Sema4 Reports First Quarter 2022 Financial Results and Business Highlights

Total revenue of $53.9 million

1,300 basis points of sequential adjusted gross margin improvement

Reaffirming full year 2022 pro forma revenue target

New operating model and focus on efficiencies to reduce 2022 cash burn by an estimated $50 million, extending cash runway into 2024

Sema4 to host conference call today at 4:30 p.m. ET

STAMFORD, Conn., May 12, 2022 (GLOBE NEWSWIRE) --  Sema4 Holdings Corp. (Nasdaq: SMFR) (“Sema4”), an AI-driven genomic and clinical data intelligence platform company, today reported its financial results for the first quarter ended March 31, 2022 and provided an update on key strategic and operational initiatives.

“I am very pleased by our start to the year, which shows fundamental improvements from a financial perspective, as well as significant progress across our strategic objectives. We delivered record test volume and expanded engagement across our health system partnerships,” said Eric Schadt, PhD, President and Chief Research & Development Officer of Sema4. “We were also delighted to complete the acquisition of GeneDx and welcome Katherine Stueland as our new CEO to further scale, operationalize, and strengthen Sema4.”

“With the strength of Sema4’s platform, the addition of GeneDx will accelerate the delivery of precision medicine and enable even broader data capabilities than before. We have strong momentum that puts us on a path to deliver on our 2022 pro forma revenue target of $350 million. In addition, we are focused on operating efficiencies that will reduce 2022 cash burn by an estimated $50 million compared to our original plan, extending our cash runway into 2024,” said Katherine Stueland, Chief Executive Officer of Sema4. “Since closing the GeneDx acquisition, we have streamlined our leadership team and established a new, agile operating model to drive growth, operating efficiency, and the delivery of transformational partnerships, all of which put us on a scalable path to profitability. With this focus, we can realize our vision of applying the use of genomics and large-scale clinical data to set a new standard of care, enabling comprehensive family health, from planning a pregnancy through every stage of life.”

First Quarter & Recent Highlights

  • Testing volumes were up 27% in the first quarter of 2022 compared to the same period of 2021, with 84,925 tests resulted (excluding COVID-19 tests)
  • Total revenue in the first quarter of 2022, excluding COVID-19 testing revenue, was $50.1 million compared to $48.3 million in the same period of 2021. Total revenue in the first quarter of 2022, including COVID-19 testing revenue, was $53.9 million compared to $64.2 million in the same period of 2021
  • Completed the acquisition of GeneDx, Inc. (“GeneDx”) at the end of April, accelerating the Company’s path to improving gross margins and ultimately towards profitability
  • Streamlined the leadership team to enable focused execution across key growth priorities, operating efficiency, and transformational health system and biopharma partnerships
  • Closed $200 million in financing via private placement from leading growth and life sciences investors, including Pfizer, in conjunction with the completion of the GeneDx acquisition
  • Expanded REPRESENT study in March to run nationally in partnership with community oncologists caring for patients with advanced cancer in diverse and traditionally underserved populations

First Quarter 2022 Financial Results

Total revenue for the first quarter of 2022 was $53.9 million compared to $64.2 million in the first quarter of 2021. The decline in year over year revenue was primarily attributable to a decrease in COVID-19 test volumes as a result of the decision to discontinue testing services at the end of the first quarter of 2022. This was partially offset by an increase in testing volumes of both our Women’s Health and Oncology product lines. First quarter revenue growth was 4% year-over-year and 6% sequentially (excluding COVID-19 testing revenue) vs. the fourth quarter of 2021.

Gross margin for the first quarter of 2022 was 10%. Adjusted gross margin for the first quarter of 2022 was 13%, as compared to adjusted gross margin of 22% for the same period in the prior year. Adjusted gross margin was up roughly 1,300 basis points sequentially vs. the fourth quarter of 2021.

Operating expenses for the first quarter of 2022 were $94.9 million. Adjusted operating expenses for the first quarter of 2022, which excludes stock-based compensation, restructuring, and transaction expenses, were $71.8 million compared to $43.9 million in the same period of 2021.

Net loss for the first quarter of 2022 was ($76.9) million. Adjusted net loss for the first quarter of 2022 was ($65.9) million compared to ($24.9) million in the same period of 2021.

Total cash and cash equivalents were $315.0 million as of March 31, 2022 and the Company’s $125 million revolving credit facility remains undrawn, bringing total liquidity to $440.0 million. As of April 29, 2022, Sema4 had 377,249,186 outstanding shares of Class A common stock.

Fiscal Year 2022 Guidance

Sema4 is reaffirming its previously issued full year 2022 pro forma revenue target of $350 million. The company now expects fiscal year 2022 total revenue to be $305-315 million, reflecting the inclusion of GeneDx for the eight months of ownership in 2022. Sema4 is raising its full year 2022 adjusted gross margin target and now expects full year 2022 gross margin to exceed 20%. The Company expects to end 2022 with more than $200 million of cash and cash equivalents and total liquidity of over $325 million. The 2022 revenue guidance is on a combined basis for the portion of the year which Sema4 owns GeneDx, following completion of the GeneDx acquisition.

Webcast and Conference Call Details

Sema4 will host a conference call today, May 12, 2022, at 4:30 p.m. Eastern Time. Interested parties may access the live teleconference by dialing (844) 631-4065 for domestic callers or (929) 517-0920 for international callers, followed by conference ID: 6568437. A live and archived webcast of the event will be available on the “Events” section of the Sema4 investor relations website at https://ir.sema4.com/.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding our future performance and our market opportunity, including our expected full year 2022 revenue, volume and gross margin guidance, our expectations for our growth and future investment in our business, and our expectations of the anticipated benefits and synergies of the recently completed GeneDx acquisition. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) the ability to implement business plans, goals and forecasts, and identify and realize additional opportunities, (ii) the risk of downturns and a changing regulatory landscape in the highly competitive healthcare industry, (iii) the size and growth of the market in which we operate, and (iv) the risk that the anticipated benefits of the GeneDx acquisition may not be fully realized, if at all. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 14, 2022 and other documents filed by us from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. We do not give any assurance that we will achieve our expectations.  

About Sema4

Sema4 is a patient-centered health intelligence company dedicated to advancing healthcare through data-driven insights. Sema4 is transforming healthcare by applying AI and machine learning to multidimensional, longitudinal clinical and genomic data to build dynamic models of human health and defining optimal, individualized health trajectories. Centrellis®, our innovative health intelligence platform, is enabling us to generate a more complete understanding of disease and wellness and to provide science-driven solutions to the most pressing medical needs. Sema4 believes that patients should be treated as partners, and that data should be shared for the benefit of all.

For more information, please visit sema4.com and connect with Sema4 on Twitter, LinkedIn, Facebook and YouTube.

Investor Relations Contact:
Joel Kaufman
investors@sema4.com

Media Contact:
Radley Moss
radley.moss@sema4.com

Sema4 Holdings Corp.
Condensed Statements of Operations and Comprehensive Loss
(In thousands, except share amounts)
(unaudited)

 Three months ended March 31,
  2022  2021 (1)
Revenue:   
Diagnostic test revenue$52,495  $62,760 
Other revenue 1,446   1,441 
Total revenue 53,941   64,201 
Cost of services 48,316   68,524 
Gross profit (loss) 5,625   (4,323)
Research and development 21,315   53,133 
Selling and marketing 29,547   35,366 
General and administrative 42,784   102,038 
Related party expenses 1,284   1,797 
Loss from operations (89,305)  (196,657)
    
Other income (expense), net:   
Change in fair market value of warrant and earn-out contingent liabilities 13,190    
Interest income 27   21 
Interest expense (808)  (723)
Other income    5,584 
Total other income (expense), net 12,409   4,882 
Loss before income taxes$(76,896) $(191,775)
Income tax provision     
Net loss and comprehensive loss$(76,896) $(191,775)
Weighted average shares outstanding of Class A common stock 244,368,743   549,778 
Basic and diluted net loss per share, Class A common stock$(0.31) $(348.82)

Sema4 Holdings Corp.
Consolidated Balance Sheets
(unaudited, in thousands, except share and per share amounts)

 March 31, 2022 (unaudited) December 31, 2021
Assets   
Current assets:   
Cash and cash equivalents$315,002  $400,569 
Accounts receivable, net 37,642   26,509 
Due from related parties 125   54 
Inventory, net 36,318   33,456 
Prepaid expenses 17,241   19,154 
Other current assets 4,096   3,802 
Total current assets$410,424  $483,544 
Operating lease right-of-use assets 38,417    
Property and equipment, net 60,976   62,719 
Restricted cash 900   900 
Other assets 6,953   6,930 
Total assets$517,670  $554,093 
Liabilities and Stockholders’ Equity  
Current liabilities:   
Accounts payable and accrued expenses$68,880  $64,801 
Due to related parties 3,237   2,623 
Contract liabilities 66   473 
Short-term lease liabilities 5,072    
Other current liabilities 23,384   33,387 
Total current liabilities$100,639  $101,284 
Long-term debt, net of current portion 11,000   11,000 
Long-term lease liabilities 57,478    
Other liabilities 500   21,907 
Warrant liability 15,177   21,555 
Earn-out contingent liability 3,432   10,244 
Total liabilities$188,226  $165,990 
Commitments and contingencies (Note 10)   
Stockholders’ equity:   
Preferred Stock, $0.0001 par value: 1,000,000 and 0 shares authorized at March 31, 2022 and December 31, 2021, respectively; 0 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively     
Class A common stock, $0.0001 par value, 380,000,000 shares authorized, 245,154,475 shares issued and outstanding at March 31, 2022 and $0.0001 par value: 380,000,000 shares authorized, 242,647,604 shares issued and outstanding at December 31, 2021 24   24 
Additional paid-in capital 981,757  $963,520 
Accumulated deficit (652,337)  (575,441)
Total stockholders’ equity 329,444   388,103 
Total liabilities and stockholders’ equity$517,670  $554,093 
        

Sema4 Holdings Corp
Consolidated Statements of Cash Flows
(in thousands, unaudited)

 Three months ended March 31,
  2022  2021 (1)
Operating activities   
Net loss$(76,896) $(191,775)
    
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization expense 5,803   4,902 
Stock-based compensation expense 17,559   164,962 
Change in fair value of warrant and earn-out contingent liabilities (13,190)   
Provision for excess and obsolete inventory 43   1,821 
Non-cash lease expense 167   191 
Amortization of deferred debt issuance costs 128    
Change in operating assets and liabilities:   
Accounts receivable (11,132)  (1,296)
Inventory (2,904)  (9,828)
Prepaid expenses and other current assets 1,596   (6,327)
Due to/from related parties 543   (688)
Other assets (151)   
Accounts payable and accrued expenses 3,932   3,951 
Contract liabilities (408)  1,027 
Other current liabilities (6,584)  (9,148)
Net cash used in operating activities (81,494)  (42,208)
    
Investing activities   
Purchases of property and equipment (1,378)  (2,075)
Development of internal-use software assets (2,535)  (2,919)
Net cash used in investing activities (3,913)  (4,994)
    
Financing activities   
Payment of deferred transaction costs    (1,254)
Finance lease principal payments (862)  (1,052)
Long-term debt principal payments    (394)
Exercise of stock options 702   422 
Net cash used in financing activities (160)  (2,278)
    
Net decrease in cash, cash equivalents and restricted cash (85,567)  (49,480)
Cash, cash equivalents and restricted cash, at beginning of period 401,469   118,960 
Cash, cash equivalents and restricted cash, at end of period$315,902  $69,480 
    
Supplemental disclosures of cash flow information   
Cash paid for interest$607  $723 
Cash paid for taxes$168  $ 
Purchases of property and equipment in accounts payable and accrued expenses$1,325  $1,164 
Software development costs in accounts payable and accrued expenses$717  $1,570 
Unpaid deferred transaction costs included in accounts payable and accrued expenses$227  $4,228 

Sema4 Holdings Corp.
Reconciliation of Revenue to our Adjusted Gross Profit & Adjusted EBITDA
(unaudited, in thousands)

The following is a reconciliation of revenue to our Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Research & Development, Adjusted Selling & Marketing, Adjusted General & Administrative and Related Party Expense, Adjusted Loss from Operations, and Adjusted Net Income for the three months ended March 31, 2022 and 2021. Please see the footnotes in the reconciliation to Adjusted EBITDA for additional detail on the following adjustments:

 Three months ended March 31,
 2022  2021 
  
 (in thousands)
Revenue53,941  64,201 
Cost of services48,316  68,524 
Gross (Loss) Profit5,625  (4,323)
Gross Margin10% (7)%
    
Stock-based compensation(1,381) (18,475)
Transaction, acquisition, and restructuring costs(106)  
Adjusted Gross Profit7,112  14,152 
Adjusted Gross Margin13% 22%
    
Research & Development21,315  53,133 
Stock-based compensation(4,341) (38,187)
Transaction, acquisition, and restructuring costs(1)  
Adjusted Research & Development16,973  14,946 
    
Selling & Marketing29,547  35,366 
Stock-based compensation(2,825) (18,688)
Transaction, acquisition, and restructuring costs(347)  
Adjusted Selling & Marketing26,375  16,678 
    
General & Administrative & Related Party Expense44,068  103,835 
Stock-based compensation(9,012) (89,612)
Transaction, acquisition, and restructuring costs(6,612) (1,954)
Adjusted General & Administrative & Related Party28,444  12,269 
    
Loss from Operations(89,305) (196,657)
Stock-based compensation(17,559) (164,962)
Transaction, acquisition, and restructuring costs(7,066) (1,954)
Adjusted loss from operations(64,680) (29,741)


 Three months ended March 31,
 2022  2021 
  
 (in thousands)
Net loss(76,896) (191,775)
Stock-based compensation expense17,559  164,962 
Change in fair market value of warrant and earn-out contingent liabilities(13,190)  
Transaction, acquisition, and restructuring costs7,066  1,954 
Adjusted net loss(65,461) (24,859)


 Three months ended March 31,
  2022   2021 
  
 (in thousands)
Net loss$(76,896) $(191,775)
Interest expense, net(1) 781   702 
Depreciation and amortization 5,803   4,902 
Stock-based compensation expense 17,559   164,962 
Transaction and acquisition costs(2) 4,337   1,954 
Restructuring costs(3) 2,729    
Change in fair market value of warrant and earn-out contingent liabilities(4) (13,190)   
Other income(5)    (5,584)
Adjusted EBITDA$(58,877) $(24,839)

__________________
(1) Represents the total of interest expense related to our finance leases and interest-bearing loans and interest income on money market funds. This also includes the unused line fee and amortization of deferred transaction costs related to the loan and security agreement entered into with Silicon Valley Bank.
(2) Represents professional service costs incurred in connection with pursuing the business combination transaction that did not meet the requirement for capitalization in 2021. In the first quarter of 2022, this represents professional service costs incurred in connection with the Acquisition transaction, which include due diligence and legal costs.
(3) Represents costs incurred for restructuring activities, which include severance packages offered to impacted employees and third party consulting costs incurred in the first quarter of 2022.
(4) Represents the change in fair market value of the liabilities associated with our public warrants and private placement warrants and the earn-out shares issuable under the terms of the merger agreement related to our business combination with CMLS.
(5) For the three months ended March 31, 2021, primarily consists of funding received under the CARES Act Provider Relief Fund.