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NeoGenomics Raises Full-Year Guidance as Q3 Revenues Top Estimates

NEW YORK – NeoGenomics said after the close of the market Monday that its third quarter revenues increased 18 percent year over year, topping analysts' consensus estimate and spurring the company to raise its full-year revenue guidance for the second consecutive quarter.

For the three months ended Sept. 30, the Fort Myers, Florida-based oncology testing services company reported total revenues of $152 million. On average, analysts had expected Q3 revenues of $142 million.

NeoGenomics' Q3 Clinical Services revenue jumped 20 percent to $128 million with the company's clinical test volume increasing 7 percent year over year and its average revenue per clinical test increasing 12 percent to $440.

Meanwhile, the company's Q3 Advanced Diagnostics revenue increased 8 percent year over year to $24 million.

In a conference call recapping Q3 earnings, NeoGenomics CFO Jeff Sherman noted that Q3 revenue growth was driven by increasing clinical test volumes, a continuing shift to higher-complexity tests, and improvements in revenue per test "driven by business mix and revenue cycle improvements."

Meanwhile, NeoGenomics CEO Chris Smith noted during the call that next-generation sequencing-based testing grew more than 35 percent in the quarter and now represents about 25 percent of the company's total clinical revenue. In addition, he said that Advanced Diagnostics, which includes pharma services and informatics, grew 8 percent year over year driven by continued growth in informatics and various applications of the company's Radar minimal residual disease liquid biopsy technology.

During the quarter, Smith further noted, the company completed three submissions to the MolDx diagnostic test insurance reimbursement program administered by Medicare contractor Palmetto. These submissions included one additional breast cancer application, as well as two new indications for lung cancer and head and neck cancer. In the second quarter of this year, the company had already garnered its first Medicare coverage for Radar with a local coverage determination for use of the test in patients with HR-positive, HER2-negative breast cancer. 

"Collectively, we now have 27 studies in progress utilizing Radar technology," Smith said. "Some of these are interventional trials including … in head and neck [and] breast and a randomized [circulating tumor] DNA lung [cancer] trial." Smith also said that additional Radar breast cancer data will be presented at the San Antonio Breast Cancer Symposium in December, and that the company has three posters featuring hematological modalities accepted for presentation at the American Society of Hematology annual meeting, also in December.

The company's Q3 R&D expenses shrunk 27 percent to $5.3 million from $7.3 million a year ago, while its SG&A spending retreated 2 percent to $79.1 million from $81.1 million a year ago.

NeoGenomics slashed its Q3 net loss to $18.5 million, or $.15 per share, from a net loss of $36.9 million, or $.30 per share, a year ago. On an adjusted basis, the firm reported earnings per share of $.00, bettering analysts' consensus estimate of a loss per share of $.08.

The company finished the quarter with $306.2 million in cash and cash equivalents and $96.0 million in marketable securities.

In light of the strong quarter, NeoGenomics upped its full-year revenue guidance to a range of $585 million to $592 million, representing 15 percent to 16 percent year-over-year growth, compared to a previous range of $565 million to $575 million. The firm also now expects a full-year net loss of $89 million to $95 million compared to prior guidance of $100 million to $107 million.