NEW YORK (GenomeWeb) – NeoGenomics today reported a 9 percent year-over-year rise in revenues for the second quarter, driven by growth in clinical testing and pharma services. The firm's revenue growth for the quarter was 12 percent after adjusting 2017 results for the divestiture of PathLogic last August.
For the three months ended June 30, the cancer genetic testing firm recorded $67.7 million in total revenues, up from restated revenues of $62.3 million in the year-ago period and beating the consensus Wall Street estimate of $66.2 million.
The company adopted a new accounting standard, effective Jan. 1, 2018 and restated all financial results as if it had adopted the standard on Jan. 1, 2017.
Clinical testing brought in revenues of $59.5 million, up 7 percent from $55.5 million in Q2 2017. Pharma service revenues rose 22 percent year over year to $8.2 million from $6.7 million.
NeoGenomics reported a 14 percent increase in clinical testing volume growth and a 95 percent increase in pharma services backlog.
The firm said that its average revenue per clinical genetic test decreased by almost 4 percent to $318, primarily due to changes in Medicare reimbursement and regulation.
NeoGenomics Chairman and CEO Douglas VanOort said in a statement that in Q2 2018 the firm continued to invest in growth in its pharma services division with the opening of a new lab facility in Houston, and with the announcement of a strategic partnership with contract research organization Pharmaceutical Product Development (PPD).
"Our clinical division results were very healthy with continued mid-teens percent volume growth, cost efficiencies, and outstanding service," he said.
On a conference call to review the company's Q2 financial results, VanOort said that he anticipates NeoGenomics will be the preferred oncology testing lab for PPD in the US and around the world.
"We also expect this new facility will help accelerate our clinical division growth in the state of Texas," he said.Â
VanOort noted that in Q2, the firm announced that it had redeemed all remaining 6.9 million shares in Series A Redeemable Preferred Stock from General Electric for about $50.1 million. He said that in less than 30 months since completing the acquisition of Clarient from General Electric, the firm has redeemed 100 percent of the $110 million in preferred stock issued in conjunction with the deal at a total redemption cost of $105 million.
VanOort said that the firm has entered a national agreement with Cigna to become a participating in-network provider for all Cigna health insurance products effective on August 1.
He said that the firm is seeking US Food and Drug Administration clearance for a large multi-gene NGS panel and is poised to begin discussions with the agency. "Seeking FDA approval for a laboratory test is new for us, and we are working hard to understand and meet the requirements of the FDA.," he said. "We believe that an FDA approved next-generation-sequencing test offering will benefit both our pharma services and clinical testing divisions, by further differentiating us from other oncology labs [and] driving improved reimbursement for our multi-panel test, and increasing our attractiveness to pharma companies for clinical trials involving companion diagnostics.Â
He said that the company is also taking proactive measures to address and improve revenues per test.
For the recently completed quarter, NeoGenomics said that it posted a profit attributable to common shareholders of $5.9 million, or $.07 per share, compared to a loss of $2.2 million, or $.03 per share, a year ago. Adjusted EPS for the recently completed quarter was $.04, matching the consensus Wall Street estimate.
In Q2 2018, the company's R&D costs increased 16 percent to $1.1 million from $947,000 a year ago, while its SG&A costs grew 17 percent to $28.7 million from $24.5 million a year ago.
The firm said it expects its 2018 revenues to be in the range of $260 million to $272 million, unchanged from the guidance issued in February.
The firm updated its guidance for earnings per share for 2018 to reflect the redemption of its preferred stock on June 25. Diluted EPS is expected to be $.01 to $.06 per share, compared to previous guidance of a loss of $.13 to $.08 per share. The company expects adjusted diluted EPS to be $.12 to $.17 per share compared to previous guidance of $.16 to $.20 per share.
NeoGenomics finished the second quarter with $9.4 million in cash and cash equivalents.
In morning trading on the Nasdaq, shares of NeoGenomics were up more than 1 percent at $14.22.