Guggenheim has begun coverage of GeneDx, identified by the ticker WGS, with a Buy recommendation and an ambitious price target of $88. This optimistic stance highlights Guggenheim's confidence in the company's potential growth and resilience in the market.
WGS Key Business Developments
Release Date: April 30, 2025
- Revenue: $87.1 million for Q1 2025.
- Exome and Genome Revenue: $71.4 million, a 62% year-over-year growth.
- Adjusted Gross Profit: $59.7 million, up 56% year over year.
- Adjusted Gross Margin: 69% in Q1 2025, up from 61% a year ago.
- Adjusted Net Income: $7.7 million for Q1 2025.
- Cash and Equivalents: $160.2 million as of March 31, 2025.
- Cash Flow from Operations: $4.1 million net cash generated in Q1 2025.
- Average Reimbursement Rate: Approximately $3,400 for exome and genome tests, up from $2,600 last year.
- Guidance for 2025 Revenue: Raised to $360 million to $375 million.
- Expected Growth in Exome and Genome Volume: At least 30% for full year 2025.
- Expected Adjusted Gross Margin for 2025: Between 66% and 68%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GeneDx Holdings Corp (WGS, Financial) reported strong first-quarter revenues exceeding $87 million, marking their third consecutive quarter of profitability.
- The company raised its full-year 2025 revenue guidance to $360 million to $375 million, reflecting confidence in continued growth.
- GeneDx's exome and genome revenues grew 62% year over year, contributing significantly to the quarter's performance.
- The company is expanding into new clinical indications and has launched an ultraRapid Genome Sequencing product with a 48-hour turnaround time.
- GeneDx announced plans to acquire Fabric Genomics, which will enhance their AI-powered genomic interpretation capabilities and add a recurring software-based revenue stream.
Negative Points
- The first quarter experienced a sequential decline in volumes, attributed to typical seasonality and climate disruptions in January and February.
- General and administrative expenses saw a significant increase, partly due to costs associated with the Epic integration.
- The NICU market remains mostly untapped, with expectations for volume ramping only in the second half of the year.
- There is uncertainty around the reimbursement rates for new indications, as the company awaits adjudication experience.
- Potential risks exist around Medicaid cuts, which could impact GeneDx's business given their exposure to Medicaid.
