AI-backed genomic and clinical data company Sema4 announced this week it would exit the reproductive health testing business, shut down its lab in Stamford, Connecticut, and lay off about 500 employees.

The company said it would complete its departure from the segment in the first quarter next year. It will now employ about 1,100 workers. According to a WARN Act Notice filed in Connecticut, the cuts affect 206 employees who report to its headquarters in Stamford, 227 who work in the Stamford lab and 15 from its Branford lab. 

The latest layoffs come months after Sema4 cut around 250 staffers, then around 13% of its workforce, as part of another restructuring. Combined with layoffs from earlier this year, Sema4 said in August it had cut about 30% of its jobs from its legacy business.

By eliminating the reproductive health segment, the company will double down on its GeneDx exome and whole genome sequencing service and its Centrellis data platform. Sema4, which acquired GeneDx earlier this year, is pitching the focus on these offerings as a way to reach profitability, which it now expects in 2025. 

"We believe that our focused commercial and R&D efforts provide the right foundation for us to target higher growth areas of the genomics market and optimize our data and health insights go-to-market strategy," Katherine Stueland, president and CEO of Sema4, said in a statement. 

"We expect the combination of these efforts will help us grow revenue in excess of 20% over the next several years. We also expect the actions we have undertaken will enable us to more than double our run rate gross margin profile exiting the third quarter and reduce our annual cash burn by greater than 50% in 2023."

THE LARGER TREND

Sema4 was spun out from Mount Sinai Health System in 2017 and hit the public markets through a merger with a special purpose acquisition company last year.

Alongside the summer job cuts, founder Eric Schadt, who had been with the company since it spun off, left his roles as president and chief research and development officer, as well as his position as director of the company.

Sema4 also posted results for the third quarter that ended September 30. It reported revenue of $83.2 million compared to $43.2 million in the prior-year period. The company posted a net loss of $77.6 million, compared with income of $32.7 million last year.

Sema4 said it will maintain its full-year revenue guidance of $245 to 255 million.