WGS - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the GeneDx First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to introduce Commercial Chief of Staff, Sabrina Dunbar.

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.

financial the released March quarter GeneDx XXXX. XX, today, results first for ended Earlier

please of including take We begin, we Before note forward-looking plans, and on business may our statements today's our call, about guidance outlook. make statement. cautionary

uncertainties risks as April we inherently and reflect no under today, only and statements our and Forward-looking obligation XX, are involve view of to update.

of non-GAAP that, could reported with results, release first of from measures we refer cause ir.genedx.com and a that and exclude And Katherine. slides our statements. I'll from the additional turn differ which quarter information at to factors materially forward-looking including certain regarding our the to actual earnings call to measures, results, results. results non-GAAP our for to discussion over refer discussing reconciliations and When available XXXX Please items definitions

Katherine Stueland

Thanks, excited We're first joining Sabrina, to from all share thank and the for results quarter. strong us. you the

from our the we our for by and unmet families. diagnosing bolstered team, execution our need deliver rare the a year, raising we're profitable critically service growth view to of ever-growing important With patients group of continued their in an guidance that disease sustainably can for

our over their to distinct We time. strength and industry on the exome years, transformed our also that genome. few industry-leading are it's fair and companies The GeneDx have changed tremendously it's that those say focused are but entire our that that past has in thriving case, are in

to hit milestone. and more their XXX,XXX the since and answers clinicians most odyssey We're clinical the to interpreted Our proud by comprehensive working team put an focus, is diagnostic We've say end yet to exceptional XXXX. care than with we've purpose to exomes another that patients. delivering

with our we've asset That give years to past To of is These a data to our in competitive more definitive more XXX,XXX our those sense interpreted patients. only assets, data growth. the advantage for and half diagnoses exomes enables and since X stronger contribute how proprietary fall. which is accelerated the the we of getting growth, key you

We last quarter is exome organized first margins we burn and two, $XX reimbursement cash X gross off. cash team delivered focus This in In consecutive goals driving average reduction. of eighth improving one rates; the million middle our revenues, of entire quarter, burn. utilization; paying around three, more XX% and our the in than an reducing year: in

million. cash Kevin result, expand a $XXX of our annual guidance will million which As our margins revenue QX, raising burn through. We'll guidance, to walk to our reducing we're we're $XXX gross out continue to and

in There's that a well lot went QX.

Our commercial impacted and increased medical and driving with affairs came in in the product pediatric This mix, positively exome our XX% representing over revenue. total the this and XX% of as care of our genome which setting. teams at about are genome exome standard utilization

Over X to and substantially time, through our to path this expect early a genome this to sign we all success exome our drive of volumes quarter on of test and mix a is future. revenues product

that providers with market run including The categories: and specialists, drive into geneticists XX% leadership and pediatric exomes of neurologists clinical at targeting developmental we're to being continue all GeneDx. pediatric fall specialists. We X pediatric

reimbursement the planned of customers. improvements in spot the to positively than We're our contributed faster new rates, the the bright as as accounts also saw was team We deeper also Improving focusing reimbursement strength which quarter. a existing on well first to in penetration quarter. average in

down features our management strong introduce we've machine market there's time. COGS improve scalability, still technologies, room improvements towards lab. as with operating and seen and processes, tools cash and over drive and efficiency and we integrate bias to We're We learning believe that new a streamline

tests line with Our our XXX menu our simplify team than to also retired strategy. in more

rare attributes business. both the our that say patient what and products for best for is flagship and of We care our to being continue exome have best genome

We being by growing XX the genetic in we the a are XX% committed diseases, serving know and with of that population impacted have X to disease future. of rare Today, Americans expanded patient in that this more are reveals the utilization far children. people testing

Our sites are set as all disease on in as families many diagnosing possible. hereditary

as for we GeneDx So honesty our focused team life. and through team pace each over the that can diagnostic stage helping and purpose time, informed every we'll every introduce is for of many to population children of on through broader health and decisions quickly our families as motivates and day. But as now,

over with Kevin. to call I'll And hand that, the

Kevin Feeley

Katherine. Thanks,

$XX.X grew to continuing X% of operations First and the to increase the million fourth in revenues quarter first XXXX an XXXX. and sequentially. compared is in $XX.X year-over-year That $XX.X million XXXX of million from of XX% quarter quarter

XX% contributed Our performance which over and and revenues XX% the growth. volume and team from XX,XXX genome resulted tests in the first generated the whole million collection sequentially. portfolio. exome to quarter Both and $XX exome of first quarter, an of That's increase year-over-year the in genome

margin exome and from the was of favorable during continuing year in shift expansion cost from quarter driven of is the test from and per quarter a all XXXX, up first The gross Adjusted mix the quarter average X margin XX% by leverage. ago XX% exome, towards reimbursement operations fourth continued XX% in continued rates up improved of XXXX.

tests from XX% genome a from and up of XX% key the ago XXXX. quarter. year in representing of XX% quarter all a this fourth That's and surpassed exome resulted mix, milestone On up

benefit and replace high-value on share overall of all disease genome test run and as margin or our lower volume continue time, gross that over be believe tests We heritable will that these greater continue our prop up total margin products. nearly diagnosis backbone an pick exome to will to

to amplified areas XXXX. for the compares which after all rate $X,XXX in approximately and XXXX, rate, approximately Katherine our with X first the average outlined. was such In fourth line of improving in we've exome focus of reimbursement On One imperative was average quarter through resources the genome reimbursement reduction. the reimbursement denial denials $X,XXX, exome portfolio quarter

nonmedical in reality with the the A claims denied. are nature of for half but encouraged is are all of requirements variety being and enable We success. And to order, evolve payers. of document that to hard we're working insurance-specific processes our ensure all upfront nearly to workflows here, claims not probability administrative a by of uptick submission claims portion exome still collection meeting improve denials designed large are

have of April State already portion added plan to XXXX. over X, large and time And and the our might XXXX, momentum Medicaid for exome expanded in outpatient exome in its New abate coverage X continues NICU coverage Another denials towards setting, coverage the rapid genome. policy effective whole York for broad medical genome in states their as

great but efficiency. automation per done has Lower we and XX there outpatient the offers potential inpatient. a XX go believe this lab need and the scalability continue and it. drive to test, rapid and still us to long to way states covering costs nationwide to On states team wet all across access long-term mostly are step, clinical That but patients who We cost interpretation covering cost that those this improvements in exome towards taking ensuring analysis job. a important process input headliners is brings applaud for for quarter, setting the genome whole equitable untapped

Having the base XXXX. operating to I for approaching the expense. first OpEx again down XX% reduced is of operating normalized a million quarter what That was be we're moving delivered Total expense consider $XX.X X% a of year-over-year Now reduction costs, adjusted to for sequentially. and business.

has Our will stop ways for memory improve throughout for muscle the not efficiency, built operating we team the looking and leverage to business.

narrowed of bottom net XX% for XXXX total to $X.X quarter the first loss company XX% On an sequentially. improvement of and adjusted line, million. That's the year-over-year

previously $XX.X was XXX(k) call quarter company's burn and this $X.X to can previously in which announced out $XXX,XXX SemaX payments net cash payments related sequentially. related be XX% million, severance approximately fund refund million quarter to requests match, included what year-over-year XX% cost reduction initiative. cash employer onetime annual in first Our reserved million legacy improved $X that and burn considered to our the approximately I'd

credit declines cash of X million we to was of to tranche March second drive an a and $XX equivalents, each XXXX, of And We've cash XXXX. we of October burn tranche in $XXX.X in through consisting cash of marketable Cash, announced was drawn X-year reduction which securities optional as burn facility secured up a expect and XXXX. The delivered now of quarters million, capacity, Perceptive $XX reminder, initial in restricted available Advisors. and entered million as provided is agreement which $XX in consecutive an with XXXX sequential for cash XXXX. XX, quarter senior that million, into October December

guidance. to turning Now

adjusted gross and Katherine said, We're revenues year gross deliver between at margin and or previously raising land XX% we full now million million As issued to now guidance $XXX XXXX. adjusted expect guidance revenue year for $XXX full to the expect and issued are higher. previously margin raising

and for the net to profitable the of year cash guide improving end low our again $XX turn in expectation million are now $XX anticipate our We reiterate burn finally, net million XXXX. using And to of cash we XXXX. once of full

remarks. to now any for closing With that, I'll it turn back Katherine

Katherine Stueland

exome testing decade shifting Kevin. and market takes we're ago. to This began a single-gene shift successfully from And The Wonderful. genome. panels than from Thanks, testing multi-gene to multi-gene now the more a made growth. rely shareholders disease of member support of and our team possible to us, all patients the dedication the and and by wants who time growing it's for that the families on who win rare

we we are our for that now and set for to more help We ensure can the families team new the that space can companies We'll not clinical to I'd while path have the value standard committed like our we is to questions. way. that know return achieved, along in care a really up to our one and call shareholders happen making the our that running many to prove thank of open and more opportunity good fully to business. and a investors profitability

Operator

with And question line our TD Instructions] the from Dan Cowen. Brennan [Operator first of comes

Daniel Brennan

the and another on had congrats about you company? questions before the we what LDT the a just it wondering from guide. Obviously, comments impact the on the of I'm it, few issued Obviously, what today, quarter thought stood might management any Maybe FDA and how good guidance out, quarter.

Katherine Stueland

out to we XXX-plus speculation. happy that page document think a come were opportunity. good lot today earlier after We this Net-net, of see Certainly. a the is

FDA been new this of era have We regulation. for planning

of a joining fact, team. is hired Regulatory, who In we've the Head

operating and in So well XX-plus I lab comply to prepared think complied the for having can York New years State. and been ensure with having with we CLIA,CAP we FDA that are

would regulatory and have place. in really good, system strong really, very already systems We say, a and quality I

moving forward So into we're this to new looking era.

Daniel Brennan

-- fact standpoint, grandfathered get LDTs And that the like it. existing maybe competitive just a from business. in. quick one maybe quick But then Got sorry, then and follow-up -- the just gets one to that maybe one LDT Katherine, on

it now you guys PMAs had not do? or running maybe of earmarked you sort have a, maybe to make with it the you're harder might that would associated b, want So you raise in, to some the to that other at then, anything players that plays because for it And could costs for all compete? future expect hurdle on market? does And come

Katherine Stueland

Yes. for We think us. important an is this opportunity that

more than we got we exomes run anyone. believe the robust As genome. largest clinical a rare running what data and today, We've exome is said asset we've such disease

So we think be we set to the into FDA. us it's that able for move a standard as opportunity compliance with really to important

how going costs think our being best forward, consultants XXX-plus that we're working clinical bar high associated pertains our and going and in pages exactly baked enter still be But to the there the regulatory it. teams we've a to to market. but determine and we to able as move And with should with it we're others through

So ahead. opportunity the we're good feeling about

Daniel Brennan

one by it. reiterated many Got And guide be you will raise them there ask I'll profitability the business. 'XX, the margin this on of then guide to although materially pretty just year. did you follow. for But Obviously, gross

the year. You this lowered burn

something So versus come fact Just expected full seeing better that Is impact more must the quarter 'XX? stays for guide year? it than the you're in a it changed in is in that 'XX? profitability color 'XX benefits guide. any -- in the like it profitability Is in the have about

Kevin Feeley

performance. Dan, we're pleased super Yes, QX's look, with

in for improved the that year along which the the there in be said and make in the all we representative will be outlook that's year. We there profitable, that we think expect we that I remainder quarter provided of a turn. to XXXX, full

that balance We overall year on profitable behind Overall, that be a specifically there. that make within we're full out there'll commitment the standing year think and haven't timing I the turn. be that we our sustainable will called where quarter

Daniel Brennan

Congrats.

Operator

BTIG. [Operator Instructions] Massaro comes next line from of Our question the Mark with

Mark Massaro

those, QX. I of growth. price. a Congratulations exome genome with know But extrapolate to in you And come guidance shift it fourth sell on at force growth it's to you and sequential another that for perhaps higher This and revenue didn't good provide have sales us revenue Is could throughout reasonable looks quarter. for year? like consecutive your to mix this which the this aligned quarter sequential rising

Kevin Feeley

I Mark. I our typically to I is Yes, quarter to out for quarter, year. think fair, continue and fourth see this no the that's reason seasonally call that that strongest change

testing to in anybody would and line exome our volumes with if with those So revenues to exome robust delivered would expect time, replace consistent call do portion surprise to to decline our want see in in be growth line the lines That portfolio, and I that have in we with non-exome that, expect the continue. But at same we revenue genome. we of testing don't that and overall strategy those out want lines.

Mark Massaro

a Okay. just And maybe question. clarification

assume about I denials or quarter. denial provide genome Did you any then the think improvement some can commercial or talk $X,XXX probably payer in on lift to on And you up collections panel Medicaid the some heard from a on? last you patient whether ASP, the rate? exome had $X,XXX new the I like a I it's speak coming -- payers metric from in in you quarter?

Kevin Feeley

Yes.

All to average a come underlying of reimbursement the reduction changes in rate improvements no There's denials. pricing. in been contracted would that vis-a-vis

in of the the XX% rate quarter. And denials reduction so just with first in north denial

Mark Massaro

if more health could you're long-term Okay. for the other ASPs? then that mean, $X,XXX think paid genome that, getting know I I Xx you're related from run And around Got I than it. rate today, do at what you exome to level think be plans.

So guess, to a you it's do normalized even X from X now? where I perhaps see run rate, years if

Kevin Feeley

the Yes. over to new contracting time, of years. the consider some denial think quarters off that Look, experienced in potentially over first $X,XXX next us the I rates reduction expect be such of rate, and couple we might the reduced work I floor you for quarter, a several to a in

Mark Massaro

Okay. Got me. it. for And maybe one last

$XX exceeded my well over guys million. You revenue by projections

any in what related of So know are to, from you put a guess those can I expectations year? Invitae that I acquire Can executing are success that, bid if your good accounts you assets had Invitae Invitae. converting must the this be converting later or LabCorp not guys speak well. quarter? any then and speak perhaps you to I won to a just modeler the of in just from to you potential some accounts And

Katherine Stueland

Perfect. Yes.

on So the the on. rare of of terms targets disease we're business focused that's that at neurology Invitae is in our And providers part market. one centered in core pediatric

So from who pulled have about, utilizing double down good with That's out where to where the rapidly really customers pediatricians as we've success, new as of we testing talked both And them. ordering our been space. back seeing we're that to targeting general gate. haven't genetic them exome we been convert we really in

been from Invitae getting panels, have pediatric who have neurologists including ordering we our to start and ordering them in exome. success then And seen panels

seen expect to exomes. that that panels continue and convert success to in there from market entire that we have segment we'll So

genome. business I that hereditary think and obviously builds and panels LabCorp be the rare of there. certainly obsolete Invitae and to business, converting made acquisition become has star over that exome we will that kind think, all important time, an we'll of The is shining cancer disease

the as most part of providing about not comprehensive and core we out-of-pocket. of a as that's that's as turnaround But expanding most patients having our think utilization time panels, that strategy an rapid test quickly

medical that the from turn to commercial crank continue and perspective. affairs we'll a on So

Mark Massaro

Okay.

good. Sounds quarter. Congrats the on

Operator

with the from of comes Matt question Sachs. next Goldman Sykes line Our

Matthew Sykes

mentioned press you in know kind you comparing data, the that the the quarter. I presented Maybe, exome earlier Genetics question. released But of Medical the and had Katherine, on CMA. release Congrats you a of at American had high-level just College versus

need education help to CMAs from to of do set, particular, is that you to much And education people to much people That think do do? that converting start to in to the convince know with more continue awareness. first? will like similar data do data challenge you education you you to that I exome in need feel exome part And awareness how awareness? provide how here,

Katherine Stueland

the When Yes. of general us. data refocusing really segment. important the we in It's for future kind about pediatric on think

but we CMA. to are to go we payers, general that not what to can to when that year their in enter see super to to was ensure continue being pede last tendency started utilize therefore, the able clinicians CMA. So the able ordering we of data did been segment who generate is And terms only educate we've helpful

to the since as seen, has you from have volume general away our shifted. refocused pede commercial our CMA expect, and pediatricians we strategy the neuros, would We have

So we for that pediatric really being longer-term educate segments. is important able the think of pediatrician to this -- strategy broader

pediatric to those the utilization doubling specialists. of really going next we're over settings, several neurologists, down less developmental in But years, be pediatric on And CMA. there's

So we is that think strategy. generated really, data really good for longer-term the the we've

Matthew Sykes

exome looks on averaged a genomes. of that test for in Got balance improving have year Is a quarter step seasonality. number around QX helpful. because maybe of of per terms up like extrapolate And of towards should could you then the that in points of it. mix we kind the higher exome genome this mix, basis just that guys with it kind Very -- XXX

at of basis? in importance to how mix, on how just is, driving terms how out mix increases that of higher the cadence and it margins, it is of look quarterly predictable Just given the regular shift test trying figure this you a

Kevin Feeley

Yes.

sequential fair. absolutely I increases is think certainly,

X% that X%. in anywhere of range So to

XXXX, profiles up towards at profitable a sort in I think expect. XX% all of a that profile. you about And of get that sort mix consistent test steady march is else said OpEx we'd what a our along equal, all think point to margin turn gross us in if would we've roughly profitability of

Matthew Sykes

apologies Got just you've the you've of given before, that my traction of it. Maybe just the but that just And remind are you just said then some on Medicaid question, of just and sort in percentage that. eligible, reimbursement. me, this patients have for had final face if that the states passed

want to a of the for Medicaid the sense get context Just population.

are down, of addressed denied, that earlier that like work? you with know do like was of the you and wondering half terms and of some Or on like administrative denials an OpEx the you more denials moving just staff secondarily, still claims largely needle I in question. a body Kevin, denial can do just on then in feel rate I you exome And that problem of mentioned hiring that to that is people terms you the being move spend have today? current

Kevin Feeley

Yes.

On the the first, institutional. roughly XX% is XX% volume-wise business of to

Medicaid. And rapid so exome business insurance the called between Medicaid. and remainder there's then With and insurance split commercial and split genome XX-XX outpatients in covering of in on -- states whole patients. between commercial in is as product roughly that genome And XX the a out, XX we've channel the

so is higher without states the rate in coverage. populations from denial sourced wherever today those disproportionately Medicaid for a And volume

front-end get well unique administrative upfront medical necessity insurance no, genome system is the at the ensure throwing to not patient from and of then claims time it, in solve a on processes, as that the to vast claim requirements submission can necessarily workflows paid. what disparity And exome that individual addressing products see as than that bodies more rather or ensuring a one-size-fits-all by body requirements so specific we process, just ultimately ordering we are and more problem something through

accustomed than those makes process-based to that what to more that adding make And do is and if to That's some people work just workflows has sure unique happen. sense. so are processes to technology-based

Operator

with the Our next Stanton Matt of line Jefferies. from question comes

Matthew Stanton

last business revenue been margin increase, the visibility in how the maybe the just side XX%. the has love and to lot just get of high-level I of over few you A much both terms guidance and today would and reiterating improved Kevin, that's have just kind thoughts quarters targets your in or here. covered the on But

Kevin Feeley

a look, the invested of And a lessons with XXXX, to lot in lot respect learned Yes. commercial execution. I -- we've team. into

is well skill have team to set right understand organization. now call work what points the we think commercial us. poised And I size and the across for the

the it's using think to we've lessons our raise the learned some I as that those forward guidance it execute of us or think year. the the plan. in to genome we confidence this a our substantial to allowed provides to team the over of So strategy year in expand earlier raise utilization exome And the and what to has some of X guidance start past needs and on look developed it

the to results as And year so forward progresses. the looking seeing

Matthew Stanton

one, in update did around a you've but And quick an update last accounts. And the it's of just target the then made some any I then know sales bit to maybe force those one sales any profitable more more you just on quarter around enterprise realignment longer changes recently? team. cycle, color

Katherine Stueland

Yes. Sure.

right. opportunity, force sales X medical in We're predominantly outpatient fourth into the focus of scope XX We've we team. of performance our place XXXX. the got You've about that And our happy with put the on to quarter the the got [indiscernible] exome. and in with really which absolutely sales anticipation reps is

way door, they're we're we've percentage motivated is feeling this their right really in on We feel program the seeing in comp by focused place. they of the that I that the year-to-date think by team And plan. got are what mix, volume executing good importantly based on right of accounts like incentive comp we're that the incentive

to great I drive So about forward with and continuing the team feel XXXX.

momentum So And of you're on good the enterprise force. the side with sales right absolutely things.

good sales approach. small that opportunity. going a team sales in but is, NICU and think, NICU I doing of We that is enterprise-wide market different an important think it's that for a type for us, have data We the really to be a the hospital to these get of economics it's of health a with sale able different and front to try consultative systems. of some sort able be in way really C-suite

in beds the NICU fixed are number There of setting. a

level. -- introduce it's genomics that's point we a about cycle, think why. we a to system-wide coming anticipating that to this last longer greater So to But able some of And to see XXXX, from from way hope But in at would more [indiscernible] exactly segment. a volume selling percentage of will your be and in NICU it's it a year. revenue year, we're

Operator

call turn to will Stueland, Thank now I Katherine over you. back any remarks. the for further CEO,

Katherine Stueland

and of Thank investor all continue look to great our and you provide We'll questions updates the you at so forward on much. conferences. engagement. We appreciate seeing progress, we upcoming to

thanks so a Have So much. night. good

Operator

now Ladies you This and thank gentlemen, you may and participating. today's disconnect. for program, conclude does

GeneDx (WGS) 29 Apr 242024 Q1 Earnings call transcript