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NeoGenomics Q1 Revenues Grow 11 Percent

This story has been updated with information from the company's earnings call. 

NEW YORK --NeoGenomics reported Tuesday that its first quarter revenues grew 11 percent year over year with clinical service revenues up 8 percent.

For the three months ended March 31, the Fort Myers, Florida-based company recorded revenues of $106 million compared to $95.6 million a year ago. It beat the consensus Wall Street estimate of $104.6 million.

Earlier this month, NeoGenomics withdrew its previously issued full-year 2020 financial guidance as a result of uncertainty surrounding the COVID-19 pandemic. On a conference call to discuss the company's financial results, CEO Douglas VanOort noted that NeoGenomics is now offering PCR-based testing for SARS-CoV-2 using Thermo Fisher Scientific's TaqPath COVID-19 Combo test. He added that they will also soon be offering serology testing using Abbott's recently launched SARS-CoV-2 IgG antibody test. Within the end of this week, VanOort said, he expects NeoGenomics to be able to perform 5,000 tests per day.

Clinical service revenues grew to $93 million from $86.2 million, and pharma service revenues grew 39 percent to $13 million from $9.4 million. Growth in pharma services was driven largely by the company's $37 million acquisition of the oncology division assets of Human Longevity in January. The company noted that the COVID-19 pandemic disrupted volumes and reduced growth in both divisions. VanOort added that testing volume in the last two weeks of March was down 20 percent, and that April testing volume has been down 20 to 30 percent, but he expects volumes to rebound once the pandemic ends. Clinical trials for the pharma services division have also been delayed as a result of the pandemic, VanOort said.

The COVID-19 pandemic reduced revenue by $4 million due to the test volume reduction, said CFO Kathryn McKenzie on the call.

Within the clinical operations, the number of requisitions received were up 5 percent year over year to 144,319 from 137,111, and the number of tests performed grew 7 percent to 250,376 from 234,317 a year ago. Average revenues per test increased 1 percent to $371 from $368.

In March, NeoGenomics announced a three-year contract to serve as the cornerstone laboratory for HealthTrust Purchasing Group's Specialized Reference Laboratory for Oncology & Cancer Genetics.

Next-generation sequencing and companion diagnostics are some areas of particular focus for the company, VanOort noted on the conference call.

He said NeoGenomics expects to introduce several new products in 2020, including a pan-cancer liquid biopsy test expected before the end of the second quarter. VanOort added that the company is looking at other liquid biopsy products and initiatives and determining how to best develop and add those products to the product line.

NeoGenomics submitted a multigene panel to the US Food and Drug Administration, which is still under consideration but VanOort said the company is making good progress.

He added that the company is also expanding its offering of RNA-based NGS assays for solid tumor and hematologic malignancies and is developing a rapid NGS panel for acute myeloid leukemia.

VanOort said NeoGenomics is also continuing to investigate NGS tests for minimal residual disease, particularly for hematologic neoplasms. The company already has an MRD test using flow cytometry and any NGS test would complement the existing work, he said. "We expect that MRD is going to be an important test in the future, but there's a lot of development that has to take place in the near-term to make that viable commercially."

On the companion diagnostics side, NeoGenomics has agreements with "several large pharmaceutical firms" to provide commercial launch services and analytical support for companion diagnostic testing associated with drugs in the late-stage pipeline, VanOort said. The company has around 30 companion diagnostics projects in the pipeline. Robert Shovlin, president of the clinical services division, added there are a handful of projects with signed contracts that are planned for this year, but their launches are contingent upon FDA approval of the drugs. VanOort added that the company doesn't know whether the COVID-19 pandemic will impact the projects.

For Q1 2020, NeoGenomics' R&D spending increased 75 percent to $2.1 million from $1.2 million a year ago. Its SG&A costs rose 14 percent year over year to $49.6 million from $43.4 million.

VanOort also said the company will continue to consider select strategic acquisitions and investments, particularly in NGS, companion diagnostics, and informatics.

The firm posted a net loss of $7 million, or $.07 per share, in the recently completed quarter, compared to a net loss of $2.4 million, or $.03 per share, a year ago. On an adjusted basis, NeoGenomics had a loss of $.02 per share, falling short of the consensus Wall Street estimate of a gain of $.02 per share.

NeoGenomics finished the quarter with $86.3 million in cash and cash equivalents.