric | Q1 2024 Value | YoY Change | Sequential Change | | :-------------------------------- | :---------------- | :--------- | :---------------- | | Revenues from continuing operations | $61.5 million | +51% | +6% | | Total company revenues | $62.4 million | N/A | N/A | | Exome and genome test revenue | $44.0 million | +96% | +12% | | Exome and genome test results volume | 16,592 | +91% | +6% | | Exome and genome % of all test results | 30% | Up from 16% (Q1 2023) | Up from 27% (Q4 2023) | | Adjusted gross margin (continuing operations) | 61% | Up from 34% (Q1 2023) | Up from 56% (Q4 2023) | | Total company gross margin | 60% | N/A | N/A | | Exome and genome adjusted gross margin | >65% | N/A | N/A | Operating Expenses and Net Loss The company significantly reduced adjusted total operating expenses year-over-year and sequentially, contributing to a substantial narrowing of the adjusted net loss in Q1 2024 Q1 2024 Operating Expenses and Net Loss Metrics | Metric | Q1 2024 Value | YoY Change | Sequential Change | | :-------------------------- | :---------------- | :--------- | :---------------- | | Adjusted net loss | $8.5 million | Improved by 83% | Improved by 52% | | GAAP net loss | $20.2 million | N/A | N/A | | Adjusted total operating expenses | $45.4 million | -26% | -6% | | Total GAAP operating expenses | $50.1 million | N/A | N/A | Cash Position and Burn GeneDx achieved a significant 71% year-over-year reduction in net cash use (cash burn) in Q1 2024, while maintaining a healthy cash and equivalents balance Q1 2024 Cash Metrics | Metric | Q1 2024 Value | YoY Change | Sequential Change | | :-------------------------------------------------- | :---------------- | :--------- | :---------------- | | Total net use of cash (cash burn) | $17.2 million | -71% | -48% | | Cash, cash equivalents, marketable securities and restricted cash (as of Mar 31, 2024) | $113.9 million | N/A | N/A | Updated Full Year 2024 Guidance GeneDx raised its full-year 2024 revenue guidance and adjusted gross margin expectations, improved its net cash use forecast, and reiterated its path to 2025 profitability Updated Full Year 2024 Guidance | Metric | New FY 2024 Guidance | Previous FY 2024 Guidance | Change | | :-------------------------- | :------------------- | :---------------------- | :----- | | Revenues | $235 million - $245 million | $220 million - $230 million | Raised | | Adjusted Gross Margin Profile | At least 60% | At least 50% | Expanded | | Net Cash Use | $70 million - $80 million | $75 million - $80 million | Improved | | Profitability | In 2025 | In 2025 | No Change | First Quarter 2024 Business Highlights GeneDx achieved key business milestones in Q1 2024, including sequencing 600k exomes/genomes, expanding rapid genetic testing coverage, and growing biopharma partnerships Driving Sustainable Growth and Market Leadership GeneDx reached a significant milestone of sequencing 600k clinical exomes and genomes, demonstrating accelerated growth and strengthening its proprietary dataset for enhanced diagnostic capabilities - Reached new milestone of sequencing 600k clinical exomes and genomes since inception, with over half sequenced since July 2021 and 100k sequenced since the fall, solidifying industry leadership and enhancing proprietary dataset robustness[7] - Presented new data at the American College of Medical Genetics and Genomics Annual Meeting, demonstrating the clinical superiority of exome compared to chromosomal microarray (CMA), supporting efforts to eliminate the need for CMA when exome is ordered first[7] Expanded Coverage and Partnerships GeneDx expanded rapid genetic testing coverage to 11 states and outpatient WES to 28 states, while growing biopharma partner programs to 21 and partnering with Komodo Health - State Medicaid programs expanded coverage of rapid genetic testing in NICU, bringing total states covering rapid whole genome in acute care to 11, including new coverage in Georgia (Jan 2024) and South Dakota (Mar 2024)[7] - New York added outpatient whole exome sequencing (WES) coverage to its Medicaid plan, effective April 1, 2024, increasing total states covering WES to 28[7] - Grew biopharma partner programs to 21, predominantly with biotech companies, and launched a strategic partnership with Komodo Health to improve access to genetic insights and accelerate clinical trial enrollment[7] Company Information This section provides details on GeneDx's Q1 2024 webcast, forward-looking statements, company overview, and investor/media contact information Webcast and Conference Call Details GeneDx hosted a conference call on April 29, 2024, to discuss Q1 2024 results, with a live and archived webcast available on its investor relations website - GeneDx hosted a conference call on April 29, 2024, at 4:30 p.m. Eastern Time, with registration required for investors and a webcast available on their investor relations website[8] Forward-Looking Statements This section cautions that future performance, market opportunities, and financial guidance are subject to risks and uncertainties outlined in SEC filings, with no commitment to updates - The press release contains forward-looking statements regarding future performance, market opportunity, and financial guidance (FY2024 revenue, adjusted gross margin, net cash use, 2025 profitability)[9] - These statements are subject to risks and uncertainties, including business plan implementation, regulatory landscape changes, market size, strategic direction, and AI tool enhancement, as detailed in SEC filings[9] - Readers are cautioned not to place undue reliance on forward-looking statements, and the company assumes no obligation to update or revise them[9] About GeneDx GeneDx is a leader in genomic insights, providing AI-driven exome and genome tests that translate complex genomic data into clinical answers, leveraging a large rare disease dataset - GeneDx (Nasdaq: WGS) delivers improved health outcomes through genomic insights, believing personalized medical care begins with a genetic diagnosis[10] - The company uses industry-leading exome and genome tests, fueled by one of the world's largest rare disease datasets, to translate complex genomic data into clinical answers for personalized health plans, drug discovery, and health system efficiencies[10] Investor and Media Contacts Contact information for GeneDx's investor relations and media inquiries is provided - Investor Relations Contact: Investors@GeneDx.com[11] - Media Contact: Press@GeneDx.com[11] Detailed Financial Statements This section presents detailed Q1 2024 financial statements, including volumes, revenues, non-GAAP reconciliations, balance sheets, income statements, and cash flow data Volume & Revenue This section details quarterly volumes and revenues for various test types, highlighting significant growth in whole exome and whole genome tests from Q1 2023 to Q1 2024 Volumes | | 1Q24 | 4Q23 | 3Q23 | 2Q23 | 1Q23 | | :------------------------ | :----- | :----- | :----- | :----- | :----- | | Whole exome, whole genome | 16,592 | 15,663 | 13,216 | 11,855 | 8,705 | | Hereditary cancer | 6,868 | 8,240 | 8,556 | 7,142 | 7,120 | | Other panels | 31,763 | 33,692 | 35,861 | 35,931 | 36,953 | | Total | 55,223 | 57,595 | 57,633 | 54,928 | 52,778 | Revenue ($ millions) | | 1Q24 | 4Q23 | 3Q23 | 2Q23 | 1Q23 | | :------------------------ | :----- | :----- | :----- | :----- | :----- | | Whole exome, whole genome | $44.0 | $39.2 | $34.0 | $28.7 | $22.4 | | Hereditary cancer | $5.5 | $5.5 | $4.5 | $3.8 | $4.3 | | Other panels | $10.7 | $11.2 | $10.6 | $10.6 | $12.7 | | Data information | $1.3 | $2.2 | $1.3 | $2.1 | $1.3 | | Total | $61.5 | $58.1 | $50.4 | $45.2 | $40.7 | Unaudited Select Financial Information (GeneDx vs. Legacy Sema4) This table breaks down revenue, adjusted cost of services, gross profit, and gross margin for GeneDx and Legacy Sema4, individually and combined, for Q1 2024, Q4 2023, and Q1 2023 Three months ended March 31, 2024 (in thousands) | | GeneDx | Legacy Sema4 | Total | | :------------------------ | :------- | :----------- | :------ | | Revenue | $61,461 | $961 | $62,422 | | Adjusted cost of services | 24,099 | — | 24,099 | | Adjusted gross profit (loss) | $37,362 | $961 | $38,323 | | Adjusted gross margin % | 60.8% | (100.0)% | 61.4% | Three months ended December 31, 2023 (in thousands) | | GeneDx | Legacy Sema4 | Total | | :------------------------ | :------- | :----------- | :------ | | Revenue | $58,107 | $(689) | $57,418 | | Adjusted cost of services | 25,626 | — | 25,626 | | Adjusted gross profit (loss) | $32,481 | $(689) | $31,792 | | Adjusted gross margin % | 55.9% | 100.0% | 55.4% | Three months ended March 31, 2023 (in thousands) | | GeneDx | Legacy Sema4 | Total | | :------------------------ | :------- | :----------- | :------ | | Revenue | $40,693 | $2,446 | $43,139 | | Adjusted cost of services | 26,826 | 2,080 | 28,906 | | Adjusted gross profit (loss) | $13,867 | $366 | $14,233 | | Adjusted gross margin % | 34.1% | 15.0% | 33.0% | Reconciliation of Non-GAAP Financial Measures This section details reconciliations of GAAP to adjusted non-GAAP figures for revenue, cost of services, gross profit, operating expenses, and net loss for Q1 2024, Q4 2023, and Q1 2023 Three months ended March 31, 2024 (in thousands) | Metric | Reported | Depreciation and amortization | Stock-based compensation expense | Restructuring costs | Change in FV of financial liabilities | Adjusted | | :-------------------------- | :------- | :---------------------------- | :------------------------------- | :------------------ | :------------------------------------ | :------- | | 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 | | Loss from operations | $(13,660) | $5,248 | $(451) | $843 | $— | $(8,020) | | Net loss | $(20,239) | $5,248 | $(451) | $843 | $6,101 | $(8,498) | Three months ended March 31, 2023 (in thousands) | Metric | Reported | Depreciation and amortization | Stock-based compensation expense | Restructuring costs | Change in FV of financial liabilities | Charges related to business exit | Other | Adjusted | | :-------------------------- | :------- | :---------------------------- | :------------------------------- | :------------------ | :------------------------------------ | :----------------------------- | :---- | :------- | | Total revenue | $43,139 | $— | $— | $— | $— | $— | $— | $43,139 | | Cost of services | $27,903 | $(589) | $1,666 | $(74) | $— | $— | $— | $28,906 | | Gross profit (loss) | $15,236 | $589 | $(1,666) | $74 | $— | $— | $— | $14,233 | | Gross margin | 35.3 % | | | | | | | 33.0 % | | Research and development | $14,592 | $(852) | $(943) | $(91) | $— | $— | $— | $12,706 | | Selling and marketing | $13,452 | $(1,227) | $(63) | $(142) | $— | $— | $— | $12,020 | | General and administrative | $43,689 | $(5,968) | $(708) | $(395) | $— | $— | $— | $36,618 | | Loss from operations | $(60,364) | $8,636 | $48 | $702 | $— | $2,120 | $— | $(48,858) | | Net loss | $(60,989) | $8,636 | $48 | $702 | $3,453 | $2,120 | $(2,750) | $(48,780) | Three months ended December 31, 2023 (in thousands) | Metric | Reported | Depreciation and amortization | Stock-based compensation expense | Restructuring costs | Change in FV of financial liabilities | Charges related to business exit | Other | Adjusted | | :-------------------------- | :------- | :---------------------------- | :------------------------------- | :------------------ | :------------------------------------ | :----------------------------- | :---- | :------- | | Total revenue | $57,418 | $— | $— | $— | $— | $— | $— | $57,418 | | Cost of services | $26,664 | $(915) | $(123) | $— | $— | $— | $— | $25,626 | | Gross profit (loss) | $30,754 | $915 | $123 | $— | $— | $— | $— | $31,792 | | Gross margin | 53.6 % | | | | | | | 55.4 % | | Research and development | $12,248 | $(919) | $2,320 | $(1,300) | $— | $— | $— | $12,349 | | Selling and marketing | $15,559 | $(1,225) | $1,071 | $(487) | $— | $— | $— | $14,918 | | General and administrative | $26,626 | $(3,035) | $(2,356) | $(197) | $— | $— | $— | $21,038 | | Loss from operations | $(25,643) | $6,094 | $(912) | $1,984 | $— | $1,277 | $— | $(17,200) | | Net loss | $(25,773) | $6,094 | $(912) | $1,984 | $(485) | $1,277 | $48 | $(17,767) | Condensed Consolidated Balance Sheets The condensed consolidated balance sheets present GeneDx's financial position as of March 31, 2024, and December 31, 2023, detailing assets, liabilities, and stockholders' equity As of March 31, 2024 and December 31, 2023 (in thousands) | Asset/Liability/Equity | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Assets: | | | | Cash and cash equivalents | $83,673 | $99,681 | | Marketable securities | $29,239 | $30,467 | | Accounts receivable | $28,151 | $32,371 | | Total current assets | $163,424 | $182,339 | | Property and equipment, net | $31,301 | $32,479 | | Intangible assets, net | $169,119 | $172,625 | | Total assets | $394,528 | $418,756 | | Liabilities: | | | | Accounts payable and accrued expenses | $32,410 | $37,456 | | Total current liabilities | $50,734 | $58,818 | | Long-term debt, net | $52,293 | $52,688 | | Total liabilities | $187,311 | $190,739 | | Stockholders' Equity: | | | | Additional paid-in capital | $1,527,351 | $1,527,778 | | Accumulated deficit | $(1,320,427) | $(1,300,188) | | Total stockholders' equity | $207,217 | $228,017 | Condensed Consolidated Statements of Operations The condensed consolidated statements of operations provide a comparative view of GeneDx's financial performance for the three months ended March 31, 2024, and 2023, detailing revenue, cost of services, gross profit, operating expenses, and net loss Three months ended March 31 (in thousands) | Metric | 2024 | 2023 | | :------------------------------------------------- | :------- | :------- | | Diagnostic test revenue | $61,104 | $41,850 | | Other revenue | $1,318 | $1,289 | | Total revenue | $62,422 | $43,139 | | Cost of services | $25,011 | $27,903 | | Gross profit | $37,411 | $15,236 | | Research and development | $11,567 | $14,592 | | Selling and marketing | $16,085 | $13,452 | | General and administrative | $22,445 | $43,689 | | Loss from operations | $(13,660) | $(60,364) | | Change in fair value of warrants and earn-out contingent liabilities | $(6,101) | $(3,453) | | Net loss | $(20,239) | $(60,989) | | Basic and diluted net loss per share, Class A common stock | $(0.78) | $(3.04) | Condensed Consolidated Statements of Cash Flows The condensed consolidated statements of cash flows detail cash inflows and outflows from operating, investing, and financing activities for Q1 2024 and 2023, showing reduced net cash use Three months ended March 31 (in thousands) | Activity | 2024 | 2023 | | :------------------------------------------ | :------- | :-------- | | Net cash used in operating activities | $(16,413) | $(55,560) | | Net cash provided by (used in) investing activities | $843 | $(462) | | Net cash (used in) provided by financing activities | $(438) | $132,658 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(16,008) | $76,636 | | Cash, cash equivalents and restricted cash, at end of period | $84,660 | $214,939 |