GeneDx (NASDAQ:WGS) was the top performing midcap stock of 2024, rising more than 2,700% last year. It started 2024 at about $2.70 per share and ended it at just under $77 per share.
The stock’s upward trajectory has continued in 2025 as GeneDX’s stock price spiked some 47% on Tuesday to over $110 per share after the biopharma company released its first quarter earnings.
GeneDx is a leader in genome and exome testing, diagnostics, and sequencing. In particular, it specialized in exome sequencing, which is a process that helps medical professionals understand what is causing symptoms or disease in patients. GeneDx owns about 80% market share among ordering clinicians in clinical exomes.
In the fourth quarter, GeneDX blew away earnings and revenue estimates, which sent the stock price flying.
Crushed estimates
The firm generated $95.3 million in revenue in Q4, which was up 64% year-over-year and 24% from the third quarter. This crushed estimates of $612.7 million. Of that amount, $78.8 million came from exome and genome test revenue. That marked an increase of 101% year-over-year and 31% sequentially.
Also in the quarter, GeneDX turned a profit, generating $5.4 million in net income, up from a $25.8 million net loss in Q4 of 2023. Also, adjusted net income was $16.8 million, or 8 cents per share, up from a $17.8 million net loss in Q4 2023. The earnings exceeded expectations, as analysts had projected a 48 cent per share adjusted net loss in the quarter.
Expenses only increased 1% and the adjusted gross margin – which is the profit after expenses are subtracted – soared to 70%, from 56% in the same quarter a year ago.
The firm expects to generate revenue of between $350 million and $360 million in 2025, which would be up from $302 million in 2024. The adjusted gross margin is pegged at 65% to 67%, compared to 65% in 2024. Also, the firm expects profitability in each quarter and for full-year 2025.
“Looking ahead, we’ll introduce our testing to a larger population of patients, as we expand in the outpatient pediatric setting, the NICU, adult conditions, and eventually realize the promise of newborn screening,” Katherine Stueland, president and CEO of GeneDx, said.
A buying opportunity?
The strong earnings come about two weeks after a negative report on GeneDx by Grizzly Research that questioned the firm’s hyper-growth.
“We believe the company’s growth is largely an illusion, driven by fraudulent schemes and illegal tactics deliberately aimed at exploiting Medicaid and Medicare systems to artificially inflate revenue,” Grizzly officials wrote in the February 5 report.
A few analysts that commented said the Grizzly the report was either overdone or misguided, and that the selloff that ensued was a buying opportunity. The stock had plunged about 18% following the February 5 report to $59 per share. Investors clearly saw the dip and this latest earnings report as an opportunity to buy.
The median price target before today’s rally was $85 per share. That will likely rise.
It’s hard to gauge the impact of the Grizzly report and if anything will come of it. But any stock that rises that fast and that high should be carefully considered, certainly from a valuation perspective. It might be wise to monitor it, research it, and perhaps look for another dip.