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Test Volume Drives up Neogenomics' Q1 Revenues 73 Percent

NEW YORK (GenomeWeb News) – Neogenomics today reported a 73 percent uptick in first-quarter revenues year over year as the number of tests performed increased 75 percent.

Revenues for the three months ended March 31 totaled $15.2 million, up from $8.8 million a year ago. The number of tests performed during the quarter increased to 26,932 from 15,396 a year ago.

A net loss of $893,000, or $.02 per share, a year ago was turned into a profit of $603,000, or $.01 per share, in Q1 2012.

The firm's R&D expenses more than quadrupled to $497,000 from $119,000. Its SG&A costs rose 29 percent to $5.8 million from $4.5 million due to an increase in payroll expense and bad debt expense, the Ft. Myers, Fla.-based firm said.

Neogenomics ended the quarter with $2.8 million in cash and cash equivalents and $300,000 in restricted cash.

At the end of March, the company announced an agreement with CapitalSource Finance to increase the maximum availability of its revolving credit facility to $8 million from $5 milllion.

Neogenomics Chairman and CEO Douglas VanOort said in a statement today that the first quarter marked the company's first in which it surpassed $15 million in revenues, resulting from "significant increases in spending for R&D and new test development." He added that in 2012 the firm expects to launch 25 new molecular tests.

VanOort noted that the firm remains in discussions with the American Clinical Laboratory Association and the College of American Pathologists to permanently extend the Hospital Technical Component Grandfather Clause, under which independent laboratories have billed Medicare directly for the technical component of tests reimbursed under the Medicare Physician Fee Schedule, and which is set to expire on June 30 as a result of recent legislation.

If it does expire, pathology laboratories would have to bill hospitals directly for the technical component of affected tests starting July 1. VanOort said that under such a scenario, hospitals may seek price concessions on affected tests, which could reduce Neogenomic's average revenues per test by 5 percent to 8 percent beginning in the third quarter.

"Although the immediate impacts would likely result in 'break-even' profitability for the third quarter, we believe that growth and productivity improvements will offset these impacts in fairly short order," VanOort said.

Neogenomics issued guidance for the second quarter of between $15.5 million and $16 million in revenues, and break-even to $.01 in EPS.

The company raised revenue guidance for full-year 2012 to between $57 million and $63 million from a previous range of $54 million to $59 million. EPS guidance remained at between $.02 and $.04.

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