FT. MYERS, Fla., July 19, 2012 /PRNewswire/ -- NeoGenomics, Inc. (NASD OTC QB: NGNM), a leading provider of cancer-focused genetic testing services today reported its results for the second quarter 2012.
Second Quarter 2012 Highlights:
- 57% test volume growth
- 49% revenue growth
- 58% gross profit growth
- Net Income of $551,000, or $0.01 per share, vs. a loss of $(293,000), or ($0.01) per share in Q2 2011.
- Adjusted EBITDA of $1.943 million, versus $0.483 million in Q2 2011
Revenue for the second quarter 2012 was $15.6 million, a 49%, increase over second quarter 2011 revenue. Test volume increased by 57%. Average cost of goods sold per test improved by 10% from last year, and resulted in gross margin improvement to 47.2% as compared to 44.5% in the second quarter of last year. As a result, gross profit increased by 58% to $7.4 million.
Total operating expenses were $6.5 million, a 37% increase from last year's second quarter, primarily as a result of higher bad debt expense and sales commissions resulting from the higher revenue, as well as increases in R&D expenditures related to new test development. Operating expenses as a percentage of revenue fell to 41.8% from 45.6% last year. Net income for the quarter was $551,000, or $0.01 per share, versus a net loss of ($293,000), or ($0.01) per share, in last year's second quarter. Adjusted EBITDA increased by 300% to $1.9 million from $0.5 million last year.
For the first six months of 2012, revenue was $30.8 million, a 60% increase over first half 2011 revenue. Test volume increased by 65%. Gross profit increased by 70% to $14.5 million, and operating expenses increased by 37% to $12.8 million. Net Income was $1.2 million, or $0.03 per share, versus a net loss of ($1.2) million, or ($0.03) per share, in the first half of 2011. Adjusted EBITDA increased by 860% to $3.7 million from $386,000 in the first half of 2011.
Douglas M. VanOort, the Company's Chairman and CEO, commented, "We are very pleased with our industry leading revenue growth rates of 49% in the second quarter and 60% on a year-to-date basis. These growth rates were accomplished despite the fact that we had to redirect the focus of our sales force over the last four months to prepare clients for the expiration of the Technical Component (TC) Grandfather Clause on July 1st. We have also made huge strides in increasing the productivity and efficiency of our lab operations. The average number of tests completed per lab employee has increased 16% and the average cost per test has decreased 9% since the end of last year. Our operations are also now generating significantly more EBITDA than ever before with Adjusted EBITDA of $3.7 million in the first six months of 2012 versus $400,000 in the comparable period in 2011.
Mr. VanOort continued, "I am also delighted that our significant investments in new test development are starting to pay off. We launched 20 new molecular assays thus far in 2012, and expect to launch another 15-20 assays, including our new NeoTYPE Cancer Profiles, by year-end. We now have one of the most advanced molecular testing capabilities in the United States and we continue to invest in this area. We also added over 60 immunohistochemistry (IHC) antibodies to our menu in 2012, and we are in the process of rolling out a new digital pathology imaging platform. These investments are beginning to fuel growth in our molecular and IHC volumes, and allowed each of these laboratories to turn profitable in the second quarter for the first time. In addition, we recently introduced 10-color Flow Cytometry, which makes us one of only a few labs to offer this service on a broad scale. Finally we continue to invest heavily to develop products using the pattern recognition technologies we licensed from Health Discovery Corp earlier this year, and the early results are quite promising. Indeed, we expect to begin launching the first of several products using this technology later this year."
Mr. VanOort concluded by saying, "We also made several key investments in infrastructure to sustain our continued pace of growth. During the second quarter, we significantly upgraded our IT infrastructure, and moved our mission critical IT systems to a secure co-location facility. We are also in the process of building out a larger, state-of-the-art laboratory facility in Irvine, California, which we expect to move into by the end of the third quarter. We believe these infrastructure investments will position us to handle our growth while maintaining the high service levels our clients have come to expect from us. All in all, we continue to make deliberate strides towards our goal of becoming America's premier cancer testing laboratory."
Third Quarter 2012 Financial Outlook
As we have discussed previously, we expect the expiration of the TC Grandfather Clause to impact us beginning in the third quarter. Effective as of July 1st, we are now required to bill hospitals for the technical component of certain tests performed on behalf of Medicare in-patients and out-patients, whereas previously we were allowed to bill Medicare directly for such services if they were provided to hospitals that were "grandfathered" under the regulations. We are re-iterating our previously issued guidance that we expect a 5-8% reduction in our overall average unit price per test as a result of this regulatory change. Thus, we are expecting revenue of $14.0 - $14.8 million and earnings of $0.00 to ($0.02) per share in Quarter 3. We are also re-affirming our previously issued full year revenue guidance of $57-63 million for FY 2012. The Company reserves the right to adjust this guidance at any time based on the ongoing execution of its business plan. Current and prospective investors are encouraged to perform their own due diligence before buying or selling any of the Company's securities, and are reminded that the foregoing estimates should not be construed as a guarantee of future performance.
(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and non-cash stock-based compensation expenses. See table for a reconciliation to net income.
The Company has scheduled a web-cast and conference call to discuss their Q2 2012 results on July 19, 2012 at 11:00 AM EDT. Interested investors should dial (877) 407-8035 (domestic) and (201) 689-8035 (international) at least five minutes prior to the call. A replay of the conference call will be available until 11:59 PM on August 2, 2012 and can be accessed by dialing (877) 660-6853 (domestic) and (201) 612-7415 (international). The playback account number is 397361 and the playback conference ID Number/PIN Number is 286. The web-cast may be accessed under the Investor Relations section of our website at http://www.neogenomics.com or http://www.investorcalendar.com/IC/CEPage.asp?ID=169119. An archive of the web-cast will be available until 11:59 PM EST on November 19, 2012.
About NeoGenomics, Inc.
NeoGenomics, Inc. is a high-complexity CLIAcertified clinical laboratory that specializes in cancer genetics testing, the fastest growing segment of the laboratory industry. The company's testing services include cytogenetics, fluorescence in-situ hybridization (FISH), flow cytometry, immunohistochemistry, anatomic pathology and molecular genetic testing. Headquartered in Fort Myers, FL, NeoGenomics has labs in Nashville, TN, Irvine, CA, Tampa, FL and Fort Myers, FL. NeoGenomics services the needs of pathologists, oncologists, other clinicians and hospitals throughout the United States. For additional information about NeoGenomics, visit http://www.neogenomics.com.