NeoGenomics Reports 72% Revenue Growth, 85% Gross Profit Growth and $1.5 Million Increase in Net Income for Q1 2012
Reinstates and Raises Full Year 2012 Revenue Guidance
FT. MYERS, Fla., April 25, 2012 /PRNewswire/ -- NeoGenomics, Inc. (NASD OTC QB: NGNM), a leading provider of cancer-focused genetic testing services today reported its results for the first quarter 2012.
First Quarter 2012 Highlights:
- 75% test volume growth
- 72% revenue growth
- 85% gross profit growth
- Adjusted EBITDA of $1.8 million versus $(97,000) in Q1 2011
- Net income of $603,000, or $0.01 per share, versus a net loss of ($893,000), or ($0.02) per share, in Q1 2011
Revenue for the first quarter 2012 was $15.2 million, a 72%, increase over first quarter 2011 revenue of $8.8 million. Tests reported increased by 75% and average revenue per test declined by 1.6%. Requisitions increased by 66% and the average number of tests per requisition increased by 5.5%. Average cost of goods sold per test improved by 7.2% from last year, which resulted in an improvement in gross margin to 47.1% in the first quarter as compared to 43.9% in the first quarter of last year. As a result, gross profit increased by 85% to $7.1 million.
Selling, research and development, and general and administrative (SG&A) expenses increased by $1.7 million, or 37%, from last year's first quarter due primarily to an increase in payroll, research and development expenses and bad debt expense. SG&A as a percentage of revenue fell to 41.4% from 52.0% last year. Net income for the quarter was $603,000 or $0.01/share versus a net loss of ($893,000) or ($0.02)/share in last year's first quarter. Adjusted EBITDA increased to $1.8 million from ($97,000) last year.
Douglas M. VanOort, the Company's Chairman and CEO, commented, "For the fourth quarter in a row we posted the largest year-over-year and sequential quarterly revenue increases in our corporate history, and for the first time we surpassed $15 million in quarterly revenue. We are very pleased with our record revenue and increases in both Adjusted EBITDA and Net Income. We continue to realize significant improvements in laboratory and sales force productivity as a result of initiatives we have implemented over the last two years. As a result, both gross margin and overall operating leverage have improved."
Mr. VanOort continued, "We achieved these results while investing heavily in our future, including significant increases in spending for R&D and new test development. We are expanding our Molecular testing menu and plan to launch approximately 25 new molecular tests this year alone. In addition, we are expanding our menu of immunohistochemistry tests and improving our service offering in this important area. Finally, we are making good progress in our work with Health Discovery Corporation to develop new cancer genetic tests and new and better ways to perform our current tests as a result of the licensing agreement we entered into earlier this year. Overall, we are making our operations stronger, investing in future growth opportunities, and operating profitably."
In other news, NeoGenomics continues to work with the American Clinical Laboratory Association and the College of American Pathologists to permanently extend the Hospital Technical Component ("TC") Grandfather Clause, which has allowed independent laboratories to bill Medicare directly for the technical component of tests reimbursed under the Medicare Physician Fee Schedule. As a result of recent legislation, this decades-old billing practice is now set to expire on June 30th. Unless it is extended further, NeoGenomics and other pathology labs will be required to begin billing hospitals directly for the technical component of affected tests beginning on July 1st.
In commenting on this legislation, Mr. VanOort stated, "In the event the TC Grandfather Clause is not extended further, we anticipate that previously grandfathered hospitals will seek price concessions on the affected services as they will receive little or no corresponding increases in reimbursement from Medicare. In such a scenario, we would expect an approximately 5-8% decrease in our overall average revenue per test beginning in Quarter 3. Although the immediate impacts would likely result in "break-even" profitability for the third quarter, we believe that growth and productivity improvements will offset these impacts in fairly short order. During 2011, we experienced similar reimbursement declines with average revenue per test decreasing by 6.3% from Quarter 4 2010 to Quarter 4 2011. However, our gross margin increased by 60 basis points during this period as a result of improvements in laboratory productivity. We expect that we could similarly absorb any unit price decreases in the event the TC Grandfather Clause is not extended."
Mr. VanOort concluded by saying, "We are also re-instating our previously suspended guidance for 2012. Given Quarter 1 performance, we are increasing our revenue guidance to $57-63 million for the full year 2012, and are re-instating our original 2012 earnings guidance of $0.02 - $0.04 per share."
Second Quarter 2012 Financial Outlook
The Company also issued guidance for the fiscal second quarter today. In Quarter 2, the Company expects revenue of $15.5 - $16.0 million and net income of $0.00 to $0.01 per share. This guidance is based on organic growth in the current business, and 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 Q1 2012 results on April 25, 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 May 9, 2012 and can be accessed by dialing (877) 660-6853 (domestic) and (201) 612-7415 (international). The playback account number is 392969 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=168279 An archive of the web-cast will be available until 11:59 PM EDT on August 25, 2012.
About NeoGenomics, Inc.
NeoGenomics, Inc. is a high-complexity CLIA–certified clinical laboratory that specializes in cancer genetics diagnostic 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 [email protected] and from Zack's Investment Research at http://www.zacks.com or [email protected].
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 |
March 31, 2012 |
December 31, 2011 |
||
Cash, cash equivalents |
$ |
2,756 |
$ |
2,628 |
Restricted Cash |
300 |
500 |
||
Accounts Receivable (net of allowance for doubtful accounts of $2,293 and $2,150, respectively) |
10,683 |
7,894 |
||
Other Current Assets |
2,249 |
2,156 |
||
TOTAL CURRENT ASSETS |
15,988 |
13,178 |
||
PROPERTY AND EQUIPMENT (net of accumulated depreciation of $7,402 and $6,653, respectively) |
7,355 |
6,642 |
||
INTANGIBLE ASSETS (net of accumulated amortization |
2,968 |
- |
||
OTHER ASSETS |
129 |
129 |
||
TOTAL |
$ |
26,440 |
$ |
19,949 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
CURRENT LIABILITIES |
$ |
14,749 |
$ |
11,444 |
LONG TERM LIABILITIES |
3,021 |
2,608 |
||
TOTAL LIABILITIES |
17,770 |
14,052 |
||
STOCKHOLDERS' EQUITY |
8,670 |
5,897 |
||
TOTAL |
$ |
26,440 |
$ |
19,949 |
NeoGenomics, Inc. |
||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||
(Unaudited, in thousands, except per share data) |
||||
For the Three Ended March 31, |
For the Three Ended March 31, |
|||
REVENUE |
$ |
15,160 |
$ |
8,805 |
COST OF REVENUE |
8,016 |
4,940 |
||
GROSS PROFIT |
7,144 |
3,865 |
||
OPERATING EXPENSES: |
||||
General and administrative |
3,750 |
2,704 |
||
Research and development |
497 |
119 |
||
Sales and marketing |
2,036 |
1,753 |
||
Total operating expenses |
6,283 |
4,576 |
||
INCOME (LOSS) FROM OPERATIONS |
861 |
(711) |
||
INTEREST AND OTHER INCOME (EXPENSE) - NET |
(258) |
(182) |
||
NET INCOME (LOSS) |
$ |
603 |
$ |
(893) |
NET INCOME (LOSS) PER SHARE |
||||
- Basic |
$ |
0.01 |
$ |
(0.02) |
- Diluted |
$ |
0.01 |
$ |
(0.02) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – - Basic |
44,697 |
41,734 |
||
- Diluted |
47,424 |
41,734 |
||
NeoGenomics, Inc. |
||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
(Unaudited, in thousands) |
||||
For the Three March 31, |
For the Three March 31, |
|||
NET CASH USED IN OPERATING ACTIVITIES |
$ |
(1,065) |
$ |
(1,544) |
NET CASH USED IN INVESTING ACTIVITIES |
(1,314) |
(71) |
||
NET CASH PROVIDED BY FINANCING ACTIVITIES |
2,507 |
3,051 |
||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
128 |
1,436 |
||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
2,628 |
1,097 |
||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
2,756 |
$ |
2,533 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW |
||||
Interest paid |
$ |
250 |
$ |
174 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||||
Purchase of licenses |
$ |
1,945 |
$ |
- |
Equipment leased under capital lease and equipment loans |
$ |
1,174 |
$ |
141 |
NeoGenomics, Inc. |
||||
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA AND ADJUSTED EBITDA |
||||
(Unaudited, in thousands) |
||||
For the Three Months Ended |
||||
2012 |
2011 |
|||
Net income (loss) |
$ |
603 |
$ |
(893) |
Adjustments to Net Income (Loss): |
||||
Interest expense (income), net |
258 |
182 |
||
Amortization of intangibles |
14 |
- |
||
Depreciation |
749 |
488 |
||
EBITDA |
1,624 |
(223) |
||
Further Adjustments to EBITDA: |
||||
Non-cash stock-based compensation |
151 |
126 |
||
Adjusted EBITDA |
$ |
1,775 |
$ |
(97) |
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 Ended March 31, |
For the Three Ended March 31, |
% Increase |
|
Requisitions Received |
16,934 |
10,214 |
65.8% |
Number of Tests Performed |
26,932 |
15,396 |
74.9% |
Avg. # of Tests / Requisition |
1.59 |
1.51 |
5.5% |
Total Testing Revenue |
$15,160 |
$8,805 |
72.2% |
Avg. Revenue/Requisition |
$ 895.23 |
$ 862.00 |
3.9% |
Avg. Revenue/Test |
$ 562.89 |
$ 571.87 |
(1.6)% |
SOURCE NeoGenomics, Inc.
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