GeneDx Holdings Corp.

Previous wording

See Note 1, “Organization and Description of Business” to our condensed consolidated financial statements included in this Quarterly Report for more information on the Company’s history.

Current wording

See Note 1, “Organization and Description of Business” to our condensed consolidated financial statements included in this Quarterly Report for more information.

Previous wording

We believe several important factors have impacted, and will continue to impact, our performance and results of operations. While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address. See the section titled “Item 1A. Risk Factors” in this Quarterly Report and in our 2024 Form 10-K and our Quarterly Reports for the quarterly periods ended March 31, 2025 and June 30, 2025, which are incorporated by reference in this Quarterly Report, for further information.

Current wording

We believe several important factors have impacted, and will continue to impact, our performance and results of operations. While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address. See Item 1A, “Risk Factors” in this Quarterly Report and Part I, Item 1A “Risk Factors” in our 2025 Form 10-K, which are incorporated by reference in this Quarterly Report, for further information.

Previous wording

We believe the number of resulted exome and genome tests in any period is important and useful to investors because it directly correlates with long-term patient relationships and the size of our genomic database. During the three months ended September 30, 2025, we resulted 25,702 exome and genome tests, which represented 43% of all test results, compared to the three months ended September 30, 2024, in which we resulted approximately 19,262 exome and genome tests, which represented 33% of all test results. During the nine months ended September 30, 2025, we resulted 69,510 exome and genome tests, which represented 41% of all test results, compared to the nine months ended September 30, 2024, in which we resulted approximately 53,871 exome and genome tests, which represented 31% of all test results.

Current wording

We believe the number of resulted exome and genome tests in any period is important and useful to our investors because it directly correlates with long-term patient relationships and the size of our genomic database. During the three months ended March 31, 2026, we resulted 27,488 exome and genome tests, which represented 50% of all test results, compared to the three months ended March 31, 2025, in which we resulted approximately 20,562 exome and genome tests, which represented 40% of all test results.

Previous wording

Our ability to increase the number of billable tests and our revenue therefrom will depend on our success in achieving reimbursement for our tests from third-party payors. Reimbursement by a payor may depend on several factors, including a payor’s determination that a test is appropriate, medically necessary, cost-effective, and has received prior authorization. The commercial success of our current and future products, if approved, will depend on the extent to which our customers receive coverage and adequate reimbursement from third-party payors. Since each payor makes its own decision as to whether to establish a policy or enter into a contract to provide coverage for our tests, as well as the amount it will reimburse us for a test, seeking these approvals is a time-consuming and costly process.

Current wording

Our ability to increase the number of billable tests and our revenue therefrom will depend on our success in achieving reimbursement for our tests from third-party payors. Reimbursement by a payor may depend on several factors, including a payor’s determination that a test is appropriate, medically necessary, cost-effective, and has received prior authorization. The commercial success of our current and future products, if approved, will depend on the extent to which our customers receive coverage and adequate reimbursement from third-party payors including commercial and Medicaid. Since each payor makes its own decision as to whether to establish a policy or enter into a contract to provide coverage for our tests, as well as the amount it will reimburse us for a test, seeking these approvals is a time-consuming and costly process.

Previous wording

We expect to continue to focus our resources on increasing the adoption of, and expanding coverage and reimbursement for, our current and any future tests we may develop or acquire. If we fail to expand and maintain broad adoption of, and coverage and reimbursement for, our tests, our ability to generate revenue and our future business prospects may be adversely affected.

Current wording

We expect to continue to focus our resources on increasing the adoption of, and expanding coverage and reimbursement for, exome and genome, and any future tests we may develop or acquire. If we fail to expand and maintain broad adoption of, and coverage and reimbursement for, our tests, our ability to generate revenue and our future business prospects may be adversely affected.

Previous wording

In addition, with the acquisition of Fabric Genomics, we generate revenues through software and interpretation services as part of the arrangements related to rare disease, hereditary risk, and cancer testing. Our customers include clinical laboratories, hospitals, and research institutions. Our ability to increase this revenue will depend on our ability to expand our customer base among hospitals and genomic centers, along with increased adoption of whole genome sequencing and AI-enabled interpretation in clinical workflows.

Current wording

In addition, with the acquisition of Fabric Genomics, we generate revenues through software and interpretation services related to rare disease, hereditary risk, and cancer testing. Our customers include clinical laboratories, hospitals, and research institutions. Our ability to increase this revenue will depend on our ability to expand our customer base among hospitals and genomic centers, along with increased adoption of whole genome sequencing and AI-enabled interpretation in clinical workflows.

Previous wording

The cost of services reflects the aggregate costs incurred in performing services, which include expenses for reagents and laboratory supplies, compensation expenses 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 is 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, compensation expenses 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

Research and development expenses represent costs incurred to develop our technology and future test offerings. These costs are principally associated with our efforts to develop the software we use to analyze data and process customer orders. These costs primarily consist of compensation expenses for employees performing research and development, innovation and product development activities, costs of reagents and laboratory supplies, costs of consultants and third-party services, equipment and related depreciation expenses, non-capitalizable software development costs, research funding to our research partners as part of research and development agreements and allocated facility and information technology costs associated with genomics medical research. Research and development costs are generally expensed as incurred and certain non-refundable advanced payments provided to our research partners are expensed as the related activities are performed.

Current wording

Research and development expenses represent costs incurred to develop our technology and future test offerings. These costs are principally associated with our efforts to develop the software we use to analyze data and process customer orders. These costs primarily consist of compensation expenses for employees performing research and development, innovation and product development activities, costs of reagents and laboratory supplies, costs of consultants and third-party services, equipment and related depreciation expenses, non-capitalizable software development costs, research funding to our research partners as part of research and development agreements and allocated facility and information technology costs associated with genomics medical research.

Previous wording

General and administrative expenses primarily consist of compensation expenses for employees in executive leadership, legal, finance and accounting, human resources, information technology, and other administrative functions. In addition, these expenses include office occupancy and information technology costs. General and administrative costs are expensed as incurred.

Current wording

Selling, general and administrative expenses primarily consist of compensation expenses for employees performing commercial sales, account management, marketing, genetic counseling, executive leadership, legal, finance and accounting, human resources, information technology, and other administrative functions. These expenses also include office occupancy, information technology, marketing-related costs, and other corporate infrastructure expenses. Selling, general and administrative costs are expensed as incurred.

Previous wording

We generally expect our general and administrative expenses to continue to increase in absolute dollars as we increase headcount and incur costs associated with operating as a public company, including expenses related to legal, accounting, and regulatory matters, and maintaining compliance with requirements of Nasdaq and of the SEC. We expect these expenses to decrease as a percentage of revenue in the long term as revenue increases, although the percentage may fluctuate from period to period due to fluctuations in our compensation-related charges.

Current wording

We generally expect our selling, general and administrative expenses to continue to increase in absolute dollars as we expand our commercial sales, marketing and counseling teams, increase marketing activities, grow our administrative infrastructure, and incur costs associated with operating as a public company, including legal, accounting, regulatory, and Nasdaq and SEC compliance expenses. However, we expect selling, general and administrative expenses to decrease as a percentage of revenue over the long term as revenue increases, subject to fluctuations from period to period due to the timing and magnitude of these expenses and compensation-related charges.

Previous wording

Diagnostic test revenue increased by $91.4 million, or 44%, to $299.4 million for the nine months ended September 30, 2025, from $208.0 million for the nine months ended September 30, 2024. The increase is attributable to increase of 66% in whole exome and genome sequencing revenues driven by a 29% increase in test volumes and a 29% increase in average reimbursement rates. This was partially offset by declines in other non-exome test revenues.

Current wording

Diagnostic test revenue increased by $15.5 million, or 18%, to $101.3 million for the three months ended March 31, 2026, from $85.8 million for the three months ended March 31, 2025. The increase is attributable to increase of 27% in whole exome and genome sequencing revenues driven by a 34% increase in test volumes. This was partially offset by a 5% decrease in average reimbursement rates and declines in other non-exome test revenues.

Previous wording

Research and development expense increased by $8.2 million, or 70%, to $19.8 million for the three months ended September 30, 2025, from $11.7 million for the three months ended September 30, 2024. The increase was driven by higher overall compensation costs of $7.4 million, which primarily reflects an investment to expand our product development team and the inclusion of research and development costs of Fabric Genomics.

Current wording

Research and development expense increased by $7.2 million, or 57%, to $19.8 million for the three months ended March 31, 2026, from $12.6 million for the three months ended March 31, 2025. The increase was primarily attributable to higher compensation-related costs of $6.2 million which reflects an investment to expand our product development team and the inclusion of research and development costs of Fabric Genomics. In addition, an increase in costs related to sponsored research programs of $0.6 million and an increase in software-related expenses of $0.4 million contributed to the overall increase in research and development expenses.

Previous wording

Selling and marketing expense increased by $11.6 million, or 23%, to $61.3 million for the nine months ended September 30, 2025, from $49.7 million for the nine months ended September 30, 2024. The increase was primarily attributable to higher compensation related costs of $9.5 million which reflects our investment to support growth in our commercial team, as well as the inclusion of selling and marketing costs of Fabric Genomics.

Current wording

Selling, general and administrative expense increased by $24.1 million, or 48%, to $74.6 million for the three months ended March 31, 2026, from $50.5 million for the three months ended March 31, 2025. The increase was primarily attributable to higher compensation-related costs of $16.6 million which reflects our investment to support growth in our commercial team, as well as the inclusion of selling, general and administrative costs of Fabric Genomics in the current period. The increase also reflected higher IT software and infrastructure costs of $1.9 million, third-party consulting costs of $2.0 million and increased amortization expense for acquired intangible assets established in connection with purchase accounting.

Previous wording

Adjusted gross profit is a non-GAAP financial measure that we define as revenue less cost of services, excluding depreciation and amortization expense, stock-based compensation expense and restructuring costs. We define adjusted gross margin as our adjusted gross profit divided by our revenue. We believe these non-GAAP financial measures are useful in evaluating our operating performance compared to that of other companies in our industry, as these metrics generally eliminate the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

Current wording

Adjusted gross profit is a non-GAAP financial measure that we define as revenue less cost of services, excluding depreciation and amortization expense and stock-based compensation expense. We define adjusted gross margin as our adjusted gross profit divided by our revenue. We believe these non-GAAP financial measures are useful in evaluating our operating performance compared to that of other companies in our industry, as these metrics generally eliminate the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

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 nine months ended September 30, 2025 and 2024:

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 months ended March 31, 2026 and 2025:

Previous wording

Adjusted net income (loss) is a non-GAAP financial measure that we define as net income (loss) adjusted for depreciation and amortization, stock-based compensation expenses, restructuring costs, change in fair value of financial liabilities, interest expense (net), income tax expense (benefit), transaction costs, legal reserves and tax refunds. 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.

Current wording

Adjusted net income (loss) is a non-GAAP financial measure that we define as net income (loss) adjusted for depreciation and amortization, stock-based compensation expenses, restructuring costs, change in fair value of financial liabilities, non-core lease costs, loss on extinguishment of debt, interest expense (net), income tax expense (benefit), transaction costs and costs related to a legal reserve. 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 income (loss) for the three and nine months ended September 30, 2025 and 2024:

Current wording

The following is a reconciliation of our net loss to adjusted net (loss) income for the three months ended March 31, 2026 and 2025:

Previous wording

(1)For the three and nine months ended September 30, 2025, represents interest expense, net, income tax expense, net, transaction costs associated with the Merger Agreement and a sales-and-use tax refund. For the three and nine months ended September 30, 2024, represents interest expense, net, income tax benefit, net, and reserves net of insurance for a certain litigation matter.

Current wording

(2)For the three months ended March 31, 2026, represents interest expense, net, income tax expense, net, and costs related to a certain litigation matter. For the three months ended March 31, 2025, represents interest expense, net, income tax expense, net, and transaction costs associated with the Merger Agreement.

Previous wording

As of September 30, 2025, our existing cash and cash equivalents and available-for-sale marketable securities were $155.1 million.

Current wording

As of March 31, 2026, our existing cash and cash equivalents and available-for-sale marketable securities were $170.7 million.

Previous 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 claims related to coverage and billing matters allegedly resulting in overpayments by the payor to Legacy Sema4. As of September 30, 2025, remaining payments due to the payor were $12.0 million, with $10.0 million due prior to December 31, 2025. For more information regarding this matter, see Note 3, “Revenue Recognition” to our consolidated financial statements included in our 2024 Form 10-K and Note 4, “Revenue Recognition,” to our condensed consolidated financial statements included within this Quarterly Report, respectively.

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 claims related to coverage and billing matters allegedly resulting in overpayments by the payor to Legacy Sema4. As of March 31, 2026, remaining payments due to the payor were $2.0 million. For more information regarding this matter, see Note 4, “Revenue Recognition” to our consolidated financial statements included in our 2025 Form 10-K and Note 3, “Revenue Recognition,” to our condensed consolidated financial statements included within this Quarterly Report, respectively.

Previous wording

Our critical accounting policies and estimates are described in Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included in the 2024 Form 10-K. Except as disclosed in Note 2, “Summary of Significant

Current wording

Our critical accounting policies and estimates are described in Note 2, “Summary of Significant Accounting Policies” to our condensed consolidated financial statements, and Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included in the 2025 Form 10-K. Other than disclosed in Note 2, there have been no material changes to our critical accounting policies and estimates in the current period.

Previous wording

Net cash used in investing activities during the nine months ended September 30, 2025 was $50.4 million, which included $33.2 million for the acquisition of Fabric Genomics, purchases of marketable securities of $36.5 million and property and equipment of $14.7 million, partially offset by $34.0 million in proceeds from the maturities of marketable securities.

Current wording

Net cash used in investing activities during the three months ended March 31, 2026 was $17.3 million, which included purchases of marketable securities of $20.2 million and purchases of property and equipment and development of internal-use software of $6.5 million. This was partially offset by proceeds from maturities of marketable securities of $8.5 million.

Previous wording

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

Current wording

Net cash used in investing activities during the three months ended March 31, 2025 was $9.4 million, which included purchases of marketable securities of $17.2 million and property and equipment of $6.1 million, partially offset by $13.9 million in proceeds from the maturities of marketable securities.

Previous wording

Net cash provided by financing activities during the nine months ended September 30, 2025 was $24.8 million, which primarily reflected proceeds from our prior at-the-market (“prior ATM offering”) of $25.6 million.

Current wording

Net cash provided by financing activities during the three months ended March 31, 2025 was $13.7 million, primarily driven by the $13.9 million net proceeds from our prior ATM offering, net of issuance costs.