What changed in this filing

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Item 9A. Controls and Procedures

2025-02-20 compared with 2024-02-23 · 42 added, 55 removed, 199 unchanged (33% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

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.

Disclosure controls and procedures 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, 2024.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2023 because of the material weaknesses in internal control over financial reporting discussed below.

Notwithstanding the material weaknesses in internal control over financial reporting described below, our management has concluded that our consolidated financial statements included in this Annual Report on Form 10-K are fairly stated in all material respects in accordance with accounting principles generally accepted in the United States of America (“U.S.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2024, the end of the period covered by this Annual Report on Form 10-K.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

We do not expect that our disclosure controls and procedures, or our internal controls, will prevent all error and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

Under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer and oversight of the Board of Directors, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO framework).

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.

Material Weaknesses

Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024.

Previously Reported Material Weakness

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 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.

In connection with the preparation of the Annual Report on Form 10-K as of December 31, 2023, we previously reported the following material weakness in our internal control over financial reporting:

• 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”).

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 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.

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

Remediation of Previously-Reported Material Weakness

To remediate this material weakness, we completed the following actions:

• We hired key personnel and expanded available resources with experience designing and implementing ITGCs, and through the use of outside consultants.

• We performed a risk assessment over the IT systems used as part of financial reporting.

• We rationalized user roles and permissions and established 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 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.

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.

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.

• We strengthened and documented our procedures around ITGCs and communicated them to relevant personnel.

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

Accordingly, management has concluded that the material weaknesses has 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 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

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal controls, will prevent all error and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

On November 7, 2024 , a grantor annuity trust (the “GRAT”) of which Jason Ryan , our chairman and a director , is the trustee, entered into a written plan for the potential transfer of up to an aggregate of 141,356 shares of our Class A common stock (the “Ryan GRAT 10b5-1 Plan”).

The Ryan GRAT 10b5-1 Plan is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act and will be effective from November 19, 2025 to March 5, 2027 .

The Ryan GRAT 10b5-1 plan included a representation from the GRAT to the broker administering the plan that the GRAT was not in possession of any material nonpublic information regarding the Company or the securities subject to the plan.

A similar representation was made to us in a certification from Mr.

Ryan provided to us in connection with the adoption of the applicable plan under our insider trading policy.

Those representations were made as of the date of adoption of the Ryan GRAT 10b5-1 Plan or the certification, as applicable, and speak only as of those dates.

In making those representations, there is no assurance with respect to any material non-public information of which the GRAT or Mr.

Ryan was unaware, or with respect to any material non-public information acquired by the GRAT, Mr.

Ryan or us after the applicable date of the representation.

Other than as disclosed above, during the quarter ended December 31, 2024, none of our directors or officers adopted or terminated any “Rule 10b5-1 trading arrangements” or any “non-Rule 10b5-1 trading arrangements,” as each term is defined in Item 408 of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

22 unchanged sentences

8-K 1.1 01/30/2023

1.2 Sales Agreement, dated April 29, 2024, by and between GeneDx Holdings Corp.

and TD Securities (USA) LLC.

8-K 1.1 04/29/2024

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.

115 unchanged sentences

10-Q 10.3 05/09/2023

Employment Agreement by and between Dr.

Bryan Dechairo and GeneDx, LLC, dated as of October 10, 2024.

8-K 10.1 01/02/2025

Amendment to Form of Restricted Stock Unit Award Agreement under the 2023 Equity Inducement Plan.

19.1 Insider Trading Policy.

21.1 Subsidiaries of the Company.

16 unchanged sentences

Management Contract or Compensatory Plan

+ Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with

Regulation S-K Item 601(a)(5).

The Company agrees to furnish a copy of all omitted exhibits

and schedules to the SEC upon its request.

+ Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5).

The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

# The Company has omitted portions of the exhibit as permitted under Regulation S-K Item 601(b)(10).

9 unchanged sentences

(Principal Executive Officer)

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.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Katherine Stueland, Kevin Feeley and Heidi Chen, 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.

15 unchanged sentences

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