GeneDx Holdings Corp.

Thank you for standing by, and welcome to the GeneDx Fourth Quarter 2023 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'll need to press star-1-1 on your telephone. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Sabrina Dunbar, Chief of Staff. Please go ahead.

Thank you, Operator, and thank you to everyone for joining us today. On the call, we have Catherine Stuland, President and Chief Executive Officer, and Kevin Feely, Chief Financial Officer. Earlier today, GNDX released financial results for the fourth quarter, ended December 31, 2023, and shared guidance for the full year, 2024. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans, guidance, and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, February 20th, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our fourth quarter 2023 earnings release and slides available at ir.gndx.com for definitions and reconciliations of non-GAAP measurements and additional information regarding our results. including a discussion of factors that could cause actual results to materially differ from forward-looking statements. And with that, I'll turn the call over to Catherine.

Thanks, Sabrina, and thank you all for joining us. 2023 was a pivotal year for us at GeneDx. We're on a stronger path forward and closer to our goal of reaching profitability in 2025. Last year, we centered our entire team on three goals. One, increasing utilization of our industry-leading exome and genome. Two, improving our average reimbursement rate. And three, dramatically reducing our cash burn. The combination of these three organizational goals ultimately ensured that our teams were focused on what's clinically best for patients and what's best for the financial health of the company. And that focus paid off. Our teams worked with deep commitment in the fourth quarter and delivered $58 million of revenue, driven by more than 68% year-over-year growth in exome and genome test revenue, expanded our adjusted gross margins to 56%, and ended the year ahead of our expected cash position, demonstrating a 51% year-over-year reduction burn. We're proud of our team's performance and we're prepared to rinse and repeat that same level of commercial and operational execution. As we look to 2024, and based on what we're seeing so far, you can continue to expect this level of focus on exome and genome revenue growth, gross margin expansion, and disciplined cash management. The investments that we're making, whether it's in commercial, operations, medical affairs, or product and technology, are directly tied to these goals. In the fourth quarter, we realigned our sales strategy to focus on account profitability. We've right-sized our sales territories and further refined our commercial tactics and tools with account profitability in mind, and we're seeing good progress. Our strategy continues to include efforts that drive exome conversion with current customers, but we're taking a more precise yet high-impact approach with new customer acquisition. mainly targeting pediatric neurologists. We continue to see better traction and faster growth ramps with these new ordering providers compared to lower productivity accounts, including general pediatrics. We're also keeping our operations team focused on the biggest levers for our P&L, reports out, billing operations, and COGS reduction, among other efforts to ensure we maintain our turnaround time. Our product and tech team is working on our strategy to further scale our operations, improve our customer experience, open up access with EMR integrations, automate our billing operations, and drive greater efficiency in every aspect of the business. The total addressable market in pediatrics is large, and while we are the dominant provider of whole exome sequencing today, We've only penetrated about 3% of the total addressable market of $3 billion in the US-only pediatric setting. It's a market that we're developing in pediatric neurology where clinical evidence and health economics strongly support the transition to exome analysis. We will also expand further into the general pediatric setting over the coming years as guidelines and payer policy continue to evolve to become more ready for commercial expansion and execution. On the other side of that is an entire $10 billion market in the US only for adult conditions that we'll be working to develop over the mid and long term. And along the way, there's a growing data opportunity in rare disease drug development. We've steadily added biopharma partners and have 20 active programs, mainly with biotech companies who are relying on us to find patients with a specific variant for clinical trial purposes. We're expecting that business to continue to grow at a similar pace. We think there's great promise in the role that diagnostics can play in rare disease drug development. In fact, the New York Times recently highlighted a new gene therapy for children with hearing loss. They featured an 11-year-old boy who had no ability to hear until researchers at the Children's Hospital of Philadelphia gave him an experimental gene therapy from our partner, Accuos, an Eli Lilly company. The boy was able to hear sound for the first time ever, and now the company is expanding its research to several other centers. And just a few weeks ago, FDA Commissioner Dr. Robert Califf said the agency will need to get creative about regulatory pathways, given the tsunami of rare disease and gene therapies that the FDA is anticipating. Rare disease treatments are reliant upon rare disease diagnoses, and that's what we do best at GeneDx. We believe this market is developing and are well positioned to be the genetic testing partner of choice for these companies. Looking forward to 2024 guidance, we expect a similar growth trajectory as demonstrated quarter over quarter in 2023, as we continue to focus the teams on driving exome and GM utilization and improving our reimbursement rates. With that in mind, we expect to deliver between $220 to $230 million in revenue this year. And Kevin will provide some additional commentary. With a growing proportion of our test mix shifting to XM, we will continue to unlock greater gross margins, effectively converting more of the market to better volume. And with the continued decrease in cash burn, we will end the year with strong operating leverage to put us on the precipice of profitability heading into 2025. And with that, I'll hand the call over to Kevin.