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Sema4 Q3 Revenues Rise 12 Percent

NEW YORK – Sema4 reported after the close of the market on Monday that its third quarter revenues rose 12 percent year over year.

"We continued to make significant progress this quarter expanding our infrastructure while also building our platform of algorithms," Sema4 CEO Eric Schadt said in a statement. "It is early days in the journey, and we exited the quarter seeing accelerating growth and a broadening scope of opportunity in front of us."

For the quarter ended Sept. 30, the Stamford, Connecticut-based firm reported $43.2 million in revenues, up from $38.6 million in Q3 of 2020 and beating the average Wall Street estimate of $42.7 million. Without COVID-19 tests, revenues climbed 17 percent in Q3.

Diagnostic test revenue was $41.4 million, up 9 percent from $37.9 million. It included $4.2 million in COVID testing revenue, which was down 21 percent year over year. Other revenue more than doubled to $1.8 million from $715,000 in the year-ago quarter due to collaboration services from new pharma partnerships.

Excluding COVID-19 tests, Sema4 processed 69,895 diagnostic tests during the quarter, up 36 percent from Q3 of 2020. This included 166 percent volume growth in oncology testing, which now accounts for 6 percent of all non-COVID tests, and 33 percent volume growth in women's health testing.

During a conference call to discuss the earnings, CFO Isaac Ro said that Q3 testing volumes were somewhat lower than expected but started to pick up at the end of Q3 and continue to grow.

Sema4's Centrellis database now contains more than 11.9 million de-identified clinical records, including more than 500,000 with clinical genomic profiles. Schadt said that more than 80 percent of patients who engaged with the Sema4 portal subsequently consented to contribute their personal health information to the platform.

"In the majority of cases, this partnership with patients provides us access to any and all medical record information ever generated for that patient," he said, including genomic testing results, longitudinal electronic medical records, physician notes, hospital records, and population health data. "The unrivaled level of access to information and partnership with patients and health systems allows Sema4 to develop deep and information-based relationships that continuously drive improved knowledge and understanding within the Sema4 platform," he said. "It is this patient-informed knowledge that we believe is a competitive differentiator for Sema4."

In August, the company announced a partnership with a fourth health system, Avera Health. Schadt said the firm plans to ultimately profile the tumors of all cancer patients in the Avera system as a standard of care and to integrate the result with their electronic medical records to provide personalized care.

It has also advanced its other collaborations with health systems, for example NorthShore University HealthSystem. Schadt said about 42,000 NorthShore patients have completed a questionnaire about their health so far, and more than 6,400 had a genomic screening test ordered. Almost 1,000 patients have been identified as having an increased risk of heritable cancer. This, Schadt said, "is evidence that our platform and go-to-market strategy can quickly and significantly improve the standard of care."

Also this quarter, the company launched Sema4 Elements, a portfolio of genomic tests, digital tools, and services for reproductive health. The updated expanded carrier screening test that is part of this portfolio in particular "is resonating well and has allowed us to take market share in key national [in vitro fertilization] accounts," Schadt said.

The company still has gaps in its testing portfolio, he said, for example, a lack of a minimal residual disease test for cancer. It might obtain such a test through an acquisition or through a strategic partnership, he added.

Next year, Sema4 expects pharma collaborations to "grow significantly," Schadt said, adding that the firm is in talks with potential partners. Having access to hospital systems and patients "can bring highly accurate and clinically actionable data to our pharmaceutical partners," he added.

The firm's net income totaled $31.4 million, or $.15 per share, compared to a net loss of $56.6 million in the year-ago quarter. It included $122.2 million in other income related to the change in fair market value of warrant and earn-out contingent liabilities recorded in connection with the merger with CM Life Sciences earlier this year.

Its R&D expenses in Q3 totaled $17.8 million, down 7 percent from $19.1 million a year ago due to a decrease in stock-based compensation costs. SG&A costs rose sharply to $55.4 million in Q3, up 49 percent from $37.1 million last year, due to an increase in headcount and because of expenses related to going public.

As of Sept. 30, the company had $461.3 million in cash and cash equivalents. Ro said that the company also secured a $125 million revolving credit in Q4 but has not drawn from it yet.

Sema4 expects full-year 2021 revenues to be in the range of $201 million to $204 million. It anticipates Q4 testing volumes, excluding COVID-19 tests, of 73,000 to 79,000 tests, corresponding to 20 to 30 percent year-over-year growth. Ro added that COVID testing is expected to contribute about $3 million in revenues in Q4.

In morning trading on the Nasdaq, Sema4 shares fell 5 percent to $7.42.

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