Conference Transcript - WGS 2026-03-02

Dan Brennan, Analyst — TD Cowan

Dan Brennan, TD Cowan Tools and Diagnostics Analyst, day one of the 46th annual conference. Pleased to be joined here with me on the stage, the management team of GeneDx. To my immediate right, we have Catherine Stulin, who's CEO, and to her right, we have Kevin Feely, who's CFO. So, Kevin, Catherine, thank you.

Katherine Stueland, CEO

Thank you for having us.

Dan Brennan, Analyst — TD Cowan

Awesome, for sure. So, you know, 25, another big year for GeneDx, you know, really strong growth north of 40%, whole maximum growth of over 50 with you know 30 volume growth good pricing gains so um listen you saw really strong growth from from the foundational markets but now entering 2026 you've really expanded the sales force pretty significantly to go after some new opportunities so maybe just zooming out just talk a little bit about like exiting 25 going into 26 with this kind of

Katherine Stueland, CEO

expanded strategy if you will and you know kind of the thoughts around that certainly well first I think there's never been a more hopeful time in the world of rare disease and genetic medicine and in fact tomorrow there's going to be the first ever CNBC Cures Summit which is bringing together the entire ecosystem of researchers, policy makers, biopharma companies and central to that entire ecosystem is GeneDx. we are enabling all of that by being able to diagnose more patients more rapidly earlier in in their diagnostic odyssey it still takes on average five years for a child with a rare disease to get an accurate diagnosis that should not be the standard of care we can do it today within 48 hours using a rapid genome using our exome or genome our turnaround times are are two to three weeks. So we've been able to fundamentally take the vision of the Human Genome Project and turn it into something that can be embedded into medicine as the standard of care. So we feel very passionately about the ability to fundamentally shift the way that anyone of any age is diagnosed with a genetic disease. What we were able to do last year by way of growth is deliver more than 30 percent growth in our core market. And as we look at the ability for us to have an impact into the future, including in 2026, but for the foreseeable future, we expect that we're going to continue to grow. We said 33 to 35 percent this year alone. The way that we are structuring our commercial efforts we wanted to be able to have multiple sales forces to be able to tackle different problems that are happening in the marketplace so in our foundational market so think about geneticists and specialists there is still tremendous ability for us to have an impact there while we have 80% market share today in geneticists there's still room for us to convert multi-gene panels to exome and genome as we think about the pediatric neurology space while we have about 30% of those clinicians and that leaves us wide open runway to be able to continue to drive utilization and we're only at about 15% penetration in terms of the the patients who we believe that we can help in that setting so we've got a sales team that is incentivized each and every day to drive utilization there the next market is in the nicu and we have about 10 sales reps that are focused there we've made some shifts to that commercial strategy and we're really really happy with what we're seeing early in the year in that market there's the general pediatrician strategy which was enabled of course last year by our by the the american academy of pediatrics and the guidelines that came out encouraging pediatricians to start utilizing the testing so we've got a full commercial team and strategy there and then we also introduced a prenatal genome we were seeing really good organic growth in the prenatal space utilizing our exome so we've now launched a genome in that space so our investments across those four sales teams and efforts are going to pay off not only in terms of growth this year and profitable growth at that but also as we we think about the the future of growth as well terrific um maybe i'll ask a

Dan Brennan, Analyst — TD Cowan

question just you did this on the call a little bit but it'd be interesting to just hear it more transparently or more explicitly so kevin or catherine just those extra kind of new expansion markets like how do you think about the contribution or the or the as part of that seven eight percent growth that you're guiding to between NICU, General Pede, the adult, and the prenatal?

Kevin Feeley, CFO

Yeah, the largest component there will be the NICU. So we began commercial efforts selling into the NICU in 2024. In 2025, some landmark pieces of evidence, Seek First study came out in February of last year. We commissioned a health economic study specific to the NICU for hospital systems that came out in April. We began implementing Epic Aura, spring of 2025. And so it was a year of significant learnings for us. We embarked on a top-down sales approach across the C-suite of the hospital system. We now need to couple that top-down approach, which will continue with a bottoms-up pull, engaging with neonatologists, neonate nurses, others on the field in the in the field and so if you look at the components of those expansion markets you have seven to eight percent of that growth rate coming from the collection of those but at least half of that coming from the NICU specifically a market that we now know fairly well we're expanding the sales team in that regard so 10 new reps at least focused on that bottoms-up poll of volume, and so a lot of lessons from last year to draw upon, and I think that positions us well. Ultimately, we see a market need of over 200,000 tests a year. The basis of that is that Seek First study that came out a year ago in partnership with Seattle Children's would say that 60 percent of all level four babies would have a meaningful change of care with intervention from a genome. Today's standard of care would have those hospital systems ordering for about mid-single digits of their admittances, and so we know what good looks like, and now it's a matter of drawing up utilization over time. If you had to rank order them after the NICU, next would be general pediatricians, but what we're counting on in 26 is a really modest number compared to the overall totality of the market. But if you look at what we've said consistently, we've got about 18 months of education from the time those AAP guidelines dropped last summer to when we would expect volumes to start to inflect. That would put it in the fourth quarter of this year. Something like 3,000 units in the fourth quarter is all that we would need to see and a lot of confidence. We've done extensive market research with pediatricians. we've engaged deeply with that community ever since those guidelines have come out we've been running focus groups quantitative and qualitative research and we know those physicians will be large orders of this test over time and we're busy building a customer experience for pediatricians built by pediatricians it's in beta testing now features will release later this summer and that really is the start of efforts to begin to pull through volume and then you'd round that out with a small pilot team we've built around 10 new sales reps focused on prenatal the target audience their maternal fetal medicine for a late stage whole genome diagnostic test we'll build that team as as we go but starting with a fairly modest team and some pragmatic expectations there and what

Dan Brennan, Analyst — TD Cowan

they would pull through this year. Terrific. I wanted to hit on just guidance philosophy for a moment. You know, 25, as Catherine mentioned at the kickoff, really solid 30 percent volume growth to exome genomes, which was kind of met expectations. You know, Wall Street can get fixated on positive surprises each quarter. So while delivering acceleration at 33 to 35 percent should be like welcome because you're accelerating to a really rapid level is also the question about is there any cushion this acceleration when you just hit the numbers last year just from a philosophy basis how do you think about that 33 to 35 do you feel like you kind of left some conservatism in it such that either there could be potential upside and or it could account for you know there's always unforeseen problems to so enable you to hit those numbers i mean look the the guide was built no

Kevin Feeley, CFO

different this year than it has in any other year i've been at the company now for for 10 years We've taken stock of the markets in which we plan to operate. As we just said, two of those, geneticists and pediatric neurologists and other pediatric specialists, what we'll call our foundational markets, we know them really well. But there's some new markets to us. So those maternal fetal medicine physicians, general pediatricians, new doors and a physician cohort. And so we've taken stock of all of the known unknowns in those new markets. We've performed extensive market research, a bottoms-up build of the guide and our internal operating plan based on what we're operationally equipped to deliver. And I think we entered this year certainly with higher aspirations, but want to be careful in those new markets to not overpromise. We take seriously. We're putting out numbers that we can't live up to. And this year is no different in that regard.

Dan Brennan, Analyst — TD Cowan

OK, maybe just on the competitive landscape, you know, the market's attractive. It's largest on the penetrated. There's real utility for patients and, you know, and for their families. And you guys have a certainly a big first mover. So can you just discuss I think you talked about 80 percent share in your core markets. can you discuss a little bit about the mode if you will your competitive profile there how do you stay ahead of competition which today there's a you know a handful of strong competitors but they're smaller and there's the potential for some bigger players to enter

Katherine Stueland, CEO

yeah so as as we think about the market first competition is a good thing and we've had competition on the market for years there have been a few dozen exomes and genomes we've seen competitors come and go over the years so we welcome it ultimately yes we are the 80 percent leader in a smaller market today it's a 45 billion dollar market though if we think about newborn screening the pediatric opportunity and the adult opportunity and we want to be the 80 percent um uh owner of those markets as well so um what sets us apart um a few things one our our data set which is infinity and we have invested over 25 years in building infinity it's comprised of more than an a million exomes and genomes all enriched for rare disease 60 of the time we're getting mom and dad as well um and it is a diverse data set so it's highly representative of the the U.S. population. It's complemented by more than 8 million phenotypic data points. So think about all of the clinic notes that we get when an order is placed, which is only further being accelerated by not just our own growth, but EMR connectivity, as well as information coming directly from parents about what they're witnessing with their child. So infinity at its core is is what helps us deliver the most accurate information when we are, when we're running these tests. The ability to interpret all of that genomic information at scale is dependent on that reference data set. I say this having lived a life where I tried to compete with GNDX with a better, bigger commercial muscle, but without that reference data set, we failed to do so, which is why you see competitors come and go so there's the core infinity data set that is our data moat we also have about 150 genetic counselors more than 100 MD PhDs who are clinical experts who are ensuring that as we are running these tests we have the benefit of their expertise looking at the responses that that we're putting out into clinicians and parents and of course all of that is enabled by AI and machine learning and so the combination of all of that plus our commercial might our commercial team as we've been talking about we've been investing in much larger than the next commercial team and we've been investing in a better customer experience all around so it's all of those things in totality that will ensure that we'll continue to be the leader all of that being said we welcome given the fact that there is a massive patient opportunity there's a massive opportunity for us to change the standard of care more voices out there certainly validate that opportunity and help accelerate the utilization of this testing maybe just thank you before we

Dan Brennan, Analyst — TD Cowan

dig in on some of the businesses maybe just a high-level one on AI hasn't come up too much in our conversations but nonetheless things as if you AI can solve a lot of problems. And certainly software, maybe AI on top, could kind of find these signals in these kids better than needing a rich database that GeneDx has. So I don't know how you would characterize the risk of AI and or how AI is maybe helping you. Kind of a push-pill question, but maybe on the risk factor first. And then, you know, maybe how you're leveraging it.

Katherine Stueland, CEO

So AI, without a doubt, is an enabler for GeneDx and our ability to deliver on our mission of diagnosing disease as early as possible and on working more effectively with the ecosystem to get to a place where these kids have cures that's ultimately where we want to get to as we think about building our business is diagnosing any of us with a genetic disease and delivering a therapeutic or curative approach I will quote our friend Larry Ellison from last night he said the real moat isn't the model itself it's the proprietary data behind it companies that can train on exclusive data sets gain and advantage competitors cannot replicate having data that no one else has will allow you to dominate your market and that's exactly what we have we have a proprietary data set that is very difficult not impossible but very difficult to recreate and it will take anyone as I went through the specifics of the the rare disease enriched data set that we have in infinity. AI models are only as good as the underlying data, and the proprietary nature of infinity is going to be what continues to ensure that we're the leader, but that AI can help us accelerate that. We want to accelerate the gene disease discoveries. Today, we're doing that on our own on almost a weekly basis, which is hugely important in taking a genome's worth of information and putting it to work for more patients, putting it to work for biopharma companies um ai whether it is our own that we're building or in partnership with ai companies it's only going to be an accelerator for us and ensure that as we accelerate the the amount of data that we are enriching infinity with that it can help more patients okay um so maybe toggling

Dan Brennan, Analyst — TD Cowan

over some of the markets now maybe starting on the core market first i just want to before i ask about salesforce productivity i just wanted to level set so you have 50 reps there and you've kind of add 25 so you're 75 there in total where you're adding 25 roughly plus or minus okay so before i ask about productivity so why so you've expanded it you know 50 which is huge at the same time you are still very under penetrated in the markets how do you think about the toggle between maintaining profitability versus even putting more chips in the middle and say you know what we just want to drive more growth and we'll sacrifice margins for a couple years while we

Kevin Feeley, CFO

just capture all this volume yeah look I think we can do both as outlined we're investing heavily into the business this year whether it's the tripling of that commercial field force or it's building the customer experience or it's maintaining the high stock diagnostic yield possible so R&D efforts ongoing there but at the same time believe that the business is highly leverageable. This year we will push the bounds I think I said on the first on the last earnings call expect the first quarter to operate close to break-even so there's not a lot of room on the bottom line there in the first quarter and we'll accrete operating margin back up to exit the fourth quarter. I think we've proven that the business model can drive that leverage and we're investing heavily back but there's enough headroom that we want to try to toggle the line above break-even for some period of time while we still put significant capital to work to capture these markets. At the end of the day, we've seen companies in our space, in particular over the past two decades, measure growth solely based on volume units, with unit economics be damned and operating margin completely out of sight and that's not worked out well for some of those companies in the past we don't intend to make that same mistake unit economics matter because gross profit is what provides fuel back to invest in the business and we think we're in a position where we can both maintain a profitable business and grow at a high clip for multiple years to come okay so so maybe of that core

Dan Brennan, Analyst — TD Cowan

market so last year grew 30 I don't know if you shared what that overall I don't if you shared what the core market grew in 25 but i i guess i asked a question from a productivity basis meaning you're guiding to like 25 27 from that market and you're adding 50 to the sales force so is like is that sales force productivity enabled in terms of your guidance would that more hit in 27 maybe you grow to like like a lower pace in 25 from the core market just understanding the

Kevin Feeley, CFO

productivity of that sales force? I mean, we tacked on 22,000 units of exome genome volume in 2025, and we did that with 50 sales reps. That equates to something like three to four million dollars of revenue per rep. So highly efficient and effective team. As we move beyond today's foundational markets of geneticists and neuro and into primary care settings like general pediatricians that team will get less efficient for sure today you would expect nearly every patient who enters a geneticist's office to get a genetic test as we move into a general pediatrician office it might be closer to 10 a year and so that sales team has a lot of education to do as these markets build their acumen it's going to take repetition it's going to take some trialing of the customer experience to ensure that we live up to the commitments that we've made to that market and so there will be some loss of efficiency in those new reps and I think the further we go out from those foundational markets the paradigm there will get less efficient for sure we built all of that into the ramp and expectations that we laid out for the year so maybe on the NICU

Dan Brennan, Analyst — TD Cowan

since that's going to be the biggest contributor of the incremental drivers kind of what were the lessons learned I think you talked about how maybe you didn't really focus on the neonatologist as much you really are doing a top-down sale but just speak to the lessons learned and what's the visibility like on that three to four thousand incremental growth um given you know

Katherine Stueland, CEO

given the shortfall last year yeah the the go-to-market strategy last year as kevin said was an enterprise sale so going in selling to the c-suite um working through a complex set of stakeholders we hired new commercial leadership for that team including a neonatal nurse we have a new chief medical officer who is a neonatologist and a new sales leader and so we brought in a group of humans who have really studied this setting closely we also had sales reps in that enterprise approach who are focused on epic aura and so as as we've pivoted our commercial strategy and we've seen early success with this this year by focusing on the neonatologist where we're able to kind of knock down the the barriers and what they're doing is they're going in sharing that seek first data that we published last year with Seattle Children's to say this is what good looks like you can indeed order this testing so thus far we're really happy with the momentum that we're seeing in that strategy um and we'll we'll continue to drive that fewer than than five percent of these kids in the nicu setting are getting a genetic test which then bleeds into that outpatient setting so um we've got strength in that commercial team we're pleased with the momentum um and we'll continue to drive uh good growth in that segment and how would the nicu

Dan Brennan, Analyst — TD Cowan

like develop like is it one where if it starts you think in like 27 is it going to be linear Could it go up more, given the benefits of the seed first study and given the unmet need? Just kind of wondering how it might progress.

Katherine Stueland, CEO

Yeah, I think this year we'll see some healthy growth with momentum building into 2027.

Dan Brennan, Analyst — TD Cowan

Maybe on the general piece, because that's such a big market. Just wondering, Kevin, you talked about, and Catherine, you talked about you spent a lot of time on education. I think you've done a lot of outreach. Just kind of what has the outreach told you? like what's what's kind of informing obviously building this one minute ordering and this care plan but i'm just wondering because it is such a 600 000 diagnosis but you know these are pediatricians so it's a very different channel so just maybe share some color it's a different

Katherine Stueland, CEO

channel i think it's it's helpful to look back at the world of cancer diagnostics as a good proxy for this as well back in 2013 the only clinicians who are ordering hereditary cancer testing were genetic counselors and geneticists. And what we were able to do over the following decade is shift utilization into oncologists, into breast surgeons, into OBs, into primary care doctors. So there's a really good model that should give us all confidence that we have the ability to drive utilization from genetics experts into mainstream medicine. So with that as a backdrop, what we've learned through engaging with with pediatricians we've done quant and qual research with them and they are eager to start utilizing this testing and so we know that there is a hunger for using an exome in that pediatrician setting we also know that it requires some changes in workflow so one minute ordering so we don't have to burden that pediatrician from including all of that phenotypic information. So they'll be able to work in partnership with the parent to get the order started. So that is a big enabler. But on the back end, we also have to simplify the report and make sure that they know exactly what that care plan looks like, who the family should be reaching out to next in terms of a specialist. So we're building both the front end workflow as well as the back end very understandable next steps so we have our product and technology teams focused on on that but overall we're we're hearing good engagement from the field we have 50 sales reps who have been busy getting appointments scheduled and so we're we're eager to accelerate that market without a doubt it's the first line of defense for any parent and that's where we want to continually be the the first place that parents are going whether they're going online to chat gbt to their pediatrician gene dx will be there to be a partner to the parent and to the clinician to provide the

Dan Brennan, Analyst — TD Cowan

earliest possible answer and between now and the launch like what needs to be done is there's still a lot of work on this technology the one-minute ordering the care path can you just speak to some the milestones or efforts that you need to still finish up right now before it launches first

Katherine Stueland, CEO

milestone was getting our beta testing done and seeing orders start to come through so it was great to to get that off the ground um and that was just um uh earlier this year so we're we're happy to see the the beta testing um uh live and in the market so early um and so in the meantime our sales reps, this is an important time for us to gather some data to set the baseline. How productive can those sales reps be? What are their needs? We still need to do a lot of education in that market. But then middle of this year, we'll start to see how technology can also be

Dan Brennan, Analyst — TD Cowan

an enabler for the market. And have you guys been able to identify like a real cohort? I know there's 60,000 pediatricians, but a subset, I think 25,000, you said order of that 25,000.

Katherine Stueland, CEO

has their data that helps you even zero in a lot more yep we've got targeting data that is ensuring that our reps are going to the place where there's the the fewest barriers i would say to to be able

Dan Brennan, Analyst — TD Cowan

to place that order okay um okay i mean maybe a quick one on prenatal i mean you have 10 sales people but i think the market's like maybe a half billion dollars right in terms of four percent of pregnancies abnormal fetal ultrasound so 140 000 you know i i think that's a number right and you've got, you know, $3,600. So it's a decent sized market. What's the, and it seems like it'd be a lot more efficient than a CMA or karyotype. So you're not really baking in much this year, just kind of, just a little color on that opportunity. And it was most exciting about

Kevin Feeley, CFO

that is we've actually had a prenatal exome in the market for quite a while now. And that's without ever knocking on the door actively of a maternal, maternal fetal medicine. So those MFNs organically word-of-mouth through conferences, through peer-to-peer exchange have found GeneDx and we're ordering prenatal exome to the point where it made the radar and we began to fully interrogate the market. It's what culminated in us launching a prenatal genome product into the market in February to complement the exome and to be really clear this is a late-term diagnostic tests same level of coverage that you would get on live birth so it's not an IPS and yeah I think the size of the market ultimately should frame out to be about four percent of pregnancies have some level of abnormality through ultrasound or other means that you mean well over a hundred thousand tests we're starting with a pilot group of ten we want to get in the market we want to learn more about that market and we'll expand accordingly once signals present

Dan Brennan, Analyst — TD Cowan

that we should do that got it we have a couple minutes just on um moving over to the income statement just on pricing you know the guide is for flat pricing but you've talked about obviously a lot of these new tests probably won't get paid for as routinely so there's some pressure there but even last you had such success on getting payments on your core exome genomes looks like it kind of flattened out a little bit so just talk a little bit about between the core exome genome kind of underlying is there still more price realization to capture there and kind of how that you know kind of works against some of these new indications yeah that core

Kevin Feeley, CFO

business of those foundational markets outpatient uh geneticists and uh p neuro look there's still room to improve denials um we're at a point now where we're getting paid about 55 percent of the time um absolutely certain that in 2026 we'll continue to see underlying fundamental reduction and denial rate across those channels we just wanted to build into the expectation we think uh appropriate level of uh cushion to say as we enter new markets and bringing begin to bring in volumes from new diagnosis codes we should have an inherent expectations that those will be denied at a higher rate than the business we've been in for a couple of years we've got to show sustained demand to payers we've got to show that the revenue cycle is going to appeal upon denial and those are all things we're well equipped to do but think it far more pragmatic to assume a higher denial rate on the outside of these new markets than the flip side of that and so we will build that into expectations to start the year and at the same time in the fourth quarter as we highlighted in that innermost core of geneticists we see them finally at the point where we're seeing mix shift from exome to genome and because of underlying reimbursement coverage exome is more well paid than genome today. We've got to do the work to expand medical necessity criteria for genome in payer contracts. Certainly we believe the evidence and science is clear there and inevitable, but today the reality is we get paid at a higher rate for exome than genome outpatient, which is counterintuitive. You would expect the genome delivers more content. We should get more value for that over time, and so also left in some room to see continuation in that mixed shift trend to genome, which ultimately is a good thing for both patients and our business. Both exome and genome are very attractive margins for us, and ultimately I've always expected and still do expect all hereditary disease diagnosis one day to be off a whole genome backbone running through GeneDx. Terrific. Well, I think we're a few seconds past,

Dan Brennan, Analyst — TD Cowan

excuse me, but obviously, Catherine and Kevin, thank you so much for being here. Thank you to the audience, and have a great rest of the conference.

Katherine Stueland, CEO

Thank you.

Dan Brennan, Analyst — TD Cowan

Terrific. Thanks. Thank you.