Sema4 Holdings Corp.

Good day and thank you for standing by. Welcome to the SEMMA IV First Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Joel Kaufman, Vice President of Finance and Corporate Development. Please go ahead.

Thank you. Good afternoon, everyone, and thank you all for participating in today's conference call. Participating for the company today will be Catherine Suen, Chief Executive Officer, Eric Schott, Founder, President, and Chief R&D Officer, and Isaac Rowe, Chief Financial Officer. Earlier today, Semaphore released financial results for the first quarter ended March 31, 2022. A copy of the press release, along with our first quarter earnings slide deck, are available on the company's website. Before we begin, I'd like to remind you that management will make forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Security Litigation Reform Act of 1995. Any statements contained in this call that relate to expectation or predictions of future events, results, or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. Additionally, these forward-looking statements, particularly our 2022 financial guidance, involve a number of risks, uncertainties, and assumptions. For a list and description of these risks and uncertainties associated with Semaphore's business, please refer to the risk factors section of our Form 10-K filed with the Securities and Exchange Commission on March 14, 2022. We urge you to consider these factors, and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. During the call, we may discuss certain non-GAAP financial measures. For reconciliations of non-GAAP measures to GAAP financial measures, as well as other information regarding these measures, please refer to our earnings release and other materials in the investor relations section of our website. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 12, 2022. SEMA 4 disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to Catherine.

All right. Thank you, Joel. I'm so happy to be here at SEMA 4 leading an incredible team as we work together to transform the company and enter a new phase of growth, efficiency, and scale. The vision remains the same, to usher in a new era of better health made possible by Semaphore's health intelligence platform. What will be different is the efficiency in which we drive growth. Or put another way, how do we deliver more insights to more patients at scale? Semaphore is in the best possible position to do this today. With the close of the GDX acquisition, we're now a more diverse, stronger company with a faster path to profitability. We're committed to building our data platform, delivering growth with significantly improved efficiency, and importantly, reducing our cash burn with intention. Our investments to date have been critically important to creating a data platform unlike any other in our space. Under Eric's leadership, Semaphore has developed a clinically advanced data insights engine for patients, clinicians, health systems, and biopharma partners. The value of this data engine is massive. We are able to partner with health systems to deliver insights for clinicians and their patients, and ultimately, we'll be able to deliver a personalized health plan. With our pharma partners, our data engine drives value as we aim to help them accelerate drug discovery and development. The combined company now has an incredibly rich data set flowing through our health intelligence platform, including one of the largest rare disease data sets in existence. We will continue to invest in building that platform, and with Eric's vision and passion for this and his new role as Chief R&D Officer, our intention is to accelerate the delivery of transformational deals. By combining Semaphore and GeneDx, we now have a company that is changing the landscape of how patient care is delivered and leveraging efficiencies that are unique in our industry. And that leads me to our new operating model. As a public company, it is imperative that we run an agile organization that empowers people to perform at an exceptional level. Following the close of the GNDX acquisition, we have created a more operationally focused management team, including new leadership for our commercial operations and transformational efforts, in order to capture the best of both the Semaphore and GNDX businesses and to ignite key drivers of our growth. This integrated and flattened organization is designed to support three pillars that put us on an accelerated path to profitability. First, driving growth at scale. Second, improving operating efficiency. And third, delivering transformational deals. I'll take a few moments to speak about each of these pillars for the next phase of Semaphore. First, growth at scale. As you may have read by now, we're starting off 2022 with solid performance for a semaphores-based business and a return to positive growth margin. We also saw strong performance from GNDX for the first quarter. Together, the combined company has strong momentum heading into the remainder of this year. Second is operating efficiency. We've already begun work against several efforts aimed at creating stronger operating leverage across the newly combined company, by improving revenue collection, driving down COGS, and reducing cash spend. In conjunction with the GNDX acquisition, we implemented a corporate restructuring, eliminating roles of roughly 10% of the SEMA IV team. Although the decision was incredibly difficult, these changes enable us to execute with a greater degree of precision and simplicity to deliver on our mission. With measures we've already undertaken and several others that are in process, we'll be able to end this year with at least $200 million cash on our balance sheet, which extends our runway well into 2024 and ensures we can continue to invest in building our data platform in service of health systems, biopharma partners, and ultimately patients. Third, the delivery of transformational deals based on that Health Insights platform, which just became even more powerful. One of the biggest advantages of the technology and team we acquired with GeneDx is its industry-leading database of more than 350,000 clinical exomes enriched for rare disease. This further enhances our value proposition to health systems and pharma companies with a best-in-class exome and expanded data capabilities. Coupled with Semaphore's unmatched access to patient data and clinically relevant insights, this will position us as the partner of choice to help systems and pharma companies. All of this points to a renewed commitment on behalf of the management team to accelerating our path to profitability, and we believe that this quarter's financial performance, as well as the burn reduction efforts that are already underway, demonstrate tangible progress. Not only are we making fundamental improvements from a financial perspective, but we also have a stronger and more agile leadership team. As we look ahead, I believe that systematic execution of these plans will drive sustainable long-term value as we pave the way to revolutionize patient care with genomic testing solutions and data-driven insights. In closing, 2022 is an exciting year for the company. As we exit this year, we anticipate Semaphore will be a company with trailing revenue on a pro forma basis of $350 million, an exit gross margin run rate of 30%, more than $200 million of cash on the balance sheet, cash runway into 2024, and an operating model that gives us the ability to achieve positive free cash flow by the end of 2025. With that, I'm pleased to hand the call over to Eric.