GeneDx Holdings Corp. Q4 FY2023 earnings call

Key Goals in 2023

• Increase utilization of exome and genome tests.
• Improve average reimbursement rate.
• Dramatically reduce cash burn.

Fourth Quarter Results

• $58M revenue, 68% y-o-y growth in exome/genome test revenue, 56% adjusted gross margin, 51% cash burn reduction.

2024 Focus

• Continue focus on exome/genome revenue growth, gross margin expansion, and disciplined cash management.
• Realigned sales strategy to account profitability, right-sized sales territories, and targeted new customers (pediatric neurologists).
• Operations team focused on P&L levers like billing and COGS reduction.
• Product/tech team working on scaling operations, EMR integrations, automation.
• Addressable market: $3B US pediatric, $10B US adult conditions, growing rare disease drug development partnerships.

In the fourth quarter of 2023, GeneDx generated $58 million in revenue. The exome and genome test revenue saw more than 68% year-over-year growth, contributing over $39 million of the quarter's revenue. Adjusted gross margins expanded to 56%. Exome and genome represented 27% of all tests resulted in the fourth quarter of 2023, up from 16% the previous year. The exome portfolio operates north of 60% gross margin, and the team is focused on driving cost efficiency across lab processes.

Revenue

• Expect to deliver $220 million to $230 million in revenue in 2024.

Gross Margin

• Expect full year 2024 adjusted gross margins in excess of 50% (2023 was 45%).

Cash Burn

• Anticipate using $75 million to $85 million of net cash for 2024, with quarterly sequential declines in cash burn. Aim to turn profitable in 2025.

• Forward-looking statements involve risks and uncertainties.
• Factors causing actual results to differ from forward-looking statements, including dependence on exome/genome conversion and reimbursement trends.

Q: Exome volume mix shift, do you think 27% is a good baseline for 2024 and how will it evolve?

A: Katherine and Kevin state it's a good baseline, with focus on continuing exome conversion and expecting expansion throughout 2024.

Q: 400 basis point gross margin benefit in Q4, what's attributable to it?

A: Kevin explains it includes reversal of bonus/incentive accruals, favorable reimbursement on stop-loss insurance.

Q: Can you capture market share from competitors?

A: Katherine says they're confident in targeting pediatric neurology, leveraging previous efforts to convert customers from panels to exome/genome.

Q: Thoughts on EMR integration and test retirement?

A: Katherine mentions EMR integration is invested in to open access, and they're pleased to have retired 350+ tests, continuing to focus on test menu review for steady growth.