NeoGenomics Reports 142% Revenue Growth To $60.8 Million And A Record $9.6 Million In Cash Flow From Operations In The Third Quarter Of 2016
FT. MYERS, Fla., Oct. 26, 2016 /PRNewswire/ -- NeoGenomics, Inc. (NASDAQ: NEO), a leading provider of cancer-focused genetic testing services, today reported its results for the third quarter of 2016.
Third Quarter 2016 Highlights:
- 142% increase in consolidated revenue to $60.8 million
- 150% increase in clinical genetic testing volume(1)
- Diluted EPS of ($0.07) per share and Adjusted Diluted EPS(2) of $0.04 per share
- Year-to-date cash flow from operations of $21.7 million
Consolidated revenue for the third quarter was $60.8 million, an increase of 142% over the same period last year. Clinical genetic test volume(1) grew 150% driven by the inclusion of Clarient's results in the consolidated total. Average revenue-per-test for clinical genetic tests decreased by 5.5% year over year to $385, primarily due to the inclusion of Clarient's lower average reimbursement rate per test in the combined test mix.
Consolidated gross margin for the quarter was 45.0% as compared to 44.5% in last year's third quarter. Gross margin improved due to a 6.2% reduction in average cost-of-goods-sold per clinical genetic test ("Cost per Test") compared to the third quarter of 2015.
Consolidated operating expenses increased by $14.9 million, or 135%, from Quarter 3 2015, primarily as a result of the Clarient acquisition. Non-cash amortization of intangibles related to the Clarient acquisition and non-cash stock-based compensation expenses accounted for $2.5 million of this increase.
Interest expense for the quarter increased by $1.2 million from the third quarter of 2015 as a result of the bank debt incurred to finance the Clarient acquisition. Cash provided by operating activities in Quarter 3 was $9.6 million, a new quarterly record for NeoGenomics.
Net loss in Quarter 3 was ($67,000), versus a net loss of ($125,000) in last year's third quarter. Diluted loss per share was ($0.07) in Quarter 3, versus ($0.00) per share in last year's third quarter.
Adjusted EBITDA(2) was $9.1 million in the third quarter, an increase of 224% over the prior year. Adjusted Net Income(2) was $3.4 million, a 302% increase over the prior year. Adjusted Diluted EPS(2) was $0.04 per share, versus $0.01 per share in Quarter 3 2015.
Douglas M. VanOort, the Company's Chairman and CEO, commented, "We are particularly pleased with our Clinical Division performance in Quarter 3. We began migrating Clarient clients to the NeoGenomics Laboratory Information System (LIS) in July with a goal of 100% client retention. Our Sales and Operating Teams have been working tirelessly to make this happen. Their efforts are paying off, as half of the Clarient accounts have now been successfully migrated and retention rates are outstanding. We expect to finish this migration process in the fourth quarter and are looking forward to moving our focus back to closing the large number of accounts in our sales pipeline."
Mr. VanOort continued, "Our Pharma Services Division continues to make very good progress, although revenue levels can fluctuate somewhat on a quarter to quarter basis. We are managing important projects with many of the leading pharmaceutical companies in the world, and are adding new clients and developing a robust pipeline of opportunities. As a result, we expect Pharma Services revenue to increase substantially in Quarter 4. There are many promising new therapeutics being developed in Oncology, and we see great growth potential for our services. We are adding to our capabilities with new resources and technologies, and expect to offer international lab services to pharma clients in the first half of next year."
"The consolidation of our two Orange County, California facilities is on schedule to be completed in the next four months. While we drove cost-per-test to its lowest level ever in Quarter 3, we expect to make significantly more gains when our Orange County teams are together in one state-of-the-art laboratory facility early next year. Even now, synergy-related improvements in productivity and efficiency have driven Adjusted EBITDA margin to a record 15% of revenue. Importantly, cash flow from operations increased to a record $9.6 million in Quarter 3 from $5.2 million in Quarter 2, and our cash balance increased by $7.1 million in the quarter. This acceleration in financial strength provides us with increasing flexibility to pursue strategic initiatives and/or redeem our preferred stock with internally generated cash flow and incremental bank financing."
Mr. VanOort concluded, "As we finish 2016, I am enormously proud of our people and what they have accomplished in the ten months since we closed the Clarient acquisition. It's a challenge to acquire a company larger than your own and then integrate the operations in a timely manner, but we are on track to do just that. The integration risks are now subsiding rapidly, and we are extremely excited about our prospects for 2017."
Full-Year 2016 Financial Outlook:
NeoGenomics also revised its guidance for fiscal year 2016 today by narrowing the ranges for consolidated revenue to $245 - $250 million and Adjusted EBITDA(2) to $36-38 million, but increasing the ranges for Adjusted Net Income(2) to $13 - $15 million (previously $8 - 13 million) and Adjusted Diluted EPS(2) to $0.14 - $0.16 per share (previously $0.08-$0.13 per share). The Company expects GAAP Diluted EPS to be a loss of ($0.28) ($0.27) per share. Please also refer to the tables reconciling forecasted Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA to their closest GAAP equivalents in the section of this report entitled "Reconciliation of Non-GAAP Financial Guidance to Corresponding GAAP Measures".
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.
Conference Call
The Company has scheduled a web-cast and conference call to discuss their Q3 2016 results on Wednesday, October 26, 2016 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.
To read full press release, please click here.