Full Press Release Details
NeoGenomics Reports Revenue of $15.6 Million, Adjusted EBITDA of $1.8 Million and Earnings per share of $0.01 for the Second Quarter
Ft. Myers, Florida - July 31, 2013 - NeoGenomics, Inc. (NASDAQ: NEO), a leading provider of
cancer-focused genetic testing services today reported its results for the second quarter of 2013.
Revenue for the second quarter was $15.6 million, essentially unchanged from second quarter 2012 revenue. Test volume increased by 12.7%.
Year over year revenue growth was impacted by the $1.3 million reduction in quarterly revenue that resulted from the expiration of the Medicare Technical Component Grandfather Clause (TCGF) in July 2012. Revenue growth was also impacted by decreases
in reimbursement for molecular testing which were finalized by CMS in the second quarter.
Average revenue per test declined
11.3% from last year, primarily as a result of the TCGF expiration. This decrease was partially offset by a 9.1% improvement in average cost of goods sold per test. As a result, gross profit margin decreased slightly to 45.9% in the second quarter
from 47.2% in the prior year. Total operating expenses increased by 1.9%, from last year s second quarter, primarily as a result of increases in R&D expenses.
Net income for the quarter was $273,000, or $0.01 per share, versus net income of $551,000, or $0.01 per share, in
last year s second quarter. Adjusted EBITDA(1) of
$1.8 million for the quarter was largely unchanged from last year s second quarter despite the approximately $1.6 million reduction in quarterly profit resulting from the TCGF expiration and molecular reimbursement changes.
Douglas M. VanOort, the Company s Chairman and CEO commented, Our quarterly
results were adversely impacted by Medicare s molecular reimbursement changes and resulted in approximately $275,000 less revenue than we would have otherwise reported. In addition, approximately $150,000 of expected clinical trials work was
delayed into the third quarter. These items reduced revenue from our original expectations for the second quarter.
Mr. VanOort continued, On the positive side, test volume continued to grow with a record number of new clients starting in
June. Test volume grew despite a slight increase in in-sourcing of certain tests by a few clients. We also continued to strengthen our Sales team by adding five experienced sales professionals. We now have a total of 26 sales representatives
covering the country. We expect our sales productivity to be strong for the second half of the year.
our steadfast focus on continuously improving laboratory operations and driving down costs is yielding results. A great number of our people are involved in Best Practice Teams, Kaizen events, and analysis and implementation of
automation initiatives. We have also increased our investment in Information Technology and expect to make significant improvements in electronic ordering and other methods to increase efficiencies. As a result of these initiatives, we drove a 9.1%
reduction in average cost-per-test over the last year and maintained gross margins of around 46% despite an 11.3% reduction in average revenue per test. We finished the second quarter with the lowest average cost-per-test we have ever
Mr. VanOort concluded, Innovation continues to be an important focus for
NeoGenomics. In the past six quarters, we developed and launched over 60 new molecular tests and now have the most comprehensive oncology-focused molecular test menu in America. Work also continues on our new plasma and urine-based, NeoSCORETM prostate cancer test. There are two goals for this test, to diagnose
the presence of cancer in patients with BPH (benign prostatic hyperplasia), and to distinguish high-grade from low-grade prostate cancer in patients with prostate cancer. We are excited about the potential for this test and currently expect to
launch it in the first half of 2014.
Third Quarter and Full-Year 2013 Financial Outlook:
We expect revenue of $15.8 - $16.4 million and earnings of $0.00 - $0.01 per share in Quarter 3. For the full year 2013, we expect revenue
to be $63-$66 million with earnings per share of $.01 - $.04. 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.
The Company has scheduled a web-cast and conference call to discuss their second quarter results on July 31, 2013 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 and ask for
Conference ID Number 418008. A replay of the conference call will be available until 11:59 PM on August 14, 2013 and can be accessed by dialing (877) 660-6853 (domestic) and
(201) 612-7415 (international). The playback Conference ID Number is 418008. 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=171229. An archive of the web-cast will be available until 11:59 PM on October 31, 2013.
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 neogenomics@hawk.com and from Zack s Investment Research at
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.
For further information,
| 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, 2013 | December 31, 2012 | |||||||
| ASSETS | ||||||||
| Cash, cash equivalents | $ | 4,636 | $ | 1,868 | ||||
| Accounts Receivable ( net of allowance for doubtful accounts of $4,147 and $3,002, respectively) | 16,005 | 14,034 | ||||||
| Other Current Assets | 2,522 | 2,679 | ||||||
| TOTAL CURRENT ASSETS | 23,163 | 18,581 | ||||||
| PROPERTY AND EQUIPMENT (net of accumulated depreciation of $12,341 and $10,289, respectively) | 8,437 | 8,607 | ||||||
| INTANGIBLE ASSETS (net of accumulated amortization of $293 and $182, respectively) | 2,689 | 2,800 | ||||||
| OTHER ASSETS | 170 | 83 | ||||||
| TOTAL | $ | 34,459 | $ | 30,071 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| CURRENT LIABILITIES | $ | 12,056 | $ | 17,758 | ||||
| LONG TERM LIABILITIES | 2,963 | 3,097 | ||||||
| TOTAL LIABILITIES | 15,019 | 20,855 | ||||||
| STOCKHOLDERS EQUITY | 19,440 | 9,216 | ||||||
| TOTAL | $ | 34,459 | $ | 30,071 |
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, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| NET REVENUE | $ | 15,603 | $ | 15,611 | $ | 31,260 | $ | 30,771 | ||||||||
| COST OF REVENUE | 8,446 | 8,244 | 16,857 | 16,261 | ||||||||||||
| GROSS PROFIT | 7,157 | 7,367 | 14,403 | 14,510 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative | 4,064 | 4,066 | 8,239 | 7,816 | ||||||||||||
| Research and development | 616 | 528 | 1,451 | 1,025 | ||||||||||||
| Sales and marketing | 1,972 | 1,934 | 3,903 | 3,969 | ||||||||||||
| Total operating expenses | 6,652 | 6,528 | 13,593 | 12,810 | ||||||||||||
| INCOME FROM OPERATIONS | 505 | 839 | 810 | 1,700 | ||||||||||||
| INTEREST AND OTHER INCOME (EXPENSE) - NET | (232 | ) | (288 | ) | (517 | ) | (546 | ) | ||||||||
| INCOME BEFORE TAXES | 273 | 551 | 293 | 1,154 | ||||||||||||
| INCOME TAXES | 17 | |||||||||||||||
| NET INCOME | $ | 273 | $ | 551 | $ | 276 | $ | 1,154 | ||||||||
| NET INCOME PER SHARE | ||||||||||||||||
| - Basic | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.03 | ||||||||
| - Diluted | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.02 | ||||||||
| WEIGHTED AVG NUMBER OF SHARES OUTSTANDING | ||||||||||||||||
| - Basic | 48,793 | 44,954 | 47,529 | 44,827 | ||||||||||||
| - Diluted | 53,744 | 47,650 | 52,297 | 47,501 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| For the Six Months Ended June 30, 2012 | For the Six Months Ended June 30, 2012 | |||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 533 | $ | 16 | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (608 | ) | (2,050 | ) | ||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 2,843 | 1,972 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2,768 | (62 | ) | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,868 | 2,628 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 4,636 | $ | 2,566 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | 495 | $ | 529 | ||||
| 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 | $ | 1,402 | $ | 2,140 |
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, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net income (Per GAAP) | $ | 273 | $ | 551 | $ | 276 | $ | 1,154 | ||||||||
| Adjustments to Net Income: | ||||||||||||||||
| Interest expense (income), net | 232 | 288 | 517 | 546 | ||||||||||||
| Amortization of intangibles | 55 | 56 | 111 | 70 | ||||||||||||
| Income tax expense | 17 | |||||||||||||||
| Depreciation | 1,063 | 856 | 2,052 | 1,605 | ||||||||||||
| EBITDA | 1,623 | 1,751 | 2,973 | 3,375 | ||||||||||||
| Further Adjustments to EBITDA: | ||||||||||||||||
| Non-cash stock-based compensation | 202 | 192 | 646 | 343 | ||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 1,825 | $ | 1,943 | $ | 3,619 | $ | 3,718 |
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 performance.
Supplemental Information on Customer Requisitions Received and Tests Performed
(Unaudited, in thousands, except test and requisition data)
| For the Three- Months Ended June 30, 2013 | For the Three- Months Ended June 30, 2012 | % Inc (Dec) | For the Six-Months Ended June 30, 2013 | For the Six-Months Ended June 30, 2012 | % Inc (Dec) | |||||||||||||||||||
| Requisitions Rec d (cases) | 20,875 | 18,561 | 12.5 | % | 41,479 | 35,495 | 16.9 | % | ||||||||||||||||
| Number of Tests Performed | 32,519 | 28,846 | 12.7 | % | 64,607 | 55,778 | 15.8 | % | ||||||||||||||||
| Avg. # of Tests / Requisition | 1.56 | 1.55 | 0.2 | % | 1.56 | 1.57 | (0.9 | )% | ||||||||||||||||
| Total Testing Revenue | $ | 15,603 | $ | 15,611 | (0.1 | )% | $ | 31,260 | $ | 30,771 | 1.6 | % | ||||||||||||
| Avg. Revenue/Requisition | $ | 747 | $ | 841 | (11.1 | )% | $ | 754 | $ | 867 | (13.1 | )% | ||||||||||||
| Avg. Revenue/Test | $ | 480 | $ | 541 | (11.3 | )% | $ | 484 | $ | 552 | (12.3 | )% | ||||||||||||
| Total Cost of Revenue | $ | 8,446 | $ | 8,244 | (2.5 | )% | $ | 16,857 | $ | 16,261 | 3.7 | % | ||||||||||||
| Avg. Cost/Requisition | $ | 405 | $ | 444 | (8.9 | )% | $ | 406 | $ | 458 | (11.4 | )% | ||||||||||||
| Avg. Cost/Test | $ | 260 | $ | 286 | (9.1 | )% | $ | 261 | $ | 292 | (10.6 | )% |