GeneDx Holdings Corp. Q2 FY2025 earnings call

Key Points

• Achieved over $100 million in revenue for the first time in a quarter.
• Core business strength and resilience drove performance.
• Vision to shift from sick care to health care using genomic technology.
• Major milestones in ped neuro, NICU, and general pediatrics markets.
• Acquired Fabric Genomics to strengthen interpretation capability and international opportunities.
• Q2 volume growth from existing clinicians and new indications like cerebral palsy.
• NICU market has 3 health systems live on Epic Aura, aiming for dozen hospitals and few thousand tests by year-end.
• General pediatrics market driven by AAP guidance, with plans to engage at AAP meeting and invest in CME.

In the second quarter of 2025, GeneDx reported total revenues of $102.7 million. The exome and genome segment contributed $85.9 million, which is a 69% increase year-over-year and represents 83.6% of the total revenue. Adjusted gross margin was expanded to a record high of 71% driven by favorable mix shift, improved reimbursement, and lower COGS.

Guidance Details

• Raised top-line total revenue guidance to $400 million to $415 million for full year 2025.
• Exome and genome revenue guidance increased to $345 million to $355 million, expecting 48%-52% growth.
• Reaffirmed expectation of at least 30% year-over-year volume growth.
• Adjusted gross margin expected to be between 68% and 71%.
• Remain profitable each quarter for full year 2025 on adjusted net income basis.

Risks

• Potential impact of denial rates on revenue collection, though efforts are ongoing to reduce denials.
• Market adoption challenges in expanding into new segments like general pediatrics, which require careful execution.
• Uncertainty in Medicaid coverage changes and their potential impact on paid volumes.

Q: Congrats on such a great quarter. ASPs trounced estimates by a lot. Can you go back a couple of quarters to explain drivers?

A: Thanks, Dave. Rolled back to end of 2023, major overhauls to revenue cycle processes to reduce denials. More states picking up Medicaid coverage, which was volume already there but now paid volume. No major one-off appeals, just continued work to reduce denials.

Q: As you're thinking about going after the pediatric market in 2026, how to balance economically sound approach with big opportunity?

A: General pediatric opportunity is massive but needs building. Focus remains on core ped neuro with great success. First step includes targeted sales to existing ordering pediatricians, education at AAP meeting, market access team updating payer medical policies, and extending marketing investment. Also, simplifying ordering experience for nonexperts.

Q: Congrats on strong quarter. Speak to volumes and bridge to second half, especially NICU impact?

A: Most Q2 volume growth from existing clinicians. New indications like cerebral palsy driving same-store sales. NICU has 3 health systems live on Epic Aura, aiming for 12 hospitals and few thousand tests by year-end. Q3 to see some contribution, real boost in Q4. Volume growth bolstered by new indications in second half.

Q: Amazing quarter. Follow-up to Dave's question, how to identify pediatricians who have ordered genetic test?

A: Focus on 25,000 pediatricians who diagnose patients with DD/ID. Sales team will focus on this segment initially as we enter general pediatrics market.

Q: A couple of things. Kevin, sense of volume growth between third and fourth quarter?

A: Guide anchored on 30%+ volume growth. Back half of year needs ~53,200 tests. Q4 typically strongest, Q1 lightest. Confidence in 30% growth due to acceleration in Q2, new indications maturing, and same-store sales growth.

Q: Congratulations for nice quarter. Curious on denial rate now?

A: Paid rate is now mid-50s, a couple of hundred basis points improvement from last quarter. Still room to reduce denials over time, guide allows for conservative room on new indications.

Q: Appreciate color on AAP guidelines. Talk about role of pediatricians and rate-limiting factor for adoption?

A: Pediatricians' time is tight. Need to simplify ordering and reporting process. Customer experience improvements, including streamlining report and care plans, and engaging parents to offload work from pediatricians. Product team building features to unlock market.

Q: Kevin, do you think second quarter volume growth benefited from catch-up from first quarter weather disruptions?

A: Yes, weather-related disruptions in Q1 deferred tests, which carried over to Q2, and there was nice growth on top of that.

Q: Katherine, data business and pharma partnership front? Any milestones?

A: Data business is healthy, bringing on new customers. Excited about pharma partnerships, with potential for broader collaborations, but focus on current performance and future potential of data in drug discovery.