NEW YORK (GenomeWeb) – NeoGenomics today reported a 17 percent year-over-year rise in its Q3 revenues, beating the consensus Wall Street analyst estimate.
The cancer genetic testing company reported revenues of $69.1 million for the three months ended Sept. 30, up from restated revenues of $59.1 million in the year-ago period. The consensus Wall Street estimate was $66.3 million.
In the clinical services division, testing volume grew 14 percent year over year, and average revenue per test was up 3 percent, NeoGenomics Chairman and CEO Douglas VanOort said during the quarterly results conference call. The company improved revenue per test by evaluating areas where it is being underpaid for testing, improving its billing system to avoid reimbursement denials, and working denials more effectively when they do occur, according to VanOort.
Clinical testing revenues rose 16 percent in the quarter to $59.4 million from $51.2 million in the same quarter last year.
Meantime, revenues in the pharma division rose 20 percent to $9.6 million from $8.0 million in the same quarter last year, the company reported. In addition, during the quarter the company’s Pharma Services backlog rose 75 percent year over year, he said.
The company completed a $125 million stock offering during the quarter, and it recently announced plans to acquire clinical oncology laboratory Genoptix for $125 million in cash and 1 million shares of NeoGenomics stock.
"Importantly, the acquisition expands our reach into community oncology practices, which has been a strategic priority given changes in ordering paradigms by oncologists," VanOort said during the quarterly earnings call.
Also in the quarter, NeoGenomics negotiated a group purchasing agreement with healthcare provider network Premier.
"This agreement opens the door for us to negotiate contracts with these member hospitals," VanOort said.
The company is also in the process of seeking US Food and Drug Administration approval for a large multigene panel. The company filed pre-submission documents with the FDA earlier in the year and had a presubmission meeting with the agency in August, according to VanOort, who characterized the meeting as "very helpful."
"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, driving reimbursement for a multipanel test and increasing our attractiveness to pharma companies for clinical trials involving companion diagnostics," VanOort said.
NeoGenomics is also working with a major, unnamed pharma sponsor on getting FDA approval for a companion diagnostic for the pharma client's drug in development, according to VanOort.
For the recently completed quarter, NeoGenomics posted a profit attributable to common shareholders of $2.0 million, or $0.2 per share, compared to a loss of $6.9 million, or $.09 per share a year ago. Adjusted EPS for the quarter was $ .05, beating the average analysts' estimate of $.02.
In Q3 the firm's R&D costs were $446,000, down 66 percent year over year from $1.3 million in the same quarter last year. SG&A expenses were $28.0 million, up 14 percent from $24.6 million in the same quarter last year.
The company ended the quarter with $118.4 million in cash.
Due to improved operating performance and an estimated $2.6 million of non-recurring acquisition-related expenses, the company updated its 2018 revenue and earnings guidance. The company expects consolidated revenues of $270 million to $272 million for the year compared to a previous guidance of $260 million to $272 million. EPS is expected to be $.04 to $.05 per share, compared to a previous guidance of $.01 to $.06 per share. Adjusted diluted EPS is expected to be $.17 to $.19 per share, compared to a previous guidance of $.12 to $.17 per share.
In morning trading, shares of NeoGenomics on the Nasdaq were up more than 7 percent to $17.21.