What changed in this filing

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Item 9A. Controls and Procedures

2024-02-23 compared with 2023-03-16 · 89 added, 66 removed, 165 unchanged (48% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2023.

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Based on this evaluation, due to the material weaknesses described below, management concluded that the Company’s internal control over financial reporting were not effective.

As discussed elsewhere in this Annual Report on Form 10-K, we completed our acquisition of Legacy GeneDx on April 29, 2022.

The SEC permits companies to exclude acquisitions from their assessment of internal control over financial reporting during the first year in which the acquisition was completed, and our management has elected to exclude Legacy GeneDx from our assessment as of December 31, 2022.

Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the preparation of Legacy Sema4's audited financial statements as of December 31, 2020, we previously identified material weaknesses in our internal controls over financial reporting.

Certain of these material weaknesses remain unremediated as of December 31, 2022.

Specifically, as of December 31, 2022, the material weaknesses that remain unremediated include the following:

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• We do not have sufficient, qualified finance and accounting staff with the appropriate U.S.

GAAP technical accounting expertise to effectively maintain processes and controls that allow for the timely production of accurate financial information in accordance with internal financial reporting timelines, commensurate with our size and the nature and complexity of our operations.

In connection with the preparation of the Annual Report on Form 10-K as of December 31, 2022, we previously reported three material weaknesses in our internal controls over financial reporting, as follows:

• We did not have sufficient, qualified finance and accounting staff with the appropriate U.S.

GAAP technical accounting expertise to effectively maintain processes and controls that allow for the timely production of accurate financial information with internal financial reporting timelines, commensurate with our size and the nature and complexity of our operations.

• We did not maintain formal processes and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over the preparation and review of account reconciliations, journal entries, classification of certain costs, non-recurring complex transactions and the accounting in accordance with U.S.

• Our accounting and operating systems lacked controls over access, and program change management that are needed to ensure access to financial data is adequately restricted to appropriate personnel, including consideration of the appropriate segregation of duties.

As a result, it is possible that the Company’s business process controls that depend on the accuracy and completeness of data or financial reports generated by the Company's information technology system could be adversely affected due to the lack of operating effectiveness of the information technology general controls (“ITGCs”).

As a result, it is possible that the Company’s business process controls that depend on the accuracy and completeness of data or financial reports generated by the Company's information technology

system could be adversely affected due to the lack of operating effectiveness of the information technology general controls (“ITGCs”).

Of the three previously reported material weaknesses noted above, the first two items have been remediated as of December 31, 2023 and due to significant enhancement during 2023, only portions of the third remains unremediated as of December 31, 2023.

Specifically, our accounting and operating systems lacked controls over user access and program change management that are needed to ensure access to financial data is adequately restricted to appropriate personnel, including consideration of the appropriate segregation of duties.

Remediation Plan

Our management is actively engaged and committed to taking the steps necessary to remediate the control deficiencies that constituted the material weaknesses.

The Company has continued to improve its organizational capabilities and continues to implement processes and controls to remediate the material weaknesses.

During 2021 and 2022, we made the following enhancements to our control environment:

• We have hired key personnel, obtained qualified accountants through the acquisition of Legacy GeneDx, and supplemented interim staffing needs with third-party consultants that have the appropriate technical accounting skills to enable us to achieve complete, accurate, and timely financial accounting and reporting.

In addition, we have reallocated responsibilities across the organization to ensure that the appropriate level of knowledge and experience is applied based on risk and complexity of transactions.

• We added information technology employees with appropriate experience, certification, education and training to the organization to strengthen our IT team, to enable us to improve the ITGCs over our accounting and operating systems.

• We engaged outside consultants to assist in the design, implementation, documentation, and remediation of internal controls that address the relevant risks, and to assist us in the evaluation of our relevant accounting and operating systems, to enable us to improve our processes and controls over financial reporting.

• We provided training to internal control performers in order to enhance their level of understanding over the appropriate design, implementation and effectiveness of controls.

• We have strengthened and documented our internal accounting policies and procedures and communicated the policies to relevant personnel.

• We have completed the design of our internal controls, and have completed detailed remediation plans at the risk and control level.

Management has been actively engaged in remediation efforts to address the material weaknesses throughout 2022 and these efforts will continue into fiscal year 2023.

While we believe significant progress was made in 2022 to enhance and strengthen our internal control over financial reporting, material control weaknesses are not considered remediated until new internal controls have been operational for a sufficient period of time, are tested, and management concludes that these controls are operating effectively.

As of December 31, 2022, there was not a sufficient period of time available to sufficiently test nor conclude that these controls are operating effectively.

We will continue to monitor the effectiveness of our

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remediation measures in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures, and we will make any changes to the design of our plan and take such other actions that we deem appropriate given the circumstances.

Our management is actively engaged and committed to taking the steps necessary to remediate the material weakness over user access and program change management in order to establish a strong internal control environment.

During 2023, we designed and implemented the following measures as part of the remediation efforts over the lack of operating effectiveness of the information technology general controls (“ITGCs”):

• We expanded the available resources with experience designing and implementing ITGCs, through hired information technology (“IT”) employees and use of outside consultants.

• We implemented role redesign for certain systems, including rationalization user roles and permissions and establishing appropriate segregation of duties, where applicable.

• We implemented process improvements and standardized certain practices across relevant systems, including access provisioning, deprovisioning and user access review (UAR) processes.

• We conducted training for personnel responsible for internal control performers to deepen their comprehension of risk assessment concepts and to refine their execution of controls pertaining to financial reporting.

• We strengthened and documented our accounting policies and procedures around ITGCs and communicated the policies to relevant personnel.

• We have implemented action plans to address remaining issues that still exist within user access and change management, and continue to enforce consistent execution of key internal control procedures.

While significant progress has been made to strengthen the design and operating effectiveness of our ITGCs, management has concluded that as of December 31, 2023, there was not a sufficient period of time available to sufficiently test nor conclude that enhanced internal controls were fully implemented and operating effectively.

We will continue to monitor the effectiveness of our remediation measures in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures, and we will make any changes to the design of our plan and take such other actions that we deem appropriate given the circumstances.

We will continue to monitor the effectiveness of ITGC remediation actions in connection with future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures.

Assessment results will be used to validate the efficacy of our ITGC remediation efforts and identify any additional actions necessary to ensure ongoing design and operating effectiveness.

Remediation of Previously-Reported Material Weaknesses

As of December 31, 2023, management believes the following two previously reported material weaknesses have been remediated:

• We did not have sufficient, qualified finance and accounting staff with the appropriate U.S.

To remediate these material weaknesses, the Company documented and implemented the following actions:

• We hired key personnel, obtained qualified accountants and retained additional resources with the appropriate technical accounting skills to achieve complete, accurate, and timely financial accounting and reporting.

In addition, we formalized roles and review responsibilities to align the team’s skills and experience, including consideration related to the segregation of duties, to the risk and complexity of our transactions.

• We completed a gap analysis of the processes supporting our internal control over financial reporting to identify areas where new controls are needed and where existing controls required improvement.

Based on that analysis, we formalized detailed remediation plans at the risk and control level to improve our internal control framework.

• We strengthened and documented our internal accounting policies and procedures and communicated them to all relevant personnel.

• We standardized business practices and implemented various improvements within financial functional areas, including account reconciliation reviews and automation of certain close processes.

Management believes it has effectively designed and tested the operating effectiveness related to the previously-reported material weaknesses noted above.

Accordingly, management has concluded that these material weaknesses have been remediated because each component of the material weakness has been operating effectively for a sufficient period of time.

Changes in Internal Control Over Financial Reporting

Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the fourth quarter of 2023.

Except as described above, there were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, other than as described herein.

We are continuing to take steps to remediate the material weakness in our internal control over financial reporting, as discussed above.

Except as described above with respect to the remediation of certain previously-reported material weaknesses, there were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We continue to take steps to remediate the material weakness in our information technology general controls over financial reporting, as discussed above.

Inherent Limitation on the Effectiveness of Internal Control

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Other Information

As previously disclosed, we expect to call a special meeting of stockholders for the approval of the issuance of the additional 22,336,624 shares of Class A common stock in our registered direct offering for purposes of complying with Nasdaq listing rules.

At the special meeting, we also intend to seek stockholder approval of a reverse stock split of our outstanding shares of Class A common stock at a ratio to be set by our board of directors within a range approved by our stockholders, an amendment to our certificate of incorporation to limit the liability of certain of our officers as permitted pursuant to recent amendments to the Delaware corporate law, and an amendment to our 2021 Equity Incentive Plan to increase the aggregate number of shares of Class A common stock authorized for issuance under the plan by 26,000,000 shares.

Other Information

Following the expiration of his employment agreement on December 31, 2023 in accordance with its terms, on February 23, 2024, Jason Ryan resigned from his officer position as the Executive Chairman of the Company, effective February 23, 2024.

Ryan continues to serve as a member of and as the Chairman of the Board of Directors.

Rule 10b5-1 Plan Adoptions and Modifications

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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The information required by this Item is incorporated by reference from our definitive proxy statement for our 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2023.

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Exhibits, Financial Statement Schedules

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Description of Exhibit Form Exhibit Filing Date Filed Herewith

1.1 Underwriting Agreement by and between GeneDx Holdings Corp.

and Jefferies LLC, dated January 26, 2023.

8-K 1.1 01/30/2023

2.1+ Agreement and Plan of Merger, dated February 9, 2021, by and among CMLS, Merger Sub and Legacy Sema4, as amended by Amendment to Agreement and Plan of Merger dated May 3, 2021.

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8-K 3.1 07/28/2021

3.2 Certificate of Amendment of Restated Certificate of Incorporation of Sema4 Holdings Corp.

3.2 First Certificate of Amendment of Restated Certificate of Incorporation of Sema4 Holdings Corp.

8-K 3.1 01/09/2023

3.3 Second Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of GeneDx Holdings Corp.

8-K 3.1 04/17/2023

3.4 Third Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of GeneDx Holdings Corp.

8-K 3.1 04/28/2023

3.5 Amended and Restated Bylaws of GeneDx Holdings Corp.

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8-K 10.1 09/04/2020

4.4 Warrant to Purchase Stock, dated October 27, 2023, by and among the Company and Perceptive Credit Holdings IV, LP.

8-K 4.1 10/30/2023

4.5 Description of Securities.

3 unchanged sentences

8-K 10.4 07/28/2021

10.3* 2021 Equity Incentive Plan.

10.3* GeneDx Holdings Corp.

Amended and Restated 2021 Equity Incentive Plan .

8-K 10.1 04/17/2023

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10.4* Form of Stock Option Agreement under the 2021 Equity Incentive Plan.

6 unchanged sentences

8-K 10.9 07/28/2021

10.8* Amended and Restated Employment Agreement of Eric Schadt.

10.8* GeneDx Holdings Corp.

2023 Equity Inducement Plan.

8-K 10.1 07/24/2023

10.9* Form of Option Award Agreement under the 2023 Equity Inducement Plan.

8-K 10.2 07/24/2023

10.10* Form of Restricted Stock Unit Award Agreement under the 2023 Equity Inducement Plan.

8-K 10.3 07/24/2023

10.11 Sub-Sublease, dated as of June 6, 2017, by and between Icahn School of Medicine at Mount Sinai and the Company, as amended July 31, 2019.

24 unchanged sentences

S-8 99.6 09/27/2021

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10.23 Loan and Security Agreement, dated as of November 15, 2021, between Silicon Valley Bank, the Company and Sema4 OpCo, Inc.

10-Q 10.26 11/15/2021

10.22 Lockup Agreement, dated as of February 9, 2021, by and among the Company and the stockholder parties identified therein.

8-K 10.2 02/11/2021

10.24 Subscription Agreement, dated as of February 9, 2021, by and among the Company and the subscriber parties thereto.

10 unchanged sentences

10-K 10.31 03/14/2022

10.30* Amendment No.

1 to Executive Chairman Agreement.

8-K 10.1 04/14/2023

10.31+ Transition Services Agreement, dated as of April 29, 2022, by and between GeneDx, Inc.

4 unchanged sentences

8-K 10.2 05/02/2022

10.31* Amendment No.1 to the Amended and Restated Employment Agreement of Eric Schadt, dated June 14, 2022

8-K 10.1 06/14/2022

10.33* Employment Agreement of Kevin Feeley, dated January 14, 2022.

10-K 10.32 03/16/2023

10.34* Amendment No.

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1 to BioMe Biospecimen and Data Access Agreement, dated as of January 19, 2023, by and between Icahn School of Medicine at Mount Sinai and Sema4 OpCo, Inc.

10-K 10.34 03/16/2023

10.36 2022 Replacement Promissory Note.

10.36* Separation Agreement, dated as of August 12, 2022, by and between Sema4 Holdings Corp.

and Eric Schadt

10-K 10.35 03/16/2023

10.37 Credit Agreement and Guaranty, dated October 27, 2023, by and among the Company and Perceptive Credit Holdings IV, LP.

8-K 10.1 10/30/2023

10.38 Security Agreement, dated October 27, 2023, by and among the Company and Perceptive Credit Holdings IV, LP.

8-K 10.2 10/30/2023

10.39 Form of Subscription Agreement.

8-K 10.1 01/30/2023

10.40+ Letter Agreement, Amendment No.

2 to Sub-Sublease, dated as of March 20, 2023, by and between Icahn School of Medicine at Mount Sinai and the Company.

10-Q 10.3 05/09/2023

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23.1 Consent of Ernst & Young LLP, independent registered accounting firm for GeneDx Holdings Corp.

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24.1 Power of Attorney (included on signature page to this Annual Report on Form 10-K).

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Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.SCH XBRL Taxonomy Extension Schema Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document X

101.LAB XBRL Taxonomy Extension Labels Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X

97.1 Policy Relating to Recovery of Erroneously Awarded Compensation.

101.INS Inline XBRL Instance Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X

101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X

104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)

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We have elected not to include such summary information.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GENEDX HOLDINGS CORP.

March 16, 2023 By:

February 23, 2024 By:

/s/ Katherine Stueland

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(Principal Executive Officer)

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Katherine Stueland, Jason Ryan and Kevin Feeley and each or any one of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the United States Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Katherine Stueland, Kevin Feeley and Devin Schaffer, and each or any one of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the United States Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Katherine Stueland Chief Executive Officer and Director March 16, 2023

/s/ Katherine Stueland Chief Executive Officer and Director February 23, 2024

Katherine Stueland (Principal Executive Officer)

/s/ Kevin Feeley Chief Financial Officer March 16, 2023

/s/ Kevin Feeley Chief Financial Officer February 23, 2024

Kevin Feeley (Principal Financial Officer)

/s/ Jason Ryan Executive Chairman and Director March 16, 2023

Casdin Director March 16, 2023

/s/ Dennis Charney Director March 16, 2023

Dennis Charney

/s/ Emily Leproust Director March 16, 2023

/s/ Jason Ryan Chairman of the Board February 23, 2024

Casdin Director February 23, 2024

/s/ Emily Leproust Director February 23, 2024

Emily Leproust

/s/ Keith Meister Director March 16, 2023

/s/ Keith Meister Director February 23, 2024

Keith Meister

/s/ Joshua Ruch Director March 16, 2023

/s/ Joshua Ruch Director February 23, 2024

/s/ Richard Pfenninger, Jr.

Director March 16, 2023

Director February 23, 2024

Richard Pfenninger, Jr.

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/s/ Rachel Sherman Director March 16, 2023

Rachel Sherman

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 9A. Controls and Procedures