NEW YORK – GeneDx said Tuesday after market close that its second quarter revenues grew nearly 35 percent to $48.7 million from $36.2 million a year ago, boosted by growth in whole-exome and genome sequencing testing revenue. The total beat the Wall Street consensus estimate of $47.6 million.
More than 96 percent of revenues in the three months ended June 30 came from diagnostic testing, with the balance attributed to the legacy Sema4 informatics business. The former Sema4 purchased GeneDx in April 2022 from Opko Health for $623 million and subsequently changed the corporate name to GeneDx.
Stamford, Connecticut-based GeneDx performed 54,928 tests in the quarter, 21 percent more than the 45,557 tests it conducted a year earlier when calculated on a pro forma basis. The company saw year-on-year growth in all categories of testing except hereditary cancer testing, with particular strength in exomes and genomes. It ceased COVID-19 testing in Q1 2022.
In a conference call to discuss the financial results, President and CEO Katherine Stueland said that GeneDx has sequenced nearly 500,000 exomes in its 10-year history, almost half in the last two years.
"We turned a critically important corner in Q2," Stueland said. The company had its "biggest revenue month in history" in June, which she said was the direct result of converting customers from gene panels to exomes. "Our focus on accelerating physician conversion to genomic sequencing is working," Stueland said.
GeneDx performed a company-record 11,855 exome or genome tests in the recently completed quarter, up 56 percent from 7,579 in Q2 2022. Revenue in this segment grew 36 percent, from $21.1 million a year earlier to $28.7 million, and produced gross margins of more than 60 percent, she said.
"While our test menu is expansive today, our goal is to get to an optimized test menu of simply exome and genome as the backbone for testing all inherited diseases, going beyond the rare disease population to cover every stage of life from newborn screening to adult diagnostics," Stueland said.
She noted that GeneDx has been improving its genome interpretation capabilities with artificial intelligence.
CFO Kevin Feeley added that the firm is also using AI to capture "upfront medical necessity information in real time" to support billing claims for its tests.
Payors reimburse for fewer than half of all exome tests that GeneDx performs, according to Feeley, even though Stueland noted that 28 states now cover outpatient whole-exome sequencing through their Medicaid programs. She also said that Florida and Arizona recently became the seventh and eighth states to offer Medicaid coverage for inpatient whole-genome sequencing.
GeneDx's net loss for the quarter ended June 30 was $46.7 million, or $1.84 per share, down from a net loss of $85.7 million, or $8.38 per share, in Q2 2022. Wall Street analysts, on average, had expected a net loss of $1.31 per share. The company used 25.4 million weighted average shares of common stock to compute net loss for Q2 2023, compared to 10.2 million shares in the year-ago quarter. On an adjusted basis, the company recorded a Q2 net loss of $41.8 million, compared to a net loss of $66.4 million a year earlier.
The company executed a 1-for-33 reverse stock split in May to regain compliance with Nasdaq's minimum bid price listing requirement of $1.00 per share.
GeneDx's R&D spending in the quarter declined 37 percent to $17.1 million from $27.2 million a year ago, while SG&A costs were halved to $52.5 million from $104.1 million.
As of June 30, the company had $156.7 million in cash and equivalents and $900,000 in long-term restricted cash. It has not yet drawn on a $125 million revolving credit facility it has available.
GeneDx reiterated an earlier forecast of full-year 2023 revenues of $205 million to $220 million, not including the legacy Sema4 diagnostic testing business, and said once again that it is on course to become profitable in 2025. However, the company updated its guidance to reflect slowing cash burn, saying that it would use $70 million to $85 million of net cash in the second half of the year.
In a Form 10-Q filed with the US Securities and Exchange Commission on Tuesday, GeneDx disclosed that the Connecticut Department of Economic and Community Development has forgiven $4.5 million of $15.5 million in loans made to GeneDx because the firm has met certain job creation and retention milestones.
Still, it has been a roller coaster for the company since the merger with Sema4. GeneDx has gone through three rounds of job cuts and has shuttered a laboratory in Connecticut in a little more than a year.
In November 2022, GeneDx announced a downsizing, including the shutdown of several legacy Sema4 operations, which has been completed. The firm booked about $3.5 million in sales from these discontinued operations in Q2.
In January, GeneDx brought in $150 million in gross proceeds from new public and direct stock offerings.
This week, GeneDx and Pacific Biosciences announced a collaboration with the University of Washington to study long-read, whole-genome sequencing-based diagnostics in neonatal care.
Last month, GeneDx formed a strategic partnership with Prognos Health to help the latter's life sciences clients suggest therapies for patients newly diagnosed with rare diseases. The firms hope to apply real-world genomic data to shorten what they called the "treatment odyssey."
"We see [in this partnership] a great opportunity over the next several years to be able to ensure that rare-disease data is being put to work for patients themselves," Stueland said Tuesday.
GeneDx went live with its Illumina NovaSeq X Plus sequencer last month, and another will come online this quarter, Feeley said. Wrapping up this month is consolidation of library preparation processes with the help of Twist Bioscience.
In morning trading on the Nasdaq, GeneDx's stock was down almost 5 percent at $6.35 per share.