GeneDx Holdings Corp. Q2 FY2025 earnings call

Katherine Stueland highlighted achieving over $100 million in revenue in a quarter for the first time, driven by core business. Discussed transforming health care from reactive to proactive, with unique position in genomic testing, having built a comprehensive genomic dataset. Mentioned growth drivers like new indications (cerebral palsy, pediatric immunologists), NICU opportunity with over $1 billion potential, general pediatrics market with AAP guidance, and partnerships with pharma. Kevin Feeley talked about revenue growth, gross margin expansion, operating expenses, and balance sheet strength.

Second quarter 2025 revenues were $102.7 million, a 49% increase year-over-year. Exome and genome revenue was $85.9 million, up 69% year-over-year. Average reimbursement rate for exome and genome was over $3,700 a test in the quarter. Gross margin was a record high of 71%. Adjusted net income was $15 million. Volume of exome and genome tests was 23,102 in Q2 2025, up 28% year-over-year.

Raised top line total revenue guidance to between $400 million and $415 million for full year 2025. Raised exome and genome revenue guidance to between $345 million and $355 million, expecting at least 30% volume growth. Reaffirmed expectation to remain profitable each quarter for full year 2025 on adjusted net income basis.

Q: Congrats on such a great quarter. ASPs trounced estimates by a lot. Can you go back a couple of quarters, assuming this is ebbs and flows, are there a couple of discrete drivers to think about over the last 4 quarters?

A: Kevin Feeley said major overhauls to revenue cycle team and processes to reduce denials, and more state Medicaid coverage.

Q: As you're thinking about going after the pediatric market in 2026, can you talk about balancing an economically sound approach with going after this really big opportunity and how we should think about kind of the ramp in investment there?

A: Katherine Stueland said focus on ped neuros near-term, targeted approach to pediatricians ordering testing today, education at AAP meeting, market access team working with payers, and marketing investment.

Q: Just give us a little color on how the NICU is going, kind of what's -- how do we think about the impact in the back half of the year from the EMR integrations as well from some of these newer indications?

A: Katherine Stueland said volume growth bolstered by new indications in second half, 3 health systems live on Epic, expecting 12 hospitals on board and few thousand tests by year-end.

Q: You are targeting 60,000 or so pediatricians. First, how do you go about identifying pediatricians who have ordered genetic test at some point? What are the signs you're looking for? What would make you expand quicker or slower?

A: Katherine Stueland said focus on 25,000 pediatricians who see patients with DD/ID, sales team focused on that area.

Q: The other panels were pretty strong compared to our estimate. What drove that strength? How should we think about it in Q3 and Q4?

A: Kevin Feeley said growth from activating new accounts and educating physicians, back half expected flat or slight attrition in other panel lines with pickup in exome and genome.

Q: During the last quarter, you mentioned that there is a waiting room of clients for Epic Aura. And did you make meaningful steps to onboard all those clients? And is there still backlog, so to speak, of systems leading to integrate?

A: Katherine Stueland said made progress, 3 live, continuing to bring more Epic Aura sites on.

Q: Given the commentary about a lot of the impact, at least on the NICU side really being more Q4 than Q3 and the hopes to avoid a repeat of Q1, can you give us any kind of sense of how you think volume growth might shake out between the third and the fourth quarter?

A: Kevin Feeley said guide anchored on 30% volume growth, Q4 likely strongest quarter, Q1 lightest, Q3 with summer effects, second half tests around 53,200.

Q: I know in Q4 of '24, I believe your payment or denial rates were somewhere in the 50% range. And then I think in Q1, I believe you made some improvements, your denial rate, I think, was somewhere around the high 40s or so. Kevin, you talked about improvements in revenue cycle management. So I would just be curious where you're at today with the denial rate or the pay rate percentage?

A: Kevin Feeley said paid rate now mid-50s, nice step-up from last quarter, still room to reduce denials.

Q: I know you guys have touched on this, but there were some inbounds this morning about the rationale to increase the exome and genome revenue guide, but to hold the exome/genome volume guide. I'm pretty sure it has a lot to do with the success with the higher ASPs on exome/genome. But can you maybe just fill that rationale out a little bit further just for folks?

A: Kevin Feeley said reflects confidence in reimbursement rates, durable and expected to rise, outlook for 30% volume growth remains confident.

Q: How do you think about the role geneticists might play and to what degree that could be a rate-limiting factor for adoption?

A: Katherine Stueland said focus on simplifying ordering and report process, making it easier for pediatricians, building customer experience to not rely on genetic counselors.

Q: Just on the state front for the back half of the year? And then on Medicaid, have you sized the potential headwinds from the Big Beautiful Bill cuts that were laid out?

A: Katherine Stueland said expanded government affairs team, health economic data shows GeneDx opportunity benefits care and spend. Kevin Feeley said picked up 2 new states with outpatient coverage, momentum there, don't count on new states picking up coverage.