NEW YORK – GeneDx's stock took off on Tuesday after the company reported solid fourth-quarter 2024 financial results and provided bullish guidance for 2025.
By market close on Tuesday afternoon, shares of GeneDx on the Nasdaq had shot up almost 48 percent to $112.76.
"We were surprised by the magnitude of the stock move today, hence feel we underestimated the nervousness around the 2025 outlook," Dan Brennan of TD Cowen wrote in an analyst report. The 2025 guidance "was the key today, and the solid but still conservative guide struck a lot of the right chords."
For the three months ended Dec. 31, the clinical genetic testing firm's revenues jumped 64 percent to $95.6 million from $57.4 million in the year-ago period, exceeding the consensus Wall Street estimate of $82.2 million and in line with the company's previous projection.
Building on this momentum, GeneDx expects revenues in 2025 to be in the range of $350.0 million to $360.0 million. The company also projected exome and genome testing volume and revenues to grow at least 30 percent.
"2024 was a remarkable year for GeneDx across all metrics," GeneDx President and CEO Katherine Stueland told investors in a call recapping the company's Q4 and full-year 2024 financial results. "In the coming year, we will be layering on additional investment into growth, scale, innovation, and talent to add velocity for market development."
Fourth-quarter revenues from exome and genome testing grew to $78.8 million, doubling from the prior-year period, with both volume and reimbursement contributing to the growth.
During Q4, GeneDx's exome and genome testing volume grew to 20,676, a 32 percent increase from 15,663 in the year-ago period. Exome and genome testing accounted for 38 percent of all tests in the fourth quarter, up from 27 percent in the same quarter a year ago.
According to CFO Kevin Feeley, during Q4, the average reimbursement rate for the company's exome and genome tests was approximately $3,500 after all denials.
"We are still at a point where nearly half of all tests are being denied, and the team continually is refining processes to avoid those denials," Feeley said. "We're certainly optimistic that we can get that rate higher than what we just posted in the fourth quarter."
GeneDx's net income for Q4 was $5.4 million, compared to a net loss of $25.8 million in Q4 2023. Adjusted Q4 net income was $16.8 million versus an adjusted net loss of $17.8 million the year before.
The adjusted net income, which marks the second consecutive quarter of profitability for the company, includes $6.8 million from a multi-year reimbursement appeal win with a certain payor, Feeley noted.
R&D spending in the fourth quarter fell about 5 percent year over year to $11.6 million from $12.2 million, while SG&A costs increased 7 percent to $45.0 million from $42.2 million.
For full-year 2024, GeneDx's revenues grew 51 percent to $305.5 million from $202.6 million in 2023, surpassing the analyst consensus estimate of $290.8 million.
Exome and genome testing revenues grew to $233.5 million in 2024, representing an 88 percent increase from 2023. Full-year exome and genome testing volume grew to 74,547, an increase of 51 percent year over year.
The firm's net loss for the year was $52.3 million, or $1.94 per share, compared to 2023's net loss of $175.8 million, or $7.23 per share. Adjusted net income for the year was $6.7 million.
R&D expenses during 2024 were down 22 percent to $45.7 million from $58.3 million, while SG&A costs shrank 13 percent to $168.5 million from $194.7 million in 2023.
At the end of 2024, GeneDx had $85.2 million in cash and cash equivalents as well as $56.0 million in marketable securities.
Looking ahead, Feeley said GeneDx is committed to "keep the company profitable from this point forward."
Building on the existing momentum for the exome and genome testing business, the company plans to continue penetrating both the inpatient and outpatient testing markets. For the former, the company anticipates to generate growth from its newly launched UltraRapid whole-genome sequencing test for neonatal and pediatric patients in the NICU and PICU. For the outpatient market, the firm hopes to continue driving utilization for existing indications, such as neuro-developmental disorders and autism, as well as new indications such as cerebral palsy and hearing loss, according to Feeley.
"Both of these initiatives are starting at near zero today, and we anticipate these growth curves to ramp in the second half of 2025," he added.
As the firm continues to optimize its test menu towards the genome-testing-only paradigm and focus investments on accelerating exome and genome growth, GeneDx plans to phase out its hereditary cancer testing business during 2025. To that end, Feeley said the company assumes it will lose all revenue contributions this year from hereditary cancer testing, which is not a core business for the company.
Furthermore, Stueland told investors that GeneDx will be releasing "a steady stream of new features" designed to further simplify the customer experience in 2025. This includes the company's recently implemented integration with Epic Systems' electronic health record software, which started with North Carolina's UNC Health last week.
According to Stueland, in preparation for the company's full launch into NICU testing in 2025 and the Epic integration, it recently expanded its enterprise sales team from about five to 10 employees. GeneDx is prepared to continue expanding its commercial team as business opportunities grow, she noted.