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  Title	Q4 2024 GeneDx Holdings Corp Earnings Call
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  Published Date	Feb. 18, 2025, 10:25 p.m.
  Summary	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 GeneDx Holdings Corp Earnings Call Thomson Reuters StreetEvents Tue, Feb 18, 2025, 11:25 PM 35 min read In T
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  Content	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 GeneDx Holdings Corp Earnings Call Thomson Reuters StreetEvents Tue, Feb 18, 2025, 11:25 PM 35 min read In This Article: WGSWW -5.45% Participants Sabrina Dunbar; Head of IR; GeneDx Holdings Corp Katherine Stueland; Chief Executive Officer, Director; GeneDx Holdings Corp Kevin Feeley; Chief Financial Officer; GeneDx Holdings Corp Daniel Brennan; Analyst; TD Cowen William Bonello; Analyst; Craig-Hallum Capital Group Tycho Peterson; Analyst; Jefferies Matthew Sykes; Analyst; Morgan Stanley Mark Massaro; Analyst; BTIG Brandon Couillard; Analyst; Wells Fargo Presentation Operator Good day and thank you for standing by. Welcome to the GeneDx fourth-quarter 2024 earnings conference call. (Operator Instructions) I would not like to hand the comments over to your speaker today, Sabrina Dunbar, Investor Relations, please go ahead. Sabrina Dunbar Thank you, operator, and thank you to everyone for joining us today. On the call, we have Catherine Steland, President and Chief Executive Officer; and Kevin Feely, Chief Financial Officer. Earlier today, GDX released financial results for the fourth quarter ended December 31, 2024, and 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 18th, and we are under no obligation to update. When discussing our results, we refer to non-gap measures which exclude certain items from reported results. Please refer to our fourth quarter 2024 and full year 2024 earnings released and slides available at ir. GDs.com for definitions and reconciliations of non-gap measures 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 Katherine. Katherine Stueland Thanks, Sabrina. Good morning everyone and thank you for joining us today. 2024 was a remarkable year for GDX across all metrics. We cemented and extended our position as the market leader in exome and genome testing, expanded patient access, solidified our operating processes across all aspects of the business, and started to generate cash to fuel the next leg of growth. Our 4th quarter results surpassed expectations with revenues exceeding $95 million and gross margins expanding to 70%. While providing early and precise genetic diagnosis remains our purpose, creating a financially strong business drives our progress. We are dedicated to helping as many patients as possible, and it's not just about what we do, but how we do it in service of our customers with clinical excellence, urgency, and integrity. Our flagship Exo and Genome business delivered enormous growth in 2024, and we're bringing our focus, operational discipline and commitment to profitable growth with us into 2025. In the coming year we'll be layering on additional investment into growth, scale, innovation, and talent to add velocities for market development. Fueled by our 2024 and early 2025 momentum, we're setting guidance for 2025 to a range of $350 million to $360 million in revenue, with at least 30% growth in exome and genome volume and revenue. What's unique about our technology is that it enables a more efficient model both for families and for the US health care system. Broad genetic testing, like our differentiated exome and genome services are massively underutilized, causing the overutilization of other diagnostic tests that don't accurately diagnose disease. The economic burden of rare diseases is estimated to be around $1 trillion annually, with delayed diagnoses contributing heavily to the cost. On average, a child with a rare disease will undergo around 16 ineffective tests. And 3 misdiagnoses. The most recent literature tells us that on average a child with a rare disease will go on a 5 year diagnostic odyssey. That's down from 6 years previously, which implies that we're succeeding in our mission. By enabling earlier diagnosis with our products, GDX alleviates unnecessary suffering for patients and families and offers a readily available solution to reduce inefficient healthcare spending. There's a reason health care spend is top of mind for this administration, policymakers, insurers, and hospital systems, and GDX is in a unique position to help them solve solve this costly problem. GDX is proud to be helping American families have healthier kids and healthier lives, and by doing so reducing health care costs. With a large market opportunity in hand, it's important to understand that not all exome and genome tests are created equal. There's a reason 8 out of 10 clinicians who order exome testing choose GDX. Fueled by more than 750,000 exomes and genomes, our rapidly growing data asset and clinical expertise differentiate our products from competitors by enabling us to identify novel gene disease connections that are not widely available and ensuring we can offer the clinical utility, accuracy, and easy to understand reports that clinicians need. As we set our sights on offering these services to pediatricians, neurologists, cardiologists, and more specialists in the future, we've recruited some of the best product talent to deliver the smoothest end to end customer experience. Throughout 2025 we'll be releasing a steady stream of new features designed to further simplify our customer experience to make it the easiest to use for all. We already made great progress in the first few months of the year, and our epic aura integration is just one example of this. We've launched GDX ordering and resulting workloads at patients' bedsides and in clinician exam rooms. While we have the first mover advantage, there's a large unmet need ahead, and we're running as fast as we can to help as many families as quickly as possible. Our position becomes more formidable and our competitive advantage strengthens with the compounding force of each additional patient that we sequence, creating a flywheel effect that makes our underlying interpretation platforms smarter, faster, and more scalable. We're seizing our advantage to accelerate market development by scaling utilization of rapid genome testing in the NICU and expanding our dominance in the outpatient setting. Last week we announced our ultra rapid hole genome sequencing product which delivers results in as soon as 48 hours. Our ability to offer an ultra rapid genome demonstrates how our lab operations continue to innovate. Throughout 2025 and beyond, we're prepared to capitalize on coupling our clinically enriched data set with AI, machine learning and automation to drive cost and turnaround times down and service of patients, providers, and partners. In preparation for our full launch into the NICU in 2025. We recently expanded our enterprise sales team, launched multiple genome product enhancements and Epic aura, and are bringing our ultra rapid product to market. In the outpatient setting, pediatric neurology proved successful, driving most of the growth in 2024. We've only scratched the surface of the outpatient segments potential with a focus on patients with epilepsy, autism, and intellectual and developmental delay. There are countless applications still to come in 2025. We'll be leaning into new patient populations. Cerebral palsy and hearing loss are just two such examples we'll target as we expand our footprints. Additionally, we're developing new patient access channels like our new telehealth pathway, which accelerates access to testing for parents and caregivers via a streamlined referral process. Ultimately, the first line of defense for families lies within their general pediatrician. When the American Academy of Pediatrics guidelines are updated and reimbursement pathways are clear, we are ready to deploy a commercial strategy and meaningfully expanded sales force against this new call point. Longer term, we will extend our market leadership to the genomic newborn screening market. In total, pediatric testing is a $25 billion dollar market, and while we've made progress, this opportunity remains largely untapped with multiple levers for growth ahead. While rare diseases affect 1 in 10 Americans, they also affect over 300 million people worldwide. We will strategically target opportunities outside the US to meet the incredible need for testing on a broader scale. All of this is underpinned by our ability to provide valuable products and services to biopharma, leveraging our unique data assets to enable faster, cheaper, and more effective therapeutic development, all in service of expediting therapies to market for patients. We're in a privileged position to be the market leader with the product quality, scale, talent, and commercial strategy to transform the standard of care and win in an ever expanding market. The opportunity ahead is ours for the taking, and we're moving quickly and decisively to claim it. With that, I'll turn it over to Kevin. Story Continues Kevin Feeley Thanks Catherine, and thanks everyone for joining us. Fourth quarter 2024, revenues from continuing operations reached $95.3 million. Exo and genome revenues grew 101% year over year and 31% sequentially, contributing $78.8 million this quarter. Both volume and reimbursement contributed to the growth. Exome and genome tests accounted for 38% of all tests in the fourth quarter, up from 27% a year ago and 33% in the previous quarter. Our team delivered over 20,000 of these flagship tests, which is up 32% year over year and 7% sequentially. We are driving a long-term replacement cycle of the industry's individual gene tests and panels into exo and genome, and 2025 trends to date are encouraging. In addition to growing off this space, we'll be layering on a new growth curve in the NICU and new indications in the outpatient setting in 2025. Both of these initiatives are starting at near zero today, and we anticipate these growth curves to ramp in the second half of 2025. Demand is strong and we balance that demand with discipline, targeting only volume with a high propensity to get paid fairly. So speaking of getting paid, average reimbursement rate have have come entirely from reduced denials. In the fourth quarter, the underlying average reimbursement rate for ExoMagino after all denials was approximately $3500 excluding the discrete benefit from our large appeal win in the quarter. That's up from $3100 last quarter and up from approximately $2500 in the same quarter of last year. Our work to refine insurance specific work flow to minimize administrative and procedural denials, and the activation of additional state Medicaid policies to cover exome and genome testing more broadly are both contributing. 32 states now cover exome and or genome outpatient, and 14 cover rapid genome inpatient. We'll continuously focus on improving processes, producing clinical and health economic data, supporting patient advocates, and leaning into policy work both at the state and federal level. We've built the operational strength and tools to now open the aperture of volume. That will target to drive growth to higher levels. Adjusted gross profit from continuing operations in the fourth quarter was $66.9 million which is up 106% compared to the prior year and up 36% sequentially from the previous quarter. That translates to an adjusted growth margin of 70% in the fourth quarter, up from 56% a year ago and 64% last quarter. Our team has exceeded expectations on COGS throughout 2024, and 24 was no exception. And while we're pleased with how far we've come to reduce cost per test, there's still work to do. I'm excited to partner with our recently onboarded Chief Operating Officer, Brian DiCaro. He's begun to retool resources and our approach to extract the next leg of scalability and product enhancement. Beyond that, Brian is leading a new charge with respect to innovation and enabling a next generation customer experience to make ours the most attractive in the state. Down to the bottom line, total company adjusted net income for the fourth quarter of 2024 was $16.8 million our second consecutive quarter of profitability. Full year and fourth quarter 2024 revenues, adjusted gross margin, and adjusted net income includes $6.8 million of discrete benefit in connection with a multi-year appeal win from a single pairer. $5.8 million of that benefit went to exome and genome. This recovery to overturn past denials is a prime example of the quality and professionalism of the revenue cycle team we've assembled here at EDF. And on the balance sheet cash equivalents, marketable securities, and restricted cash total, $142.2 million as of December 31st, 2024. Cash flow for the fourth quarter, 2024 included $12.4 million in cash generated from ordinary operations, including receipts of $6.8 million in connection with the appeal recovered. And $31.9 million of proceeds, net of fees from the issuance of 406,726 shares of common stock in connection with sales pursuant to our ATM program. Those inflows were partially offset by $19.6 million in scheduled payments to service previously recorded liabilities of Legacy semi. Now turning to guidance. We expect to deliver at least 30% growth in exome and genome volume and revenues and expect total revenues between $350 to $360 million for full year 2025. We expect a full year 2025 adjusted gross margin between 65 and 67%. And for comparison, full year 2024 was 65%. We expect to maintain profitability each quarter and for the full year 2025 on an adjusted net income basis. You can generally define adjusted as EIA last year based compensation. And in our business, adjusted net income should conform fairly closely to operating cash flow over time. As we previously shared, we will continue to optimize the test menu towards the genome only paradigm. To that end, and in order to focus all investment and investment into accelerating exome and genome growth, hereditary cancer is a non-core fit within our business. We are exiting in 2025. So I'll wrap with this GDX has spent two decades investing in the accumulation and expert curation of data, know-how and tools necessary to interpret a genome's worth of information most definitively and at previously unimaginable scale. And under Catherine's leadership over the past 3+ years, it's now coupled that long history of clinical expertise with the strategy, commercial effectiveness, and operating discipline to finally scale the promise of genomics. Stepping forward, we intend to address a large unmet medical need and do so while saving an overly complex, bloated, and expensive healthcare system, massive dollars. In an era where cost efficiency for healthcare in the United States is top of mind for hospital executives, insurance partners, policymakers, politicians, and taxpayers alike, the GDXXO and genome are a large part of the solution. And with that we welcome any questions operator. Question and Answer Session Operator Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press 11 on your telephone. If your question has been answered, you wish to remove yourself from the queue, please press 11 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Dan Brennan with TD Cowen. Your line is open. Daniel Brennan Great, thank you. Thanks for the questions. Congrats on the quarter. Maybe to start off, Kevin, could you just give some color on the implied price assumption for 25? Obviously you're saying 30% plus rev and volume, so I guess the implication is maybe pricing can be flat or so, obviously great progress in the quarter on price, but you know we understand it's still decently below, the institutional and Medicaid rates and the commercial list price. So just wondering how we're thinking about pricing in 205. Kevin Feeley Yeah, the way I look at it, Dan, is the $3500 in the fourth quarter was very much improved in outpaced expectations, and I would say at this point we consider rates to be stable and have room to go much higher. We're still at a point where nearly half of all tests are being denied and the team continually is refining processes to avoid those denials. We're certainly optimistic. That we can get that rate higher than what we just posted in the 4th quarter, and our guidance philosophy tends to be, very much data dependent, and we look forward to updating you as as we move throughout the year. Daniel Brennan Got it. Okay, and then can you speak a little bit to like what's implied? You talked about being adjusted com positive and adjusted that positive in 25, which is, I think consensus has you guys at that level at a, low level, but can you just speak to how we should think about OpEx leverage and kind of what the magnitude of kind of, done cash flow could be in 25. Kevin Feeley Yeah, so there'll be a step up in opp X as we look to ways, look for ways to accelerate growth and reduce costs. I think Epic is a prime example of that. That'll be about $5 million annual to add to the current OpEx base. And so we certainly see areas to invest. Katherine spoke about some across the commercial commercial teams and ways to drive further automation. I think we built the discipline within the company at large to look at the multitude of bets that we can place and ensure a high level of probability of success. The way I would think about it is you've got the revenue and gross margin guide. OpEx will step up and but only in a way in which we're committed to keep profitability positive each quarter for the full year. Daniel Brennan Okay, maybe just the final one you talked about new opportunities you're kind of baking into the guide in the second half. I think you mentioned the NICU, but you've already launched there, so I'm just wondering, can you speak to kind of what these new opportunities are and can you frame like relatively how meaningful they are in the 25 guide? Thank. Kevin Feeley You. Yeah, so the NICU was one we did deliver the Epic or integration ahead of schedule. Still expect a second half of year ramp and the NICU may be pulling that forward a couple months into the 2nd quarter. What's also built in that we're excited about is turning on new indications and use cases for exome and genome. The growth to date, or at least over the last year plus, has been on that focus of epilepsy, autism, intellectual delay, developmental delay across the peat neuro call point, maybe just a couple examples and then just a couple, so stepping into use cases like cerebral palsy. It is a is an example hearing loss maybe another one so use cases to drive further same source sales within call points we've launched into will be a focus of the second half of the year. Operator Thank you one moment one moment for our next question. The next question comes from William Bonello with Craig Hallam Capital Group. Your line is open. William Bonello Hey, thanks a lot guys. Just wanted to follow up a little bit more on the the comments on the on the earnings guidance and profitability and the incremental investment, maybe two things in particular. One, you mentioned expanding the sales team. I'm wondering if you can give us any sense of magnitude of that expansion and maybe the corresponding cost, and then I'll ask the next one. Katherine Stueland Certainly, so, and thanks Bill. A couple things on Salesforce. So, we have expanded our enterprise team from about 5 to 10, and that's something that we have our eye on as we get epic off the ground as we start really getting more experience, we're going to keep an eye on that and we're prepared to continue to add reps, as we make progress on on the plan on the NICU side of things. We also have hired inside sales reps for the team that's been focusing on the outpatient opportunity. I think we've talked about the fact that that that sales force has been they've been out there focused on new accounts on same store sales, but they're also doing a lot of administrative work, so. We've hired a team of about 25 people to focus on inside sales that are really helping to offload the administrative burden and ensure that our sales reps can be focused on bringing in new accounts and and looking for additional opportunities within existing accounts. I would say our sales force is by far an order of magnitude 3 times larger than the next. Sales force and our space, so, our focus is on continuing to get greater productivity out of that team. The customer experience that we're investing in is also intended to create a really intuitive, experience that will also offload some of the more manual work. And so we think that the investments that we're making on customer experience are going to pay off in terms of stickiness and same for our sales as well in the future. William Bonello Sure, and in in terms of cost, I mean that sounds like maybe 1 to 2 million bucks or something like that. Kevin Feeley Yeah, it's certainly I don't know if I'd give you the exact number, but say it's a. Order of magnitude is not that large. I'd say the epic investment that I cited being the single largest investment year over year. And the way I think about cadence on the bottom line is Q1 being near break even slightly positive and then ramping in the latter three quarters. William Bonello Okay, and then that was the follow up on on profitability. So is your goal to just ensure that you stay profitable, or I mean you were meaningfully profitable in the 4th quarter, how are you thinking about growing profits in addition to revenue, this year and maybe next year? Kevin Feeley Yeah, I think so. We've stated it is a commitment of ours to keep the company profitable from this point forward. That said, we're excited about ways to accelerate growth as we enter into new call points and new indications, we want to see what it takes to really dominate and win those markets and have some latitude to tackle accordingly. William Bonello Okay, that's very helpful. Thanks a lot. Operator One moment for our next question. Our next question comes from Tycho Peterson with Jeffries. Your line is open. Tycho Peterson Thanks. Mat for Tyco. Maybe first one going back to some of the new product innovation on the ultra rapid whole genome sequencing product you recently launched, you just remind us the immediate opportunity that opens up for you, like what size of the market or kind of TAM does this let you address now and then what are your kind of expectations for penetration of that opportunity? Sounds like it's more maybe back half of the year and. And beyond, we're just trying to get a better understanding of the potential impact from this launch on volumes as we move through 25 and beyond. Thank you. Katherine Stueland Yeah, so one, I would say ultimately down the road we want to be delivering the best, fastest, and most cost effective genome across the board. So we ultimately want to move to just being able to run a highly accurate, fast, clinically actionable genome for everyone, but in the meantime that product is indeed focused in the NICU setting. So we think being able to have the 5 day turnaround time and now the ultra rapid for patients who may be in most need really unlocks what is, roughly considered to be about a billion dollars dollar market opportunity in in that NICU inpatient setting. Fewer than 5% of babies in the NICU get a genetic test today. And so we think there's just, it, it's massively underutilized in that setting. So this gives us the ability to to provide either that 5 day turnaround time or for super dire cases, the the ultra rapid as well. Tycho Peterson Thanks. And maybe one on capital location, I think you talked about in the prepared remarks kind of fueling the next leg of growth. Just talk about what your priorities are today, how that might, differ between organic and inorganic, and, if there are items on the inorganic side, can you just remind us kind of your types of assets you might consider looking at either on size or kind of where it fits relative to your existing portfolio today. Thank you. Katherine Stueland So in in terms of priorities of of investment, continuing to invest in growth is obviously critically important so product having best in class products, having the best in class customer experience, we think this is a prime opportunity to really be able to deploy AI machine learning and other automation, technologies to help smooth out that overall customer experience. As I mentioned, we've hired. In particular, one of the leading industry customer experience products designers who has tremendous experience in terms of making it a really sticky experience for everyone, continuing to automate as much of the lab as possible, the interpretation platform. Those are the major areas as we think about prioritization of investments, all of that, of course. A to fuel a fast growing market, we want to make sure, as I said, that we've got the best, fastest, and most competitive in terms of pricing. We've invested a lot in scale, so I think we're really pleased about our ability to have the highest level of clinical excellence, but also be able to do it more cost effectively than anyone else in the space. Tycho Peterson And maybe just one more I could sneak in for Kevin on the hereditary cancer exit in 25, could you just like out what's in or out of the guide for that and then any more color on, timing when we could expect or the type of exit we could expect in 25 for that hereditary business. Kevin Feeley Thank you. It assumes in 2025, losing the vast majority, nearly all of the hereditary cancer contribution that we saw in 2024. Thank you. Operator One moment for our next question. Our next question comes from Matt Sykes with Goldman Sachs. Your line is open. Matthew Sykes Hi, thanks for taking my question this morning. Kevin, maybe we just two quick ones for you and then I have a follow up, Katherine, for you, a more bigger picture. But just Kevin, can you talk a little bit about what your expectations are for ches within that guide for 2025? I know that Q4 was more of a one-off appeal, but how should we think about cheer ups as we move through this year as a portion of that revenue? And then secondly, just given the exit rate of gross margins in Q4 and then your guide for 65 to 67. How should we think about phasing for gross margin improvement over the course of this year on a quarterly basis? Kevin Feeley Yeah, thanks. So on the true ups, I think fair to say that the order of magnitude of subsequent quarter true ups may come down some naturally as we're getting to a more mature spot, although I will say we're still far away off from what we think is a the theoretical maximum payment rate, which is probably likely around 80% and so still a lot of room to go. But would expect that every quarter, we're on the positive side of those tropes, frankly, it's an estimate that, It is meant to align to expected cash collection, and there's always some slippage up or down on that and it's our hope that we're being appropriately conservative and coming back with positives in that regard. And then on gross margin we're certainly excited about the ability to unlock further efficiency and cost savings in the dry side of the lab. I would think most of the impact to come in the second half of the year, but not really in a large step down function, more so pretty smooth, frankly, there's a lot of manual steps we think right for automation and so we'll have a bit of a a rolling launch of automation throughout those steps rather than one big bang really. Matthew Sykes Got it. And then Katherine, just when you think about sort of the moat you're trying to build around this business, you've you've mentioned a few things in this call, product development and design, investment in commercial, sales force turnaround time, etc. How do you think about protecting sort of the market share you've got while also expanding the business, keeping in mind, some of the competitors might not have the resources you have, but others might get into this business over the course of the next few years. How do you think about building that moat and protecting that and what types of investments will you make to do that? Katherine Stueland Certainly, I mean, a couple of things come to mind, as the first mover we have an advantage so long as we run fast, and I think we have proven over the past several years we're running fast. And if there's if there's a message we want to make sure everyone understands coming out of this call, we're going to continue to run fast and hard this year too. I think continuing to diversify our customer base and really cementing the GDX brand in in settings like the NICU, and continuing to cement our brand, with health systems, we think it is critically important. As I said on the call, there's a reason 8 out of 10 genetics experts use us, and we intend to ensure that we can continue to leverage that as we introduce our services to new call points as well. We think that's going to pay dividends once we move into the general pediatric segment. The endorsement by the genetic experts is going to go a long way for us. But at the end of the day, the reason why we have prevailed, not just over 1 year, 2 years, but over a decade where competitors have entered our space and have failed to catch up to us is because our data asset is indeed truly. It sets apart our interpretation platform. It ensures that clinicians can can trust the answers that we're providing them. We deliver fewer variants of unknown significance. Our diagnostic yield is higher. It's a better product. And that's the reason that that we have the stickiness with the most discerning genetics experts out there. So we're going to continue to build that that data mode rapidly. We're going to build, as I said, a customer experience that we think will be an amazing complement to that data mode, just making it super intuitive and easy to to order, easy to understand. And I think the rate at which we're onboarding new customers and continuing to see same store sales, is exactly the reason that we'll continue to win in this space. Matthew Sykes Great, thank you, very helpful I appreciate it. Operator One moment for our next question. Our next question comes from Mark Massaro with BTIG. Your line is Austin. Mark Massaro Hey guys, thanks for taking the questions and congrats for a strong 2024. Katherine, the first one I wanted to ask of you is the ultra rapid whole genome, which I think you're targeting turnaround time in about 48 hours. Can you just remind us how that compares to the turnaround time of your legacy. Exome or genome that you have on the market today, and is there a potential for going back to payers and looking for more payment as a result of potentially higher clinical utility, or is this more of a feature that you want to ensure that it's best in class? Katherine Stueland Yeah, that those are all spot on questions. So a couple of things just zooming out, it wasn't that long ago that the turnaround times for an exome or genome were 6 months. So I think that part of the reason why exome and genome are now and part of the reason why multi-gene panels will become obsolete in time is for exactly the point that you're making, Mark. We can now do this. Not just in weeks, not just in days, but in hours, and we want to continue to be the driver and the innovator that ensures that that we can get turnaround times as quickly as possible. So whereas a few years ago genomes were were 6 months. Last year our our genome was 14 days. We were able to get that down to 5 days. And then the 48 hour ultra rapid just gives us an additional boost in terms of making sure that that that we can provide the the most rapid results as as necessary. We will have a higher price point for that ultra rapid test. That is in the NICU, so again that is institutional pay and and so it's not contemplated in our our contracts with payers, but we think that it it ensures that for the most dire cases where where it may be warranted that we can provide that, but there is a higher price on that. Kevin Feeley Although I will we're confident that higher price point though we will be in a position to be the most competitive price in the marketplace, and then in terms of that institutional price for hospital systems in the NICU or down the road as we just effectively eradicate the terms rapid and not rapid and make all as. It's always our intention to ensure we're bringing to payers the data that shows the value add, not just clinically but from a health economic standpoint of getting these answers into the hands of providers as soon as possible. Mark Massaro Okay, great, this is actually an investor question. Can you walk us through the phasing of the 1st and 2nd half of revenue and do you think in Q1 we should expect volumes to grow sequentially off of Q4, or do you expect any impacts related to, lingering holidays or any new product rollouts that might impact Q1 volume? Kevin Feeley Yeah, I'd expect Q1 to be slightly above Q4, which does show tremendous underlying growth. There is a seasonal effect in our business and across the industry. Typically, Q1, the seasonally weakest, Q4 the seasonally highest that patients are trying to get into physician offices before co-pays and deductibles reset. So there is a fairly A habitual 1 lag, not just for us but across the industry. We expect to grow beyond that to keep volumes at or above Q4 levels and then ramp up significantly around the same pacing as you saw in 2024 in terms of cadence for each of the quarters, but Q1, the lowest in Q4, the strongest data to date. Through Q1 is very encouraging despite the fact that much of the country had a rough January and February in terms of weather, and in terms of the wildfires, but very encouraged and happy with the data that we're seeing today. Okay, last one for Mark, I would expect a larger proportional second half of the year solely as a function of us activating the NICU opportunity and those new indications we talked about, both of those, hitting at best, late in the first half but really ramping up in the second half of the year. Mark Massaro Okay, I got it. Maybe last one for me. It was great to meet Brian last month. I think in the press release hire, I think he might be overseeing the program management office, so I'd be curious to better understand some of the programs or initiatives you guys have rolling out in 25 and 26. And then specifically I wanted to ask about the opportunity in adults. You've done a really nice job with pediatrics, but I'm curious what inning you think we're in in adults and maybe can you touch on some of the clinical areas that you can help address unmet needs for in adults. Katherine Stueland Absolutely, yeah, so it's been fantastic having Brian on board. He's he's on week 6. It feels like 6 months in the best way possible though he really has immersed, and, he's responsible for operations, medical affairs, products, technology, and the program management office so that the PMO is really intended to ensure that we accelerate any sort of automation efforts, coming out of the product and technology groups and into into the the lab operation. In addition to any sort of customer experience efforts that that we've mentioned that we're investing in, customer experience is one of our biggest areas of focus for the year, so the PMO just helps us run more efficiently. We've just recruited a fantastic person. To to lead that organization so that is Brian's focus in addition to a new innovation team, which is looking at, I think in a more forward-looking way how we continue to to make sure that as new technologies come to bear, whether it's from sequencing companies. Or otherwise that that we can be as forward leaning as as possible. So those are the sorts of efforts that will come out of the PMO and out of Brian's organization. On the adult side of things, the way that we think about it, we're in like 0 right now on that. We have like a smattering of tests that come in for adults today and historically that that's been the case. And so that is a massive and untapped opportunity ahead. The clinical areas that we think are most representative, so think neurodegenerative disease for adults Parkinson's, Alzheimer's. Think about some of the cardiac conditions, so amyloidosis. Hypertrophic, cardiomyopathy, so some of those areas where you're seeing biotech companies focus on, genetic-based medicine, so those are areas that we think are important and as we continue to build a biopharma pipeline, having conversations and and some of those areas as well. Mark Massaro Thanks so much. Operator One moment for our next question. Our next question comes from Brandon Couillard with Wells Fargo. Your line is open. Brandon Couillard Hey thanks. Good morning. Kevin, not surprising to see you exit hereditary cancer. Can you just remind us what the gross margin profile of that revenue stream was? I imagine it's slightly accretive exiting. Hereditary cancer is probably slightly accretive overall this year. That'd be helpful. Kevin Feeley Yeah, it's about 40%. Brandon Couillard Okay, and then, Katherine, on the Epic aura roll out, so you've launched in one site right now at UNC Health. How many sites do you expect to have by the end of the year and just generally remind us.what the process is like from kind of turning it on, kind of educating doctors until you start, recognizing revenue from that. Katherine Stueland Yeah, that. Yeah, absolutely, I'll kick it off and then let Kevin comment as well. So before we even made the decision to sign the epic contract. We booked a large pipeline of business that was primed to flip when we had the epic aura of functionality. So we did a lot of the pre-work and we kept those customers warm over the course of time as we did all of the tooling required to really build the capability. UNC is one that we've been closed with, and they wanted to be the first. We've got. A number of others in the waiting room that are are fast followers and then we'll continue to drive our sales effort as I said, we've got an expanded enterprise sales team that that will be focused in this area but we're starting with with UNC we'll start adding them as we start to build that muscle in terms of how we work quickly with with these health systems. Not just on on their side of the integration but then starting to pull through the volumes and the revenues and so that's part of the reason why it will be a slower start in terms of the guide and then start to pick up really in the back half of the year. Kevin Feeley And Brandon, it was about 6 months of picks and shovels from the time we signed the contract to going live. We're launching last week. That was really to build the infrastructure, so I considered that. Efforts to build one time at this point though, and moving forward, it radically improves our time to deliver new integrations with willing hospital systems down to a matter of something close to 2 to 3 weeks for each additional hospital system, so a massive improvement over building customized bespoke, bi-directional interfaces. So we're really excited to deliver that better experience of integrating with hospital systems. And then to your point, the end user, the real key is putting bedside ordering and result delivery on the screen in the exam room or at the patient's bedside. Operator Great thank you. And ladies and gentlemen, that's include the Q&A portion of today's call and I'd like to turn it back to the captain for any further remarks. Katherine Stueland Amazing. Well, we look forward to seeing you all very soon at investor conferences and thanks so much for your ongoing support. Have a good day. Operator Ladies and gentlemen, that's conclude today's presentation. You may now disconnect and have a wonderful day. View Comments Terms and Privacy Policy Privacy & Cookie Settings More Info Recommended Stories
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