Skip to main content
Premium Trial:

Request an Annual Quote

NeoGenomics Q4 Revenues Spike on Clarient Buy

The story has been updated to include comments from NeoGenomics' conference call on Wednesday.

NEW YORK (GenomeWeb) – NeoGenomics on Wednesday said that its fourth quarter revenues more than doubled year over year as clinical genetic test volumes also shot up, driven by the inclusion of Clarient's results.

NeoGenomics acquired Clarient from GE Healthcare Life Sciences at the end of 2015.

For the three months ended Dec. 31, 2016, NeoGenomics reported $60.5 million in revenues, up from $27.3 million in Q4 2015, but below the consensus Wall Street estimate of $61.8 million.

Clinical testing revenues grew to $55.3 million from $26.8 million from a year ago, while pharmaceutical service revenues increased to $5.1 million from $454,000.

Clinical genetic testing requisitions shot up to 91,304 cases from 38,793 in Q4 2015. The number of tests performed more than doubled to 147,317 from 61,332 a year ago, and total genetic testing revenues grew to $53.8 million from $25.0 million, NeoGenomics reported.

On a conference call following the release of the financial results, NeoGenomics Chairman and CEO Douglas VanOort said the volume growth in clinical genetic testing occurred in both immunohistochemistry and molecular tests. Molecular testing growth was driven in part by the expansion of the firm's testing menu resulting from the Clarient purchase, while immunohistochemistry testing growth resulted from the "incredible growth in immune-oncology-related therapies."

In particular, PD-L1 inhibitor therapy was designated as a first-line therapy for some cancers, driving the increase in PD-L1 immunohistochemistry tests during Q4, VanOort said.

"NeoGenomics was a leader in performing clinical trials testing for this biomarker, and we were capable of performing the test clinically as soon as the Keytruda and Opdivo drugs were approved" he said.

In the firm's PathLogic business, the number of requisitions received in Q4 2016 retreated to 13,591, compared to 14,122 cases in the year-ago period, and the total testing revenue shrank to $1.5 million from $1.8 million.

NeoGenomics' R&D spending was sliced to $930,000 in the recently completed quarter from $1.9 million in Q4 2015. Its SG&A costs were up 65 percent year over year to $25.8 million from $15.6 million.

The firm reported a net loss of $6.2 million, compared to a net loss of $1.5 million a year ago. Net loss attributable to common shareholders for Q4 2016 was $14.2 million, compared to a loss of $1.6 million a year ago.

NeoGenomics reported a loss of $.18 per share in Q4 2016, compared to a loss of $.03 per share a year ago. Adjusted EPS of $.05 beat the consensus Wall Street estimate of $.03.

In a statement VanOort said that during Q4, the firm completed the process of migrating all remaining Clarient customers to NeoGenomics' laboratory information system and billing system, which required the dedication of the company's sales and operations teams "and temporarily disrupted normal operations and growth initiatives."

That is expected to continue for another three to four months as NeoGenomics combines its two Orange County, California facilities at the end of Q1 2017, he added.

On the conference call, he added that NeoGenomics has yet to realize synergies from the Clarient acquisition. "In fact, I might argue that we had some negative synergies in the fourth quarter as we operated two different [laboratory information systems], two different billing systems, and had significant migration of many clients from one system to another."

The firm continues to expect to see synergies from the deal, but VanOort said that NeoGenomics anticipates them to come to fruition in the second half of 2017.  

For full-year 2016, the company reported total revenues of $244.1 million, up from $99.8 million in 2015. It fell short of the analysts' average estimate of $245.4 million.

Clinical testing revenues came in at $222.0 million compared to $98.6 million a year ago, while pharma revenues rose to $22.1 million from $1.2 million in 2015.

In clinical genetic testing, NeoGenomics recorded 361,220 requisitions received in 2016, up from 139,195 in 2015. The number of tests performed last year increased to 563,132 from 221,191 in 2015. Total genetic testing revenue grew to $214.7 million from $90.5 million.

PathLogic requisitions decreased to 56,165 in 2016 from 63,535, and total testing revenues fell to $7.3 million from $8.1 million.

NeoGenomics recorded R&D costs of $4.6 million in 2016, up about 10 percent from $4.2 million in 2015. Its SG&A expenses rose to $99.7 million last year from $45.2 million a year ago.

The company's net loss for 2016 grew to $5.7 million from $2.5 million in 2015. Net loss attributable to common shareholders shot up to $30.4 million from $2.7 million.

The company's net loss on a per-share basis was $.39 compared to a loss of $.04 in 2015. Adjusted EPS of $.15 edged out the analysts' average estimate of $.14. 

NeoGenomics ended 2016 with $12.5 million in cash and cash equivalents.

The company issued preliminary guidance for 2017 of $260 million to $275 million in revenues. Net loss per share is estimated at between $.05 to $.10.

Adjusted net income is anticipated to be in the range of $15 million to $19 million, and adjusted EPS is expected to be between $.17 and $.22.

The consensus Wall Street estimate for 2017 is for $274.3 million in revenues with adjusted EPS of $.21.

In early aftenoon trading on the Nasdaq on Wednesday, NeoGenomics' shares were up a fraction of 1 percent at $7.91.