NeoGenomics Reports Revenue Growth of 20% to Record $125 Million in the Third Quarter

Rhea-AI Summary

NeoGenomics reported strong third-quarter 2020 results with consolidated revenue increasing by 20% to $125 million, and clinical services revenue up 17% to $109 million. Pharma services revenue rose 38% to $17 million, while backlog surged 57% to $185 million. Despite a less than 3% drop in average revenue per clinical test, gross profit increased by 6.4% to $54.1 million. Net income was $3 million, up from $2 million last year. Cash and equivalents totaled $265 million, showcasing the company's strong liquidity position.

Positive

• Consolidated revenue increased by 20% to $125 million.
• Clinical services revenue grew by 17% to $109 million.
• Pharma services revenue surged by 38% to $17 million.
• Pharma services backlog rose by 57% to $185 million.
• Gross profit increased by 6.4% to $54.1 million.
• Net income improved to $3 million compared to $2 million last year.
• Cash and cash equivalents, including restricted cash, stood at $265 million.

Negative

• Average revenue per clinical test decreased by less than 3% to $359.
• Adjusted net income fell to $7 million from $8 million in the previous year.

Third-Quarter 2020 Results and Highlights:

• Consolidated revenue increased 20% to $125 million
• Clinical Services revenue increased 17% to $109 million
• Pharma Services revenue increased 38% to $17 million
• Pharma Services backlog increased 57% to $185 million

FORT MYERS, FL / ACCESSWIRE / October 27, 2020 / NeoGenomics, Inc. (NASDAQ:NEO) (the "Company"), a leading provider of cancer-focused genetics testing services, today announced its third-quarter results for the period ended September 30, 2020.

"Third quarter results were strong as we bounced back nicely from a challenging second quarter and set new company records for quarterly consolidated revenue and pharma services revenue and backlog. Importantly, test volume in our core clinical⁽¹⁾ oncology business continued to trend higher on what looks to be a V-Shaped recovery and the majority of our pharma clients' clinical trial sites are now open," said Douglas M. VanOort, Chairman and CEO of NeoGenomics.

We have continued to make strategic investments, even in the midst of the pandemic, to put us in a stronger position for growth. We are particularly excited about our investments in global Pharma Services, Informatics, strategic marketing initiatives, liquid biopsy, including our investment in Inivata, certain research and development priorities, and the on-going construction of our new state-of-the-art laboratory and global headquarters in Fort Myers.

Even in this uncertain and challenging operating environment, the dedication of NeoGenomics' employees has been extraordinary as we have stayed laser-focused on patient care."

Third-Quarter Results
Consolidated revenue for the third quarter of 2020 was $125 million, an increase of 20% over the same period in 2019. Clinical Services revenue increased year-over-year by 17% to $109 million, primarily driven by COVID-19 Polymerase Chain Reaction ("PCR") testing revenue of $17 million. Clinical testing volume⁽¹⁾ grew 2% year-over-year and improved month-to-month as the quarter progressed. Average revenue per clinical test ("revenue per test") decreased by less than 3% to $359. Pharma Services revenue grew by 38% to $17 million compared to the third quarter of 2019, primarily due to an increase in revenue related to clinical trials.

Gross profit was $54.1 million, an increase of 6.4%, compared to the third quarter of 2019. This increase was the result of higher test volume.

Operating expenses increased by $2 million, or 5%, compared to the third quarter of 2019, reflecting investments in informatics, growth initiatives and costs associated with the integration of HLI - Oncology.

Net income for the quarter was $3 million compared to net income of $2 million for the third quarter of 2019.

Adjusted EBITDA⁽²⁾ was $17 million compared to $15 million in the third quarter of 2019. Adjusted Net Income ⁽²⁾ was $7 million compared $8 million in the third quarter of 2019.

Cash and cash equivalents, including restricted cash, was $265 million and short-term marketable securities were $50 million. Days sales outstanding ("DSO") was 76 days at the end of the third quarter of 2020.

____________________

⁽¹⁾ Clinical tests exclude requisitions, tests, revenue and costs for Pharma Services and COVID-19 PCR tests.

⁽²⁾ The Company has provided adjusted financial information that has not been prepared in accordance with GAAP, including Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Diluted EPS. Each of these measures is defined in the section of this report entitled "Use of Non-GAAP Financial Measures." See also the tables reconciling such measures to their closest GAAP equivalent.

Conference Call
The Company has scheduled a webcast and conference call to discuss their third quarter results on Tuesday, October 27, 2020 at 8:30 AM EDT. Interested investors should dial (844) 602-0380 (domestic) and (862) 298-0970 (international) at least five minutes prior to the call. A replay of the conference call will be available until 8:30 AM EST on November 10, 2020, and can be accessed by dialing (877) 481-4010 (domestic) and (919) 882-2331 (international). The playback conference ID number is 37902. The webcast may be accessed under the Investor Relations section of our website at www.neogenomics.com. An archive of the web-cast will be available until 08:30 AM EDT on October 27, 2021.

About NeoGenomics, Inc.
NeoGenomics, Inc. specializes in cancer genetics testing and information services. The Company provides one of the most comprehensive oncology-focused testing menus in the world for physicians to help them diagnose and treat cancer. The Company's Pharma Services Division serves pharmaceutical clients in clinical trials and drug development.

Headquartered in Fort Myers, FL, NeoGenomics operates CAP accredited and CLIA certified laboratories in Fort Myers and Tampa, Florida; Aliso Viejo, Carlsbad and San Diego, California; Houston, Texas; Atlanta, Georgia; Nashville, Tennessee; and CAP accredited laboratories in Rolle, Switzerland, and Singapore. NeoGenomics serves the needs of pathologists, oncologists, academic centers, hospital systems, pharmaceutical firms, integrated service delivery networks, and managed care organizations throughout the United States, and pharmaceutical firms in Europe and Asia. For additional information about NeoGenomics, visit http://www.neogenomics.com/.

Forward-Looking Statements
Certain information contained in this press release constitutes forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These forward looking statements involve a number of risks and uncertainties that could cause actual future results to differ materially from those anticipated in the forward-looking statements as a result of the Company's ability to continue gaining new customers, respond to the effects of the COVID-19 outbreak, offer new types of tests, integrate its acquisitions and otherwise implement its business plan, as well as additional factors discussed under the heading "Risk Factors" and elsewhere in the Company's Annual Report on Form 10-K filed with the SEC on February 28, 2020. Accordingly, this press release should be read in conjunction with the Company's periodic filings with the SEC. In addition, it is the Company's practice to make information about the Company available by posting copies of its Company Overview Presentation from time to time on the Investor Relations section of its website at http://ir.neogenomics.com/.

Forward-looking statements represent the Company's estimates only as of the date such statements are made (unless another date is indicated) and should not be relied upon as representing the Company's estimates as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if its estimates change.

For further information, please contact:
NeoGenomics, Inc.
Doug Brown
Chief Strategy and Corporate Development Officer
T: 239.768.0600 x2539
M: 704.236.2064
doug.brown@neogenomics.com

Charlie Eidson
Manager of Investor Relations and Manager of Strategy and Corporate Development
T: 239.768.0600 x2726
M: 952.221.8816
charlie.eidson@neogenomics.com

NeoGenomics, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

		September 30, 2020 (Unaudited)				December 31, 2019
ASSETS
Cash and cash equivalents		$	233,233			$	173,016
Marketable securities, at fair value			50,375				-
Accounts receivable, net			103,697				94,242
Inventories			20,643				14,405
Other current assets			14,427				9,075
Total current assets			422,375				290,738
Property and equipment (net of accumulated depreciation of $85,987 and $68,809 respectively)			85,449				64,188
Operating lease right-of-use assets			45,856				26,492
Intangible assets, net			123,353				126,640
Goodwill			210,833				198,601
Restricted cash, non-current			32,003				-
Prepaid lease asset			10,142				-
Investment in non-consolidated affiliate			25,600				-
Other assets			3,817				2,847
TOTAL ASSETS		$	959,428			$	709,506
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other current liabilities		$	56,211			$	50,091
Short-term portion of financing obligations			3,700				10,432
Short-term portion of operating leases			4,701				3,381
Total current liabilities			64,612				63,904
Convertible senior notes, net			166,440				-
Long-term portion of financing obligations			1,399				95,028
Long-term portion of operating leases			43,123				24,034
Other long-term liabilities			3,937				3,566
Deferred income tax liability, net			13,554				15,566
Total long-term liabilities			228,453				138,194
TOTAL LIABILITIES		$	293,065			$	202,098
TOTAL STOCKHOLDERS' EQUITY		$	666,363			$	507,408
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	959,428			$	709,506

NeoGenomics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
NET REVENUE:
Clinical Services		$	108,733			$	92,565			$	275,599			$	267,757
Pharma Services			16,711				12,107				42,852				34,205
Total revenue			125,444				104,672				318,451				301,962
COST OF REVENUE			71,379				53,840				190,011				155,049
GROSS PROFIT			54,065				50,832				128,440				146,913
Operating expenses:
General and administrative			36,128				33,054				107,085				94,773
Research and development			1,964				2,611				6,129				6,407
Sales and marketing			11,304				11,508				34,757				35,048
Total operating expenses			49,396				47,173				147,971				136,228
INCOME (LOSS) FROM OPERATIONS			4,669				3,659				(19,531	)			10,685
Interest expense, net			2,458				203				4,825				3,333
Other (income) expense, net			(11	)			(35	)			(7,639	)			5,124
Loss on extinguishment of debt			-				-				1,400				1,018
Loss on termination of cash flow hedge			-				-				3,506				-
Income (loss) before taxes			2,222				3,491				(21,623	)			1,210
Income tax (benefit) expense			(335	)			1,348		<

FAQ

What were the third-quarter 2020 revenue results for NeoGenomics (NEO)?

NeoGenomics reported a consolidated revenue increase of 20% to $125 million in the third quarter of 2020.

How did NeoGenomics' clinical services revenue perform in Q3 2020?

Clinical services revenue rose by 17% to $109 million compared to the same period in 2019.

What was the net income reported by NeoGenomics for Q3 2020?

Net income for the third quarter of 2020 was $3 million, up from $2 million in Q3 2019.

What is the status of NeoGenomics' cash reserves as of Q3 2020?

The company reported cash and cash equivalents of $265 million as of the end of the third quarter 2020.

How much did NeoGenomics' Pharma Services backlog increase in Q3 2020?

Pharma services backlog increased by 57% to $185 million in the third quarter of 2020.