GeneDx Holdings Corp
For the period ended Jun 30, 2024. Filed Jul 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 30, 2024
WGS$62.37-3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-29.
0001818331-24-000023
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0001818331-24-000042
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 112 previous paragraphs and 137 current paragraphs.
87 unchanged; 22 reworded; 25 added; 3 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
Other revenue decreased by $1.0 million, or 48%, to $1.1 million for the three months ended June 30, 2024, from $2.1 million for the three months ended June 30, 2023. The decrease reflected the milestone achievement of partnership revenues recognized in the second quarter of 2023, which did not recur in the second quarter of 2024.
Current report
General and administrative expense decreased by $12.2 million, or 33%, to $25.2 million for the three months ended June 30, 2024, from $37.3 million for the three months ended June 30, 2023. The decrease was primarily attributable to lower current expenses related to professional services, software and information technology related costs, insurance costs and personnel-related costs as a result of the discontinued Legacy Sema4 business.
Current report
Non-operating income, net decreased by $23.5 million. The current quarter results primarily include legal reserves, net of insurance, of approximately $13.4 million and a non-cash charge of $5.1 million associated with the exercise of the Perceptive Warrant. The prior year quarter results included a non-cash gain of $3.3 million related to the Milestone Payment for the contingent liability and net interest income driven by higher cash balances driven by the capital raise in the first quarter of 2023.
Current report
Comparison of the six months ended June 30, 2024 and 2023
Current report
NM – Not Meaningful
Current report
Revenue
Current report
Total revenue increased by $41.1 million, or 45%, to $132.9 million for the six months ended June 30, 2024, from $91.8 million for the six months ended June 30, 2023.
Current report
Other revenue decreased by $1.0 million, or 29%, to $2.4 million for the six months ended June 30, 2024, from $3.4 million for the six months ended June 30, 2023. The decrease reflects the milestone achievement of partnership revenues recognized in the six months ended June 30, 2023, which did not recur in the six months ended June 30, 2024.
Current report
Gross Profit
Current report
Gross profit increased by $46.4 million for the six months ended June 30, 2024, driven by a combination of lower cost of services from the now discontinued Legacy Sema4 business and improved margins from Legacy GeneDx. The gross profit performance from Legacy GeneDx reflected favorable volume mix shift to higher margin whole exome and genome tests, partially offset by lower average cost per test associated with these tests.
Current report
Research and Development
Current report
Selling and Marketing
Current report
General and Administrative
Current report
General and administrative expense decreased by $33.4 million, or 41%, to $47.6 million for the six months ended June 30, 2024, from $81.0 million for the six months ended June 30, 2023. The decrease was attributable to lower current expenses related to professional services, software and information technology related costs, insurance costs, fixed asset depreciation and personnel-related costs as a result of the discontinued Legacy Sema4 business.
Current report
Other Operating Expenses, Net
Current report
Other operating expenses, net were $1.8 million for the six months ended June 30, 2024 as compared with $2.5 million for the six months ended June 30, 2023. The decrease in expense reflected decreased services costs following the expiration of the transition services agreement with OPKO in October 2023. This was partially offset by the impact of a gain recognized on the sale of certain assets sold as a result of an auction held during the six months ended June 30, 2023, which did not recur in the six months ended June 30, 2024.
Current report
Non-Operating Income, Net
Current report
Non-operating income, net, decreased by $29.4 million. The current period results primarily include legal reserves, net of insurance, of approximately $13.4 million, and non-cash charges of $5.1 million associated with the exercise of the Perceptive Warrant exercised and $5.4 million driven by the significant increase in fair value of our public and private placement warrants and Perceptive Warrant driven primarily by the increase in our share price as of June 30, 2024. See Note 4, “Fair Value Measurements” to our condensed consolidated financial statements for further information on the changes in fair value of our warrant and earn-out contingent liabilities. Also see Note 9, “Purchase Commitments and Contingencies” to our condensed consolidated financial statements for further information.
Current report
The prior year results included net interest income driven by higher cash balances driven by the capital raise in the first quarter of 2023 and the principal loan forgiveness of $2.8 million under the amendment to the DECD loan. See Note 8, “Long-Term Debt” to our condensed consolidated financial statements for further information.
Current report
(5)For the three and six months ended June 30, 2024, represents reserves net of insurance for a certain litigation matter. See Note 9 “Purchase Commitments and Contingencies” to our condensed consolidated financial statements for further information.
Current report
On April 29, 2024, we entered into a sales agreement (the “Sales Agreement”) with TD Securities (USA) LLC (“TD Cowen”), pursuant to which we may, but are not obligated to, offer and sell, from time to time, shares of our Class A common stock with an aggregate offering price up to $75.0 million through TD Cowen, as sales agent, subject to the terms and conditions described in the Sales Agreement and SEC rules and regulations (our “ATM offering”). As of June 30, 2024, no sales of Class A common stock had been made pursuant to this Sales Agreement.
Current report
Net cash used in investing activities during the six months ended June 30, 2023 was $11.7 million, which was primarily attributable to the $12.1 million in consideration on escrow paid for the Legacy GeneDx Acquisition.
Current report
Filer Status
Current report
Loss of Smaller Reporting Company Status
Current report
Because the market value of our shares of Class A common stock held by non-affiliates was between $250 million and $700 million as of June 30, 2024 and our revenue for the year ended December 31, 2023 was more than $100 million, we will continue to be deemed an accelerated filer under the Exchange Act as of December 31, 2024. However, we are no longer a “smaller reporting company” and will no longer be eligible to rely on the scaled disclosure exemptions available to smaller reporting companies starting with our first quarterly report on Form 10-Q in 2025.
Removed paragraphs (3)
Previous report
Other revenue increased by a nominal amount for the three months ended March 31, 2024, from $1.3 million for the three months ended March 31, 2023.
Previous report
Non-operating income, net decreased by $5.9 million, due to the significant increase in fair value of our public, private placement and Perceptive warrants, driven primarily by the increase in our share price as of March 31, 2024 and the prior year impact of $2.8 million for principal loan forgiveness under the amendment to the DECD loan.
Previous report
Net cash used in investing activities during the three months ended March 31, 2023 was $0.5 million, which reflected spend on development of internal-use software assets.
Reworded paragraphs (22)
Previous wording
We are a leading genomics company—one that sits at the intersection of diagnostics and data science, pairing decades of genomic expertise with an ability to interpret clinical data at scale. We are focused on delivering personalized and actionable health insights to inform diagnosis, direct treatment and improve drug discovery. We believe we are well-positioned to accelerate the use of genomics and leverage large-scale clinical data to enable precision medicine as the standard of care. Our initial focus is in pediatric and rare diseases, two areas in which we believe we have competitive advantage and can deliver on our vision today.
Current wording
We are a leading genomics company—one that sits at the intersection of diagnostics and data science, pairing decades of genomic expertise with an ability to interpret clinical data at scale. We are focused on delivering personalized and actionable health insights to inform diagnosis, direct treatment and improve drug discovery. We believe we are well-positioned to accelerate the use of genomics and leverage large-scale clinical data to enable precision medicine as the standard of care. Our focus is in pediatric and rare diseases, two areas in which we believe we have competitive advantage and can deliver on our vision today.
Previous wording
During the three months ended March 31, 2024, we resulted 55,223 tests, compared to the three months ended March 31, 2023, in which we resulted approximately 52,778 tests.
Current wording
During the six months ended June 30, 2024, we resulted 112,926 tests, compared to the six months ended June 30, 2023, in which we resulted approximately 107,706 tests.
Previous wording
Total revenue increased by $19.3 million, or 45%, to $62.4 million for the three months ended March 31, 2024, from $43.1 million for the three months ended March 31, 2023.
Current wording
Total revenue increased by $21.8 million, or 45%, to $70.5 million for the three months ended June 30, 2024, from $48.7 million for the three months ended June 30, 2023.
Previous wording
Gross profit increased by $22.2 million or 146%, to $37.4 million for the three months ended March 31, 2024, from $15.2 million for the three months ended March 31, 2023, driven by a combination of a shift in test mix to more profitable whole exome and genome tests, improvement in exome average reimbursement rates, continued cost per test leverage and the removal costs from the now discontinued Legacy Sema4 business.
Current wording
Gross profit increased by $24.2 million or 129%, to $43.0 million for the three months ended June 30, 2024, from $18.8 million for the three months ended June 30, 2023, driven by a combination favorable volume mix shift to higher margin whole exome and genome tests, improvement in exome average reimbursement rates and continued cost per test leverage.
Previous wording
Research and development expense decreased by $3.0 million, or 21%, to $11.6 million for the three months ended March 31, 2024, from $14.6 million for the three months ended March 31, 2023. The decrease was primarily attributable to costs associated with a $1.1 million decrease in stock compensation expense resulting from forfeitures of unvested equity awards of terminated employees and a decrease in depreciation expense of $0.7 million related to the discontinued Legacy Sema4 business.
Current wording
Research and development expense decreased by $6.2 million, or 36%, to $10.9 million for the three months ended June 30, 2024, from $17.1 million for the three months ended June 30, 2023. The decrease was primarily attributable to a $1.0 million decrease in stock compensation expense resulting from forfeitures of unvested equity awards of terminated employees and a decrease in depreciation expense of $4.4 million related to the discontinued Legacy Sema4 business.
Previous wording
Selling and marketing expense increased by $2.6 million, or 20%, to $16.1 million for the three months ended March 31, 2024, from $13.5 million for the three months ended March 31, 2023. The increase reflects our investment to support growth in our commercial team.
Current wording
Selling and marketing expense increased by $1.4 million, or 9%, to $16.6 million for the three months ended June 30, 2024, from $15.2 million for the three months ended June 30, 2023. The increase reflects our investment to support growth in our commercial team.
Previous wording
Other operating expenses, net were $1.0 million for the three months ended March 31, 2024 as compared with $1.7 million for the three months ended March 31, 2023. This decrease reflected the expiration of the transition services agreement with OPKO in October 2023.
Current wording
Other operating expenses, net were $0.9 million for the three months ended June 30, 2024 as compared with $0.7 million for the three months ended June 30, 2023. This increase reflected a gain recognized on the sale of certain assets sold as a result of an auction held during the second quarter of 2023. This was partially offset by decreased services costs following the expiration of the transition services agreement with OPKO in October 2023.
Previous wording
See Note 4, “Fair Value Measurements” to our condensed consolidated financial statements for further information on the changes in fair value of our warrant and earn-out contingent liabilities, and see Note 8, “Long-Term Debt” to our condensed consolidated financial statements for further information regarding the DECD loan..
Current wording
See Note 4, “Fair Value Measurements” to our condensed consolidated financial statements for further information on the changes in fair value of our warrant and earn-out contingent liabilities. Also see Note 9, “Purchase Commitments and Contingencies” to our condensed consolidated financial statements for further information.
Previous wording
Diagnostic test revenue increased by $19.3 million, or 46%, to $61.1 million for the three months ended March 31, 2024, from $41.9 million for the three months ended March 31, 2023. The increase primarily reflected an increase in Legacy GeneDx diagnostic testing revenues driven by a $21.6 million, or 96%, increase in whole exome and genome sequencing revenues resulting from a 91% increase in test volumes partially offset by declines in other non-exome test revenues and lower revenues from the now discontinued Legacy Sema4 business.
Current wording
Diagnostic test revenue increased by $42.1 million, or 48%, to $130.5 million for the six months ended June 30, 2024, from $88.5 million for the six months ended June 30, 2023. The increase primarily reflected an increase in Legacy GeneDx diagnostic testing revenues driven by a $43.5 million, or 85%, increase in whole exome and genome sequencing revenues resulting from a 68% increase in test volumes coupled with improved whole exome and genome average reimbursement, partially offset by lower revenues from the now discontinued Legacy Sema4 business.
Previous wording
General and administrative expense decreased by $21.2 million, or 49%, to $22.4 million for the three months ended March 31, 2024, from $43.7 million for the three months ended March 31, 2023. The decrease was primarily attributable to lower current period compensation costs as a result of headcount reduction actions, and lower depreciation expense related to the discontinued Legacy Sema4 business.
Current wording
Research and development expense decreased by $9.3 million, or 29%, to $22.5 million for the six months ended June 30, 2024, from $31.7 million for the six months ended June 30, 2023. The decrease was primarily attributable to lower current period compensation costs as a result of headcount reduction actions and a decrease in depreciation expense of $5.1 million related to the discontinued Legacy Sema4 business.
Previous wording
The non-cash charge of $2.1 million for the three months ended March 31, 2023 reflected the impairment loss recorded in connection with the modification of certain capital and right-of-use asset leases. See Note 6, “Property and Equipment, net” to our condensed consolidated financial statements for further information.
Current wording
The non-cash charge of $2.1 million for the six months ended June 30, 2023 reflected the impairment of certain capital and right-of-use asset leases. See Note 6, “Property and Equipment, net” to our condensed consolidated financial statements for further information.
Previous wording
The following is a reconciliation of gross profit to our adjusted gross profit and of our gross margin to adjusted gross margin for the three months ended March 31, 2024 and 2023:
Current wording
The following is a reconciliation of gross profit to our adjusted gross profit and of our gross margin to adjusted gross margin for the three and six months ended June 30, 2024 and 2023:
Previous wording
Adjusted net loss is a non-GAAP financial measure that we define as net loss adjusted for depreciation and amortization, stock-based compensation expenses, transaction costs, other (income) expense, net, impairment loss, restructuring and business exit related charges, acquisition costs and change in fair market value of warrant and earn-out contingent liabilities. We believe Adjusted net loss is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain factors that may vary from company to company for reasons unrelated to overall operating performance.
Current wording
Adjusted net loss is a non-GAAP financial measure that we define as net loss adjusted for depreciation and amortization, stock-based compensation expenses, impairment loss, restructuring costs, gain on sale of assets, other (income) expense, net, impairment loss, provision for excess and obsolete inventory associated with Legacy Sema4, gain on debt forgiveness and change in fair market value of warrant and earn-out contingent liabilities. We believe Adjusted net loss is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain factors that may vary from company to company for reasons unrelated to overall operating performance.
Previous wording
The following is a reconciliation of our net loss to Adjusted net loss for the three months ended March 31, 2024 and 2023:
Current wording
The following is a reconciliation of our net loss to Adjusted net loss for the three and six months ended June 30, 2024 and 2023:
Previous wording
(3)Represents the change in fair value of the liabilities associated with our public warrants, private placement warrants and the earn-out shares.
Current wording
(3)Represents the change in fair value of the liabilities associated with our public warrants, private placement warrants, Perceptive Warrant and the earn-out shares.
Previous wording
We have an effective shelf registration statement that we filed with the SEC in August of 2022, registering $300 million shares of our Class A common stock and other securities. Following the underwritten and registered direct offerings described above, approximately $150 million of securities remained available under this registration statement.
Current wording
We have an effective shelf registration statement that we filed with the SEC in August of 2022, registering $300 million shares of our Class A common stock and other securities. As of June 30, 2024, $150 million of securities remained available under this registration statement.
Previous wording
We anticipate fulfilling our contractual obligations and commitments with existing cash and cash equivalents and available-for-sale marketable securities, which amounted to $112.9 million at March 31, 2024, through additional capital raised to finance our operations or through an additional tranche of $25 million under the Perceptive credit facility, which is subject to certain conditions. See “Liquidity and Capital Resources” for further information.
Current wording
We anticipate fulfilling our contractual obligations and commitments with existing cash and cash equivalents and available-for-sale marketable securities, which amounted to $106.9 million at June 30, 2024, through additional capital raised to finance our operations, including pursuant to our ATM offering, or through an additional tranche of $25 million under the Perceptive credit facility, which is subject to certain conditions. See “Liquidity and Capital Resources” for further information.
Previous wording
Net cash used in operating activities during the three months ended March 31, 2024 was $16.4 million, driven by lower cash expenditures associated with the current year period net loss as compared with the prior year period, which reflected improved gross margin profitability, as well as the realization of cost savings from exiting the Legacy Sema4 business and other cost reduction initiatives.
Current wording
Net cash used in operating activities during the six months ended June 30, 2024 was $20.9 million, driven by lower cash expenditures associated with the current year period net loss as compared with the prior year period, which reflected improved gross margin profitability, as well as the realization of cost savings from exiting the Legacy Sema4 business and other cost reduction initiatives.
Previous wording
Net cash used in operating activities during the three months ended March 31, 2023 was $55.6 million, driven by higher cash expenditures associated with the prior year net loss, which reflected the costs associated with the exiting of the Legacy Sema4 business.
Current wording
Net cash used in operating activities during the six months ended June 30, 2023 was $109.1 million, driven by higher cash expenditures associated with the prior year net loss, which reflected the costs associated with the exiting of the Legacy Sema4 business.
Previous wording
Net cash provided by investing activities during the three months ended March 31, 2024 was $0.8 million, which included $6.5 million in proceeds from the sales and maturities of marketable securities, partially offset by net purchases of marketable securities of $5.2 million.
Current wording
Net cash provided by investing activities during the six months ended June 30, 2024 was $21.9 million, which included purchases of marketable securities of $29.4 million, partially offset by $9.3 million in proceeds from the sales and maturities of marketable securities.
Previous wording
Net cash used in financing activities during the three months ended March 31, 2024 was $0.4 million, which reflected finance lease payments.
Current wording
Net cash used in financing activities during the six months ended June 30, 2024 was $0.8 million, which reflected finance lease payments.
Previous wording
Net cash provided by financing activities during the three months ended March 31, 2023 was $132.7 million, which reflected $135.4 million net proceeds from our January 2023 underwritten public offering and concurrent registered direct offering, net of issuance costs, partially offset by a $2.0 million payment on the DECD loan and $1.0 million of finance lease principal payments.
Current wording
Net cash provided by financing activities during the six months ended June 30, 2023 was $140.0 million, which was primarily driven by the $143.0 million net proceeds from our January 2023 underwritten public offering and concurrent registered direct offering, net of issuance costs, which was offset partially a payment of $2.0 million on the DECD loan and $1.2 million of finance lease payments.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Diagnostic test revenue increased by $22.8 million, or 49%, to $69.4 million for the three months ended June 30, 2024, from $46.6 million for the three months ended June 30, 2023. The increase primarily reflected an increase in Legacy GeneDx diagnostic testing revenues driven by a $22.0 million, or 77%, increase in whole exome and genome sequencing revenues resulting from a 52% increase in test volumes, partially coupled with higher whole exome and genome average reimbursement rates.
Current report — wording carried from elsewhere
The following table sets forth our results of operations for the periods presented:
Current report — wording carried from elsewhere
Selling and marketing expense increased by $4.0 million, or 14%, to $32.7 million for the six months ended June 30, 2024, from $28.6 million for the six months ended June 30, 2023. The increase reflects our investment to support growth in our commercial team.