What changed in this filing

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Item 1. Business

2024-02-23 compared with 2023-03-16 · 91 added, 119 removed, 375 unchanged (36% of the section changed)

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.

For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Unless the context otherwise requires, the description of our business and operations below assumes the completion of the exits from the somatic tumor testing and the reproductive and women’s health testing businesses.

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.

Unless otherwise stated in this Annual Report or the context otherwise requires, references to:

• “GeneDx Holdings” refer to GeneDx Holdings Corp., a Delaware corporation (f/k/a Sema4 Holdings Corp.

(“Sema4 Holdings”));

• “Legacy GeneDx” refer to GeneDx, LLC, a Delaware limited liability company (formerly, GeneDx, Inc., a New Jersey corporation), which we acquired on April 29, 2022 (the “Acquisition”);

• “Legacy Sema4” refer to Mount Sinai Genomics, Inc.

d/b/a as Sema4, a Delaware corporation, which consummated the business combination with CM Life Sciences, Inc.

(“CMLS”) on July 22, 2021 (the “Business Combination”);

• “we,” “us” and “our,” the “Company” and “GeneDx” refer, as the context requires, to:

◦ Legacy Sema4 prior to the Business Combination, and GeneDx Holdings and its consolidated subsidiaries following the consummation of the Business Combination;

◦ Legacy GeneDx prior to the Acquisition, and GeneDx Holdings and its consolidated subsidiaries following the consummation of the Acquisition.

• “Company,” or “GeneDx” refer to (i) Legacy Sema4 prior to the consummation of the Business Combination;

and (ii) GeneDx Holdings and its subsidiaries following the consummation of the Business Combination (including, following the consummation of the Acquisition, Legacy GeneDx).

On January 9, 2023, Sema4 Holdings Corp.

changed its name to GeneDx Holdings Corp.

The Company’s Class A common stock and public warrants are listed on the Nasdaq under the symbols “WGS” and “WGSWW,” respectively.

We operate with conviction that what is best for patients must be embedded in every aspect of our work.

At GeneDx, we believe:

• genomic information has broad utility, and every person should have access to their genome—delivered expertly, ethically and responsibly—to guide health decisions throughout life;

• exome and Whole Genome Sequencing (“WGS”) will facilitate a transition from hypothesis-based to genome-guided healthcare which will improve outcomes for patients and healthcare systems that benefit society as a whole;

• the ability to curate and combine genomic information with clinical and electronic medical record (“EMR”) data will transform therapeutic development, bringing better therapies to patients, faster;

• patients should control and have the ability to direct the use of their genomic information to both benefit themselves and advance scientific understanding that helps others.

In support of these beliefs, we value equitability, simplicity and transparency.

Through this value system, we aim to deliver personalized and actionable health insights to inform diagnosis, direct treatment and improve drug discovery, bringing better health from genomics to patients around the world.

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.

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.

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.

Our initial focus is in pediatric and rare diseases, two areas in which we believe we have competitive advantages and can deliver on our vision today.

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.

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More than 20 years later, we have amassed one of the world’s largest rare disease data sets and remain a leader in genomics.

In May 2022, GeneDx was acquired by and integrated with Sema4 Holdings, adding Legacy Sema4’s Centrellis®, a highly innovative health information platform to our portfolio of solutions.

Centrellis® integrates digital tools and artificial intelligence, allowing our scientists to ingest and synthesize clinical and genomic data to deliver better, more comprehensive health insights.

Today, we are powered by our industry-leading genomic interpretation platform and Centrellis®.

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.

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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

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The barrier to having actionable information from a genomic sequence is significant—and not just due to costs, which are coming down.

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

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.

Most companies in today’s genetics industry are taking a test-by-test approach to cross the chasm from genetics early adopters to genome-guided healthcare in the mainstream market.

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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.

It also requires having a robust, well-characterized dataset that can maximize answers and minimize unknowns to drive a new era of discovery.

Exome and whole genome sequencing provide the broadest view into the genomic variant—we are looking comprehensively into over 20,000 genes, while panels look at anywhere from two to a few hundred genes.

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.

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.

The genome is composed of 3 billion “letters”, or base pairs, of DNA.

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.

Changes in a genome or exome can change the way proteins are formed or utilized by the cell, potentially causing disease.

When patients present with complex issues, a genetic diagnosis may be available, but a traditional genetic panel test may be too narrow to identify the cause.

Some genetic disorders present with very specific symptoms, so tests that read the “letters” of a single gene or a small panel of genes, may make sense for physicians to use in diagnosis.

But for many other genetic diseases, patients can present with overlapping symptoms so finding the correct

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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.

Exome and genome sequencing can find different genetic alterations, or variants, that more targeted tests miss and are especially useful when the timing is critical to directing or altering medical management.

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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.

We have performed over a million genetic tests and worked tirelessly to develop the following:

We have performed over a million genetic tests and worked tirelessly to develop:

• A curated database of disease-associated genomic variants;

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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.

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.

As the number of new patients we test grows, so does our database, as new data increases the potential for greater insights.

Comparing new cases against the data from previous cases helps to confirm whether a genetic variant is significant.

Once new findings are identified, we aim to proactively reach out to healthcare providers and offer to reanalyze their patients’ previous results.

Over time, our objective is to fully automate this reanalysis process in a convenient, easy to understand, efficient method.

In this new world of “one test,” people may be able to carry their genomic data—their DNA blueprints—with them throughout their life.

GeneDx intends to assist in providing new answers from within, decoding more insights over time.

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.

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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.

We engage with patients, physicians, health systems, and other partners based on principles of transparency, choice, and consent.

Driven by our direct engagement with patients and strategic relationships with multiple health systems, the database we have built contains extensive Electronic Medical Record (EMR) data, totaling approximately 3.1 million patient health records, and has been designed to enable Centrellis® to draw from its extensive data assets in a way that enables physicians to proactively diagnose and manage disease.

Our datasets include over 20 years of records abstracted from approximately 56 million clinical documents, 47 million phenotypes and 8 million disease diagnoses.

We expect our current and targeted strategic relationships will provide us with access to additional active patient cohorts and datasets to continue to build our information base and enable our iterative, data-driven business model, including our genomic test solutions franchise.

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.

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”).

As we plan for longer-term growth, we believe there is a large data partnership opportunity with biopharmaceutical (“biopharma”) companies, international testing opportunities, as well as a market to provide interpretation and information services for customers that sequence locally but look to GeneDx for analysis and interpretation.

We believe we are particularly well-suited for helping rare disease and pediatric developmental disorder patients, their care teams and biopharma companies today.

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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.

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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.

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In the near term, our principal target markets will be settings with the most vulnerable patients who can benefit the most including, but not limited to, NICU and patients with Pediatric Developmental Disorders.

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.

We aim to collaborate on programs to establish definitive clinical and economic case for broad use of genomic-guided medicine.

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◦ 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.

• Plan to open new markets and geographies and unlock the value of our dataset with independently scalable cloud-based interpretation and information service offerings.

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.

• Plan to launch a new provider and patient experience with the eventual goal of providing lifelong access and portability of genomic information.

At initial sequence, rapid results provide clinicians simple, actionable, easy to understand results for non-geneticists and tailored resources for patients and caregivers.

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We will sequence once, and analyze for life.

• Optimize Centrellis® to become a solutions provider of choice for biopharma.

• Plan to optimize our services to become a solutions provider of choice for biopharma.

Such solutions will focus on three value-added services:

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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.

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 and oncology.

Supporting research and development for targeted therapies with analytic reports leveraging clinicogenomics data across multiple therapeutic areas with an initial emphasis in rare disease.

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.

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These activities are principally focused on our efforts to develop and improve the software we use to analyze data, process genomic test orders, deliver reports, and improve customer experience.

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.

Two such studies currently underway include the SeqFirst study—in collaboration with Seattle Children’s Hospital and University of Washington—which is designed to demonstrate the broad utility of rapid whole genome sequencing for critically ill newborns and, the Genomic Uniform-Screening Against Rare Diseases In All Newborns (“GUARDIAN”) study—in collaboration with New York-Presbyterian, Columbia University, New York State Department of Health and Illumina—which is designed to assess whole genome sequencing to screen newborns for more conditions than those currently included in standard newborn screening in the United States.

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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.

Principal competitors include companies such as Baylor, Centogene, Exact Sciences, Rady Children’s Hospital as well as other commercial and academic labs.

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.

We receive payment for our products and services from third-party payors, patients, business-to-business clients, and from other healthcare partners.

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.

During the year ended December 31, 2022, 94% of pediatric specialists in the United States who order exome testing have ordered from GeneDx.

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.

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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.

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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.

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.

We expect incrementally less concentration among third-party payors following the exits from reproductive health and somatic tumor testing.

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.

We have experienced incrementally less concentration among third-party payors following the exits from reproductive health and somatic tumor testing in 2022.

Raw Materials and Suppliers

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Transitioning to a new supplier would be time consuming and expensive, may result in interruptions in operations, could affect the performance specifications of our laboratory operations or could require that we revalidate our tests.

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.

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.

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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.

In this regard, we have three pending U.S.

non-provisional utility patent applications and one patent application pending in the European Patent Office.

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.

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.

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.

The claim scope of any potentially issued patents stemming from the present applications may be narrowed from initial filings due to any amendments that may arise throughout their prosecution.

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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.

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Trade secrets

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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.

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.

Our team of nearly 1,000 individuals are champions of not only our organization, but our patients, providers and partners.

Our values guide our interactions.

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• Simplicity & Curiosity

Diversity and Inclusion

We believe that a diverse and inclusive workforce is important.

Our JEDI (Justice, Equity, Diversity and Inclusion) initiatives enable us to build a diverse and inclusive workplace that help make progress in our belief of equitability.

Every team has a JEDI goal to ensure we are accountable to one another and this commitment.

Talent Development

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We are committed to developing our workforce.

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CLIA requires such laboratories to be certified by the federal government and mandates compliance with various operational, personnel, facilities administration, inspections, quality control, quality assessment and proficiency testing requirements intended to ensure that testing services are accurate, reliable and timely.

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.

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.

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The biennial survey is conducted by the Centers for Medicare & Medicaid Services (“CMS”), a CMS agent (typically a state agency), or a CMS-approved accreditation organization.

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.

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.

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.

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.

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As a condition of state licensure, these state laws may require that laboratory personnel meet certain qualifications, specify certain quality control procedures or facility requirements, or prescribe record maintenance requirements.

We maintain state laboratory licenses for our Gaithersburg and Stamford facilities in Maryland, New York,

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California, Pennsylvania and Rhode Island;

our Stamford laboratory also maintains a Connecticut clinical laboratory permit.

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.

We maintain state laboratory licenses for our Gaithersburg facility in Maryland, New York, California, Pennsylvania and Rhode Island.

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.

If any states currently have or adopt similar licensure requirements in the future, we may be required to modify, delay or stop our operations in those states.

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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.

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.

We believe that we are in material compliance with CLIA and all applicable licensing laws and regulations.

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Such LDT testing is primarily under the purview of CMS and state agencies that provide oversight over clinical laboratory operations.

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

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).

In recent years, the FDA has stated it intends to end its policy of general enforcement discretion and regulate certain LDTs as medical devices.

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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.

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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.

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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 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:

Department of Transportation, the U.S.

Public Health Service, the United States Postal Service, the Office of Foreign Assets Control and the International Air Transport Association.

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.

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Federal and State Healthcare Fraud & Abuse Laws

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Federal and State Physician Self-Referral Prohibitions

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In addition, violations of the Stark Law may also serve as the basis for liability under the federal False Claims Act (the “FCA”), which can result in additional civil and criminal penalties.

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.

Federal and State Anti-Kickback Laws

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Additionally, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

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.

Penalties for violations of such laws include imprisonment and significant monetary fines and, in the case of the AKS, exclusion from federal health care programs.

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or paying or offering any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral of an individual to a laboratory and certain other entities or in exchange for an individual using the services of such entities.

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

to 10 years in jail, separate and apart from existing AKS liability.

Several EKRA exceptions are relevant to many common financial relationships involving clinical laboratories and may be relied upon if all of the elements of the applicable exception are satisfied.

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Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account all facts and circumstances.

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Other Federal and State Fraud & Abuse Healthcare Laws

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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.

Several states have enacted comparable false claims laws which may be broader in scope and apply regardless of payor.

The Social Security Act includes civil monetary penalty provisions that impose penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

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.

In addition, a person who offers or provides to a Medicare or Medicaid beneficiary any remuneration, including waivers of co-payments and deductible amounts (or any part thereof), that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services may be liable under the civil monetary penalties law.

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Any failure to comply with these laws and regulations could result in civil or criminal penalties against telehealth providers.

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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.

implementing regulations at 21 C.F.R.

Parts 11, 50, 54, 56, 58 and 812 and all equivalent legal requirements in other jurisdictions.

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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

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HIPAA privacy and security standards.

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.

It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the civil monetary penalty paid by the violator.

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The CCPA is enforceable through administrative fines of up to $2,500 for each violation, or $7,500 for intentional violations or where we have actual knowledge that the personal information relates to an individual under 16 years of age.

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.

In 2023, seven other states passed comprehensive consumer data privacy laws, and many others have introduced similar consumer privacy laws.

These new state privacy laws and any potential federal consumer privacy law will and would impose additional data protection obligations on covered businesses, including additional consumer rights, limitations on data uses, new audit requirements for higher risk data and opt outs for certain uses of sensitive data.

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These regulations and legislative developments have potentially far-reaching consequences and may require us to modify our data management and data use practices and incur substantial compliance expense.

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

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to our reputation, and loss of goodwill, any of which could have a material adverse effect on our operations, financial performance, and business.

Genetic Privacy and Testing Laws

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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.

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.

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.

goods or services.

Certain data protection laws, such as those in the European Union, (the “EU”) and United Kingdom, are comprehensive in nature and include significant requirements around the processing of personal information, while other jurisdictions may have laws less restrictive or prescriptive than those in the U.S.

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The information blocking regulations became effective on April 5, 2021.

Under the 21st Century Cures Act, health care providers that violate the information blocking prohibition will be subject to appropriate

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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.

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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.

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.

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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.

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.

None of our tests meet the current definition of advanced

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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.

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.

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.

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.

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.

For clinical diagnostic laboratory tests that are assigned a new or substantially revised code, initial payment rates for clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests will be assigned by the cross-walk or gap-fill methodology, as under prior law.

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Rates were held at 2020 levels during 2021 and 2022 and will continue to be held at such levels in 2023.

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).

PAMA codified Medicare coverage rules for laboratory tests by requiring any local coverage determination to be made following the local coverage determination process.

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Reimbursement and billing for diagnostic services is highly complex, and errors in billing potentially can result denied claims and/or in substantial obligations to repay overpayments to payors.

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.

Additionally, the audit requirements we must meet to ensure compliance with applicable laws and regulations, as well as our internal compliance policies and procedures, add further complexity to the billing process.

Other factors that complicate billing include:

• variability in coverage and information requirements among various payers;

• variability in coverage and information requirements among various payors;

• 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;

• disputes with payers as to the appropriate level of reimbursement.

• billings to payors with whom we do not have contracts;

• disputes with payors as to which party is responsible for payment;

• disputes with payors as to the appropriate level of reimbursement.

Depending on the reimbursement arrangement and applicable law, the party that reimburses us for our services may be:

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• a third party who provides coverage to the patient, such as an insurance company or MCO;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business