Related Party Transactions

9 Months Ended

Sep. 30, 2022

Related party revenues

Related party revenues primarily include diagnostic testing revenues generated by GeneDx from BioReference Laboratories, Inc. (“BRLI”), which is a subsidiary of OPKO. The prices charged represent market rates. Revenue recorded from this contract was $0.6 million and $1.0 million for the three and nine months ended September 30, 2022, respectively.

Related party expenses

For three months ended September 30, 2022 and 2021, the Company incurred certain related party costs. There were no expenses recognized under the Transition Services Agreement with ISMMS (the “ISMMS TSA”) for the three months ended September 30, 2022 and 2021. There were no expenses recognized under the ISMMS TSA for the nine months ended September 30, 2022 and $1.4 million for the nine months ended September 30, 2021 which is presented within related party expenses in the condensed consolidated statements of operations and comprehensive loss. The Company had no ISMMS TSA payables due to ISMMS as of September 30, 2022 and December 31, 2021. The ISMMS TSA expired on March 28, 2021.

Expenses recognized pursuant to other service arrangements with ISMMS, including certain sub-lease arrangements the Company has through ISMMS, totaled $2.0 million and $1.5 million for the three months ended September 30, 2022 and 2021, respectively and $6.2 million and $4.1 million for the nine months ended September 30, 2022 and 2021, respectively. These amounts include certain lease expenses the Company incurs and pay to ISMMS for certain sub-lease arrangements. They are included in either cost of services or related party expenses on the condensed consolidated statements of operations and comprehensive loss depending on the particular activity to which the costs relate. Payables due to ISMMS for the other service arrangements were $1.5 million and $2.6 million as of September 30, 2022 and December 31, 2021, respectively. These amounts include unpaid lease payments the Company accrued for the payments to be made to ISMMS and are included within due to related parties on the Company’s condensed consolidated balance sheets.

Additionally, the Company has purchased $1.3 million of diagnostic testing kits and materials and $1.3 million was recorded in cost of services for the nine months ended September 30, 2022 from an affiliate of a member of the Board of

Directors who has served in the role since July 2021. The prices paid represent market rates. Payables due were $0 million and $0.1 million as of September 30, 2022 and December 31, 2021, respectively.

GeneDx and OPKO entered into a Transition Services Agreement dated as of April 29, 2022 (the “OPKO TSA”) pursuant to which OPKO has agreed to provide, at cost, certain services in support of the Acquisition of the GeneDx business through December 31, 2022, subject to certain limited exceptions, in order to facilitate the transactions contemplated by the Acquisition Merger Agreement, including human resources, information technology support, and finance and accounting. The Company recognized $0.5 million and $0.8 million in costs for the three and nine months ended September 30, 2022, respectively. As of September 30, 2022, $0.3 million was unpaid and included in due to related parties in condensed consolidated balance sheets.

The Company also recorded $4.5 million of receivables from OPKO related to the Acquisition closing working capital adjustment. This amount is presented as other current assets in condensed consolidated balance sheets as of September 30, 2022.

Total related party costs are included within cost of services and related party expenses in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):


	Three months ended September 30,
	2022		2021
Cost of services	$	1,103	$	656
Related party expenses	1,697		847
Total related party costs	$	2,800	$	1,503


	Nine months ended September 30,
	2022		2021
Cost of services	$	3,507	$	1,942
Related party expenses	4,712		3,532
Total related party costs	$	8,219	$	5,474