GeneDx Holdings Corp

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 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 today, two areas in which we believe we have competitive advantage and can deliver on our vision.

Previous 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.

Current wording

During the nine months ended September 30, 2024, we resulted 171,955 tests, compared to the nine months ended September 30, 2023, in which we resulted approximately 165,339 tests.

Previous wording

The cost of services reflect the aggregate costs incurred in performing services, which include expenses for reagents and laboratory supplies, personnel-related expenses (comprising salaries and benefits) and stock-based compensation for employees directly involved in revenue generating activities, shipping and handling fees, costs of third-party reference lab testing and phlebotomy services, if any, and allocated genetic counseling, facility and IT costs associated with delivery services. Allocated costs include depreciation of laboratory equipment, facility occupancy, and information technology costs. The cost of services are recorded as the services are performed.

Current wording

The cost of services reflect the aggregate costs incurred in performing services, which include expenses for reagents and laboratory supplies, personnel-related expenses (comprising salaries and benefits) and stock-based compensation for employees directly involved in revenue generating activities, shipping and handling fees, costs of third-party reference lab testing and phlebotomy services, if any, and allocated genetic counseling, facility and information technology costs associated with delivery services. Allocated costs include depreciation of laboratory equipment, facility occupancy, and information technology costs. The cost of services are recorded as the services are performed.

Previous wording

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 wording

Diagnostic test revenue increased by $25.5 million, or 49%, to $77.4 million for the three months ended September 30, 2024, from $52.0 million for the three months ended September 30, 2023. The increase of $26.0 million, or 77%, primarily reflected an increase in whole exome and genome sequencing revenues resulting from a 46% increase in test volumes, partially coupled with higher whole exome and genome average reimbursement rates.

Previous 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.

Current wording

Gross profit increased by $22.6 million, or 89%, to $47.8 million for the three months ended September 30, 2024, from $25.3 million for the three months ended September 30, 2023, driven by a combination of a favorable shift in volume mix to higher margin whole exome and genome tests, an improvement in exome average reimbursement rates and continued cost per test leverage.

Previous 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.

Current wording

Selling and marketing expense increased by $0.3 million, or 2%, to $17.0 million for the three months ended September 30, 2024, from $16.8 million for the three months ended September 30, 2023. The increase reflected our investment to support growth in our commercial team.

Previous 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.

Current wording

The non-cash charge of $8.3 million for the three months ended September 30, 2023 reflected the impairment of certain capital and right-of-use asset leases. See Note 5, “Property and Equipment, net” to our condensed consolidated financial statements for further information.

Previous 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.

Current wording

Other operating expenses, net were $0.8 million for the three months ended September 30, 2024 as compared with $2.8 million for the three months ended September 30, 2023. This decrease reflected a non-cash charge of $1.0 million in the prior period to reserve for obsolete Legacy Sema4 inventory and decreased services costs of $1.0 million following the expiration of the transition services agreement with OPKO in October 2023.

Previous 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.

Current wording

Total revenue increased by $64.7 million, or 45%, to $209.8 million for the nine months ended September 30, 2024, from $145.1 million for the nine months ended September 30, 2023.

Previous 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.

Current wording

Diagnostic test revenue increased by $67.5 million, or 48%, to $208.0 million for the nine months ended September 30, 2024, from $140.4 million for the nine months ended September 30, 2023. The increase of $69.6 million, or 82%, primarily reflected an increase in whole exome and genome sequencing revenues resulting from a 59% 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

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 wording

Gross profit increased by $68.9 million for the nine months ended September 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.

Previous 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.

Current wording

Research and development expense decreased by $11.9 million, or 26%, to $34.1 million for the nine months ended September 30, 2024, from $46.0 million for the nine months ended September 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 $5.2 million related to the discontinued Legacy Sema4 business.

Previous wording

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.

Current wording

Selling and marketing expense increased by $4.3 million, or 9%, to $49.7 million for the nine months ended September 30, 2024, from $45.4 million for the nine months ended September 30, 2023. The increase reflected our investment to support growth in our commercial team.

Previous wording

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 wording

General and administrative expense decreased by $33.4 million, or 31%, to $73.8 million for the nine months ended September 30, 2024, from $107.1 million for the nine months ended September 30, 2023. The decrease was attributable to lower current period 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 restructuring to discontinue the Legacy Sema4 business.

Previous wording

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 wording

Other operating expenses, net were $2.6 million for the nine months ended September 30, 2024 as compared with $5.3 million for the nine months ended September 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 nine months ended September 30, 2023, which did not recur in the nine months ended September 30, 2024.

Previous wording

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 wording

Non-operating income (expense), net, decreased by $30.5 million, to $26.0 million of expense for the nine months ended September 30, 2024, from $4.4 million of income for the nine months ended September 30, 2023. The current period results primarily included legal reserves, net of insurance, of approximately $12.1 million, net interest expense of $2.3 million, and non-cash charges of $10.1 million associated with the exercise of the Perceptive warrant and $1.3 million driven by the increase in fair value of our public and private warrant liabilities driven primarily by the increase in our stock price as of September 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.

Previous wording

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 wording

The prior year results included net interest income of $2.1 million driven by higher cash balances as a result of the public offering of Class A common stock in the first quarter of 2023 and the principal loan forgiveness of $2.8 million under the amendment to our loan from the Connecticut Department of Economic and Community Development (“DECD”). See Note 8, “Long-Term Debt” and Note 14, “Supplemental Financial Information” 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 and six months ended June 30, 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 nine months ended September 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, 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.

Current wording

Adjusted net income (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, change in fair value of financial liabilities, gain on sale of assets, provision for excess and obsolete inventory associated with Legacy Sema4, gain on debt forgiveness and other (income) expense, net. We believe adjusted net income (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 and six months ended June 30, 2024 and 2023:

Current wording

The following is a reconciliation of our net loss to adjusted net income (loss) for the three and nine months ended September 30, 2024 and 2023:

Previous wording

(2)Represent costs incurred for restructuring activities, which include severance and third-party consulting costs.

Current wording

(2)Represent costs incurred for restructuring activities, which include severance, and in the prior periods, third-party consulting costs.

Previous wording

(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 wording

(5)For the three and nine months ended September 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. For the three and nine months ended September 30, 2023, represents contract termination costs associated with the discontinued Legacy Sema4 business.

Previous wording

Management believes that our cash and cash equivalents and available-for-sale marketable securities provide us with sufficient liquidity for at least twelve months from the filing date of this Quarterly Report.

Current wording

Management believes that our cash and cash equivalents and available-for-sale marketable securities provide us with sufficient liquidity for at least 12 months from the filing date of this Quarterly Report.

Previous wording

Accordingly, our condensed consolidated financial statements included in this Quarterly Report have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. Nevertheless, we may also seek additional funding in the future through the sale of common or preferred equity or convertible debt securities, drawing on the additional $25 million tranche of the term loan under the Perceptive term loan facility, the entry into other credit facilities or another form of third-party funding or by seeking other debt financing. See Note 8, “Long-Term Debt” to our condensed consolidated financial statements for further information regarding the Perceptive term loan facility.

Current wording

Accordingly, our condensed consolidated financial statements included in this Quarterly Report have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. Nevertheless, we may also seek additional funding in the future through the sale of common or preferred equity or convertible debt securities, drawing on the additional $25 million tranche of the term loan under the Perceptive term loan facility, the entry into other credit facilities or another form of third-party funding, by seeking other debt financing or by disposing assets or businesses. See Note 8, “Long-Term Debt” to our condensed consolidated financial statements for further information regarding the Perceptive term loan facility.

Previous wording

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 wording

In addition, we have 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”). During the third quarter of 2024, we issued 418,653 shares of our Class A common stock in connection with the ATM offering at an average price of $35.83 per share. Proceeds received, net of agent fees and other offering expenses, were $14.6 million.

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 $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.

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 $116.5 million at September 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

As discussed in the notes to our condensed consolidated financial statements, in 2022, we entered into a settlement agreement with one of our third-party payors in order to settle the claims related to coverage and billing matters allegedly resulting in overpayments by the payor to Legacy Sema4. Under the settlement agreement, $42 million is to be paid by us to the payor in a series of payments each year through June 30, 2026. In consideration for the payments, the payor provided releases of the disputed claims, effective March 31, 2023.

Current wording

As discussed in the notes to our condensed consolidated financial statements, in 2022, we entered into an agreement with one of our third-party payors to settle for $42.0 million claims related to coverage and billing matters allegedly resulting in overpayments by the payor to Legacy Sema4. As of September 30, 2024, remaining payments due to the payor were $22.0 million.

Previous 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.

Current wording

Net cash used in operating activities during the nine months ended September 30, 2024 was $25.3 million, driven by lower cash expenditures associated with the current period net loss as compared with the prior period, which reflected improved gross margin profitability, as well as the realization of cost savings from exiting the Legacy Sema4 business and other previously announced cost reduction initiatives.

Previous 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.

Current wording

Net cash used in operating activities during the nine months ended September 30, 2023 was $150.3 million, driven by higher cash expenditures associated with the prior period 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 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.

Current wording

Net cash used in investing activities during the nine months ended September 30, 2024 was $29.6 million, which included purchases of marketable securities of $52.7 million and $2.4 million of capital expenditures, partially offset by $25.6 million in proceeds from the sales and maturities of marketable securities.

Previous wording

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 wording

Net cash used in investing activities during the nine months ended September 30, 2023 was $38.9 million, which primarily included purchases of marketable securities of $43.9 million, $12.1 million in consideration in escrow paid for the Legacy GeneDx acquisition and $2.9 million in purchases of property and equipment, which was offset partially by $16.7 million in proceeds from the maturities of marketable securities and $3.9 million in proceeds from the sale of assets.

Previous 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.

Current wording

Net cash provided by financing activities during the nine months ended September 30, 2023 was $139.1 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 by a payment of $2.0 million on the DECD loan and $2.1 million of finance lease payments.