GeneDx Q1 2025 slides: revenue jumps 42%, raises guidance on Fabric acquisition

Introduction & Market Context

GeneDx Holdings Corp (NASDAQ:WGS) reported its first quarter 2025 financial results on April 30, 2025, showcasing strong revenue growth and continued profitability. The genetic testing company also announced a strategic acquisition of Fabric Genomics to expand its market reach. Despite the positive results, GeneDx’s stock was down 26.45% in premarket trading, suggesting investors may have had higher expectations following the company’s impressive 1,411% stock price increase over the past year.

The company has been on a significant growth trajectory, having reported its first profitable quarter in Q3 2024. This latest earnings report represents GeneDx’s third consecutive quarter of profitability, cementing its transition from growth-at-all-costs to sustainable financial performance.

Quarterly Performance Highlights

GeneDx reported Q1 2025 revenue of $87.1 million, representing a 42% year-over-year increase. The company’s core exome and genome testing business drove this growth, with revenue in this segment increasing by 62% year-over-year to $71.4 million. Exome and genome tests now represent 40% of all test results, up from 30% in Q1 2024.

As shown in the following chart of quarterly exome/genome volume growth, the company has consistently increased its testing volume over the past two years, with Q1 2025 showing a 24% year-over-year increase to 20,562 tests:

The company’s profitability metrics also showed significant improvement. Adjusted gross margin expanded to 69% in Q1 2025, up from 61% in the same period last year. GeneDx achieved an adjusted net income of $7.7 million, marking its third consecutive profitable quarter after years of losses.

The following chart illustrates the company’s transition to profitability over the past two years:

GeneDx’s cash position remains strong, with $160.2 million in cash, cash equivalents, marketable securities, and restricted cash as of March 31, 2025. The company reported its second consecutive quarter of positive operational cash flow, providing financial flexibility for strategic investments and acquisitions.

Strategic Acquisition of Fabric Genomics

A major highlight of GeneDx’s presentation was the announcement of its planned acquisition of Fabric Genomics, a provider of AI-driven interpretation-as-a-service platforms for genomic testing. The acquisition, expected to close in Q2 2025, represents a strategic expansion of GeneDx’s business model from centralized testing to include decentralized interpretation services.

As illustrated in the following slide, the acquisition aims to combine GeneDx’s extensive rare disease database with Fabric Genomics’ cloud-based interpretation platform:

The acquisition will expand GeneDx’s addressable market through multiple avenues, including NICU genomic testing, genomic newborn screening, global commercial expansion, and platform economics at scale:

Under the terms of the transaction, GeneDx will pay $33 million in cash at closing, with potential additional payments of up to $18 million based on revenue and gross margin targets for fiscal years 2025 and 2026. The total consideration could reach up to $51 million, with GeneDx having the option to satisfy milestone payments through cash, stock, or a combination of both.

Updated 2025 Guidance

Following the strong Q1 results and the announced acquisition, GeneDx raised its full-year 2025 guidance. The company now expects:

• Revenue between $360 million and $375 million, up from the previous guidance of $350 million to $360 million. This includes a $3 million to $5 million contribution from Fabric Genomics, assuming a Q2 2025 close.
• Growth in exome/genome volume and revenue of at least 30% (unchanged).
• Adjusted gross margins between 66% and 68%, up from the previous guidance of 65% to 67%.
• Profitability with adjusted net income each quarter and for the full year 2025 (unchanged).

The following slide details the updated guidance:

Market Opportunity (SO:FTCE11B) and Growth Drivers

GeneDx highlighted several growth drivers that support its optimistic outlook. The company’s market opportunity is substantial, estimated at $45 billion across pediatrics, rare diseases, and adult indications:

A key growth driver is the expanding insurance coverage for exome and genome sequencing. GeneDx is now contracted with 80% of covered lives, including all large national commercial payers. Medicaid coverage continues to grow, with 33 states now covering exome or genome sequencing and 14 states covering rapid genome sequencing.

The following map illustrates the expanding Medicaid coverage across the United States:

The company also emphasized the clinical value of its exome and genome testing, which offers superior diagnostic rates compared to traditional testing methods for conditions like developmental delay, intellectual disability, and epilepsy:

Conclusion

GeneDx’s Q1 2025 results demonstrate the company’s continued execution on its growth strategy, with strong revenue growth, expanding margins, and sustained profitability. The acquisition of Fabric Genomics represents a strategic expansion of the company’s business model and addressable market, particularly in international markets and decentralized testing environments.

While the company has raised its full-year guidance and presented a compelling growth story, the negative premarket stock reaction suggests investors may have been expecting even stronger results or guidance following the stock’s extraordinary performance over the past year. Nevertheless, GeneDx appears well-positioned to capitalize on the growing adoption of genomic testing in clinical settings, supported by expanding insurance coverage and increasing recognition of the value of early genetic diagnosis.

Full presentation:

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