Sema4 Holdings Corp. (Nasdaq: SMFR) (“Sema4”), an AI-driven genomic and clinical data intelligence platform company, today reported the financial results for the third quarter ended September 30, 2021 and provided an update on key strategic and operational initiatives.

“We continued to make significant progress this quarter expanding our infrastructure while also building our platform of algorithms. These activities will allow us to better accommodate volume growth while increasing the resolution of data that each sample provides,” said Eric Schadt, PhD, Founder and Chief Executive Officer of Sema4. “The access to capital from our public markets transition has allowed us to scale investments in technology, infrastructure, and people, all with the aim to better serve our current and future health system partners to enhance patient care. It is early days in the journey and we exited the quarter seeing accelerating growth and a broadening scope of opportunity in front of us.”

Third Quarter & Recent Highlights

  • Diagnostic test volumes were up 36% compared to the same period of 2020, with 69,895 tests resulted during the third quarter of 2021 (excluding COVID-19 tests). This includes 166% growth in Oncology and 33% growth in Women’s Health.
  • Revenue in the third quarter increased 17% (excluding COVID-19 tests) compared to the same period of 2020, resulting in total revenue of $43.2 million compared to $38.6 million.
  • Lab capacity and informatics infrastructure continued to be built out, enabling significantly higher volumes in support of deeper penetration of existing health systems and onboarding of additional health systems.
  • Announced a fourth health system partnership, Avera Health, and the launch of a broad precision medicine initiative to leverage Sema4’s health intelligence platform to curate data and create predictive system-wide modeling.
  • Centrellis now contains over 11.9 million de-identified individual clinical records, including over 500,000 with matching clinical genomic profiles, making it one of the largest known data set of this kind in the world.
  • Launched Sema4 Elements™, our portfolio of data science-driven products and services to support reproductive and generational health.
  • Published two papers in collaboration with the Icahn School of Medicine at Mount Sinai focused on the prediction of Postpartum Hemorrhage using Sema4 machine learning algorithms, derived from large-scale, comprehensive real-world data, to predict clinical outcomes and drive meaningful changes in the standard of care.
  • Strengthened executive team by adding a world-renowned expert in computational biology, Gustavo Stolovitzky, as Chief Science Officer in September.

Third Quarter Financial Results

Total revenue for the third quarter of 2021 was $43.2 million, compared to $38.6 million in the third quarter of 2020. Revenue growth was driven primarily by an increase of volume from Women’s Health and Oncology testing.

Cost of services was $58.8 million in the third quarter of 2021, compared to $36.5 million in the same period of 2020. The increase was a result of expansion at our Stamford clinical laboratory, increased headcount, investments in systems and higher logistical and supply costs due to increased volumes in our non-COVID business. We anticipate these new investments will enable us to support continued volume growth with significantly higher cost efficiencies over time.

Adjusted cost of service, which excludes stock-based compensation expense was $55.1 million in the third quarter of 2021, compared to $33.0 million in the same period of 2020.

Operating expenses for the third quarter of 2021 were $74.0 million, compared to operating expenses of $58.1 million in the third quarter of 2020. The increase in operating expenses was due in part to higher personnel-related costs as we build out our laboratory operations and investment in our health intelligence platform, as well as incremental public company expenses.

Adjusted operating expenses, which excludes stock-based compensation and non-recurring transaction costs associated with our go public process, for the third quarter of 2021 were $59.3 million, compared to $32.1 million in the same period of 2020.

Net income for the third quarter of 2021 was $31.4 million compared to a net loss of ($56.6) million for the same period in 2020. Net income included other income of $122.2 million related to the change in fair market value of warrant and earn-out contingent liabilities recorded in connection with the merger with CM Life Sciences, Inc.

Total cash, including cash equivalents, was $461.3 million as of September 30, 2021. As of November 8, 2021, Sema4 had 241,261,362 outstanding shares of Class A common stock.

“We are in growth mode and made a number of investments in the quarter to capitalize on the current and future opportunities for growth at Sema4,” said Isaac Ro, Chief Financial Officer of Sema4. “We expect those investments to drive improved financial performance in subsequent quarters with higher reimbursement in our oncology portfolio, enhanced sales force productivity, and greater efficiency in our lab operations.”

Full Year and Fourth Quarter 2021 Guidance

Sema4 expects full year 2021 total revenue to be in the range of $201 million to $204 million. Fourth quarter resulted volume is expected to be in the range of 73,000 to 79,000 tests (excluding COVID-19 tests). This range implies 20% to 30% resulted volume growth (excluding COVID-19 tests) compared to the fourth quarter of 2020 and 9% growth (excluding COVID-19) at the midpoint compared to the third quarter of 2021.

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Webcast and Conference Call Details

Sema4 will host a conference call today, November 15, 2021, at 4:30 p.m. Eastern Time. Interested parties may access the live teleconference by dialing (844) 631-4065 for domestic callers or (929) 517-0920 for international callers, followed by conference ID: 4636627. A live and archived webcast of the event will also be available on the “Events” section of the Sema4 investor relations website at https://ir.sema4.com/.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding our future performance and our market opportunity, including our long-term goal for 2023 revenue, and our expectations for our growth and future investment in our business. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) the ability to implement business plans, goals and forecasts, and identify and realize additional opportunities, (ii) the risk of downturns and a changing regulatory landscape in the highly competitive healthcare industry, and (iii) the size and growth of the market in which we operate. In particular, our ability to achieve our long-term goal for 2023 revenue is highly dependent on a number of variables, including our ability to increase the number of billable tests and achieve reimbursement for our tests from third-party payers, our ability to successfully execute our technology and business development plans and growth strategy, our ability to compete in rapidly developing markets, our ability to demonstrate the clinical utility of and continue to commercialize our platforms including Centrellis and Traversa, and the continuation of favorable regulations affecting the markets in which we operate. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of our Registration Statement on Form S-1 filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 4, 2021 and other documents filed by us from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. We do not give any assurance that we will achieve our expectations. Furthermore, our long-term goal for 2023 revenue should not be looked upon as “guidance” of any sort. 

About Sema4

Sema4 is a patient-centered health intelligence company dedicated to advancing healthcare through data-driven insights. Sema4 is transforming healthcare by applying AI and machine learning to multidimensional, longitudinal clinical and genomic data to build dynamic models of human health and defining optimal, individualized health trajectories. Centrellis®, our innovative health intelligence platform, is enabling us to generate a more complete understanding of disease and wellness and to provide science-driven solutions to the most pressing medical needs. Sema4 believes that patients should be treated as partners, and that data should be shared for the benefit of all.

For more information, please visit sema4.com and connect with Sema4 on Twitter, LinkedIn, Facebook and YouTube.

Investor Relations Contact:Joel Kaufmaninvestors@sema4.com

Media Contact:Radley Mossradley.moss@sema4.com

Sema4 Holdings Corp.Condensed Balance Sheets(In thousands, except per share amounts)

    September 30,2021 (unaudited)   December 31, 2020
Assets        
Current assets:        
Cash and cash equivalents   $ 461,276     $ 108,132  
Accounts receivable   21,257     32,044  
Due from related parties   413     289  
Inventory   31,174     24,962  
Prepaid expenses   20,205     4,557  
Other current assets   4,186     4,124  
Total current assets   $ 538,511     $ 174,108  
Property and equipment, net   60,333     63,110  
Restricted cash   900     10,828  
Other assets   3,613     3,596  
Total assets   $ 603,357     $ 251,642  
         
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)    
Current liabilities:        
Accounts payable and accrued expenses   $ 43,079     $ 38,591  
Due to related parties   1,425     1,425  
Current contract liabilities   493     1,783  
Other current liabilities   26,369     31,643  
Total current liabilities   $ 71,366     $ 73,442  
Long-term debt, net of current portion   11,000     18,971  
Stock-based compensation liabilities       131,989  
Other liabilities   21,699     22,852  
Warrant liability   46,629      
Earn-out contingent liability   61,400      
Total liabilities   $ 212,094     $ 247,254  
         
Commitments and contingencies (Note 9)        
         
Redeemable convertible preferred stock:        
Series A-1 redeemable convertible preferred stock, $0.00001 par value: 0 and            
55,399,943 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $0 and $55,000 at September 30, 2021 and December 31, 2020, respectively       51,811  
Series A-2 redeemable convertible preferred stock, $0.00001 par value: 0 and            
64,718,940 shares authorized at September 30, 2021 and December 31, 2020, respectively; 0 and 49,700,364 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $0 and $49,342 at September 30, 2021 and December 31, 2020, respectively       46,480  
Series B redeemable convertible preferred stock, $0.00001 par value: 0 and 41,937,960            
shares authorized, issued and outstanding at September 30, 2021 and December 31,2020, respectively; aggregate liquidation preference of $0 and $204,302 at September 30, 2021 and December 31, 2020, respectively       118,824  
Series C redeemable convertible preferred stock, $0.00001 par value: 0 and 24,497,317            
shares authorized at September 30, 2021 and December 31, 2020, respectively; 0 and 24,496,946 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $0 and $121,397 at September 30, 2021 and December 31, 2020, respectively       117,324  
Redeemable convertible preferred stock       334,439  
Stockholders’ equity (deficit):        
Preferred Stock, $0.0001 par value: 1,000,000 and 0 shares authorized at September            
30, 2021 and December 31, 2020, respectively; 0 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively        
Class A common stock: $0.0001 par value, 380,000,000 shares authorized,            
240,190,402 shares issued and outstanding at September 30, 2021 and $0.00001 par value: 309,584,750 shares authorized, 124 shares issued and outstanding at December 31, 2020   24      
Class B convertible common stock, $0.00001 par value: 0 and 18,575,085 shares            
authorized at September 30, 2021 and December 31, 2020, respectively; 0 and 130,557 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively        
Additional paid-in capital   926,253     $  
Accumulated deficit   (535,014 )   (330,051 )
Total stockholders’ equity (deficit)..............................................................................................................................................   391,263     (330,051 )
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)   $ 603,357     $ 251,642  

Sema4 Holdings Corp.Condensed Statements of Operations and Comprehensive Loss(In thousands, except share amounts)(Unaudited)

    Three months ended September 30,   Nine months ended September 30,
    2021   2020   2021   2020
Revenue                
Diagnostic test revenue (including related party                                
revenue of $20 and $86 for the three months ended September 30, 2021 and 2020, respectively and $90 and $186 for the nine months ended September 30, 2021 and 2020, respectively)   $ 41,410     $ 37,893     $ 148,973     $ 113,759  
Other revenue (including related party revenue of                        
$65 and $0 for the three months ended September 30, 2021 and 2020, respectively and $153 and $0 for the nine months ended September 30, 2021 and 2020, respectively)....................................................................................   1,768     715     5,421     1,606  
Total revenue   43,178     38,608     154,394     115,365  
Cost of services (including related party expenses of                        
$656 and $452 for the three months ended September 30, 2021 and 2020, respectively and $1,942 and $1,485 for the nine months ended, September 30, 2021 and 2020 respectively)........................................................................................   58,752     36,530     180,195     111,754  
Gross (loss) profit   (15,574 )   2,078     (25,801 )   3,611  
Research and development   17,831     19,083     82,916     41,540  
Selling and marketing   22,121     12,735     69,937     33,154  
General and administrative   33,230     24,342     147,941     39,627  
Related party expenses   847     1,933     3,532     6,239  
Loss from operations   (89,603 )   (56,015 )   (330,127 )   (116,949 )
                 
Other income (expense), net:                
Change in fair market value of warrant and earn-out contingent liabilities   122,171         122,171      
Interest income   27     63     57     473  
Interest expense   (683 )   (637 )   (2,128 )   (1,826 )
Other income (expense), net   (520 )   (26 )   5,064     2,645  
Total other income (expense), net   120,995     (600 )   125,164     1,292  
Income (loss) before income taxes   $ 31,392     $ (56,615 )   $ (204,963 )   $ (115,657 )
Income tax provision                
Net income (loss) and comprehensive income (loss)   $ 31,392     $ (56,615 )   $ (204,963 )   $ (115,657 )
Weighted average shares outstanding of Class A common stock for basic earnings   185,680,394     124     63,121,738     124  
Weighted average shares outstanding of Class A common stock for diluted earnings   210,330,946     124     63,121,738     124  
Basic net income (loss) per share, Class A common stock   $ 0.17     $ (456,573 )   $ (3.25 )   $ (932,718 )
Diluted net income (loss) per share, Class A common stock   $ 0.15     $ (456,573 )   $ (3.25 )   $ (932,718 )

Sema4 Holdings Corp.Condensed Consolidated Statements of Cash Flows(In thousands) (Unaudited)

    Nine months ended September 30,
    2021   2020
Operating activities        
Net loss   $ (204,963 )   $ (115,657 )
         
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization expense...................................................................   16,012     8,147  
Stock-based compensation expense   182,454     30,073  
Change in fair value of warrant and contingent liabilities   (122,171 )    
Provision for excess and obsolete inventory   1,122      
Non-cash lease expense   1,174     2,203  
Loss on extinguishment of debt   301      
Change in operating assets and liabilities:        
Accounts receivable   10,787     (3,159 )
Inventory   (7,334 )   (8,105 )
Prepaid expenses and other current assets........................................................................   (15,710 )   516  
Due to/from related parties   (124 )   617  
Other assets   (17 )   1,174  
Accounts payable and accrued expenses...........................................................................   4,685     (537 )
Contract liabilities   (1,290 )   (135 )
Other current liabilities   (3,375 )   10,068  
Net cash used in operating activities.........................................................................................   (138,449 )   (74,795 )
         
Investing activities        
Purchases of property and equipment ......................................................................................   (4,344 )   (17,310 )
Development of internal-use software assets   (8,749 )   (3,165 )
Net cash used in investing activities.........................................................................................   (13,093 )   (20,475 )
         
Financing activities        
Proceeds from issuance of Series C redeemable convertible preferred stock, net of issuance costs       117,326  
Proceeds from PIPE issuance   350,000      
Proceeds from equity infusion from the merger, net of redemptions.....................................   442,684      
Legacy Sema4 Shareholder payout   (230,665 )    
Payment of transaction costs   (51,760 )    
Stock Appreciation Rights payout   (3,795 )    
Repayment of long-term debt   (8,741 )    
Capital lease principal payments   (2,960 )   (3,384 )
Long-term debt principal payments   (1,000 )    
Proceeds from long-term debt       6,000  
Exercise of stock options   995      
Net cash provided by financing activities   494,758     119,942  
         
Net increase in cash, cash equivalents and restricted cash   343,216     24,672  
Cash, cash equivalents and restricted cash, at beginning of period   118,960     115,006  
Cash, cash equivalents and restricted cash, at end of period   $ 462,176     $ 139,678  
         
Supplemental disclosures of cash flow information        
Cash paid for interest   $ 2,128     $ 1,826  
Cash paid for taxes   $ 50     $  
Purchases of property and equipment in accounts payable and accrued expenses   $ 193     $ 268  
Software development costs in accounts payable and accrued expenses   $ 1,228     $ 1,629  
Assets acquired under capital leases obligations   $ 641     $ 5,637  

Sema4 Holdings Corp.Reconciliation of Revenue to our Adjusted Gross Profit & Adjusted EBITDA (In thousands)

The following is a reconciliation of revenue to our Adjusted Gross Profit and Adjusted Gross Margin for the three months ended September 30, 2021 and 2020:

    Three months ended September 30,
    2021   2020
    (in thousands)
Revenue           $ 43,178       $ 38,608  
Cost of services           58,752       36,530  
Gross (Loss) Profit            (15,574 )     2,078  
Gross Margin           (36 ) %   5 %
Add:                
Stock-based compensation expense           3,699       3,506  
Adjusted Gross (Loss) Profit            $ (11,875 )     $ 5,584  
Adjusted Gross Margin            (28 ) %   14 %

The following is a reconciliation of our net loss to Adjusted EBITDA for the three months ended September 30, 2021 and 2020:

    Three months ended September 30,
    2021   2020
    (in thousands)
Net Income (loss)           $ 31,392     $ (56,615 )
Interest expense, net (1)           656     574  
Depreciation and amortization           5,491     3,067  
Stock-based compensation expense           18,011     29,453  
Transaction costs (2)           391     —   
Change in fair market value of warrant and earn-out contingent liabilities (3)           (122,171 )   —   
Other (income) expense, net (4)           343     26  
Adjusted EBITDA           $ (65,887 )   $ (23,495 )
_______________________(1)   Represents the total of Interest Expense related to our capital leases and interest-bearing loans and Interest Income on money market funds.(2)   Represents professional service costs incurred in connection with pursuing the Business Combination transaction that did not meet the requirement for capitalization.(3)   For the three months ended September 30, 2021, represents the change in fair market value of the liabilities associated with our public warrants and private placement warrants and the earn-out shares issuable under the terms of the Merger Agreement.(4)   For the three months ended September 30, 2021, consists primarily of penalties related to early extinguishment of debt.

 

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