GeneDx Reports Fourth Quarter and Full Year 2023 Financial Results and Issues Guidance for Full Year 2024


Reported fourth quarter 2023 revenue from continuing operations1 of $58.1M with more than 68% year-over-year growth of exome and genome test revenue

Expanded fourth quarter 2023 adjusted gross margins2 from continuing operations to 56%

Narrowed fourth quarter 2023 adjusted net loss2 to $17.8M and delivered 51% year-over-year cash burn reduction

Issued guidance to deliver between $220M and $230M in FY 2024 revenue and reiterate path to profitability in 2025

GeneDx to host conference call today at 4:30 p.m. ET

STAMFORD, Conn., Feb. 20, 2024 (GLOBE NEWSWIRE) -- GeneDx Holdings Corp. (Nasdaq: WGS), a leader in delivering improved health outcomes through genomic and clinical insights, today reported its financial results for the fourth quarter and full year of 2023.

“Our strong fourth quarter results were a product of our relentless focus on exome and genome revenue growth, uplift from gross margin expansion, and continued efforts to meaningfully reduce our cash burn,” said Katherine Stueland, Chief Executive Officer of GeneDx. “With our focus and disciplined approach to delivering on our goals in 2024, we are confident in our ability to continue to execute and reach profitability in 2025.”

Fourth Quarter and Full Year 2023 Financial Results (Unaudited)1,2,3

Revenues

Fourth quarter 2023:

  • Revenues from continuing operations grew to $58.1 million, an increase of 27% year-over-year and 15% sequentially.
    • Total company revenues were $57.4 million.
  • Exome and genome test revenue grew to $39.2 million, an increase of 68% year-over-year and 15% sequentially.

Full year 2023:

  • Revenues from continuing operations grew to $194.4 million, an increase of 59% year-over-year and 14% year-over-year on a pro-forma basis3.
    • Total company revenues were $202.6 million.
  • Exome and genome test revenue grew to $124.3 million, an increase of 43% year-over-year on a pro-forma basis3.

Exome and genome volume

Fourth quarter 2023:

  • Exome and genome test results volume grew to 15,663, an increase of 99% year-over-year and 19% sequentially.
  • Exome and genome represented 27% of all test results, up from 16% in the fourth quarter of 2022 and up from 23% in the third quarter of 2023.

Full year 2023:

  • Exome and genome test results volume grew to 49,439, an increase of 62% year-over-year on a pro-forma basis3.
  • Exome and genome represented 22% of all test results, up from 17% for the full year 2022 on a pro-forma basis3.

Gross margin

Fourth quarter 2023:

  • Adjusted gross margin from continuing operations expanded to 56%, up from 41% in the fourth quarter of 2022 and up from 48% in the third quarter of 2023.
    • Total company gross margin was 53.6%.
  • Exome and genome adjusted gross margin operated in excess of 60%.

Full year 2023:

  • Adjusted gross margin from continuing operations expanded to 45%, up from 39% for full year 2022.
    • Total company gross margin was 44.4%.
  • Exome and genome adjusted gross margin operated in excess of 60%.

Operating expenses

Fourth quarter 2023:

  • Adjusted total operating expenses reduced to $48.3 million, a decrease of 36% year-over-year.
    • Total GAAP operating expenses were $54.4 million.

Full year 2023:

  • Adjusted total operating expenses reduced to $216.3 million, a decrease of 33% year-over-year.
    • Total GAAP operating expenses were $253.0 million.

Net loss

Fourth quarter 2023:

  • Adjusted net loss narrowed to $17.8 million, an improvement of 76% year-over-year and 16% sequentially.
    • GAAP net loss was $25.8 million.

Full year 2023:

  • Adjusted net loss narrowed to $126.3 million, an improvement of 53% year-over-year.
    • GAAP net loss was $175.8 million.

Cash burn and cash position

  • Excluding one-time items, representative continuing operations cash burn was $23.9 million in the fourth quarter of 2023. Total net use of cash, excluding net financing proceeds, was $32.9 million in the fourth quarter of 2023, an improvement of 51% year-over-year and 22% sequentially. The use of cash in the fourth quarter included $5 million in scheduled payments under the Legacy Sema4 payer settlement entered into in 2022, $3 million to discharge operating payables for the exited reproductive health business and $1 million in severance payments related to the previously announced cost reduction initiative.
  • Cash, cash equivalents, marketable securities and restricted cash was $131.1 million as of December 31, 2023.
  1. Revenue and gross margin results from continuing operations, which we believe are representative of our ongoing business strategy exclude any revenue and cost of goods sold of the exited Legacy Sema4 diagnostic testing business. Total company results include GeneDx’s continuing operations and the financial impacts of exited Legacy Sema4 business activities.
  2. Adjusted gross margin, adjusted total operating expenses and adjusted net loss are non-GAAP financial measures. See appendix for a reconciliation of GAAP to Non-GAAP figures presented.
  3. Volume and revenue comparison for full year 2022 are on a pro forma basis assuming Legacy GeneDx and the Company were combined for the entirety of 2022.

GeneDx Full Year 2024 Guidance

Management expects GeneDx to:

  • Drive full year 2024 revenues between $220 and $230 million;
  • Expand full year 2024 adjusted gross margin profile to at least 50%;
  • Use $75 to $80 million of net cash for full year 2024;
  • Turn profitable in 2025.

2023 Business Highlights

Driving sustainable growth and market leadership

  • Presented new data at the American Epilepsy Society Annual Meeting demonstrating that exome sequencing outperforms multi-gene panels for patients with epilepsy
  • Announced that Genetics in Medicine, the official journal of the American College of Medical Genetics and Genomics (ACMG), published a peer-reviewed research analysis involving GeneDx that concluded that variants of unknown significance (VUS) are reported more frequently on multi-gene panels than exome and genome sequencing
  • Reached a milestone of over 1,000 publications in peer-reviewed journals, demonstrating GeneDx’s leadership in furthering scientific discoveries and innovation in the commercial laboratory space
  • Worked closely with state Medicaid programs, including Florida, Arizona, and Utah, to expand coverage of rapid genetic testing in the NICU
  • Announced partnership program with the New York Center for Rare Diseases (NYCRD) at Montefiore, PacBio and Google Health to deliver genetic diagnoses for Bronx families living with rare diseases
  • Continued to support the GUARDIAN study, which continued to offer data and insights on the benefits and potential for genetic diagnoses through newborn screening – a retrospective analysis of GeneDx data showed that more than 20% of individuals could have identified their genetic disease, on average, 7 to 11 years sooner had they received genome sequencing at birth
  • Launched research collaboration with the University of Washington and PacBio to study the capabilities of long-read whole genome sequencing (WGS) to increase diagnostic rates in pediatric patients with genetic conditions
  • Refined the strategic direction for biopharma and partnerships efforts and aligned the team within the Commercial organization, offering enhanced integration between our testing and data businesses
  • Evolved the management team to include Melanie Duquette as Chief Growth Officer and Eric Olivares as Chief Product Officer

Strengthening our financial health and path to profitability

  • On October 30, 2023, the Company announced a continued strategic realignment of its organization to key priorities which included the elimination of approximately 50 positions impacted on August 23, 2023 and approximately 35 positions impacted on October 30, 2023. Together these actions reduced the size of the Company’s workforce by 10% from the total number that existed at the time of the August reduction in force. In total, the Company announced cost saving initiatives, including but not limited to these reductions in force, that are expected to amount to approximately $40 million in annual cost reduction.
  • Entered into a new, five-year senior secured credit facility with Perceptive Advisors. The agreement provides access of up to $75 million, consisting of an initial tranche of $50 million, and a subsequent tranche for an additional $25 million, subject to certain timelines and other defined criteria.
    • Interest is payable in cash on the outstanding principal amount at a rate per annum equal to the sum of the applicable secured overnight financing rate (SOFR), plus 7.5%.
    • Under the terms of the agreement, Perceptive was issued warrants to purchase 800,000 shares of the Company’s Class A common stock on the closing date, with an exercise price equal to $3.18. Upon the borrowing of the subsequent tranche, Perceptive will be issued warrants to purchase an additional 400,000 shares of Class A common stock.

Webcast and Conference Call Details

GeneDx will host a conference call today, February 20, 2024, at 4:30 p.m. Eastern Time. Investors interested in listening to the conference call are required to register online. A live and archived webcast of the event will be available on the “Events” section of the GeneDx investor relations website at https://ir.genedx.com/.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding our future performance and our market opportunity, including our expected full year 2024 reported revenue guidance, our expectations regarding our adjusted gross margin profile in 2024, our use of net cash in 2024 and our turning profitable in 2025, the expected annual cost reduction from our cost savings initiatives. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) our ability to implement business plans, goals and forecasts, and identify and realize additional opportunities, (ii) the risk of downturns and a changing regulatory landscape in the highly competitive healthcare industry, (iii) the size and growth of the market in which we operate, (iv) our ability to pursue our new strategic direction, and (vi) our ability to enhance our artificial intelligence tools that we use in our clinical interpretation platform. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2023 and other documents filed by us from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. We do not give any assurance that we will achieve our expectations.

About GeneDx

GeneDx (Nasdaq: WGS) delivers personalized and actionable health insights to inform diagnosis, direct treatment and improve drug discovery. The company is uniquely positioned to accelerate the use of genomic and large-scale clinical information to enable precision medicine as the standard of care. GeneDx is at the forefront of transforming healthcare through its industry-leading exome and genome testing and interpretation, fueled by one of the world’s largest rare disease data sets. For more information, please visit genedx.com and connect with us on LinkedIn, Facebook, Twitter and Instagram.

Investor Relations Contact:
Investors@GeneDx.com

Media Contact:
Press@GeneDx.com

Volume and revenue in the table below include the combination of the Legacy GeneDx diagnostic business with the data and information business of Legacy Sema4.

Volume & Revenue

 4Q23 3Q23 2Q23 1Q23 4Q22 2023 YTD 2022 YTD1
Volumes             
Whole exome, whole genome 15,663  13,216  11,855  8,705  7,862  49,439  30,560
Exome based panels 2,606  2,922  3,472  3,136  3,013  12,136  11,767
Hereditary cancer 8,240  8,556  7,142  7,120  6,069  31,058  25,334
Other individual gene tests and multi-gene disease panels 31,086  32,939  32,459  33,817  31,891  130,301  112,711
Total 57,595  57,633  54,928  52,778  48,835  222,934  180,372
              
Revenue ($ millions)             
Whole exome, whole genome$39.2 $34.0 $28.7 $22.4 $23.3 $124.3 $86.8
Exome based panels 1.7  1.7  2.0  2.1  2.0  7.5  9.1
Hereditary cancer 5.5  4.5  3.8  4.3  4.4  18.1  14.4
Other individual gene tests and multi-gene disease panels 9.5  8.9  8.6  10.6  14.2  37.6  53.0
Data information 2.2  1.3  2.1  1.3  1.9  6.9  7.7
Total$58.1 $50.4 $45.2 $40.7 $45.8 $194.4 $171.0

1 Volume and revenue comparison for full year 2022 are on a pro forma basis as if Legacy GeneDx and the Company were combined for the entirety of 2022.

Unaudited Select Financial Information (in thousands)

 Three months ended December 31, 2023 Three months ended December 31, 2022
 GeneDx Legacy Sema4 Total GeneDx Legacy Sema4 Total
Revenue$58,107  $(689) $57,418  $45,824  $15,526  $61,350 
Adjusted cost of services 25,626      25,626   27,000   30,153   57,153 
Adjusted gross profit (loss)$32,481  $(689) $31,792  $18,824  $(14,627) $4,197 
Adjusted gross margin % 55.9%  (100.0)%  55.4%  41.1%  (94.2)%  6.8%


 Year ended December 31, 2023 Year ended December 31, 2022
 GeneDx Legacy Sema4 Total GeneDx Legacy Sema4 Total
Revenue$194,376  $8,190  $202,566  $122,234  $112,460  $234,694 
Adjusted cost of services 106,983   2,305   109,288   74,213   148,897   223,110 
Adjusted gross profit (loss)$87,393  $5,885  $93,278  $48,021  $(36,437) $11,584 
Adjusted gross margin % 45.0%  71.9%  46.0%  39.3%  (32.4)%  4.9%


 Three months ended September 30, 2023
  
 GeneDx Legacy Sema4 Total
  
Revenue$50,350  $2,953  $53,303  
Adjusted cost of services 26,079   225   26,304  
Adjusted gross profit (loss)$24,271  $2,728  $26,999  
Adjusted gross margin % 48.2%  92.4%  50.7% 


 For the three months ended December 31, 2023
 Reported Depreciation and amortization Stock-based compensation expense Restructuring costs Change in FV of financial liabilities Charges related to business exit Other Adjusted
Diagnostic test revenue$55,214  $  $  $  $  $  $ $55,214 
Other revenue 2,204                    2,204 
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 
Impairment loss                      
Other, net 1,964               (1,277)    687 
                
Loss from operations (25,643)  6,094   (912)  1,984      1,277     (17,200)
                
Interest income (expense), net (978)                   (978)
Other income (expense), net 437            (485)     48   
Income tax benefit 411                    411 
Net loss$(25,773) $6,094  $(912) $1,984  $(485) $1,277  $48 $(17,767)


 For the three months ended December 31, 2022
 Reported Depreciation and amortization Stock-based compensation expense Restructuring costs Change in FV of financial liabilities Charges related to business exit Adjusted
Diagnostic test revenue$59,345  $  $  $  $  $  $59,345 
Other revenue 2,005                  2,005 
Total revenue 61,350                  61,350 
Cost of services 77,676   (19,993)  (412)  (118)        57,153 
Gross profit (loss) (16,326)  19,993   412   118         4,197 
Gross margin(26.6)%            6.8%
              
Research and development 24,366   (9,149)  937   (892)        15,262 
Selling and marketing 29,236   (1,226)  324   (3,476)        24,858 
General and administrative 43,209   (3,672)  (1,271)  (2,770)        35,496 
Impairment loss 210,145               (210,145)   
Other, net 1,600                  1,600 
              
Loss from operations (324,882)  34,040   422   7,256      210,145   (73,019)
              
Interest income (expense), net 333                  333 
Other income (expense), net 15,878            (15,878)      
Income tax benefit (90)                 (90)
Net loss$(308,761) $34,040  $422  $7,256  $(15,878) $210,145  $(72,776)


 For the year ended December 31, 2023
 Reported Depreciation and amortization Stock-based compensation expense Restructuring costs Change in FV of financial liabilities Charges related to business exit Other Adjusted
Diagnostic test revenue$195,654  $  $  $  $  $  $  $195,654 
Other revenue 6,912                     6,912 
Total revenue 202,566                     202,566 
Cost of services 112,560   (4,350)  1,217   (139)           109,288 
Gross profit (loss) 90,006   4,350   (1,217)  139            93,278 
Gross margin 44.4%              46.0%
                
Research and development 58,266   (6,710)  2,585   (3,176)           50,965 
Selling and marketing 60,956   (4,902)  1,266   (1,371)           55,949 
General and administrative 133,755   (17,772)  (4,742)  (1,846)           109,395 
Impairment loss 10,402               (10,402)      
Other, net 7,223               (1,957)     5,266 
                
Loss from operations (180,596)  33,734   (326)  6,532      12,359      (128,297)
                
Interest income (expense), net 1,114                     1,114 
Other income (expense), net 2,789            (1,170)     (1,619)   
Income tax benefit 926                     926 
Net loss$(175,767) $33,734  $(326) $6,532  $(1,170) $12,359  $(1,619) $(126,257)


 For the year ended December 31, 2022
 Reported Depreciation and amortization Stock-based compensation expense Restructuring costs Change in FV of financial liabilities Charges related to business exit Other Adjusted
Diagnostic test revenue$227,334  $  $  $  $  $    $227,334 
Other revenue 7,360                     7,360 
Total revenue 234,694                     234,694 
Cost of services 261,444   (31,328)  (5,080)  (1,926)           223,110 
Gross profit (loss) (26,750)  31,328   5,080   1,926            11,584 
Gross margin(11.4)%              4.9%
                
Research and development 86,203   (14,960)  (1,755)  (3,260)           66,228 
Selling and marketing 122,075   (3,271)  (5,390)  (7,979)           105,435 
General and administrative 216,167   (9,750)  (29,750)  (12,645)        (13,436)  150,586 
Impairment loss 210,145               (210,145)      
Other, net 6,312                     6,312 
                
Loss from operations (667,652)  59,309   41,975   25,810      210,145   13,436   (316,977)
                
Interest income (expense), net (666)                    (666)
Other income (expense), net 70,286            (70,229)     (57)   
Income tax benefit 49,052                     49,052 
Net loss$(548,980) $59,309  $41,975  $25,810  $(70,229) $210,145  $13,379  $(268,591)


 For the three months ended September 30, 2023
 Reported Depreciation and amortization Stock-based compensation expense Restructuring costs Change in FV of financial liabilities Charges related to business exit Other Adjusted
Diagnostic test revenue$51,955  $  $  $  $  $  $ $51,955 
Other revenue 1,348                    1,348 
Total revenue 53,303                    53,303 
Cost of services 28,044   (1,613)  (75)  (52)        26,304 
Gross profit (loss) 25,259   1,613   75   52           26,999 
Gross margin 47.4%              50.7%
                
Research and development 14,288   (283)  533   (970)          13,568 
Selling and marketing 16,763   (1,225)  115   (416)          15,237 
General and administrative 26,099   (5,551)  (1,004)  (753)          18,791 
Impairment loss 8,282               (8,282)     
Other, net 2,794               (1,014)    1,780 
                
Loss from operations (42,967)  8,672   431   2,191      9,296     (22,377)
                
Interest income (expense), net 1,053                    1,053 
Other income (expense), net (544)           (590)     1,134   
Income tax benefit 172                    172 
Net loss$(42,286) $8,672  $431  $2,191  $(590) $9,296  $1,134 $(21,152)


GeneDx Holdings Corp.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)

 December 31,
  2023   2022 
Assets   
Current assets:   
Cash and cash equivalents$99,681  $123,933 
Marketable securities 30,467    
Accounts receivable 32,371   42,634 
Due from related parties 445   708 
Inventory, net 8,777   13,665 
Prepaid expenses and other current assets 10,598   31,682 
Total current assets 182,339   212,622 
Operating lease right-of-use assets 26,900   32,758 
Property and equipment, net 32,479   51,527 
Intangible assets, net 172,625   186,650 
Other assets(1) 4,413   7,385 
Total assets$418,756  $490,942 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable and accrued expenses$37,456  $84,878 
Due to related parties 1,379   3,593 
Short-term lease liabilities 3,647   6,121 
Other current liabilities 16,336   49,705 
Total current liabilities 58,818   144,297 
Long-term debt, net of current portion 52,688   6,250 
Long-term lease liabilities 62,938   60,013 
Other liabilities 14,735   24,018 
Deferred taxes 1,560   2,659 
Total liabilities 190,739   237,237 
    
Stockholders’ Equity:   
Preferred stock     
Class A common stock 2   1 
Additional paid-in capital 1,527,778   1,378,125 
Accumulated deficit (1,300,188)  (1,124,421)
Accumulated other comprehensive income 425    
Total stockholders’ equity 228,017   253,705 
Total liabilities and stockholders’ equity$418,756  $490,942 

(1)  Other assets includes $987 thousand and $900 thousand of restricted cash as of December 31, 2023 and December 31, 2022, respectively.

GeneDx Holdings Corp.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)

 Year ended December 31,
  2023   2022 
Revenue   
Diagnostic test revenue$195,654  $227,334 
Other revenue 6,912   7,360 
Total revenue 202,566   234,694 
Cost of services 112,560   261,444 
Gross profit (loss) 90,006   (26,750)
Research and development 58,266   86,203 
Selling and marketing 60,956   122,075 
General and administrative 133,755   216,167 
Impairment loss 10,402   210,145 
Other operating expenses, net 7,223   6,312 
Loss from operations (180,596)  (667,652)
    
Non-operating income (expenses), net   
Change in fair market value of warrant and earn-out contingent liabilities 1,170   70,229 
Interest income (expense), net 1,114   (666)
Other income, net 1,619   57 
Total non-operating income, net 3,903   69,620 
Loss before income taxes$(176,693) $(598,032)
Income tax benefit 926   49,052 
Net loss$(175,767) $(548,980)
    
Weighted average shares outstanding of Class A common stock 24,311,989   10,236,960 
Basic and diluted net loss per share, Class A common stock$(7.23) $(53.63)


GeneDx Holdings Corp.
Consolidated Statements of Cash Flows
(in thousands)

 Year Ended December 31,
  2023   2022 
Operating activities   
Net loss$(175,767) $(548,980)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization expense 33,734   59,309 
Stock-based compensation expense (326)  41,975 
Change in fair value of warrant and contingent liabilities (1,170)  (70,229)
Deferred tax benefit (926)  (49,124)
Provision for excess and obsolete inventory 3,913   1,125 
Third-party payor reserve release (9,745)   
Gain on sale of assets (1,677)   
Gain on debt forgiveness (2,750)   
Impairment loss 10,402   210,145 
Other 1,308   2,743 
Change in operating assets and liabilities, net of effects from purchase of business:   
Accounts receivable 10,263   5,527 
Inventory 975   2,350 
Accounts payable and accrued expenses (46,953)  34,459 
Other assets and liabilities (2,526)  (8,455)
Net cash used in operating activities (181,245)  (319,155)
Investing activities   
Consideration on escrow paid for GeneDx acquisition (12,144)  (127,004)
Purchases of property and equipment (5,250)  (7,156)
Proceeds from sale of assets 4,034    
Purchases of marketable securities (47,670)   
Proceeds from maturities of marketable securities 17,765    
Development of internal-use software assets (461)  (7,166)
Net cash used in investing activities (43,726)  (141,326)
Financing activities   
Proceeds from PIPE issuance, net of issuance costs    197,659 
Proceeds from offerings, net of issuance costs 143,002    
Proceeds from long-term debt, net of issuance costs 48,549    
Exercise of stock options 285   2,948 
Long-term debt principal payments (2,000)   
Finance lease payoff and principal payments (2,500)  (3,292)
Net cash provided by financing activities 187,336   197,315 
Net decrease in cash, cash equivalents and restricted cash (37,635)  (263,166)
Cash, cash equivalents and restricted cash, at beginning of year 138,303   401,469 
Cash, cash equivalents and restricted cash, at end of year(1)$100,668  $138,303 

(1) Cash, cash equivalents and restricted cash at December 31, 2023 excludes marketable securities of $30.5 million.