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NeoGenomics Q1 Revenues Grow 51 Percent

NEW YORK (GenomeWeb) – NeoGenomics reported today that its first quarter revenues grew 51 percent year over year with clinical service revenues up also 51 percent.

For the three months ended March 21, the Ft. Myers, Florida-based company recorded revenues of $95.6 million compared to $63.4 million a year ago. It beat the consensus Wall Street estimate of $90.6 million.

Clinical service revenues grew to $86.2 million from $57.0 million, and pharma service revenues grew 45 percent to $9.4 million from $6.5 million.

Within the clinical operations, the number of requisitions received were up about 48 percent year over year to 155,963 from 105,229, and the number of tests performed grew 31 percent to 234,317 from 178,794 a year ago. Average revenues per test increased 15 percent to $368 from $319.

On a conference call to discuss the results, NeoGenomics Chairman and CEO Douglas VanOort said that revenues grew 20 percent organically, while the Genoptix acquisition, which closed at the end of 2018, also contributed significantly to revenue growth, particularly in clinical service revenues.

VanOort also said that the firm has signed a national contract with Humana and is now contracted with every major national health plan in the US. NeoGenomics CFO Sharon Virag added that the contract became effective April 1 and covers all of NeoGenomics' products and all 50 states.

"The new contract will allow us to better serve existing customers, add additional customers, reduce billing complexity, and improve our average revenue per test in the clinical segment," she said.

In the past, the firm has discussed its plans to submit a marketing application to the US Food and Drug Administration for a large, multigene next-generation sequencing panel, and on today's call, VanOort said that it expects the submission to happen in the fourth quarter.

"The development of FDA-approved tests and FDA-compliant processes is one area of NGS investment, along with others, to competitively position our company for success over the long haul," he said, noting that in Q1, NeoGenomics' NGS test volume increased by more than 50 percent organically.

On NeoGenomics' efforts in companion diagnostics development, he said that as of the end of Q1 the company had about 30 CDx-related projects in its pharma services backlog, and it has several planned CDx test launches in its pipeline.

For Q1 2019, NeoGenomics' R&D spending increased 27 percent to $1.2 million from $956,000 a year ago. Its SG&A costs rose 82 percent year over year to $43.4 million from $23.8 million.

The firm posted a net loss of $2.4 million, or $.03 per share, in the recently completed quarter, compared to a net loss of $2.2 million, or $.03 per share, a year ago. Adjusted EPS for Q1 2019 was $.07, beating analysts' average estimate of $.04.

Virag said that the Q1 2019 loss was due to a one-time payment of $6.6 million to Health Discovery resulting from a dispute between the two firms.

NeoGenomics finished the quarter with $13.2 million in cash and cash equivalents.

For full-year 2019, the firm revised its revenue guidance to a new range of between $384 million to $400 million from a previous range of $379 million to $395 million. On a per share basis, it expects between a loss of $3 to a gain of $1 for the year. Previously, the firm said that it anticipated a range of between a loss of $3 per share and a gain of $3 per share.

In morning trading on the Nasdaq, NeoGenomics' shares were down 3 percent to $20.33.