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GeneDX Overbills Customers, Returns Millions & Sets Aside Millions More

Genomics firm signals more trouble ahead after overbilling key customer more than $40 million.

May 13, 2024

GeneDx Holdings Corp. (WGS), a provider of genomics-related diagnostic and information services, recently settled accusations it overbilled a third-party payor and put investors on notice it may not have been an isolated incident.

To settle the dispute, GeneDX agreed to pay $42 million in a series of payments each year through June 30, 2026.

However, the settlement doesn’t end GeneDX’s overbilling trouble.

After what it calls a review of its billing procedures, GeneDX established a multi-million dollar reserve to repay other third-party payors it may have previously overbilled. As of March 31, 2024, $23.9 million of liabilities were recorded in GeneDX’s accounts payable and accrued expenses and other liabilities.

Combined, the settlement and reserve total:

—105.6% of Q1 2024 revenue
—32.5% of 2023 revenue
—27.15% of the consensus 2024 revenue estimate

Additionally, GeneDX hinted it may have previously recognized revenue it shouldn’t have and warned of potential revenue reversals in the future, plus:

“In addition, as discussed above, the Company has made certain adjustments to its estimated variable consideration as result of this matter and other potential settlements with payors.”

Not surprisingly, GeneDX’s CEO Katherine Stueland and CFO Kevin Feeley receive annual bonuses based, in part, on revenue growth targets.

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