NEW YORK – NeoGenomics believes that its clinical testing strength, driven by its expansion into next-generation sequencing, represents a bright future for the company overall despite continued weakness in its nonclinical business, company executives said Tuesday.
The firm reported Tuesday morning that its revenues for the first quarter of 2025 were up 8 percent year over year, driven primarily by higher test volume, which was partially offset by lower nonclinical revenue.
For the three months ended March 31, the company brought in $168.0 million in total revenues, compared to $156.2 million in the same period last year, falling short of Wall Street's average prediction of $170.9 million. Shares of the company tumbled more than 20 percent in early Tuesday trading on the Nasdaq and had dropped nearly 34 percent in mid-afternoon trading to $6.59.
However, executives maintained in an earnings call that the firm has every reason to believe that its clinical testing growth is a boon for the future, and that it can turn around its nonclinical business in time.
In Q1, the firm's average revenue per clinical test increased by 3 percent to $459, reflecting higher value tests, including next-generation sequencing, as well as strategic reimbursement initiatives, the firm said.
During the call, NeoGenomics President and Chief Operating Officer Warren Stone said that the company's clinical test volumes grew 8 percent in the first quarter and that NGS tests, in particular, grew 18 percent year over year. "Since Q1 of 2023, we have launched five NGS products that accounted for 22 percent of our total clinical revenue in Q1, which demonstrates our ability to penetrate the market with new and relevant products and the value of our sales channel," he said.
Stone added that NeoGenomics believes it can continue to grow its share of the NGS market above the average rate of expansion for that market. "We expect that with the upcoming product launches, as well as the maturation of [an] expanded sales force, we'll be able to further accelerate growth and achieve the 25 percent annual growth in NGS that we outlined in our long-range plan," he said.
The firm is preparing to launch its PanTracer liquid biopsy test later this quarter and to kick off its commercial collaboration with Adaptive Biotechnologies to deliver combined hematologic cancer testing starting in the third quarter.
NeoGenomics Chief Innovation Officer Andrew Lukowiak described PanTracer LBx as a blood-based test that analyzes circulating tumor DNA to identify key genomic alterations in patients with advanced-stage solid tumors. It is designed to support treatment decisions when tumor tissue is unavailable or insufficient.
In the company's validation study, Lukowiak said that PanTracer LBx demonstrated strong concordance with comparable products across multiple biomarker classes, including calculations of microsatellite instability and tumor mutational burden scores, which can aid in the selection of various immunotherapeutic treatments.
The company has submitted this study along with other analytical validation data for approval by Medicare's MolDx program, run by Medicare administrative contractor Palmetto. Investigators also shared some data from its validation package in a presentation this week at the annual meeting of the American Association for Cancer Research.
In its meeting poster, the company reported that PanTracer LBx showed high accuracy for detection of both SNVs and indels, meeting all of the company's prespecified analytical validation acceptance criteria.
Lukowiak said that in preparation for a full clinical launch later this quarter, NeoGenomics is allowing select physicians to use the assay on a limited basis under an evaluation assessment program. The EAP is intended to test and identify opportunities to streamline logistics, reporting, and customer support ahead of a full launch.
According to Lukowiak, physician interest in the program has been strong, and the company was pleased to see the program oversubscribed within five days of its announcement.
With the launch of PanTracer LBx, NeoGenomics is also updating and rebranding its NEO comprehensive NGS panel, which will now be called PanTracer Tissue. The upgrade to the tissue test will include the option of adding HRD (homologous recombination deficiency) scoring, which provides predictive and prognostic value in ovarian cancer therapy selection with potential in other tumor types, as well.
Stone said the company anticipates a large portion of customers for the new liquid biopsy NGS test will come from lung cancer, where testing has been embraced by guidelines.
Other applications will be a matter of physician preference. "We are hearing more and more that physicians like the flexibility of the faster turnaround time [with liquid biopsy], and it eliminates the need for block retrieval," he said.
While highlighting the firm's progress in clinical NGS testing, Stone also acknowledged its struggles with the nonclinical arm of its business, saying that macro factors have impacted things beyond what the company had anticipated.
"Specifically, pharma and biotech spend has not rebounded sufficiently to facilitate growth in that business," Stone said, noting recent tariff announcements and other trade headwinds, as well as potential cuts in National Institutes of Health funding.
"While the nonclinical portion of our business accounts for around 10 percent of our total revenue in the quarter and is dilutive to our growth today, we continue to believe in the strategic value of this business and are confident it will return to growth," he added.
NeoGenomics' Q1 net loss was $25.9 million, or $.20 per share, compared to a net loss of $27.1 million, or $.21 per share, in the first quarter of 2024. On an adjusted basis, the firm calculated its Q1 net loss as $.00 per share, just shy of analysts' average expectation of a net loss of $.01 per share.
NeoGenomics' Q1 R&D expenses were $10.2 million, up 34 percent from $7.6 million in the first quarter of 2024. Its SG&A costs were $90.9 million, up 6 percent from $86.0 million.
According to the company, its operating expenses included higher compensation and benefit costs as well as an increase in software and technology costs.
The firm ended the quarter with $346.2 million in cash and cash equivalents and $11.9 million in marketable securities.
It also revised its full-year 2025 guidance to reflect the inclusion of $12 million to $14 million of revenue related to its acquisition of Pathline, a New Jersey-based clinical lab. The company now expects between $747 million and $759 million in full-year revenues.