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NeoGenomics Stock Plummets on Predicted Lower Q1 Expectations, Departure of CEO

NEW YORK – NeoGenomics announced Monday after the close of the market that it anticipates Q1 2022 financial results may fall below the low end of its guidance and withdrew its full-year 2022 financial guidance. It also said CEO and board member Mark Mallon would leave the company, effective immediately.

The firm's shares dropped 33 percent to $11.93 in Tuesday morning trade on the Nasdaq in response to the news.

Cowen analyst Dan Brennan said in a note to investors Tuesday morning that during a call with management after the announcement, the team confirmed that Mallon's lack of clinical lab experience and the disappointing performance of NeoGenomics' lab led to the decision.

NeoGenomics had previously announced expected revenue for the first quarter ending March 31 of $118 million to $120 million, but noted on Monday that its Q1 revenues "may be below the low end" of that guidance. The firm also expects earnings before interest, taxes, depreciation, and amortization to come in below its previous guidance of a loss of $12 million to $15 million. The EBITDA loss has been driven primarily by higher than anticipated clinical services cost of goods sold, the firm said. 

In February, the company announced that it expected between $530 million and $550 million in revenues for 2022, but it also has withdrawn that guidance.

The company "intends to take immediate action to address performance and costs," NeoGenomics added. It intends to report its full Q1 financial results on April 27.

SVB Leerink's Puneet Souda wrote in a note to investors, "After disappointing investors with lowered 4Q21 guidance, (which was already viewed as a reset), this step down was both unexpected and is bound to put further pressure on already meaningfully lower shares." However, he added that he sees "these changes also opening the door for potential strategic options for [NeoGenomics] given the unique nature of its business model and a large well-established menu in the cancer Dx testing market that is expected to be EBITDA-positive next year."

Craig-Hallum's Alexander Nowak, meantime, noted that "there is much value to be unlocked at [NeoGenomics], with it being well positioned within the community setting to bring new tests to the masses, plus informatics creating the glue with the continued innovation flywheel of pharma."