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NeoGenomics Q4 Revenue Up 40 Percent

This article has been updated from a previous version to include comments made by NeoGenomics executives during the company's earnings call.

NEW YORK – NeoGenomics on Thursday reported a 40 percent year-over-year jump in its Q4 revenues.

The cancer genetic testing company reported revenues of $106.9 million for the three-month period ended Dec. 31, 2019, up from revenues of $76.5 million in the same period last year and beating the consensus Wall Street estimate of $104.2 million.

During the quarter, clinical services revenues grew 42 percent to $93.4 million from $65.9 million in the year-ago quarter, and pharma services revenues were $13.5 million up 27 percent from $10.6 million in the same quarter last year.

In the clinical division, test volumes increased 27 percent versus the year-earlier quarter, and average revenue per test increased 11 percent to $370. This is the sixth straight quarter revenue per test has increased on a year-over-year basis, CEO Douglas VanOort said on a conference call to discuss the earnings. The increase is mostly due to the acquisition of Genoptix and the impact of favorable test mix and growth in next-generation sequencing. VanOort said NeoGenomics is working toward finishing the integration of Genoptix customers onto a single lab info and billing system, and expects the integration to be completed in two months. 

VanOort also noted the company’s "particular strength" in next-generation sequencing and molecular testing, which grew by approximately 50 percent. Specifically, NGS and flow cytometry volumes are growing at higher relative rates, VanOort said.

Douglas Brown, the company’s chief strategy and corporate development officer, said NGS is a particular development focus for NeoGenomics, with multiple products to be introduced in 2020, including a rapid NGS panel for acute myeloid leukemia.

VanOort said the company is working with the US Food and Drug Administration to achieve approval of its large multi-gene NGS panel, and he hopes the process is completed by the end of the year, although he declined to give specific timeline estimates.

NeoGenomics is working to expand its offering of RNA-based sequencing assays for both solid tumor and hematologic malignancies, Brown said. He further noted that the firm is working on a suite of liquid biopsy offerings for cases where tissue samples can't be obtained, and the company plans to introduce a pan-cancer liquid biopsy test early in the second half of 2020.                                     

In the pharma services, the backlog of signed contracts increased 32 percent to $130.3 million.

NeoGenomics' net income for the quarter was $6.3 million, or $.06 per share, compared to net income of $353,000, or $.00 per share, in the same quarter last year. Its adjusted EPS for the quarter was $.10, beating analysts' average estimate of $.06.

NeoGenomics spent $2.1 million on research and development in the quarter compared to $526,000 in the same quarter a year ago. Its SG&A expenses were $45.5 million, up 35 percent from $33.8 million in the year-ago quarter.

Revenues for full-year 2019 were $408.8 million, up 48 percent from $276.7 million in 2018, primarily due to the Genoptix acquisition and continued volume growth. It beat analysts' average estimate of $406.2 million. Clinical testing was up 49 percent to $361.2 million from $241.9 million, while pharma services grew 37 percent to $47.7 million from $34.9 million.

NeoGenomics' net income attributable to common stockholders for the year was $8.0 million, or $.08 per share, compared to $6.1 million, or $.07 per share, in 2018. Adjusted EPS for 2019 was $.31 per share and beat the consensus Wall Street estimate of $.28.

NeoGenomics' R&D spending for 2019 came in at $8.5 million, up 183 percent year over year from $3.0 million. Its SG&A costs grew 21 percent to $175.3 million from $114.2 million.

The company ended the year with cash and cash equivalents of $173.0 million.

For 2020, NeoGenomics projected revenues of $464 million to $474 million. Net income available to common stockholders is projected to be in the range of $8 million to $13 million.

Brown noted on the conference call that the company's expectations for profitability in the first quarter of 2020 were lower than usual due to the timing dynamics for pharma services projects. Many of the company's projects ended in December, and Brown said new large projects weren't expected to start until late March or early April, which would impact Q1 revenues.

In Thursday afternoon trading on the Nasdaq, shares of NeoGenomics were down 11 percent at $26.82