UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

March 31, 2024

Commission File No.file number 001-39482

Blue Logo 600x208.jpg
GeneDx Holdings Corp.

CM LIFE SCIENCES, INC.

(Exact name of registrant as specified in its charter)


Delaware85-1966622
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
333 Ludlow Street, North Tower; 6th Floor
Stamford, Connecticut 06902
(Address of Principal Executive Offices) (Zip Code)

c/o Corvex Management LP

667 Madison Avenue

New York, New York 10065

(Address of Principal Executive Offices, including zip code)

(212) 474-6745

(Registrant’s

Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

code: (888) 729-1206

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolTrading
Symbol(s)
Name of each exchange
on which registered
Units, each consisting of one share of Class A common stock and one-third of one redeemable warrantCMLFUThe Nasdaq Stock Market LLC
Class A common stock, par value $0.0001 per shareWGSCMLFThe Nasdaq Stock Market LLC
Redeemable warrants, each whole warrant exercisable forWarrants to purchase one share of Class A common stock, each at an exercise price of $11.50$379.50 per shareWGSWWCMLFWThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No

o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No

o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated fileroAccelerated filerx
Non-accelerated fileroSmaller reporting companyx
Emerging growth companyx

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):. Yes o No

Asx

The registrant had 26,141,701 shares of November 16, 2020, 44,275,000 Class A ordinary shares, $0.0001common stock, par value and 11,068,750 Class B ordinary shares, $0.0001, par value, were issued and outstanding.

outstanding at April 22, 2024.

CM LIFE SCIENCES, INC.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS




Table of Contents
Page
Cautionary Note Regarding Forward Looking Statements
PART I – FINANCIAL INFORMATION
1
Unaudited Condensed Balance Sheet as of September 30, 20201
Unaudited Condensed Statement of Operations for the Period from July 10, 2020 (Inception) Through September 30, 20202
Unaudited Condensed Statement of Changes in Stockholders’ Equity for the Period from July 10, 2020 (Inception) Through September 30, 20203
Unaudited Condensed Statement of Cash Flows for the Period from July 10, 2020 (Inception) Through September 30, 20204
Notes to Condensed Financial Statements5
14
16
16
17
17
17
17
17
17
18
19

i


PART I – FINANCIAL INFORMATION

ITEM 1.CONDENSED FINANCIAL STATEMENTS

CM LIFE SCIENCES, INC.

CONDENSED BALANCE SHEET

SEPTEMBER 30, 2020

(Unaudited)

ASSETS
Current assets
Cash$1,139,979
Prepaid expenses325,442
Total Current Assets1,465,421
Cash and marketable securities held in trust account442,752,790
Total Assets$444,218,211
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accrued expenses$19,347
Accrued offering costs25,000
Total Current Liabilities44,347
Deferred underwriting fee payable15,496,250
Total Liabilities15,540,597
Commitments and contingencies
Class A common stock subject to possible redemption, 42,367,761 shares at $10.00 per share423,677,610
Stockholders’ Equity
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 1,907,239 shares issued and outstanding (excluding 42,367,761 shares subject to possible redemption)191
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 11,068,750 shares issued and outstanding1,107
Additional paid-in capital5,055,629
Accumulated deficit(56,923)
Total Stockholders’ Equity5,000,004
Total Liabilities and Stockholders’ Equity$444,218,211

The accompanying notes are an integral part



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this report, including matters discussed under the caption “Management’s Discussion and Analysis of the unaudited condensed financial statements.


CM LIFE SCIENCES, INC.

CONDENSED STATEMENT OF OPERATIONS

FOR THE PERIOD FROM JULY 10, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020

(Unaudited)

General and administrative expenses $59,713 
Loss from operations  (59,713)
     
Other income:    
Interest earned on marketable securities held in trust account  2,790 
     
Loss before provision for income taxes  (56,923)
Provision for income taxes   
Net loss $(56,923)
     
Weighted average shares outstanding of Class A redeemable common stock  44,275,000 
Basic and diluted income per share, Class A redeemable common stock $ 
     
Weighted average shares outstanding of Class B non-redeemable common stock  11,068,750 
Basic and diluted net loss per share, Class B non-redeemable common stock $(0.01)

The accompanying notes are an integral partFinancial Condition and Results of the unaudited condensed financial statements.


CM LIFE SCIENCES, INC.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE PERIOD FROM JULY 10, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020

(Unaudited)

  Class A
Common Stock
  Class B
Common Stock
  Additional
Paid-in
  Accumulated  Total
Stockholders’
 
  Shares  Amount  Shares  Amount  Capital  Deficit  Equity 
Balance – July 10, 2020 (Inception)    $     $  $  $  $ 
                             
Issuance of Class B common stock to Sponsor        11,068,750   1,107   23,893      25,000 
                             
Sale of 44,275,000 Units, net of underwriting discounts  44,275,000   4,427         417,850,110      417,854,537 
                             
Sale of 7,236,667 Private Placement Warrants              10,855,000      10,885,000 
                             
Common stock subject to possible redemption  (42,367,761)  (4,236)        (423,673,374)     (423,677,610)
                             
Net loss                 (56,923)  (56,923)
                             
Balance – September 30, 2020  1,907,239  $191   11,068,750  $1,107  $5,055,629  $(56,923) $5,000,004 

The accompanying notes are an integral part of the unaudited condensed financial statements.


CM LIFE SCIENCES, INC.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE PERIOD JULY 10, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020

(Unaudited)

Cash Flows from Operating Activities:   
Net loss $(56,923)
Adjustments to reconcile net loss to net cash used in operating activities:    
Interest earned on marketable securities held in trust account  (2,790)
Changes in operating assets and liabilities:    
Prepaid expenses  (325,442)
Accrued expenses  19,347 
Net cash used in operating activities  (365,808)
     
Cash Flows from Investing Activities:    
Investment of cash into Trust Account  (442,750,000)
Net cash used in investing activities  (442,750,000)
     
Cash Flows from Financing Activities:    
Proceeds from sale of Units, net of underwriting discounts paid  433,895,000 
Proceeds from sale of Private Placement Warrants  10,855,000 
Proceeds from promissory note – related party  112,837 
Repayment of promissory note – related party  (165,081)
Payment of offering costs  (441,969)
Net cash provided by financing activities  444,255,787 
     
Net Change in Cash  1,139,979 
Cash – Beginning of period   
Cash – End of period $1,139,979 
     
Non-Cash financing activities:    
Initial classification of common stock subject to possible redemption $423,731,850 
Change in value of common stock subject to possible redemption $(54,240)
Deferred underwriting fee payable $15,496,250 
Offering costs paid directly by Sponsor in consideration for the issuance of Class B common stock $25,000 
Deferred offering costs included in accrued offering costs $

25,000

 
Payment of offering costs through promissory note — related party $52,244 

The accompanying notes are an integral part of the unaudited condensed financial statements.


CM LIFE SCIENCES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(Unaudited)

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

CM Life Sciences, Inc. (the “Company”) was incorporated in Delaware on July 10, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is not limited to a particular industry or sectorOperations,” may constitute forward-looking statements for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of September 30, 2020, the Company had not commenced any operations. All activity for the period from July 10, 2020 (inception) through September 30, 2020 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and, subsequent to the Initial Pubic Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The registration statement for the Company’s Initial Public Offering was declared effective on September 1, 2020. On September 4, 2020 the Company consummated the Initial Public Offering of 44,275,000 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriter of its over-allotment option in the amount of 5,775,000 Units, at $10.00 per Unit, generating gross proceeds of $442,750,000 which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 7,236,667 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to CMLS Holdings LLC (the “Sponsor”) and certain of the Company’s independent directors, generating gross proceeds of $10,855,000, which is described in Note 4.

Transaction costs amounted to $24,895,463, consisting of $8,855,000 in cash underwriting fees, $15,496,250 of deferred underwriting fees and $544,213 of other offering costs. In addition, as of September 30, 2020, cash of $1,139,979 was held outside of the Trust Account (as defined below) and is available for the payment of offering costs and for working capital purposes.

Following the closing of the Initial Public Offering on September 4, 2020, an amount of $442,750,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States and will be invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment CompanySecurities Act of 1940,1933, as amended, (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act.

The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and any other holders of the Company’s common stock prior to the Initial Public Offering (the “initial stockholders”) have agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.


CM LIFE SCIENCES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(Unaudited)

Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. The words “anticipate,” “believe,” “estimate,” “may,” “expect” and similar expressions are generally intended to identify forward-looking statements. Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, those discussed under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as other factors which may be identified from time to time in our other filings with the Securities and Exchange Commission (the “SEC”), will be restricted from redeeming its shares with respector in the documents where such forward-looking statements appear. All written or oral forward-looking statements attributable to more than an aggregate of 20%us are expressly qualified in their entirety by these cautionary statements. Such forward-looking statements include, but are not limited to, statements about:

our estimates of the Public Shares, withoutsufficiency of our existing capital resources combined with future anticipated cash flows and future capital requirements to finance our operating requirements, and capital expenditures;
our expectations for generating revenue, incurring losses, and becoming profitable on a sustained basis;
unforeseen circumstances or other disruptions to normal business operations arising from general economic and political conditions such as recessions, rising inflation and interest rates, supply chain interruptions and manufacturing constraints, public health emergencies such as but not limited to the prior consentCOVID-19 pandemic, natural disasters, acts of terrorism or other uncontrollable events;
our expectations regarding our ability to scale to profitability, our plans to pursue a new strategic direction, and the cost savings and impact on our gross margins from exiting our reproductive and women’s business and our somatic tumor testing business;
our ability to successfully implement our business strategy;
our expectations or ability to enter into service, collaboration and other partnership agreements;
our expectations or ability to build our own commercial infrastructure to scale market and sell our products;
actions or authorizations by the U.S. Food and Drug Administration (“FDA”), or other regulatory authorities;
risks related to governmental regulation and other legal obligations, including privacy, data protection, information security, consumer protection, and anti-corruption and anti-bribery;
our ability to obtain and maintain intellectual property protection for our product candidates;
our ability to compete against existing and emerging technologies;
third-party payor reimbursement and coverage decisions, negotiations and settlements;
our reliance on third-party service providers for our data programs;
our accounting estimates and judgments, including our expectations regarding the adequacy of our reserves for third party payor claims and our conclusions regarding the appropriateness of the Company.

The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other material provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

If the Company has not completed a Business Combination by September 4, 2022 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed to waive its rights to its deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per sharecarrying value of the assets remaining available for distribution will be less than the Initial Public Offeringintangible assets;

our stock price per Unit ($10.00).

In orderand its volatility; and

our ability to protect the amounts heldattract and retain key personnel.
The forward-looking statements contained in the Trust Account, the Sponsor has agreed to be liable to the Company ifthis report reflect our views and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Accountassumptions only as of the date that this report is signed. Except as required by law, we assume no responsibility for updating any forward-looking statements.
We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the liquidationsafe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
3


Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements
GeneDx Holdings Corp.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
March 31, 2024 (Unaudited)December 31, 2023
Assets:
Current assets:
Cash and cash equivalents$83,673 $99,681 
Marketable securities29,239 30,467 
Accounts receivable28,151 32,371 
Due from related parties772 445 
Inventory, net11,615 8,777 
Prepaid expenses and other current assets9,974 10,598 
Total current assets163,424 182,339 
Operating lease right-of-use assets26,304 26,900 
Property and equipment, net31,301 32,479 
Intangible assets, net169,119 172,625 
Other assets4,380 4,413 
Total assets$394,528 $418,756 
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable and accrued expenses$32,410 $37,456 
Due to related parties1,041 1,379 
Short-term lease liabilities4,043 3,647 
Other current liabilities13,240 16,336 
Total current liabilities50,734 58,818 
Long-term debt, net of current portion52,293 52,688 
Long-term lease liabilities62,030 62,938 
Other liabilities20,836 14,735 
Deferred taxes1,418 1,560 
Total liabilities187,311 190,739 
Commitments and contingencies (Note 9)
Stockholders’ Equity:
Preferred Stock, $0.0001 par value: 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2024 and December 31, 2023— — 
Class A common stock, $0.0001 par value: 1,000,000,000 shares authorized, 26,122,348 and 25,978,863 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
Additional paid-in capital1,527,351 1,527,778 
Accumulated deficit(1,320,427)(1,300,188)
Accumulated other comprehensive income291 425 
Total stockholders’ equity207,217 228,017 
Total liabilities and stockholders’ equity$394,528 $418,756 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


GeneDx Holdings Corp.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except share and per share amounts)
Three months ended March 31,
20242023
Revenue
Diagnostic test revenue$61,104 $41,850 
Other revenue1,318 1,289 
Total revenue62,422 43,139 
Cost of services    25,011 27,903 
Gross profit37,411 15,236 
Research and development11,567 14,592 
Selling and marketing16,085 13,452 
General and administrative22,445 43,689 
Impairment loss— 2,120 
Other operating expenses, net974 1,747 
Loss from operations(13,660)(60,364)
Non-operating income (expenses), net
Change in fair value of warrants and earn-out contingent liabilities(6,101)(3,453)
Interest expense, net(597)(35)
Other income, net37 2,716 
Total non-operating loss, net(6,661)(772)
Loss before income taxes(20,321)(61,136)
Income tax benefit82 147 
Net loss$(20,239)$(60,989)
Other comprehensive loss, net of tax
Unrealized loss related to available for sale securities, net(134)— 
Comprehensive loss$(20,373)$(60,989)
Weighted average shares outstanding of Class A common stock26,062,170 20,061,945 
Basic and diluted net loss per share, Class A common stock$(0.78)$(3.04)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


GeneDx Holdings Corp.
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
(in thousands, except share amounts)

Three months ended March 31, 2024
Class A Common StockAdditional paid-in capitalAccumulated
deficit
Accumulated other comprehensive incomeTotal stockholders’ equity
SharesPar value
Balance at December 31, 202325,978,863$2 $1,527,778 $(1,300,188)$425 $228,017 
Net loss— — — (20,239)— (20,239)
Common stock issued pursuant to stock option exercises4,877 — 24 — — 24 
Stock-based compensation expense— — (451)— — (451)
Other comprehensive loss, net of tax— — — — (134)(134)
Vested restricted stock units converted to common stock138,608 — — — — — 
Balance at March 31, 202426,122,348$2 $1,527,351 $(1,320,427)$291 $207,217 
Three months ended March 31, 2023
Class A Common StockAdditional paid-in capitalAccumulated
deficit
Accumulated other comprehensive incomeTotal stockholders’ equity
SharesPar value
Balance at December 31, 202211,773,065$1 $1,378,125 $(1,124,421)$ 253,705 
Net loss— — — (60,989)— (60,989)
Common stock issued pursuant to stock option exercises50,444 — 266 — — 266 
Stock-based compensation expense— — 48 — — 48 
Vested restricted stock units converted to common stock54,175 — — — — — 
Issuance of Class A common shares in underwritten public offering, net of issuance costs12,315,752 135,438 — — 135,439 
Balance at March 31, 202324,193,436$2 $1,513,877 $(1,185,410)$ $328,469 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6


GeneDx Holdings Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Three months ended March 31,
20242023
Operating activities
Net loss$(20,239)$(60,989)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense5,248 8,636 
Stock-based compensation expense(451)48 
Change in fair value of warrants and contingent liabilities6,101 3,453 
Deferred tax benefit(82)(147)
Provision for excess and obsolete inventory40 — 
Change in third party payor reserves(193)(1,070)
Gain on debt forgiveness— (2,750)
Impairment loss— 2,120 
Other846 274 
Change in operating assets and liabilities:
Accounts receivable4,220 9,723 
Inventory(2,877)1,331 
Accounts payable and accrued expenses(4,733)(13,400)
Other assets and liabilities(4,293)(2,789)
Net cash used in operating activities(16,413)(55,560)
Investing activities
Purchases of property and equipment(443)— 
Purchases of marketable securities(5,167)— 
Proceeds from sales of marketable securities598 — 
Proceeds from maturities of marketable securities5,855 — 
Development of internal-use software assets— (462)
Net cash provided by (used in) investing activities843 (462)
Financing activities
Proceeds from offerings, net of issuance costs— 135,439 
Exercise of stock options24 266 
Long-term debt principal payments— (2,000)
Finance lease payoff and principal payments(462)(1,047)
Net cash (used in) provided by financing activities(438)132,658 
Net (decrease) increase in cash, cash equivalents and restricted cash(16,008)76,636 
Cash, cash equivalents and restricted cash, at beginning of period100,668 138,303 
Cash, cash equivalents and restricted cash, at end of period$84,660 $214,939 
Supplemental disclosures of cash flow information
Cash paid for interest$2,019 $583 
Cash paid for taxes$300 $104 
Purchases of property and equipment in accounts payable and accrued expenses$36 $1,073 
Software development costs in accounts payable and accrued expenses$— $157 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


GeneDx Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Description of Business
GeneDx Holdings Corp., through its subsidiary GeneDx, LLC, provides genomics-related diagnostic and information services and pursues genomics medical research. GeneDx utilizes an integrated portfolio of laboratory processes, software tools and informatics capabilities to process DNA-containing samples, analyzes information about patient-specific genetic variation and generates test reports for clinicians and their patients. GeneDx provides a variety of genetic diagnostic tests, screening solutions, and information with a focus on pediatrics, rare diseases for children and adults, and hereditary cancer screening. GeneDx Holdings’ operating subsidiaries primarily serve healthcare professionals who work with their patients and bills third-party payors across the United States.
On January 31, 2023, the Company raised approximately $150.0 million in gross proceeds and announced the closing of an underwritten public offering of 9,962,316 shares of its Class A common stock and a concurrent registered direct offering of 2,353,436 shares of its Class A common stock. The net offering proceeds received after deducting underwriters' discounts and commissions payable by the Company were approximately $135.4 million. On April 17, 2023, following the Company’s receipt of stockholder approval for the issuance, the Company issued the remaining 676,868 shares of the Trust Account, if less than $10.00 per public Share dueCompany’s Class A common stock in its previously announced registered direct offering for gross proceeds of approximately $7.6 million.
Unless otherwise stated herein or unless the context otherwise requires, references in these notes to reductions in:
“GeneDx Holdings” refers to GeneDx Holdings Corp., a Delaware corporation (f/k/a Sema4 Holdings Corp. (“Sema4 Holdings”));
“Legacy GeneDx” refers to GeneDx, LLC, a Delaware limited liability company (formerly, GeneDx, Inc., a New Jersey corporation), which we acquired on April 29, 2022 (the “Acquisition”);
“Legacy Sema4” refers to Mount Sinai Genomics, Inc. d/b/a as Sema4, a Delaware corporation, which consummated the valuebusiness combination with CM Life Sciences, Inc. (“CMLS”) on July 22, 2021 (the “Business Combination”); and
“we,” “us” and “our,” the “Company” and “GeneDx” refer, as the context requires, to:
Legacy Sema4 prior to the Business Combination, and GeneDx Holdings and its consolidated subsidiaries following the consummation of the trust assets, less taxes payable, provided that such liability will not applyBusiness Combination; and
Legacy GeneDx prior to any claims by a third party or prospective target business who executed a waiver of anythe Acquisition, and all rights to monies held inGeneDx Holdings and its consolidated subsidiaries following the Trust Account nor will it apply to any claims under the Company’s indemnityconsummation of the underwriterAcquisition.
2. Summary of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Significant Accounting Policies

CM LIFE SCIENCES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(Unaudited)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordanceconformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the accounting disclosure rules and regulations of the SEC forregarding interim financial reporting. Accordingly, theythe condensed consolidated financial statements do not include all of the information and footnotes necessary for a complete presentationrequired by U.S. GAAP. These condensed financial statements consolidate the operations and accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Unless otherwise noted, all tabular dollars are in thousands, except per share amounts. Certain reclassifications have been made to the prior year condensed consolidated financial position, results of operations, or cash flows. statements in order to conform to the current year’s presentation.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements includereflect all adjustments, consisting of a normal recurring nature, which areadjustments considered necessary for a fair presentationstatement of the financial position operatingand the results andof operations of the Company for the interim periods presented. Interim results are not necessarily indicative of the results of operations or cash flows for the periods presented.

a full year or any subsequent interim period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s final prospectus for its Initial Public Offering as filed with the SEC on September 3, 2020, as well asconsolidated financial statements and notes thereto included in the Company’s Current ReportsAnnual Report on Form 8-K, as filed with the SEC on September 4, 2020 and September 11, 2020. The interim results for the period from July 10, 2020 (inception) through September 30, 2020 are not necessarily indicative of the results to be expected10-K for the year endingended December 31, 2020 or for any future interim periods.

2023 (the “2023 Form 10-K”).

Emerging Growth Company

The Company is an “emerging growth company,”company” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)2012. In addition, the Company is a “smaller reporting company”, as defined in Item 10(f)(1) of the U.S. Securities and it may take advantage of certainExchange Commission’s Regulation S-K. As such, the Company is eligible for exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including but not limited to,reduced reporting, including the reporting of two fiscal years of
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financial statements, not being required to comply with the independent registered public accounting firmprovide an auditor attestation requirements of internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being requiredextended transition periods to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.for public business entities. The Company has elected to avail itself of this exemption and, therefore, will not be subject to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt thesame new or revised standard at the time privateaccounting standards as other public companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither anthat are not emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

companies.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilitiesthe related disclosures at the date of the condensed consolidated financial statements andas well as the reported amounts of revenues and expenses during the reporting period.

Makingperiods presented. The Company bases these estimates requires management to exercise significant judgment. It is at least reasonably possibleon current facts, historical and anticipated results, trends and various other assumptions that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could changeit believes are reasonable in the near term duecircumstances, including assumptions as to one or more future events. Accordingly,These estimates include, but are not limited to, the transaction price for certain contracts with customers, potential or actual claims for recoupment from third-party payors, the valuation of stock-based awards, the valuation of warrant liabilities, income taxes and intangible assets. Changes in estimates are recorded in the period in which they become known. Actual results could differ significantlymaterially from those estimates.

Cashestimates, judgments and Cash Equivalents

assumptions.

Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included in the 2023 Form 10-K. There have been no material changes to the Company’s critical accounting policies and estimates in the current period.
Concentration of Credit Risk and Other Risks and Uncertainties
The Company considers all short-term investments with an original maturityassesses both the self-pay patient and, if applicable, the third-party payor that reimburses the Company on the patient’s behalf when evaluating concentration of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2020.

Class A common stock subject to possible redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A Common stock subject to mandatory redemption is classified as a liability instrumentcredit risk. Significant patients and is measured at fair value. Conditionally redeemable common stock (including common stockpayors are those that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outsiderepresent more than 10% of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2020, Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.


CM LIFE SCIENCES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(Unaudited)

Offering Costs

Offering costs consist of underwriting, legal, accounting and other expenses incurred through the Initial Public Offering that are directly related to the Initial Public Offering. Offering costs amounting to $24,895,463 were charged to stockholders’ equity upon the completion of the Initial Public Offering.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of September 30, 2020, the Company had a deferred tax asset of approximately $12,000, which had a full valuation allowance recorded against it of approximately $12,000.

The Company’s currently taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative costs are generally considered start-up costs and are not currently deductible. During the period from July 10, 2020 (inception) through September 30, 2020, the Company recorded no income tax expense. The Company’s effective tax ratetotal revenues for the period or accounts receivable balance at each respective balance sheet date. The significant concentrations of accounts receivable as of March 31, 2024 and December 31, 2023 were primarily from July 10, 2020 (inception) through September 30, 2020large managed care insurance companies, institutional billed accounts, and data arrangements. There was one individual client that accounted for approximately 0%, which differs from the expected income tax rate due to the start-up costs (discussed above) which are not currently deductible.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement14% of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.accounts receivable as of March 31, 2024. The Company recognizes accrued interestdoes not require collateral as a means to mitigate customer credit risk.

For each significant payor, revenue as a percentage of total revenues and penalties related to unrecognized tax benefitsaccounts receivable as income tax expense. There were no unrecognized tax benefitsa percentage of total accounts receivable are as follows:
RevenueAccounts Receivable
Three months ended March 31,

March 31,

December 31,
2024202320242023
Payor A (1)
19%15%**
Payor B30%24%*10%
Payor C**14%*
* Less than 10%
(1)This payor group includes multiple individual plans and no amounts accruedthe Company calculates and presents the aggregated value from all plans, which is consistent with the Company’s portfolio approach used in accounting for interest and penalties as of September 30, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. diagnostic test revenue.
The Company is subject to a concentration of risk from a limited number of suppliers for certain reagents and laboratory supplies. One supplier accounted for approximately 8% and 14% of purchases for the three months ended March 31, 2024 and 2023, respectively. This risk is managed by maintaining a target quantity of surplus stock. Alternative suppliers are available for some or all of these reagents and supplies.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-09, Income Taxes – Improvements to Income Tax Disclosures (“ASU 2023-09”). The standard requires additional disclosures around disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income tax examinationstaxes paid. ASU 2023-09 will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.
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In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The standard requires enhanced segment reporting disclosures, including significant segment expenses and other segment items. Additionally, the standard requires public entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 will be effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. The guidance will be applied retrospectively to all periods presented in financial statements unless it is impractical to do so. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.
3. Revenue Recognition
Disaggregated Revenue
The following table summarizes the Company’s disaggregated revenue by major taxing authorities since inception.

Net Income (Loss) per Common Share

Net income (loss) per common share is computed by dividingpayor category:

Three months ended March 31,
20242023
GeneDxLegacy Sema4ConsolidatedGeneDxLegacy Sema4Consolidated
Diagnostic test revenue:
Patients with third-party insurance$42,878 $961 $43,839 $22,878 $2,451 $25,329 
Institutional customers16,674 — 16,674 16,060 — 16,060 
Self-pay patients591 — 591 466 (5)461 
Total diagnostic test revenue60,143 961 61,104 39,404 2,446 41,850 
Other revenue1,318 — 1,318 1,289 — 1,289 
Total$61,461 $961 $62,422 $40,693 $2,446 $43,139 
Reassessment of Variable Consideration
Subsequent changes to the estimate of the transaction price, determined on a portfolio basis when applicable, are generally recorded as adjustments to revenue in the period of the change. The Company updates estimated variable consideration quarterly.
For the three months ended March 31, 2024 and 2023, the total change in estimate resulted in a net incomeincrease to revenue of $5.7 million and $2.7 million, respectively, resulting from changes in the estimated transaction price due to contractual adjustments, obtaining updated information from payors and patients that was unknown at the time the performance obligation was met and potential and actual settlements with third party payors. The change in estimate also included an increase in revenue related to a partial release of a previously established payor reserve, as further disclosed in the “Certain Payor Matters” section below. The quarterly change in estimate did not result in material adjustments to the Company’s previously reported revenue or accounts receivable amounts.
Certain Payor Matters
As noted above, third-party payors, including government programs, may decide to deny payment or seek to recoup payments for tests performed by the weighted average numberCompany that they contend were improperly billed, not medically necessary or against their coverage determinations, or for which they believe they have otherwise overpaid, including as a result of common shares outstandingtheir own error. As a result, the Company may be required to refund payments already received, and the Company’s revenues may be subject to retroactive adjustment as a result of these factors among others, including without limitation, differing interpretations of billing and coding guidance, and changes by government agencies and payors in interpretations, requirements, policies and/or “conditions of participation” in various programs. The Company processes requests for recoupment from third-party payors in the ordinary course of its business, and it is likely that the Company will continue to do so in the future. If a third-party payor denies payment for testing or recoups money from the Company in a later period, reimbursement and the associated recognition of revenue for the period.Company’s testing services could decline.
From time to time, the Company may have an obligation to reimburse Medicare, Medicaid, and third-party payors for overpayments regardless of fault. Settlements with third-party payors for retroactive adjustments due to audits, reviews, or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing services. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor, the Company’s historical settlement activity (if any), and the Company’s assessment of the probability a significant reversal of cumulative revenue recognized will occur when the uncertainty is subsequently resolved. Estimated settlements are adjusted in future periods as such adjustments become known (that is, if new information becomes available), or as years are settled or are no longer subject to such audits, reviews, and investigations.
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On December 30, 2022, the Company entered into a settlement agreement with one of its third-party payors (the “Payor”) in order to settle the claims related to coverage and billing matters allegedly resulting in the overpayments by the Payor to Legacy Sema4 (the “Disputed Claims”). Under the settlement agreement, $42.0 million is to be paid by the Company to the Payor in a series of payments each year through June 30, 2026. In consideration for these payments, the Payor provided releases of the Disputed Claims, effective March 31, 2023.
As a result of this matter, and in connection with a review of certain billing policies and procedures undertaken by management, the Company considered the need to establish reserves for potential recoupments of payments previously made by third-party payors. As of March 31, 2024 and December 31, 2023, $23.9 million and $27.0 million of liabilities were recorded in accounts payable and accrued expenses and other liabilities, respectively. The Company has not considered the effect of warrants solduses estimates, judgments, and assumptions to assess whether it is probable that a significant reversal in the Initial amount of cumulative revenue may occur in future periods, based upon information presently available. These estimates are subject to change. In addition, as discussed above, the Company has made certain adjustments to its estimated variable consideration as result of this matter and other potential settlements with payors.
Remaining Performance Obligations
Due to the long-term nature of collaboration service agreements, the Company’s obligations pursuant to such agreements represents partially unsatisfied performance obligations at March 31, 2024. The revenues under these existing long-term service agreements are estimated to be approximately $2.6 million. The Company expects to recognize the majority of this revenue over the next twelve months.
Costs to Fulfill Contracts
Costs associated with fulfilling the Company’s performance obligations pursuant to its collaboration service agreements include costs for services that are subcontracted to Icahn School of Medicine at Mount Sinai (“ISMMS”). Amounts are generally prepaid and then expensed in line with the pattern of revenue recognition. Prepayment of amounts prior to the costs being incurred are recognized on the condensed consolidated balance sheets as current or non-current assets based upon forecasted performance.
As of March 31, 2024 and December 31, 2023, deferred costs to fulfill contracts were nominal. At each period, all outstanding deferred costs were recorded as other current assets.
The cost recognized was $0.4 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively and are recorded in the cost of services in the condensed consolidated statements of operations and comprehensive loss.
4. Fair Value Measurements
The following tables set forth the fair value of financial instruments that were measured at fair value on a recurring basis:
March 31, 2024
TotalLevel 1Level 2Level 3
Financial Assets:
Money market funds$75,334 $75,334 $— $— 
U.S. treasury bonds5,929 — 5,929 — 
Corporate and municipal bonds23,028 — 23,028 — 
Total financial assets$104,291 $75,334 $28,957 $— 
Financial Liabilities:
Public warrant liability$905 $905 $— $— 
Private warrant liability414 — 414 — 
Perceptive warrant liability7,517 — — 7,517 
Total financial liabilities$8,836 $905 $414 $7,517 
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December 31, 2023
TotalLevel 1Level 2Level 3
Financial Assets:
Money market funds$92,702 $92,702 $— $— 
U.S. treasury bonds6,128 — 6,128 — 
Corporate and municipal bonds24,098 — 24,098 — 
Total financial assets$122,928 $92,702 $30,226 $— 
Financial Liabilities:
Public warrant liability$149 $149 $— $— 
Private warrant liability71 — 71 — 
Perceptive warrant liability2,515 — — 2,515 
Total financial liabilities$2,735 $149 $71 $2,515 
There were no transfers between Level 1, Level 2 and Level 3 during the three months ended March 31, 2024 or 2023.
The Company’s marketable securities presented in the condensed consolidated balance sheet as of March 31, 2024 have maturity dates ranging from 2024 through 2027 and are classified as current assets as these investments are intended to be readily available to fund current operations. The differences between the fair value and amortized cost basis of each security are the unrealized gains or losses recorded in accumulated other comprehensive income. As of March 31, 2024, the amortized cost for maturities less than one year and greater than one year were $15.1 million and $13.5 million, respectively.
Public Offering and private placementPrivate Warrants
As of the consummation of the merger in July 2021 in connection with the Business Combination, there were 666,516 warrants to purchase 21,995,000 shares of Class A common stock in the calculationoutstanding, including 447,223 public warrants and 219,293 private placement warrants. As of diluted income per share, since the exercise of theMarch 31, 2024, there were 666,515 warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The Company’s condensed statement of operations includes a presentation of income per share for commonto purchase shares subject to possible redemption in a manner similar to the two-class method of income per share. Net income per common share, basic and diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account of $2,790 for the period from July 10, 2020 (inception) through September 30, 2020 (net of applicable franchise taxes of approximately $3,000 for the period from July 10, 2020 (inception) through September 30, 2020), by the weighted average number of Class A redeemable common stock for the period. Net loss per common share, basic and diluted, for Class B non-redeemable common stock is calculated by dividing the net income, less income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period. Class B non-redeemable common stock includes the Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheet, primarily due to their short-term nature.


CM LIFE SCIENCES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(Unaudited)

Recently Issued Accounting Standards

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial statements.

NOTE 3. INITIAL PUBLIC OFFERING

Pursuant to the Initial Public Offering, the Company sold 44,275,000 Units, which includes the full exercise by the underwriter of its over-allotment option in the amount of 5,775,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock outstanding, including 457,323 public warrants and one-third of one redeemable209,192 private placement warrants outstanding. Each warrant (“Public Warrant”). Each whole Public Warrantexpires 5 years after the Business Combination or earlier upon redemption or liquidation, and entitles the holder to purchase one share of Class A common stock at aan exercise price of $11.50$379.50 per share, subject to adjustment, (see Note 7).

NOTE 4. PRIVATE PLACEMENT

Simultaneously withat any time commencing on September 4, 2021.

The Company may redeem the closingoutstanding public warrants if the price per share of the Initial Public Offering, the SponsorClass A common stock equals or exceeds $594.00 as described below:
in whole and certain of the Company’s independent directors purchased an aggregate of 7,236,667 Private Placement Warrants, not in part;
at a price of $1.50$0.33 per Private Placement Warrant, for an aggregate purchase pricepublic warrant;
upon not less than 30 days’ prior written notice of $10,855,000. The Sponsor purchased 6,903,335 Private Placement Warrants, and each of Mr. Islam and Dr. Leproust (and/or one or more entities controlled by them) purchased 166,666 Private Placement Warrants. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7). Proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.

NOTE 5. RELATED PARTY TRANSACTIONS

Founder Shares

In July 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 10,062,500 shares of the Company’s Class B common stock (the “Founder Shares”). In August 2020, the Sponsor transferred 25,000 Founder Shares to each of Munib Islam, Emily Leproustwarrant holder; and Nat Turner, certain of the Company’s independent directors, at their original per-share purchase price, for an aggregate of 75,000 Founder Shares transferred. On September 1, 2020, the Company effected a 1:1.1 stock split of its Class B common stock, resulting in the Sponsor holding an aggregate of 10,993,750 Founder Shares

if, and there being an aggregate of 11,068,750 Founder Shares outstanding. All share and per-share amounts have been retroactively restated to reflect the stock split, The Founder Shares included an aggregate of up to 1,443,750 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment was not exercised in full or in part, so that the number of Founder Shares would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding shares of common stock after the Initial Public Offering. As a result of the underwriter’s election to fully exercise its over-allotment option, 1,443,750 Founder Shares are no longer subject to forfeiture.

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x)only if, the last reported saleclosing price of the Class A common stock equals or exceeds $12.00$594.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like)adjusted) for any 20 trading days within anya 30-trading day period commencing at least 150ending three trading days after a Business Combination, or (y)before sending the date on whichnotice of redemption to warrant holders.

The Company may redeem the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in alloutstanding public warrants if the price per share of the Public Stockholders having the right to exchange their shares of common stock for cash, securitiesequals or other property.

Promissory Note – Related Party

On July 16, 2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal amountexceeds $330.00 as described below:

in whole and not in part;
at $3.30 per warrant upon a minimum of $300,000. The Promissory Note was non-interest bearing and payable on the earlier30 days’ prior written notice of (i) December 31, 2020 or (ii) the consummation of the Initial Public Offering. The outstanding balance under the Promissory Note of $165,081 was repaid at the closing of the Initial Public Offering on September 4, 2020.

Related Party Loans

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into warrants at a price of $1.50 per warrant. Such warrants would be identical to the Private Placement Warrants. In the eventredemption provided that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of September 30, 2020, there were no amounts outstanding under the Working Capital Loans.


CM LIFE SCIENCES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(Unaudited)

NOTE 6. COMMITMENTS AND CONTINGENCIES

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Registration Rights

Pursuant to a registration rights agreement entered into on September 1, 2020, the holders of the Founder Shares, Private Placement Warrants and securities that may be issued upon conversion of Working Capital Loans and forward purchase shares are entitled to registration rights. The holders of these securities will be entitledable to make upexercise their warrants on a cashless basis prior to three demands, excluding short form demands,redemption and receive that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completionnumber of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The underwriter is entitled to a deferred fee of $0.35 per Unit, or $15,496,250 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

Forward Purchase Agreement

The Company entered into separate forward purchase agreements with affiliates of the Sponsor, Casdin Capital, LLC (“Casdin”) and Corvex Management LP (“Corvex”), in their capacities as investment advisors on behalf of one or more investment funds, clients or accounts managed by each of Casdin and Corvex, respectively (collectively, their “Clients”), pursuant to which, subject to the conditions described below, they will cause the Clients to purchase from the Company up to an aggregate amount of 15,000,000 shares of Class A common stock, or the forward purchase shares, for $10.00 per forward purchase share, or an aggregate amount of up to $150,000,000, in a private placement that will close concurrently with the closing of a Business Combination. The amount of forward purchase shares sold pursuant to the forward purchase agreements will be determined in the Company’s discretion based on the Company’s need for additional capital to consummate a Business Combination. Under each forward purchase agreement,redemption date and the Company is required to approach Casdin and Corvex if it proposes to raise additional capital by issuing any equity, or securities convertible into, exchangeable or exercisable for equity securities in connection with a Business Combination. The respective obligations of Casdin and Corvex to purchase forward purchase shares will, among other things, be conditioned on the Company completing a Business Combination with a company engaged in a business that is within the investment objectivesfair market value of the Clients purchasing forward purchase shares and on the Business Combination (including the target assets or business, and the terms of the Business Combination) being reasonably acceptable to such Clients as determined by Casdin or Corvex, as relevant, as investment advisors on behalf of such Clients. Each of Casdin and Corvex will have the right to transfer a portion of its purchase obligation under the forward purchase agreement to third parties, subject to compliance with applicable securities laws. To the extent that the Company obtains alternative financing to fund the initial Business Combination and the Clients participate in such financing, the aggregate commitment under the forward purchase agreement will be reduced by the amount of such alternative financing.

NOTE 7. STOCKHOLDERS’ EQUITY

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2020, there were no shares of preferred stock issued or outstanding.

Class A Common Stock — The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At September 30, 2020, there were 1,907,239 shares of Class A common stock issued or outstanding, excluding 42,367,761 shares of Class A common stock subject to possible redemption.

stock;

CM LIFE SCIENCES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(Unaudited)

Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At September 30, 2020, there were 11,068,750 shares of Class B common stock issued and outstanding. 

The shares of Class B common stock will automatically convert into Class A common stock concurrently with or immediately following the consummation of the Business Combination, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in connection with a Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination (including the forward purchase shares), excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.

Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Unitsif, and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months fromif, the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act,price of the Class A common stock issuable upon exerciseequals or exceeds $330.00 per share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of the Public Warrants. The Company will use its best effortsredemption to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statementholders; and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Class A common stock are, at the time of any exercise of a Public Warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their Public Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:

in whole and not in part;

at a price of $0.01 per Public Warrant;

upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

if, and only
if the closing price of the Class A common stock equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a 30-trading day period ending three trading days before sending the notice of redemption to warrant holders (the “Reference Value”)

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.


Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $10.00 — Once the warrants become exercisable, the Company may redeem the outstanding warrants:

in whole and not in part;

at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A common stock;

if, and only if, the closing price of the Class A common stock equals or exceeds $10.00 per share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and

if the closing price of the Class A common stock for any 20 trading days within a 30-trading day period ending three trading days before the Company sends notice of redemption to the warrant holders is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.

In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during thefor any 20 trading days within a 30-trading day period startingending three trading days before the Company sends notice of redemption to the warrant holders is less than $594.00 per share (as adjusted), the private placement warrants must also be concurrently called for redemption on the trading day aftersame terms as the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of theoutstanding public warrants, will be adjusted (to the nearest cent)as described above.

The private placement warrants were issued to be equal to 115% of the higher of the Market ValueCMLS Holdings, LLC, Mr. Munib Islam, Dr. Emily Leproust and the Newly Issued Price, the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market ValueMr. Nat Turner, and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.

The Private Placement Warrants are identical to the Public Warrantspublic warrants underlying the Unitsunits sold in the Initial Public Offering,initial public offering, except that (1) the Private Placement Warrantsprivate placement

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warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants willprivate placement warrants would not be transferable, assignable or saleablesalable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (2) the Private Placement Warrants will beprivate placement warrants are exercisable on a cashless basis, (3) the Private Placement Warrants will beprivate placement warrants are non-redeemable (except as described above, in “Redemptionupon a redemption of Warrants Whenwarrants when the Priceprice per Shareshare of Class A Common Stock Equalscommon stock equals or Exceeds $10.00”)exceeds $330.00) so long as they are held by the initial purchasers or their permitted transferees, and (4) the holders of the Private Placement Warrantsprivate placement warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants willprivate placement warrants have certain registration rights. If the Private Placement Warrantsprivate placement warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrantsprivate placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

NOTE 8. FAIR VALUE MEASUREMENTS

At September 30, 2020, assets heldpublic warrants.

For the three months ended March 31, 2024, a loss of $1.1 million was recorded within the change in fair value of warrants and earn-out contingent liabilities in the Trust Accountcondensed consolidated statements of operations and comprehensive loss. The change in fair value of the warrants for the three months ended March 31, 2023 was nominal.
Perceptive Warrant
On October 27, 2023 (the “Closing Date”), the Company entered into a Credit Agreement and Guaranty (the “Credit Agreement”) with Perceptive Credit Holdings IV, LP, as lender and administrative agent (“Perceptive”), which provides for a senior secured delayed draw term loan facility in an aggregate principal amount of up to $75.0 million (the “Perceptive Term Loan Facility”). As consideration for the Credit Agreement, the Company issued to Perceptive a warrant to purchase up to 1,200,000 shares (the “Perceptive Warrant”) of its Class A common stock. 800,000 warrant shares (the “Initial Warrant Shares”) vested and became exercisable on the Closing Date and 400,000 warrant shares (the “Additional Warrant Shares” and together with the Initial Warrant Shares, the “Warrant Shares”) will potentially vest and become exercisable on the Tranche B Borrowing Date, as defined in Note 8, “Long-Term Debt” included within this Quarterly Report.
The Perceptive Warrants are classified within Level 3 of the fair value hierarchy.The key assumptions utilized in determining the valuation of the Perceptive Warrants as of March 31, 2024 and December 31, 2023 were comprised of $442,752,790 in money market funds which are invested primarily in U.S. Treasury Securities. 

as follows:

March 31, 2024December 31, 2023
Stock price$9.13$2.75
Exercise price$3.18$3.18
Expected volatility110.0%110.0%
Expected term (in years)9.69.8
Risk-free interest rate4.20%3.88%
Dividend yield
The fair value of the Perceptive Warrants as of March 31, 2024 and December 31, 2023 was $7.5 million and $2.5 million, respectively. For the three months ended March 31, 2024, a loss of $5.0 million was recorded within the change in fair value of warrants and earn-out contingent liabilities in the condensed consolidated statements of operations and comprehensive loss based on re-measurement performed as of the period end date.
Contingent Consideration (Legacy GeneDx)
In connection with the Acquisition, up to $150.0 million of contingent payments was to be payable to OPKO Health, Inc. (“OPKO”), based upon achievement of 2022 and 2023 revenue milestones (the “Milestone Payments”) pursuant to the merger agreement (the “Acquisition Merger Agreement”). The first Milestone Payment was paid out in full in April 2023 and the second Milestone Payment was valued at zero as the milestone was not met during fiscal year 2023.
During the three months ended March 31, 2023, a loss of $3.4 million was recorded within the change in fair market value of warrant and earn-out contingent liabilities in the condensed consolidated statements of operations and comprehensive loss.
Connecticut Department of Economic and Community Development Funding Commitment
The Company’s financialloan from the Connecticut Department of Economic and Community Development (“DECD”) is classified within Level 2 of the fair value hierarchy. The loan was recorded at its carrying value of $6.3 million as of March 31, 2024 and December 31, 2023, with $0.8 million recorded in other current liabilities on the condensed consolidated balance sheets at March 31, 2024. The fair value of the loan as of March 31, 2024 was $5.1 million, which is estimated based on discounted cash flows using the yields of similar debt instruments of other companies with similar credit profiles.
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5. Property and Equipment, net
Property and equipment, net consisted of the following:
March 31, 2024December 31, 2023
Capitalized software$32,171 $32,171 
Laboratory equipment14,983 15,538 
Leasehold improvements14,614 14,614 
Computer equipment5,981 5,819 
Building under finance lease4,529 4,529 
Equipment under finance leases3,293 2,604 
Furniture, fixtures and other equipment550 550 
Construction in-progress2,910 3,106 
Total property and equipment79,031 78,931 
Less: accumulated depreciation and amortization(47,730)(46,452)
Property and equipment, net$31,301 $32,479 
For the three months ended March 31, 2024 and 2023, depreciation and amortization expense was $1.7 million and $5.1 million, respectively.
For the three months ended March 31, 2023, the Company recorded a $1.6 million non-cash impairment charge on the condensed consolidated statements of operations and comprehensive loss (of which $0.8 million was allocated to the right-of-use asset associated with the sublease), which was driven by indicators of impairment related to a sublease agreement.
Depreciation and amortization expense is included within the condensed consolidated statements of operations and comprehensive loss as follows:
Three months ended March 31,
20242023
Cost of services$816 $589 
Research and development196 852 
Selling and marketing— 
General and administrative730 3,687 
Total depreciation and amortization expenses$1,742 $5,130 
6. Intangible Assets
The following table reflects, as of March 31, 2024, the carrying values and remaining useful lives of acquired intangible assets:
Gross Carrying AmountAccumulated AmortizationNet Carrying ValueWeighted-Average Amortization Period (in years)
Tradenames and trademarks$50,000 $5,989 $44,011 14.1
Developed technology48,000 11,500 36,500 6.1
Customer relationships98,000 9,392 88,608 18.1
$196,000 $26,881 $169,119 
Amortization expense for tradenames and trademarks and developed technology of $2.3 million was recorded in general and administrative for the three months ended March 31, 2024 and 2023 within the condensed consolidated statements of operations and comprehensive loss. Amortization expense for customer relationships of $1.2 million was recorded in selling and marketing for the three months ended March 31, 2024 and 2023 within the condensed consolidated statements of operations and comprehensive loss.
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7. Related Party Transactions
Related Party Revenues
Total related party diagnostic testing revenues were $0.6 million and $0.8 million for the three months ended March 31, 2024 and 2023, respectively.
Related party revenues primarily include diagnostic testing revenues from a subsidiary of OPKO. The prices charged represent market rates. Revenue recorded from this contract was $0.4 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively.
Related Party Expenses
Total related party costs are included within cost of services and other operating expenses, net in the condensed consolidated statements of operations and comprehensive loss as follows:
Three months ended March 31,
20242023
Cost of services$1,452 $815 
Other operating expenses, net974 1,747 
Total related party costs$2,426 $2,562 
On June 1, 2017, the Company signed a contribution and funding agreement and other agreements with ISMMS, whereby ISMMS contributed certain assets and liabilities reflects management’s estimate of amounts thatrelated to the Company’s operations, provided certain services to the Company, would have receivedand also committed to funding the Company up to $55.0 million in future capital contributions in exchange for equity in the Company, of which $55.0 million was drawn as of December 31, 2019. Following the transaction, the Company commenced operations and began providing the services and performing research.
Expenses recognized pursuant to other service arrangements with ISMMS totaled $1.4 million and $1.9 million for the three months ended March 31, 2024 and 2023, respectively. These amounts are included in either cost of services or other operating expenses, net on the condensed consolidated statements of operations and comprehensive loss depending on the particular activity to which the costs relate. Payables due to ISMMS for the other service arrangements were $1.0 million at both March 31, 2024 and December 31, 2023. These amounts are included within due to related parties on the Company’s condensed consolidated balance sheets.
Additionally, the Company incurred $2.5 million and $0.5 million in purchases of diagnostic testing kits and materials and $1.0 million and $0.1 million was recorded in cost of services for the three months ended March 31, 2024 and 2023, respectively, from an affiliate of a member of the Board of Directors who has served in the role since July 2021. The prices paid represent market rates. Payables due were less than $0.1 million and $0.4 million as of March 31, 2024 and December 31, 2023, respectively.
Legacy GeneDx and OPKO entered into a Transition Services Agreement dated as of April 29, 2022 (the “OPKO TSA”) pursuant to which OPKO had agreed to provide services, at cost, subject to certain limited exceptions, in order to facilitate the transactions contemplated by the Acquisition Merger Agreement, including human resources, information technology support, and finance and accounting. Services in connection with the saleOPKO TSA were fully completed in October 2023. The Company recognized $0.8 million of expenses for the three months ended March 31, 2023 related to the agreement.
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8. Long-Term Debt
At March 31, 2024, long-term debt matures as follows:
2024 (remainder of year)$497 
20251,211 
20261,235 
20271,260 
202851,285 
Thereafter762 
Total debt56,250 
Less: current portion of long-term debt(798)
Less: long-term debt issuance costs(3,159)
Total long-term debt, net of current portion and debt issuance costs$52,293 
Perceptive Term Loan Facility
On October 27, 2023 (the “Closing Date”), the Company entered into the Perceptive Term Loan Facility. An initial tranche of $50 million (the “Tranche A Loan”) was funded under the Perceptive Term Loan Facility on the Closing Date. In addition to the Tranche A Loan, the Perceptive Term Loan Facility includes an additional tranche of $25 million (the “Tranche B Loan,” and together with the Tranche A Loan, the “Term Loans”), which will be accessible by the Company so long as the Company satisfies certain customary conditions precedent, including a specified revenue milestone (the funding date of the Tranche B Loan, the “Tranche B Borrowing Date”). The Perceptive Term Loan Facility has a maturity date of October 27, 2028 (the “Maturity Date”) and provides for an interest-only period during the term of the loan with principal due at the maturity date.
Interest Rate
The Perceptive Term Loan Facility will accrue interest at an annual rate equal to the sum of (a) Term SOFR (as defined in the Credit Agreement) and (b) an applicable margin of 7.5% (the “Applicable Margin”). Accrued interest on the Term Loans is payable monthly in arrears. Upon an Event of Default (as defined in the Credit Agreement), the Applicable Margin will automatically increase by an additional 4% per annum.
Amortization and Prepayment
Prior to the Maturity Date, there will be no scheduled principal payments under the Perceptive Term Loan Facility. On the Maturity Date, the Company is required to pay Perceptive the aggregate outstanding principal amount of the Term Loans and all accrued and unpaid interest thereon. The Term Loans may be prepaid at any time, subject to a prepayment premium equal to 0% to 10% of the aggregate outstanding principal amount being prepaid, depending on the date of prepayment.
Security Instruments and Warrant
In connection with the Credit Agreement, the Company also entered into a Security Agreement, dated as of the Closing Date, with Perceptive, pursuant to which all of its obligations under the Credit Agreement are secured by a first lien perfected security interest on substantially all of its existing and after-acquired assets, subject to customary exceptions.
On the Closing Date, as consideration for the Credit Agreement, the Company issued the Perceptive Warrant to Perceptive, which allows them to purchase up to 1,200,000 Warrant Shares. The 800,000 Initial Warrant Shares vested and became exercisable on the Closing Date and the 400,000 Additional Warrant Shares will potentially vest and become exercisable on the Tranche B Borrowing Date. The per share exercise price for the Initial Warrant Shares is $3.1752 (the “Initial Warrant Exercise Price”), which is equal to the10-day volume weighted average price (the “10-day VWAP”) of the Company’s Class A common stock at the end of the business day immediately prior to the Closing Date, and the per share exercise price for the Additional Warrant Shares will be equal to the lower of (a) the Initial Warrant Exercise Price or (b) the 10-day VWAP ending on the end of the business day immediately preceding the Tranche B Borrowing Date. The Perceptive Warrant will be exercisable, in whole or in part, until the 10th anniversary of the applicable vesting date.
Connecticut Department of Economic and Community Development Funding Commitment
In June 2017, ISMMS assigned a loan funding commitment from the DECD to the Company (the “DECD Loan Agreement”) to support the Genetic Sequencing Laboratory Project in Branford, Connecticut, with funding based on the achievement of certain
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project development phases. The DECD Loan Agreement provided for a total loan commitment of $15.5 million at a fixed annual interest rate of 2.0% for a term of 10 years. The Company was required to make interest-only payments through July 2023 and principal and interest payments commencing in August 2023. The final payment of principal and interest was due in July 2028. However, under the terms of the DECD Loan Agreement, the DECD granted a partial principal loan forgiveness of up to $12.3 million in the aggregate. Such forgiveness was contingent upon the Company achieving certain job creation and retention milestones and $4.5 million had been forgiven at December 31, 2022. This commitment was collateralized by a security interest in certain machinery and equipment the Company acquired from ISMMS, as defined in a separate security agreement.
In January 2023, the Company amended the DECD Loan Agreement, which resulted in the Company agreeing to pay $2.0 million in principal, obtaining $2.8 million in debt forgiveness for achieving its Phase 2 job milestone, and agreeing to two new forgiveness milestone targets for its Phase 3 job milestone (eligible for $2.0 million in forgiveness) and a final phase job milestone (eligible for $1.0 million in forgiveness) (the “2022 Amended DECD Loan Agreement”). Upon execution of this amendment, the Company paid the $2.0 million in principal and received $2.8 million in debt forgiveness, and the Company recognized the debt forgiveness as other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023. The terms of the 2022 Amended DECD Loan Agreement require the Company to make interest-only payments through July 2024 and principal and interest payments commencing in August 2024 through July 2029 at the same fixed annual interest rate of 2.0%. The other terms of the 2022 Amended DECD Loan Agreement remained the same.
The outstanding loan balance from the 2022 Amended DECD Loan Agreement was $6.3 million at March 31, 2024.
9. Purchase Commitments and Contingencies
Purchase Commitments
The following sets forth purchase commitments with software and equipment providers as of March 31, 2024 with a remaining term of at least one year:
2024 (remainder of year)$3,040 
20252,438 
20261,771 
2027643 
2028107 
Total purchase commitments$7,999 
The Company enters into contracts with suppliers to purchase materials needed for diagnostic testing. These contracts generally do not require multi-year purchase commitments.
There have been no material changes to the lease obligations from those disclosed in Note 10, “Leases” to the consolidated financial statements included in the 2023 Form 10-K.
Contingencies
The Company is or may become subject to various claims and legal actions arising in the ordinary course of business. The Company does not believe that the outcome of any existing matters will have a material effect on the Company’s condensed consolidated financial statements. However, no assurance can be given that the ultimate resolution of such proceedings will not materially impact the Company’s condensed consolidated financial statements.
Except as described below, the Company was not a party to any material legal proceedings at March 31, 2024, nor is it a party to any material legal proceedings at the date of issuance of these condensed consolidated financial statements.
On September 7, 2022, a shareholder class action lawsuit was filed in the United States District Court for the District of Connecticut against the Company and certain of the Company’s current and former officers. The complaint purports to bring suit on behalf of stockholders who purchased the Company’s publicly traded securities between March 14, 2022 and August 15, 2022. Following the appointment of a lead plaintiff, an amended complaint was filed on January 30, 2023. As amended, the complaint purports to allege that the defendants made false and misleading statements about the Company’s business, operations and prospects in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and seeks unspecified compensatory damages, fees and costs. The defendants moved to dismiss the amended complaint on August 21, 2023. That motion is pending. The Company believes the allegations and claims made in the complaint are without merit.
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On February 7, 2023, a stockholder commenced a lawsuit in the Delaware Court of Chancery. The suit is brought as a class action on behalf of stockholders of CMLS who did not redeem their shares in connection with the transferBusiness Combination. The suit names as defendants all directors of CMLS at the time of the liabilitiestransaction, including directors who continue to serve on the Company’s Board of Directors, as well as CMLS Holdings LLC. The Company is not named as a defendant. The complaint alleges that the July 2, 2021 proxy statement mailed to CMLS stockholders in an orderly transaction between market participants at the measurement date. In connection with measuring the fair valuetransaction contained false and misleading statements, and purports to assert a claim of its assetsbreach of fiduciary duty against all individual defendants, and liabilities,a similar claim against CMLS Holdings LLC and certain individuals for breach of fiduciary duty as control persons. The suit seeks to recover unspecified damages on behalf of the alleged class, among other relief. After defendants moved to dismiss the case, the plaintiff filed an amended complaint on July 6, 2023, revising certain allegations and adding third parties as defendants. The defendants answered the amended complaint on September 15, 2023. The Company believes the allegations and claims made in the amended complaint are without merit. The Company is subject to certain claims for advancement and indemnification by the individual defendants in this proceeding.
On November 28, 2023, a stockholder filed a derivative suit, allegedly on behalf of the Company, seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based largely on the observable inputssame allegations in the securities class action referenced above. The suit was filed in federal court in the District of Delaware, styled Ghazaleh v. Schadt, et al, 23-cv-01357 (D. Del.), and unobservable inputs used in orderpurports to valueassert claims against certain of the assetsCompany’s former and liabilities:

Level 1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3:Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
current officers and directors under Section 10(b) of the Exchange Act, and for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment and corporate waste. The Company is named only as a nominal defendant. The complaint seeks damages on the Company’s behalf, and seeks corporate governance and other relief. The response to the complaint is not yet due.

10. Stock-Based Compensation
Stock-based compensation expense is included within the condensed consolidated statements of operations and comprehensive loss as follows:
Three months ended March 31,
20242023
Cost of services$48 $(1,666)
Research and development(187)943 
Selling and marketing(20)63 
General and administrative(292)708 
Total stock-based compensation expense1
$(451)$48 
1 The Company recorded an aggregate reversal of stock-based compensation of $3.2 million and $8.1 million during the three months ended March 31, 2024 and 2023, respectively, due to forfeiture activities upon employee terminations.
The Company maintains the 2021 Equity Incentive Plan (as amended, the “2021 Plan”), which allows for grants of stock-based awards. No awards granted under the 2021 Plan are exercisable after 10 years from the date of grant, and the awards granted under the 2021 Plan generally vest over a four-year period on a graded vesting basis; however, the Company also granted certain RSUs with vesting terms beginning 12 months from the grant date and vesting immediately on the grant date. On January 1 of each year through 2031, the aggregate number of shares of Class A common stock reserved for issuance under the 2021 Plan may be increased automatically by the number of shares equal to 5% of the total number of shares of all classes of common stock issued and outstanding immediately preceding December 31. In January 2024, the number of Class A common stock reserved for future issuance under the 2021 Plan automatically increased by 1,298,943 shares.
The Company also maintains the 2023 Equity Inducement Plan (the “Equity Inducement Plan”), which allows for grants of equity awards of the Company’s Class A common stock to individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.
As of March 31, 2024, there was an aggregate of 1,879,336 shares available for grants of stock options or other awards under the 2021 Plan and Equity Inducement Plan.
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Stock Options
The following table presents information aboutsummarizes the stock option activity during the three months ended March 31, 2024:

Stock OptionsWeighted Average Exercise Price
Outstanding at December 31, 2023497,976$42.80 
Exercised(4,877)$5.05 
Forfeited/Expired(63,306)$56.84 
Outstanding at March 31, 2024429,793 $41.20 
Options exercisable at March 31, 2024280,612 $35.43 
At March 31, 2024, unrecognized stock-based compensation cost related to the unvested portion of the Company’s assets that are measured at fair valuestock options was $1.5 million, which is expected to be recognized on a recurringgraded-vesting basis at September 30, 2020 and indicatesover a weighted-average period of 1.3 years.
Restricted Stock Units (RSUs)
The following table summarizes the fair value hierarchytime-based RSU activity during the three months ended March 31, 2024:

Restricted Stock UnitsWeighted Average Grant Date Fair Value Per Unit
Outstanding at December 31, 20231,507,877$15.48 
Granted1,010,121$8.66 
Vested(138,608)$16.20 
Forfeited(223,140)$18.67 
Outstanding at March 31, 20242,156,250$11.75 
Employee Stock Purchase Plan
The 2021 Employee Stock Purchase Plan (the “2021 ESPP”) authorizes the issuance of shares of Class A common stock pursuant to purchase rights granted to employees. On January 1 of each year through 2031, the aggregate number of shares of Class A common stock reserved for issuance under the 2021 ESPP may be increased automatically by the number of shares equal to 1% of the valuation inputs the Company utilized to determine such fair value:

Description Level September 30,
2020
 
Assets:     
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund 1 $442,752,790 

NOTE 9. SUBSEQUENT EVENTS

The Company evaluated subsequent eventstotal number of shares of all classes of common stock issued and transactions that occurred after the balance sheet date up to November 16, 2020, the date that the condensed financial statements were issued. Based upon this review, theoutstanding immediately preceding December 31. The Company did not identifymake any subsequentgrants of purchase rights under the 2021 ESPP during the three months ended March 31, 2024 and 2023. A total of 596,604 shares of Class A common stock have been reserved for future issuance under the 2021 ESPP.

11. Income Taxes
Income tax benefit for the three months ended March 31, 2024 and 2023 was $0.1 million. Income taxes for these periods are recorded at the Company’s estimated annual effective income tax rate, subject to adjustments for discrete events should they occur. The Company’s estimated annual effective tax rate was 0.42% and 0.30% for the three months ended March 31, 2024 and 2023, respectively.
The difference between the Company’s effective tax rates in 2024 and 2023 compared to the U.S. statutory tax rate of 21% is primarily due to changes in valuation allowances associated with the Company’s assessment of the likelihood of the recoverability of deferred tax assets. The Company currently has valuation allowances against a significant portion of its deferred tax assets primarily related to its net operating loss carryforwards and tax credit carryforwards.
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12. Net Loss per Share
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:
Three months ended March 31,
20242023
Numerator:
Net loss attributable to common stockholders$(20,239)$(60,989)
Denominator:
Basic and diluted weighted-average common shares outstanding26,062,170 20,061,945 
Basic and diluted loss per share$(0.78)$(3.04)
The following table summarizes the outstanding shares of potentially dilutive securities that were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented as the effect would have required adjustment or disclosurebe anti-dilutive:
March 31,
20242023
Outstanding options and RSUs to purchase Class A common stock2,586,043 1,973,590 
Outstanding warrants1,466,515 666,515 
Outstanding earn-out shares— 554,799 
Outstanding earn-out RSUs— 21,613 
Total4,052,558 3,216,517 
13. Restructuring Costs
Total restructuring costs were $0.8 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively. The table below provides certain information concerning restructuring activity during the three months ended March 31, 2024:
Reserve Balance at December 31, 2023Charged to Costs and ExpensesPayments and OtherReserve Balance at March 31, 2024
Severance$1,853 $843 $(1,342)$1,354 
On October 30, 2023, the Company announced a continued strategic realignment of its organization to key priorities which includes the elimination of approximately 50 positions impacted on August 23, 2023, and approximately 35 positions impacted on October 30, 2023. Together these actions reduced the size of the Company’s workforce by 10% from the total number that existed at the time of the August reduction in force. In total, the Company announced cost saving initiatives, including but not limited to these reductions in force, that are expected to result in an excess of $40 million in annual cost reduction. The Company expects that all remaining cash severance payments will be complete in less than one year.
14. Supplemental Financial Information
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the condensed financial statements.

consolidated balance sheets to the total of the same amounts shown on the condensed consolidated statements of cash flows:

March 31, 2024December 31, 2023
Cash and cash equivalents$83,673 $99,681 
Restricted cash (included in other assets)987 987 
Total$84,660 $100,668 
Restricted cash as of March 31, 2024 and December 31, 2023 primarily consists of money market deposit accounts that secure an irrevocable standby letter of credit that serves as collateral for security deposit operating leases.
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Accounts payable and accrued expenses consisted of the following:
March 31, 2024December 31, 2023
Accounts payable$9,477 $10,238 
Accrued purchases11,292 12,154 
Reserves for refunds to insurance carriers and others11,641 15,064 
Total$32,410 $37,456 
Other current liabilities consisted of the following:
March 31, 2024December 31, 2023
Accrued compensation$9,995 $12,465 
Accrued severance1,354 1,853 
Other1,891 2,018 
Total$13,240 $16,336 
Other liabilities consisted of the following:
March 31, 2024December 31, 2023
Warrant liability$8,836 $2,735 
Third party payor reserve12,000 12,000 
Total$20,836 $14,735 
15. Segment Reporting
The Company’s structure is aligned with how the chief operating decision maker (“CODM”) reviews the business, makes investing and resource allocation decisions and assesses operating performance. The Company’s two reportable segments are: (i) GeneDx inclusive of Legacy GeneDx and Legacy Sema4 data revenues and associated costs and (ii) Legacy Sema4 diagnostics. The GeneDx segment primarily provides pediatric and rare disease diagnostics with a focus on whole exome and genome sequencing and, to a lesser extent, data and information services. The Legacy Sema4 diagnostics segment provided reproductive and women’s health and somatic oncology diagnostic testing and screening products and has been completely shut down.
The CODM evaluates segment performance based on revenue and adjusted gross profit.
Three months ended March 31,
20242023
GeneDxLegacy Sema4TotalGeneDxLegacy Sema4Total
Revenue$61,461 $961 $62,422 $40,693 $2,446 $43,139 
Adjusted cost of services24,099 — 24,099 26,826 2,080 28,906 
Adjusted gross profit (1)
37,362 961 38,323 13,867 366 14,233 
Reconciliations:
Depreciation and amortization816 — 816 476 113 589 
Stock-based compensation48 — 48 305 (1,971)(1,666)
Restructuring costs48 — 48 43 31 74 
Gross profit$36,450 $961 $37,411 $13,043 $2,193 $15,236 
(1)Adjusted cost of services and adjusted gross profit exclude depreciation and amortization expense, stock-based compensation expense and restructuring costs.
Management manages assets on a total company basis, not by reporting segment. The CODM does not regularly review any asset information by reporting segment and, accordingly, the Company does not report asset information by reporting segment.
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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to CM Life Sciences, Inc. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to CMLS Holdings LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report (the “Financial Statements”). Capitalized terms used but not otherwise defined herein have the meaning set forth in the Financial Statements. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regardingOperations
You should read the Company’sfollowing discussion and analysis of our financial position, business strategycondition and results of operations together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and our audited consolidated financial statements and the plans and objectives of managementrelated notes in our Annual Report on Form 10-K for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Suchthe year ended December 31, 2023 (the “2023 Form 10-K”). This discussion contains forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance orand involves numerous risks and uncertainties. Actual results tomay differ materially from the events, performance and results discusseddescribed in or implied by the forward-looking statements. For information identifyingYou should carefully read the section entitled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from those anticipatedthese forward-looking statements.
Overview
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.
See Note 1, “Organization and Description of Business” included in this Quarterly Report for more information on the Company’s history.
Factors Affecting Our Performance
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 2023 Form 10-K, which is incorporated by reference in this Quarterly Report, for further information.
Number of Resulted Tests
A test is resulted once the appropriate workflow is completed and details are provided to the ordered patients or healthcare professional for reviews, which corresponds to the timing of our revenue recognition. We believe the number of resulted 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.
Success Obtaining and Maintaining Reimbursement
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.
In cases where we or our partners have established reimbursement rates with third-party payors, we face additional challenges in complying with their procedural requirements for reimbursement. These requirements often vary from payor to payor and are reassessed by third-party payors regularly. As a result, in the forward-looking statements, please referpast we have needed additional time and resources to comply with the Risk Factors section of the Final Prospectus. The Company’s securities filings canrequirements.
Third-party payors may decide to deny payment or seek to recoup payments for tests performed by us that they contend were improperly billed, not medically necessary or against their coverage determinations, or for which they believe they have otherwise overpaid. As a result, we may be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whetherrefund payments already received, and our revenues may be subject to retroactive adjustment as a result of new information, future events or otherwise.

Overview

We are a blank check company incorporated on July 10, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar Business Combination with one or more target businesses. We intend to effectuate our Business Combination using cash from the proceeds of our Initial Public Offering , the sale of the Private Placement Warrants that occurred simultaneously with the completion of our Initial Public Offering and the sale of the Forward Purchase Units, shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.

these factors among others.

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.
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Ability to Lower the Costs Associated with Performing our Tests
Reducing the costs associated with performing our diagnostic tests is both our focus and a strategic objective. We source, and will continue to source, components of our diagnostic testing workflows from third parties. We also rely upon third-party service providers for data storage and workflow management.
Increasing Adoption of our Services by Existing and New Customers
Our performance depends on our ability to retain and broaden the adoption of our services with existing customers as well as our ability to attract new customers. Our success in retaining and gaining new customers is dependent on the market’s confidence in our services and the willingness of customers to continue to seek more comprehensive and integrated genomic and clinical data insights.
Investment in Platform Innovation to Support Commercial Growth
We are seeking to leverage and deploy our platforms to develop a pipeline of future disease-specific research and diagnostic and therapeutic products and services. We have limited experience in the development or commercialization of clinical or research products in connection with our database and platform.
We operate in a rapidly evolving and highly competitive industry. Our business faces changing technologies, shifting provider and patient needs, and frequent introductions of rival products and services. To compete successfully, we must accurately anticipate technology developments and deliver innovative, relevant, and useful products, services, and technologies on time. As our business evolves, the competitive pressure to innovate will encompass a wider range of products and services. We must continue to invest significant resources in research and development, including investments through acquisitions and partnerships. These investments are critical to the enhancement of our current diagnostics and health information and data science technologies from which existing and new service offerings are derived.
We expect to incur significant costs in the pursuitexpenses to advance these development efforts, but they may not be successful. New potential services may fail at any stage of development and, if we determine that any of our acquisition plans. current or future services are unlikely to succeed, we may abandon them without any return on our investment. If we are unsuccessful in developing additional services, our growth potential may be impaired.
Key Performance Indicators
We cannot assure youuse the following key financial and operating metrics to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. These key financial and operating metrics should be read in conjunction with the following discussion of our results of operations and financial condition together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this report.
The principal focus of our commercial operations is to offer our diagnostic tests through both our direct sales force and laboratory distribution partners. Test volume correlates with genomic database size and long-term patient relationships. Thus, test volumes drive database diversity and enable potential identification of variants of unknown significance and population-specific insights. The number of tests resulted and the mix of test results, with a focus on driving whole exome and whole genome sequencing, are key indicators that we use to assess the operational efficiency of our plansbusiness. Once the appropriate workflow is completed, the test is resulted and details are provided to complete a Business Combination will be successful.

ordered patients or healthcare professionals for reviews.

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.
Key Components of Results of Operations

Revenue
Diagnostic Test Revenue
The majority of our revenue is derived from genetic and genomic diagnostic testing services for three groups of customers: healthcare professionals working with patients with third-party insurance coverage or without third-party insurance coverage, institutional clients such as hospitals, clinics, state governments and reference laboratories, and self-pay patients. The amount of revenue recognized for diagnostic testing services depends on a number of factors, such as contracted rates with our customers and third-party insurance providers, insurance reimbursement policies, payor mix, historical collection experience, price concessions and other business and economic conditions and trends. To date, the majority of our diagnostic test revenue has been
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earned from orders received for patients with third-party insurance coverage. Our ability to increase our diagnostic test revenue will depend on our ability to increase our market penetration, obtain contracted reimbursement coverage from third-party payors, enter into contracts with institutions, and increase our reimbursement rate for tests performed.
Other Revenue
We also generate revenue from collaboration service agreements with biopharma companies and other third parties, pursuant to which we provide health information and patient identification support services. Certain of these contracts provide non-refundable payments, which we record as contract liabilities, and variable payments based upon the achievement of certain milestones during the contract term.
With respect to existing collaboration and service agreements, our revenue may fluctuate period to period due to the pattern in which we may deliver our services, our ability to achieve milestones, the timing of costs incurred, changes in estimates of total anticipated costs that we expect to incur during the contract period, and other events that may not be within our control. Our ability to increase our revenue will depend on our ability to enter into contracts with third-party partners.
Cost of Services
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.
We expect the cost of services to generally increase in line with the anticipated growth in diagnostic testing volume and services we provide under our collaboration service agreements. However, we expect the cost per test to decrease over the long term due to the efficiencies we may gain from improved utilization of our laboratory capacity, automation, and other value engineering initiatives. These expected reductions may be offset by new tests which often have neither engageda higher cost per test during the introductory phases before we can gain efficiencies. The cost per test may fluctuate from period to period.
Research and Development Expenses
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 personnel-related expenses (comprising salaries and benefits), stock-based compensation 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.
We generally expect our research and development expenses to continue to increase as we innovate and expand the application of our platforms. However, we expect research and development expenses to decrease as a percentage of revenue in any operations nor generated any revenuesthe long term, although the percentage may fluctuate from period to date. Our only activities through September 30, 2020 were organizational activities,period due to the consummationtiming and extent of our development and commercialization efforts and fluctuations in our compensation-related charges.
Selling and Marketing Expenses
Selling and marketing expenses primarily consist of personnel-related expenses (comprising salaries and benefits) and stock-based compensation for employees performing commercial sales, account management, marketing, and certain genetic counseling services. Selling and marketing costs are expensed as incurred.
We generally expect our selling and marketing expenses will continue to increase in absolute dollars as we expand our commercial sales and marketing and counseling teams and increase marketing activities. However, we expect selling and marketing expenses to decrease as a percentage of revenue in the long term, subject to fluctuations from period to period due to the timing and magnitude of these expenses.
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General and Administrative Expenses
General and administrative expenses primarily consist of personnel-related expenses (comprising salaries, billing and benefits) and stock-based compensation 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.
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, maintaining compliance with requirements of Nasdaq and of the Initial Public Offering, described below,SEC, and identifyingdirector and officer insurance premiums. We expect these expenses to decrease as a target company for our initial Business Combination. We do not expect to generate any operating revenues until after the completionpercentage of our initial Business Combination. We generate non-operating incomerevenue in the formlong term as revenue increases, although the percentage may fluctuate from period to period due to fluctuations in our compensation-related charges.
Comparison of interest income on marketable securities heldthe three months ended March 31, 2024 and 2023
The following table sets forth our results of operations for the periods presented:
Three months ended March 31,
20242023$ Change% Change
Revenue

Diagnostic test revenue$61,104 $41,850 $19,254 46 %
Other revenue1,318 1,289 29 %
Total revenue62,422 43,139 19,283 45 %
Cost of services    25,011 27,903 (2,892)(10)%
Gross profit37,411 15,236 22,175 146 %
Research and development11,567 14,592 (3,025)(21)%
Selling and marketing16,085 13,452 2,633 20 %
General and administrative22,445 43,689 (21,244)(49)%
Impairment loss— 2,120 (2,120)NM
Other operating expenses, net974 1,747 (773)(44)%
Loss from operations(13,660)(60,364)46,704 (77)%
Non-operating income (expenses), net
Change in fair value of warrants and earn-out contingent liabilities(6,101)(3,453)(2,648)77 %
Interest expense, net(597)(35)(562)NM
Other income, net37 2,716 (2,679)NM
Total non-operating loss, net(6,661)(772)(5,889)763 %
Loss before income taxes(20,321)(61,136)40,815 (67)%
Income tax benefit82 147 (65)(44)%
Net loss$(20,239)$(60,989)$40,750 (67)%
NM - Not Meaningful
Revenue
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.
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 Trust Account. We will incur expensesnow discontinued Legacy Sema4 business.
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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.
Gross Profit
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.
Research and Development
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.
Selling and Marketing
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.
General and Administrative
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 being a public company (for legal, financial reporting, accountingheadcount reduction actions, and auditing compliance), as well aslower depreciation expense related to the discontinued Legacy Sema4 business.
Impairment Loss
The non-cash charge of $2.1 million for due diligence expensesthe three months ended March 31, 2023 reflected the impairment loss recorded in connection with completingthe modification of certain capital and right-of-use asset leases. See Note 6, “Property and Equipment, net” to our initial Business Combination.

Forcondensed consolidated financial statements for further information.

Other Operating Expenses, Net
Other operating expenses, net were $1.0 million for the period from July 10, 2020 (inception) through September 30, 2020, we had athree 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.
Non-Operating Income, Net
Non-operating income, net lossdecreased by $5.9 million, due to the significant increase in fair value of $56,923, which consists of operating costs of $59,713, offset by interest income on marketable securities held in the Trust Account of $2,790.

Liquidityour public, private placement and Capital Resources

On September 4, 2020, we consummated the Initial Public Offering of 44,275,000 Units, which included the full exercisePerceptive warrants, driven primarily by the underwritersincrease in our share price as of March 31, 2024 and the over-allotment optionprior year impact of $2.8 million for principal loan forgiveness under the amendment to purchase an additional 5,775,000 Units, at $10.00 per Unit, generating gross proceedsthe DECD loan.

See Note 4, “Fair Value Measurementstoour condensed consolidated financial statements for further information on the changes in fair value of $442,750,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 7,236,667 Private Placement Warrantsour warrant and earn-out contingent liabilities, and see Note 8, “Long-Term Debt to our Sponsor at a pricecondensed consolidated financial statements for further information regarding the DECD loan..
Reconciliation of $1.50 per warrant, generating gross proceeds of $10,855,000.

Following the Initial Public Offering, the exercise of the over-allotment option and the sale of the Private Placement Warrants, a total of $442,750,000 was placed in the Trust Account. We incurred $24,895,463 in transaction costs, including $8,855,000 of underwriting fees, $15,496,250 of deferred underwriting fees and $544,213 of other offering costs.

Non-GAAP Financial Measures

For the period from July 10, 2020 (inception) through September 30, 2020, cash used in operating activities was $365,808. Net loss of $56,923 was affected by interest earned on marketable securities held in the Trust Account of $2,790 and changes in operating assets and liabilities, which used $306,095 of cash from operating activities.

As of September 30, 2020, we had cash and marketable securities held in the Trust Account of $442,752,790. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable and deferred underwriting commissions) to complete our initial Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. During the period ended September 30, 2020, we did not withdraw any interest income from the Trust Account.

As of September 30, 2020, we had $1,139,979 of cash held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with our initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants identical to the Private Placement Warrants, at a price of $1.50 per warrant at the option of the lender.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prioraddition to our Business Combination. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination,results determined in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than as described below.

The underwriters are entitled to a deferred fee of $0.35 per Unit, or $15,496,250 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

In addition, we entered into separate forward purchase agreements with affiliates of the Sponsor, Casdin and Corvex, in their capacities as investment advisors on behalf of one or more investment funds, clients or accounts managed by the Clients, pursuant to which, subject to the conditions described below, they will cause the Clients to purchase from us up to an aggregate amount of 15,000,000 shares of Class A common stock, or the forward purchase shares, for $10.00 per forward purchase share, or an aggregate amount of up to $150,000,000, in a private placement that will close concurrently with the closing of a Business Combination. The amount of forward purchase shares sold pursuant to the forward purchase agreements will be determined at our discretion based on our needs for additional capital to consummate a Business Combination. Under each forward purchase agreement, we are required to approach Casdin and Corvex if it proposes to raise additional capital by issuing any equity, or securities convertible into, exchangeable or exercisable for equity securities in connection with a Business Combination. The respective obligations of Casdin and Corvex to purchase forward purchase shares will, among other things, be conditioned on us completing a Business Combination with a company engaged in a business that is within the investment objectives of the Clients purchasing forward purchase shares and on the Business Combination (including the target assets or business, and the terms of the Business Combination) being reasonably acceptable to such Clients as determined by Casdin or Corvex, as relevant, as investment advisors on behalf of such Clients. Each of Casdin and Corvex will have the right to transfer a portion of its purchase obligation under the forward purchase agreement to third parties, or upon mutual agreement to each other, subject to compliance with applicable securities laws. To the extent that we obtain alternative financing to fund the initial Business Combination and the Clients participate in such financing, the aggregate commitment under the forward purchase agreement will be reduced by the amount of such alternative financing.

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Critical Accounting Policies

The preparation of condensed financial statements and related disclosures in conformityaccordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which

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could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
Non-GAAP financial measures have limitations as analytical tools and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. We may in the future incur expenses similar to the adjustments in the presentation of non-GAAP financial measures. Other limitations include that non-GAAP financial measures do not reflect:
all expenditures or future requirements for capital expenditures or contractual commitments;
changes in our working capital needs;
the costs of replacing the assets being depreciated, which will often have to be replaced in the future;
the non-cash component of employee compensation expense; and
the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations.
Adjusted Gross Profit and Adjusted Gross Margin
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.
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:
Three months ended March 31,
20242023
Revenue$62,422 $43,139 
Cost of services25,011 27,903 
Gross profit$37,411 $15,236 
Gross margin59.9 %35.3 %
Add:
Depreciation and amortization expense$816 $589 
Stock-based compensation expense48 (1,666)
Restructuring costs (1)
48 74 
Adjusted gross profit$38,323 $14,233 
Adjusted gross margin61.4 %33.0 %
(1)Represent costs incurred for restructuring activities, which include severance costs to impacted employees and third-party consulting costs incurred during the periods presented.
Adjusted Net Loss
Adjusted net loss is a non-GAAP financial measure that we define as net loss adjusted for depreciation and amortization, stock-based compensation expenses, transaction costs, other (income) expense, net, impairment loss, restructuring and business exit related charges, acquisition costs and change in fair market value of warrant and earn-out contingent liabilities. We believe Adjusted net loss is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain factors that may vary from company to company for reasons unrelated to overall operating performance.
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The following is a reconciliation of our net loss to Adjusted net loss for the three months ended March 31, 2024 and 2023:
Three months ended March 31,
20242023
Net loss$(20,239)$(60,989)
Depreciation and amortization expense5,248 8,636 
Stock-based compensation expense(451)48 
Impairment loss (1)
— 2,120 
Restructuring costs (2)
843 702 
Change in fair value of financial liabilities (3)
6,101 3,453 
Gain on debt forgiveness (4)
— (2,750)
Adjusted net loss$(8,498)$(48,780)
(1)Represents the impairment of certain capital and right-of-use asset leases.
(2)Represent costs incurred for restructuring activities, which include severance and third-party consulting costs.
(3)Represents the change in fair value of the liabilities associated with our public warrants, private placement warrants and the earn-out shares.
(4)Represents principal loan forgiveness under the amendment to the DECD loan.
Liquidity and Capital Resources
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.
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.
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.

Material Cash Requirements for Known Contractual Obligations and Commitments
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.
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, $42 million is to be paid by us to the payor in a series of payments each year through June 30, 2026. In consideration for the payments, the payor provided releases of the disputed claims, effective March 31, 2023.
For more information regarding this matter, see Note 4, “Revenue Recognition” to our consolidated financial statements included in our 2023 Form 10-K and Note 3, “Revenue Recognition,” to our condensed consolidated financial statements included within this Quarterly Report, respectively.
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Cash Flows
Three Months Ended March 31,
20242023
Net cash used in operating activities$(16,413)$(55,560)
Net cash provided by (used in) investing activities843 (462)
Net cash (used in) provided by financing activities(438)132,658 
Operating Activities
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.
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.
Investing Activities
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.
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.
Financing Activities
Net cash used in financing activities during the three months ended March 31, 2024 was $0.4 million, which reflected finance lease payments.
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.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires managementus to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and incomeas well as the reported revenue generated and expenses incurred during the periods reported.reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results could materiallymay differ from these estimates under different assumptions or conditions.
Our critical accounting policies and estimates are described in Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included in the 2023 Form 10-K. There have been no material changes to our critical accounting policies and estimates in the current period. For further information, see Note 2, “Summary of Significant Accounting Policies” to our condensed consolidated financial statements.
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JOBS Act Accounting Election
We are an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act allows an emerging growth company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those estimates.standards apply to private companies. We have identifiedelected to use this extended transition period and, as a result, our financial statements may not be comparable to companies that comply with public company effective dates. We also intend to rely on other exemptions provided by the following critical accounting policies:

Class A Common Stock SubjectJOBS Act, including not being required to Possible Redemption

comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

We account forwill remain an emerging growth company until the earliest of (1) September 1, 2025, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A Common stock subject to mandatory redemption is classifiedheld by non-affiliates exceeded $700.0 million as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holderlast business day of the second fiscal quarter of such year or subject (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Recent Accounting Pronouncements
Additional information on recent accounting pronouncements can be found in Note 2, “Summary of Significant Accounting Policiesto redemption upon the occurrence of uncertain events not solelyour consolidated financial statements included within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside2023 Form 10-K, and Note 2,Summary of our control and subject Significant Accounting Policiesto occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our condensed balance sheet.

Net Income (Loss) Per Common Share

We apply the two-class method in calculating earnings per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, net of applicable franchise and income taxes, by the weighted average number of Class A redeemable common stock outstanding for the period. Net loss per common share, basic and diluted for Class B non-redeemable common stock is calculated by dividing the net income, less income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period presented.

Recent Accounting Standards

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on ourconsolidated financial statements.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As

Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of September 30, 2020, we were not subjectour business. These risks primarily relate to any market or interest rate risk. The net proceeds received into the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturityrates. Our cash, cash equivalents, available-for-sale marketable securities and restricted cash consists of 185 days or less or in certainbank deposits and money market funds, that invest solelywhich totaled $113.9 million at March 31, 2024 and $131.1 million at December 31, 2023, respectively. Such interest-bearing instruments carry a degree of risk. However, because our investments are primarily high-quality credit instruments with short-term durations with high-quality institutions, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in US treasuries. Due tointerest rates. A 100-basis point change in interest rates would not have a material effect on the short-term naturefair market value of these investments, we believe there will be no associated material exposureour cash, cash equivalents and restricted cash.
We are also exposed to interest rate risk.

risk on our variable rate debt associated with the Perceptive term loan facility. Changes in interest rates can impact future interest payments we are obligated to pay.
See Note 8, “Long-Term Debtto our condensed consolidated financial statements for further information.
ITEM 4.CONTROLS AND PROCEDURES

Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2020.March 31, 2024. Based upon theiron that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as definedwere not effective as of March 31, 2024 because of the material weakness in Rules 13a-15 (e)internal control over financial reporting at December 31, 2023 that we previously identified in Item 9A. “Controls and 15d-15 (e) underProcedures” of our Annual Report on Form 10-K for the Exchange Act)year ended December 31, 2023 had not been fully remediated at March 31, 2024.
Notwithstanding the material weakness in internal control over financial reporting, our management has concluded that our condensed consolidated financial statements included in the Quarterly Report on Form 10-Q are fairly stated in all material respects in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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Previously Reported Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
As described in more detail in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2023, the material weakness identified related to the fact that our accounting and operating systems lacked controls over access, and program change management that are needed to ensure access to financial data is adequately restricted to appropriate personnel, including consideration of the appropriate segregation of duties. As a result, it is possible that our business process controls that depend on the accuracy and completeness of data or financial reports generated by our information technology system could be adversely affected due to the lack of operating effectiveness of the information technology general controls (“ITGCs”).
Remediation Plan
Our management is actively engaged and committed to taking the steps necessary to remediate the material weakness over user access and program change management in order to establish a strong internal control environment. Remediation actions undertaken during 2023 and planned are described in more detail in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2023.
While significant progress has been made to strengthen the design and operating effectiveness of our ITGCs, management has concluded that as of March 31, 2024, there was not a sufficient period of time available to sufficiently test nor conclude that enhanced internal controls were effective.

fully implemented and operating effectively. We will continue to monitor the effectiveness of ITGC remediation actions in connection with future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures. Assessment results will be used to validate the efficacy of our ITGC remediation efforts and identify any additional actions necessary to ensure ongoing design and operating effectiveness.

Changes in Internal Control Over Financial Reporting

During the most recently completed fiscal quarter, there has been

There was no change in our internal control over financial reporting that occurred during the three months ended March 31, 2024 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are continuing to take steps to remediate the material weakness in our internal control over financial reporting, as discussed above.

Inherent Limitation on the Effectiveness of Internal Control

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal controls, will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.
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Part II - OTHER INFORMATION

Other Information
ITEM 1.LEGAL PROCEEDINGS.

None.

Item 1. Legal Proceedings
Information required under this Item is contained above in Part I. Financial Information, Item 1, Note 9, “Purchase Commitments and Contingencies,” included within this Quarterly Report and is incorporated herein by reference.
ITEM 1A.RISK FACTORS.

Item 1A. Risk Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the Final Prospectus. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report,
Except for as set forth below, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A “Risk Factors” of our 2023 Form 10-K, which section is incorporated by reference herein.
Future changes in FDA enforcement discretion for laboratory developed tests (“LDTs”) could subject our operations to much more significant regulatory requirements.
We currently offer an LDT version of certain tests. The FDA currently has a policy of enforcement discretion with respect to most LDTs, whereby the FDA does not actively enforce its medical device regulatory requirements for such tests. However, in October 2014, the FDA issued two draft guidance documents stating that the FDA intended to end enforcement discretion with respect to LDTs in a risk-based manner consistent with the existing classification of medical devices. The FDA halted finalization of the guidance in November 2016 to allow for further public discussion on an appropriate oversight approach to LDTs and to give Congressional authorizing committees the opportunity to develop a legislative solution. The FDA Commissioner and the Director of the Center for Devices and Radiological Health (“CDRH”) have expressed significant concerns regarding disparities between some LDTs and in vitro diagnostics that have been reviewed, cleared, authorized or approved by the FDA.
More recently, on September 29, 2023, the FDA published a proposed rule on LDTs, in which FDA proposes to end enforcement discretion for virtually all LDTs in five stages over a four-year period from the date FDA publishes a final rule. In Phase 1 (effective one year post-finalization), clinical laboratories would be required to comply with medical device (adverse event) reporting and correction/removal reporting requirements. In Phase 2 (effective two years post-finalization), clinical laboratories would be required to comply with all other device requirements (e.g., registration/listing, labeling, investigational use), except for quality systems and premarket review. In Phase 3 (effective three years post-finalization), clinical laboratories would be required to comply with quality systems requirements. In Phase 4 (effective three and a half years post-finalization, but not before October 1, 2027), clinical laboratories would be required to comply with premarket submission requirements for high-risk tests (i.e., tests subject to premarket approval (PMA) requirement). Finally, in Phase 5 (effective four years post-finalization, but not before April 1, 2028), clinical laboratories would be required comply with premarket submission requirements for moderate- and low-risk tests (i.e., tests subject to de novo or 510(k) requirement). Unlike previous proposals, the proposed rule does not “grandfather” existing tests. The content and timing of any final rule on LDTs is uncertain at this time.
If the FDA were to determine that certain tests offered by us as LDTs are no longer eligible for enforcement discretion for any reason, including new rules, policies or guidance, or due to changes in statute, our tests may become subject to extensive FDA requirements or our business may otherwise be adversely affected. If the FDA were to actively regulate our LDTs, we could experience reduced revenue or increased costs, which could adversely affect our business, prospects, results of operations and financial condition. If required, the regulatory marketing authorization process required to bring our current or future LDTs into compliance may involve, among other things, successfully completing additional clinical validations and submitting to and obtaining clearance from the FDA for a premarket clearance (510(k)) submission or authorization for a de novo submission or approval of a premarket approval application. Furthermore, pending legislative proposals, if enacted, such as the VALID Act, could create new or different regulatory and compliance burdens on us and could have a negative effect on our ability to keep products on the market or develop new products, which could have a material effect on our business. In the event that the FDA requires marketing authorization of our LDTs in the future, the FDA may not ultimately grant any clearance, authorization or approval requested by us in a timely manner, may limit our indication in a way that is not commercially desirable, or refuse to provide such authorization at all. In addition, if the FDA inspects our laboratory in relation to the risk factors disclosed inmarketing of any FDA-authorized test, any enforcement action the FDA takes might not be limited to the FDA-authorized test carried by us and could encompass our Final Prospectus, except we may disclose changes to such factors or disclose additional factors from time to time in our future filingsother testing services.
Compliance with the SEC.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On September 4, 2020, we consummatedHIPAA security, privacy and breach notification regulations may increase our Initial Public Offering of 44,275,000 Units, inclusive of underwriters’ election to fully exercise their over-allotment option, we sold an additional 5,775,000 Units. costs.

The Units were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $442,750,000. Jefferies LLC acted as the book running manager of the offering. The securities sold in the offering were registeredHIPAA privacy, security and breach notification regulations, which include requirements implemented under the SecuritiesHITECH Act, on a registration statement on Form S-1 (No. 333-246251 and 333-248541). The SEC declared the registration statement effective on September 1, 2020.

Simultaneouslyestablish federal standards with the consummation of the Initial Public Offering and the full exercise of the over-allotment option, we consummated a private placement of 7,236,667 Private Placement Warrants to our Sponsor at a price of $1.50 per Private Placement Warrant, generating total proceeds of $10,855,000. Such securities were issued pursuantrespect to the exemption from registration contained in Section 4(a)(2)uses and disclosures of protected health information (“PHI”), by health plans, healthcare providers and healthcare clearinghouses. The HIPAA regulations generally prohibit the Securities Act.

The Private Placement Warrantsuse and disclosure of PHI without patient authorization, unless the use or disclosure is for payment, treatment or healthcare operations purposes. In setting standards to protect the confidentiality, integrity and security of PHI, the regulations establish a regulatory framework that addresses a variety of subjects, including:

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the circumstances under which uses and disclosures of PHI are the same as the warrants underlying the Units sold in the Initial Public Offering, except that Private Placement Warrants are not transferable, assignablepermitted or salable until 30 days after the completion ofrequired without a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees.

Of the gross proceeds receivedwritten authorization from the Initial Public Offeringpatient, including but not limited to treatment purposes, activities to obtain payments for our services, and our healthcare operations activities;

a patient’s rights to access, amend and receive an accounting of certain disclosures of PHI;
requirements to notify individuals if there is a breach of their PHI;
the salecontents of the Private Placement Warrants, $442,750,000 was placed in the Trust Account.

We paid a totalnotices of $8,855,000 underwriting discounts and commissions and $544,213 for other costs and expensesprivacy practices related to the Initial Public Offering.use and disclosure of PHI;

administrative, technical and physical safeguards required of entities that use or receive PHI;
criteria related to the deidentification and aggregation of PHI; and
the use and protection of electronic PHI.
We are also required to comply with applicable state privacy, security and breach notification laws and regulations, which may be more stringent than federal HIPAA requirements. In addition, for healthcare data transfers from other countries relating to citizens and/or residents of those countries, we are also required to comply with the laws of those countries. Furthermore, on December 1, 2022, the U.S. Department of Health and Human Services, Office for Civil Rights (“OCR”) issued a Bulletin highlighting the obligations of HIPAA covered entities and business associates with respect to the use of online tracking technologies. OCR updated this Bulletin on March 18, 2024. To the extent that a covered entity or business associate permits a tracking technology vendor to collect PHI of its customers, the parties must enter into a business associate agreement. In addition, the underwriters agreedPHI collected may only be used for treatment or health care operation purposes, in accordance with HIPAA. The PHI cannot be used for marketing purposes that are not connected with treatment or health care operations absent a HIPAA compliant authorization from each customer whose information is being shared.
Although HIPAA does not provide for private rights of action, HIPAA gives OCR and the Department of Justice the authority to defer $15,496,250assess significant fines and other penalties for wrongful use or disclosure of PHI, including potential civil and criminal fines and penalties. OCR may require an entity to enter into a settlement agreement which may include ongoing oversight and auditing of a company’s HIPAA compliance program.
In addition, computer networks are always vulnerable to breach and unauthorized persons may in underwriting discountsthe future be able to exploit weaknesses in the security systems of our computer networks and commissions.

Forgain access to PHI. Additionally, we share PHI with third-parties who are legally obligated to safeguard and maintain the confidentiality of PHI. Despite such protections, unauthorized persons may also be able to gain access to PHI stored in such third parties’ computer networks. Any wrongful use or disclosure of PHI by us or such third-parties, including disclosure due to data theft or unauthorized access to us or such third-parties’ computer networks, could subject us to fines or penalties that could adversely affect our business and results of operations. In addition, we distribute PHI to patients in physical form (e.g., test materials and/or test results), which introduces additional risk that human error will result in unauthorized disclosures of PHI. Although HIPAA does not expressly provide for a descriptionprivate right of action for damages, we could also be liable for damages under state privacy laws to private parties for the wrongful use or disclosure of confidential health information or other private personal information.

We have implemented practices intended to meet the requirements of the useHIPAA privacy, security and breach notification regulations, as required by law, but cannot guarantee that such practices fully satisfy all applicable requirements under HIPAA. In addition, the Company has experienced a number of “security incidents” (as defined under HIPAA) that involved the proceeds generatedunauthorized disclosure of PHI. A subset of these incidents was determined to be reportable breaches requiring disclosure to OCR, as well as to the affected patients. Moreover, we cannot confirm that we have identified all previous incidents that could constitute reportable breaches, or that the mitigation steps undertaken in response to known breaches are adequate to satisfy applicable regulatory requirements and prevent any future unauthorized disclosures.
As noted above, in addition to HIPAA, we are subject to myriad federal, state, and local requirements pertaining to the collection, retention, and disclosure of genetic material. While we endeavor to remain current with such requirements, we can provide no assurance that we are, or will remain, in compliance with all applicable requirements. Failure to comply with privacy and data security requirements could result in a variety of consequences, including significant fines and penalties as well as damage to our Initial Public Offering, see Part I, reputation, any of which could have a material adverse effect on our business.
Item 22. Unregistered Sales of this Quarterly Report.

Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
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ITEM 3.DEFAULTS UPON SENIOR SECURITIES.

Item 3. Defaults Upon Senior Securities
None.

ITEM 4.MINE SAFETY DISCLOSURES.

Not applicable.

Item 4. Mine Safety Disclosures
None.
ITEM 5.OTHER INFORMATION.

Item 5. Other Information
Rule 10b5-1 Plan Adoptions and Modifications
None.


Supplemental Disclosure to our Annual Report on Form 10-K for the year ended December 31, 2023
ITEM 6.EXHIBITS.

The following updates Part I, Item 1. “Business—Government Regulation—Reimbursement and Billing” in our 2023 Form 10-K:
Reimbursement and Billing
In April 2014, Congress passed the Protecting Access to Medicare Act of 2014 (“PAMA”), which included substantial changes to the way in which clinical laboratory services are paid under Medicare. Under PAMA (as amended) and its implementing regulations, laboratories that realize at least $12,500 in Medicare Clinical Laboratory Fee Schedule (“CLFS”) revenues during the six month reporting period and that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule must report, beginning in 2017, and then in 2025 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”), private payor payment rates and volumes for their tests. None of our tests meet the current definition of advanced diagnostic laboratory tests, and therefore we believe we are required to report private payor rates for our tests on an every-three-years basis, starting next in 2025. The Centers for Medicare & Medicaid Services (“CMS”) use the rates and volumes reported by laboratories to develop Medicare payment rates for the tests equal to the volume-weighted median of the private payor payment rates for the tests. Laboratories that fail to report the required payment information may be subject to substantial civil money penalties.
As set forth under the regulations implementing PAMA, for tests furnished on or after January 1, 2018, Medicare payments for clinical diagnostic laboratory tests are paid based upon these reported private payor rates. For clinical diagnostic laboratory tests that are assigned a new or substantially revised code, initial payment rates for clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests will be assigned by the cross-walk or gap-fill methodology, as under prior law. Initial payment rates for new advanced diagnostic laboratory tests will be based on the actual list charge for the laboratory test.
The payment rates calculated under PAMA went into effect starting January 1, 2018. Where applicable, reductions to payment rates resulting from the new methodology were limited to 10% per test per year in each of the years 2018 through 2020. Rates were held at 2020 levels during 2021 through 2023 and will continue to be held at such levels in 2024. Then, where applicable based upon median private payor rates reported in 2017 or 2025, reduced by up to 15% per test per year in each of 2025 through 2027 (with a second round of private payor rate reporting in 2025 to establish rates for 2026 through 2028).
PAMA codified Medicare coverage rules for laboratory tests by requiring any local coverage determination to be made following the local coverage determination process. PAMA also authorizes CMS to consolidate coverage policies for clinical laboratory tests among one to four laboratory-specific Medicare Administrative Contractors (“MACs”). These same contractors may also be designated to process claims if CMS determines that such a model is appropriate. It is unclear whether CMS will proceed with contractor consolidation under this authorization.
PAMA also authorized the adoption of new, temporary billing codes and/or unique test identifiers for FDA-cleared or approved tests as well as advanced diagnostic laboratory tests. The American Medical Association has created a section of billing codes, Proprietary Laboratory Analyses (“PLA”), to facilitate implementation of this section of PAMA. These codes may apply to one or more of our tests if we apply for PLA coding.
Reimbursement and billing for diagnostic services is highly complex, and errors in billing potentially can result denied claims and/or in substantial obligations to repay overpayments to payors. Laboratories must bill various payors, such as private third-party payors, including managed care organizations (“MCO”), and state and federal health care programs, such as Medicare and Medicaid, and each may have different billing requirements. Additionally, the audit requirements we must meet to ensure compliance with applicable laws and regulations, as well as our internal compliance policies and procedures, add further complexity to the billing process. Other factors that complicate billing include:
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variability in coverage and information requirements among various payors;
patient financial assistance programs;
missing, incomplete or inaccurate billing information provided by ordering physicians;
billings to payors with whom we do not have contracts;
disputes with payors as to which party is responsible for payment; and
disputes with payors as to the appropriate level of reimbursement.
Depending on the reimbursement arrangement and applicable law, the party that reimburses us for our services may be:
a third party who provides coverage to the patient, such as an insurance company or MCO;
a state or federal healthcare program; or
the patient.
The following updates Part I, Item 1. “Business—Government Regulation—Privacy and Security Laws—California Consumer Privacy Act” in our 2023 Form 10-K:
California Consumer Privacy Act
The California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA,” and together with the California Consumer Privacy Act, the “CCPA”), confers to California consumers, among other things, the right to receive notice of the categories of personal information that will be collected by a business, how the business will use and share the personal information, and the categories of third parties who will receive the personal information. The CCPA also confers rights to access, delete, correct, or request a portable data set, the right to limit processing of “sensitive personal information,” and the right to receive equal service and pricing from a business after exercising a consumer right granted by the CCPA. In addition, the CCPA allows California consumers the right to opt out of the “sale” of their personal information, which the CCPA defines broadly as any disclosure of personal information to a third party in exchange for monetary or other valuable consideration. The CCPA also allows California consumers to opt out of the “sharing” of information, which restricts a company’s use of personal information for cross-context behavioral advertising. The CCPA also requires a business to implement reasonable security procedures to safeguard personal information against unauthorized access, use, or disclosure and imposes purpose limitation, data minimization, data retention and other security compliance obligations on regulated businesses. The CCPA requires businesses to include specific provisions in contracts with third parties that process data on a business’s behalf regarding the third party’s processing and management of such data.
The CCPA does not apply to personal information that is PHI under HIPAA and that is collected by a business associate or covered entity under HIPAA. The CCPA also exempts patient information that is processed by a covered entity and maintained in the same manner as PHI. Accordingly, the CCPA will not apply to much of the genetic testing and patient information we collect and process. However, we are required to comply with the CCPA insofar as we collect other categories of California consumers’ personal information, such as information about California-based employees, contractors, business contacts and website visitors.
The CCPA is enforceable through administrative fines of up to $2,500 for each violation, or $7,500 for intentional violations or where we have actual knowledge that the personal information relates to an individual under 16 years of age.
In addition to the CCPA, four new state privacy laws went into effect in 2023, including the Virginia Consumer Data Protection Act, the Utah Consumer Privacy Act, the Colorado Privacy Act, and the Connecticut Personal Data Privacy and Online Monitoring Act. In 2023, eight other states passed comprehensive consumer data privacy laws, and many others have introduced similar consumer privacy laws. These new state privacy laws and any potential federal consumer privacy law will and would impose additional data protection obligations on covered businesses, including additional consumer rights, limitations on data uses, new audit requirements for higher risk data and opt outs for certain uses of sensitive data. The new and proposed privacy laws may result in further uncertainty and may require us to incur additional expenditures to comply. These regulations and legislative developments have potentially far-reaching consequences and may require us to modify our data management and data use practices and incur substantial compliance expense. Our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal data, or to protect personal data from unauthorized access, use, or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals, fines, damage to our reputation, and loss of goodwill, any of which could have a material adverse effect on our operations, financial performance, and business.
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The following updates Part I, Item 1. “Business—Government Regulation—Information Blocking Prohibition” in our 2023 Form 10-K:
On May 1, 2020, the Office of the National Coordinator for Health Information Technology promulgated final regulations under the authority of the 21st Century Cures Act to impose new conditions to obtain and maintain certification of certified health information technology and prohibit certain covered actors, including developers of certified health information technology, health information networks/health information exchanges, and health care providers, from engaging in activities that are likely to interfere with the access, exchange, or use of electronic health information (information blocking). The final regulations further defined exceptions for activities that are permissible, even though they may have the effect of interfering with the access, exchange, or use of electronic health information. The information blocking regulations compliance date was April 5, 2021 and the HHS subsequently issues a final rule called the HTI-1 Rule that, among other things, revised the information blocking regulations, effective March 11, 2024. Under the 21st Century Cures Act, health care providers that violate the information blocking prohibition will be subject to appropriate disincentives. On November 1, 2023, the HHS published in the Federal Register a proposed rule to establish such disincentives. The HHS has not yet issued a final rule. Developers of certified information technology and health information networks/health information exchanges, however, may be subject to civil monetary penalties of up to $1 million per violation. The HHS Office of Inspector General has the authority to impose such penalties and on July 3, 2023, published a final rule in the Federal Register codifying new authority in regulation, which became effective September 1, 2023.
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into this Quarterly Report.

No.Description of ExhibitFiled Herewith
1.1Underwriting Agreement, dated September 1, 2020, by and between the Company and Jefferies LLC. (1)
3.1Second Amended and Restated Certificate of Incorporation. (1)
10.1Warrant Agreement, dated September 1, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent. (1)
10.2Investment Management Trust Agreement, dated September 1, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as trustee. (1)
10.3Registration Rights Agreement, dated September 1, 2020, by and among the Company, CMLS Holdings LLC and the other holders party thereto. (1)
10.431.1Private Placement Warrants Purchase Agreement, dated September 1, 2020 by and among the Company, CMLS Holdings LLC and certain of the Company’s directors named in Exhibit A thereto. (1)
10.5Letter Agreement, dated September 1, 2020, by and among the Company, its officers, its directors and CMLS Holdings LLC. (1)
10.6Forward Purchase Agreement, dated September 1, 2020, by and between the Company and Casdin Capital, LLC. (1)
10.7Forward Purchase Agreement, dated September 1, 2020, by and between the Company and Corvex Management LP. (1)
31.1*X
31.2*31.2X
32.1**X
32.2**X
101.INSInline XBRL Instance Document.X
101.INS*XBRL Instance Document
101.CAL
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase DocumentDocument.X
101.SCH*101.SCHInline XBRL Taxonomy Extension Schema DocumentDocument.X
101.DEF*101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentDocument.X
101.LAB*101.LABInline XBRL Taxonomy Extension Labels Linkbase DocumentDocument.X
101.PRE*101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document

*Document.Filed herewith.X
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibit 101).X
**Furnished.Furnished
(1)Previously filed as an exhibit to our Current Report on Form 8-K filed on September 4, 2020 and incorporated by reference herein.

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SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CM LIFE SCIENCES, INC.
GENEDX HOLDINGS CORP.
Date:April 29, 2024/s/ Katherine Stueland
Date: November 16, 2020Name:/s/ Eli CasdinKatherine Stueland
Name: Eli Casdin
Title:
Chief Executive Officer and Director
(Principal Executive Officer)
Date:April 29, 2024/s/ Kevin Feeley
Date: November 16, 2020Name:/s/ Brian EmesKevin Feeley
Name:Brian Emes
Title:
Chief Financial Officer
(Principal Financial and Accounting Officer)

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