wgs-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

Commission file number 001-39482

GeneDx Holdings Corp.

(Exact name of registrant as specified in its charter)


Delaware			85-1966622
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

333 Ludlow Street, North Tower; 6th Floor Stamford, Connecticut 06902
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (888) 729-1206

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

WGS

The Nasdaq Stock Market LLC

Warrants to purchase one share of Class A common stock, each at an exercise price of $379.50 per share

WGSWW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The registrant had 26,141,701 shares of Class A common stock, par value $0.0001, outstanding at April 22, 2024.

Table of Contents


		Page
Cautionary Note Regarding Forward Looking Statements		3

Part I. Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

Part II. Other Information
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	33
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	36

Signatures		37

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. The words “anticipate,” “believe,” “estimate,” “may,” “expect” and similar expressions are generally intended to identify forward-looking statements. Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, those discussed under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as other factors which may be identified from time to time in our other filings with the Securities and Exchange Commission (the “SEC”), or in the documents where such forward-looking statements appear. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements. Such forward-looking statements include, but are not limited to, statements about:

•our estimates of the sufficiency of our existing capital resources combined with future anticipated cash flows and future capital requirements to finance our operating requirements, and capital expenditures;

•our expectations for generating revenue, incurring losses, and becoming profitable on a sustained basis;

•unforeseen circumstances or other disruptions to normal business operations arising from general economic and political conditions such as recessions, rising inflation and interest rates, supply chain interruptions and manufacturing constraints, public health emergencies such as but not limited to the COVID-19 pandemic, natural disasters, acts of terrorism or other uncontrollable events;

•our expectations regarding our ability to scale to profitability, our plans to pursue a new strategic direction, and the cost savings and impact on our gross margins from exiting our reproductive and women’s business and our somatic tumor testing business;

•our ability to successfully implement our business strategy;

•our expectations or ability to enter into service, collaboration and other partnership agreements;

•our expectations or ability to build our own commercial infrastructure to scale market and sell our products;

•actions or authorizations by the U.S. Food and Drug Administration (“FDA”), or other regulatory authorities;

•risks related to governmental regulation and other legal obligations, including privacy, data protection, information security, consumer protection, and anti-corruption and anti-bribery;

•our ability to obtain and maintain intellectual property protection for our product candidates;

•our ability to compete against existing and emerging technologies;

•third-party payor reimbursement and coverage decisions, negotiations and settlements;

•our reliance on third-party service providers for our data programs;

•our accounting estimates and judgments, including our expectations regarding the adequacy of our reserves for third party payor claims and our conclusions regarding the appropriateness of the carrying value of intangible assets;

•our stock price and its volatility; and

•our ability to attract and retain key personnel.

The forward-looking statements contained in this report reflect our views and assumptions only as of the date that this report is signed. Except as required by law, we assume no responsibility for updating any forward-looking statements.

We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Table of Contents

Part I - Financial Information

Item 1. Condensed Consolidated Financial Statements

GeneDx Holdings Corp.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)


	March 31, 2024 (Unaudited)		December 31, 2023
Assets:
Current assets:
Cash and cash equivalents	$	83,673	$	99,681
Marketable securities	29,239		30,467
Accounts receivable	28,151		32,371
Due from related parties	772		445
Inventory, net	11,615		8,777
Prepaid expenses and other current assets	9,974		10,598
Total current assets	163,424		182,339
Operating lease right-of-use assets	26,304		26,900
Property and equipment, net	31,301		32,479
Intangible assets, net	169,119		172,625
Other assets	4,380		4,413
Total assets	$	394,528	$	418,756
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable and accrued expenses	$	32,410	$	37,456
Due to related parties	1,041		1,379
Short-term lease liabilities	4,043		3,647
Other current liabilities	13,240		16,336
Total current liabilities	50,734		58,818
Long-term debt, net of current portion	52,293		52,688
Long-term lease liabilities	62,030		62,938
Other liabilities	20,836		14,735
Deferred taxes	1,418		1,560
Total liabilities	187,311		190,739
Commitments and contingencies (Note 9)
Stockholders’ Equity:
Preferred Stock, $0.0001 par value: 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2024 and December 31, 2023	—		—
Class A common stock, $0.0001 par value: 1,000,000,000 shares authorized, 26,122,348 and 25,978,863 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	2		2
Additional paid-in capital	1,527,351		1,527,778
Accumulated deficit	(1,320,427)		(1,300,188)
Accumulated other comprehensive income	291		425
Total stockholders’ equity	207,217		228,017
Total liabilities and stockholders’ equity	$	394,528	$	418,756

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GeneDx Holdings Corp.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands, except share and per share amounts)


	Three months ended March 31,
	2024		2023
Revenue
Diagnostic test revenue	$	61,104	$	41,850
Other revenue	1,318		1,289
Total revenue	62,422		43,139
Cost of services	25,011		27,903
Gross profit	37,411		15,236
Research and development	11,567		14,592
Selling and marketing	16,085		13,452
General and administrative	22,445		43,689
Impairment loss	—		2,120
Other operating expenses, net	974		1,747
Loss from operations	(13,660)		(60,364)

Non-operating income (expenses), net
Change in fair value of warrants and earn-out contingent liabilities	(6,101)		(3,453)
Interest expense, net	(597)		(35)
Other income, net	37		2,716
Total non-operating loss, net	(6,661)		(772)
Loss before income taxes	(20,321)		(61,136)
Income tax benefit	82		147
Net loss	$	(20,239)	$	(60,989)

Other comprehensive loss, net of tax
Unrealized loss related to available for sale securities, net	(134)		—
Comprehensive loss	$	(20,373)	$	(60,989)

Weighted average shares outstanding of Class A common stock	26,062,170		20,061,945
Basic and diluted net loss per share, Class A common stock	$	(0.78)	$	(3.04)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GeneDx Holdings Corp.

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

(in thousands, except share amounts)


	Three months ended March 31, 2024
	Class A Common Stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive income		Total stockholders’ equity
	Shares	Par value
Balance at December 31, 2023	25,978,863	$	2	$	1,527,778	$	(1,300,188)	$	425	$	228,017
Net loss	—	—		—		(20,239)		—		(20,239)
Common stock issued pursuant to stock option exercises	4,877	—		24		—		—		24
Stock-based compensation expense	—	—		(451)		—		—		(451)
Other comprehensive loss, net of tax	—	—		—		—		(134)		(134)
Vested restricted stock units converted to common stock	138,608	—		—		—		—		—
Balance at March 31, 2024	26,122,348	$	2	$	1,527,351	$	(1,320,427)	$	291	$	207,217


	Three months ended March 31, 2023
	Class A Common Stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive income		Total stockholders’ equity
	Shares	Par value
Balance at December 31, 2022	11,773,065	$	1	$	1,378,125	$	(1,124,421)	$	—	253,705
Net loss	—	—		—		(60,989)		—		(60,989)
Common stock issued pursuant to stock option exercises	50,444	—		266		—		—		266
Stock-based compensation expense	—	—		48		—		—		48
Vested restricted stock units converted to common stock	54,175	—		—		—		—		—
Issuance of Class A common shares in underwritten public offering, net of issuance costs	12,315,752	1		135,438		—		—		135,439
Balance at March 31, 2023	24,193,436	$	2	$	1,513,877	$	(1,185,410)	$	—	$	328,469

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GeneDx Holdings Corp.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Three months ended March 31,
	2024		2023
Operating activities
Net loss	$	(20,239)	$	(60,989)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	5,248		8,636
Stock-based compensation expense	(451)		48
Change in fair value of warrants and contingent liabilities	6,101		3,453
Deferred tax benefit	(82)		(147)
Provision for excess and obsolete inventory	40		—
Change in third party payor reserves	(193)		(1,070)

Gain on debt forgiveness	—		(2,750)
Impairment loss	—		2,120
Other	846		274
Change in operating assets and liabilities:
Accounts receivable	4,220		9,723
Inventory	(2,877)		1,331
Accounts payable and accrued expenses	(4,733)		(13,400)
Other assets and liabilities	(4,293)		(2,789)
Net cash used in operating activities	(16,413)		(55,560)
Investing activities

Purchases of property and equipment	(443)		—

Purchases of marketable securities	(5,167)		—
Proceeds from sales of marketable securities	598		—
Proceeds from maturities of marketable securities	5,855		—
Development of internal-use software assets	—		(462)
Net cash provided by (used in) investing activities	843		(462)
Financing activities
Proceeds from offerings, net of issuance costs	—		135,439

Exercise of stock options	24		266
Long-term debt principal payments	—		(2,000)
Finance lease payoff and principal payments	(462)		(1,047)
Net cash (used in) provided by financing activities	(438)		132,658
Net (decrease) increase in cash, cash equivalents and restricted cash	(16,008)		76,636
Cash, cash equivalents and restricted cash, at beginning of period	100,668		138,303
Cash, cash equivalents and restricted cash, at end of period	$	84,660	$	214,939

Supplemental disclosures of cash flow information
Cash paid for interest	$	2,019	$	583
Cash paid for taxes	$	300	$	104
Purchases of property and equipment in accounts payable and accrued expenses	$	36	$	1,073
Software development costs in accounts payable and accrued expenses	$	—	$	157

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GeneDx Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Description of Business

GeneDx Holdings Corp., through its subsidiary GeneDx, LLC, provides genomics-related diagnostic and information services and pursues genomics medical research. GeneDx utilizes an integrated portfolio of laboratory processes, software tools and informatics capabilities to process DNA-containing samples, analyzes information about patient-specific genetic variation and generates test reports for clinicians and their patients. GeneDx provides a variety of genetic diagnostic tests, screening solutions, and information with a focus on pediatrics, rare diseases for children and adults, and hereditary cancer screening. GeneDx Holdings’ operating subsidiaries primarily serve healthcare professionals who work with their patients and bills third-party payors across the United States.

On January 31, 2023, the Company raised approximately $150.0 million in gross proceeds and announced the closing of an underwritten public offering of 9,962,316 shares of its Class A common stock and a concurrent registered direct offering of 2,353,436 shares of its Class A common stock. The net offering proceeds received after deducting underwriters' discounts and commissions payable by the Company were approximately $135.4 million. On April 17, 2023, following the Company’s receipt of stockholder approval for the issuance, the Company issued the remaining 676,868 shares of the Company’s Class A common stock in its previously announced registered direct offering for gross proceeds of approximately $7.6 million.

Unless otherwise stated herein or unless the context otherwise requires, references in these notes to:

•“GeneDx Holdings” refers to GeneDx Holdings Corp., a Delaware corporation (f/k/a Sema4 Holdings Corp. (“Sema4 Holdings”));

•“Legacy GeneDx” refers to GeneDx, LLC, a Delaware limited liability company (formerly, GeneDx, Inc., a New Jersey corporation), which we acquired on April 29, 2022 (the “Acquisition”);

•“Legacy Sema4” refers to Mount Sinai Genomics, Inc. d/b/a as Sema4, a Delaware corporation, which consummated the business combination with CM Life Sciences, Inc. (“CMLS”) on July 22, 2021 (the “Business Combination”); and

•“we,” “us” and “our,” the “Company” and “GeneDx” refer, as the context requires, to:

◦Legacy Sema4 prior to the Business Combination, and GeneDx Holdings and its consolidated subsidiaries following the consummation of the Business Combination; and

◦Legacy GeneDx prior to the Acquisition, and GeneDx Holdings and its consolidated subsidiaries following the consummation of the Acquisition.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the accounting disclosure rules and regulations of the SEC regarding interim financial reporting. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP. These condensed financial statements consolidate the operations and accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Unless otherwise noted, all tabular dollars are in thousands, except per share amounts. Certain reclassifications have been made to the prior year condensed consolidated financial statements in order to conform to the current year’s presentation.

In the opinion of management, the condensed consolidated financial statements reflect all normal recurring adjustments considered necessary for a fair statement of the financial position and the results of operations of the Company for the interim periods presented. Interim results are not necessarily indicative of the results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

Emerging Growth Company

The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. In addition, the Company is a “smaller reporting company”, as defined in Item 10(f)(1) of the U.S. Securities and Exchange Commission’s Regulation S-K. As such, the Company is eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including reduced reporting, including the reporting of two fiscal years of