GeneDx Holdings Corp. earnings

Management highlights

• GeneDx continued mission of enabling genomics-driven healthiest life, with exome and genome volume up 34% Y/Y. • Identified two factors for lower than expected total revenue: lower blended average reimbursement rate and softer non-core business line performance. • Fabric genomics acquisition integrated, focusing resources on international growth and key domestic drivers, lowering 2026 revenue expectations. • Biopharma and data business had positive momentum but fell short due to longer sales cycle, positioned as upside as it ramps. • Took $25 million OPEX cut, focusing on growing exome and genome utilization, optimizing unit economics, and delivering leading products. • Walked through customer segments: geneticists, pediatric specialists, NICU, General Pediatrics, prenatal, detailing growth and challenges in each.

Guidance

• Reduced full-year revenue guidance by 12%, expecting total revenue $475 to $490 million. • Exome and genome volume growth at least 30%, adjusted gross margin approximately 70%, aiming for adjusted profitability. • Q2 2026 expected total revenues $110 to $112 million, exome and genome volume ~30,000 tests, exome and genome revenue ~$100 million, adjusted net loss ~$5 million in Q2, moving to profitable in Q3.

Segment performance

In Q1, Exome and genome volume grew 34% year over year. Total revenue was $12 million lower than expected, driven by a lower blended average reimbursement rate for exome and genome (~$5.5M) and softer performance from non-core business lines (~$6.5M). Exome and genome revenue was $90.6 million in Q1. Geneticists are leaning into genome, pediatric specialists saw steady growth but lower exome ARR, NICU had good progress with rapid and ultra-rapid genomes, General Pediatrics is an early stage market with encouraging signals, and prenatal had building demand. Non-core business lines like Fabric and BioPharma had lower revenue contributions due to various factors.

Risks & headwinds

• Uncertainty in reimbursement dynamics for exome and genome, especially with genome having lower coverage and reimbursement rates. • Longer sales cycles in biopharma and data business impacting revenue. • Transitory nature of product mix shifts affecting blended average reimbursement rate, which needs careful management. • Execution challenges in new sales channels and markets, such as in General Pediatrics and prenatal.

Analyst Q&A

• Q: On Q2 guidance and NICU traction.

  A: Q2 guide from strong momentum, NICU has good traction with expanded sales force.

• Q: Part of guidance from end markets and competitive dynamics.

  A: In right channels, tweaking sales strategy for optimization.

• Q: Commercial footprint and sales force productivity.

  A: 4 sales teams, early stage for some, watching Salesforce productivity.

• Q: Genome mix and pricing.

  A: Aim for genome ASP to parity with exome, work on coverage and revenue cycle.

• Q: $11M cut and volume guidance.

  A: Extensive channel review, tighter assumptions.

• Q: Pricing and reflex product.

  A: Reflex as tool, genome margin good, exome higher.

• Q: Linearity and competitive dynamics.

  A: Volume came in ahead, no new competitive dynamics, working on long read.

• Q: Non-core revenue and health.

  A: Fabric refocused on international, biopharma with longer cycles.

• Q: Genome-exome mix and market penetration.

  A: Genome 40% outpatient volume, penetration based on diagnosis day.

• Q: Genome mix stability and OPEX savings.

  A: Mix resets by channel, OPEX savings not in current run rate