Full Press Release Details
NeoGenomics Reports Record Revenues of $20.7 Million on 40% Test Volume Growth and Expanding Gross Margins for the Second
Company Raises Full-Year Revenue Guidance to $83 - $86 Million
Ft. Myers, Florida July 17, 2014 - NeoGenomics, Inc. (NASDAQ: NEO), a leading provider of cancer-focused genetic testing
services today reported its results for the second quarter of 2014.
Second Quarter 2014 Highlights:
Revenue for the second quarter was $20.7 million, an
increase of 32% over last year on test volume growth of 40%. This revenue growth was achieved despite a $1.05 million reduction in revenue as a result of our conservative interpretation of the contradictory new National Correct Coding Initiative
( NCCI ) edits relating to billing Medicare for certain FISH tests, which have yet to be clarified by CMS.
revenue-per-test decreased by 5.3% from the second quarter of last year due entirely to the NCCI FISH matter, average cost-of-goods-sold-per-test improved by 11.7%. As a result, gross margin increased to 49.5% from 45.9% in last year s second
Operating expenses increased by 45.2% to $9.7 million from $6.7 million in Quarter 2 of last year. This increase was driven by
an increase in the size of our sales team, increased commission and bad debt expense related to the increase in revenue, and continued investments in facilities, information technology, and new test development activities.
Adjusted EBITDA(1) for the quarter was $2.1
million, a 15.8% increase from last year. Net income was $274,000 or $0.01/share versus $273,000 or $0.01/share in Quarter 2 of last year. Absent the impacts of the NCCI FISH matter, the Company estimates that Adjusted EBITDA would have been $3.1
million and net income would have been approximately $1.1 million, or $0.02/share.
Douglas M. VanOort, the Company s Chairman and
CEO commented, We are extremely proud of our team and our results for the second quarter. The 32% growth in revenue and 360 basis point expansion in gross margin, particularly in the face of a 5.3% reduction in average unit price, is a
significant accomplishment. Our team is executing very well, and the receptivity to our full service product offering continues to gain significant traction in the marketplace.
Mr. VanOort continued, We are especially pleased with the 12% reduction in average cost of goods sold per test in the quarter. The
redesign of our Fort Myers, FL lab and our other lean initiatives are yielding results, and we continue to believe that average cost per test can be reduced by 8-10% in both 2014 and in 2015 on a full year basis.
We are also pleased to report a record $4.3 million of cash flow from operations in the quarter. Our accounts receivable balance
expressed in days sales outstanding (DSO) has now been reduced to 83 days on June 30th from a peak of 103 days earlier in the year. Our strong collections allowed us to fund more than half of
the purchase price of our recent acquisition of Path Logic with cash flow generated in the quarter.
Mr. VanOort concluded,
Given the opportunities for further market share gains, we made a conscious decision to invest heavily in our sales and IT teams, and in new product development. Although incremental profit was not as high as in previous periods, we believe
these investments will help further position our company for sustained growth well into the future.
Third Quarter and Full-Year 2014 Financial
The Company also issued the following Quarter 3 and full year 2014 guidance for NeoGenomics on a standalone basis and for the
incremental impacts of the recently announced acquisition of Path Logic. All EPS guidance excludes the impacts from any one-time transaction-related expenses from the acquisition which may be required to be expensed.
| Quarter 3 | 2014 Full Year | |||
| Revenue NEO Standalone | $20.0 21.0 MM | $78.5 80.5 MM | ||
| Revenue Path Logic (2) | 2.0 2.5 | 4.5 5.5 | ||
| Consolidated | 22.0 23.5 | 83.0 86.0 | ||
| Recurring EPS NEO Standalone | $0.00 0.01 | $0.02 0.04 | ||
| Recurring EPS Path Logic (2) | (0.01) 0.00 | (0.02) (0.01) | ||
| Consolidated | (0.01) 0.01 | 0.00 0.03 |
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
The Company has scheduled a web-cast and conference call to discuss their Q2 2014 results on Thursday July 17, 2014 at 11:00 AM EDT.
Interested investors should dial (877) 407-0782 (domestic) and (201) 689-8567 (international) at least five minutes prior to the call and ask for Conference ID Number 13584103. A replay of the conference call will be available until 11:59
PM on July 31, 2014 and can be accessed by dialing (877) 660-6853 (domestic) and (201) 612-7415 (international). The playback conference ID Number is 13584103. 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=172856. An archive of the web-cast will be available until 11:59 PM on October 17, 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, 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
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.
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)
| June 30, 2014 | December 31, 2013 | |||||||
| ASSETS | ||||||||
| Cash, cash equivalents | $ | 5,023 | $ | 4,834 | ||||
| Accounts Receivable ( net of allowance for doubtful accounts of $5,709 and $4,540 respectively) | 18,800 | 18,653 | ||||||
| Other Current Assets | 4,259 | 4,004 | ||||||
| TOTAL CURRENT ASSETS | 28,082 | 27,491 | ||||||
| PROPERTY AND EQUIPMENT (net of accumulated depreciation of $16,877 and $14,478, respectively) | 12,974 | 9,694 | ||||||
| INTANGIBLE ASSETS ( net of accumulated amortization of $516 and $405, respectively) | 2,466 | 2,577 | ||||||
| OTHER ASSETS | 116 | 154 | ||||||
| TOTAL | $ | 43,638 | $ | 39,916 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| CURRENT LIABILITIES | $ | 15,226 | $ | 14,323 | ||||
| LONG TERM LIABILITIES | 5,279 | 3,882 | ||||||
| TOTAL LIABILITIES | 20,505 | 18,205 | ||||||
| STOCKHOLDERS EQUITY | 23,133 | 21,711 | ||||||
| TOTAL | $ | 43,638 | $ | 39,916 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| For the Three-Months Ended June 30, | For the Six-Months Ended June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| NET REVENUE | $ | 20,670 | $ | 15,603 | $ | 38,852 | $ | 31,260 | ||||||||
| COST OF REVENUE | 10,431 | 8,446 | 19,904 | 16,857 | ||||||||||||
| GROSS PROFIT | 10,239 | 7,157 | 18,948 | 14,403 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative | 5,870 | 4,064 | 10,924 | 8,239 | ||||||||||||
| Research and development | 633 | 616 | 1,261 | 1,451 | ||||||||||||
| Sales and marketing | 3,158 | 1,972 | 5,791 | 3,903 | ||||||||||||
| Total operating expenses | 9,661 | 6,652 | 17,976 | 13,593 | ||||||||||||
| INCOME FROM OPERATIONS | 578 | 505 | 972 | 810 | ||||||||||||
| INTEREST AND OTHER INCOME (EXPENSE) - NET | (253 | ) | (232 | ) | (518 | ) | (517 | ) | ||||||||
| INCOME BEFORE TAXES | 325 | 273 | 454 | 293 | ||||||||||||
| INCOME TAXES | 51 | 78 | 17 | |||||||||||||
| NET INCOME | $ | 274 | $ | 273 | $ | 376 | $ | 276 | ||||||||
| NET INCOME PER SHARE | ||||||||||||||||
| - Basic | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||
| - Diluted | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||
| WEIGHTED AVG NUMBER OF SHARES OUTSTANDING | ||||||||||||||||
| - Basic | 49,890 | 48,793 | 49,590 | 47,529 | ||||||||||||
| - Diluted | 53,733 | 53,744 | 53,551 | 52,297 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| For the Six Months Ended June 30, 2014 | For the Six Months Ended June 30, 2013 | |||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 5,298 | $ | 533 | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (1,966 | ) | (608 | ) | ||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (3,143 | ) | 2,843 | |||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 189 | 2,768 | ||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 4,834 | 1,868 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 5,023 | $ | 4,636 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | 498 | $ | 495 | ||||
| Income taxes paid | $ | 170 | $ | 17 | ||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Equipment leased under capital lease and equipment loans | $ | 3,321 | $ | 1,402 |
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA AND ADJUSTED EBITDA
(Unaudited, in thousands)
| For the Three-Months Ended June 30, | For the Six-Months Ended June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net income (Per GAAP) | $ | 274 | $ | 273 | $ | 376 | $ | 276 | ||||||||
| Adjustments to Net Income: | ||||||||||||||||
| Interest expense (income), net | 256 | 232 | 521 | 517 | ||||||||||||
| Amortization of intangibles | 55 | 55 | 111 | 111 | ||||||||||||
| Income tax expense | 51 | 78 | 17 | |||||||||||||
| Depreciation | 1,283 | 1,063 | 2,434 | 2,052 | ||||||||||||
| EBITDA | 1,919 | 1,623 | 3,520 | 2,973 | ||||||||||||
| Further Adjustments to EBITDA: | ||||||||||||||||
| Non-cash stock-based compensation | 197 | 202 | 281 | 646 | ||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 2,116 | $ | 1,825 | $ | 3,801 | $ | 3,619 |
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 June 30, 2014 | For the Three- Months Ended June 30, 2013 | % Inc (Dec) | For the Six-Months Ended June 30, 2014 | For the Six-Months Ended June 30, 2013 | % Inc (Dec) | |||||||||||||||||||
| Requisitions Rec d (cases) | 29,354 | 20,875 | 40.6 | % | 54,058 | 41,479 | 30.3 | % | ||||||||||||||||
| Number of Tests Performed | 45,475 | 32,519 | 39.8 | % | 84,209 | 64,607 | 30.3 | % | ||||||||||||||||
| Avg. # of Tests / Requisition | 1.55 | 1.56 | (0.6 | )% | 1.56 | 1.56 | 0.0 | % | ||||||||||||||||
| Total Testing Revenue | $ | 20,670 | $ | 15,603 | 32.5 | % | $ | 38,852 | $ | 31,260 | 24.3 | % | ||||||||||||
| Avg. Revenue/Requisition | $ | 704 | $ | 747 | (5.8 | )% | $ | 719 | $ | 754 | (4.6 | )% | ||||||||||||
| Avg. Revenue/Test | $ | 455 | $ | 480 | (5.3 | )% | $ | 461 | $ | 484 | (4.6 | )% | ||||||||||||
| Total Cost of Revenue | $ | 10,431 | $ | 8,446 | 23.5 | % | $ | 19,903 | $ | 16,857 | 18.1 | % | ||||||||||||
| Avg. Cost/Requisition | $ | 355 | $ | 405 | (12.2 | )% | $ | 368 | $ | 406 | (9.4 | )% | ||||||||||||
| Avg. Cost/Test | $ | 229 | $ | 260 | (11.7 | )% | $ | 236 | $ | 261 | (9.4 | )% |