This article has been updated from a previous version to include comments made by NeoGenomics executives during an earnings call.
NEW YORK – Shares of NeoGenomics plunged on Tuesday after it announced that its fourth quarter 2024 revenues were up 11 percent compared to the same quarter of 2023, but fell short of Wall Street expectations.
For the period ended Dec. 31, the firm reported $172.0 million in total revenues, compared to $155.6 million a year ago. Analysts' average projection was $173.4 million in total revenues for the quarter. In late afternoon Tuesday trading on the Nasdaq, the company's stock was down about 20 percent to $11.47.
During a call with investors NeoGenomics Chief Commercial Officer Warren Stone said that the company failed to see an anticipated bump in pharma revenues in Q4, potentially influenced by a late 2024 injunction preventing it from marketing its Radar minimal residual disease assay to new clients.
Natera won the injunction last fall in a patent infringement lawsuit, enjoining NeoGenomics from "making, using, selling, or offering for sale" in the US the RadaR assay or similar tests. Exceptions to this injunction include clinical trials begun before Jan. 10 of 2024 and instances where patients were using the assay before that date.
According to Stone, NeoGenomics has begun to implement a revised commercial strategy for 2025 that it believes better aligns with the needs of pharma customers and their buying processes and will help increase value and shorten sales cycles in this sector.
NeoGenomics CEO Chris Smith said that regarding the pharma business, the company is in a better place moving into this year than coming out of the last.
"We don't really report anymore on bookings, but I will tell you that we're having significantly more activity than we would have this time last year," he said.
The company is also confident that it will continue to see growth for its clinical test portfolio during the coming year, with plans to expand its menu of next-generation sequencing tests with a liquid biopsy solid tumor therapy selection product launching within the first half of the year.
NeoGenomics said that its average quarterly revenue per clinical test rose 5 percent year over year to $465 from $441, reflecting a shift toward higher-value tests, including next-generation sequencing, as well as strategic reimbursement initiatives.
The firm provided 321,679 tests in Q4 2024, up from 294,850 in the same period of 2023.
Andrew Lukowiak, NeoGenomics' chief innovation officer, said during the call that the company believes the therapy selection market is around $13 billion in size with only about 35 percent penetration. "To aid in capturing share of this market, we are launching Neo PanTracer liquid biopsy in the clinical setting in the first half of this year," he said. The assay is a comprehensive sequencing test, intended to complement traditional tissue testing in advanced stage solid tumor patients.
In addition to this new launch, the firm is also planning an upgrade to its Neo Comprehensive NGS panel to include a readout on homologous recombination repair deficiency (HRD), Lukowiak added.
At the same time, NeoGenomics is planning to invest in outcomes-based clinical studies during the year that it expects to "help drive adoption, support reimbursement, and expand our current clinical applications."
The company's Q4 net loss was $15.3 million, or $.12 per share, compared to a loss of $14.3 million, or $.11 per share, in the fourth quarter of 2023. On an adjusted basis, NeoGenomics reported EPS of $.04, slightly better than analysts' consensus estimate of $.03 per share.
Its fourth quarter R&D expenses were $8.0 million, up about 13 percent from $7.1million. Its SG&A expenses rose 10 percent to $85.9 million from $77.9 million.
For the full year, NeoGenomics' revenues were up 12 percent at $660.6 million, compared to $591.6 million a year ago and narrowly missing analysts' average estimate of $662.0 million.
The company attributed the increase to a boost in overall test volume and prices that offset a reduction in its Radar minimal residual disease testing.
According to Smith, a jury trial in the ongoing lawsuit by Natera is currently scheduled for October 2025. "The pharma business has been a little bit challenged because we haven't been able to sell Radar [to new customers], so getting through this court case in October, we think is going to give us some nice clarity on the future," Smith said.
Lukowiak added that NeoGenomics now has a dedicated research program in place to enhance its MRD portfolio and generate intellectual property for both broad and cancer-type specific applications. "We're pleased to announce that this program is already operational with multiple opportunities actively being explored," he said.
The firm's full-year net loss for 2024 was $78.7 million, or $.62 per share compared to $88.0 million, or $.70 per share, in 2023. NeoGenomics reported adjusted EPS of $.11, just above analysts' average estimate of $.10.
The company's full year R&D spending was up 14 percent at $31.2 million compared to $27.3 million in 2023. Its SG&A expenses were $344.5 million, up about 10 percent from $313.9 million.
NeoGenomics reaffirmed its full-year 2025 guidance, initially issued in January, of $735 million to $745 million in total revenues, with a net loss of $76 million to $85 millionre.
The firm ended 2024 with $367.0 million in cash and cash equivalents and $19.8 million in marketable securities.