Stamford, Conn. — GeneDx Holdings Corp. (Nasdaq: WGS) (“GeneDx” or the “Company”), a leader in delivering improved health outcomes through genomic and clinical insights, reported its financial results for the fourth quarter and full year ended December 31, 2022.
“Entering 2023 with a new corporate strategy and a focus on delivering profitable growth, our team is uniquely positioned to enable precision medicine by combining the power of scalable genomic sequence analysis with data from our Centrellis® platform,” said Katherine Stueland, Chief Executive Officer of GeneDx. “We have a significant opportunity to grow testing in pediatric rare disease, expand into the adult and newborn screening markets, and build our data information business. With our strong balance sheet following the successful closing of our recent public offering, we are fully funded through our expected profitability in 2025.”
Recent Business Highlights
- Announced name change to GeneDx Holdings Corp. and began trading under new ticker (Nasdaq: WGS) in January 2023
- Announced the closing of an underwritten public offering and concurrent registered direct offering for expected total gross proceeds of approximately $150 million in January 2023, including proceeds from the pending issuance of the additional shares in the direct offering
- Announced published research underscoring the role of genetic insights demonstrating how the study of rare disease can improve understanding of the biology of common disorders and can aid in the drug discovery and development process
- Announced presentations at the upcoming 2023 American College of Medical Genetics and Genomics (ACMG) Annual Clinical Genetics Meeting
Full Year 2022 Business Highlights
- Completed acquisition of GeneDx, LLC (“Legacy GeneDx”) and corporate restructuring to focus on high growth and profitability by combining scalable exome and whole genome interpretation business with Centrellis® health insights platform
- Established new management team led by Katherine Stueland as Chief Executive Officer
- Announced partnership in GUARDIAN genomic newborn screening study, the largest of its kind in North America, to improve population health by identifying more than 250 preventable and treatable conditions
- Collaborated in research that demonstrated that the use of exome or genome sequencing results in a significantly lower rate of variants of uncertain significance (VUS) compared to panel-based testing, with 30% fewer inconclusive results; research presented at the 2022 American Society of Human Genetics (ASHG) Annual Meeting
- Presented results from Phase 1 of SeqFirst Study at the 2022 ASHG Annual Meeting, demonstrating broad utility of rapid whole genome sequencing for critically ill newborns
- Presented research on autism spectrum disorders (ASD) at the Child Neurology Society (CNS) 2022 annual meeting, underscoring the positive outcomes of exome analysis for individuals with ASD
- Presented results of study on mitochondrial diseases in newborns, supporting the addition of mitochondrial DNA testing to rapid exome sequencing to lead to earlier diagnosis and potential changes in clinical management
“During the fourth quarter, we saw strong momentum across the pro forma continuing operations of GeneDx, particularly in whole exome sequencing, with total volume and whole exome volume increasing by 25.8% and 18.8% year-over-year, respectively. Throughout 2022, the Company delivered strong growth, and expanded pro forma adjusted gross margins to 41% for the fourth quarter of 2022. We believe our strategy to target higher value areas of the genomics market is working, and in 2023 we intend to continue to execute on our plans to improve our operational efficiency and reduce our ca
sh burn,” said Kevin Feeley, Chief Financial Officer of GeneDx.
In the discussion that follows, “Legacy Sema4” refers to the businesses of the Company excluding the Legacy GeneDx business, and the “now discontinued Legacy Sema4 diagnostic testing business” refers to reproductive and women’s health testing, which we exited during the first quarter of 2023, somatic tumor testing, which we exited in the fourth quarter of 2022, and COVID-19 testing, which we discontinued in the first quarter of 2022.
Sema4 and GeneDx Combined Company Fourth Quarter and Full Year Financial Results Including Now Discontinued Legacy Sema4 Diagnostic Testing Business1
Combined Company results reported today for the fourth quarter of 2022 include the combination of continuing operations and the now discontinued Legacy Sema4 diagnostic testing business, and total Company results for the full year 2022 include Legacy GeneDx and its revenues and costs only for the partial year period from the closing of the acquisition of Legacy GeneDx. Accordingly, combined Company results for 2021 do not include revenues or costs from Legacy GeneDx.
Combined Company revenue for the fourth quarter of 2022 was $61.4 million, compared to $57.8 million in the fourth quarter of 2021, representing an increase of 6.2%. Combined Company revenue for the full year of 2022 was $234.7 million, compared to $212.2 million in 2021, representing an increase of 10%.
Total Company gross margin for the fourth quarter of 2022 was (27)%, with an adjusted gross margin of 7%2 in the quarter. Total Company gross margin for the full year of 2022 was (11)%. Adjusted gross margin for the full year of 2022 was 5%2.
Total Company net operating loss for the fourth quarter of 2022 was ($324.8) million. Total Company adjusted net operating loss for the fourth quarter of 2022 was ($72.7) million2. Total Company net operating loss for the full year of 2022 was ($667.6) million. Total Company adjusted net operating loss for the full year of 2022 was ($326.0) million2.Total cash and cash equivalents and restricted cash were $138.3 million as of December 31, 2022.
GeneDx Pro Forma Fourth Quarter and Full Year Financial Results from Continuing Operations1
Pro forma results from continuing operations for GeneDx reported today include the combination of Legacy GeneDx and only the data and information business of Legacy Sema4, and assume Legacy GeneDx was owned for the entirety of 2022 and 2021. Continuing operations exclude revenues and costs from the now discontinued Legacy Sema4 diagnostics testing business.
Pro forma revenues from continuing operations for the fourth quarter of 2022 was $45.8 million, compared to $34.7 million in the fourth quarter of 2021, representing an increase of 32%. Pro forma revenues from continuing operations for the full year of 2022 was $171.0 million, compared to $123.7 million in 2021, representing an increase of 38%.
Pro forma adjusted gross margin from continuing operations in the fourth quarter of 2022 was 41%. Pro forma adjusted gross margin for the full year of 2022 was 39%2.
Full Year 2023 Guidance
GeneDx is reiterating its previously issued full year 2023 guidance.
The continuing operations of GeneDx, excluding revenues and direct costs from the now discontinued Legacy Sema4 diagnostic testing business, are expected to:
- Generate revenues between $205 to $220 million for full year 2023;
- Expand gross margin profile in 2023 and beyond;
- Use $95 to$110 million of net cash in 2023 for continuing operations. Inclusive of servicing obligations of the exited business activities, the Company’s cash burn in 2023 is expected to be in the range of $130 to $145 million; and
- Turn profitable in 2025.
1 The pro forma unadjusted and adjusted results from continuing operations for 2022 and the comparable results for 2021 are presented on a pro forma basis assuming Legacy GeneDx and the Company were combined for the entirety of 2021 and 2022 and exclude the revenues and costs from the now discontinued Legacy Sema4 diagnostic testing business, and include the combination of the Legacy GeneDx diagnostic business revenues and costs with the data and information revenues and associated costs derived from the Legacy Sema4 business. Actual total Company results include the results of the Legacy GeneDx business only from the date of the Company’s acquisition of Legacy GeneDx on April 29, 2022, the purchase accounting associated with the acquisition of Legacy GeneDx, and also include the financial impacts of exited Legacy Sema4 business activities for the full year.
2 Adjusted gross margin and adjusted net loss are non-GAAP financial measures. See appendix for a reconciliation of GAAP to Non-GAAP figures presented.
Webcast and Conference Call Details
GeneDx will host a conference call today, March 14, 2023, at 4:30 p.m. Eastern Time. Investors interested in listening to the conference call are required to register online. A live and archived webcast of the event will be available on the “Events” section of the GeneDx investor relations website at https://ir.genedx.com/.