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NeoGenomics Q2 Revenues Grow 18 Percent

NEW YORK (GenomeWeb) – NeoGenomics today reported an 18 percent year-over-year increase in second quarter revenues, including a 12 percent rise in testing revenue. 

For the three months ended June 30, the Ft. Myers, Florida-based cancer genetics testing company posted $24.3 million in revenues, up from $20.7 million in the year-ago quarter but falling shy of analysts' consensus estimate of $25.3 million.

During the recently completed quarter, NeoGenomics performed 55,223 tests for $22.4 million in testing revenues, compared to 45,475 tests and $20.7 million in testing revenues in the year-ago period. 

The firm's acquisition of PathLogic accounted for about half the revenue increase, or $1.9 million.

"Our base business had very strong results in the second quarter, which were partially masked by exceptionally large decreases in FISH reimbursement and the continued insourcing of certain FISH tests by our largest client," NeoGenomics CEO Douglas VanOort said in a statement.

Average revenue per test declined to $406 from $455. VanOort attributed the drop to a decrease in reimbursement for fluorescent in situ hybridization testing as a result of new billing codes introduced this year.

However, VanOort said that the Centers for Medicare & Medicaid Services is seeking to correct the 2015 reimbursement levels for FISH testing based on a recently released proposed rule for 2016. "If the rule is implemented as drafted, we estimate that approximately $6 million to $8 million of the $12 million two-year reduction in FISH reimbursement would be reversed, assuming most commercial insurances will follow Medicare's lead," he said.

The firm had a net loss of $176,000, or $.00 per share, in Q2 2015, compared to a profit of $274,000, or $.01, in Q2 2014. On average, analysts had expected a net loss per share of $.01 in Q2.

NeoGenomics increased its R&D spending 27 percent year over year to $803,000 from $633,000. Its SG&A costs were up just over 9 percent to $10 million from $9 million.  

The firm ended the first quarter with $33 million in cash and cash equivalents.

For full-year 2015, NeoGenomics lowered its guidance to between $100 million and $103 million from between $103 million and $108 million, due to overall reduction in FISH reimbursement and softness in PathLogic revenue.

In morning trading on the Nasdaq on Tuesday, shares of NeoGenomics were down 7 percent at $5.92.