GeneDx Holdings Corp. Q3 FY2024 earnings call

• The third quarter was exceptionally strong with over $76 million in revenue, 64% gross margin, and tenth consecutive quarter of cash burn reduction, achieving profitability.
• Raised full-year 2024 revenue guidance to $284 million to $290 million.
• Exome and genome revenues grew 77% YOY and 18% sequentially, driven by volume and collection performance.
• Gross margin expanded due to better average reimbursement rates, lower cost per test, and favorable mix shift.
• Progress in NICU with steady increase in rapid whole genome volume, and partnership with Epic Aura for integration into health systems.
• Sequenced over 700,000 clinical exomes and genomes, with opportunities in pediatric outpatient, NICU, and newborn screening markets.

In the third quarter of 2024, revenues from continuing operations reached $76.6 million, a 52% increase from Q3 2023 and 11% sequentially. Exome and genome revenues grew 77% year-over-year and 18% sequentially, contributing $60 million this quarter, which accounted for 33% of all tests (up from 23% a year ago). Adjusted gross profit for Q3 2024 was $49.3 million, up 103% year-over-year, with a gross margin of 64%, up from 48% a year ago.

• Raised full-year 2024 revenue guidance to between $284 million and $290 million.
• Adjusted gross margin guidance for full year is 62%.
• Improved net cash burn guidance to $60 million to $65 million for full year 2024, excluding financing costs.

• Impact of weather in the Southeast (hurricanes, tornadoes) affecting Q4 volume.
• Uncertainties in payer coverage and reimbursement for genomic testing.
• Potential delays in commercial launches of initiatives like Epic Aura integration.

Q: Could you give a sense on the fourth quarter, volume and price for exomes and genomes?

A: Q4 is typically seasonally strongest, but early part impacted by weather; left room in guide for non-exome/genome portfolio toggles.

Q: Talk about initiatives to drive penetration with pediatric neurologists and penetration potential?

A: Efforts include aligning with AES guidelines, sales/medical affairs education, improved reimbursement; currently at 12% penetration, aiming for broader adoption.

Q: Remind on who paid for Guardian study and commercial launch of newborn exome product?

A: Guardian study is in-kind collaboration; commercial launch of newborn exome product expected in 5-plus years with work on payer strategy.

Q: Impact of prior period collections on profitability and modeling?

A: About $6 million of estimate true-ups, outperforming past estimates, with rev rec rate of $3,100 as new floor.

Q: Impact of incremental investments and OpEx spend moving forward?

A: Discrete investments with ROI analysis, expecting OpEx as percent of revenue to slightly decline as revenue/gross profit outpace additions.

Q: Gross margin drivers and levers for improvement in 2025?

A: Drivers include average reimbursement, cost per test, mix; ongoing improvement in COGS through automation of manual processes.