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What changed in GeneDx Holdings Corp.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GeneDx Holdings Corp.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+409 added−519 removedSource: 10-K (2024-02-23) vs 10-K (2023-03-16)

Top changes in GeneDx Holdings Corp.'s 2023 10-K

409 paragraphs added · 519 removed · 330 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+12 added−18 removed149 unchanged
Biggest changeAs we capture more genomic and phenotypic data, we hope to fuel a positive feedback cycle of discovery that continuously delivers more value for patients, providers and healthcare partners. 7 Table of Content Delivering Health Insights Centrellis®, our health information platform, is supported and fueled by genomic information from our diagnostic business and combined with an ever growing population of clinical health records and data.
Biggest changeAs the number of new patients we test grows, so does our database, as new data increases the potential for greater insights. As we capture more genomic and phenotypic data, we hope to fuel a positive feedback cycle of discovery that continuously delivers more value for patients, providers and healthcare partners.
This will enable healthcare partners to incorporate genetics into clinical care by accessing our analysis and interpretation capabilities remotely while sequencing locally to reduce complexity, logistics cost and wait times, and align to local restrictions where applicable; • Launch a new provider and patient experience with the eventual goal of providing lifelong access and portability of genomic information.
This will enable healthcare partners to incorporate genetics into clinical care by accessing our analysis and interpretation capabilities remotely while sequencing locally to reduce complexity, logistics cost and wait times, and align to local restrictions where applicable; • Plan to launch a new provider and patient experience with the eventual goal of providing lifelong access and portability of genomic information.
The exome is a portion of the genome that encodes proteins, which are involved in many different types of cellular functions. Changes in the genome and exome can change the way proteins are formed or are utilized by the cell, potentially causing disease.
The exome is a portion of the genome that encodes proteins, which are involved in many different types of cellular functions. Changes in a genome or exome can change the way proteins are formed or utilized by the cell, potentially causing disease.
Under PAMA (as amended) and its implementing regulations, laboratories that realize at least $12,500 in Medicare Clinical Laboratory Fee Schedule (“CLFS”) revenues during the six month reporting period and that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule must report, beginning in 2017, and then in 2024 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”), private payer payment rates and volumes for their tests.
Under PAMA (as amended) and its implementing regulations, laboratories that realize at least $12,500 in Medicare Clinical Laboratory Fee Schedule (“CLFS”) revenues during the six month reporting period and that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule must report, beginning in 2017, and then in 2024 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”), private payor payment rates and volumes for their tests.
CLIA certification also is a prerequisite to be eligible to bill state and federal health care programs, as well as many commercial third-party payers, for laboratory testing services. Our laboratory located in Gaithersburg, Maryland is CLIA certified to perform high complexity tests. Laboratories performing high complexity testing are required to meet more stringent requirements than laboratories performing less complex tests.
CLIA certification also is a prerequisite to be eligible to bill state and federal health care programs, as well as many commercial third-party payors, for laboratory testing services. Our laboratory located in Gaithersburg, Maryland is CLIA certified to perform high complexity tests. Laboratories performing high complexity testing are required to meet more stringent requirements than laboratories performing less complex tests.
If the government intervenes and is ultimately successful in obtaining redress in the matter or if the plaintiff succeeds in obtaining redress without the government’s involvement, then the plaintiff will receive a percentage of the recovery. Several states have enacted comparable false claims laws which may be broader in scope and apply regardless of payer.
If the government intervenes and is ultimately successful in obtaining redress in the matter or if the plaintiff succeeds in obtaining redress without the government’s involvement, then the plaintiff will receive a percentage of the recovery. Several states have enacted comparable false claims laws which may be broader in scope and apply regardless of payor.
Our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal data, or to protect personal data from unauthorized access, use, or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals, fines, damage 19 Table of Content to our reputation, and loss of goodwill, any of which could have a material adverse effect on our operations, financial performance, and business.
Our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal data, or to protect personal data from unauthorized access, use, or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals, fines, damage to our reputation, and loss of goodwill, any of which could have a material adverse effect on our operations, financial performance, and business.
Failure to comply with CLIA could also result in a directed plan of correction and state on-site monitoring. Loss of a laboratory’s CLIA certificate or state license may also result in the inability to receive payments from state and federal health care programs as well as private third-party payers.
Failure to comply with CLIA could also result in a directed plan of correction and state on-site monitoring. Loss of a laboratory’s CLIA certificate or state license may also result in the inability to receive payments from state and federal health care programs as well as private third-party payors.
In addition, making genetics part of mainstream medicine requires advancing the technology to provide personalized and actionable health insights. It also will require having a robust, well-characterized dataset that can maximize answers and minimize unknowns and that can drive a new era of discovery.
In addition, making genetics part of mainstream medicine requires advancing the technology to provide personalized and actionable health insights. It also requires having a robust, well-characterized dataset that can maximize answers and minimize unknowns to drive a new era of discovery.
Then, where applicable based upon median private payer rates reported in 2017 or 2024, reduced by up to 15% per test per year in each of 2024 through 2026 (with a second round of private payer rate reporting in 2024 to establish rates for 2025 through 2027).
Then, where applicable based upon median private payor rates reported in 2017 or 2024, reduced by up to 15% per test per year in each of 2024 through 2026 (with a second round of private payor rate reporting in 2024 to establish rates for 2025 through 2027).
Combined with our proprietary, state-of-the-art variant identification software, our ability to deliver highly accurate test results makes finding definitive diagnoses, even in complex cases, possible. Implemented with expert oversight, our advanced interpretation methods incorporate automation, bioinformatics, and cloud-based machine learning, enabling efficient discovery of genetic differences at previously undetectable levels.
Combined with our proprietary, state-of-the-art variant identification software, our ability to deliver highly accurate test results makes finding definitive diagnoses, even in complex cases, possible. Implemented with expert oversight, our advanced interpretation methods incorporate automation, 5 Table of Contents bioinformatics, and cloud-based machine learning, enabling efficient discovery of genetic differences at previously undetectable levels.
CMS uses the rates and volumes reported by laboratories to develop Medicare payment rates for the tests equal to the volume-weighted median of the private payer payment rates for the tests. Laboratories that fail to report the required payment information may be subject to substantial civil money penalties.
CMS uses the rates and volumes reported by laboratories to develop Medicare payment rates for the tests equal to the volume-weighted median of the private payor payment rates for the tests. Laboratories that fail to report the required payment information may be subject to substantial civil money penalties.
We have performed over a million genetic tests and worked tirelessly to develop the following: • A curated database of disease-associated genomic variants. • Proprietary bioinformatics and variant interpretation pipelines. • Rapid exome and whole genome sequencing testing options.
We have performed over a million genetic tests and worked tirelessly to develop: • A curated database of disease-associated genomic variants; • Proprietary bioinformatics and variant interpretation pipelines; and • Rapid exome and whole genome sequencing testing options.
Although the AKS applies only to items and services reimbursable under any federal health care program, a number of states have passed statutes substantially similar to the AKS that apply to all payers or to state program payers.
Although the AKS applies only to items and services reimbursable under any federal health care program, a number of states have passed statutes substantially similar to the AKS that apply to all payors or to state program payors.
As set forth under the regulations implementing PAMA, for tests furnished on or after January 1, 2018, Medicare payments for clinical diagnostic laboratory tests are paid based upon these reported private payer rates.
As set forth under the regulations implementing PAMA, for tests furnished on or after January 1, 2018, Medicare payments for clinical diagnostic laboratory tests are paid based upon these reported private payor rates.
In addition, privacy notices should clearly and accurately disclose the type(s) of personal information the company collects, how the company uses and shares that information, and the security measures used by the company to protect that information. In recent years, the FTC’s enforcement under Section 5 related to data security has included alleged violations of the “unfairness” prong.
In addition, privacy notices should clearly and accurately disclose the type(s) of personal information the company collects, how the company uses and shares that information, and the security measures used by the company to protect that information. 16 Table of Contents In recent years, the FTC’s enforcement under Section 5 related to data security has included alleged violations of the “unfairness” prong.
Although the FDA has taken the position that it has statutory authority to assure that medical devices, including certain LDTs, are safe and effective for their intended use, the FDA has historically exercised enforcement discretion with respect to most LDTs and has not required laboratories that furnish LDTs to comply with the agency's requirements for medical devices (e.g., establishment registration, device listing, premarket clearance or approval, quality systems regulations, and post-market controls).
Although the FDA has taken the position that it has statutory authority to assure that medical devices, including certain LDTs, are safe and effective for their intended use, the 10 Table of Contents FDA has historically exercised enforcement discretion with respect to most LDTs and has not required laboratories that furnish LDTs to comply with the agency's requirements for medical devices (e.g., establishment registration, device listing, premarket clearance or approval, quality systems regulations, and post-market controls).
The less-discussed barrier to having actionable information lies in the ability to process a genome’s worth of information—quickly and scalably—and to deliver both a result that a clinician can easily act upon to help a patient and a robust dataset that enables clinicians to drive precise diagnosis and researchers to develop and advance therapeutics.
The less-discussed barrier to having actionable information lies in the ability to process a genome’s worth of information—quickly and scalably—and to deliver 4 Table of Contents both a result that a clinician can easily act upon to help a patient and a robust dataset that enables clinicians to drive precise diagnosis and researchers to develop and advance therapeutics.
Occupational Safety and Health Administration (“OSHA”) has established extensive requirements relating specifically to workplace safety for healthcare employers in the U.S. For purposes of transportation, some biological materials and laboratory supplies are classified as hazardous materials and are subject to regulation by one or more of the following: the U.S. Department of Transportation, the U.S.
For example, the U.S. Occupational Safety and Health Administration (“OSHA”) has established extensive requirements relating specifically to workplace safety for healthcare employers in the United States. For purposes of transportation, some biological materials and laboratory supplies are classified as hazardous materials and are subject to regulation by one or more of the following: the U.S. Department of Transportation, the U.S.
Laboratories must bill various payers, such as private third-party payers, including managed care organizations (“MCO”), and state and federal health care programs, such as Medicare and Medicaid, and each may have different billing requirements.
Laboratories must bill various payors, such as private third-party payors, including managed care organizations (“MCO”), and state and federal health care programs, such as Medicare and Medicaid, and each may have different billing requirements.
In addition, violations of HIPAA could result in significant penalties imposed by the HHS’s Office for Civil Rights. HIPAA also mandates that the Secretary of HHS conduct periodic compliance audits of HIPAA covered entities, such as us, and their business associates for compliance with the 18 Table of Content HIPAA privacy and security standards.
In addition, violations of HIPAA could result in significant penalties imposed by the HHS’s Office for Civil Rights. HIPAA also mandates that the Secretary of HHS conduct periodic compliance audits of HIPAA covered entities, such as us, and their business associates for compliance with the HIPAA privacy and security standards.
We cannot be certain that we will be able to secure alternative equipment, reagents and other materials, or bring such equipment, reagents and materials on-line and revalidate them without experiencing interruptions in our workflow. If we encounter delays or difficulties in securing, reconfiguring or revalidating equipment and materials, our business and reputation could be adversely affected.
We cannot be certain that we will be able to secure alternative equipment, reagents and other materials, or bring such equipment, reagents and materials online and revalidate them without experiencing interruptions in our workflow. If we encounter delays or difficulties in securing, reconfiguring or revalidating equipment and materials, our business and reputation could be adversely affected.
We expect over time to increase rest of world revenue as knowledge and understanding of the benefits of exome and whole genome sequencing continue to expand. 10 Table of Content We have historically experienced higher revenue in our fourth quarter compared to other quarters in our fiscal year due in part to seasonal demand of our tests from patients who have met their annual insurance deductible.
We expect over time to increase rest of world revenue as knowledge and understanding of the benefits of exome and whole genome sequencing continue to expand. 7 Table of Contents We have historically experienced higher revenue in our fourth quarter compared to other quarters in our fiscal year due in part to seasonal demand of our tests from patients who have met their annual insurance deductible.
We launched the industry’s first commercially available next generation sequencing panels in 2008, pioneered exome sequencing in 2012 and have sequenced over 400,000 exomes to date.
We launched the industry’s first commercially available next generation sequencing panels in 2008, pioneered exome sequencing in 2012 and have sequenced over 500,000 exomes to date.
These laws are typically triggered by a company’s establishment or physical location in the jurisdiction, data processing activities that take place in the jurisdiction, and/or the processing of personal information about individuals located in that jurisdiction that are targeted, for example, by an offer of goods or services.
These laws are typically triggered by a company’s establishment or physical location in the jurisdiction, data processing activities that take place in the jurisdiction, and/or the processing of personal information about individuals located in that jurisdiction that are targeted, for example, by an offer of 15 Table of Contents goods or services.
We are also participating in several collaborative studies aimed to provide evidence of the clinical and economic benefit for exome and whole genome sequencing.
We are also participating in certain collaborative studies aimed to provide evidence of the clinical and economic benefit for exome and whole genome sequencing.
Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account all facts and circumstances. 16 Table of Content Other Federal and State Fraud & Abuse Healthcare Laws In addition to the requirements discussed above, several other health care fraud and abuse laws could have an effect on our business.
Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account all facts and circumstances. Other Federal and State Fraud & Abuse Healthcare Laws In addition to the requirements discussed above, several other health care fraud and abuse laws could have an effect on our business.
Because our laboratories are accredited by CAP, which is a CMS-approved accreditation organization, CMS does not perform these biennial surveys and inspections and relies on our CAP surveys and inspections. We may also be subject to additional unannounced inspections.
Because our laboratory is accredited by CAP, which is a CMS-approved accreditation organization, CMS does not perform these biennial surveys and inspections and relies on our CAP surveys and inspections. We may also be subject to additional unannounced inspections.
If patents are issued from the currently pending applications, the earliest patents will begin expiring in 2040, subject to potential extensions of the patent term that will be calculated based on the length of the patent examination process.
If patents are issued from the currently pending applications, the earliest patents will begin expiring in the early 2040s, subject to potential extensions of the patent term that will be calculated based on the length of the patent examination process.
Other factors that complicate billing include: • variability in coverage and information requirements among various payers; • patient financial assistance programs; • missing, incomplete or inaccurate billing information provided by ordering physicians; • billings to payers with whom we do not have contracts; • disputes with payers as to which party is responsible for payment; and • disputes with payers as to the appropriate level of reimbursement.
Other factors that complicate billing include: • variability in coverage and information requirements among various payors; • patient financial assistance programs; 17 Table of Contents • missing, incomplete or inaccurate billing information provided by ordering physicians; • billings to payors with whom we do not have contracts; • disputes with payors as to which party is responsible for payment; and • disputes with payors as to the appropriate level of reimbursement.
Such programs will focus on: ◦ support for rapid whole genome sequencing in the NICU and Pediatric Developmental Disorder settings; ◦ diagnosis of disease and prevention of chronic conditions in adults; and ◦ use of rapid whole genome sequencing for broad newborn screening. • Open new markets and geographies and unlock the value of our dataset with independently scalable cloud-based interpretation and information service offerings.
Such programs will focus on: 6 Table of Contents ◦ support for rapid whole genome sequencing in the NICU and Pediatric Developmental Disorder settings; ◦ diagnosis of disease and prevention of chronic conditions in adults; and ◦ use of rapid whole genome sequencing for broad newborn screening. • Plan to open new markets and geographies and unlock the value of our dataset with independently scalable cloud-based interpretation and information service offerings.
The significant areas of regulation are summarized below: Clinical Laboratory Improvement Amendments of 1988 and State Regulation Our clinical laboratories must hold certain federal , state and local licenses, certifications and permits to conduct our business.
The significant areas of regulation are summarized below: 9 Table of Contents Clinical Laboratory Improvement Amendments of 1988 and State Regulation Our clinical laboratories must hold certain federal , state and local licenses, certifications and permits to conduct our business.
Several states have enacted comparable self-referral laws which may be broader in scope and apply regardless of payer.
Several states have enacted comparable self-referral laws which may be broader in scope and apply regardless of payor.
In addition to the FTC Act, most U.S. states have unfair and deceptive acts and practices statutes, known as UDAP statutes, that substantially mirror the FTC Act and have been applied in the privacy and data security context. These vary in substance and strength from state to state. Many have broad prohibitions against unfair and deceptive acts and practices.
In addition to the FTC Act, most U.S. states have unfair and deceptive acts and practices statutes, known as Unfair Deceptive Acts and Practices ("UDAP") statutes, that substantially mirror the FTC Act and have been applied in the privacy and data security context. These vary in substance and strength from state to state.
Depending on the reimbursement arrangement and applicable law, the party that reimburses us for our services may be: 22 Table of Content • a third party who provides coverage to the patient, such as an insurance company or MCO; • a state or federal healthcare program; or • the patient.
Depending on the reimbursement arrangement and applicable law, the party that reimburses us for our services may be: • a third party who provides coverage to the patient, such as an insurance company or MCO; • a state or federal healthcare program; or • the patient.
But for many other genetic diseases, patients can present with overlapping symptoms so finding the correct 6 Table of Content diagnosis is not always straightforward and may require multiple tests, costly evaluations, invasive procedures, and long hospital stays.
But for many other genetic diseases, patients can present with overlapping symptoms so finding the correct diagnosis is not always straightforward and may require multiple tests, costly evaluations, invasive procedures, and long hospital stays.
Several states have enacted comparable laws which may be broader in scope and apply regardless of payer.
Several states have enacted comparable laws which may be broader in scope and apply regardless of payor.
Other Data Protection Laws There are a growing number of jurisdictions around the globe that have privacy and data protection laws that may apply to us as we enter or expand our business in jurisdictions outside of the United States.
Other Data Protection Laws There are a growing number of jurisdictions around the globe that have privacy and data protection laws that may apply to us as we enter or expand our business in jurisdictions outside of the U.S.
Our Gaithersburg and Stamford laboratories have been accredited by the College of American Pathologists (“CAP”), which means that our laboratories have been certified as following CAP guidelines in operating the laboratory and in performing tests that ensure the quality of our results.
Our Gaithersburg laboratory has been accredited by the College of American Pathologists (“CAP”), which means that our laboratory has been certified as following CAP guidelines in operating the laboratory and in performing tests that ensure the quality of our results.
None of our tests meet the current definition of advanced 21 Table of Content diagnostic laboratory tests, and therefore we believe we are required to report private payer rates for our tests on an every-three-years basis, starting next in 2024.
None of our tests meet the current definition of advanced diagnostic laboratory tests, and therefore we believe we are required to report private payor rates for our tests on an every-three-years basis, starting next in 2024.
Such solutions will focus on three value-added services: 9 Table of Content ◦ FIND: Finding rare disease patients for clinical trial recruitment and/or delivery of targeted therapeutics, eventually moving into other disease areas such as cardiology and oncology. ◦ UNDERSTAND: Supporting research and development for targeted therapies with analytic reports leveraging clinicogenomics data across multiple therapeutic areas with an initial emphasis in rare disease and oncology. ◦ PLATFORM: In the long term, providing a therapeutic area agnostic platform to access to data, patients and insights for real world evidence and data to support end-to-end drug discovery pipeline.
Such solutions will focus on three value-added services: ◦ FIND: Finding rare disease patients for clinical trial recruitment and/or delivery of targeted therapeutics. ◦ UNDERSTAND: Supporting research and development for targeted therapies with analytic reports leveraging clinicogenomics data across multiple therapeutic areas with an initial emphasis in rare disease. ◦ PLATFORM: In the long term, providing a therapeutic area agnostic platform to access to data, patients and insights for real world evidence and data to support end-to-end drug discovery pipeline.
While most companies in the industry have grown through a focus on panels, we have focused on exome and whole genome developing structured gene-disease knowledge curated by our team of experts to power automated interpretation and reporting. One Test The genome is composed of 3 billion “letters”, or base pairs, of DNA.
While most of the industry has focused on panels, we have focused on exome and whole genome developing structured gene-disease knowledge curated by our team of experts to power automated interpretation and reporting. One Test The genome is composed of 3 billion “letters”, or base pairs, of DNA.
However, changes in our product and payer mix might cause these historical seasonal patterns to be different than future patterns of revenue or financial performance. For information regarding our customer concentration in relation to certain of the Company’s third-party payors, see Note 2, “Summary of Significant Accounting Policies” in the notes to our audited consolidated financial statements.
However, changes in our product and payor mix might cause these historical seasonal patterns to be different than future patterns of revenue or financial performance. For information regarding our customer concentration in relation to certain of the Company’s third-party payors, see Note 2, “ Summary of Significant Accounting Policies ” in the notes to our consolidated financial statements.
The EKRA applies to all payers including commercial payers and government payers, and EKRA violations result in significant fines and/or up to 10 years in jail, separate and apart from existing AKS liability.
The EKRA applies to all payors including commercial payors and government payors, and EKRA violations result in significant fines and/or up 12 Table of Contents to 10 years in jail, separate and apart from existing AKS liability.
In addition to having laboratory licenses in New York, our laboratories are also required to obtain approval on a test-specific basis for the tests they run as laboratory developed tests (“LDTs”) by the New York Department of Health before specific testing is performed on samples from New York.
In addition to having a laboratory license in New York, our laboratory is also required to obtain approval on a test-specific basis for the tests it runs as laboratory developed tests (“LDTs”) by the New York Department of Health before specific testing is performed on samples from New York.
We expect incrementally less concentration among third-party payors following the exits from reproductive health and somatic tumor testing.
We have experienced incrementally less concentration among third-party payors following the exits from reproductive health and somatic tumor testing in 2022.
The information contained on our website is not incorporated by reference in this document.
The information contained on our website is not incorporated by reference in this document. 18 Table of Contents
Any failure to comply with these laws and regulations could result in civil or criminal penalties against telehealth providers. 17 Table of Content Clinical and Human Subjects Research Regulations We may collaborate or support ongoing clinical or other human subjects research that could subject us to a number of laws and regulations pertaining to such research, including, but not limited to the Federal Policy for Protection of Human Subjects (as set forth in the implementing regulations of any signatory federal department or agency), the FDCA and its applicable implementing regulations at 21 C.F.R.
Clinical and Human Subjects Research Regulations We may collaborate or support ongoing clinical or other human subjects research that could subject us to a number of laws and regulations pertaining to such research, including, but not limited to the Federal Policy for Protection of Human Subjects (as set forth in the implementing regulations of any signatory federal department or agency), the FDCA and its applicable 13 Table of Contents implementing regulations at 21 C.F.R.
At initial sequence, rapid results provide clinicians simple, actionable, easy to understand results for non-geneticists and tailored resources for patients and caregivers. On an ongoing basis, reanalysis unlocks a renewable source of insight, replacing any future germline screening. We will sequence once, and analyze for life. • Optimize Centrellis® to become a solutions provider of choice for biopharma.
At initial sequence, rapid results provide clinicians simple, actionable, easy to understand results for non-geneticists and tailored resources for patients and caregivers. On an ongoing basis, reanalysis unlocks a renewable source of insight, replacing any future germline screening.
Public Health Service, the United States Postal Service, the Office of Foreign Assets Control and the International Air Transport Association. We generally use third-party vendors to dispose of regulated medical waste, hazardous waste and radioactive materials and contractually require them to comply with applicable laws and regulations.
Public Health Service, the U.S. Postal Service, the Office of Foreign Assets Control and the International Air Transport Association. We generally use third-party vendors to dispose of regulated medical waste, hazardous waste and radioactive materials and contractually require them to comply with applicable laws and regulations. These vendors are licensed or otherwise qualified to handle and dispose of such wastes.
Our valuable trade secrets relate to proprietary bioinformatic tools such as: • custom data processing methods and analytical pipelines for NGS, aCGH, MLPA, Sanger, and other genomic data, optimized and validated to the highest performance standards; • a novel detection method to uncover notoriously difficult to detect sequence variants called mobile element insertions and partial-exon deletions; and • custom variant analysis platforms built from the ground up for exome and genome-scale data interpretation.
In addition, we take other appropriate precautions, such as physical and technological security measures, to guard against misappropriation of our proprietary information by third parties. 8 Table of Contents Our valuable trade secrets relate to proprietary bioinformatic tools such as: • custom data processing methods and analytical pipelines for NGS, aCGH, MLPA, Sanger, and other genomic data, optimized and validated to the highest performance standards; • a novel detection method to uncover notoriously difficult to detect sequence variants called mobile element insertions and partial-exon deletions; and • custom variant analysis platforms built from the ground up for exome and genome-scale data interpretation.
Our patent protection strategy has focused on seeking protection for certain of our non-gene specific technology and our specific biomarkers. In this regard, as of January 23, 2023, we have six pending non-provisional utility patent applications and one provisional patent application.
Our patent protection strategy has focused on seeking protection for certain of our non-gene specific technology and our specific biomarkers. In this regard, we have three pending U.S. non-provisional utility patent applications and one patent application pending in the European Patent Office.
To achieve these objectives, we plan to: • Complete the build out of our commercial footprint to nearly 60 field-based sales representatives in 2023, and construct an industry-leading brand, product, marketing, communications and market access platform by leveraging decades of earned trust across the genetics community. • Partner with leaders across health systems, manufacturers, commercial and governmental payers and advocacy groups.
To achieve these objectives, we: • Deploy our team of approximately 70 field-based sales representatives and medical science liaisons, and plan to construct an industry-leading brand, product, marketing, communications and market access platform by leveraging decades of earned trust across the genetics community. • Partner with leaders across health systems, manufacturers, commercial and governmental payors and advocacy groups.
In addition to the companies that currently offer traditional genetic testing services and research centers, other established and emerging healthcare, information technology and service companies may commercialize competitive products including informatics, analysis, integrated genetic tools and services for health and wellness. Principal competitors include companies such Baylor, Centogene, Exact Sciences, Invitae as well as other commercial and academic labs.
In addition to the companies that currently offer traditional genetic testing services and research centers, other established and emerging healthcare, information technology and service companies may commercialize competitive products including informatics, analysis, integrated genetic tools and services for health and wellness.
We may, in time, seek additional patent protection to protect technology that is not gene-specific and that provides us with a potential competitive advantage as we focus on making comprehensive genetic information less expensive and more broadly available to our customers. 11 Table of Content Trade secrets We rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain and develop our competitive position.
We may, in time, seek additional patent protection to protect technology that is not gene-specific and that provides us with a potential competitive advantage as we focus on making comprehensive genetic information less expensive and more broadly available to our customers.
We believe exome and genome testing will become the standard for diagnosis of genetic disease, with the potential to transform healthcare and improve patients’ quality of life for generations by sequencing once and analyzing for a lifetime. 5 Table of Content Industry Background Targeted genetic tests and panel testing make up the vast majority of diagnostics tests ordered today.
Today, we are powered by our industry-leading genomic interpretation platform, and we believe exome and genome testing will become the standard for diagnosis of genetic disease, with the potential to transform healthcare and improve patients’ quality of life. Industry Background Targeted genetic tests and panel testing make up the vast majority of diagnostics tests ordered today.
These statutes generally allow for private rights of action and are enforced by the states’ Attorneys General. Reimbursement and Billing In April 2014, Congress passed the Protecting Access to Medicare Act of 2014 (“PAMA”), which included substantial changes to the way in which clinical laboratory services are paid under Medicare.
Reimbursement and Billing In April 2014, Congress passed the Protecting Access to Medicare Act of 2014 (“PAMA”), which included substantial changes to the way in which clinical laboratory services are paid under Medicare.
These agreements also provide that all inventions resulting from work performed for us or relating to our business and conceived or completed during the period of employment or assignment, as applicable, will be our exclusive property.
We protect trade secrets and know-how by establishing confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors, and collaborators. These agreements also provide that all inventions resulting from work performed for us or relating to our business and conceived or completed during the period of employment or assignment, as applicable, will be our exclusive property.
Equity participation is provided for certain positions because ownership in the company drives commitment to our long-term success. We provide programs including healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, flexible work schedules, fertility, adoption and surrogacy assistance, employee assistance and wellness support, among many others.
We provide programs including healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, flexible work schedules, fertility, adoption and surrogacy assistance, employee assistance and wellness support, among many others.
Under the 21st Century Cures Act, health care providers that violate the information blocking prohibition will be subject to appropriate 20 Table of Content disincentives, which the HHS has yet to establish through required rulemaking.
Under the 21st Century Cures Act, health care providers that violate the information blocking prohibition will be subject to appropriate disincentives, which the HHS has yet to establish through required rulemaking. Developers of certified information technology and health information networks/health information exchanges, however, may be subject to civil monetary penalties of up to $1 million per violation.
These vendors are licensed or otherwise qualified to handle and dispose of such wastes. Federal and State Healthcare Fraud & Abuse Laws 15 Table of Content Federal and State Physician Self-Referral Prohibitions We are subject to the federal physician self-referral prohibitions, commonly known as the Stark Law.
Federal and State Healthcare Fraud & Abuse Laws Federal and State Physician Self-Referral Prohibitions We are subject to the federal physician self-referral prohibitions, commonly known as the Stark Law.
In addition to the CCPA, four new state privacy laws have gone or will go into effect in 2023, including the Virginia Consumer Data Protection Act, the Utah Consumer Privacy Act, the Colorado Privacy Act, and the Connecticut Data Privacy Act. In 2023, a number of other states are considering similar consumer privacy laws.
In addition to the CCPA, four new state privacy laws went into effect in 2023, including the Virginia Consumer Data Protection Act, the Utah Consumer Privacy Act, the Colorado Privacy Act, and the Connecticut Personal Data Privacy and Online Monitoring Act.
Complying with the FDA's requirements for medical devices can be expensive, time-consuming, and subject us to significant or unanticipated delays. Insofar as we may be required to obtain premarket clearance or approval to perform or continue performing an LDT, we cannot be sure that we will be able to obtain such authorization.
Insofar as we may be required to obtain premarket clearance or approval to perform or continue performing an LDT, we cannot be sure that we will be able to obtain such authorization.
We maintain state laboratory licenses for our Gaithersburg and Stamford facilities in Maryland, New York, 13 Table of Content California, Pennsylvania and Rhode Island; our Stamford laboratory also maintains a Connecticut clinical laboratory permit.
We maintain state laboratory licenses for our Gaithersburg facility in Maryland, New York, California, Pennsylvania and Rhode Island.
Other Regulatory Requirements We are subject to laws and regulations related to the protection of the environment, the health and safety of employees and the handling, transportation and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemical, biological agents and compounds, blood and bone marrow samples and other human tissue, and radioactive materials. For example, the U.S.
Violation of these corporate practice of medicine prohibitions may result in civil or criminal fines, as well as sanctions imposed against us and/or the professional through licensure proceedings. 11 Table of Contents Other Regulatory Requirements We are subject to laws and regulations related to the protection of the environment, the health and safety of employees and the handling, transportation and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemical, biological agents and compounds, blood and bone marrow samples and other human tissue, and radioactive materials.
Our values Our values guide our interactions. Our model represents the interconnectedness of sometimes opposing values, where both are required to accomplish our mission.
Our team of nearly 1,000 individuals are champions of not only our organization, but our patients, providers and partners. Our values Our values guide our interactions. Our model represents the interconnectedness of sometimes opposing values, where both are required to accomplish our mission.
California Consumer Privacy Act The California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA,” and together with the California Consumer Privacy Act, the “CCPA”), confers to California consumers, among other things, the right to receive notice of the categories of personal information that will be collected by a business, how the business will use and share the personal information, and the categories of third parties who will receive the personal information.
Failure to maintain compliance, including in connection with changes in state or federal laws regarding privacy or security, could result in civil and/or criminal penalties as well as significant reputational damage and could also have a material adverse effect on our business. 14 Table of Contents California Consumer Privacy Act The California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA,” and together with the California Consumer Privacy Act, the “CCPA”), confers to California consumers, among other things, the right to receive notice of the categories of personal information that will be collected by a business, how the business will use and share the personal information, and the categories of third parties who will receive the personal information.
The likelihood that Congress will pass such legislation and the extent to which such legislation may affect the FDA's plans to regulate certain LDTs as medical devices is difficult to predict at this time. 14 Table of Content If the FDA ultimately regulates certain LDTs as medical devices, whether via final guidance, final regulation, or as instructed by Congress, our tests may be subject to certain additional regulatory requirements.
The likelihood that Congress will pass such legislation and the extent to which such legislation may affect the FDA's plans to regulate certain LDTs as medical devices is difficult to predict at this time.
By unlocking the value of the products, our knowledge base, network of relationships, and expertise, our team is well positioned to lead what we believe is a nearly $30 billion global market opportunity. 8 Table of Content Our Strategy We believe that the span and depth of our experience and dataset allows us to return more positive findings and thus clinical utility both immediately and over time through reanalysis.
By unlocking the value of the products, our knowledge base, network of relationships, and expertise, our team is well positioned to lead what we believe is a nearly $30 billion global market opportunity.
Customers and Seasonality We receive payment for our products and services from third-party payers, patients, business-to-business clients, and from other healthcare partners. Substantially all of our revenue for the year ended December 31, 2022 has been primarily derived from diagnostic test reports and we expect this trend to continue in the near-term.
Substantially all of our revenue for the year ended December 31, 2023 has been primarily derived from diagnostic test reports and we expect this trend to continue in the near-term. We expect over time to achieve a mix of revenue from diagnostic tests, data and information solutions, newborn screening products and information and interpretation services.
Importantly, we believe that we return fewer uncertain findings compared to public data sets, which makes our analysis easier to interpret outside of the medical genetics community. At the same time, we have improved quality and speed to delivery of exome and genome tests and have significantly lowered exome sequencing costs since 2013.
At the same time, we have improved quality and speed to delivery of exome and genome tests and have significantly lowered exome sequencing costs since 2013.
Market Opportunity Our primary growth engine in the short term will be expanding our current market-leading exome sequencing capabilities in the Neonatal Intensive Care Units (“NICU”) and Pediatric Developmental Disorder setting, as well as providing interpretation and information services for customers that sequence locally but look to GeneDx for analysis and interpretation, and providing our Centrellis® platform services to biopharmaceutical (“biopharma”) partners.
Market Opportunity Our primary growth engine in the short term will be expanding our current market-leading exome sequencing capabilities in the outpatient setting, including geneticists, pediatric development specialists, and other pediatric specialists, as well as the in-patient setting, also referred to as Neonatal Intensive Care Units (“NICU”).
We have a trade secrecy program to prevent disclosure of our trade secrets to others, except under stringent conditions of confidentiality when disclosure is critical to our business. We protect trade secrets and know-how by establishing confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors, and collaborators.
Trade secrets We rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain and develop our competitive position. We have a trade secrecy program to prevent disclosure of our trade secrets to others, except under stringent conditions of confidentiality when disclosure is critical to our business.
Our trademark portfolio is designed to protect the brands for our products and services, both current and in the pipeline. Human Capital Resources We aim to recruit, develop, and retain diverse, high-quality talent. We had 1,100 team members as of January 20, 2023 who are champions of not only our organization, but our patients, providers and partners.
Our trademark portfolio is designed to protect the brands for our products and services, both current and in the pipeline. Human Capital Resources We aim to recruit, develop, and retain diverse, high-quality talent and are committed to creating a workplace that supports the success of its people by investing in their personal development and career growth.
The utility patent applications include a U.S. patent application related to a genome annotation software platform for annotating genomic intervals that are clinically relevant for analysis, a U.S. patent application related to a genetic carrier screening process, and U.S. and European patent applications related to therapeutic treatment for subjects having certain polymorphic markers associated with specific human leukocyte antigen alleles.
The utility patent applications include a U.S. patent application related to identifying cancer diagnosis from electronic health records using a cancer diagnosis analysis system, a U.S. patent application related to providing a homologous recombination DNA repair deficiency score for a cancer patient, and U.S. and European patent applications related to therapeutic treatment for subjects having certain polymorphic markers associated with specific human leukocyte antigen alleles.
Our talent development programs provide employees with the resources they need to achieve their career goals, build management skills and lead their teams. Managers coach and hold conversations with employees’ regarding their career and development plans, thereby staying true to our belief in accountability and openness.
These values are: • Bravery & Humility • Openness & Accountability • Equitability & Integrity • Rigorous & Efficient Development • Simplicity & Curiosity Talent Development We are committed to developing our workforce. Our talent development programs provide employees with the resources they need to achieve their career goals, build management skills and lead their teams.
GeneDx was founded in 2000 by scientists from the National Institutes of Health whose mission was making genetic testing accessible for patients with rare diseases. The company quickly became a leader in genomics, creating the foundation for how to provide genomic information at scale and pioneering exome and genome sequencing for rare and ultra-rare genetic pediatric disorders.
The company quickly became a leader in genomics, creating the foundation for how to provide genomic information at scale and pioneering exome and genome sequencing for rare and ultra-rare genetic pediatric disorders. More than 20 years later, we have amassed one of the world’s largest rare disease data sets and remain a leader in genomics.
Total Rewards We offer competitive compensation to attract and retain high quality talent, and we care for our people so they can focus on our mission. Our employees' total compensation package includes competitive salary, bonuses or sales incentives, equity and a 401(K) plan with matching opportunities.
Managers coach and hold conversations with employees’ regarding their career and development plans, thereby staying true to our belief in accountability and openness. Total Rewards We offer competitive compensation to attract and retain high quality talent, and we care for our people so they can focus on our mission.
Overview GeneDx is focused on delivering personalized and actionable health insights to inform diagnosis, direct treatment and improve drug discovery. We sit at the intersection of diagnostics and data science, pairing decades of genomic expertise with an ability to interpret clinical data at scale.
Overview GeneDx sits at the intersection of diagnostics and data science, pairing decades of genomic expertise with an ability to interpret clinical data at scale. We believe we are well-positioned to accelerate the use of genomics to enable precision medicine as the standard of care.
Item 1. Business We are pursuing a new strategic direction focused on our exome and genome sequencing business coupled with our Centrellis® data platform. We completed the exit of our reproductive and women’s health testing business, during the first quarter of 2023, and we also completed the exit of the somatic tumor testing business during the fourth quarter of 2022.
Item 1. Business The description of our business and operations below reflect the exits from the somatic tumor testing and the reproductive and women’s health testing businesses during the fourth quarter of 2022 and the first quarter of 2023, respectively.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe and our collaborators may not succeed in achieving significant commercial market acceptance for our current or future products and services due to a number of factors, including: • our ability to demonstrate the utility of our platforms including Centrellis ® , and related products and services and their potential advantages over existing clinical artificial intelligence technology, life sciences research, clinical diagnostic and drug discovery technologies to academic institutions, biopharma companies and the medical community; • our ability, and that of our collaborators, to perform clinical trials or other research to gather adequate evidence and/or to secure and maintain FDA and other regulatory clearance authorization or approval for our products or products developed based off our platform; 35 Table of Content • the agreement by third-party payors to reimburse our products or services, the scope and extent of which will affect patients’ willingness or ability to pay for our products or services and will likely heavily influence physicians’ decisions to recommend our products or services; • the rate of adoption of our platforms and related products and services by academic institutions, clinicians, patients, key opinion leaders, advocacy groups and biopharma companies; and • the impact of our investments in product and services, and technological innovation and commercial growth.
Biggest changeWe and our collaborators may not succeed in achieving significant commercial market acceptance for our current or future products and services due to a number of factors, including: • our ability to demonstrate the utility of our platforms and related products and services and their potential advantages over existing clinical AI technology, life sciences research, clinical diagnostic and drug discovery technologies to academic institutions, biopharma companies and the medical community; • our ability, and that of our collaborators, to perform clinical trials or other research to gather adequate evidence and/or to secure and maintain FDA and other regulatory clearance authorization or approval for our products or products developed based off our platform; • the agreement by third-party payors to reimburse our products or services, the scope and extent of which will affect patients’ willingness or ability to pay for our products or services and will likely heavily influence physicians’ decisions to recommend our products or services; • the rate of adoption of our platforms and related products and services by academic institutions, clinicians, patients, key opinion leaders, advocacy groups and biopharma companies; and • the impact of our investments in product and services, and technological innovation and commercial growth. 29 Table of Contents Additionally, our customers and collaborators may decide to decrease or discontinue their use of our products and services due to changes in their research and development plans, failures in their clinical trials, financial constraints, the regulatory environment, negative publicity about our products and services, competing products or the reimbursement landscape, all of which are circumstances outside of our control.
Our success depends in large part upon the skills, experience and performance of members of our executive management team and others in key leadership positions. The efforts of these persons will be critical to us as we continue to develop our technologies and test processes and focus on scaling our business.
Our success depends in large part upon the skills, experience and performance of key members of our executive management team and others in key leadership positions. The efforts of these persons will be critical to us as we continue to develop our technologies and test processes and focus on scaling our business.
Our Charter and our Amended and Restated Bylaws (our “Bylaws”) designate the Court of Chancery of the State of Delaware and federal court within the State of Delaware as the exclusive forum for certain types of actions and proceedings that our stockholders may initiate, which could limit a stockholder’s ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our Charter and our Amended and Restated Bylaws (as amended, our “Bylaws”) designate the Court of Chancery of the State of Delaware and federal court within the State of Delaware as the exclusive forum for certain types of actions and proceedings that our stockholders may initiate, which could limit a stockholder’s ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Accordingly, our business and financial results in the future could be adversely affected due to a variety of factors, including: • multiple, conflicting and changing laws and regulations such as privacy, security and data use regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, anticorruption laws, regulatory requirements, reimbursement or payor regimes and other governmental approvals, permits and licenses; • failure by us, our collaborators or our distributors to obtain regulatory clearance, authorization or approval for the use of our products and services in various countries; • additional potentially relevant third-party patent rights; 32 Table of Content • complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property; • difficulties in staffing and managing foreign operations, including repatriating foreign earned profits; • complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; • difficulties in negotiating favorable reimbursement negotiations with governmental authorities; • logistics and regulations associated with shipping samples, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to conduct our clinical diagnostic services locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and services and exposure to foreign currency exchange rate fluctuations; • international regulations and license requirements that may restrict foreign investment in and operation of the internet, IT infrastructure, data centers and other sectors, and international transfers of data; • natural disasters, political and economic instability, including wars, terrorism and political unrest, and outbreak of disease; • boycotts, curtailment of trade and other business restrictions; and • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the Foreign Corrupt Practices Act of 1977 (the “FCPA”), its books and records provisions, or its anti-bribery provisions, Canada’s Corruption of Foreign Public Officials Act, or laws similar to the FCPA in other jurisdictions in which we may in the future operate, such as the United Kingdom’s Bribery Act of 2010 and anti-bribery requirements of member states in the European Union (the “EU”).
Accordingly, our business and financial results in the future could be adversely affected due to a variety of factors, including: • multiple, conflicting and changing laws and regulations such as privacy, security and data use regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, anticorruption laws, regulatory requirements, reimbursement or payor regimes and other governmental approvals, permits and licenses; • failure by us, our collaborators or our distributors to obtain regulatory clearance, authorization or approval for the use of our products and services in various countries; • additional potentially relevant third-party patent rights; • complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property; • difficulties in staffing and managing foreign operations, including repatriating foreign earned profits; • complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; • difficulties in negotiating favorable reimbursement negotiations with governmental authorities; • logistics and regulations associated with shipping samples, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to conduct our clinical diagnostic services locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and services and exposure to foreign currency exchange rate fluctuations; • international regulations and license requirements that may restrict foreign investment in and operation of the internet, IT infrastructure, data centers and other sectors, and international transfers of data; • natural disasters, political and economic instability, including wars, terrorism and political unrest, and outbreak of disease; • boycotts, curtailment of trade and other business restrictions; and • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the Foreign Corrupt Practices Act of 1977 (the “FCPA”), its books and records provisions, or its anti-bribery provisions, Canada’s Corruption of Foreign Public Officials Act, or laws similar to the FCPA in other jurisdictions in which we may in the future operate, such as the United Kingdom’s Bribery Act of 2010 and anti-bribery requirements of member states in the European Union (the “EU”).
If we do not continue to innovate and provide products and services that are useful to customers, including providers and patients, and partners, we may not remain competitive, which could harm our business and operating results. • If third-party payors, including managed care organizations, private health insurers and government health plans, do not provide adequate reimbursement for our tests, or seek to amend or renegotiate their fee reimbursement schedules, or if we are unable to comply with their requirements for reimbursement, our commercial success could be negatively affected. • We have limited experience with the development and commercialization of our databases and our health information and genomic platforms. • We may need to raise additional capital to fund our existing operations, develop additional products and services, commercialize new products and services or expand our operations. • If we fail to comply with federal and state laboratory licensing requirements or standards, we could lose the ability to perform our tests or experience disruptions to our business. 23 Table of Content • We rely on highly skilled personnel in a broad array of disciplines and, if we are unable to hire, retain or motivate these individuals, or maintain our corporate culture, we may not be able to maintain the quality of our services or grow effectively. • We rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately transition to alternative suppliers or service providers. • We rely on a limited number of product and service providers for data infrastructure and analytics capabilities, and any disruption of, or interference with, our use of data and workflow services could adversely affect our business, financial condition, and results of operations, and we may not be able to find replacements or immediately transition to alternative products or service providers. • Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding adoption of our products and services.
If we do not continue to innovate and provide products and services that are useful to customers, including providers and patients, and partners, we may not remain competitive, which could harm our business and operating results. • If third-party payors, including managed care organizations, private health insurers and government health plans, do not provide adequate reimbursement for our tests, or seek to amend or renegotiate their fee reimbursement schedules, or if we are unable to comply with their requirements for reimbursement, our commercial success could be negatively affected. • We have limited experience with the development and commercialization of our databases and our health information and genomic platforms. • We may need to raise additional capital to fund our existing operations, develop additional products and services, commercialize new products and services or expand our operations. • If we fail to comply with federal and state laboratory licensing requirements or standards, we could lose the ability to perform our tests or experience disruptions to our business. • We rely on highly skilled personnel in a broad array of disciplines and, if we are unable to hire, retain or motivate these individuals, or maintain our corporate culture, we may not be able to maintain the quality of our services or grow effectively. • We rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately transition to alternative suppliers or service providers. • We rely on a limited number of product and service providers for data infrastructure and analytics capabilities, and any disruption of, or interference with, our use of data and workflow services could adversely affect our business, financial condition, and results of operations, and we may not be able to find replacements or immediately transition to alternative products or service providers. • Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding adoption of our products and services.
Due to the high degree of uncertainty regarding the implementation of the CARES Act, the Consolidated Appropriations Act, 2021, other stimulus legislation and our revenue revisions, there can be no assurance that the terms and conditions of the PRF, ERC or other relief programs will not change or be interpreted in ways that affect our ability to comply with such terms and conditions in the future, which could affect our ability to retain such assistance.
Due to the high degree of uncertainty regarding the implementation of the CARES Act, the Consolidated Appropriations Act, 2021, other stimulus legislation and our revenue revisions, there can be no assurance that the terms and conditions of the PRF or other relief programs will not change or be interpreted in ways that affect our ability to comply with such terms and conditions in the future, which could affect our ability to retain such assistance.
A company is eligible for the ERC (1) its operations have been fully or partially suspended because of COVID-19, or (2) its gross receipts in a calendar quarter in 2020 declined by more than 50% from the same period in 2019. At the time of applying for the ERC, we concluded that the eligibility requirements were met.
A company is eligible for the ERC if (1) its operations have been fully or partially suspended because of COVID-19, or (2) its gross receipts in a calendar quarter in 2020 declined by more than 50% from the same period in 2019. At the time of applying for the ERC, we concluded that the eligibility requirements were met.
These laws and regulations currently include, among others: • HIPAA, which establishes comprehensive federal standards with respect to the privacy and security of protected health information and requirements for the use of certain standardized electronic transactions; 49 Table of Content • amendments to HIPAA under HITECH, which strengthen and expand HIPAA privacy and security compliance requirements, increase penalties for violators and expand vicarious liability, extend enforcement authority to state attorneys general, and impose requirements for breach notification; • the General Data Protection Regulation (“GDPR”) and UK Data Protection Act 2018 (“UK GDPR”),, which imposes strict privacy and security requirements on controllers and processors of European and UK personal data, including enhanced protections for “special categories” of personal data, including sensitive information such as health and genetic information of data subjects; • the CCPA , and similar consumer privacy laws in Colorado, Connecticut, Utah, and Virginia, which, among other things, regulate how subject businesses may collect, use, disclose and/or sell the personal information of consumers who reside in each state, affords rights to consumers that they may exercise against businesses that collect their information, and requires implementation of reasonable security measures to safeguard personal information of consumers; • Laws governing genetic counseling services, relating to, among other things, the adequacy of health care, the practice of medicine and other health professions (including the provision of remote care and cross-coverage practice), equipment, personnel, operating policies and procedures and the prerequisites for ordering laboratory tests.
These laws and regulations currently include, among others: • HIPAA, which establishes comprehensive federal standards with respect to the privacy and security of protected health information and requirements for the use of certain standardized electronic transactions; • amendments to HIPAA under HITECH, which strengthen and expand HIPAA privacy and security compliance requirements, increase penalties for violators and expand vicarious liability, extend enforcement authority to state attorneys general, and impose requirements for breach notification; • the General Data Protection Regulation (“GDPR”) and UK Data Protection Act 2018 (“UK GDPR”),, which imposes strict privacy and security requirements on controllers and processors of European and UK personal data, including enhanced protections for “special categories” of personal data, including sensitive information such as health and genetic information of data subjects; • the CCPA , and similar consumer privacy laws in Colorado, Connecticut, Utah, and Virginia, which, among other things, regulate how subject businesses may collect, use, disclose and/or sell the personal information of consumers who reside in each state, affords rights to consumers that they may exercise against businesses that collect their information, and requires implementation of reasonable security measures to safeguard personal information of consumers; • Laws governing genetic counseling services, relating to, among other things, the adequacy of health care, the practice of medicine and other health professions (including the provision of remote care and cross-coverage practice), equipment, personnel, operating policies and procedures and the prerequisites for ordering laboratory tests.
The federal and state fraud and abuse laws prescribe civil and, in some cases, criminal penalties (including fines) for noncompliance that can be substantial. In addition, various states have enacted false claim laws analogous to the federal laws that apply where a claim is submitted to any third-party payor and not only a governmental payer program.
The federal and state fraud and abuse laws prescribe civil and, in some cases, criminal penalties (including fines) for noncompliance that can be substantial. In addition, various states have enacted false claim laws analogous to the federal laws that apply where a claim is submitted to any third-party payor and not only a governmental payor program.
If required, the regulatory marketing authorization process required to bring our current or future LDTs into compliance may involve, among other things, successfully completing additional clinical validations and submitting to and obtaining clearance from the FDA for a premarket clearance (510(k)) submission or authorization for a de novo or approval of a PMA.
If required, the regulatory marketing authorization process required to bring our current or future LDTs into compliance may involve, among other things, successfully completing additional clinical validations and submitting to and obtaining clearance from the FDA for a premarket clearance (510(k)) submission or authorization for a de novo or approval of a premarket approval.
Parts 11, 50, 54, 56, 58 and 812, and all equivalent legal requirements in other jurisdictions. • the federal Anti-Kickback Statute, which prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for the referral of an individual, for the furnishing of or arrangement for the furnishing of any item or service for which payment may be made in whole or in part by a federal healthcare program, or the purchasing, leasing, ordering, arranging for, or recommend purchasing, leasing or ordering, any good, item or service for which payment may be made, in whole or in part, under a federal healthcare program; • EKRA, which prohibits payments for referrals to recovery homes, clinical treatment facilities, and laboratories and reaches beyond federal health care programs, to include private insurance; • the federal physician self-referral law, known as the Stark Law, which prohibits a physician from making a referral to an entity for certain designated health services covered by the Medicare program, including laboratory and pathology services, if the physician or an immediate family member has a financial relationship with the entity unless an exception applies, and prohibits an entity from billing for designated health services furnished pursuant to a prohibited referral; • the federal False Claims Act, which imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the federal government; • the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; 50 Table of Content • the HIPAA fraud and abuse provisions, which create new federal criminal statutes that prohibit, among other things, defrauding health care benefit programs, willfully obstructing a criminal investigation of a healthcare offense and falsifying or concealing a material fact or making any materially false statements in connection with the payment for healthcare benefits, items or services; • other federal and state fraud and abuse laws, such as anti-kickback laws, prohibitions on self-referral, fee-splitting restrictions, insurance fraud laws, anti-markup laws, prohibitions on the provision of tests at no or discounted cost to induce physician or patient adoption, and false claims acts, which may extend to services reimbursable by any third-party payer, including private insurers; • the 21st Century Cures Act information blocking prohibition, which prohibits covered actors from engaging in certain practices that are likely to interfere with the access, exchange, or use of electronic health information; • the Physician Payments Sunshine Act and similar state laws that require reporting of certain payments and other transfers of value made by applicable manufacturers, directly or indirectly, to or on behalf of covered recipients including physicians (defined to include doctors of medicine, osteopathy, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, certified nurse midwives and teaching hospitals as well as ownership and investment interests held by physicians and their immediate family members; • state laws that limit or prohibit the provision of certain payments and other transfers of value to certain covered healthcare providers; • the prohibition on reassignment of Medicare claims, which, subject to certain exceptions, precludes the reassignment of Medicare claims to any other party; • state laws that prohibit other specified practices, such as billing clinicians for testing that they order; waiving coinsurance, copayments, deductibles and other amounts owed by patients; billing a state Medicaid program at a price that is higher than what is charged to one or more other payers; • similar foreign laws and regulations that may apply to us in the countries in which we operate or may operate in the future; and • laws that relate to maintaining accurate information and control over activities that may fall within the purview of the U.S.
Parts 11, 50, 54, 56, 58 and 812, and all equivalent legal requirements in other jurisdictions. • the federal Anti-Kickback Statute, which prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for the referral of an individual, for the furnishing of or arrangement for the furnishing of any item or service for which payment may be made in whole or in part by a federal healthcare program, or the purchasing, leasing, ordering, arranging for, or recommend purchasing, leasing or ordering, any good, item or service for which payment may be made, in whole or in part, under a federal healthcare program; • EKRA, which prohibits payments for referrals to recovery homes, clinical treatment facilities, and laboratories and reaches beyond federal health care programs, to include private insurance; • the federal physician self-referral law, known as the Stark Law, which prohibits a physician from making a referral to an entity for certain designated health services covered by the Medicare program, including laboratory and pathology services, if the physician or an immediate family member has a financial relationship with the entity 40 Table of Contents unless an exception applies, and prohibits an entity from billing for designated health services furnished pursuant to a prohibited referral; • the federal False Claims Act, which imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the federal government; • the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; • the HIPAA fraud and abuse provisions, which create new federal criminal statutes that prohibit, among other things, defrauding health care benefit programs, willfully obstructing a criminal investigation of a healthcare offense and falsifying or concealing a material fact or making any materially false statements in connection with the payment for healthcare benefits, items or services; • other federal and state fraud and abuse laws, such as anti-kickback laws, prohibitions on self-referral, fee-splitting restrictions, insurance fraud laws, anti-markup laws, prohibitions on the provision of tests at no or discounted cost to induce physician or patient adoption, and false claims acts, which may extend to services reimbursable by any third-party payor, including private insurers; • the 21st Century Cures Act information blocking prohibition, which prohibits covered actors from engaging in certain practices that are likely to interfere with the access, exchange, or use of electronic health information; • the Physician Payments Sunshine Act and similar state laws that require reporting of certain payments and other transfers of value made by applicable manufacturers, directly or indirectly, to or on behalf of covered recipients including physicians (defined to include doctors of medicine, osteopathy, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, certified nurse midwives and teaching hospitals as well as ownership and investment interests held by physicians and their immediate family members; • state laws that limit or prohibit the provision of certain payments and other transfers of value to certain covered healthcare providers; • the prohibition on reassignment of Medicare claims, which, subject to certain exceptions, precludes the reassignment of Medicare claims to any other party; • state laws that prohibit other specified practices, such as billing clinicians for testing that they order; waiving coinsurance, copayments, deductibles and other amounts owed by patients; billing a state Medicaid program at a price that is higher than what is charged to one or more other payors; • similar foreign laws and regulations that may apply to us in the countries in which we operate or may operate in the future; and • laws that relate to maintaining accurate information and control over activities that may fall within the purview of the U.S.
Our Amended and Restated Certificate of Incorporation, as amended (our “Charter”), contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
Our Third Amended and Restated Certificate of Incorporation, as amended (our “Charter”), contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
The commercial success of our current and future products, if approved, will depend on the extent to which our customers receive coverage and adequate reimbursement from third-party payors, including managed care organizations and government payers (e.g., Medicare and Medicaid).
The commercial success of our current and future products, if approved, will depend on the extent to which our customers receive coverage and adequate reimbursement from third-party payors, including managed care organizations and government payors (e.g., Medicare and Medicaid).
We will continue to monitor our compliance with the terms and conditions of the PRF, including demonstrating that the distributions received have been used for healthcare-related expenses or lost revenue attributable to COVID-19, and the terms and conditions of the ERC.
We will continue to monitor our compliance with the terms and conditions of the PRF, including demonstrating that the distributions received have been used for healthcare-related expenses or lost revenue attributable to COVID-19.
As a result, the exercise price of a holder’s public warrants could be increased, the exercise period could be shortened and the number of shares of our common stock purchasable upon exercise of a public warrant could be decreased, all without the approval of that warrant holder.
As a result, the exercise price of a holder’s public warrants could be increased, the exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a public warrant could be decreased, all without the approval of that warrant holder.
Unauthorized access, loss or dissemination could also disrupt our operations (including our ability to conduct our analyses, provide test results, bill payers or patients, process claims and appeals, provide customer assistance, conduct research and development activities, collect, process and prepare company financial information, provide information about our tests and other patient and physician education and outreach efforts through our website, and manage the administrative aspects of our business) and damage our reputation, any of which could adversely affect our business.
Unauthorized access, loss or dissemination could also disrupt our operations (including our ability to conduct our analyses, provide test results, bill payors or patients, process claims and appeals, provide customer assistance, conduct research and development activities, collect, process and prepare company financial information, provide information about our tests and other patient and physician education and outreach efforts through our website, and manage the administrative aspects of our business) and damage our reputation, any of which could adversely affect our business.
In setting standards to protect the confidentiality, integrity and security of PHI, the regulations establish a regulatory framework that addresses a variety of subjects, including: • the circumstances under which uses and disclosures of PHI are permitted or required without a written authorization from the patient, including but not limited to treatment purposes, activities to obtain payments for our services, and our healthcare operations activities; • a patient’s rights to access, amend and receive an accounting of certain disclosures of PHI; • requirements to notify individuals if there is a breach of their PHI; • the contents of notices of privacy practices related to the use and disclosure of PHI; • administrative, technical and physical safeguards required of entities that use or receive PHI; 46 Table of Content • criteria related to the deidentification and aggregation of PHI; and • the use and protection of electronic PHI.
In setting standards to protect the confidentiality, integrity and security of PHI, the regulations establish a regulatory framework that addresses a variety of subjects, including: • the circumstances under which uses and disclosures of PHI are permitted or required without a written authorization from the patient, including but not limited to treatment purposes, activities to obtain payments for our services, and our healthcare operations activities; • a patient’s rights to access, amend and receive an accounting of certain disclosures of PHI; • requirements to notify individuals if there is a breach of their PHI; • the contents of notices of privacy practices related to the use and disclosure of PHI; • administrative, technical and physical safeguards required of entities that use or receive PHI; • criteria related to the deidentification and aggregation of PHI; and • the use and protection of electronic PHI.
If we identify material weaknesses in the internal control over financial reporting of the company or are unable to comply with the requirements of Section 404 or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we no longer qualify 65 Table of Content as an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be negatively affected, and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.
If we identify material weaknesses in the internal control over financial reporting of the company or are unable to comply with the requirements of Section 404 or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we no longer qualify as an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be negatively affected, and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.
Our ability to increase the number of billable tests and our revenue therefrom will depend on our success in achieving reimbursement for our tests from third-party payors. Reimbursement by a payor may depend on a number of factors, including a payer’s determination that a test is appropriate, medically necessary, cost-effective, correctly billed, and has received prior authorization.
Our ability to increase the number of billable tests and our revenue therefrom will depend on our success in achieving reimbursement for our tests from third-party payors. Reimbursement by a payor may depend on a number of factors, including a payor’s determination that a test is appropriate, medically necessary, cost-effective, correctly billed, and has received prior authorization.
To renew these certifications, we are subject to survey and inspection on a regular basis and at the request of the certifying bodies. Moreover, CLIA inspectors may make random inspections of our clinical reference laboratories. We would also be required to maintain in-state licenses if we were to conduct testing in other states.
To renew these certifications, we are subject to survey and inspection on a regular basis and at the request of the certifying bodies. Moreover, CLIA inspectors may make random inspections of our clinical reference laboratory. We would also be required to maintain in-state licenses if we were to conduct testing in other states.
As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including: (i) the exemption from the auditor attestation requirements with respect to 64 Table of Content internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements; and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports.
As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including: (i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements; and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports.
Moreover, our billing and marketing messaging can be complex and nuanced, and there may be errors or misunderstandings in our employees' communication of such messaging. Furthermore, we utilize text messaging, email, phone calls and other similar methods to communicate with patients who are existing or potential users of our products for various business purposes.
Moreover, our billing and marketing messaging can be complex and nuanced, and there may be errors or misunderstandings in our employees communication of such messaging. Furthermore, we utilize text messaging, email, phone calls and other similar methods to communicate with patients who are existing or potential users of our products for various business purposes.
The CMS reimbursement rates for clinical diagnostic laboratory tests are updated based on the volume-weighted median of private payer rates for each clinical diagnostic laboratory test based on data submitted by certain applicable laboratories. Further, laboratories that fail to report or erroneously report required payment information may be subject to substantial civil money penalties.
The CMS reimbursement rates for clinical diagnostic laboratory tests are updated based on the volume-weighted median of private payor rates for each clinical diagnostic laboratory test based on data submitted by certain applicable laboratories. Further, laboratories that fail to report or erroneously report required payment information may be subject to substantial civil money penalties.
Furthermore, in cases where we or our partners have established reimbursement rates with third-party payors, we face additional challenges in complying with their procedural requirements for reimbursement. These requirements often vary from payer to payer and are reassessed by third-party payors on a regular basis, and we have needed additional time and resources to comply with them.
Furthermore, in cases where we or our partners have established reimbursement rates with third-party payors, we face additional challenges in complying with their procedural requirements for reimbursement. These requirements often vary from payor to payor and are reassessed by third-party payors on a regular basis, and we have needed additional time and resources to comply with them.
Further, it is possible that Medicare or other federal payers that provide reimbursement for our tests may suspend, revoke or discontinue coverage at any time, may require co-payments from patients, or may reduce the reimbursement rates payable to us. Any such action could have a negative impact on our revenues.
Further, it is possible that Medicare or other federal payors that provide reimbursement for our tests may suspend, revoke or discontinue coverage at any time, may require co-payments from patients, or may reduce the reimbursement rates payable to us. Any such action could have a negative impact on our revenues.
Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our information technology and telecommunications systems, failures or significant downtime of these systems or those used by our collaborators or subcontractors could prevent it from conducting our comprehensive screening analysis, clinical diagnostics and drug discovery, preparing and providing reports to researchers, clinicians and our collaborators, billing payors, handling physician inquiries, conducting research and development activities and managing the administrative aspects of our business.
Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our information technology and telecommunications systems, failures or significant downtime of these systems or those used by our collaborators or subcontractors could prevent it from conducting our comprehensive 49 Table of Contents screening analysis, clinical diagnostics and drug discovery, preparing and providing reports to researchers, clinicians and our collaborators, billing payors, handling physician inquiries, conducting research and development activities and managing the administrative aspects of our business.
We may also consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to: • increase our sales and marketing efforts to drive market adoption of our current and future products and services; • fund development efforts for our current and future products and services; • expand our products and services into other disease indications and clinical applications; • acquire, license or invest in technologies; 28 Table of Content • acquire or invest in complementary businesses or assets; and • finance capital expenditures and general and administrative expenses.
We may also consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to: • increase our sales and marketing efforts to drive market adoption of our current and future products and services; • fund development efforts for our current and future products and services; • expand our products and services into other disease indications and clinical applications; • acquire, license or invest in technologies; • acquire or invest in complementary businesses or assets; and • finance capital expenditures and general and administrative expenses.
These laws constrain, among other things, the sales, marketing and other promotional activities of manufacturers of medical devices and providers of laboratory services by limiting the kinds 47 Table of Content of financial arrangements, including sales programs, free goods and services, consulting arrangements, speaker programs, compensated service arrangements (including specimen collection and processing), and other non-monetary compensation (e.g., meals, gifts and other business courtesies), that may be used with hospitals, healthcare providers, laboratories and other potential purchasers or prescribers of medical devices and laboratory services.
These laws constrain, among other things, the sales, marketing and other promotional activities of manufacturers of medical devices and providers of laboratory services by limiting the kinds of financial arrangements, including sales programs, free goods and services, consulting arrangements, speaker programs, compensated service arrangements (including specimen collection and processing), and other non-monetary compensation (e.g., meals, gifts and other business courtesies), that may be used with hospitals, healthcare providers, laboratories and other potential purchasers or prescribers of medical devices and laboratory services.
We believe patients, health systems, clinicians, academic institutions and biopharma companies are likely to be particularly sensitive to defects, errors, inaccuracies and delays with our products and services. Furthermore, inadequate performance of these products or services may result in lower confidence in our Centrellis ® platform in general.
We believe patients, health systems, clinicians, academic institutions and biopharma companies are likely to be particularly sensitive to defects, errors, inaccuracies and delays with our products and services. Furthermore, inadequate performance of these products or services may result in lower confidence in our services in general.
In the ordinary course of our business, our collection and storing of PHI also includes more sensitive data, such as genetic information, as well as personally identifiable information, genetic information, credit card information, financial information, intellectual property and proprietary business information owned or controlled by us or our customers, payers and other parties.
In the ordinary course of our business, our collection and storing of PHI also includes more sensitive data, such as genetic information, as well as personally identifiable information, genetic information, credit card information, financial information, intellectual property and proprietary business information owned or controlled by us or our customers, payors and other parties.
Since each payer makes its own decision as to whether to establish a policy or enter into a contract to cover our tests, as well as the amount it will reimburse for a test, seeking these approvals is a time-consuming and costly process.
Since each payor makes its own decision as to whether to establish a policy or enter into a contract to cover our tests, as well as the amount it will reimburse for a test, seeking these approvals is a time-consuming and costly process.
Potential acquisitions involve numerous risks, including: • problems assimilating the acquired products or technologies; • issues maintaining uniform standards, procedures, controls and policies; • unanticipated costs associated with acquisitions; • diversion of management’s attention from our existing business; • risks associated with entering new markets in which we have limited or no experience; and 43 Table of Content • increased legal and accounting costs relating to the acquisitions or compliance with regulatory matters.
Potential acquisitions involve numerous risks, including: • problems assimilating the acquired products or technologies; • issues maintaining uniform standards, procedures, controls and policies; • unanticipated costs associated with acquisitions; • diversion of management’s attention from our existing business; • risks associated with entering new markets in which we have limited or no experience; and • increased legal and accounting costs relating to the acquisitions or compliance with regulatory matters.
In addition, the determination by a payer to cover and the amount it will reimburse for our tests will likely be made on an indication-by-indication basis and may consider our billing practices and reimbursements from other payors and from our patient billing programs.
In addition, the determination by a payor to cover and the amount it will reimburse for our tests will likely be made on an indication-by-indication basis and may consider our billing practices and reimbursements from other payors and from our patient billing programs.
There is no guarantee that the public warrants will ever be in the money, and they may expire worthless and the terms of our public warrants may be amended. The exercise price for the public warrants is $11.50 per share of Class A common stock.
There is no guarantee that the public warrants will ever be in the money, and they may expire worthless and the terms of our public warrants may be amended. The exercise price for the public warrants is $379.50 per share of Class A common stock.
Existing legislation, and possible future legal and regulatory changes, including potential repeal or modification of the ACA, elimination of penalties regarding the individual mandate for coverage, or approval of health plans that allow lower levels of coverage for preventive services, could materially change the structure and finances of the health insurance system and the methodology for reimbursing medical services, drugs and devices, including our current and future products and services.
Existing legislation, and possible future legal and regulatory changes, including potential repeal or modification of the ACA, 41 Table of Contents elimination of penalties regarding the individual mandate for coverage, or approval of health plans that allow lower levels of coverage for preventive services, could materially change the structure and finances of the health insurance system and the methodology for reimbursing medical services, drugs and devices, including our current and future products and services.
Factors affecting the trading price of our securities may include: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; • changes in the market’s expectations about our operating results; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • speculation in the press or investment community; • announcements of technological innovation, new products, acquisitions, strategic alliances, significant agreements by us or competitors; • success of competitors; • our operating results falling below our financial guidance or other projections or failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning us or the market in general; • operating and stock price performance of other companies that investors deem comparable to us; • our ability to market new and enhanced products on a timely basis; • changes in laws and regulations affecting our business; 62 Table of Content • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Class A common stock available for public sale; • any major change in our Board or management; • sales of substantial amounts of Class A common stock by our directors, officers or significant stockholders or the perception that such sales could occur; • the expiration of the market stand-off or contractual lock-up agreements; • the realization of any of the risk factors described herein; • additions or departures of key personnel; • failure to comply with the requirements of the Nasdaq; • failure to comply with the Sarbanes-Oxley Act or other laws or regulations; • actual, potential or perceived control, accounting or reporting problems; • changes in accounting principles, policies and guidelines; and • general economic and political conditions such as recessions, rising inflation and interest rates, global conflicts such as the war in Ukraine, fuel prices, international currency fluctuations and acts of war or terrorism.
Factors affecting the trading price of our securities may include: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; • changes in the market’s expectations about our operating results; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • speculation in the press or investment community; • announcements of technological innovation, new products, acquisitions, strategic alliances, significant agreements by us or competitors; • success of competitors; 50 Table of Contents • our operating results falling below our financial guidance or other projections or failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning us or the market in general; • operating and stock price performance of other companies that investors deem comparable to us; • our ability to market new and enhanced products on a timely basis; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Class A common stock available for public sale; • any major change in our Board or management; • sales of substantial amounts of Class A common stock by our directors, officers or significant stockholders or the perception that such sales could occur; • the expiration of the market stand-off or contractual lock-up agreements; • the realization of any of the risk factors described herein; • additions or departures of key personnel; • failure to comply with the requirements of the Nasdaq; • failure to comply with the Sarbanes-Oxley Act or other laws or regulations; • actual, potential or perceived control, accounting or reporting problems; • changes in accounting principles, policies and guidelines; and • general economic and political conditions such as recessions, rising inflation and interest rates, uncertainty with respect to the U.S. federal budget, global conflicts such as the war in Ukraine and the war in Israel, fuel prices, international currency fluctuations and acts of war or terrorism.
Patent & Trademark Office (“USPTO”) may change the standards of patentability and validity of patents within the screening and diagnostics space, and any such changes could have a negative impact on our business. 54 Table of Content There have been several cases involving “gene patents” and diagnostic claims that have been considered by the U.S. Supreme Court.
Patent & Trademark Office (“USPTO”) may change the standards of patentability and validity of patents within the screening and diagnostics space, and any such changes could have a negative impact on our business. There have been several cases involving “gene patents” and diagnostic claims that have been considered by the U.S. Supreme Court.
However, as our 31 Table of Content organization grows, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. This could negatively impact our ability to retain and attract employees and our future success. The loss of any member or change in structure of our senior management team could adversely affect our business.
However, as our organization grows, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. This could negatively impact our ability to retain and attract employees and our future success. The loss of any member or change in structure of our senior management team could adversely affect our business.
A weak declining or inflationary economy could also strain our collaborators and suppliers, resulting in supply disruption, or cause delays in their payments to us. For example, we have experienced and may continue to experience interruptions in the supply of the diagnostic testing materials necessary for our testing products and material and shipping cost increases.
A weak declining or inflationary economy could also strain 27 Table of Contents our collaborators and suppliers, resulting in supply disruption, or cause delays in their payments to us. For example, we have experienced and may continue to experience interruptions in the supply of the diagnostic testing materials necessary for our testing products and material and shipping cost increases.
Such open-source software is 56 Table of Content generally licensed by its authors or other third parties under open-source licenses. There is little legal precedent governing the interpretation of certain terms of these licenses, and therefore the potential impact of these terms on our business is unknown and may result in unanticipated obligations regarding our products and technologies.
Such open-source software is generally licensed by its authors or other third parties under open-source licenses. There is little legal precedent governing the interpretation of certain terms of these licenses, and therefore the potential impact of these terms on our business is unknown and may result in unanticipated obligations regarding our products and technologies.
Because EKRA is a relatively new law, there is no agency guidance and only two courts have addressed the application of EKRA and those courts reached opposite conclusions. One Court ruled that the commission-based compensation provisions of a laboratory employee’s contract did not violate EKRA while the other court expressly disagreed.
Because EKRA is a relatively new law, there is no agency 38 Table of Contents guidance and only two courts have addressed the application of EKRA and those courts reached opposite conclusions. One Court ruled that the commission-based compensation provisions of a laboratory employee’s contract did not violate EKRA while the other court expressly disagreed.
As is typical for companies in our industry, it is continually evaluating and pursuing various strategic or commercial relationships, some of which may involve the sale and issuance of our Class A common stock, which could result in additional dilution of the percentage ownership of our stockholders and could cause the price of our Class A common stock and warrants to decline.
As is typical for companies in our industry, we are continually evaluating and pursuing various strategic or commercial relationships, some of which may involve the sale and issuance of our Class A common stock, which could result in additional dilution of the percentage ownership of our stockholders and could cause the price of our Class A common stock and warrants to decline.
We cannot eliminate the risk of accidental contamination or injury to employees or third parties from the use, storage, handling or disposal of these materials. In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our resources or any applicable insurance coverage we may have.
We cannot eliminate the risk of accidental contamination or injury to employees or third parties from the use, storage, handling or disposal of these materials. 35 Table of Contents In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our resources or any applicable insurance coverage we may have.
Further, upon completion of any restructuring initiatives, our business may not be more efficient or effective than prior to the implementation of the plan and we may be unable to achieve anticipated operating enhancements or cost reductions, which would adversely affect our business, competitive position, operating results and financial condition.
Further, upon completion of any restructuring initiatives, our business may not be more efficient or effective than prior to the implementation of the plan and we may be 34 Table of Contents unable to achieve anticipated operating enhancements or cost reductions, which would adversely affect our business, competitive position, operating results and financial condition.
If we provide products or services with undiscovered errors to our customers, our clinical diagnostics may falsely indicate a patient has a disease or genetic variant, fail to assess a patient’s risk of getting a disease or having a child with a disease, or fail to detect disease or variant in a patient who requires or could benefit from treatment or intervention.
If we provide products or services with undiscovered errors to our customers, our clinical diagnostics 42 Table of Contents may falsely indicate a patient has a disease or genetic variant, fail to assess a patient’s risk of getting a disease or having a child with a disease, or fail to detect disease or variant in a patient who requires or could benefit from treatment or intervention.
For more information, see “ Risks Related to Being a Public Company—Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation. ” Our ability to use our net operating loss carry forwards and certain other tax attributes may be limited.
For more information, see “ Risks Related to Being a Public Company—Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation. ” 33 Table of Contents Our ability to use our net operating loss carry forwards and certain other tax attributes may be limited.
We have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per public warrant; provided that the last reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give notice of such redemption to the warrant holders.
We have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.33 per public warrant; provided that the last reported sales price of our Class A common stock equals or exceeds $594.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give notice of such redemption to the warrant holders.
In addition, our agreements with some of our customers, suppliers, and other entities with whom we do business require us to defend or indemnify these parties to the extent they become involved in patent infringement claims, including the types of claims described in this risk factor.
In addition, our agreements with some of our customers, suppliers, and other entities with whom we do business require us to defend or indemnify these parties to the extent they become involved in patent infringement claims, including the types of 45 Table of Contents claims described in this risk factor.
Penalties for failure to comply with a requirement of HIPAA or HITECH vary significantly, and, depending on the knowledge 58 Table of Content and culpability of the HIPAA-regulated entity, may include civil monetary penalties of up to $1.5 million per calendar year for each provision of HIPAA that is violated.
Penalties for failure to comply with a requirement of HIPAA or HITECH vary significantly, and, depending on the knowledge and culpability of the HIPAA-regulated entity, may include civil monetary penalties of up to $1.5 million per calendar year for each provision of HIPAA that is violated.
Our management and other personnel will need to devote a substantial amount of time to these compliance and disclosure obligations. If these requirements divert the attention of our management and personnel 61 Table of Content from other aspects of our business concerns, they could have a material adverse effect on our business, financial condition and results of operations.
Our management and other personnel will need to devote a substantial amount of time to these compliance and disclosure obligations. If these requirements divert the attention of our management and personnel from other aspects of our business concerns, they could have a material adverse effect on our business, financial condition and results of operations.
They can use their experience and resources in ways that could affect our competitive position, including by making acquisitions, continuing to invest heavily in research and development and in talent, initiating intellectual property claims (whether or not meritorious), and continuing to compete 26 Table of Content aggressively for our customers and partners in the market for genetic testing and screening, health information and data science products and services.
They can use their experience and resources in ways that could affect our competitive position, including by making acquisitions, continuing to invest heavily in research and development and in talent, initiating intellectual property claims (whether or not meritorious), and continuing to compete aggressively for our customers and partners in the market for genetic testing and screening, health information and data science products and services.
If we fail to expand and maintain broad adoption of, and coverage and reimbursement for, our tests, our ability to generate revenue could be harmed and our future prospects and our business could suffer. We have limited experience with the development and commercialization of our databases and our health information and genomic platforms.
If we fail to expand and maintain broad adoption of, and coverage and reimbursement for, our tests, our ability to generate revenue could be harmed and our future prospects and our business could suffer. 22 Table of Contents We have limited experience with the development and commercialization of our databases and our health information and genomic platforms.
We may also be subject to regulation in foreign jurisdictions as we seek to expand international utilization of our tests or such jurisdictions adopt new licensure requirements, which may require review of our tests in order to offer them or may have other limitations such as restrictions on the transport of samples necessary for us to perform our tests that may limit our ability to make our tests available outside of the United States.
We may also be subject to regulation in foreign jurisdictions as we seek to expand international utilization of our tests or such jurisdictions adopt new licensure requirements, which may require review of our tests in order to offer them or may have other limitations such as restrictions on the transport of samples necessary for us to perform our tests that may limit our ability to make our tests available outside of the U.S.
Although our test volumes improved to what would be considered normalized market conditions during 2022, the COVID-19 pandemic, or other similar public health emergencies in the future, may disrupt our business in the future and materially and adversely affect our business and financial results.
Although our test volumes improved to what would be considered normalized market conditions during 2022 and we maintained normalized volumes during 2023, the COVID-19 pandemic, or other similar public health emergencies in the future, may disrupt our business in the future and materially and adversely affect our business and financial results.
Some of our systems are not fully redundant, and disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, closure of a facility, or other unanticipated problems at our data centers could result in lengthy interruptions in our service.
Some of our systems are not fully redundant, and disaster recovery planning cannot account for all eventualities. 46 Table of Contents The occurrence of a natural disaster, closure of a facility, or other unanticipated problems at our data centers could result in lengthy interruptions in our service.
In particular, the clinical laboratory and healthcare industry is subject to significant governmental certification and licensing regulations, as well as federal, state and foreign laws regarding: • test ordering and billing practices; • marketing, sales and pricing practices; • health information privacy and security, including HIPAA and comparable state laws; • insurance; 45 Table of Content • anti-markup legislation; • fraud and abuse; and • consumer protection.
In particular, the clinical laboratory and healthcare industry is subject to significant governmental certification and licensing regulations, as well as federal, state and foreign laws regarding: • test ordering and billing practices; • marketing, sales and pricing practices; • health information privacy and security, including HIPAA and comparable state laws; • insurance; • anti-markup legislation; • fraud and abuse; and 36 Table of Contents • consumer protection.
Our success and ability to compete in certain jurisdictions and under certain legal regimes depend to a large extent on our ability to develop proprietary products and technologies and to maintain adequate protection of our intellectual property in the United States and other countries; this becomes increasingly important as we expand our operations and enter into strategic collaborations with partners to develop and commercialize products outside of the United States.
Our success and ability to compete in certain jurisdictions and under certain legal regimes depend to a large extent on our ability to develop proprietary products and technologies and to maintain adequate protection of our intellectual property in the U.S. and other countries; this becomes increasingly important as we expand our operations and enter into strategic collaborations with partners to develop and commercialize products outside of the U.S.
If our diagnostic solutions or the technology underlying our current and future diagnostic solutions do not receive sufficient favorable exposure in peer-reviewed publications, the rate of clinician adoption of our diagnostic solutions and positive reimbursement coverage determinations for our diagnostic solutions could be negatively affected.
If our diagnostic solutions or the technology 30 Table of Contents underlying our current and future diagnostic solutions do not receive sufficient favorable exposure in peer-reviewed publications, the rate of clinician adoption of our diagnostic solutions and positive reimbursement coverage determinations for our diagnostic solutions could be negatively affected.
To date, we have obtained policy-level reimbursement approval or contractual reimbursement for some indications for our tests from most of the large commercial third-party payors in the United States, and the Centers for Medicare & Medicaid Services (“CMS”). We believe that establishing adequate reimbursement from Medicare is an important factor in gaining adoption from healthcare providers.
To date, we have obtained policy-level reimbursement approval or contractual reimbursement for some indications for our tests from most of the large commercial third-party payors in the U.S., and the Centers for Medicare & Medicaid Services (“CMS”). We believe that establishing adequate reimbursement from Medicare is an important factor in gaining adoption from healthcare providers.
We are creating new products and services, many of which are initially based on largely untested technologies. As all of our products and services progress, we or others may determine that it made product or service-level 52 Table of Content scientific or technological mistakes.
We are creating new products and services, many of which are initially based on largely untested technologies. As all of our products and services progress, we or others may determine that it made product or service-level scientific or technological mistakes.
Although HIPAA does not provide for private rights of action, HIPAA gives OCR and the Department of Justice the authority to assess significant fines and other penalties for wrongful use or disclosure of PHI, including potential civil and criminal fines and penalties.
Although HIPAA does not provide for private rights of action, HIPAA gives OCR and the Department of Justice the authority to assess significant fines and other penalties for wrongful use or disclosure of PHI, including potential civil and 37 Table of Contents criminal fines and penalties.
Although we maintain insurance for damage to our 25 Table of Content property and the disruption of our business, this insurance may not be sufficient to cover all potential losses and may not continue to be available to us on acceptable terms, if at all.
Although we maintain insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all potential losses and may not continue to be available to us on acceptable terms, if at all.
It is possible the GDPR, CCPA and other emerging United States and international data protection laws may be interpreted and applied in manner that is inconsistent with our practices. If so, this could result in government-imposed fines or orders requiring that we change our practices, which could adversely affect our business.
It is possible the GDPR, CCPA and other emerging U.S. and international data protection laws may be interpreted and applied in manner that is inconsistent with our practices. If so, this could result in government-imposed fines or orders requiring that we change our practices, which could adversely affect our business.
The regulatory landscape around the storage, processing and deidentification of genetic data is 37 Table of Content evolving globally and greatly impacts the ability of us, our strategic partners and collaborators to process and use the data in connection with our products and services.
The regulatory landscape around the storage, processing and deidentification of genetic data is evolving globally and greatly impacts the ability of us, our strategic partners and collaborators to process and use the data in connection with our products and services.
Those laws, regulations or rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations.
Those laws, regulations or rules and their interpretation and application may also change from time to time and those changes could have a material 51 Table of Contents adverse effect on our business, investments and results of operations.
For more information regarding this matter, see Note 4, “Revenue Recognition” to our consolidated financial statements included within this Annual Report. In addition to potential repayment obligations, failure to comply with payor reimbursement policies could result in government enforcement actions and, potentially, exclusion from certain payor programs, which could have a material adverse effect on our business.
For more information regarding this matter, see Note 4, “ Revenue Recognition ” to our consolidated financial statements included within this Annual Report. In addition to potential repayment obligations, failure to comply with payor reimbursement policies could result in government enforcement actions and, potentially, exclusion from certain payor programs, which could have a material adverse effect on our business.
When cleared, authorized or approved, we and our collaborators may market, sell, and distribute our products and services outside of the United States, and our business would be subject to risks associated with doing business outside of the United States, including an increase in our expenses and diversion of our management’s attention from the development of future products and services.
When cleared, authorized or approved, we and our collaborators may market, sell, and distribute our products and services outside of the U.S., and our business would be subject to risks associated with doing business outside of the U.S., including an increase in our expenses and diversion of our management’s attention from the development of future products and services.
Any such effort to realign or streamline our organization may result in the recording of restructuring or other charges, such as asset impairment charges, contract and lease termination costs, exit costs, termination benefits and 42 Table of Content other restructuring costs.
Any such effort to realign or streamline our organization may result in the recording of restructuring or other charges, such as asset impairment charges, contract and lease termination costs, exit costs, termination benefits and other restructuring costs.
As technologies continue to develop, our competitors may be able to offer products and services that are, or that are seen to be, substantially similar to or better than our current products and services. This may force us to compete in different ways and expend significant resources in order to remain competitive.
As technologies continue to develop, our competitors may be able to offer products and services that are, or that are 21 Table of Contents seen to be, substantially similar to or better than our current products and services. This may force us to compete in different ways and expend significant resources in order to remain competitive.
Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us.
Enforcing a claim that a party illegally disclosed or 43 Table of Contents misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us.
We rely on commercial delivery services to transport samples to our facilities in a timely and cost-efficient manner and if these delivery services are disrupted, our business could be harmed. Our core business depends on our ability to quickly and reliably deliver test results to our customers.
Risks Related to Our Key Relationships We rely on commercial delivery services to transport samples to our facilities in a timely and cost-efficient manner and if these delivery services are disrupted, our business could be harmed. Our core business depends on our ability to quickly and reliably deliver test results to our customers.
Any of the foregoing consequences could seriously harm our business and our financial results. 51 Table of Content We face uncertainty related to healthcare reform, pricing, coverage and reimbursement, which could reduce our revenue.
Any of the foregoing consequences could seriously harm our business and our financial results. We face uncertainty related to healthcare reform, pricing, coverage and reimbursement, which could reduce our revenue.
Under PAMA, unless delayed by an act of Congress, CMS reimbursement rates for clinical diagnostic laboratory tests are updated every three years, or annually for clinical laboratory tests that are considered "advanced diagnostic laboratory tests".
Under PAMA, unless delayed by an act of Congress, CMS reimbursement rates for clinical diagnostic laboratory tests are updated every three years, or annually for clinical laboratory tests that are considered “advanced diagnostic laboratory tests”.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of progress in establishing payor coverage and reimbursement arrangements with commercial third-party payors and government payors; • the cost of expanding our laboratory operations and offerings, including our sales and marketing efforts; • our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our Centrellis® solution; • our rate of progress in, and cost of research and development activities associated with, products and services in research and early development; • the effect of competing technological, product and market developments; • costs related to international expansion; and • the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products and services.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of progress in establishing payor coverage and reimbursement arrangements with commercial third-party payors and government payors; • the cost of expanding our laboratory operations and offerings, including our sales and marketing efforts; 23 Table of Contents • our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our services for biopharma partners; • our rate of progress in, and cost of research and development activities associated with, products and services in research and early development; • the effect of competing technological, product and market developments; • costs related to international expansion; and • the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products and services.
Further, we may be unable to obtain the necessary visas for foreign personnel to work in the United States. In addition, our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees.
Further, we may be unable to obtain the necessary visas for foreign personnel to work in the U.S. In addition, our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees.
The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies. We currently qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act.
The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies. We currently qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act (“JOBS”).
Legal Proceedings.” This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.
This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.
If and when the public warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If and when the public warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state 54 Table of Contents securities laws.
Our ability to transfer data stored outside of the United States could be limited by international regulations or other action by foreign governments, which could adversely affect our business. Some of the data we process in the ordinary course of our business may be stored outside of the United States.
Our ability to transfer data stored outside of the U.S. could be limited by international regulations or other action by foreign governments, which could adversely affect our business. Some of the data we process in the ordinary course of our business may be stored outside of the U.S.
Further, we must expend resources to operationalize our existing collaborations with our health system partners, which requires substantial effort in areas such as integrations for testing workflow, EMR, consents, marketing, and billing.
Further, we must expend resources to operationalize our existing collaborations with our health system partners, which requires substantial effort in areas such as integrations for testing workflow, electronic medical record, consents, marketing, and billing.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThese facilities are actively being marketed for sublet; however, the outstanding lease obligations remain obligations of the Company. Our material lease agreements for our offices and laboratory facilities as shown in the table below. We believe that our current facilities are suitable and adequate to meet our current needs. Properties Term Space Stamford, CT Corporate Headquarter Through 2033 30,000 sq.ft.
Biggest changeThese facilities as well as a portion of our headquarters located in Stamford, Connecticut are actively being marketed for sublet; however, the outstanding lease obligations remain obligations. The lease agreements for these properties expire in 2030 and 2036, respectively. We believe that our current facilities are suitable and adequate to meet our current needs.
Item 2. Properties Properties for our core operations include our corporate office and headquarters located at 333 Ludlow Street, Stamford, Connecticut 06902, our primary operating laboratory located at 207 Perry Parkway, Gaithersburg, Maryland 20877, and a satellite meeting space located at 200 Park Avenue South, New York, NY 10002; each are leased spaces.
Item 2. Properties Properties for our core operations include our corporate office and headquarters located in Stamford, Connecticut, our primary operating laboratory located in Gaithersburg, Maryland, and a satellite meeting space located in New York City; each are leased spaces with an aggregate of approximately 115,000 square feet.
As of the date of this Annual Report, our laboratory in Stamford, CT will fully cease operations by the end of March 2023 and, as of the date of this Annual Report, our laboratory in Branford, CT has fully ceased operations as part of the Company’s announced exits in 2022 from reproductive health and somatic tumor testing.
The lease agreements for these properties expire in 2034, 2031, and 2025, respectively. As previously disclosed, our laboratories in Branford, Connecticut and Stamford, Connecticut have ceased operations as part of our announced exits in 2022 from reproductive health and somatic tumor testing.
Removed
Stamford, CT Office Through 2033 60,000 sq.ft. Branford, CT Laboratory (1) Through 2030 40,000 sq ft. Stamford, CT Laboratory (1) Through 2046 67,000 sq.ft. New York, NY Office Through 2023 10,000 sq.ft. Gaithersburg, MD Laboratory Through 2031 84,000 sq.ft. (1) Laboratory has ceased operations and is actively being marketed for sublet.
Removed
In an effort to downsize our corporate headquarter space, we are also actively marketing certain floors of the headquarter building for sublet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 3. Legal Proceedings Except as described below, we, and our subsidiaries, are currently not a party to, and our property is not currently the subject of, any material pending legal proceedings; however, we may become involved in various claims and legal actions arising in the ordinary course of business.
Added
Item 3. Legal Proceedings Information regarding legal proceedings can be found in the consolidated financial statements in Note 11, “ Purchase Commitments and Contingencies ” included in this Annual Report. Item 4. Mine Safety Disclosures None. 57 Table of Contents Part II
Removed
On September 7, 2022, a shareholder class action lawsuit was filed in the United States District Court for the District of Connecticut against the Company and certain of the Company’s current and former officers. Following the appointment of a lead plaintiff, an amended complaint was filed on January 30, 2023.
Removed
As amended, the complaint purports to bring suit on behalf of stockholders who purchased the Company’s publicly traded securities between March 14, 2022 and August 15, 2022.
Removed
The complaint purports to allege that defendants made false and misleading statements about the Company’s business, operations and prospects in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and seeks unspecified compensatory damages, fees and costs. The Company believes the allegations and claims made in the complaint are without merit.
Removed
On February 7, 2023, a stockholder commenced a lawsuit in the Delaware Court of Chancery. The suit is brought as a class action on behalf of stockholders of CMLS who did not redeem their shares in connection with the Business Combination.
Removed
The suit names as defendants all directors of CMLS at the time of the transaction, including directors who continue to serve on the Company’s board of directors, as well as CMLS Holdings LLC, the Former Sponsor. The Company is not named as a defendant.
Removed
The complaint alleges that the July 2, 2021 proxy statement mailed to CMLS stockholders in connection with the transaction contained false and misleading statements, and purports to assert a claim of breach of fiduciary duty against all individual defendants, and a similar claim against the Former Sponsor and certain individuals for breach of fiduciary duty as control persons.
Removed
The suit seeks to recover 69 Table of Content unspecified damages on behalf of the alleged class, among other relief. The Company believes the allegations and claims made in the complaint are without merit. The Company is subject to certain claims for advancement and indemnification by the individual defendants in this proceeding. Item 4.
Removed
Mine Safety Disclosures None. 70 Table of Content Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe anticipate that we will retain earnings, if any, to support operations and to finance the growth and development of our business.
Biggest changeWe anticipate that we will retain earnings, if any, to support operations and to finance the growth and development of our business. In addition, the terms of our credit agreement with Perceptive Credit Holdings IV, LP restrict us from paying cash dividends. Therefore, we do not expect to pay cash dividends for the foreseeable future. Sale of Unregistered Securities None.
Holders As of March 6, 2023, there were 44 record holders of our Class A common stock and 4 record holders of our public warrants, based upon information received from our transfer agent. However, this number does not reflect beneficial owners whose shares were held of record by nominees or broker dealers.
Holders As of February 20, 2024, there were 45 record holders of our Class A common stock and 5 record holders of our public warrants, based upon information received from our transfer agent. However, this number does not reflect beneficial owners whose shares were held of record by nominees or broker dealers.
Sale of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. Reserved Not applicable
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Removed
In addition, the terms of the revolving credit facility with Silicon Valley Bank (“SVB,”) preclude us from paying cash dividends without the prior written consent of SVB, which credit facility was recently assumed by Silicon Valley Bridge Bank, N.A. following the closure of SVB by banking regulators. Therefore, we do not expect to pay cash dividends for the foreseeable future.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations A discussion regarding our financial condition and results of consolidated operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020 is presented below. 78 Table of Content Comparison of the Years Ended December 31, 2022 and 2021 The following table sets forth our results of operations for the periods presented: Year Ended December 31, 2022 2021 (in thousands) Revenue Diagnostic test revenue $ 227,334 $ 205,100 Other revenue 7,360 7,095 Total revenue 234,694 212,195 Cost of services 261,444 228,797 Gross loss (26,750) (16,602) Research and development 86,203 105,162 Selling and marketing 134,913 112,738 General and administrative 203,329 205,988 Related party expenses 6,312 5,659 Impairment Loss 210,145 — Loss from operations (667,652) (446,149) Other income (expense): Change in fair market value of warrant and earn-out contingent liabilities 70,229 198,401 Interest income 2,541 79 Interest expense (3,207) (2,835) Other income, net 57 5,114 Total other income (expense), net 69,620 200,759 Loss before income taxes (598,032) (245,390) Income tax provision 49,052 — Net loss and comprehensive loss $ (548,980) $ (245,390) Revenue Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Diagnostic test revenue $ 227,334 $ 205,100 $ 22,234 11 % Other revenue 7,360 7,095 265 4 % Total revenue $ 234,694 $ 212,195 $ 22,499 11 % Total revenue increased by $22.5 million, or 11%, to $234.7 million for the year ended December 31, 2022, from $212.2 million for the year ended December 31, 2021.
Biggest changeWe expect these expenses to decrease as a percentage of revenue in the long term as revenue increases, although the percentage may fluctuate from period to period due to fluctuations in our compensation-related charges. 62 Table of Contents Comparison of the Years Ended December 31, 2023 and 2022 The following table sets forth our results of operations for the periods presented (in thousands): Year Ended December 31, 2023 2022 $ Change % Change Revenue Diagnostic test revenue $ 195,654 $ 227,334 $ (31,680) (14) % Other revenue 6,912 7,360 (448) (6) % Total revenue 202,566 234,694 (32,128) (14) % Cost of services 112,560 261,444 (148,884) (57) % Gross profit (loss) 90,006 (26,750) 116,756 (436) % Research and development 58,266 86,203 (27,937) (32) % Selling and marketing 60,956 122,075 (61,119) (50) % General and administrative 133,755 216,167 (82,412) (38) % Impairment loss 10,402 210,145 (199,743) (95) % Other operating expenses, net 7,223 6,312 911 14 % Loss from operations (180,596) (667,652) 487,056 (73) % Non-operating income (expenses), net Change in fair market value of warrant and earn-out contingent liabilities 1,170 70,229 (69,059) (98) % Interest income (expense), net 1,114 (666) 1,780 (267) % Other income, net 1,619 57 1,562 2740 % Total non-operating income, net 3,903 69,620 (65,717) (94) % Loss before income taxes (176,693) (598,032) 421,339 (70) % Income tax benefit 926 49,052 (48,126) (98) % Net loss $ (175,767) $ (548,980) $ 373,213 (68) % Revenue Total revenue decreased by $32.1 million, or 14%, to $203 million for the year ended December 31, 2023, from $234.7 million for the year ended December 31, 2022.
We will remain an emerging growth company until the earliest of (1) September 1, 2025, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Class A common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We will remain an emerging growth company until the earliest of (1) September 1, 2025, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Class A common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
General and Administrative Expenses General and administrative expenses primarily consist of personnel-related expenses (comprising salaries and benefits) and stock-based compensation for employees in executive leadership, legal, finance and accounting, human resources, information technology, and other administrative functions. In addition, these expenses include office occupancy and information technology costs. General and administrative costs are expensed as incurred.
General and Administrative Expenses General and administrative expenses primarily consist of personnel-related expenses (comprising salaries, billing and benefits) and stock-based compensation for employees in executive leadership, legal, finance and accounting, human resources, information technology, and other administrative functions. In addition, these expenses include office occupancy and information technology costs. General and administrative costs are expensed as incurred.
Accordingly, the consolidated financial statements included in this Annual Report have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Accordingly, our consolidated financial statements included in this Annual Report have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Certain of these contracts provide non-refundable payments, which we record as contract liabilities, and variable payments based upon the achievement of certain milestones during the contract term.
Certain of these contracts provide non-refundable upfront payments, which we record as contract liabilities, and variable payments based upon the achievement of certain milestones during the contract term.
We have concluded it is probable that all terms and conditions associated with the funds received under the PRF distribution have been met. As a result, we recorded the funds received under the PRF in other income in the statements of operations and comprehensive loss during the periods in which we received the funds.
We have concluded it is probable that all terms and conditions associated with the funds received under the PRF distribution have been met. As a result, we recorded the funds received under the PRF in other expense (income), net in the statements of operations and comprehensive loss during the periods in which we received the funds.
GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.
The preparation of these consolidated financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.
We believe we are well-positioned to accelerate the use of genomics and leverage large-scale clinical data to enable 71 Table of Content precision medicine as the standard of care. Our initial focus is in pediatric and rare diseases, two areas in which we believe we have competitive advantage and can deliver on our vision today.
We believe we are well-positioned to accelerate the use of genomics and leverage large-scale clinical data to enable precision medicine as the standard of care. Our initial focus is in pediatric and rare diseases, two areas in which we believe we have competitive advantage and can deliver on our vision today.
Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for interest expense (income), net, depreciation and amortization, stock-based compensation expenses, transaction costs, other (income) expense, net, COVID-19 costs, impairment loss, restructuring and business exit related charges, acquisition costs and change in fair market value of warrant and earn-out contingent liabilities.
Adjusted Net Loss Adjusted net loss is a non-GAAP financial measure that we define as net loss adjusted for depreciation and amortization, stock-based compensation expenses, transaction costs, other (income) expense, net, impairment loss, restructuring and business exit related charges, acquisition costs and change in fair market value of warrant and earn-out contingent liabilities.
Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
Investors are encouraged to review the related GAAP financial measures 64 Table of Contents and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
However, we 77 Table of Content expect selling and marketing expenses to decrease as a percentage of revenue in the long term, subject to fluctuations from period to period due to the timing and magnitude of these expenses.
However, we expect selling and marketing expenses to decrease as a percentage of revenue in the long term, subject to fluctuations from period to period due to the timing and magnitude of these expenses.
Corporate History Overview Legacy Sema4 was established out of the Mount Sinai Health System and commenced operations as a commercial entity on June 1, 2017. Legacy Sema4 derived the majority of its revenue from diagnostic testing services, which primarily related to reproductive and women’s health and somatic tumor testing.
Corporate History Overview Mount Sinai Genomics, Inc. d/b/a as Sema4 (“Legacy Sema4”) was established out of the Mount Sinai Health System and commenced operations as a commercial entity on June 1, 2017. Legacy Sema4 derived the majority of its revenue from diagnostic testing services, which primarily related to reproductive and women’s health and somatic tumor testing.
Management believes that our cash and cash equivalents provide us with sufficient liquidity for at least twelve months from the filing date of this Annual Report.
Management believes that our cash and cash equivalents and available-for-sale marketable securities provide us with sufficient liquidity for at least twelve months from the filing date of this Annual Report.
JOBS Act Accounting Election We are an “emerging growth company” within the meaning of the JOBS Act. The JOBS Act allows an emerging growth company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.
JOBS Act Accounting Election We are an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act allows an emerging growth company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.
Under the settlement agreement, the total settlement amount is $42 million, to be paid by us to the payor in a series of installments over the next four years with the final installment payment scheduled to be on or before June 30, 2026. The first payment of $15 million was made on December 30, 2022.
Under the settlement agreement, the total settlement amount is $42 million, to be paid by us to the payor in a series of installments over the next four years with the final installment payment scheduled to be on or before June 30, 2026.
While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address. See the section titled “Item 1A. Risk Factors” for more information.
While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address. See the section titled “ Item 1A. Risk Factors ” for more information.
We estimate zero dividend yield as we have not historically paid dividends on common stock and do not anticipate paying dividends in the foreseeable future.
We estimate 69 Table of Contents zero dividend yield as we have not historically paid dividends on common stock and do not anticipate paying dividends in the foreseeable future.
A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial 86 Table of Content measure stated in accordance with GAAP.
A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.
Selling and Marketing Expenses Selling and marketing expenses primarily consist of personnel-related expenses (comprising salaries and benefits) and stock-based compensation for employees performing commercial sales, account management, marketing, and allocation of genetic counseling services. Selling and marketing costs are expensed as incurred.
Selling and Marketing Expenses Selling and marketing expenses primarily consist of personnel-related expenses (comprising salaries and benefits) and stock-based compensation for employees performing commercial sales, account management, marketing, and allocation of genetic counseling services for us.
These costs include expenses for reagents and laboratory supplies, personnel-related expenses (comprising salaries and benefits) and stock-based compensation for employees directly involved in revenue generating activities, shipping and handling fees, costs of third-party reference lab testing and phlebotomy services, if any, and allocated genetic counseling, facility and IT costs associated with delivery services.
Cost of Services The cost of services reflect the aggregate costs incurred in performing services, which include expenses for reagents and laboratory supplies, personnel-related expenses (comprising salaries and benefits) and stock-based compensation for employees directly involved in revenue generating activities, shipping and handling fees, costs of third-party reference lab testing and phlebotomy services, if any, and allocated genetic counseling, facility and IT costs associated with delivery 61 Table of Contents services.
In cases where we or our partners have established reimbursement rates with third-party payors, we face additional challenges in complying with their procedural requirements for reimbursement. These requirements often vary from payor to payor and are reassessed by third-party payors regularly. As a result, in the past we have needed additional time and resources to comply with the requirements.
In cases where we or our partners have established reimbursement rates with third-party payors, we face additional challenges in complying with their procedural requirements for reimbursement. These requirements often vary from payor to payor and are reassessed by third-party payors regularly.
Our future minimum payments under non-cancellable operating lease and finance lease agreements were $80.1 million and $60.8 million, respectively as of December 31, 2022. The timing of these future payments, by year, can be found in our consolidated financial statements in Note 9, “Leases,” included within this Annual Report.
Our future minimum payments under non-cancellable operating lease and finance lease agreements were $66.8 million and $34.3 million, respectively as of December 31, 2023. The timing of these future payments, by year, can be found in our consolidated financial statements in Note 10, “ Leases ”, included within this Annual Report.
Nevertheless, we may also seek additional funding in the future through the sale of common or preferred equity or convertible debt securities, the entry into other credit facilities or another form of third-party funding or by seeking other debt financing.
Nevertheless, we may also seek additional funding in the future through the sale of common or preferred equity or convertible debt securities, drawing on the additional $25.0 tranche of the term loan under the Perceptive Term Loan Facility, the entry into other credit facilities or another form of third-party funding or by seeking other debt financing.
We anticipate fulfilling such commitments with our existing cash and cash equivalents, which amounted to $123.9 million and $400.6 million as of December 31, 2022 and December 31, 2021, respectively, or through additional capital raised to finance our operations.
We anticipate fulfilling such commitments with our existing cash and cash equivalents and available-for-sale marketable securities, which amounted to $130.1 million and $123.9 million as of December 31, 2023 and December 31, 2022, respectively, or through additional capital raised to finance our operations.
Other revenue We also recognize revenue from service agreements and collaboration agreements with biopharma companies and other third parties pursuant to which we provide diagnostic testing and related data aggregation reporting services. Certain of these contracts provide non-refundable upfront payments, which we record as contract liabilities, and variable payments based upon the achievement of certain milestones during the contract term.
Other Revenue We also generate revenue from collaboration service agreements with biopharma companies and other third parties, pursuant to which we provide health information and patient identification support services. Certain of these contracts provide non-refundable payments, which we record as contract liabilities, and variable payments based upon the achievement of certain milestones during the contract term.
At the time of applying for the ERC, we concluded that it was reasonably possible the eligibility requirements would be met; however, due to a change in circumstances, we are re-evaluating our position.
At the time of applying 60 Table of Contents for the ERC, we concluded that it was reasonably possible the eligibility requirements would be met; however, due to a change in circumstances, we re-evaluated our position and concluded that the funds received under the ERC needed to be repaid.
Our contracts require significant judgments in determining the transaction price and satisfying performance obligations. 92 Table of Content Diagnostic test revenue We estimate a transaction price in arrangements with third-party insurance payors based on historical collection experience, contractual provisions and insurance reimbursement policies, payor mix, and other relevant information for applicable payor portfolios.
Diagnostic test revenue We estimate a transaction price in arrangements with third-party insurance payors based on historical collection experience, contractual provisions and insurance reimbursement policies, payor mix, and other relevant information for applicable payor portfolios.
For example, we have an effective shelf registration statement that we filed with the SEC in August of 2022, registering $300 million shares of our Class A common stock and other securities. Following the Offerings in January 2023, approximately $150 million of securities remained available under this registration statement.
We have an effective shelf registration statement that we filed with the SEC in August of 2022, registering $300 million shares of our Class A common stock and other securities.
During the year ended December 31, 2022, we resulted 528,876 tests in our laboratories, 121,214 of which were processed by Legacy GeneDx compared to the period ended December 31, 2021, in which we resulted approximately 709,942 tests in Legacy Sema4 laboratories.
During the year ended December 31, 2023, we resulted 222,934 tests, all of which were processed by the Legacy GeneDx laboratory compared to the period ended December 31, 2022, in which we resulted 528,876 tests in our Legacy GeneDx and Legacy Sema4 laboratories.
Diagnostic Test Revenue We primarily generate revenue from performing diagnostic testing services for three groups of customers: healthcare professionals working with patients with third-party insurance coverage or without third-party insurance coverage, institutional clients such as hospitals, clinics, state governments and reference laboratories, or self-pay patients. Customers are billed upon delivery of test results.
Key Components of Results of Operations Revenue Diagnostic Test Revenue The majority of our revenue is derived from genetic and genomic diagnostic testing services for three groups of customers: healthcare professionals working with patients with third-party insurance coverage or without third-party insurance coverage, institutional clients such as hospitals, clinics, state governments and reference laboratories, and self-pay patients.
Key Performance Indicators We use the following key financial and operating metrics to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions.
In 2022, we deferred the recognition of the funds received under the ERC and repaid them in July 2023. Key Performance Indicators We use the following key financial and operating metrics to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions.
Third-party payors may decide to deny payment or seek to recoup payments for tests performed by us that they contend were improperly billed, not medically necessary or against their coverage determinations, or for which they believe they have otherwise overpaid.
As a result, in the past we have needed additional time and resources to comply with the requirements. 59 Table of Contents Third-party payors may decide to deny payment or seek to recoup payments for tests performed by us that they contend were improperly billed, not medically necessary or against their coverage determinations, or for which they believe they have otherwise overpaid.
Intangible assets Amortizable intangible assets include trade names and trademarks, developed technology and customer relationships acquired as part of business combinations. All intangible assets subject to amortization are reviewed for impairment in accordance with ASC 360, Property, Plant and Equipment. The recoverability test was performed on a company-wide single asset group level.
All intangible assets subject to amortization are reviewed for impairment in accordance with ASC 360, Property, Plant and Equipment. The recoverability test is performed on a company-wide single asset group level.
Financing Activities Net cash provided by financing activities during the year ended December 31, 2022 was $197.3 million, which was primarily driven by the $197.7 million proceeds from the Acquisition PIPE Investment, net of issuance costs of $2.3 million.
Net cash provided by financing activities during the year ended December 31, 2022 was $197.3 million, which was primarily driven by the $197.7 million net proceeds from the Acquisition PIPE Investment. Additionally, $2.9 million relates to cash received from exercise of employee stock options, which was offset by $3.3 million of finance lease principal payments.
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer.
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer. Our contracts require significant judgments in determining the transaction price and satisfying performance obligations.
The model used requires the use of assumptions regarding variables that are complex, subjective and generally require judgment to determine. Stock-Based Compensation Stock-based compensation for all employee and non-employee stock-based awards, including restricted stock units, is measured at fair value on the date of grant and recognized over the service period.
Stock-Based Compensation Stock-based compensation for all employee and non-employee stock-based awards, including restricted stock units, is measured at fair value on the date of grant and recognized over the service period.
See Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements for further discussion on our accounting policies. We have identified below our accounting policies that we believe could potentially generate materially different results if we were to change underlying assumptions, estimates and/or judgments.
See Note 2, “ Summary of Significant Accounting Policies ” to our consolidated financial statements for a complete description of each of these critical accounting policies and estimates. Each of these critical accounting policies could potentially generate materially different results if we were to change underlying assumptions, estimates and/or judgments.
Investing Activities Net cash used in investing activities during the year ended December 31, 2022 was $141.3 million, which was primarily attributable to the $127 million net of cash spent for the Acquisition of Legacy GeneDx, $7.2 million in 91 Table of Content purchases of property and equipment and $7.2 million related to spend on development of internal-use software assets.
Investing Activities Net cash used in investing activities during the year ended December 31, 2023 was $43.7 million which primarily included net purchases of marketable securities of $47.7 million, $12.1 million in consideration held in escrow paid for the Legacy GeneDx Acquisition and $5.3 million in purchases of property and equipment, which was offset partially by $17.8 million in proceeds from maturities of marketable securities and $4.0 million in proceeds from the sale of assets. 67 Table of Contents Net cash used in investing activities during the year ended December 31, 2022 was $141.3 million, which was primarily attributable to the $127 million net of cash spent for the Acquisition of Legacy GeneDx, $7.2 million in purchases of property and equipment and $7.2 million related to spend on development of internal-use software assets.
Our ability to increase our revenue will depend on our ability to enter into contracts with third-party partners. Cost of Services The cost of services reflect the aggregate costs incurred in performing services.
Our ability to increase our revenue will depend on our ability to enter into contracts with third-party partners.
These increases were partially offset by $4.0 million in principal payments on our capital lease obligations and $0.2 million in principal payments on our long-term debt obligations. Critical Accounting Policies and Estimates Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S.
Critical Accounting Policies and Estimates Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
We expect to continue to focus our resources on increasing the adoption of, and expanding coverage and reimbursement for, our current and any future tests we may develop or acquire.
As a result, we may be required to refund payments already received, and our revenues may be subject to retroactive adjustment as a result of these factors among others. We expect to continue to focus our resources on increasing the adoption of, and expanding coverage and reimbursement for, our current and any future tests we may develop or acquire.
We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
However, non-GAAP financial information is presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
Diagnostic test revenue increased by $22.2 million, or 11%, to $227.3 million for the year ended December 31, 2022, from $205.1 million for the year ended December 31, 2021.
Diagnostic test revenue decreased by $31.7 million, or 14%, to $195.7 million for the year ended December 31, 2023, from $227.3 million for the year ended December 31, 2022.
We also rely upon third-party service providers for data storage and workflow management. 73 Table of Content Increasing adoption of our services by existing and new customers Our performance depends on our ability to retain and broaden the adoption of our services with existing customers as well as our ability to attract new customers.
Increasing adoption of our services by existing and new customers Our performance depends on our ability to retain and broaden the adoption of our services with existing customers as well as our ability to attract new customers.
We source, and will continue to source, components of our diagnostic testing workflows from third parties.
We source, and will continue to source, components of our diagnostic testing workflows from third parties. We also rely upon third-party service providers for data storage and workflow management.
To date, the majority of our diagnostic test revenue has been earned from orders received for patients with third-party insurance coverage.
To date, the majority of our diagnostic test revenue has been earned from orders received for patients with third-party insurance coverage. The discontinued Legacy Sema4 diagnostics business previously provided reproductive and women’s health testing and screening, as well as somatic tumor testing.
Our ability to increase our diagnostic test revenue will depend on our ability to increase our market penetration, obtain contracted reimbursement coverage from third-party payors, enter into contracts with institutions, and increase our reimbursement rate for tests performed. 76 Table of Content Other Revenue We generate revenue from health information and patient identification support services under both short-term and long-term project-based collaboration and service agreements with third parties.
Our ability to increase our diagnostic test revenue will depend on our ability to increase our market penetration, obtain contracted reimbursement coverage from third-party payors, enter into contracts with institutions, and increase our reimbursement rate for tests performed.
(7) For the years ended December 31, 2022 and 2021, represents the change in fair market value of the liabilities associated with our public warrants, private placement warrants and the earn-out shares issuable under the terms of the merger agreement for our business combination.
(3) Represents costs incurred for restructuring activities, which include severance for impacted employees and costs incurred in connection with these activities. (4) Represents the change in fair market value of the liabilities associated with our public warrants, private placement warrants, Perceptive warrants and the earn-out shares that were issuable under the terms of the merger agreement for our business combination.
If actual results in the future vary from our estimates, we will adjust these estimates, which could affect revenue and earnings in the period such variances become known.
If actual results in the future vary from our estimates, we will adjust these estimates, which could affect revenue and earnings in the period such variances become known. 68 Table of Contents Other revenue We also recognize revenue from collaboration service agreements with biopharma companies and other third parties pursuant to which we health information and patient identification support services.
On April 29, 2022, upon the closing of the Acquisition, we received gross proceeds of $200 million from the issuance of 50 million shares of our Class A common stock pursuant to the Acquisition PIPE Investment. The gross proceeds were partially used to pay for the cash consideration of the Acquisition and transaction costs incurred in connection with the Acquisition.
Liquidity and Capital Resources On April 29, 2022, upon the closing of the Acquisition, we received gross proceeds of $200 million from the issuance of 1.5 million shares of our Class A common stock pursuant to a related private placement (the “Acquisition PIPE Investment”).
Research and Development Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Research and development $ 86,203 $ 105,162 $ (18,959) (18) % Research and development expenses decreased by $19.0 million, or 18%, to $86.2 million for the year ended December 31, 2022, from $105.2 million for the year ended December 31, 2021.
Research and Development Research and development expenses decreased by $27.9 million, or 32%, to $58.3 million for the year ended December 31, 2023, from $86.2 million for the year ended December 31, 2022.
This decrease in resulted volume from 2021 to 2022 largely resulted from the Company’s decision to discontinue COVID-19, somatic oncology and reproductive health testing in 2022, which was partially offset by inclusion of volumes from GeneDx’s laboratory following the closing of the Acquisition of GeneDx as further discussed below.
This volume decrease from 2022 to 2023 was primarily attributed to our decision to terminate our Legacy Sema4 reproductive health and somatic oncology testing activities in 2022, and was partially offset by the addition of volumes from Legacy GeneDx’s laboratory subsequent to the closing of the Acquisition.
In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. 94 Table of Content We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.
In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
The measure of progress is developed using our best estimate of the performance period and the anticipated costs to be incurred to perform such services, including any subcontracted service costs. Capitalized Internal-Use Software Costs We capitalize certain costs related to the development of our software applications for internal use.
The measure of progress is developed using our best estimate of the performance period and the anticipated costs to be incurred to perform such services, including any subcontracted service costs. Intangible Assets Amortizable intangible assets include trade names and trademarks, developed technology and customer relationships acquired as part of business combinations.
The following is a reconciliation of revenue to our Adjusted Gross Profit and Adjusted Gross Margin for the years ended December 31, 2022, 20 21 and 2020 (in thousands) : Year Ended December 31, 2022 2021 2020 Revenue $ 234,694 $ 212,195 $ 179,322 Cost of services 261,444 228,797 175,296 Gross (Loss) Profit (26,750) (16,602) 4,026 (11) % (8) % 2 % Add: Depreciation and amortization expense $ 31,328 $ 14,094 $ 9,055 Stock-based compensation expense 5,080 22,567 12,942 Restructuring expense (1) 1,926 — — Labor costs due to laboratory move (2) — — 16,391 COVID-19 costs (3) — — 3,179 Adjusted Gross Profit $ 11,584 $ 20,059 $ 45,593 Adjusted Gross Margin 5 % 9 % 25 % __________________ (1) Represents costs incurred for restructuring activities, which include severance packages offered to impacted employees and third party consulting costs incurred during 2022.
The following is a reconciliation of revenue to our Adjusted Gross Profit and Adjusted Gross Margin for the years ended December 31, 2023 and 2022 (in thousands) : Year Ended December 31, 2023 2022 Revenue $ 202,566 $ 234,694 Cost of services 112,560 261,444 Gross Profit (Loss) 90,006 (26,750) Gross Margin 44 % (11) % Add: Depreciation and amortization expense $ 4,350 $ 31,328 Stock-based compensation expense (1,217) 5,080 Restructuring expense (1) 139 1,926 Adjusted Gross Profit $ 93,278 $ 11,584 Adjusted Gross Margin 46 % 5 % __________________ (1) Represents costs incurred for restructuring activities, which include severance to impacted employees and costs incurred in connection with these activities.
Other revenue increased by $ 0.3 million, or 4%, to $7.4 million for the year ended December 31, 2022, from $7.1 million for the year ended D ecember 31, 2021.
Other revenue decreased by $0.4 million , or 6%, to $6.9 million for the year ended December 31, 2023, from $7.4 million for the year ended December 31, 2022 due to lower revenues from the now discontinued Legacy Sema4 business.
Net cash used in operating activities during the year ended December 31, 2021 was $190.4 million, which was primarily attributable to a net loss of $245.4 million and a change in fair value of the warrant and earn-out contingent liabilities of $198.4 million, partially offset by non-cash depreciation and amortization of $21.8 million, non-cash stock-based compensation expense of $219.4 million, and a reserve against obsolete inventory of $2.1 million.
Net cash used in operating activities during the year ended December 31, 2022 was $319.2 million, which was primarily attributable to a net loss of $549.0 million, a change in fair value of the warrant and earn-out liabilities of $70.2 million and a deferred income tax benefit of $49.1 million.
(2) Represents impairment charge incurred in connection with the business exit activities and discontinuance of testing for Legacy Sema4. (3) Represents costs incurred for restructuring and business exit activities, which include severance packages offered to impacted employees and third party consulting costs incurred during 2022. Certain professional service costs incurred in connection with the business exit are also included..
For fiscal year 2022, represents impairment charge incurred in connection with the business exit activities and discontinuance of testing for Legacy Sema4. (2) For fiscal year 2022, represents costs incurred in connection with the Legacy GeneDx Acquisition, which include due diligence and legal costs.
In consideration for the payments, the payor has agreed to provide releases of the Disputed Claims, which releases will become effective 91 days after the first installment payment was received by the payor. For more information regarding this matter, see Note 4, “Revenue Recognition” to our audited consolidated financial statements included within this Annual Report.
The first installment payment of $15 million was made on December 31, 2022 and the second installment of $5 million was made on December 27, 2023. In consideration for the payments, the payor has agreed to provide releases of the Disputed Claims, which releases will become effective 91 days after the first installment payment was received by the payor.
Reconciliation of Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.
We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance.
On January 31, 2023, we announced the closing of an underwritten public offering and a concurrent registered direct offering of shares of our Class A common stock. The total gross proceeds are expected to be approximately $150 million, including proceeds from the issuance of the additional shares in the direct offering. See “-Recent Developments’ above.
On January 31, 2023, we announced the closing of an underwritten public offering of 9,962,316 shares of our Class A common stock and a concurrent registered direct offering of 2,353,436 shares of our Class A common stock. On April 17, 2023, we issued the remaining 676,868 shares of our Class A common stock in the registered direct offering.
COVID-19 Impact During the year ended December 31, 2022, we resulted 73,408 COVID-19 tests, compared to the year ended December 31, 2021, in which we resulted 418,053 COVID-19 tests. In March 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), was signed into law.
COVID-19 Impact During 2023, our test volumes improved to what would, at this time, be considered normalized market conditions. In March 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), was signed into law.
The decrease was primarily driven by a decrease of $45.4 million in stock-based compensation expense year-over-year which was primarily due to the reversal of stock-based compensation expense by $11.3 million based on forfeiture of unvested equity awards upon termination of our executives.
The decrease was primarily attributable to lower current year costs from the now discontinued Legacy Sema4 business, which included a $4.3 million decrease in stock compensation 63 Table of Contents expense resulting from forfeitures of unvested equity awards by terminated employees.
Our future contractual purchase commitments were $8.8 million as of December 31, 2022.
For more information regarding this matter, see Note 4, “ Revenue Recognition ” included within this Annual Report. Our future contractual purchase commitments were $3.8 million as of December 31, 2023.
The Company does not know what impact the ongoing situation at SVB will ultimately have on the SVB Agreement. 89 Table of Content Material Cash Requirements for Known Contractual Obligations and Commitments The following is a description of commitments for known and reasonably likely cash requirements as of December 31, 2022 and December 31, 2021.
Following the underwritten and registered direct offerings described above, approximately $150 million of securities remained available under this registration statement. 66 Table of Contents Material Cash Requirements for Known Contractual Obligations and Commitments The following is a description of commitments for known and reasonably likely cash requirements as of December 31, 2023 and December 31, 2022.
The following is a reconciliation of our net loss to Adjusted EBITDA for the years ended December 31, 2022, 20 21 , and 2020 (in thousands) : Year Ended December 31, 2022 2021 2020 Net loss $ (548,980) $ (245,390) $ (241,340) Interest expense (income), net (1) 666 2,756 1,968 Income tax benefit (49,052) — — Depreciation and amortization 59,309 21,807 11,734 Stock-based compensation expense 41,975 219,421 120,231 Impairment loss (2) 210,145 — — Restructuring and other business exit transaction costs (3) 25,810 — — Transaction, acquisition and business acquisition costs (4) 13,436 5,496 — Other (income) expense, net (5) (57) (5,291) (2,622) COVID-19 costs (6) — — 3,179 Change in fair market value of warrant and earn-out contingent liabilities (7) (70,229) (198,401) — Adjusted EBITDA $ (316,977) $ (199,602) $ (106,850) __________________ (1) Represents the total of interest expense related to our finance leases and interest-bearing loans and interest income on money market funds.
We believe Adjusted net loss is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain factors that may vary from company to company for reasons unrelated to overall operating performance. 65 Table of Contents The following is a reconciliation of our net loss to Adjusted net loss for the years ended December 31, 2023 and 2022 (in thousands) : Year Ended December 31, 2023 2022 Net loss $ (175,767) $ (548,980) Depreciation and amortization 33,734 59,309 Stock-based compensation expense (326) 41,975 Impairment loss (1) 10,402 210,145 Transaction, acquisition and business integration costs (2) — 13,436 Restructuring costs (3) 6,532 25,810 Change in fair market value of financial liabilities (4) (1,170) (70,229) Gain on sale of assets (5) (1,677) — Provision for excess and obsolete inventory associated with Legacy Sema4 3,634 — Other income, net (1,619) (57) Adjusted net loss $ (126,257) $ (268,591) __________________ (1) For fiscal year 2023, represents the impairment of certain capital and right-of-use asset leases.
Effective January 9, 2023, Sema4 Holdings Corp. changed its name to GeneDx Holdings Corp. 72 Table of Content Factors Affecting Our Performance We believe several important factors have impacted, and will continue to impact, our performance and results of operations.
Additional information on Legacy GeneDx and Legacy Sema4 can be found in the consolidated financial statements in Note 1, “ Organization and Description of Business ” included within this Annual Report. Factors Affecting Our Performance We believe several important factors have impacted, and will continue to impact, our performance and results of operations.
Net cash provided by financing activities during the year ended December 31, 2020 was $129.0 million, which was primarily attributable to $117.3 million in net cash proceeds from the issuance of our Series C redeemable convertible preferred stock and $15.9 million in net cash proceeds from the issuance of long-term debt.
Financing Activities Net cash provided by financing activities during the year ended December 31, 2023 was $186.2 million which was primarily driven by the $143.0 million net proceeds from the underwritten public offering and concurrent registered direct offering, net of issuance costs, and $48.5 million from the Perceptive Term Loan Facility, which was offset partially by the DECD loan payment of $2.0 million and $3.6 million of finance lease payments.
Legacy GeneDx derived its revenue primarily from diagnostic testing services, including revenue related to exome sequencing and whole genome sequencing.
In addition, between May 2020 through March 31, 2022, Legacy Sema4 provided COVID-19 diagnostic testing services. GeneDx, LLC (formerly, GeneDx, Inc.) (“Legacy GeneDx”), which derives its revenue primarily from diagnostic testing services, including revenue related to exome sequencing and whole genome sequencing, was acquired by us on April 29, 2022 (the “Acquisition”).
Related Party Expenses Change Year Ended December 31, 2021 to 2022 2022 2021 $ % (dollars in thousands) Related party expenses $ 6,312 $ 5,659 $ 653 12 % Related party expenses increased by $0.7 million, or 12%, to $6.3 million for the year ended December 31, 2022, from $5.7 million for the year ended December 31, 2021.
Other operating expenses, net were $6.3 million for the year ended December 31, 2022 primarily reflected related party expenses.
Removed
In addition, between May 2020 through March 31, 2022, Legacy Sema4 provided COVID-19 diagnostic testing services. Business Combination On July 22, 2021, Legacy Sema4 completed the Business Combination with CMLS, received net cash proceeds of $510 million, and CMLS changed its name to Sema4 Holdings.
Added
The diagnostic testing services businesses of Legacy Sema4 were discontinued as of the end of the first quarter of 2023, and our continuing operations now include the combination of the Legacy GeneDx diagnostic testing services business with the data and information business of Legacy Sema4.
Removed
The Business Combination was accounted for as a reverse recapitalization with Legacy Sema4 as the accounting acquirer and CMLS as the acquired company for accounting purposes. Legacy GeneDx Legacy GeneDx was founded in 2000 by scientists from the National Institutes of Health and, prior to the Acquisition by the Company, was a wholly-owned subsidiary of OPKO Health, Inc. (“OPKO”).
Added
The commercial success of our current and future products, if approved, will depend on the extent to which our customers receive coverage and adequate reimbursement from third-party payors.
Removed
Acquisition On April 29, 2022, Sema4 Holdings acquired Legacy GeneDx from OPKO for an upfront payment of $150 million in cash, and 80 million shares of Class A common stock, subject to adjustment, with up to an additional $150 million revenue-based milestones (payable in cash or up to 30.9 million shares of Class A common stock at our discretion).
Added
Allocated genetic counseling service cost for Legacy Sema4 is recorded as general and administrative expenses, as the activities are not expected to support selling and marketing expenses of Legacy Sema4. Selling and marketing costs are expensed as incurred.
Removed
Our results of operations include the results of operations of Legacy GeneDx from the date of acquisition. For more information, see “—Acquisition of Legacy GeneDx” below.
Added
The decrease was attributable to lower revenues from the now discontinued Legacy Sema4 business, partially offset by an increase in diagnostic test revenue from Legacy GeneDx driven by an increase in whole exome and genome sequencing test volumes. In addition, the prior period only reflected Legacy GeneDx’s revenue following the closing of the Acquisition.
Removed
New Strategic Direction for GeneDx and Legacy Sema4 Business Exits On August 11, 2022, our board of directors approved a restructuring plan that contemplated exiting Legacy Sema4’s somatic tumor testing services and the closing of the laboratory in Branford, CT, which we completed as of December 31, 2022. In connection with the plan, we also eliminated approximately 250 positions.
Added
Gross Profit (Loss) Gross profit increased by $116.8 million for the year ended December 31, 2023, driven by a combination of lower cost of services from the now discontinued Legacy Sema4 business and improved margins from Legacy GeneDx.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeTherefore, changes change in interest rates can impact our interest payments we are obligated to pay. As of December 31, 2022, no amounts have been drawn under the SVB Agreement. A dditional information on our long-term debt can be found in out audited financial statements in Note 8, “Long-Term Debt.” 95 Table of Content
Biggest changeTherefore, changes in interest rates can impact future interest payments we are obligated to pay. See Note 9, “Long-Term Debt” to our consolidated financial statements for further information.
Such interest-bearing instruments carry a degree of risk. However, because our investments are primarily high-quality credit instruments with short-term durations with high-quality institutions, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
However, because our investments are primarily high-quality credit instruments with short-term durations with high-quality institutions, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rates. Our cash, cash equivalents, and restricted cash consists of bank deposits and money market funds, which totaled $138.3 million and $401.5 million at December 31, 2022 and 2021, respectively.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rates.
A 100 basis point change in interest rates would not have a material effect on the fair market value of our cash, cash equivalents and restricted cash. The majority of our cash, cash equivalents and restricted cash are uninsured with account balances in excess of the Federal Deposit Insurance Company limits.
A 100 basis point change in interest rates would not have a material effect on the fair market value of our cash, cash equivalents and restricted cash. Our Perceptive Term Loan Facility includes variable interest rate terms for the outstanding principal amount of $50 million at October 27, 2023.
Removed
On March 14, 2023, we announced full access to our capital with nearly 100% of the Company’s cash and cash equivalents held in an institution designated as systematically important financial institutions. The revolving credit facility under the SVB Agreement includes variable interest rate terms for the outstanding principal amount of any advance.
Added
Our cash, cash equivalents, available-for-sale marketable securities and restricted cash consists of bank deposits and money market funds, which totaled $131.1 million and $138.3 million at December 31, 2023 and 2022, respectively. Such interest-bearing instruments carry a degree of risk.

Other WGS 10-K year-over-year comparisons