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GeneDx Holdings Corp. (WGS)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue of $87.1M, up 42% year-over-year; exome/genome revenue $71.4M (+62% y/y), adjusted gross margin 69% and adjusted net income $7.7M (third consecutive profitable quarter). Management raised FY25 revenue guidance to $360–$375M and adjusted GM to 66%–68% .
  • Sequential revenue declined versus Q4 on typical seasonality, one fewer sales day, and severe weather, though March and April volumes strengthened; GAAP net loss was $(6.5)M and GAAP gross margin 67% .
  • Strategic catalysts: launch of ultraRapid whole genome (48-hour TAT), Epic Aura integration to drive NICU adoption, and planned acquisition of Fabric Genomics (near-70% GM SaaS/interpretation model) to open decentralized interpretation and international channels .
  • External headline risk: multiple law firms announced investigations after a short-seller report on Feb 5; WGS fell 6.7% that day. Management reiterated momentum and reaffirmed adjusted profitability targets, but this overhang may influence stock reaction near term .

What Went Well and What Went Wrong

What Went Well

  • Exome/genome mix and growth improved: exome/genome revenue rose 62% y/y to $71.4M and comprised 40% of test results; adjusted gross margin expanded to 69% from 61% a year ago .
  • “The first quarter exceeded our expectations across all measures… our third consecutive quarter of profitability, demonstrating the leverage in our business model to drive sustained, profitable growth.” — Katherine Stueland, CEO .
  • Reimbursement tailwinds and volumes: average exome/genome reimbursement rate increased to ~$3,400 vs ~$2,600 last year; Medicaid coverage reached 33 states outpatient and 14 states rapid genome (NICU), with New Mexico added in Q1 .

What Went Wrong

  • Sequential revenue decline: total revenue fell to $87.1M from $95.3M in Q4 amid seasonality, one fewer sales day, and severe weather, which pushed some appointments out weeks/months given specialist scarcity .
  • GAAP profitability: despite adjusted net income, GAAP net loss was $(6.5)M; G&A increased with Epic infrastructure costs (~$5M annually) as platform investments scale .
  • External scrutiny: an investor alert highlighted a short-seller report alleging misconduct; shares fell 6.7% on Feb 5, adding headline and litigation risk despite operational momentum .

Financial Results

Core P&L and Margins (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$76.6 $95.3 $87.1
GAAP Gross Margin (%)62% 69% 67%
Adjusted Gross Margin (%)64% 70% 69%
Adjusted Net Income ($M)$1.2 $16.8 $7.7
GAAP EPS ($)$(0.31) N/A$(0.23)

Year-over-Year Comparison

MetricQ1 2024Q1 2025
Revenue ($M)$61.5 $87.1
Adjusted Gross Margin (%)61% 69%
Adjusted Net Income (Loss) ($M)$(8.0) $7.7
GAAP Net Income (Loss) ($M)$(20.2) $(6.5)

Operating Expense and Cash

MetricQ3 2024Q4 2024Q1 2025
Adjusted Total OpEx ($M)$46.6 $49.0 $52.3
Cash, Cash Equivalents, Marketable Securities & Restricted Cash ($M)$117.4 $142.2 $160.2
Cash from Operations ($M)N/A$12.4 (incl. discrete receipts) $4.1

Segment Revenue and Volumes (oldest → newest)

Segment Revenue ($M)Q3 2024Q4 2024Q1 2025
Exome/Genome$60.0 $78.8 $71.4
Hereditary Cancer$3.3 $2.8 $2.2
Other Panels$13.8 $12.3 $12.1
Data Information$(0.5) $1.4 $1.4
Total$76.6 $95.3 $87.1
Segment VolumesQ3 2024Q4 2024Q1 2025
Exome/Genome19,262 20,676 20,562
Hereditary Cancer4,672 3,486 2,725
Other Panels35,095 30,115 28,228
Total59,029 54,277 51,515

KPIs

KPIQ3 2024Q4 2024Q1 2025
Exome/Genome Mix (%)33% 38% 40%
Adjusted Cost of Services ($M)27.4 28.4 27.4
Avg Exome/Genome Reimbursement ($/test)N/AN/A~$3,400; prior-year ~$2,600

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$350–$360M $360–$375M (incl. $3–$5M Fabric post-close) Raised
Adjusted Gross MarginFY 202565%–67% 66%–68% Raised
Exome/Genome Volume & Revenue GrowthFY 2025≥30% ≥30% Maintained
Adjusted Net Income (Quarterly and Full Year)FY 2025Profitability expected Profitability expected Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Exome/Genome momentumExome/genome rev +77% y/y; mix 33% Exome/genome rev $78.8M; mix 38% Exome/genome rev $71.4M; mix 40% Mix rising; sustained growth
NICU product/TATrWGS TAT to 5 days; cheek swabs Announced ultraRapid WGS (as soon as 2 days) UltraRapid launched in April; Epic Aura piloting, NICU ramp expected H2 Acceleration expected H2
Epic Aura (integration)Launch planned H1’25 Epic Aura launched Feb Exiting pilot in May; client pipeline to onboard Scaling deployments
Medicaid coverage & reimbursement30 states cover exome/genome 32 states; 14 rapid genome 33 states outpatient; 14 rapid genome; exome/genome reimbursement up to ~$3,400 Coverage expanding; rates improving
AI/technology initiativesData leadership; interpretation platform Platform enhancements; biopharma tools Announced Multiscore AI decision support; Fabric Genomics acquisition AI leverage increasing
Biopharma collaborationsData partnerships; trial enablement Expanded programs; GeneDx Discover launched Steady drumbeat of partnerships; early innings in revenue Growing pipeline
Revenue cycle dynamicsGM expansion via mix/reimbursement Discrete appeal benefit noted Ongoing positive true-ups (~$6M); denials mid-40% with target ~80% paid over time Continued improvement

Management Commentary

  • “Healthcare is at an inflection point… our third consecutive quarter of profitability, demonstrating the leverage in our business model to drive sustained, profitable growth.” — Katherine Stueland, CEO .
  • “Looking forward… rolling expansion of new indications in the outpatient setting, and the recent launch of a new ultraRapid genome product are expected to drive incremental volume growth opportunities.” — Kevin Feeley, CFO .
  • “We’re raising guidance… $360M to $375M… raising adjusted gross margin to 66%–68% and reaffirming quarterly and full-year adjusted profitability.” — Kevin Feeley .
  • “Our integration with Epic continues to progress… we anticipate that… will support a NICU volume ramp in the second half of the year.” — Katherine Stueland .

Q&A Highlights

  • Sequential volumes: Seasonality plus severe weather and one fewer sales day drove Q1 step-down; March/April volumes strengthened and guide for ≥30% volume growth reaffirmed .
  • OpEx/G&A: Epic infrastructure and support drove G&A increase; management expects OpEx leverage to improve with automation and tools; ~$5M annual G&A cost tied to Epic .
  • NICU outlook: UltraRapid (2-day TAT) orderable; Epic Aura exiting pilot; H2 ramp expected; mix between 2-day and 5-day products could provide pricing uplift .
  • Reimbursement/denials: Positive ordinary-course true-up adjustments (~$6M); average exome/genome reimbursement ~$3,400; denials mid-40% with goal ~80% paid over time .
  • Fabric Genomics economics: ~70% gross margin SaaS/interpretation; small workforce; accretive in 2026; opens decentralized interpretation and international markets .

Estimates Context

  • Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable at time of review; as a result, an estimates beat/miss comparison cannot be made. Values retrieved from S&P Global.*
MetricQ1 2025 ActualQ1 2025 Consensus# of Estimates
Revenue ($M)$87.1 N/A*N/A*
Primary EPS ($)$(0.23) N/A*N/A*

Key Takeaways for Investors

  • Mix shift to higher-value exome/genome continues (40% of results), sustaining gross margin expansion; March/April strength suggests momentum into Q2 despite Q1 seasonality .
  • Raised FY25 revenue and margin guidance signals confidence in reimbursement gains and cost controls; watch adoption ramp from Epic Aura and ultraRapid genome in H2 as potential upside drivers .
  • Revenue cycle improvements (true-ups, state coverage expansion) are durable tailwinds; tracking denial rate reduction toward ~80% paid will be a key KPI for margin durability .
  • Fabric Genomics adds a high-margin, recurring interpretation/SaaS layer with international reach; integration benefits are more 2026–2027, but positioning expands TAM and leverages AI .
  • External investigations following a short-seller report present headline risk; near-term volatility possible, but core fundamentals (profitability on adjusted basis, coverage expansion) remain intact .
  • Near-term trading: catalysts include NICU order ramp, additional Epic Aura go-lives, and further reimbursement wins/true-ups; monitor quarterly adjusted net income continuity and cash from operations .
  • Medium-term thesis: leadership in pediatric/rare genomics with expanding indications, improving economics, and AI-enabled interpretation scale positions WGS to compound margins and revenue as exome→genome parity develops with payers .