Full Press Release Details
NeoGenomics Reports Record Revenue of $18.3 Million, Adjusted EBITDA of $2.7 Million and Net Income of $0.02 per Share for the
Company Set to Launch Next Generation Sequencing Services in March 2014
Ft. Myers, Florida - February 19, 2014 - NeoGenomics, Inc. (NASDAQ: NEO), a leading provider of cancer-focused genetic testing
services today reported its results for the fourth quarter and full year of 2013.
Fourth Quarter 2013 Highlights:
Revenue for the fourth
quarter was $18.3 million, a 23% increase over fourth quarter 2012 revenue. Test volume increased by 28%, while average revenue per test declined by 3.7%. Average cost of goods sold per test declined by 15.3% driven by continued productivity
improvements, increased leverage from higher volumes, and other cost containment initiatives. As a result, gross profit increased by 42% to $9.2 million and gross margin increased to 50.0% from 43.2% in the prior year.
Total operating expenses increased by 27.6% from last year s fourth quarter, primarily as a result of additional sales representatives,
increases in billing and information technology costs, and an increase in stock-based compensation expense related to the increase in the Company s stock price in the fourth quarter 2013.
Net income for the quarter was $857,000, or $0.02 per share, versus a net loss of $(113,000), or $(0.00) per share, in last year s fourth
quarter. Adjusted EBITDA(1) improved by 90% to $2.7 million in Quarter 4 from $1.4 million last year.
For fiscal year 2013, revenue was $66.5 million, an 11% increase from 2012. Test volume increased
by 20%, while average revenue per test declined by 7.3%. Revenue growth was driven by an expanded menu of tests and an increasing client base. Average cost of goods sold per test declined by 12.2%. As a result, gross profit increased by 18% to $31.7
million and gross margin increased to 47.8% from 44.8% in 2012.
Total operating expenses for fiscal year 2013 increased by 11.5% from
2012, primarily as a result of additional sales representatives and increases in billing and information technology expenses. Net income for 2013 was $2.0 million, or $0.04 per share, versus $0.00 per share in 2012. Adjusted EBITDA(1) improved by 42% to $8.5 million in 2013 from $6.0 million in 2012.
VanOort, the Company s Chairman and CEO commented, We are very proud of both our fourth quarter and full year results. Despite continued pressure on reimbursement, we achieved strong revenue growth and sharply increased gross margins. Our
stream of innovative new tests and consistently high service levels is attracting new clients, and we are gaining market share. We have also been successful at increasing productivity and reducing costs. As a result, we were able to drive 80% of the
year-over-year revenue increase to gross profit in the fourth quarter, and increase net income by almost $1.0 million, despite a 3.7% reduction in average revenue-per-test over the same period.
Mr. VanOort continued, Our brisk pace of innovation continues. During 2013, we launched approximately 40 new molecular tests and
NeoTYPE cancer profiles. With 68 new molecular tests launched over the last two years, we now have one of the broadest molecular testing menus in the world. Our comprehensive test menu is attracting the interest of both traditional clients and of
the pharmaceutical industry.
He added, We are very enthusiastic about our growth plans for 2014. We expect to launch Next
Generation Sequencing testing in March, and we are making significant progress developing our new NeoSCORETM Prostate Cancer Test. The preliminary results of our first trial have now been
published online in the Genetic Testing and Molecular Biomarkers Journal and we recently completed a second trial which has largely confirmed the results of the first trial. In addition, we are off to a good start in our new strategic alliance
with Covance, and expect growth of our clinical trials business as the year progresses.
Mr. VanOort concluded, Although there
is uncertainty regarding new guidance from CMS National Correct Coding Initiative (NCCI) on how to properly bill for FISH testing for Medicare beneficiaries, we believe reimbursement for the rest of our testing and from our non-Medicare payers
will remain reasonably stable in 2014. We also expect to reduce costs per test by another 8-10% this year. In addition, we are increasingly focused on exploring mergers and/or acquisitions as a means to increase our scale and to diversify our
First Quarter and Full-Year 2014 Financial Outlook:
The Company also issued preliminary guidance for the full year and fiscal first quarter of 2014 today. Before factoring in any potential
impacts from a negative resolution of the NCCI FISH edit issue (see below), which currently remains unresolved, the Company expects revenue of $73 - $77 million and net income of $0.05 - $0.07 per share in FY 2014. For the fiscal first quarter, the
company expects revenue of $18.8 - $19.3 million and net income of $0.01 - $0.02 per share.
While NeoGenomics is still determining the impacts that might arise from a negative resolution of
the NCCI FISH edit issue, the Company preliminarily estimates that it may result in a reduction of approximately $3 million of revenue and $0.04 per share of net income for the full year 2014 with the impact concentrated more in the first half of
the year. For the first quarter of 2014, a negative resolution of this issue may result in a reduction of approximately $1.0 million of revenue and $0.02 per share of net income.
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.
Recent Guidance from the National Correct Coding Initiative on FISH Testing
In December 2013, the Centers for Medicare and Medicaid Services (CMS) issued new guidance through their National Correct Coding Initiative
(NCCI) Policy Manual which could potentially change how laboratories account for the quantity of FISH probes being billed to CMS. The Company issued a Form 8-K with the SEC this morning discussing this issue in detail, and there is now a link on the
homepage of the Company s website with a more complete discussion of the issue as well as a copy of a recent letter to the Medical Director of the NCCI requesting clarification on the issue.
scheduled a web-cast and conference call to discuss their Q4 2013 and full year 2013 results on Wednesday February 19, 2014 at 11:00 AM EST. Interested investors should dial (877) 407-8035 (domestic) and (201) 689-8035 (international)
at least five minutes prior to the call and ask for Conference ID Number 13574927. A replay of the conference call will be available until 11:59 PM on March 5, 2014 and can be accessed by dialing (877) 660-6853 (domestic) and
(201) 612-7415 (international). The playback conference ID Number is 13574927. The web-cast may be accessed under the Investor Relations section of our website at www.neogenomics.com or
http://www.investorcalendar.com/IC/CEPage.asp?ID=172163. An archive of the web-cast will be available until 11:59 PM on May 19, 2014.
About NeoGenomics, Inc.
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, pharmaceutical firms, 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
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.
For further information, please contact:
| NeoGenomics, Inc. | Hawk Associates, Inc. | |
| Steven C. Jones | Ms. Julie Marshall | |
| Director of Investor Relations | (305) 451-1888 | |
| (239) 325-2001 | neogenomics@hawkassociates.com | |
| sjones@neogenomics.com |
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
| December 31, 2013 | December 31, 2012 | |||||||
| ASSETS | ||||||||
| Cash, cash equivalents | $ | 4,834 | $ | 1,868 | ||||
| Accounts Receivable ( net of allowance for doubtful accounts of $4,540 and $3,002, respectively) | 18,653 | 14,034 | ||||||
| Other Current Assets | 4,004 | 2,679 | ||||||
| TOTAL CURRENT ASSETS | 27,491 | 18,581 | ||||||
| PROPERTY AND EQUIPMENT (net of accumulated depreciation of $14,478 and $10,289, respectively) | 9,694 | 8,607 | ||||||
| INTANGIBLE ASSETS (net of accumulated amortization of $405 and $182, respectively) | 2,577 | 2,800 | ||||||
| OTHER ASSETS | 154 | 83 | ||||||
| TOTAL | $ | 39,916 | $ | 30,071 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| CURRENT LIABILITIES | $ | 14,323 | $ | 17,758 | ||||
| LONG TERM LIABILITIES | 3,882 | 3,097 | ||||||
| TOTAL LIABILITIES | 18,205 | 20,855 | ||||||
| STOCKHOLDERS EQUITY | 21,711 | 9,216 | ||||||
| TOTAL | $ | 39,916 | $ | 30,071 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| For the Three-Months Ended December 31, | For the Year Ended December 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| NET REVENUE | $ | 18,323 | $ | 14,893 | $ | 66,467 | $ | 59,867 | ||||||||
| COST OF REVENUE | 9,160 | 8,460 | 34,730 | 33,031 | ||||||||||||
| GROSS PROFIT | 9,163 | 6,433 | 31,737 | 26,836 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative | 4,823 | 4,097 | 17,397 | 15,843 | ||||||||||||
| Research and development | 649 | 448 | 2,440 | 2,281 | ||||||||||||
| Sales and marketing | 2,487 | 1,692 | 8,726 | 7,501 | ||||||||||||
| Total operating expenses | 7,959 | 6,237 | 28,563 | 25,625 | ||||||||||||
| INCOME FROM OPERATIONS | 1,204 | 196 | 3,174 | 1,211 | ||||||||||||
| INTEREST AND OTHER INCOME (EXPENSE) - NET | (241 | ) | (309 | ) | (989 | ) | (1,146 | ) | ||||||||
| INCOME (LOSS) BEFORE TAXES | 963 | (113 | ) | 2,185 | 65 | |||||||||||
| INCOME TAXES | 106 | 152 | ||||||||||||||
| NET INCOME (LOSS) | $ | 857 | $ | (113 | ) | $ | 2,033 | $ | 65 | |||||||
| NET INCOME (LOSS) PER SHARE | ||||||||||||||||
| - Basic | $ | 0.02 | $ | (0.00 | ) | $ | 0.04 | $ | 0.00 | |||||||
| - Diluted | $ | 0.02 | $ | (0.00 | ) | $ | 0.04 | $ | 0.00 | |||||||
| WEIGHTED AVG NUMBER OF SHARES OUTSTANDING | ||||||||||||||||
| - Basic | 49,021 | 45,273 | 48,263 | 45,027 | ||||||||||||
| - Diluted | 53,638 | 45,273 | 52,775 | 48,715 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| For the Year Ended December 31, 2013 | For the Year Ended December 31, 2012 | |||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ | 2,227 | $ | (492 | ) | |||
| NET CASH USED IN INVESTING ACTIVITIES | (2,011 | ) | (3,652 | ) | ||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 2,750 | 3,384 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2,966 | (760 | ) | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,868 | 2,628 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 4,834 | $ | 1,868 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | 1,073 | $ | 1,108 | ||||
| Income taxes paid | $ | 17 | $ | |||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Purchase of licenses | $ | $ | 1,945 | |||||
| Equipment leased under capital lease and equipment loans | $ | 3,249 | $ | 2,782 |
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA AND ADJUSTED EBITDA
(Unaudited, in thousands)
| For the Three-Months Ended December 31, | For the Year Ended December 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net income (loss) (Per GAAP) | $ | 857 | $ | (114 | ) | $ | 2,033 | $ | 65 | |||||||
| Adjustments to Net Income (Loss): | ||||||||||||||||
| Interest expense (income), net | 241 | 311 | 989 | 1,146 | ||||||||||||
| Amortization of intangibles | 56 | 56 | 223 | 182 | ||||||||||||
| Income tax expense | 106 | 152 | ||||||||||||||
| Depreciation | 1,074 | 1,088 | 4,189 | 3,637 | ||||||||||||
| EBITDA | 2,334 | 1,341 | 7,586 | 5,030 | ||||||||||||
| Further Adjustments to EBITDA: | ||||||||||||||||
| Non-recurring costs | 170 | |||||||||||||||
| Non-cash stock-based compensation | 399 | 99 | 929 | 798 | ||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 2,733 | $ | 1,440 | $ | 8,515 | $ | 5,998 |
Non - GAAP Adjusted EBITDA Definition
Adjusted EBITDA is defined by NeoGenomics as net income from continuing operations before (i) interest expense, (ii) tax expense,
(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
Supplemental Information on Customer Requisitions Received and Tests Performed
(Unaudited, in thousands, except test and requisition data)
| For the Three-Months Ended December 31, 2013 | For the Three-Months Ended December 31, 2012 | % Inc (Dec) | For the Year Ended December 31, 2013 | For the Year Ended December 31, 2012 | % Inc (Dec) | |||||||||||||||||||
| Requisitions Rec d (cases) | 25,215 | 19,971 | 26.3 | % | 88,431 | 73,773 | 19.9 | % | ||||||||||||||||
| Number of Tests Performed | 38,987 | 30,513 | 27.8 | % | 137,317 | 114,606 | 19.8 | % | ||||||||||||||||
| Avg. # of Tests / Requisition | 1.55 | 1.53 | 1.2 | % | 1.55 | 1.55 | 0.0 | % | ||||||||||||||||
| Total Testing Revenue | $ | 18,323 | $ | 14,893 | 23.0 | % | $ | 66,467 | $ | 59,867 | 11.0 | % | ||||||||||||
| Avg. Revenue/Requisition | $ | 726.69 | $ | 745.74 | (2.6 | )% | $ | 751.63 | $ | 811.50 | (7.4 | )% | ||||||||||||
| Avg. Revenue/Test | $ | 469.99 | $ | 488.09 | (3.7 | )% | $ | 484.04 | $ | 522.37 | (7.3 | )% | ||||||||||||
| Total Cost of Revenue | $ | 9,160 | $ | 8,460 | 8.3 | % | $ | 34,730 | $ | 33,031 | 5.1 | % | ||||||||||||
| Avg. Cost/Requisition | $ | 363.29 | $ | 423.60 | (14.2 | )% | $ | 392.73 | $ | 447.73 | (12.3 | )% | ||||||||||||
| Avg. Cost/Test | $ | 234.96 | $ | 277.25 | (15.3 | )% | $ | 252.92 | $ | 288.21 | (12.2 | )% |