Title

Presentation

GeneDx Holdings Corp. misses on earnings expectations. Reported EPS is $-0.28 EPS, expectations were $-0.06.

Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the GeneDx Holdings Corp. First Quarter 2026 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question at that time, you need to press star 11 on your telephone keypad. Please be reminded that this conference call is being recorded. At this time, I would like to introduce your host for today’s presentation, Sabrina Dunbar of Investor Relations. Ma’am, please begin.

Sabrina Dunbar: Thank you, operator, and thank you to everyone for joining us today. On the call, we have Katherine Stueland, President and Chief Executive Officer, and Kevin Feeley, Chief Financial Officer. Earlier today, GeneDx Holdings Corp. released financial results for the first quarter ended March 31, 2026. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today’s call, including about our business plans, guidance, and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, May 4, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures that exclude certain items from reported results.

Please refer to our first quarter 2026 earnings release and slides available at ir.gendx.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. With that, I will now turn the call over to Katherine.

Katherine Stueland: Thanks, Sabrina, and good afternoon, everyone. In the first quarter, GeneDx Holdings Corp. continued our mission of enabling everyone to live their healthiest life through genomics, leading the shift from diagnosing genetic conditions using multi-gene panels to the most comprehensive genetic tests available: exome and genome. In Q1, test result volume grew 34% year-over-year, demonstrating robust demand in our foundational markets and indicating positive early momentum in our expansion markets. Our competitive advantage continues to set us apart from others in the market. The combined strength of our large, diverse data set, GeneDx Infinity, our team of genetics experts, and our advanced technology underpins products that cement our leadership position, as evidenced by a loyal and growing customer base that drove the 34% volume growth in Q1.

While volume growth outpaced our expectations, total revenue was $12 million lower than expected. We conducted a thorough, channel-by-channel business review to diagnose what happened, and we learned it was driven by two factors. First, approximately $5.5 million was due to a lower-than-expected blended average reimbursement rate for exome and genome. Second, approximately $6.5 million was due to softer-than-expected performance from our non-core business lines. As a result, we are updating our outlook for the year and now expect total revenues to be in the range of $475 million to $490 million, with strong continued exome and genome volume growth of at least 30% and gross margins of approximately 70%. We are also committed to returning to profitability on an adjusted basis for the full year and expect profitability to grow significantly into 2027 and beyond as we continue to lead and shape this large and ever-expanding market.

Now I want to walk you through the Q1 revenue dynamics in more detail. Starting with the blended average reimbursement rate, ARR was primarily impacted by product mix with no structural changes in pricing. Through our business review, we identified clear opportunities to improve reimbursement dynamics spanning commercial execution and revenue cycle management, and our team has already taken action. Moving to our non-core business lines, which include Fabric and our biopharma business, it has been one year since we closed the Fabric Genomics acquisition, and it has become increasingly clear that the interpretation-as-a-service product is best suited for international markets. We are fully integrating the Fabric team, technology, and services into the GeneDx Holdings Corp.

brand, and we are focusing our resources to support international growth and key domestic drivers. We are lowering our expectations for revenue contribution in 2026 accordingly. On the biopharma and data business, we saw positive underlying momentum but fell short of delivering Q1 revenue due to a longer-than-anticipated sales cycle. As we continue to build demand for our data asset and engage with biopharma companies large and small, our conviction around this business continues to strengthen. These partnerships can offer meaningful long-term value creation for patients and for GeneDx Holdings Corp., and the value proposition will grow alongside our clinical testing business. With more than 2.5 million patients, more than 1 million exomes and genomes, and more than 8 million matched phenotypic profiles, our contactable database stands apart.

We have right-sized revenue contribution to the 2026 guide based on high-probability deals in our pipeline, positioning this business as upside as it continues to ramp. With our guidance now reflecting these shifts, and with the strong performance thus far in Q2, we are confident in the path forward with a massive focus on our core diagnostic business as the primary driver. Let us walk through each of the customer segments to give you more color. Starting with geneticists, as we continue to lead the market transition from multi-gene panels to exome and genome, geneticists are leaning into genome. This is an exciting development. We chose the ticker symbol WGS because we have always believed that the market would move to genome over time, but the speed of this transition in Q1 outpaced our expectations.

We made the strategic decision to begin capturing share. Importantly, the experts are the clinicians who are interested in genomes. Most patients in the outpatient setting remain best served by exome testing, given that it covers approximately 85% of known disease-causing mutations. GeneDx Holdings Corp. is best positioned to lead the genome future by leveraging our scale, brand, clinician relationships, first-mover advantage, and vast dataset, GeneDx Infinity. Infinity enables us to interpret both coding and noncoding regions of the genome with speed and precision. As genome coverage matures, access improves, and volumes scale, the flywheel effect of this additional data will compound our competitive advantage across our portfolio. Informed by early data, we launched a Reflex offering in February to balance clinical demand with a relatively higher gross margin product.

Customer feedback has been positive, and early adoption has reinforced that we can actively manage this market transition. Looking at pediatric specialists, we continue to deliver steady growth supported by exome utilization, high clinician retention, and robust same-store sales in the quarter. However, the blended exome ARR came in lower than expected based on the mix of tests submitted with parental comparator samples, a shift that we have already mobilized to correct with customer experience features, sales messaging, and incentives. We expect a return to longstanding exome reimbursement norms in the near future. In the NICU, we are seeing good progress driven by rapid and ultra-rapid genomes. It has been just over a year since the first study data was published demonstrating how a programmatic approach to testing can ensure that every NICU baby who needs a genome receives one.

Genome ARR and gross margins are desirable in the inpatient setting, and with a robust set of institutions already ordering from us, our focus remains on increasing utilization as accounts mature. We have expanded the sales team to accelerate this ramp and plan to leverage our dominant market position to fuel continued growth. General pediatrics is our largest long-term opportunity and our earliest-stage market. We are beginning to see encouraging signals with early exome orders coming in as our sales reps get accounts up and running. It typically takes several touchpoints and meetings before the first order is placed, and we are seeing that progression play out. While volumes are still modest, our experience is reinforcing that education, awareness, and service are all critical in this market.

Our tailored customer experience for non-expert clinicians remains on track, and upcoming workflow enhancements, including streamlined bundled ordering and improved post-test guidance, are all designed to reduce friction and accelerate uptake in the second half of the year. And finally, prenatal. Demand has been building steadily in the new market, and we are seeing good traction with maternal-fetal medicine physicians. Importantly, genome adoption appears additive to our small but existing exome volume in this channel. Stepping back, our core testing business is well positioned to translate demand momentum into profitable growth. We have line of sight to at least 30% volume growth at approximately 70% gross margins on the exome and genome portfolio, and we are committed to a return to profitability on the balance of the year.

We have taken the decisive step of cutting $25 million of OpEx for the year, and we are putting our capital and team to work on the three biggest levers for the business: number one, growing utilization of exome and genome; number two, optimizing unit economics through both ARR and COGS; and number three, delivering the leading products at unmatched scale. Aligned around these three goals, we are moving forward with more clarity and operating rigor than ever before. With that, I will pass it over to Kevin. Thanks.

Kevin Feeley: In the first quarter, we delivered $102.3 million of total revenue, including $90.6 million of exome and genome revenue, up 27%, and test result volume of 27,488 tests, up 34%. The blended average reimbursement rate was approximately $3,300. Adjusted gross margin was 69%, and we reported an adjusted net loss of $8.2 million. As Katherine outlined, two factors drove the quarter: mix dynamics resulting in a lower-than-expected blended average reimbursement rate and softer non-core business line performance. First, the blended ARR came in approximately $200 below expectations. I want to be very clear: on a like-for-like basis, ARR by product is relatively unchanged. There have been no meaningful contracted price changes, nor any material variation in coverage or collection rates across each respective channel.

Instead, the lower ARR is primarily a result of product mix shifts within the exome and genome portfolio. The impact of mix is important, so let me walk you through it. Starting with payers, roughly 85% of volume is insurance-based outpatient services, and 15% is institutional pay. Specific to outpatient, genome was approximately 40% of volume in the first quarter, which is roughly double from a year ago. We expect that mix shift to continue, but at a far more moderate pace as we manage the transition. Both exome and genome are good for patients and our business, but in terms of ARR in outpatient, exome is closer to a blended average of $4,000 per test after all denials, and we are reimbursed more for cases with parental comparators than cases without them.

In contrast, an outpatient genome blended ARR today is about half that of exome due to the relative maturity of payer coverage. Each has a very wide array of medical necessity criteria across payers. Policies are not all created equal, and policy coverage does not always equal broad access nor guarantee payment. Over time, a strengthening coverage landscape will help close the gap between products. Continued investment in automation and AI creates meaningful opportunity to improve collection rates across both as we scale. Our team continues to make the case for expanded coverage with payers, leveraging clinical and health economic evidence like the recent SAVE Kids study to open access for both exome and genome testing, which found that GeneDx Holdings Corp.

exome and genome leads to cost savings of up to $80,000 in the first year after testing for children with neurodevelopmental disorders. That tells us testing should be covered much more broadly than it is today to deliver cost efficiencies to the U.S. healthcare system. We are in the early days of making the case, and across state Medicaid programs, there are now 38 states covering either test. Go back just a few years, there were none. Additions have been coming almost quarterly; it would be reasonable to expect momentum to continue. But it will take time. In the meantime, we will continue to accept samples in states without coverage, which is an intentional margin investment in market share and the evidence necessary to influence policymakers.

If more states adopt coverage, orders that are zeros today in our blended ARR will become something more. Our strategy remains intentionally driving each market first from lower-margin panels to exome, and eventually towards genome for all. While genome reimbursement is currently constrained by coverage, we expect rates to strengthen over time as clinician demand grows, clinical and economic evidence builds, advocacy efforts advance, and the need for biopharma to identify patients drives payer modernization. Genome COGS are also higher than exome’s, specifically due to higher reagent input costs. Unprecedented? We can assume the cost curve here will continue to come down as utilization and scale grow. Not to be overlooked, approximately half of all tests we resulted in the first quarter were single-gene and multi-gene panels.

Conversion has always been a cornerstone of our strategy. It remains both a big growth opportunity ahead and evidence that our market-leading exome will be durable for years to come. We have also taken steps to more actively manage the longer-term transition to genome, in particular with our Reflex product enabling more patient access to this innovative testing while maintaining higher unit economics. Parental sample mix also impacted the blended ARR this quarter by 200 basis points across the combined portfolio. We view this as a function of an opportunity for stronger field force training and execution, as well as new clinician education rather than any structural shift, and we are addressing it directly. Moving forward, we expect the blended ARR to stabilize and improve modestly over the balance of the year.

To reiterate, there have been no changes to pricing, and a balanced payer coverage policy has expanded and is expected to continue to expand over the coming quarters. The lower realized rate in the first quarter was driven by product mix shifts within the portfolio, many of which are transitory and should have been better anticipated. We have invested significantly over the past several weeks to enhance forecasting precision, including bringing in external perspective to rigorously stress test our updated market assumptions and bottoms-up plan. This work reinforced our conviction in the long-term opportunity while sharpening our near-term expectations. With that added rigor and better visibility into each channel, the business is more predictable today than it was at the start of the year.

Moving to non-core business lines where revenue fell $6.5 million short: in Fabric, the $2.5 million miss reflected legacy positioning in its go-to-market approach. The GAAP financials include a non-cash impairment charge of approximately $31.3 million to write down goodwill and certain intangible assets. In biopharma and data, a $2 million miss was timing-related, reflecting longer sales cycles. We are treating this business as line of sight for the purposes of guidance rather than relying on it. In multi-gene panels, a $2 million miss was caused by overestimating the timing of organic CMA uptake in the pediatric market prior to our sales force efforts ramping. This reflects a forecasting correction and should not be read as a demand signal.

So we are taking four actions to get the year back on track. First, improving blended ARR through tighter channel management. Second, accelerating market access and revenue cycle investments. Third, optimizing cost per test for genome as we scale. And fourth, enhancing forecasting precision. Finally, we have already reduced and reallocated approximately $25 million in planned spend to align investments with current performance and remain committed to full-year 2026 adjusted profitability. This is not a cut out of our current run-rate spend, but rather a reduction in future planned increases to match our updated revenue timing. The reductions are primarily a recalibration of our hiring and marketing timing, essentially slowing out-year non-direct expenses while protecting investments in our proven channels and more line-of-sight expansion markets.

Now on to guidance. We are reducing full-year revenue guidance by 12%, or $65 million, at the midpoint. The bridge on that is $36 million from the effects of blended ARR, $11 million from lower volume contribution across new expansion markets, and $18 million from non-core business lines split evenly between Fabric, biopharma, and other testing. With that, we expect full-year 2026 total revenues of $475 million to $490 million, exome and genome volume growth of at least 30%, translating to approximately 126,400 tests, exome and genome revenue growth of at least 20%, adjusted gross margin of approximately 70%, and profitability on an adjusted basis. In the second quarter of 2026, we expect total revenues of $110 million to $112 million, exome and genome volume of approximately 30,000 tests, exome and genome revenue of approximately $100 million, adjusted gross margin of approximately 70%, and an adjusted net loss of approximately $5 million in the second quarter as we move back to profitable in the third quarter.

This is a framework we can execute with confidence. Katherine? Back to you.

Katherine Stueland: Thank you, Kevin. Just twenty years ago, it cost millions of dollars and multiple weeks to sequence and interpret a genome. Today, GeneDx Holdings Corp. has scaled the promise of this technology like no one else in our space, with turnarounds in as little as 48 hours. And we continue to innovate. Three hundred million people are living with a rare disease globally, and we have never been more confident about our ability to drive profitable growth in service of these patients and shareholders. I recognize that resetting expectations is difficult, but it also gives us all great clarity and conviction in our ability to deliver on our commitment. We are grateful to our shareholders for the support and patience as we continue to deliver on a bold mission.

Leading a generational shift in medicine is no small undertaking. It requires taking some big swings, learning quickly, and moving forward with urgency to satisfy the growing number of patients who need our services. You have my assurance that we have recalibrated our assumptions, taken decisive action, and positioned the company for long-term sustainable and profitable growth. Thank you. We will now open the call for questions.

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Operator: Thank you. Ladies and gentlemen, if you have a question or comment at this time, please press 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press 11 again. In an effort to facilitate as many participants as possible, we ask that you please limit yourself to two questions. If you have additional questions, you may reenter the queue again by pressing 11. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Mark Massaro from BTIG. Your line is open.

Mark Massaro: Hey, guys. Thank you. There is a lot to digest here. I guess the first question I want to ask is on the Q2 guidance, because clearly, when I look at it, it does not look like that is fully de-risked either. Can you give me a sense for why you are guiding to approximately 30,000 in Q2? And can you give us a sense for what type of traction you are picking up in the NICU? Because I know that is an area where I think you noted that you missed in 2025, and I just wanted to get a sense for how you are doing here in 2026.

Katherine Stueland: Yes, I will start. First of all, what we are seeing in the business today is strong momentum. As we arrived at a Q2 guide, it is coming from a knowing place reflective of the momentum that we are seeing in terms of volumes coming in for the quarter and overall the business behaving in line with the way that we want it to. I would say we are operating from a place of strength and clarity for that Q2 guide. On NICU, we have continued to see, with our expanded sales force, really good continued traction there. We had a lot of ambition last year, and I would say we right-sized that in the guide. We are feeling really good about line of sight in terms of momentum in the NICU.

Mark Massaro: Okay. Can you give us a sense for if any part of your guidance has been a function of the end markets being, in any of the submarkets, a little different than you had expected? I also wanted to ask about competitive dynamics. Are you seeing any changes in the field? You did a good job, I think, on volumes in Q1, but you are lowering your volume uptake. I am wondering to what extent that might have an impact from competition.

Katherine Stueland: Sure. First, as we look at the channels that we are in, this is the first time that we have four sales teams going after different clinicians, and there is a different product for each of those. So we are learning a lot. I think, reassuringly, we learned we are in the right channels. We have a good business model. As we really dug into our business review, we are not pivoting out of any of those channels because we have the right overall strategy. The tweaks that we need to make—we talked a bit about the genome dynamic for the expert geneticist; we talked about the pediatric neurologist and how we get them ordering more parental comparators—are areas that we have already actioned through sales messaging and incentives.

We have great confidence that is something within our control. Similar goes for the general pediatrics segment. We are pleased to be in that channel. We are learning that it takes multiple touchpoints and meetings to get an account activated and to start seeing orders come through, but we are seeing early signs of exome. I would say this is more reassuring in terms of being in the right market with the right products. We are tweaking our sales strategy and commercial strategy to make sure we are really optimizing the way that we are showing up in the markets. I believe that we have in hand the right course correction to make sure that we can realize the guide and continue to execute on a really clear and achievable plan—we want to go out there and crush it as the leader.

Operator: Our next question or comment comes from the line of David Westenberg from Piper Sandler. Your line is now open.

David Westenberg: I just wanted to talk about some of the commercial footprint here and maybe some of the potential productivity per rep that we would expect to see in the back half of the year. Can you talk about adding those additional reps, how we should think about productivity, and then whether doubling or tripling the sales force had any issues impacting other parts of the business, like small panels or Fabric?

Katherine Stueland: As we look at the sales force, a couple of things. There are four sales teams, so we have 75 people selling to specialists—about 25 of them new and added—and we are just starting to see them move out of their early stage and starting to get into greater productivity. In general pediatrics, there are 50 reps; they are still in their early days. That is a new channel where we do not yet have a sense of exactly what full productivity is going to look like—whether it will mirror what we see in the specialist sector or be a little bit different. We are seeing that it takes several meetings to get accounts activated, so more to come as we spend more time in the field with new reps there. There are 10 reps in the NICU and 10 reps in the prenatal space, and they are all still in the early days.

One of the important factors that we are going to keep an eye on is sales force productivity and how that is changing week to week, month to month, quarter to quarter. We are in the early stages with a lot of these reps, and that should give us a lot of confidence in terms of our ability to continue to generate more volume and more healthy volume across these different sales channels.

Kevin Feeley: And, Dave, that was the grounding philosophy of the guide, which is to build it from the core business with tighter assumptions and less reliance on areas where visibility is limited, including what those new reps in new channels might translate to in the back half of the year. It is a more disciplined framework than the one with which we started the year. At this point, it comes down to execution, and we will learn and iterate as we move forward.

David Westenberg: Got it. And I will just ask one follow-up on the genome mix. I appreciate the color around 40% and the ASP being around $2,000. Is there any possibility of seeing a big coverage decision in that area? Is there blocking and tackling that you can do in the near term to get that ASP up? As we look out a couple years from now, can that ASP become around the same ASP as exome?

Kevin Feeley: Yes, we think it can get towards parity with exome. There are a number of factors there, including improving commercial coverage, which today is far more expansive for exome than genome. There is also, as you alluded to, a lot of blocking and tackling with respect to ensuring that as we submit claims, they adhere to what is a wide array of medical necessity and documentation requirements. We can use better process, technology, and automation to tighten up the revenue cycle, reduce denials, and improve collection rates, all while expanding policy coverage for genome. We have run this playbook before; we are just years behind exome in driving commercial payers and Medicaid towards improving coverage similar to exome.

We have seen it be done; we are confident we can get it done. But there is a lot of work to do to march genome ARR up towards parity with exome. It is going to take a number of quarters, and we have built that level of expectation into the blended ARR and the guide.

Katherine Stueland: I would just add: control what you can control, and the COGS side of the house is an area where we think AI and automation give us an important ability to continue to reduce our cost of goods on the genome product. That will be a huge factor for us internally, because we have done that masterfully on the exome side of things, and we will rinse and repeat that on the genome side.

Operator: Our next question or comment comes from the line of Daniel Brennan from TD Cowen. Mr. Brennan, your line is open.

Daniel Brennan: Great, thank you. Maybe just the first one on the $11 million cut on the growth expansion market and the cut to volumes on exome/genome to 30%. Walk through the thinking there. Is that just de-risking versus your original expectations?

Kevin Feeley: Yes, Dan. We have gone through an extensive exercise through the core business—really channel by channel, bottoms-up by assumptions—and tightened a number of product mix assumptions, not just exome versus genome, but how much to expect with respect to parent comparators. We recently introduced a Reflex product, which will play an important part in the geneticist channel. The outlook is representative of a lot of work to tear down and rebuild assumptions at a more granular level by channel. In doing so, the overarching philosophy was to rely on things that are far more line of sight rather than having to pull out any heroics in improving any of those metrics or over-reliance in the expansion markets. For those new markets, namely prenatal and general pediatricians, I have taken those down some, with the balance coming from the core foundational markets, to ensure we get back to an old habit of setting expectations that we can deliver upon.

Daniel Brennan: Thank you for that. And then one more back to price. As this transition occurs, is the goal just to get the genome price back to parity with the exome—taking a fully reimbursed exome and now swapping in this lower-priced genome trying to get back up there? Or is there a future benefit long term for the genome? And then, Kevin, any way you can give us color as we think about the back half of the year pricing—what is baked in and any high-level math on the genome/exome split we can think about?

Katherine Stueland: I will kick it off, Dan. We have good gross margins on the genome product, and the transition and the demand for genome are really good things. We are excited about the opportunity to continue to improve the unit economics on the genome product. We have introduced this Reflex test that enables us to satisfy the need of a geneticist for more content while also having the benefit of better unit economics for us. On top of that, the whole-genome opportunity continues to help us generate more and more data, which continues to build our competitive moat, which is proving to be effective. The demand is part of the way that we are measuring our effectiveness in terms of the competitive lead. We do want to see a future where we are running genomes for everyone.

But the reality is, for a lot of clinicians like general pediatricians and many pediatric neurologists, exome is going to do the job because it will satisfy information for about 85% of the diseases that we can diagnose off of the genome. So it is a yes-and: we want to usher in this era we have been thinking about for a long time, we have to continue to improve the unit economics, and we have a portfolio of products that help ensure we can provide the right clinical information and insight for the right patient and the right customer channel at the right time.

Operator: Thank you. Our next question or comment comes from the line of William Bonello from Craig-Hallum. Mr. Bonello, your line is now open.

William Bonello: Thanks a lot. I want to push a little bit more on some of these pricing or ASP dynamics. On the geneticist side, I want to confirm that geneticists were just ordering a straight-up genome, not the Reflex product. I think maybe you just introduced that. Going forward, are you going to offer standalone genome, or do you have to order the Reflex? If Reflex is ordered, can you bill for an exome with payers where you are not reimbursed for a genome? That would be helpful to know. And then explain more about this shift in the parental mix and why you would be seeing suddenly fewer trios and how that is happening.

Katherine Stueland: On the parental comparator side of things, which is mainly in the pediatric neurology space, the good news is it is not a structural problem. It is an execution problem, and we have already implemented changes in the sales force, messaging, and incentives to address it. When you go from one sales force to four sales forces, you are going to get some things right and some wrong. We were thrilled to diagnose this quickly and implement course correction immediately. On what we are selling to geneticists: if a geneticist wants a genome, we are selling them a genome, full stop. We are also offering them the additional Reflex product. Because our turnaround times are so fast on exome and genome, we can turn around both tests quickly. To the super-savvy geneticist who knows for most patients an exome will do it, if they want to Reflex to a genome, then they can.

Kevin Feeley: Think of the Reflex as a tool to manage the transition in the geneticist office only. From a margin perspective, do not get confused: genome is still a good margin test for our business, and it is a great test for patients. Exome has a higher gross margin than genome, and the Reflex product slots in between in terms of its gross margin profile.

William Bonello: Sure. Okay. But if I understand your answer, while there is less coverage for genome than for exome, you are going to have to live through a phase as the market continues to shift to genome where you are getting more zero pays. Is that basically what I am hearing?

Kevin Feeley: There is more coverage for exome today than genome. Exome has a higher average reimbursement rate today. Now we have to work on ensuring that access for genome expands in commercial policy and that we tighten the revenue cycle to get the reimbursement rate between the two closer to parity. The Reflex test will have a reimbursement rate closer to exome.

Operator: Our next question or comment comes from the line of Tycho Peterson from Jefferies. Mr. Peterson, your line is now open.

Tycho Peterson: Thanks. Kevin, I wanted to understand the linearity here. There is a bit of déjà vu from a year ago—different issues—but you guided in late February, you were out in March on the conference circuit. When did you see the impact from the genome mix shift in the quarter? Maybe start with that. And then get us more comfortable that you have better visibility going forward.

Kevin Feeley: We were glad to see volume come in above expectations. It came in slightly ahead of expectations this first quarter; a quarter ago it was 100 tests less versus the consensus number. The demand and volume number ended up exactly where we expected. That demand strength informed most of the quarter. As the quarter wrapped up, trends and mix in particular began to crystallize at the end of March. That triggered extensive work to go back into each and every channel and reset assumptions. Those reset assumptions are baked into the Q2 guide and full-year guide we just put out. The volume flows for incoming orders were strong and continued strong through the end of April. But the mix dynamic, we were slow to pick up on in our models, and forecasting did not anticipate those as well as it should have.

Tycho Peterson: And the 30% volume guide—can you clarify specific assumptions now for foundational growth versus new market growth? What is the key driver behind the lower foundational guide?

Kevin Feeley: Effectively, the core foundational markets plus the NICU make up the overwhelming portion of the guide, leaving very little with respect to the expansion markets beyond that. We want to see those markets begin to develop before we bake them into forward-looking projections.

Tycho Peterson: And the $25 million on OpEx—get us comfortable that does not have a revenue impact. And why are you no longer breaking out SG&A versus R&D? We are getting a little bit less visibility here as you are leaning into OpEx.

Kevin Feeley: SG&A is broken out from R&D. What we did was combine the G&A and Sales & Marketing lines into SG&A—we think that is in line with our peers. The $25 million in cuts, as we said on the call, are more a calibration of longer-term investments we were making—slowing some anticipated hiring plans and longer-term R&D initiatives, indirect marketing spend, and some G&A build in anticipation of future growth. We are confident that the core areas of investment remain untouched and we are recalibrating some dollars to ensure that we are opening up more access, improving reimbursement rates, and driving volume and growth. Investing in commercial expansion, AI, and automation to reduce COGS—we are confident that despite the trimmed outlook in future expenditures, there is enough OpEx and capex to fund the growth plan we have outlined.

Katherine Stueland: I would just add, we have tracked every dollar and every effort to one of three areas of focus: one, utilization of exome and genome; two, improving unit economics; and three, making sure we have the industry’s leading products and services. Everything we continue to invest in is tied to one of those three levers. We are confident we are not cutting into our growth strategy; we are trimming where we can to get the team fully focused on the biggest levers for the business.

Operator: Our next question or comment comes from the line of Keith Hinton from Freedom Capital Markets. Mr. Hinton, your line is now open.

Keith Hinton: Thank you. I want to push on the volume side of things a little bit, since ASP has been pretty well covered. Volume came in a little bit above expectations for the first quarter, and yet you took the volume guide down. Help us better understand the drivers there. And related to this, there was a large genomics player that recently announced they are launching into non-oncology rare diseases with a long-read option. Any comment on the competitive dynamics there—was that a driver of the downgraded guidance at all? And where are you in getting a long-read or medium-read option into the marketplace?

Katherine Stueland: Thanks, Keith. On the competitive dynamics, we have not seen any change from our point of view—nothing new happening out there. As we think about continuing to lead the way with whole-genome sequencing, long-read for WGS is without a doubt an important element we are working on. It will enable us to continue to drive our dataset to be even more enriched on the genome side. We have been able to offer it to clients in a research setting, and we will have it available at some point in a commercially available product as well.

Kevin Feeley: We set the initial guide and it proved to be too aggressive, primarily with respect to mix shift, and we want to make sure we do not get that wrong moving forward, in particular with contribution from the new markets. We believe we corrected that. We understand we need to rebuild credibility, and the way we expect to do that is by setting a guide we believe we can execute on and deliver against. This guide today is underwritten with more line of sight, relying only on those more mature foundational markets, leaving volume contribution from the new channels as upside as they come.

Keith Hinton: Great. And a quick clarification on the ASP side. The reason why the average genome is lower is purely because of higher denial rates, right? There is not a situation where genome, when paid, is meaningfully lower than exome. Correct?

Kevin Feeley: I would refer back to the clinical lab fee schedule, which is usually the basis for every contract negotiation. Without sharing proprietary contracted rates, exome has a higher contracted rate today than genome, and exome is in more commercial policy coverage than genome today. So it is both price and coverage, and then the overall denial rate also plays in. We have room to improve both the contracted status as well as overall collections and denial rates to get those two ARRs over time, we think, towards parity.

Operator: Our next question or comment comes from the line of Kyle Mikson from Canaccord Genuity. Your line is now open.

Kyle Mikson: Hey, guys. Thanks for the questions. I want to go to the non-core revenue—it was a $4.5 million headwind on the non-core excluding other tests, so Fabric and biopharma. On the Fabric side, I think the deal milestone was $12 million in revenue for this year. You are clearly going to be well below that. You have the impairment too, which is disappointing. What does the refocus on international really mean for that business, as well as powering some of these domestic competitive tests that we know about? Then on biopharma, there is momentum but longer-than-anticipated sales cycles—that would imply you will get that revenue back one day. How should we think about the health of that segment?

Katherine Stueland: Starting with Fabric, the technology is valuable. What changed for us was the durability of the domestic commercial opportunity. As we have been building out—and as we always intended—Fabric’s interpretation-as-a-service is a really attractive way for us to cost-effectively drive international volumes. We have been integrating the team and the technology to support that. We wanted to right-size our expectations for this year and make sure we get it right. On the biopharma side, it remains an important opportunity, not just from a patient perspective, but it fundamentally brings us more testing and gives us the requisite next steps that every diagnosed patient needs to figure out the healthiest course of action.

The selling cycle is longer. We are also taking a deeper look—the data is even more robust than what we originally thought. We talked about the Komodo deal earlier this year; that is giving us really good insight into the longitudinal nature of the view that is interesting to biopharma. With new products like that out there, we are learning a lot about the selling cycle. Yes, it takes longer, but some of the deals that we were counting on at the end of Q1 we hope we will realize later this year; if not, we are really ramping up the pipeline with a sales team that we continue to expand.

Kyle Mikson: Thanks, Katherine. On pricing, it seems in the guidance we can get to maybe mid-$3,000 ARR by the end of this year. Could you get to maybe the high $3,000 by 2027? And I also want to confirm that the 2026 guidance now includes Medi-Cal.

Kevin Feeley: The guide is at 20% exome/genome revenue growth and 30% volume growth; you can back into what that ARR is, and it is just a very slight step up above Q1’s approximately $3,300. We want to make sure we do not get too far ahead of our skis there, so I am not going to go above the guide. For 2027, that is theoretical. We certainly believe there is room to improve blocking and tackling on the revenue cycle to get paid more often. It will become harder and harder for payers to ignore the clinical and economic evidence in support of opening up policy for genome. Those things, along with greater clinician demand, should lead to an improved ARR structure for whole genome in 2027 and beyond.

Operator: Next question or comment comes from the line of Subhalaxmi Nambi from Guggenheim. Your line is now open.

Subhalaxmi Nambi: Hey, guys. Thank you for taking my question. Given the granular details, what are you assuming whole-genome versus whole-exome mix is going to be this year in the current guide? It used to be 70/30, right?

Kevin Feeley: In the prepared remarks, we said genome is 40% of the outpatient volume. When you load in the NICU, genome is about 45% of all exome/genome volume in the first quarter. We do not anticipate giving that split for the guide, but I would point you to the volume and inferred ARR in that guide. What underpins that is different assumptions channel by channel.

Subhalaxmi Nambi: Thank you for that, Kevin. Regarding your current market penetration, you include a slide where you have penetration by market. There is a bit of investor confusion about this analysis. For example, if a patient sees a pediatric specialist and a geneticist after being referred, that is still one patient and only one test. Does your analysis count this as one test in each specialty area, meaning in both pediatrics and geneticist market, or only once based on the clinician that actually orders the one test?

Katherine Stueland: As we zoom out, remember, the diagnostic odyssey typically entails a patient seeing several different clinicians over a five-year period. They start with the general pediatrician, move to a specialist, and then get to a geneticist. As we think about penetration, we are zeroing in on where the patients are landing and getting diagnosed. We are focusing on the diagnosis day as the anchoring factor.

Operator: Next question or comment comes from the line of Brandon Couillard from Wells Fargo. Mr. Couillard, your line is open.

Brandon Couillard: Thanks. Kevin, a few clarifications. Did you say that the spike in the genome/exome mix was not evident until late in the quarter? And are you assuming that mix is stable in future periods or comes down? I want to understand directionally what is embedded in the guide.

Kevin Feeley: The bottom line is the signals we had internally were not showing in real time the extent of those shifts and the economic impact. Those did not really become clear until late in the quarter, and then more so after we dug in channel by channel through a fairly extensive review. The go-forward expectation is now reset clinician by clinician and channel by channel, informed by experience at the end of the quarter as well as through April. We think we have proper expectations now at that granular level by channel and enough of a trend on which to make a call.

Brandon Couillard: I believe you said the $25 million of OpEx savings was not in the current run rate, so we should not necessarily expect it to decline sequentially in Q2 or Q3. Is that correct?

Kevin Feeley: Yes, that is correct. I think Q1 is fairly representative, on an annualized basis, of where we might end up. There will be some puts and takes and some refocusing to ensure we are spending every dollar on those with a shorter payback and the most impactful ROI. The $25 million effectively came out of what was planned expenditures for the full year.

Operator: Showing no additional questions in the queue at this time. Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Speakers, standby.

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