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NeoGenomics Q4 Revenues Up on Strong Test Volume Growth

This article has been updated with comments from a conference call following the release of the firm's financial results.

NEW YORK (GenomeWeb) – NeoGenomics reported today a nine percent increase in fourth quarter revenues on increased base test volume growth, helping the firm top Wall Street's consensus estimate.

For the three-month period ended Dec. 31, the cancer genetics testing firm reported revenues of $27.3 million compared to $25 million in the same period the year before. Analysts had, on average, expected revenues of $26.5 million. 

Base test volume — which excludes contributions from PathLogic and Clarient, companies acquired by NeoGenomics in 2014 and 2015, respectively — grew 25 percent in the quarter, driven by increases in all of the company's product lines across all geographic regions.

Molecular testing growth was particularly strong, accounting for about a quarter of the company's test mix in the fourth quarter, NeoGenomics Chairman and CEO Douglas VanOort noted during a conference call to discuss the financial results. The fastest growing subset of molecular testing was the firm's NeoType cancer panels, which combine molecular, fluorescence in situ hybridization (FISH), and immunohistochemistry testing components and grew 75 percent year over year.

The firm's average revenue-per-test fell nearly 12 percent due to an approximately $2.1 million reduction in reimbursement for its fluorescence in situ hybridization (FISH) testing resulting from changes to FISH reimbursement levels in 2015 by the Centers for Medicare & Medicaid Services. However, this decrease was largely offset by an approximately 12 percent reduction in NeoGenomics' average cost per test.

NeoGenomics posted a net loss of $1.6 million, or $.03 per share, for the quarter, compared to a profit of $1.0 million, or $.02 per share, for Q4 2014. Excluding certain one-time expenses related to the Clarient acquisition and other items, NeoGenomics' non-GAAP adjusted net income for the fourth quarter climbed to $2.9 million, or $.05 per share, versus $1.1 million, or $.02 per share in the year-ago quarter, beating Wall Street's consensus EPS estimate of $.02.

The firm's SG&A costs in the quarter, which include one-time costs related to the Clarient acquisition and $1.6 million in variable stock-based compensation expenses, increased to $15.6 million from $9.7 million. NeoGenomics' R&D spending in the quarter surged to $1.9 million from $414,000 as it expanded its line of liquid biopsy tests and test panels to 16, and continued development of NeoLab Prostate, a liquid biopsy prostate cancer test.

NeoLab Prostate is currently available commercially, but NeoGenomics expects to ramp up marketing around the test in the second half of the year after the publication of data from a study evaluating the test in more than 2,500 patient samples, VanOort said.

During the quarter, the company also made progress with Support Vector Machine, a proprietary machine learning tool developed for automating the handling and interpretation of flow cytometry data, and expects to roll it out to "selected areas of our business in the next few months," he added.

For the full year, NeoGenomics' revenues rose to $99.8 million from $87.1 million in 2014.

The firm posted a net loss of $2.7 million, or $.04 per share, for FY 2015, compared to net income of $1.1 million, or $.02 per share, in FY 2014. Its adjusted net income for FY 2015 was $4 million, or $.06 per share, versus $2.7 million, or $.05 a share, in 2014, and above Wall Street's consensus estimate of $.01.

NeoGenomics' SG&A expenses in 2015 were $45.2 million compared to $35.8 million the year before, while R&D costs swelled to $4.2 million from $2.7 million.

Looking ahead, NeoGenomics said it anticipates full-year 2016 revenues to be in the range of $240 million to $250 million. Its adjusted net income is expected to be in the range of $7 million to $12 million, and adjusted EPS for 2016 is expected to be between $.07 and $.12.

In early Tuesday afternoon trade on the Nasdaq, shares of NeoGenomics were up 9 percent at $6.97.