Conference Transcript - WGS 2026-03-11

Luke Sergat, Analyst — Barclays

All right. Good afternoon, everybody. I'm Luke Sergat. I cover life science, tools, and diagnostics here for Barclays. With me, I have Kevin Feely, CFO of GeneDX. Thanks again for making it, and it's always a pleasure to have you guys here. You guys have been, over the last couple of years, just been executing against your commercial targets, right? Continuing to build out the platform. Why don't you just kind of walk us through the transition that you've had, or not the transition, but the momentum that you've been building over the last couple of years and where you are now and kind of how you're positioned there to jump off into 26 and beyond.

Katherine Stueland, CEO

Yeah, and thank you, everybody, for being here. I mean, GNDX has operated for 25 years and with a focus specifically in solving the world's hardest to diagnose cases around rare disease. For the past several years, really focused for the first time since 2021 with full commercial efforts behind our flagship whole exome and whole genome sequencing technology. And technology we spent the better part of the last two decades refining. The core of the business had been expert clinical geneticists in the United States. There's about 2,000 of those really utilizing exome and genome as a last-in-line diagnosis for those hardest-to-crack cases. Most people over the past two decades hadn't heard of GeneDx unless you were a global expert in genetics and rare disease, and GeneDx is really where you went when you were searching for an answer. What we've embarked on over the past several years is to move the utilization of those tests outside of just the pure expert space. Beginning in 2023, launched into pediatric neurology as the first of what over time will be a wide array of pediatric specialists and eventually adult specialists as well. An exciting time for us to move in beyond specialty call points. It was summer of last year, the American Academy of Pediatrics updated their genetic testing guidelines for the first time in 11 years, calling for exome and genome to be a first-line diagnostic for children with global intellectual and developmental delay. So a company with a long history, but really just a couple of years now of proliferating the use of exome and genome into standard of care across multiple different physician types. We're embarking on an investment cycle to expand the commercial team to go after what we think is ultimately going to be a massive market that invents genomics into the medical stack around the world.

Luke Sergat, Analyst — Barclays

And so when you guys talk about your overall market, you break it into foundational expansion of future markets. Can you just level set and briefly describe what you mean by those before we start digging into the details of each?

Katherine Stueland, CEO

Yeah, happy to. Those foundational markets are those that we have most experience with, that being clinical geneticists, about 2,000 expert clinical geneticists in the United States, pediatric neurologists, about 2,000 pediatric neurologists in the U.S. And over the past several years, those have really been the primary outpatient call points that we've been actively engaged with. What you see in 2025 is the overwhelming majority of all volume of revenue coming from just those two call points with some contribution from the neonatal intensive care unit. but those two markets making up what we think is a foundational base of experts and foremost specialists with respect to the use of geneticists. And I think going forward, still a lot of room to grow there. Eight out of ten clinical geneticists order their exome and genome from GDX and have for many years. And so fairly well established and entrenched with a strong market share in terms of clinician counts, but even those foremost experts are still only ordering for about a third, exogenome, for about a third of all patients they see. Now, you'd expect every patient a geneticist sees to ultimately get a genetic test, but today they're still very much entrenched with ordering single-gene tests, multi-gene panels, and so a lot of runway to growth for multiple years to come, even in that innermost core of expert geneticists by converting the use of genetic tests from panels and into exome and eventually all genome backbone for all. And in terms of pediatric neurologists in that foundational market, about a third of all pediatric neurologists at this point are ordering exome and genome and from GeneDx. So still a large runway of activating more pede neuros. It'll take several more years for us to accomplish filling up that far close to the 80% market share we have in geneticists. And that cohort of PNURO is still working for about 15% penetrated in terms of patient And so we'd expect over time to continue this evolution of a replacement cycle of single gene tests and multi-gene panels with strong growth to come, even in those foundational markets, which have been where we've been commercially focused. On top of that, we're now two years into commercializing the neonatal intensive care unit. We think ultimately there should be north of 200,000 tests a year ordered in the NICU. We've got about 25% of those NICUs with active accounts ordering at some small levels from us today. But the standard of care today is having a reality that about 5% of all patients in the NICU are getting any genetic tests. We know what good looks like there. It's what Seattle Children's is doing. They outlined that in a study we released a year ago called Seek First, in which they're ordering a rapid genome on 60% of all babies in their NICU and seeing the clinical and economic benefit from that. And so still in the very early innings of what are those three call points, which is the entirety of what we called upon in fiscal 2025. And what we've outlined recently is a number of markets that will be expanding into, notably, the prenatal space with the use of a late-term prenatal exome or prenatal genome. That's a diagnostic-level test. And the largest market of all, the general pediatrician on the back of those AAP guidelines released last year.

Luke Sergat, Analyst — Barclays

All right. So going back into the foundational market, this has been kind of the workhorse of your business right now. 80% penetrated on the general specialist and then you have the specialist there, lower penetration. But like you said, it's only like 15% of patients. Why? I mean, clearly these doctors are using it, but not using it enough or using it with all their patients. Why not? Typically you see them adopt something and it's like, okay, we're just going to use this with all the patients. We check the box. I mean, they're not getting paid for it, but I don't understand why there's just such a hesitance or inability to penetrate that patient population.

Katherine Stueland, CEO

Yeah, it's a great question, and it mostly comes down to education and our ability to repeatedly get in front of those physicians to bring them up to speed. There were old realities around exome and whole genome sequencing that are no longer true, that being that only an expert clinician, a geneticist, could understand the results of these tests and that these tests take weeks, if not months, to produce and that they were so expensive that they were cost prohibitive. And that's frankly what GeneDx has aspired over the past decade to solve for. We've gotten turnaround times and cost and complexity down towards parity with multi-gene panels. And frankly, that's new news for many clinicians outside of the genetic space that we run into. And so dispelling what used to be old realities that are now myths is part of the education process. I think there's entrenched behavior. All of us in health care, as many steeped in all forms of health care in this room, know that changing doctor behavior is one of the hardest things to do in all of health care. And so those doctors who have been accustomed to running single gene tests or multi-gene panels for certain symptom types or hypothesis, getting them to change behavior just takes time. And again, repetition to get back to the physician's office to make sure that they're staying abreast of the technology advancements that have been immense over the past decade. And then third, some of this is in our control. If you look over the past three years or so of commercialization efforts on our part, we really were just focused on a few specific diagnosis codes or indications, namely symptom types and disorders around autism epilepsy and intellectual developmental delay not because those are the only disorder types that our technology can diagnose we can and do span the spectrum of all rare disease but those are areas specifically where we saw that guidelines were in place and therefore had to influence payer policies already and there was a fighting shot to get paid fairly for our services. I think what's incumbent on us to further develop the market is continue to bring clinical evidence and economic evidence to payers, whether those payers are Medicaid programs or commercial payers, to open up the aperture of coverage. There's been an emergence of guidelines over the past half decade. We don't expect that to slow down at all, and that will further make it appealing enough for us to go target to bring volumes in. At the end of the day, an exome or a genome is a better test. It's a better mousetrap than a multi-gene panel. That is well understood by physicians. We want to make sure that before we meaningfully take on that volume, that there's an ability to get paid, and that will continue to improve over the next half a decade here.

Luke Sergat, Analyst — Barclays

Yeah, and I was just about to ask about the clinic. Is it like that they doubt the clinical utility of it? I mean, I know you have like specific test locations themselves, but How much on that piece of the education, and then once you get a net fees reimbursement, and then they're like, oh, okay, this has been vetted. Is that kind of how the path here to adoption to the test has come?

Katherine Stueland, CEO

Yeah, I think what we've seen is sometimes it takes multiple visits, that repetition, to first, like I said, dispel those old myths about the test, to then try and influence changing behavior. and ultimately then proving that demand to payers is what really gets them to move the needle on reimbursement coverage. Clinical data, economic data, helpful. The biggest tool in the tool chest is always physician demand, and so that will mean in certain situations bringing on volume prior to reimbursement being in place, but that's an important part of the dossier to influence the emergence of more coverage for more patients, and ultimately that's what we're in the

Luke Sergat, Analyst — Barclays

business is doing and so as you guys are you exited the year with i think 50 reps in this in this business adding 25 more um your guide embeds 25 to 27 on this side from a volume growth perspective here walk us through the assumptions and is this really just about how much is i guess efficiency on on existing reps versus just adding on the onesies and twosies from the new reps

Katherine Stueland, CEO

Yeah, so if you look at the outpatient setting, those foundational markets, last year we really went to bat with roughly 50 reps, 50 back-carrying sales reps. That team calling on specialists, geneticists, p-neuro, and additional specialty types, so think specialty types like pediatric cardiologists. That team will go from 50 to 75, or has already here in the first quarter. and that allows us to layer on those additional call points of new specialists while at the same time they will stay churning the crank on what we see as large pockets of growth still to be had in that innermost core of those foundational markets so geneticists continuing to improve utilization rates to get them to order these tests for more and more of their patients for us in the geneticist community with eight out of ten already ordering from us it's not about running new accounts, but it's improving utilization at existing accounts, and that will continue. At Pete Neuro, like I said, there's still about two-thirds of that doctor population that we've yet to reach. We've been in that call point active for two and a half years now, and so the additional heads will allow us to accelerate, knocking on more doors, go through that education process, activate more Pete Neuros, and continue to improve the utilization rate there, while also giving them those additional call points of additional specialty types. So if you look at the components of what we guided to, 33% to 35% volume growth, a good 25% to 27% of that is coming from those foundational markets alone, which have multiple years to continue to mature into.

Luke Sergat, Analyst — Barclays

Yeah, okay. And moving on to the expansion markets here, you talked about your general PEDS, your NICU, I had to write them all down, your prenatal, your adult specialist in the international. I think that, you know, from the adult special, the international is more kind of outside of what your core has been. So focusing on like the general beds, the NICU and the prenatal, I remember we talked about NICU last year, and it's just like a notoriously tough market to penetrate. and you're i think like the utilization is probably is it i'm not going to put words my feeling was it was worse than even the the utilization from like the specialists and geneticists above like can you just walk through why that's such a difficult market and why again like if you're in the NICU that is a very motivated patient population to figure out what is going on And so, I mean, I totally would be like, I don't care. Give me the test. I want to know what's going on. So why isn't it like we seeing that pick up more meaningfully?

Katherine Stueland, CEO

Yeah, and it's really a market we began to commercialize in 2024, 2025, a number of key milestones. Starting with that Seek First study I mentioned earlier came out in February. We think that's a definitive clinical marker. We launched a health economic tool for use by hospital administrators to prove the ROI on the test in spring of last year. We began a path of implementing sites onto Epic Ora last spring, and it was in April of last year we launched a two-day turnaround time in the NICU to supplement the five-day. if you look back at fiscal 25 overall volume flows did fall short of our expectation of where they were a year ago but underlying that was a really good sign in terms of account activations so we now have more than 25 percent of the target 800 level 3 and level 4 NICUs with a signed contract at GNDX and actively ordering. What we saw in 25 on the heels of an approach to work top-down through hospital systems, working through the C-suite of the hospital, whether it's the chief medical officer, the CEO, the CFO, bringing attributes that they would all be most interested in. A lot of success at activating that level of the hospital to understand the clinical and economic benefits, signed contracts. That was the bright spot. Where we fell short was in improving a utilization rate within those NICUs. Standard of care today has, you know, them ordering for about 5% of their births. And like I said, we know what good looks like. It should be closer to 60. Yeah. What we're supplementing this year as a key lesson learned is, of course, We will continue that top-down approach, but inadvertently, I think where we can and have already approved is putting in additional resources on the ground to work bottoms up to engage with folks on the floor of the NICU. So the neonatologist, the neonate nurse, the department chair and department head work with them to ease the implementation burden, not relying on having a contract alone, but ensuring that we're working actively to educate, to help with protocols and ease implementation in order to pull volume. That's a new go-to-market approach for the past couple months, and we're starting to see early signals that the utilization rate in those NICUs are picking up in that regard. But there's no doubt there's a long cycle to work both top-down and bottoms-up to influence what is a fairly radical change in care across those neonatal units.

Luke Sergat, Analyst — Barclays

And so from the bottoms-up side, is it kind of, all right, we've laid the groundwork on the top-down, and that 25% of the 800, that's where you're going to deploy more of the commercial hand-to-hand combat in the NICU, where you already have some presence and buy-in from the C-suite and management. And then those sales and BD people will go out and just continue landing.

Katherine Stueland, CEO

It's like this land and expand. That's exactly right. We're starting with a supplemental team, but we added 10 reps in January specific to the NICU. And as you laid out, the fertile ground for them would likely be those accounts that we've already activated, while in parallel we continue to sign more contracts and activate more accounts.

Luke Sergat, Analyst — Barclays

Got you. Got you. And then on the general PEDS, you know, you're adding reps across the entire business here. So you're adding, I think, 50 more here, or you have a dedicated team of 50, and you're adding more in this. Like, how does the general PEDS, like, it feels like all these, like, sub-markets are completely different and siloed and at risk of boiling the ocean all at the same time. I mean, why is this, like, why do you need to be in general PEDS and NICU, and how do they all talk to each other and feed into each other?

Katherine Stueland, CEO

Yeah, it's a great question, and they are very different. There's different characteristics around education levels that are necessary and then what it will take to win in each of those. And so one thing that we've done intentionally to avoid distraction factor is that specialty team that calls on the outpatient specialists, segregated from the prenatal team calling on maternal fetal medicine, segregated from the team calling on general pediatricians and the NICU. Obviously, they work together. They share knowledge and insight. There's some shared functions around marketing. and leadership. But those are all dedicated sales teams. Rather than try to have a rep who could be good across all of those, we want the people engaging with our clients to be steep in what exactly makes those positions tick. That's also gone into the hiring plan. So if you look at the near 100 heads that we added for the first time, not just adding folks with specialty diagnostic experience. Take general pediatrician for an example. Yes, of course, we brought on some experience general diagnostic reps in that space, but we've also brought on people who maybe don't have diagnostic experience, but they've been selling therapeutics or vaccines or other products to pediatricians who understand how those offices tick and the phenotype, no pun intended, for those specific types of doctors and yeah I think there's a call to say well why go into all of those now versus take one at a time I think at the end of the day there is a large unmet need there's only GNDX we think in large part that can solve for some of that at the moment you know if you look at our diagnostic quality our turnaround times the end-to-end customer experience, we think it necessary for us now to invest in taking market share to extend the leadership position we have in geneticists. As I said, 8 out of 10 ordering from us. We think that expert support is going to carry forward as we move into the non-expert space. And we're in a unique period of time where we're ready, willing, and able, and we think uniquely capable of making a big bet to enter into these new markets.

Luke Sergat, Analyst — Barclays

And it seems like, so you're putting a big bet in to enter these markets. You're investing a significant amount of capital. Talk about the pool from the market side. Like, what are the catalysts coming up this year that are going to help unlock this? Because it can't all just be on your side.

Katherine Stueland, CEO

So in the general pediatrician market, the largest, we'll start there, we've done extensive research. We've been engaged with that community since guidelines have come out, focus groups, qualitative, quantitative research. I think all of that tells us that these physicians can and will be orderers, but they've outlined for us criteria both on the front end and the back end of the diagnostic process in terms of user experience that they need to see. And so we've committed to a next generation customer experience, effectively take the burden of a fairly lengthy the ordering process off of the physician in the physician's office that will release later this summer. And on the back end, a report that is more tailored for non-experts, easier to read, easier to understand and digest, and more so, how do we arm the physician so they don't feel exposed without the knowledge to explain the diagnosis to a patient and more so what to do next with that diagnosis. And so part of a suite of customer experience enhancements coming out later this summer. To us, that's really the starting gun for the market to really open up. And so a key milestone there to be on the lookout for. That experience is in beta testing now, being beat up fairly extensively by pediatricians. It will be designed and built for pediatricians by pediatricians. And like I said, that's in beta testing now. On the prenatal side, we did launch a new product into that market in February that was a prenatal genome. It supplements a prenatal exome that we've had on the menu, frankly, for many years now and have been seeing organic volumes despite the fact of never actively calling on MFNs. We started to see demand come through in terms of orders of that prenatal exome that was really coming organically, word-of-mouth, peer-to-peer exchange at their conferences, them finding GDX. So what it told us is if we were having good success selling that product without even trying, we ought to try. And so we built out a team of 10 to get to learn the market. And I think periodically throughout the year, we'll be coming back to say, what are the signals and lessons learned in the first couple quarters to identify when's the right time to expand that sales team? The team of 10, certainly you can envision larger. If you look at what is the go-get there, about 4% of all births in the United States have some level of abnormality flag, whether through ultrasound or some other diagnosis, that would make them a good candidate for this test. That's about 150,000 tests a year. And so to knock on all those doors, at some point, you'd expect a larger team. So another key watch out for us throughout the year is just a signal on how that market is developing. And, of course, the NICU, we want to be able to report back definitively that that step up and that utilization rate towards what we're seeing and seeing first is starting to become a big reality.

Luke Sergat, Analyst — Barclays

That's great. Thanks. And I really appreciate the time. That's it. We just kind of ran blasted right through. Thanks for having us. Yeah, thank you.