• Revenue: Fourth-quarter 2024 revenue reached $95.3 million.
• Exome and Genome Revenue: Grew 101% year-over-year and 31% sequentially, contributing $78.8 million.
• Gross Margin: Adjusted gross margin expanded to 70% in the fourth quarter, up from 56% a year ago.
• Net Income: Adjusted net income for the fourth quarter was $16.8 million.
• Cash and Equivalents: Totaled $142.2 million as of December 31, 2024.
• Cash Flow: Generated $12.4 million in cash from ordinary operations in the fourth quarter.
• Guidance for 2025: Expected revenue between $350 million to $360 million, with at least 30% growth in Exome and Genome volume and revenue.
• Reimbursement Rate: Average reimbursement rate for exome and genome tests was approximately $3,500 in the fourth quarter.

• Warning! GuruFocus has detected 4 Warning Sign with WGS.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GeneDx Holdings Corp (NASDAQ:WGS) reported fourth-quarter revenues exceeding $95 million, surpassing expectations.
• The company achieved a gross margin expansion to 70%, indicating improved operational efficiency.
• Exome and genome revenues grew 101% year-over-year, showcasing strong demand for their flagship products.
• GeneDx set a 2025 revenue guidance of $350 million to $360 million, with at least 30% growth in exome and genome volume and revenue.
• The company launched an ultra-rapid whole genome sequencing product, delivering results in as soon as 48 hours, demonstrating continued innovation.

Negative Points

• Nearly half of all tests are being denied, indicating challenges in reimbursement processes.
• The company is exiting the hereditary cancer segment in 2025, which may impact revenue streams.
• There is a seasonal effect in the business, with Q1 typically being the weakest quarter.
• Despite improvements, the average reimbursement rate is still below institutional Medicaid rates.
• The company anticipates a step up in operating expenses as they invest in growth and automation.

Q & A Highlights

Q: Can you provide some color on the pricing assumptions for 2025, given the expected 30% revenue and volume growth? A: Kevin Feeley, CFO: The average reimbursement rate in Q4 was $3,500, which exceeded expectations. We consider rates stable with potential for increase, as nearly half of all tests are still being denied. We are optimistic about improving these rates and will update as the year progresses.

Q: How should we think about operating expenses and profitability in 2025? A: Kevin Feeley, CFO: There will be a step-up in OpEx to accelerate growth and reduce costs, such as the $5 million annual investment in Epic. We aim to maintain profitability each quarter and for the full year, balancing revenue growth with disciplined spending.

Q: What new opportunities are included in the 2025 guidance, particularly in the second half? A: Kevin Feeley, CFO: The NICU is a key focus, with the Epic Aura integration ahead of schedule. We expect a ramp in the NICU and new indications for exome and genome testing, such as cerebral palsy and hearing loss, to drive growth in the second half.

Q: Can you elaborate on the expansion of the sales team and its impact on costs? A: Katherine Stueland, CEO: We've expanded our enterprise team from 5 to 10 and hired 25 inside sales reps to focus on outpatient opportunities. This investment is not large compared to the Epic investment, and we aim to enhance productivity and customer experience.

Q: What is the market opportunity for the ultra-rapid whole-genome sequencing product? A: Katherine Stueland, CEO: The NICU setting represents a $1 billion market opportunity, with fewer than 5% of NICU babies currently receiving genetic tests. The ultra-rapid genome product, with a 48-hour turnaround, addresses this underutilization and offers a higher price point for urgent cases.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.