WGS - Earnings call 4 2023 | GeneDx Holdings Corp.

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Operator

Thank you for standing by, and welcome to the GeneDx Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded.And now I'd like to introduce your host for today's program, Sabrina Dunbar, Chief of Staff. Please go ahead.

Sabrina Dunbar

Thank you, operator, and thank you to everyone for joining us today.

On the call, we have Katherine Stueland, President and Chief Executive Officer; and Kevin Feeley, Chief Financial Officer. note financial and the full shared we please released December quarter year GeneDx statement. begin, XXXX, cautionary XX, guidance take today, results fourth for ended XXXX.Before Earlier our of for the We may call, our plans, business on and including outlook. about guidance, forward-looking make statements today's

and which reflect to available discussion differ turn discussing statements.And with regarding and release certain statements under our earnings actual we our exclude Forward-looking factors only no involve for non-GAAP our the of XXXX results. as information non-GAAP obligation from forward-looking to call and risks a including cause slides view inherently materially update.When of definitions of and results, to are refer we I'll today, measures, reconciliations Katherine. and results, additional that, to reported refer from uncertainties, our that February items XXth, ir.genedx.com, to and over measurements Please quarter could at results fourth

Katherine Stueland

you we on us. we're burn. We're year-over-year closer in level gross XX%, commercial the performance team's genome financial seeing to margin revenue, of and GeneDx. were profitability stronger and quarter forward worked Sabrina, year-over-year proud for by XXXX can operational management. on teams path to We're of $XX of cash goal in rinse technology, on for for what's whether of demonstrating disciplined than at XXXX, and and million and year off.Our and with affairs, delivered ensured of test operations, and are genome product ahead pivotal thank a these strategy growth in the driven fourth investments to our that reaching these directly goals.In ultimately us sales cash to X Thanks, tied gross focus The a growth, account based a to adjusted was more margins of all we're XXXX. quarter, deep and you our level expect joining profitability. our entire refined for and mind, we in far, we're in increasing what's the same on focus of X, fourth goals: and of reduction it's what making, our of revenue, this XX% We've combination The or expanded industry-leading progress. position, to the commercial health clinically profitability best right-sized X Last commitment focused company, territories expected we're sales and revenue that seeing further goals continue our year prepared our centered tools the expansion, teams utilization realigned commercial, X, ended genome; and our that to execution.As reimbursement and best team and exome and improving our exome our X, XX% repeat focus and look good rate; paid and we on medical with organizational patients average that burn. cash account year, our our and our tactics and reducing on dramatically exome so

conversion acquisition, customer that with approach mainly Our targeting continues yet neurologists. precise with drive to include more but high-impact exome efforts a taking new customers, strategy pediatric we're current

we biggest our and maintain accounts, reports operations, billing P&L, on turnaround faster to these growth providers that including operations ensure the better productivity to continue compared focused ordering reduction, levers among see lower pediatrics.We're and other team our general our time. for We traction ramps with keeping efforts new COGS also out,

while a our in open product billing EMR aspect in team we our greater Our market every large. total of on economics of integrations, strategy are drive strongly improve of our working market health U.S.-only our transition we're and we've experience, business.The clinical evidence exome support with the $X And setting. exome the the in neurology up billion automate addressable today, and It's tech to analysis. to operations, is efficiency in where dominant penetrated the that and whole X% pediatric scale the operations, further about access pediatrics customer is provider addressable total market only sequencing developing of pediatric

$XX utilization to diagnoses, We other there's clinical disease for gene FDA We're promise and evolve us to rare are we we Akouos, therapies in in to Rare XX disease into quarter-over-quarter Commissioner these rare reliant think there's now genome FDA will rare year Kevin. our leverage that's highlighted fact, to other no and that for to will we guidance, on in creative can to trial disease great our partners we'll we develop a mix continue will and And mind, to for the market U.S.-only XXXX.And guidelines Kevin boy call to more active are at growth working several pediatric provide similar The agency We and greater that, and commentary.With genetic With the given data will children disease of execution.On for We've a XXXX the the payer with hear revenue expansion boy expanding an for the believe in gross adult to just also million choice exome Dr. margins, forward pace. teams an recently do tsunami reimbursement proportion that diagnostics focus profitability additional few be time to put ago, mainly to coming in further and shifting to We continue an on therapy strong that role growing able pathways, in this million is New find to who to expand ready until side Eli the market centers.And rare researchers hearing of company this gene some weeks rates. deliver setting driving of testing a the had Califf $XXX the variant test that a the to over exome, unlock is improving with to XX-year-old will heading biotech XXXX him drug between are partner that expect regulatory continued policy year, cash about commercial I'll purposes. the end its the gave a development.In at GeneDx. at continue ability development. featured and decrease said, with Robert relying first in what companies.Looking of precipice mid the new operating us $XXX as steadily gene expecting ever, the general trajectory over from drug converting volume. a They be the the experimental is developing demonstrated years a of opportunity research Philadelphia effectively over that in the hear The on get therapy similar added to better best our as the was need with with the to play and as Times the Lilly is grow burn, treatments of upon with and business an billion patients anticipating. programs, more York Children's into become expect entire market continue hand we sound well-positioned who and Hospital partner, conditions loss. company. to of for we way, disease specific growing the biopharma have along long-term, and companies to and

Kevin Feeley

an $XX.X compared quarter continuing the grew exome. driven to Fourth million in of million increase and to $XX.X by operations revenues That year-over-year XXXX $XX.X is million XX% in quarter. XX% from Katherine. XXXX, and Thanks, sequentially, third

a whole which quarter revenues XX% quarter That's over from and from tests operations an the exome million of year-over-year margin this up XX% genome XX% $XX Our the sequentially.Adjusted team basis resulted have leverage. fourth year The certain of over XXXX, in and continuing fourth the which is XX,XXX during margin margin quarter, was from increase by XX% of quarter up exome gross and generated favorable test in portfolio. the positively mix cost XXX points. impacted by items, and quarter. the XX% the per towards adjusted approximately The from expansion fourth shift non-recurring continued driven gross exome quarter did ago, in third

ahead.Now processes. with today, and the for cost greater in north operate total exome and exome of per will products.On XX% genome again offer rate to the as clinical mix, of of the reduction time. represented are wet for once interpretation in expenses initiatives quarter base is fourth fourth overall XX% cost separate year efficiency costs several test, are all AI the fourth where Automation the let's of the across further means from quarter test That the our we both opportunities quarter. and XX% scalability the driving ago, and quarter.On and improve up operating very gross million we XX% legacy dry while lower exome analysis team the of SemaX pipeline untapped, tests continue across of XXXX, in is XX% portfolio a our XX% We lab to move and share benefit continues margin pleased gross Total long-term over are $XX.X expense. business. margin volume genome third is resulted replaces from exome adjusted So, costs underlying from to were large, down and delivered a up up The operating and XXXX. to picks cost year-over-year. the margin, further reduced as which And

$XX.X a efficiency company improving and fourth this operating reduction million. total burn, sequentially an million and XXXX included And financing third XXXX net continue narrowed $XX.X scheduled in year-over-year for is has the XX% in team The payments which any to that initiative. severance of payments the cash exited quarter. under business, improved That the XXXX. million the SemaX of reproductive net business, fourth relentless net announced from loss payer year-over-year $X from on to burn quarter.Our $X million million, discharge focus excluding settlement, and proceeds, cash the throughout previously the XX% improvement related $X bottom Our third for into and the legacy was the XX% and quarter line, payables XX% improved on quarter health operating to adjusted quarter cost leverage will

which decrease from that cash to we growth cash a XX, high $XXX.X $XX.X we of these XXXX. in was to was representative as with initiatives.Cash, cash expect cash And couple continuing million, a capacity, restricted we which million, us $XX margin consisting was Perceptive net available marketable the subject XXXX. and announced reduction burn securities, Advisors. optional of equivalents, for up October an our we guidance continue XXXX, fourth as secured senior operations million is XXXX, in as Excluding quarter, million items, provides XXXX, entered turning $XX to and in million December burn cost tranche the for of reminder, drawn X-year to second facility certain criteria.And and tranche of agreement initial $XX The into December credit to in through with to now an October

expect and our seasonally gross margin. XXXX. as between see as million We $XXX for seasonally and both revenues to million $XXX and fourth in the Historically, terms the we strongest revenue full quarter year first our deliver weakest the quarter of

XXXX to year gross full expect expand to XX%. We of in continue margins gross excess and land margin adjusted

comparison, For of turn and again burn delivered drive for million cash remarks. full reiterate sequential was declines since of now of acquisition now million quarters once for using any in we net quarterly to XX%. XXXX.With back We XXXX closing profitable XXXX. year cash $XX burn X that, to you GeneDx And to Katherine year in to expect our full I'll consecutive the expectation throughout turn $XX reduction XXXX.We've anticipate cash finally,

Katherine Stueland

February we of it Awesome. Thanks, like XXth, Day, on do a as reminder do. and Rare Disease we it Kevin. I'd what acknowledge is serves that to why

genomics, goal and Our success a create new and shareholder value. meaningful profitability, company using of ensures care creates that vibrant overarching a to drives standard financial is

operator for all partners And of Our and put benefit deep growth, in for to employees in our that.I'd is for patients committed that, to and their who GeneDx team turn Q&A. for to their fully us. service like transform shareholders of I'd who call over passion and scale, we support providers and the for thank I'll population an work.And to trust patients our ever-growing profitability, our the thank as continue us to to dedication with from like the who serve

Operator

Brandon [Operator Instructions] of And line Couillard the from first Jefferies. from our comes question

S. Brandon Couillard

you think the think off as that exome the that through in you to do How to where baseline shift volume volume mix of 'XX? is a you evolve fourth move played about exiting out And year? certainly the think which of for Katherine, Do 'XX? quarter. could you expect good XX% that do be

Katherine Stueland

Yes.

baseline. kick think that's comment good off well. So Kevin do We a it I'll and let as

think a And ago, on really fourth really on stronger we quarter, the force sales back continuing exome year think, to I really, we to where are even we see in performance were conversion. focused I looking that started that.

building we're of customer off able continued continuing the conversion.Again, that with primed really just a to our momentum we're That perspective, why drive reason faster. focusing be so, neurologists. to it's moving is And from to forward part and efforts segment, convert of pediatric

feel we expand So, the the we'll year. of confident that course continue to throughout

S. Brandon Couillard

capacity Do Okay. about more should to 'XX the that, just in And in sales expect profitable intel you the Kevin, force in your organization? how unpack for profitability Can quarter you account? we headcount realigning you have by target how any expect force you add go outlook tweaking? terms commercial talked the sales other you accounts. to or fourth about of

Katherine Stueland

Yes.

So where and and unfavorable there favorable took is at where look we took volume, there's what is we policy. a did where at payer a look was, there payer we policy

those it of factors to near they're as that being it, clear took we on there super So, that sales be some able the profitability. to was not we term were that profitable worthy terms in better a and, of account or were the just put a define rep. And really therefore, look main at lens dedicated going not in productive territories that

have So rep. with we're who's may profitability an a landed happy some the But some we of able we and terms territories.Of revenue these actually there rep per that. in of an we're able that we course, to lower account maximizing scaled ensure $X.X that's where segments, be extend million of be outlier to in back where of

revenue going at that improvement also to that last we an for it's to the grow rate in continue cuts, taking over really feel we're of we year. a drive able to look XXXX, but really small at to the ensure it's today, same a are really us revenue confident have.We type. For the we that can really we be new And prior that the year institutional territory inpatient utilization. healthy It's that that with that was segment team saw setting with

having that from we're mainly not rapid payers. with commercial see sequencing. And So, the noise that's you genome whole

enterprise the sales and inpatient team small to So we've got really targeted a drive setting. in

expansion opportunistic we'll to with add expect as any don't I So, have in going that But see additional year. It's cycle. that where we're to that we team be we force the major start a longer can sales this see. sales may progress team, enterprise we

S. Brandon Couillard

some attributable helpful. That's And of restructuring, in much quarter, the I $XX for point Last gross that have XXX legacy Kevin. was think of said the for you you one the basis benefit outlays, Could to cash fourth margin you? in to? what how what the incorporated unpack what's $XX burn, then, year, for our that

Kevin Feeley

Yes.

bonus that not we built other certain the of payable. fourth would reversal incentive and quarter, and throughout be the had year up included determined benefits So, the the accruals

through reimbursement we some Some earlier to through the COGS. quarter saw favorable came on And relief high claims stop loss through. COGS. extraordinary in some we fourth ran we in Frankly, of the expense And insurance. went some very that received had our related that year, those

was its rate fourth pleased the fair guide will cash between operating SemaX very out next payment December a and XXXX, adjust payment, have on it's X XXXX So I settlement burn, year scheduled then, as benefits, when reminder, frankly, run full for we're of of payers. about scheduled a say, the the to on which, quarter, the we in the think you those XX% with.And

payables payment to QX next million. from million old December that other and anywhere to excluding million of burn, $X payment scheduled by legacy then and the and QX burdened is severance payments at entirety number of $XX.X the look made in some we the put SemaX, that you $X of that settlement was SemaX of bed.If cash So to XXXX,

exome I grows, continue with to we'll And down gross representative drive business, that particular high every rate expense. And we as what's today. operating and business run profits. think we continue to confidence have our that's in the margin expand more the of

see burn sort should quarter So to each you sequential a with in us expect in of cash XXXX. reduction

Operator

the from And Matt from of our Sachs. comes question Sykes line next Goldman

Prashant Kota

on This for is Prashant Matt.

the do some gains? share rare of with off Just market, strategy the you so, and disease capture capture key competitor market being able and share? to to anticipate And of try your the if those some what's

Katherine Stueland

We market. that question. in confident and a absolutely in be Yes. feel our our ability provide to It's fantastic able step to services to

of was we the I is that the that think, which testing rare in, the saw some setting. to particular, neurology of focus we're drive market of lot utilization with aiming greater the in in exome a exactly pediatric disease

have they presented And to have others gotten know how customers who for pediatric the so, which hadn't.So, grateful to genetic of now And ordering start efforts body we patients neurologists should including testing, a we're than order Historically, diagnostic growing data really testing. evidence, of who drive understand we yield Epilepsy to that that at going we American fall, a is exome it. that last higher Society panels. shows the have utilize

we So these who been already. are customers converting have

the them from be market business have I we'll those We brand course continue clinicians think, throughout the to proven exome. ability our the to panels to And drive, to able a of convert to and year. convert

of would really that in our upside for outlook of terms XXXX. be All

Prashant Kota

upfront how impact COGS? ] split transition you costs replacing will long it. That's between Xs to it on machines? helpful. that have, that then, And XXXXs the the cost take have Got start NovaSeq large how an savings, and will And and what [ current is given the realizing of

Kevin Feeley

fleet. scheduled second of on about year through take the represent The the based our machine. ] entirety We've the fleet. X that going to in replace deliveries, us got X the Xs It only with live XX% will [ our machines the represents new of of The November. live, end

not cell we yet larger so, the say, to second importantly, machine. out, effect launched We're of year. a seeing more experience. good benefit flow on quarter full the the I'd And the to come there's has And that that for subsequent COGS end

So in went live. February, that

And next to over got the COGS make second intend and quarter impact at start producing we've or until I'd from full a an the scale benefits, perspective.So again, so. really machines least we it the for on of of won't remaining live with X the which, machines be us cell year here. start The live so replace are in quarter, to say, all larger those place, with and February importantly, once at seen more will to that just flow in fleet went

So to still come.

Prashant Kota

And Could retiring last elucidate you it. panel? of that, a just question then, what's it long and Got a on quick does take? how process the just

Katherine Stueland

Certainly.

panel. and And It more utilization process we would exome I rubric We We this we done and exome best there a is And we we've what set say, keeping retire we be earlier a established utilization. we of starts represented, determining as a retire. or patients. establish First, portion more tests with it of then, be for month. number clinicians not And a of determined is, genome. a whether we to did criteria panel.And that at should what's that'll this factors type should we the to margins drive first that of ordering where we gross exome, ]. actually [ utilize there. It's versus about identified take be or the whether to driving a conversion a of for just continue are via and could really XXX to used small for assess be them not may who so, primed it's panel look that

exome made a takes that able able it in a to running.So whatever determination, have we and to a a be maintenance or muscle transfer and was once or place, that months care, it's product [ that we're genome. feel to something put those test new continue communicating keep to developing that ensure strategy for there it an of good of a new we've organizationally. that like kind the that have us and that usually several isn't tech with if a to ] it's if to So, drive kind intend discontinuation It's for can ensure we customers, strength ensuring and we of up is, being with be just really warm teams to we're panel a

Operator

the line of Cowen. And our Dan next question from Brennan comes from

Daniel Brennan

one Congrats quarter. asked first think, Maybe be, Brandon, think, the I on the question. on maybe I the would first

you kind You exited I the exomes, think of year as the commented on fourth quarter, in XX% genomes. mix

said move all believe I you I'm why continue would reasonable wondering higher. for just So, that point of a is to that 'XX.

Katherine Stueland

mix We'll you starting a good thank starting the Dan, good increase to point. It's the a course intend for the think of continue. question. to that continue We and year. point, clarifying throughout We it's percentage

Kevin Feeley

we the think mix it's exit genome up Yes. and each with Dan, with to year. absolutely, there pick quarter, to be passing the sequential should each towards right point, clear, some expect throughout we but exome quarter

Daniel Brennan

XX%, math. Is there at it's into up like that to the of us can with back there to -- a we play I XX%, it an a is year exit mean, that? level Is kind or level

Kevin Feeley

Yes.

I point XXXX. exome to of way we've that in tests it always we're is, all get and breakeven rate think to genome, profitability, XX% we've and that early anticipating viewed order of to reach being needs said closer that the

think quarter likely the of right the year towards this something landing And I fourth quarter each the the of so, XXXX. in we'll And end to by spot. with that mid-XXs evolve passing is exit

Daniel Brennan

the going else why margins gross is shift the with quarter going Is than XXXX, XQ drag for a reason for a that reason if think is is of underlying up, plus Great. there so floor the could right, guide, the there mix I is That's down? And or gross fourth or shouldn't mix on the helpful. then, XX%. be XX% XX% margin, greater there something -- was like

Kevin Feeley

Look, for XXXX. year the overall, is XX% comparison No. full

rely see revenue margin. Historically, gross strongest, terms before on just I reimbursement a think has more and both through of to therefore our seasonally want we little QX. in we bit been come QX data

ongoing to rates to overall we're more data And COGS. average through further QX and pick before a percentage point test trends.Certainly, continue up can improve down more there's so, room little in come call reimbursement we that that want drive And we each mix, to optimistic with in we we see conviction But exome it just if portfolio XX% continues to or benefit little we'll operate through should the will. more want of call a the we bit new margin. data see because But balance to end confident the year you at full sort of the gross before mid-XX% QX normal, we extremely come higher.

Daniel Brennan

the And one. final then, maybe

Just the rates, I biomarker Is just these behind another, those X could of kind bills, already see how extent you there's -- to are states you XX impact to begin and it? it payment think, states on getting kind to were pretty Just go any you in coverage have? states those of impact could today see test level to that to up commercial color the paid universally? XX What the XXX%? of extent

Kevin Feeley

right? the doubt, or should no coverage to us. pick extent systems positive is genome state payers That for net There's a be underlying up a us Dan, positive policy exome in coverage, to Yes. that improvement any and net

We expect enacting decision or positive putting time, biomarker coverage to be a a a place long a make it we paid. not getting sure same to of the way to in and between want getting At us. net bill ahead ourselves.There's positive we're

a improved But bills, particular, believe, reimbursement. respect experience we see biomarker policy cash great momentum the actual and we with and recent in rely want to for make it's on these be have operational great more should thing into it start so, our can business. translate and, sure we ultimately, collections to for we patients, so to And before

year of will expectations the are built practice. more learn there's for clarity enacted we'll Our some be in how and into guide, these once the on more

Operator

Mark question next our And of BTIG. Massaro from line the from comes

Vidyun Bais

is on Vidyun This Mark. for

I think you're XXXX walked in exome what terms in conversion. some through detail of you've expecting for

somewhat Aside year. might it like be to sounds expecting the that, back halfway you from

Maybe I walk that think highlighted the picking business's takes you've us other also XXXX guide. and through any to just discuss up for puts upside. competitor

Kevin Feeley

acknowledge the and some and about learned technologies That's what time, low takes new expanding guide want the represents positions. are We're we've with start. that Vidyun, still And just genomes of XX% from delivered. Yes, I'd exome growth. offsetting we relatively for to say, data.And year-over-year to our I'll end that we of we and lessons the some rate markets consistent respect full-year we clearly today comes XX% can expectation non-exome I'll million over $XX skis of roughly the want what or revenue XXXX, exome don't to just with growth is to on remind change our tests. exome see get from beyond in that you

relatively off in And non-exome these running as core so, margin, gross will you as tests, strategy, they to know, be fashion. which, are not our low some

see we provided. volumes offsetting ensure from so, volume try so the growth, that And to guide acknowledge expect in to we in some declines in revenue non-exome we and tests, that that

Katherine Stueland

we are this kind back Yes. year the weighted. our what of want to 'XX. anticipating actuals in a saw little And half just year is steady of modeling similar in We add to bit color, 'XX was heavily And terms growth. of we I really think original the guide of what from

are say, course earlier, of throughout I think would I year. it's, Kevin but said steady the and quarters As usually strongest seasonally, QX, continued growth our the QX

Vidyun Bais

should a in then, how could have just the you're Okay, And about a Kevin, also quick how thinking into thinking little you dig we a that you so little maybe perfect. follow-up. sounds bit, guys about just like bit, consolidated integration be opportunity. that? potential menu EMR upsides It

Katherine Stueland

Yes.

up say, So to open to something it's starting we on EMR, and I will continue that focus that we with routinely, access. do would

smooth we in table as customer continue put kind easier I terms of that we we how the in experience. out make how of So operate, it to how stakes work to us, with

a test for So the menu, we that and team make team making we'll healthy feel with test operations we'll as to continue itself.And conversion strength to rate.We and honestly strategy There's time. we have that feel that, a to it position or as retiring pays everyone to, beautiful tests on focused really earlier, we're and we continue going something reviewing terms that's retire because that mentioned invest those tests. we menu overall like test retirement, healthy seeing I teams on near-term how I so keeps and keep really We team. sales think, growth a between to genome. execution. up we're that focused want very over progress like approach the And we exome a can continue terms in of And sure drive XXX of that in to X pleased, a able commercial is were we're to have that of to to handoff in really those continue in that to our steady the links that operations

volume we great feel in continue continuing in the we're on get of XXXX. terms focus in forward getting door, out, profitability, good to drive and profitability volume, us like getting reports and account in that a place towards So, to

Operator

Thank the session for hand you. any the program. today's back of I'd conclude like does program question-and-answer further to Stueland remarks. This to Katherine

Katherine Stueland

Thank to excited then. and weeks, we'll so upcoming look seeing so in We're you about all much, and XXXX, coming be everyone you much. the forward Awesome. us. thank for conferences joining to Thanks Jonathan, you and at

Operator

participation you, ladies This today's for Thank your program. at does conference. and gentlemen, conclude the

disconnect. now Good may day. You

GeneDx (WGS) 20 Feb 242023 Q4 Earnings call transcript