Skip to main content
Premium Trial:

Request an Annual Quote

NeoGenomics Q4 Revenues up 12 Percent, Topping Analyst Estimates as NGS Drives Growth

This article has been updated to include comments from a conference call with investors.

NEW YORK – NeoGenomics said Tuesday after the close of the market that its fourth quarter revenues grew 12 percent year over year on improved test volume and a boost in revenue per test.

For the three months ended Dec. 31, 2023, the company reported $156.6 million in consolidated revenue compared to $138.7 million in Q4 2022, beating analysts' average estimate of $152.5 million.

The company's Q4 clinical services revenue increased 20 percent to $130.1 million from $108.2 million in the same period last year, while its advanced diagnostics revenue decreased 17 percent to $25.5 million from $30.5 million.

The firm's clinical test volume was up 6 percent year over year, at 294,850 tests, and its average revenue per test rose 13 percent to $441.

NeoGenomics' Q4 net loss was $14.3 million, or $.11 per share, compared to $22.7 million, or $.18 per share, in Q4 2022. On an adjusted basis, the firm's net income was $3.9 million, or $.03 per share, for the quarter. Analysts, on average, had predicted a per-share loss of $.02.

The firm's Q4 R&D expenses totaled $7.1 million, up about 6 percent from $6.7 million a year ago. It's SG&A spending was up nearly 4 percent at $77.9 million compared to $75.0 million a year ago, reflecting an increase in professional fees, payroll and payroll-related costs, and travel expenses.

During a call with investors, NeoGenomics CEO Chris Smith highlighted the fact that the company's quarterly next-generation sequencing testing, in particular, grew more than 40 percent year over year and currently represents 25 percent of the company's clinical revenue.

He added that NeoGenomics has three major financial priorities moving forward: to "protect, expand, and acquire."

Smith called the firm "under-indexed" in NGS compared to other firms, which see this testing driving up to 90 percent of their revenue. Warren Stone, NeoGenomics' president of clinical services, added that the firm has been directing more of its sales resources toward the relatively underpenetrated oncology community.

To complement its tissue-based NGS offerings, NeoGenomics expects to launch a blood-based comprehensive genomic panel toward the second half of this year. Vishal Sikri, president of pharma services, said during the call that the firm sees a place for this liquid biopsy assay on both the pharmaceutical services and clinical sides of its business, with early growth likely coming from the pharma arm.

"We're hearing a lot from pharma companies that they just don't have enough tissue … with all the testing they want to do, so this gives them the opportunity to choose both liquid or solid from that perspective," Sikri said. Smith added that the company expects that to translate into clinical market sales by early next year.

According to Stone, NeoGenomics believes it can drive NGS revenue growth in two areas. For one, it will be targeting oncologists who are beginning to embrace this technology for the first time — either current customers using other modalities or community oncologists who the company hasn't interacted with before. At the same time, it plans to convert customers who use its smaller panels and single-gene tests to its newer comprehensive genomic profiling panel.

One roadblock that NeoGenomics faces is ongoing patent litigation with rival Natera regarding its minimal residual disease technology, Radar, which the firm brought on with the acquisition of Inivata in 2021.

Last December, Natera won a preliminary injunction against NeoGenomics, which restricts sales of Radar in the US.

During the call with investors, Smith reiterated that the company has a policy to avoid comment on ongoing litigation.

"However," he said, "I will say that [NeoGenomics] is committed to serving cancer patients with MRD testing, and we believe that we have several viable pathways to accomplish that."

According to Smith, NeoGenomics has thus far appealed the preliminary injunction and has been granted an expedited hearing, which will occur on March 29.

"We intend to vigorously pursue the appeal, and we have moved for an administrative stay pending appeal from the Federal Circuit Court," he said.

Smith also said that the company's 2024 guidance does not include any revenue from MRD testing, making the outcome of the litigation moot in terms of impact on projected revenues for the year.

According to Smith, the firm is "actively exploring all options around MRD," including adapting its assay to a new, non-infringing technology. "We have been in development for additional MRD products beginning probably 12 months before this even started," he said.

FY2023 results

NeoGenomics' full-year 2023 revenues were $591.6 million, an increase of 16 percent from $509.7 million in 2022, and above analysts' average estimate of $588.9 million. According to the company, this increase was primarily driven by higher test volumes, a more favorable test mix in its clinical services segment, an increase in average test price due to strategic reimbursement initiatives, and growth in its advanced diagnostics segment.

Its 2023 clinical services revenue increased 18 percent to $495.6 million from $418.8 million in 2022, and its advanced diagnostics revenue increased 6 percent to $96.0 million from $91.0 million.

The firm's full-year net loss was $88.0 million, or $.70 per share, compared to $144.3 million, or $1.16 per share, in 2022. On an adjusted basis, NeoGenomics' 2023 net loss was $14.8 million, or $.12 per share. Analysts, on average, had predicted a per-share loss of $.17 for the year.

The company ended the year with cash and cash equivalents of $342.5 million and marketable securities of $72.7 million.

For 2024, NeoGenomics projected total revenues between $650 million and $660 million, which would represent year-over-year growth of 10 percent to 12 percent. The company said it expects a 2024 net loss of $66 million to $72 million.