This story has been updated with information from a conference call with NeoGenomics executives discussing the financial results.
NEW YORK – NeoGenomics Tuesday reported a 14 percent year-over-year decline in its second quarter revenues due to fallout from the COVID-19 pandemic.
For the three months ended June 30, total revenues reached $87.0 million, down from $101.7 million in Q2 2019, and slightly beating analysts' average estimate of $86.6 million.
Clinical services revenues decreased 14 percent to $73.9 million from $89.0 million a year ago, while pharma services revenues rose 3 percent to $13.1 million from $12.7 million. The increase in pharma revenue was primarily attributed to NeoGenomics' acquisition of the oncology assets of Human Longevity earlier this year, which CFO Kathryn McKenzie said on a conference call to discuss the results will allow NeoGenomics to advance its next-generation sequencing capabilities. Pharma services revenue was negatively impacted by delays in clinical trials and reduced patient enrollment in clinical trials, but CEO Douglas VanOort said the company had a current backlog of $170 million in signed contracts for the division.
In NeoGenomics' clinical operations, clinical test volume declined 18 percent and requisitions fell 21 percent to 114,413 in the recently completed quarter from 144,983 a year ago. The number of tests performed declined 18 percent to 204,844 from 250,330, and the average revenue per test fell slightly to $351 from $355. The disruptions in testing volume were the result of the COVID-19 pandemic, but the firm noted in a statement there were steady improvements throughout the second quarter.
On the call, VanOort said he expected core oncology testing volume to improve in the third quarter. He noted that the impact of the COVID-19 pandemic on testing volumes was most severe in April and that volumes began to recover throughout May and June. Testing volume in June was in line with volume in June 2019, although it was still 15 percent below the company's pre-COVID expectations.
The firm has also provided COVID-19 testing at its facility in Carlsbad, California, and currently has the capacity to perform more than 10,000 tests per day. VanOort said the company ramped up its COVID-19 testing in July and may scale up its capacity as the pandemic continues. NeoGenomics has benefited from the COVID-19 revenue, but VanOort emphasized it is short-term and "not an overall strategy."
In Q2 2020 the company's R&D spending declined 19 percent to $2.1 million in Q2 2020 from $2.6 million in Q2 2019, while its SG&A costs increased 7 percent to $44.8 million from $41.9 million. The operating increase was due to investments in informatics and the Human Longevity acquisition, McKenzie said, although it was offset by significantly reduced travel expenditures.
NeoGenomics posted a net loss of $6.8 million, or $.06 per share, during Q2 2020 compared to a profit of $2.0 million, or $.02 per share, a year ago. Its adjusted loss per share for the quarter was $.04 and missed the consensus Wall Street estimate of a loss of $.01 per share.
NeoGenomics exited the quarter with $331.3 million in cash, cash equivalents, and restricted cash. McKenzie noted that $36 million is restricted for construction of the firm's new facility in Fort Myers, Florida, which is expected to open in 2021.
She added that NeoGenomics received $7.9 million in provider disbursements from the CARES Act - $4 million in the second quarter, with the remainder disbursed earlier this month.
Earlier this year, NeoGenomics withdrew its previously issued full-year 2020 guidance because of uncertainty due to the pandemic. The firm had previously projected revenues of between $464 million and $474 million.
VanOort said NeoGenomics was expecting recovery in the second half of the year but noted there is still uncertainty as COVID-19 cases resurge in parts of the US. He said the firm expected to report organic revenue growth of 20 percent in the third quarter, due to the boost from COVID-19 testing and continuing recovery of the core oncology business.
In early morning trading on the Nasdaq, NeoGenomics' shares slid about 2 percent to $36.23.