NeoGenomics reports 49% Revenue Growth, Adjusted EBITDA of $1.9 million and Net Income of $550,000 for the Second Quarter 2012

Significant Gains in Laboratory Productivity Driving Gross Margin Improvements

Jul 19, 2012, 07:00 ET from NeoGenomics, Inc.

FT. MYERS, Fla., July 19, 2012 /PRNewswire/ -- NeoGenomics, Inc. (NASD OTC QB: NGNM), a leading provider of cancer-focused genetic testing services today reported its results for the second quarter 2012.

Second Quarter 2012 Highlights:

  • 57% test volume growth
  • 49% revenue growth  
  • 58% gross profit growth
  • Net Income of $551,000, or $0.01 per share, vs. a loss of $(293,000), or ($0.01) per share in Q2 2011.
  • Adjusted EBITDA of $1.943 million, versus $0.483 million in Q2 2011

Revenue for the second quarter 2012 was $15.6 million, a 49%, increase over second quarter 2011 revenue.  Test volume increased by 57%.  Average cost of goods sold per test improved by 10% from last year, and resulted in gross margin improvement to 47.2% as compared to 44.5% in the second quarter of last year.  As a result, gross profit increased by 58% to $7.4 million.

Total operating expenses were $6.5 million, a 37% increase from last year's second quarter, primarily as a result of higher bad debt expense and sales commissions resulting from the higher revenue, as well as increases in R&D expenditures related to new test development.  Operating expenses as a percentage of revenue fell to 41.8% from 45.6% last year.  Net income for the quarter was $551,000, or $0.01 per share, versus a net loss of ($293,000), or ($0.01) per share, in last year's second quarter.  Adjusted EBITDA increased by 300% to $1.9 million from $0.5 million last year.

For the first six months of 2012, revenue was $30.8 million, a 60% increase over first half 2011 revenue.  Test volume increased by 65%.  Gross profit increased by 70% to $14.5 million, and operating expenses increased by 37% to $12.8 million.  Net Income was $1.2 million, or $0.03 per share, versus a net loss of ($1.2) million, or ($0.03) per share, in the first half of 2011.  Adjusted EBITDA increased by 860% to $3.7 million from $386,000 in the first half of 2011.

Douglas M. VanOort, the Company's Chairman and CEO, commented, "We are very pleased with our industry leading revenue growth rates of 49% in the second quarter and 60% on a year-to-date basis.  These growth rates were accomplished despite the fact that we had to redirect the focus of our sales force over the last four months to prepare clients for the expiration of the Technical Component (TC) Grandfather Clause on July 1st.  We have also made huge strides in increasing the productivity and efficiency of our lab operations.  The average number of tests completed per lab employee has increased 16% and the average cost per test has decreased 9% since the end of last year.   Our operations are also now generating significantly more EBITDA than ever before with Adjusted EBITDA of $3.7 million in the first six months of 2012 versus $400,000 in the comparable period in 2011.           

Mr. VanOort continued, "I am also delighted that our significant investments in new test development are starting to pay off.  We launched 20 new molecular assays thus far in 2012, and expect to launch another 15-20 assays, including our new NeoTYPE™ Cancer Profiles, by year-end.  We now have one of the most advanced molecular testing capabilities in the United States and we continue to invest in this area.  We also added over 60 immunohistochemistry (IHC) antibodies to our menu in 2012, and we are in the process of rolling out a new digital pathology imaging platform.  These investments are beginning to fuel growth in our molecular and IHC volumes, and allowed each of these laboratories to turn profitable in the second quarter for the first time.  In addition, we recently introduced 10-color Flow Cytometry, which makes us one of only a few labs to offer this service on a broad scale.  Finally we continue to invest heavily to develop products using the pattern recognition technologies we licensed from Health Discovery Corp earlier this year, and the early results are quite promising.  Indeed, we expect to begin launching the first of several products using this technology later this year."

Mr. VanOort concluded by saying, "We also made several key investments in infrastructure to sustain our continued pace of growth.  During the second quarter, we significantly upgraded our IT infrastructure, and moved our mission critical IT systems to a secure co-location facility.  We are also in the process of building out a larger, state-of-the-art laboratory facility in Irvine, California, which we expect to move into by the end of the third quarter.  We believe these infrastructure investments will position us to handle our growth while maintaining the high service levels our clients have come to expect from us. All in all, we continue to make deliberate strides towards our goal of becoming America's premier cancer testing laboratory." 

Third Quarter 2012 Financial Outlook
As we have discussed previously, we expect the expiration of the TC Grandfather Clause to impact us beginning in the third quarter.  Effective as of July 1st, we are now required to bill hospitals for the technical component of certain tests performed on behalf of Medicare in-patients and out-patients, whereas previously we were allowed to bill Medicare directly for such services if they were provided to hospitals that were "grandfathered" under the regulations.  We are re-iterating our previously issued guidance that we expect a 5-8% reduction in our overall average unit price per test as a result of this regulatory change.  Thus, we are expecting revenue of $14.0 - $14.8 million and earnings of $0.00 to ($0.02) per share in Quarter 3.  We are also re-affirming our previously issued full year revenue guidance of $57-63 million for FY 2012.  The Company reserves the right to adjust this guidance at any time based on the ongoing execution of its business plan.  Current and prospective investors are encouraged to perform their own due diligence before buying or selling any of the Company's securities, and are reminded that the foregoing estimates should not be construed as a guarantee of future performance.  

____________________

(1)  Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and non-cash stock-based compensation expenses.  See table for a reconciliation to net income.

Conference Call
The Company has scheduled a web-cast and conference call to discuss their Q2 2012 results on July 19, 2012 at 11:00 AM EDT.  Interested investors should dial (877) 407-8035 (domestic) and (201) 689-8035 (international) at least five minutes prior to the call.  A replay of the conference call will be available until 11:59 PM on August 2, 2012 and can be accessed by dialing (877) 660-6853 (domestic) and (201) 612-7415 (international).  The playback account number is 397361 and the playback conference ID Number/PIN Number is 286.  The web-cast may be accessed under the Investor Relations section of our website at http://www.neogenomics.com or http://www.investorcalendar.com/IC/CEPage.asp?ID=169119.  An archive of the web-cast will be available until 11:59 PM EST on November 19, 2012.

About NeoGenomics, Inc.
NeoGenomics, Inc. is a high-complexity CLIA–certified clinical laboratory that specializes in cancer genetics testing, the fastest growing segment of the laboratory industry.  The company's testing services include cytogenetics, fluorescence in-situ hybridization (FISH), flow cytometry, immunohistochemistry, anatomic pathology and molecular genetic testing.  Headquartered in Fort Myers, FL, NeoGenomics has labs in Nashville, TN, Irvine, CA, Tampa, FL and Fort Myers, FL.  NeoGenomics services the needs of pathologists, oncologists, other clinicians and hospitals throughout the United States. For additional information about NeoGenomics, visit http://www.neogenomics.com.    

Interested parties can also access investor relations material from Hawk Associates at http://www.hawkassociates.com or neogenomics@hawk.com and from Zack's Investment Research at http://www.zacks.com or scr@zacks.com.

Forward Looking Statements
Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are forward-looking statements.  These forward looking statements involve a number of risks and uncertainties that could cause actual future results to differ materially from those anticipated in the forward looking statements, Actual results could differ materially from such statements expressed or implied herein. Factors that might cause such a difference include, among others, the company's ability to continue gaining new customers, offer new types of tests, and otherwise implement its business plan. As a result, this press release should be read in conjunction with the company's periodic filings with the SEC.

 


NeoGenomics, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)






ASSETS


 

June 30,

2012


 

December 31,

2011











  Cash, cash equivalents

$

2,566

$

2,628






  Restricted Cash


300


500






  Accounts Receivable (net of allowance for doubtful

     accounts of $2,466 and $2,150, respectively)


11,327


7,894






  Other Current Assets


2,363


2,156






TOTAL CURRENT ASSETS


16,556


13,178






PROPERTY AND EQUIPMENT (net of accumulated

   depreciation of $8,258 and $6,653, respectively)


8,410


6,642






INTANGIBLE ASSETS (net of accumulated amortization
of $70 and $-, respectively)


2,912


-






OTHER ASSETS


123


129






    TOTAL

$

28,001

$

19,949






LIABILITIES AND STOCKHOLDERS' EQUITY










CURRENT LIABILITIES

$

15,096

$

11,444






LONG TERM LIABILITIES


3,186


2,608






    TOTAL LIABILITIES


18,282


14,052






STOCKHOLDERS' EQUITY


9,719


5,897






   TOTAL

$

28,001

$

19,949






 

 

NeoGenomics, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)









For the Three-Months Ended
June 30,


For the Six-Months Ended

June 30,



2012


2011


2012


2011










NET REVENUE

$

15,611

$

10,466

$

30,771

$

19,271

COST OF REVENUE


 

8,244


 

5,810


 

16,261


 

10,750

GROSS PROFIT


7,367


4,656


14,510


8,521

 

OPERATING EXPENSES









General and administrative


4,066


2,914


7,816


5,618

Research and development


528


172


1,025


291

Sales and marketing


1,934


1,684


3,969


3,437

   Total operating expenses


6,528


4,770


12,810


9,346










INCOME (LOSS) FROM

OPERATIONS


839


(114)


1,700


(825)










INTEREST AND OTHER INCOME (EXPENSE) - NET


(288)


(179)


(546)


(361)










NET INCOME (LOSS) BEFORE TAXES


551


(293)


1,154


(1,186)










INCOME TAXES


-


-


-


-










NET INCOME (LOSS)

$

551

$

(293)

$

1,154

$

(1,186)










NET LOSS PER SHARE 

- Basic

$

0.01

$

(0.01)

$

0.03

$

(0.03)

- Diluted

$

0.01

$

(0.01)

$

0.02

$

(0.03)










WEIGHTED AVG NUMBER

OF SHARES OUTSTANDING

- Basic


44,954


42,857


44,827


42,299

- Diluted


47,650


42,857


47,501


42,299












 

 

NeoGenomics, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)



For the

Six Months Ended

June 30,
2012


For the

Six Months Ended

June 30,
2011






NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES

$

16

$

(1,054)






NET CASH USED IN INVESTING ACTIVITIES


(2,050)


(125)






NET CASH PROVIDED BY FINANCING ACTIVITIES


1,972


2,714






   NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(62)


1,535






CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


2,628


1,097






CASH AND CASH EQUIVALENTS, END OF PERIOD

$

2,566

$

2,632






SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:










Interest paid

$

529

$

344






 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND  FINANCING ACTIVITIES:






     Purchase of licenses

$

1,945

$

-

     Equipment leased under capital lease and equipment loans

$

2,140

$

523






 


NeoGenomics, Inc.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA AND ADJUSTED EBITDA
(Unaudited, in thousands)



For the Three-Months Ended

June 30,


For the Six-Months Ended
June 30,



2012


2011


2012


2011










Net Income (loss) (Per GAAP)

$

551

$

(293)

$

1,154

$

(1,186)










Adjustments to Net Loss:









   Interest expense (income), net


288


178


546


360

   Income tax expense


-


-


-


-

   Depreciation and amortization


912


475


1,675


963

 EBITDA


1,751


360


3,375


137










Further Adjustments to EBITDA:









  Non-cash stock-based

       compensation


192


123


343


249

 Adjusted EBITDA (non-GAAP)

$

1,943

$

483

$

3,718

$

386


Non – GAAP Adjusted EBITDA Definition

"Adjusted EBITDA" is defined by NeoGenomics as net income (loss) from continuing operations before (i) interest expense, (ii) tax expense and therapeutic discovery tax grants, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation and warrant amortization expense and (v) other extraordinary or non-recurring charges.  NeoGenomics believes that Adjusted EBITDA provides a more consistent measurement of operating performance and trends across reporting periods by excluding these cash and non-cash items of expense not directly related to ongoing operations from income.  Adjusted EBITDA also assists investors in performing analysis that is consistent with financial models developed by research analysts. 

 

Adjusted EBITDA as defined by NeoGenomics is not a measurement under GAAP and may differ from non-GAAP measures used by other companies.  There are limitations inherent in non-GAAP financial measures such as Adjusted EBITDA because they exclude a variety of charges and credits that are required to be included in a GAAP presentation, and do not therefore present the full measure of NeoGenomics recorded costs against its net revenue.  Accordingly, investors should consider non-GAAP results together with GAAP results in analyzing NeoGenomics financial performance.



 

 

NeoGenomics, Inc.

Supplemental Information on Customer Requisitions Received and Tests Performed
(Unaudited, in thousands, except test and requisition data)

 


 

 

For the

Three-
Months

Ended

June 30, 2012

 

 

For the

 Three-Months

Ended

June 30, 2011

 

 

 

% Inc (Dec)


 

 

 

For the

Six-Months

Ended

June 30, 2012

 

 

 

For the

Six-Months

Ended

June 30, 2011

 

 

 

% Inc (Dec)









Requisitions Rec'd (cases)

18,561

11,924

55.7%


35,495

22,138

60.3%

Number of Tests Performed

28,846

18,358

57.1%


55,778

33,754

65.2%

Avg. # of Tests / Requisition

1.55

1.54

0.9%


1.57

1.52

3.1%









Total Testing Revenue

$ 15,611

$ 10,466

49.2%


$  30,771

$ 19,271

59.7%

Avg Revenue/Requisition

$ 841.09

$ 877.75

(4.2)%


$ 866.92

$ 870.48

(0.4)%

Avg Revenue/Test

$ 541.20

$ 570.12

(5.1)%


$ 551.67

$ 570.92

(3.4)%









 

 

 

SOURCE NeoGenomics, Inc.



RELATED LINKS

http://www.neogenomics.org