GeneDx Holdings Corp. Class A Common Stock 2026 Q2 Earnings Call

Thank you everyone for joining us today. On the call, we have Katherine Stueland, Chief Executive Officer, Kevin Feeley, Chief Financial Officer, and Mark Gardner, President. Earlier today, GeneDx released financial results for the second quarter ended June 30th, 2026. 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, updated 2026 guidance and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, August 3rd, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our second quarter 2026 earnings release and slides available at ir.genedx.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results.

Additionally, please refer to our most recent annual and quarterly filings with the SEC for a discussion of factors that could cause actual results to materially differ from forward-looking statements. With that, I will turn the call over to Katherine.

Thank you, Sabrina. Good afternoon, everyone. Our team demonstrated incredible focus and agility to deliver a solid second quarter. We hit a new record, resulting more than 30,000 exome and genome tests in a quarter, which represents 32% year-over-year growth. We reported $114.4 million of total revenue, exceeding our guide, and returned it to profitability one quarter earlier than we had previously expected. Based on our second quarter performance and our continued momentum into Q3, we are reaffirming our full year 2026 guidance. Demand for our services has never been higher, and as we continue to drive adoption of our exome and genome, we must be relentless in our efforts to improve the rate at which we get paid for our services. It's the single biggest opportunity for us, and as we shared on the last call, we've organized the business around three key imperatives.

First, optimizing unit economics. Second, growing utilization of exome and genome. Third, delivering leading products at unmatched scale, all while managing our capital responsibly. Optimizing unit economics is our first priority because we're under-earning on our potential, and we see significant room for improvement off this Q2 baseline. Our long-term vision remains unchanged. We believe the genome will increasingly become the standard for diagnosing all heritable disease, and we're continuing to optimize our commercial and operational strategies to bridge this transition. Our strategies took hold in the second quarter as mix moderated with steady month-over-month mix gains back into our exome products, including reflex. In tandem, we saw coverage begin to catch up with the clinical demand, with Carelon announcing a new coverage policy that expanded commercial genome coverage from 47% to 87% in just one quarter.

Our team plays a pivotal role in these coverage expansions through advocacy and evidence generation and will continue to pursue coverage expansion opportunities for both exome and genome. This is our market development strategy in action. By surveying the market ahead of coverage, we demonstrate demand and medical necessity. That unpaid volume is primed for us to accrete revenue in new markets as coverage expands. Our greatest focus is translating coverage into payment. We'll spend the majority of our time today discussing how we'll get paid far more for our tests, and in doing so, see in the fullness of time, revenue growth rates converge with or exceed volume growth in the future. We're committed to serving families during their moments of greatest need. They are at the center of everything we do.

To reach them, we're making strong progress against those foundational and expansion markets. Demand continues to be a source of strength and optionality. We've proven we can maintain our leadership position through this genome transition. Our competitive positioning is directly translatable. Clinicians choose GeneDx and return to GeneDx because of the quality and reliability of our results, our leading turnaround times, our deep data and expertise, and the customer support infrastructure we have built specifically for the complexity of rare disease. As genomic testing moves into the mainstream, our ability to transform a genome's worth of information into a single actionable answer will only increase in importance. In summary, demand is strong, and we're now leading into a large multi-year opportunity to improve ARR, which will serve as a significant revenue tailwind.

We are confident we can drive collections to the industry standard of 70%. We're building on the strengths of our team to realize this massive revenue opportunity ahead. With that, I'm happy to pass the call over to the newest addition to our executive team, Mark Gardner. I was elated to welcome Mark to the team back in June. He has brought his experience from across the industry and passion for what we do to ensure our capabilities keep pace with the growing demand for our services. I'm excited for you to hear directly from him. Mark, please take it away.

Thank you, Katherine. Good afternoon, everyone. I'm excited to be here and really grateful for the opportunity to serve patients and customers in this critical segment of the advanced diagnostics industry.

I joined GeneDx because I saw a company with proven clinical leadership, a strong market position, and a tremendous opportunity ahead. Six weeks in, that conviction has only grown. The quality of our products, our variant classification interpretation capabilities, our Infinity database, and our scale are just some of the things that set us apart as the leader in rare disease testing. I've also observed that while we've grown quickly, we need to strengthen specific elements of our operations to unlock the next phase of growth. Today, I'll walk you through what I believe to be the two most impactful areas for improvement, Revenue Cycle Management and commercial operations. We bring significant value to the healthcare system, and we should be paid fairly for our services.

I agree with Katherine that we are under-earning today on both exome and genome testing. This is a significant opportunity that the whole of our company has rallied around. To be specific, we are focused on four operational levers to improve the blended average reimbursement rate of the company. First, mix management. By managing our exome versus genome mix in the near term, we have more time to build the internal processes needed to maximize payment on whole genome volume in the long term. Mix improved during the second quarter and continued to improve throughout July. Second, expand payer coverage. Payer coverage is moving in the right direction as a direct result of GeneDx's evidence and advocacy. It still lags clinical demand and includes too much red tape. Third, implement payer-specific workflows. Medical necessity criteria, documentation requirements, and prior authorization processes vary across payers.

We need to build workflows to ensure that we meet every administrative requirement to collect payment. When done well, this approach improves prior authorization approval rates, reduces avoidable denials, and increases the percentage of tests for which we are ultimately paid. While we're focused in the near term on improving our RCM processes for genome, I would note that our exome business will also continue to see improvements in collection rate. Fourth, we have to invest in technology. We're applying artificial intelligence and other systems and processes around or across our entire Revenue Cycle operations to build a more intelligent and scalable function. This includes internal controls and customer experience features to collect and submit billing information that enables consistent and reliable payment. This is a longer-term capability and under development.

We've already made progress on all four of these actions. We expect they'll begin to influence rates in the quarters to come. I'm confident based on the data we've seen during Q2 and our ability to drive ARR improvements off this Q2 baseline. Next on commercial. Our core market of geneticists and Pediatric Neurology continued to perform well. We maintained our approximately 80% market share among geneticists while expanding our Pediatric Neurology market share grew up to 50%. While geneticists may have moved from exome to genome over the past year, they did not leave GeneDx. At the same time, it could still take years to reach a geneticist, thus diversifying call points will enable us to unlock our total addressable market and bring the power of genomic testing to patients with a much shorter diagnostic journey. This strategy is driving our investment approach.

For example, based on changes in the AAP guidelines, we invested in building out our commercial team to serve General Pediatrics in early 2026. In Q2, we saw our highest growth ever in this channel. We're seeing the early signals that typically precede larger scale adoption, including increased engagement with our field reps and medical science liaisons, new account creation, and first orders from new clinicians. Across all markets, we'll continually adjust coverage models as necessary to ensure that each dollar we invest in the sales force has an appropriate return on investment in the longer term. In summary, by driving process excellence in Revenue Cycle Management and prudently investing in call point diversification, we will drive sustainable long-term growth for the company. I'll now pass it to Kevin to walk through our financials and the leading indicators we will use to track progress over time.