GeneDx (WGS) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, total revenues reached $121 million, a 27% increase year-over-year, with full-year revenues at $428 million, driven by 54% growth in exome and genome revenues [4][16] - Exome and genome revenues specifically were $104 million in Q4, marking a 32% year-over-year increase, and an organic growth rate of 42% when excluding a one-time payor recovery from the previous year [16] - Adjusted gross margin for Q4 and full year 2025 was 71%, up from 65% in 2024, indicating improved cost management [18] Business Line Data and Key Metrics Changes - The company reported 27,761 exome and genome test results in Q4, reflecting a consistent growth trend throughout the year, with growth rates increasing from 24% in Q1 to 34% by year-end [16] - The average reimbursement rate for exome and genome tests was approximately $3,750 in Q4, showing a significant increase from $2,500 in 2023 and $3,000 in 2024 [17] Market Data and Key Metrics Changes - GeneDx is expanding into new markets, including general pediatrics, where only 30% of clinicians currently order tests, indicating substantial growth potential [10] - The NICU market is also targeted for growth, with expectations of increasing utilization rates from single digits to 60% over time [21] Company Strategy and Development Direction - The company aims to solidify its leadership in rare disease diagnostics by leveraging its extensive dataset, GeneDx Infinity, which includes over 2.5 million rare genetic tests [7] - GeneDx plans to triple its sales force in 2026 to capture new market opportunities and enhance clinician engagement [9][11] - The introduction of a one-minute ordering experience for general pediatricians is expected to significantly boost test volumes starting in Q4 2026 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in 2026 being a breakout year, with a reaffirmed revenue guidance of $540 million to $555 million and exome and genome volume growth of 33%-35% [24] - The company is strategically investing in R&D and customer experience to support its growth initiatives and improve diagnostic yield [23] Other Important Information - GeneDx has received FDA Breakthrough Device Designation, positioning it as a leader in comprehensive genomic solutions [5] - The company is actively preparing for international expansion and exploring new channels like telemedicine [13] Q&A Session Summary Question: What is driving the confidence in guidance despite a recent trend reversal? - Management highlighted the significant white space available for clinician activation and the ongoing conversion from single gene tests to exome and genome tests as key growth drivers [34] Question: What are the expectations for quarterly cadence in volumes and pricing? - Management indicated that Q1 is typically the lowest point for volume and reimbursement rates due to seasonal factors, with expectations for a gradual ramp-up throughout the year [36] Question: How does the company view pricing and reimbursement in new markets? - Management is taking a conservative approach to pricing and reimbursement in new markets, anticipating initial challenges but expecting improvements as demand increases [57]