Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the GeneDx' First Quarter 2023 Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions]

today's is that recorded. advised be conference being call Please conference to your Investor I like the Relations. over of would now Head hand to Truehart, speaker, Tricia Please go ahead.

Tricia Truehart

today everyone Thank of Head at is you and Relations call. to you, joining Tricia thank Investor us on GeneDx. Truehart, this I'm who

and Officer the Brendel, and On President Chief today, Kevin Officer; Commercial have we Executive call Jennifer Feeley, Stueland, Officer. Katherine Chief Chief Financial

A on ended copy financial released for first March results and XXst XXXX first deck XXXX. website. the Earlier earnings today, GeneDx our of quarter the release the press slide of quarter are company's available

harbor Before statements of Litigation Securities remind Act within we you the laws, of to of Reform forward-looking XXXX. meaning safe make securities federal will pursuant provisions begin, the made like which Private that I'd are management the to

Any this statements of forward-looking forward-looking materially predictions in or to of performance expectations factors. Actual implied events, relate from results or that are a results variety may due differ to or expressed statements. contained future call those statements, in the

involve and risks, Additionally, in our and guidance, revenue for our expectations several and XXXX cost the gross particularly uncertainties margin expected and savings these assumptions. our growth, profitability burn years of financial cash over forward-looking a statements, number next reduction

our a performance. estimates only and us should considered these should are the that We you For not and with latest Commission of be statements by urge risks the to Form a the GeneDx' consider filed and filed the Factors documents time-to-time you guarantee list these Exchange associated Risk XX-K factors and with and business, section uncertainties from description SEC. future of to please refer other Securities the be with of and aware

may measures. we certain call, the financial non-GAAP During discuss

materials other reconciliations regarding other measures, the earnings section website. these refer information as measures to well release measures to and the of financial our in Investor our For please GAAP as Relations of non-GAAP

of to by as or whether or events today, Xth, accurate any time-sensitive required and projections revise May because any contains or This conference the information XXXX. new law, live GeneDx update is otherwise. statements, only or of as information, future call intention except forward-looking financial disclaims broadcast obligation,

that, with to call the Katherine. turn over I And will

Katherine Stueland

excited Tricia. to in like back share and far XXXX. take I'm you here progress But a you, to begin, at our so remind I'd why we're Thank GeneDx. step

massive the a conversion to from testing panels. Over multi-gene decade, we've past single-gene seen

pioneering With more the GeneDx versus comprehensive played also whole role in conversion poised in clinical lead era, supporting has more this GeneDx set services ushering comprehensive, exome is answers more to instrumental to deliver more of an data this necessity definitive exome patients. more to testing. now genome an whole new of panels, with sequencing even while and multi-gene

Today, we're focused disease on the testing pediatric setting. and rare

lack a generally of care a current diagnostic for for With and children is multiyear usually of in resulting the odyssey standard testing, their parents.

rare average, that know years diseases And eight that on We a all a takes when genome from weeks. to diagnose fact that it In we shortens dramatically taken are not exome disease. and timeframe to as whole. also pediatric-rare testing, these at years rare know

disease XX of cancer. as actually be half as nearly eight with women Consider are are that in Similarly, Think in hundreds rare whom have cancer children. will there cancer. people that together a X,XXX a of, is breast constellation of are common one how Of of one diseases diseases. diagnosed rare

And million in or not U.S. fortunately, each genome we one fact, estimate from to mission testing. alone the benefit over children In infants whole expand year we're in would that our alone care. and exome

given and as major the and/or whole exome highly the genome are a and whole validated test Medical genome exome societies, Society such are as first-line cover moving for ACMG, NSGC Epilepsy payers testing, American national sequencing to costly and alternative. calling

over tested is past has completed Of of the year. in building. past a XXX,XXX Momentum have exomes quarter just decade GeneDx been the them the

genome exome and become we neurodegenerative increasingly the us expect to population. whole disease we allowing patients standard tests cardiovascular will that of diseases future, expand to look with the broader into as, As such adult and care for

utilization to job of services, number is as today, primarily converting on panel an as serve testing well But one testing. as that with expanding pediatric physicians' of stepping the our emphasis use in exome tests stones exome

patients genetic market in XXXX quarter our generated into that, in over the let's pleased physicians our coming So and XX,XXX I us say to first We growing. we've revenue are increased of more nearly And and turning at in more. volume GeneDx this saw $XX is across testing of tests am confidence dive that million testing to quarter, giving XXXX. progress. all and the

growth focus on gives accelerating the volume all and will QX test strategy from to The working, exome is conviction our QX revenue the that is gains into us the in lines of growth. materialize these Furthermore, working. the use

of which revenues in exome increase test, of and genome exome a reflected million full $XX.X year-over-year volume $XX Our the revenue, is million delivered first progress quarter. increase in revenues and the whole in robust of the representing in XX%

our We deliver in course of and revenue this these as throughout see expect approximately April, gross volume momentum continue year XX%. the we to to a of see expansion tests the of exome growth in margin and margin

in this ordering to towards margin a build shift and from that frame the are second factors see amount quarter enable will time growth recognition, this to expect of results revenue revenue There half we the five in year. and second acceleration. significant gross the Given of

continuing strengthen our strategy. First, footprint commercial we're to and

patients our important as them as certain of and Our team volume includes broader testing. genetic that This see better to We physicians stones is increased the tests are to exome. on strategically for non-exome focused physicians converting with become comfortable are stepping business. tests that better for

We're are diagnostics. encouraged exome genetic were testing ordered nongenetics, GeneDx. to a that patients tests by We're and We in behind. which GeneDx their yield customers panels, data educating that multi-gene leave physicians first who exome QX to compared of new CMA, also new clinicians provides higher who like that show be FMRX, diagnostic many may targeting to XX%

taken orders invest among higher year sequencing. sales incentive We And orders first and year. support our for commercial to dedicated XX also the in of includes client team. from were growth. sales teammates added our last to XX test drive the We've and to We've rep medical and from part to United specialists continue care the neurologists expanded That across team. to pediatric significantly each to States managers, territories our managed to cross-functional conversion science the also Leason, built relationship panel exome of compared plans

marketing. is acceleration our in Second,

engagement meeting generating ultimately increasing data are at variety and clinic. aid initiatives of efforts, brand and to conferences, through them they Our and launching talking in team clinician in growth. awareness accelerate of the share where in publications, focused the on is to and build We're a QX education, outside

we Our differentiation cross-channel GeneDx's as through from and to QX continue others to recognition the in offerings website e-mail to and we awareness that. traffic market. activities campaigns drive expect on to our social advertising, and doubled XXXX, fact, And of brand expand bringing and presence build since media we've build

providing patients. CMA. which sequencing the exome exome data much more X,XXX Annual covers of data showed and poster, CNVs, to and the diagnostic a CMA Third, than the patients new exome into or that recently to detecting who we sequencing sequencing had demonstrated CNV. compared is yield sequence only where variance recorded CNVs, or as as copy exome in CMA both on higher number microarray variants it clinical we're for Meeting, We continuing limited to research, which ACMG at insightful presented over chromosomal sequencing value diagnostic of And is the contribute advantages also

outdated guidelines CMA and is exome why less a adoption presented current used commonly care research at these driven and to critical time. data that driving ACMG takes guiding is conversations are convince a clinicians first. test standard our should order Sharing by they of

focus We've collection for has automate sequencing, time efficiency. to option, rapid COGS been experience product patients Fourth decreasing which rate relative our Trio improve on swab genome shown including facilitate our for parental is enables by or samples quality. our for Buckle key turnaround also collection the results gross margins. been diagnosis and customer with increase and Automation double. is and the quicker of testing, easier to nearly high our introduced to testing shorten which expanded We've to working to same improvement also operating our

goes The our fifth beyond own efforts. factor

amplified genome with sequencing. aware and and notice in taking societies the sequencing are policy payers of adopted medical be these of Cigna are they UnitedHealthcare benefits and working are work of sure by who and exome particular, health-economic Both changes. have recently Our favorable physicians to of is we clinical genome coverage and favorable

do Recently, state coverage to and XXth are state an published sequencing make updated coverage so. Carolina exome clinical North Medicaid meaningful for the outpatient to continuing becoming policy to coverage setting add progress. groups

do to barriers One the of many with results. key testing what to of the adoption is the

step so to further advocacy relief. many, patients best help And answer a possible getting groups to an and connect we're a payers by them. with a working ecosystem the broader committed For to for as treatment of biopharma, going

opportunity with our biopharma of across Our based are Centrella seeing flow deal which therapeutic the clinical We're data and significant. genomic is on various partner generated areas part to assets, platform.

including quarter, on groups. data we first with signed the or focused neurological diseases In forming rare disorders, agreements companies five

product these are Centralis scalable a internal partners have with patients We efficiently data gross We agreements deliver gather as Data teams value our margins helps believe more highly launched called also well. these which Explorer, and and new high our opportunities. high to and

to discovery way in our improve health direct reach drug exciting in personalized XXXX. moment delivery care actionable We're treatment and profitability to on an of to we're year-to-date performance strong the accelerate inform in diagnosis With development. clearly and and health insights

Kevin. pass the with to call that, to like And I'd

Kevin Feeley

and wrap Katherine. business. financial our since with Thank all are gross revenues improvements another would to spend and burn through cash our like up I which you, XXXX you restructuring, aspects and guidance, margins address on take we then With seeing across from we're first company quarter I'll basis. past reaffirming. meaningful operations total a XXXX continuing of

increase compared forma XXXX, of $XX quarter volumes year-over-year. to was up of sequencing continuing growth by XX% million in quarter in first driven whole and the sequentially exome first The revenue operations the revenue. XX% million X% $XX.X XXXX. from pro are test was Total During

reflective quarter of. few of a effects aware first to revenues transitory The are be

First, of deductibles co-pays. insurance and the reset annual

decline The reimbursement that creates a then first up and the patient quarter year progresses. typically brings a rates to in insurance reset seasonal average plans as ramp that

change that direct favorable to order line margin accelerate made with clients. while to we for our long-standing and maintaining match gross billing adjusted some We in also plan in Second, growth profile. pricing current certain a rates

sequencing. sequencing on we to our think tests. often gross carry team But of test compared margins volumes exome rates exome. up non-exome sales intentionally are that Third, higher-value to whole our a tests lower them lower These mentioned, stones to and exome as Katherine mix, precursors built ordering client certain reimbursement as average the stepping

quarter the and XX% for XX%. in forma operations sequencing whole was sequencing first Adjusted exome gross exome was in approximately margin the Pro volume margin total XX% gross adjusted from continuing whole quarter. represents of

volume makes March we mix, in gross resulted highlighted, production the margins. through April has its way and As our Katherine and blended expect that accretion

seasonal to implement Beyond year, both and gross and mix margin operations. through a effects, times further aimed number will our working our shift turnaround at naturally improving the are lab COGS projects which teams throughout expand of

equipment, end-to-end automation These aluminum and of Twist production and counseling and a next-generation across but implementation limited of not be include Biosciences, number it processes, library genetic are of writing steps. further the our to, preparation introduction of report the consolidation AI

we're exome are in the strong improving coverage underway revenue across reimbursed. order management cycle to optimize ensure whole environment Additionally, policy initiatives and to there for properly promising

same You to to simplify gross care where expect the clinical and our continue expand performance margins test to see and should both we of time. tests also menu ability economic improve monitor the patient the the at and us

and and at We have operations technology optimizing experience. the hard costs lowering product that a work customer best-in-class is and team

diagnostic Total discontinued the in $XX.X loss all of now was compared to million million activity, same period company of XXXX, including Semaphore an adjusted $XX.X net quarter first operation, the adjusted inclusive the XXXX. of net loss in legacy of

XX% $XX.X an the XXXX. first million quarter net loss compared to adjusted of for is fourth quarter of an The improvement of

improved XX% quarter, first have cost of to year-over-year mitigation in ongoing the burn discontinued to operations. portion is delivering related efforts we a approximately million are substantial cash our $XX by which and Our

quarter expect quarterly of We sequential the rate through this burn to year. each reduce

will in Operating expectations the in we the have from separation quarter. operations to line and come down discontinued complete continue G&A aren't Expenses, in as expenses reduce expenses, with first we done. particular, and

legacy of the our We'll integration and second GeneDx finalize on the sharp remaining some activities quarter focus and between gaining our across efficiencies business all in business. continue aspects

of April as Total cash, that and capital final of XXXX. and raise were $X direct March received offering January was cash in tranche $XXX In million the XX, equivalents XXXX. the $XXX.X from part million cash XXXX, registered restricted million we of the

$XXX in reaffirm we issued Turning fully $XXX XXXX gross the margins guidance to We XXXX and previously to servicing our we to of use to million guidance. $XXX million cash to in activities, of continuing we exited obligations of use and to XXXX expect the to are of million expand profitability XXXX, XXXX. beyond. in expect for $XXX We in million operations. $XX Inclusive believe revenue expect million $XXX funded in business million and to we

last reverse week a been all amounts share X have common today to presented a per Finally, shares for in amounts split split. all XX-Q reverse the retroactively Accordingly, additional periods our and we where adjusted, reflect stock stock paid-in and XX affected at applicable stock ratio. to capital filed

shares important shares we an the outstanding. of note additional direct previously payments stock the milestone closing in as that of of of XX,XXX,XXX and March common the GeneDx part to April we XX, XXXX had is registered disclosed as X,XXX,XXX As acquisition It XXXX, issued offering.

that for with Q&A. will call over operator the turn And to I the

Operator

this Brandon, your conduct question first Our you. from of Couillard is now At session. Jefferies. [Operator comes time, Instructions] line line we a Brandon open. from Thank question-and-answer the will

Brandon Couillard

I Hi, to us ASP at That to just we what's stone? And stepping the ASP with just multi-gene described you as thanks. team and in I guess sales so that. that rationale those a think Thanks. remarks. strategically, prepared volumes being Do spoke the of be behind guess of non-test the as commercial look revenues through normalize realized of Good using the expect quarter, move strategy. help tests and in I or year? improve Ken, the realized up, the afternoon. the your the seems single some as if trend But to of we down, newer reconcile this Catherine driving that a aspect kind you you

Katherine Stueland

Absolutely.

was indeed strategies team to to key volume overall autism and able the include up clinicians across to But is that the one And board. from FMRX be exome. the sell pleased So incentivized testing. the getting moving sales really does there CMA of

of the at came why spending out may CMA why educating calling ASC that some be them fall, as time So we're for a a test on and CMA on data last outdated. exome AAN of guidelines superior lot is at and

momentum expect beyond in the to year. continue the and continuing of April that momentum into are is the We see QX the rest building April and growth exome will

huge I also can think we're data. the It's the give where we as of our at, aspect them percentage But clinicians look at really revenue of here. the that we exome drives, of they ensuring sooner. meet new spend that it's forward a in data to educating the it really they're strategy one team as the to taking MSL relatively be time why the why exome, invested we've them should on there get pertains reasons to step

want of message case. pocket us. to that zero we're have that's to that And working. They that see start out to it's also five that and we want of out see patients four with want that delivering see for see exome they with clinicians that They exome the the

expect build able this in the out that half include the we trajectory to year to second that will of So the be and we've on ASPs to set achieve. momentum

Brandon Couillard

it's the and just pace those? you'd whether top as helpful. of two reimbursement, And would we Mark think color back drivers share how year? move as us lab And or that, better efficiencies, then with we in should one magnitude That's the terms Okay. mix, margins you gross be about willing of Kevin, to rank what of the through

Kevin Feeley

Yes.

out adjusted our full year guidance, above the the of exited we We with we'd where at expect XXXX. margin. reiteration the So quarter fourth average gross ended XX% full-year to consistent

towards we think, we growth underway. main out really quarter see continuation COGS I mid-XXs. the through efforts that way improvement have a of that each something is that the playing is sequential The drivers towards year of of the

the test. of expect of examples prepared see as improvements year seasonal sequential I We progresses those then gave remarks. shift and effect a the the towards ASPs in higher-margin few mix in my overall to do

does to we be gross second back will guide combination all in XXXX. So really us margin profile quarter that but then the beyond it the able to be full the of exited see getting fourth-quarter that our above reaffirm towards those, take and of year where

Brandon Couillard

how of of XQ? Okay. first And restructuring the by burn then much the end in cash the fully and outlays quarter to expect you tied those was be behind to

Kevin Feeley

We of will the further It way improved are But future. our some some business very There still some in look Yeah. was was the the downs remaining at I into first activities included line the pay go plans. diagnostic complete. our in quarter. Semafo and with remain to quarter. much A accounts pleased is first Overall substantial where now although was us think shutdown that facility have with ended of we payments burn expenses leases payable with the we the operating amount substantially.

to you integration at line GDX, basis of on If XX% following impactful really line on improvement that were off include finishing merged systems out of stock-based acquisition adjusted sequential bottom further with the the depreciation taking some a and versus our just non-cash previous the an items left and look compensation quarter. fourth bottom and IT ownership over its up getting reduce in of items them the burn Semaphore. activities More

quarter quarter wind to in the really pleased activities of $XX in on coming and the burn in million of XXXX. quarter continued neighborhood expect those and -- leverage in fourth then overall, the improvements OpEx down fourth But we're taking see with for with the driving second sequential focus down We'll the G&A. see of

Brandon Couillard

Okay. Thank you.

Operator

to closing remarks. would like the very turn Thank call Katherine much. for back to you Stueland I

Katherine Stueland

want just us. thank to continue so who ability and many to rely and say, our who that teammates you of the are grow patients. the to we on their the shareholders, trust to who to patients definitely plays customers a I thank customers business role our our serve want in trust to lives meaningful to most I in putting this

talking thank forward to So we you much you with soon. very look and all

Operator

Thank you for in your does participation program. the This conclude today's conference.

You may now disconnect.

GeneDx (WGS) 9 May 232023 Q1 Earnings call transcript