GeneDx Holdings Corp. Q4 FY2024 earnings call

Key Points

• 2024 was a remarkable year for GeneDx with revenues exceeding $95 million in Q4 and cementing market leadership in exome and genome testing.
• 2025 guidance set for revenue between $350 million to $360 million, with at least 30% growth in exome and genome volume and revenue.
• Focus on expanding into NICU with ultraRapid whole genome sequencing (48-hour turnaround) and outpatient settings, targeting new patient populations like cerebral palsy and hearing loss.
• Adjusted gross margin in Q4 was 70%, up from 56% the prior year, driven by operational strength and reduced denials.
• Hereditary cancer is being exited in 2025 as it's a non-core fit, allowing focus on exome and genome growth.

In the fourth quarter of 2024, exome and genome revenues were $78.8 million, accounting for 38% of total revenues. Adjusted gross profit from continuing operations was $66.9 million, resulting in an adjusted gross margin of 70% in the fourth quarter. Exome and genome tests grew 101% year-over-year and 31% sequentially, with over 20,000 flagship tests delivered, up 32% year-over-year and 7% sequentially.

Guidance

• 2025 revenue guidance: $350 million to $360 million, with at least 30% growth in exome and genome volume and revenue.
• Adjusted gross margin for 2025 expected to be between 65% and 67%.
• Committed to maintaining profitability each quarter in 2025.

Risks

• Potential for continued denials in reimbursement, with nearly half of tests still being denied.
• Competitive pressures from other players in the exome and genome testing space.
• Regulatory and policy challenges that could impact coverage and reimbursement of exome and genome testing.

Q: Dan Brennan from TD Cowen asked about pricing assumptions for 2025 and how pricing is being thought about.

A: Kevin Feeley responded that rates are stable with room to go higher, and the team is refining processes to avoid denials, with guidance being data-dependent.

Q: William Bonello from Craig-Hallum Capital Group asked about sales force expansion and cost.

A: Katherine Stueland said they expanded the enterprise team and hired inside sales reps, with investments in customer experience to offload manual work.

Q: Matt Stanton from Jefferies asked about the ultraRapid whole genome sequencing product and hereditary cancer exit.

A: Katherine Stueland discussed the ultraRapid product's market opportunity in NICU, and Kevin Feeley noted hereditary cancer contribution is expected to be nearly eliminated in 2025.

Q: Matt Sykes from Goldman Sachs asked about true ups and gross margin phasing.

A: Kevin Feeley said true ups are expected to be positive each quarter and gross margin improvement will be smooth, with most impact in the second half.

Q: Mark Massaro from BTIG asked about turnaround time and revenue phasing.

A: Katherine Stueland discussed turnaround time improvements and Kevin Feeley noted Q1 expected to be slightly above Q4 with growth continuing.