Sema4 Holdings Corp. shares fell 30% to $1.68 after the company lowered its revenue guidance for the year and unveiled further restructuring measures.
The health intelligence company after the bell Monday lowered its 2022 revenue guidance to $245 million to $255 million, versus prior guidance of $305 million to $315 million. Sema4 said the guidance includes a more conservative outlook on volumes and pricing trends within reproductive health product lines.
The company said it is exiting the somatic tumor testing business, including closing its clinical laboratory in Branford, Conn., effective December 31. The company said it is eliminating 250 positions, representing 13% of its workforce.
The company said it would move its hereditary cancer testing operations from Stamford, Conn., to Gaithersburg, Md., at the end of the third quarter.
“Our new management team has been reviewing our business lines and is acutely focused on assessing what’s working and what’s not. And as a result, we’re making changes to ensure we strengthen our foundation and financials,” Chief Executive Katherine Stueland said in the company’s conference call.
Sema4 in early May completed the acquisition of GeneDx from OPKO Health.
The company said its revenue guidance excludes $48 million of revenue generated from GeneDx for the first four months of 2022 prior to the close of the deal.
“We expect revenue in the second half in the range of $154 million to $164 million, and gross margins in the range of 15% to 20%,” said Joel Kaufman, vice president of finance and corporate development. “This trajectory will put us well on our way to our long-term target of greater than 50% gross margin. We plan to reduce our cash spend significantly throughout 2022 and finish 2022 with at least $165 million in cash and equivalents.”
Second-quarter revenue was $36.2 million, down from $47.0 million in the second quarter of 2021. FactSet consensus was $67.6 million. Excluding $30.1 million of prior period revenue adjustments recorded in the second quarter, total revenue would have been $66.3 million for the quarter.
“As a result of the negotiations to this point and an assessment of our current reimbursement landscape for third-party payers, Sema4 has reversed $30.1 million of revenue this quarter related to prior periods,” Kevin Feeley, senior VP of operations and head of GeneDx said. “We believe this reversal of revenue accurately reflects and captures the potential risk of recoupment from our entire portfolio of third-party payers, which is a risk that is common in our industry.”
The company said founder Eric Schadt is resigning as president and chief research and development officer.
With the closing of the GeneDx deal in May, Ms. Stueland joined Sema4 as CEO. Mr. Schadt, founder and former CEO of Sema4, would serve as president and chief research and development officer, the company said in May.