FT. MYERS, Fla., April 25, 2012 /PRNewswire/ -- NeoGenomics, Inc. (NASD OTC QB: NGNM), a leading provider of cancer-focused genetic testing services today reported its results for the first quarter 2012.
First Quarter 2012 Highlights:
- 75% test volume growth
- 72% revenue growth
- 85% gross profit growth
- Adjusted EBITDA of $1.8 million versus $(97,000) in Q1 2011
- Net income of $603,000, or $0.01 per share, versus a net loss of ($893,000), or ($0.02) per share, in Q1 2011
Revenue for the first quarter 2012 was $15.2 million, a 72%, increase over first quarter 2011 revenue of $8.8 million. Tests reported increased by 75% and average revenue per test declined by 1.6%. Requisitions increased by 66% and the average number of tests per requisition increased by 5.5%. Average cost of goods sold per test improved by 7.2% from last year, which resulted in an improvement in gross margin to 47.1% in the first quarter as compared to 43.9% in the first quarter of last year. As a result, gross profit increased by 85% to $7.1 million.
Selling, research and development, and general and administrative (SG&A) expenses increased by $1.7 million, or 37%, from last year's first quarter due primarily to an increase in payroll, research and development expenses and bad debt expense. SG&A as a percentage of revenue fell to 41.4% from 52.0% last year. Net income for the quarter was $603,000 or $0.01/share versus a net loss of ($893,000) or ($0.02)/share in last year's first quarter. Adjusted EBITDA increased to $1.8 million from ($97,000) last year.
Douglas M. VanOort, the Company's Chairman and CEO, commented, "For the fourth quarter in a row we posted the largest year-over-year and sequential quarterly revenue increases in our corporate history, and for the first time we surpassed $15 million in quarterly revenue. We are very pleased with our record revenue and increases in both Adjusted EBITDA and Net Income. We continue to realize significant improvements in laboratory and sales force productivity as a result of initiatives we have implemented over the last two years. As a result, both gross margin and overall operating leverage have improved."
Mr. VanOort continued, "We achieved these results while investing heavily in our future, including significant increases in spending for R&D and new test development. We are expanding our Molecular testing menu and plan to launch approximately 25 new molecular tests this year alone. In addition, we are expanding our menu of immunohistochemistry tests and improving our service offering in this important area. Finally, we are making good progress in our work with Health Discovery Corporation to develop new cancer genetic tests and new and better ways to perform our current tests as a result of the licensing agreement we entered into earlier this year. Overall, we are making our operations stronger, investing in future growth opportunities, and operating profitably."
In other news, NeoGenomics continues to work with the American Clinical Laboratory Association and the College of American Pathologists to permanently extend the Hospital Technical Component ("TC") Grandfather Clause, which has allowed independent laboratories to bill Medicare directly for the technical component of tests reimbursed under the Medicare Physician Fee Schedule. As a result of recent legislation, this decades-old billing practice is now set to expire on June 30th. Unless it is extended further, NeoGenomics and other pathology labs will be required to begin billing hospitals directly for the technical component of affected tests beginning on July 1st.
In commenting on this legislation, Mr. VanOort stated, "In the event the TC Grandfather Clause is not extended further, we anticipate that previously grandfathered hospitals will seek price concessions on the affected services as they will receive little or no corresponding increases in reimbursement from Medicare. In such a scenario, we would expect an approximately 5-8% decrease in our overall average revenue per test beginning in Quarter 3. 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. During 2011, we experienced similar reimbursement declines with average revenue per test decreasing by 6.3% from Quarter 4 2010 to Quarter 4 2011. However, our gross margin increased by 60 basis points during this period as a result of improvements in laboratory productivity. We expect that we could similarly absorb any unit price decreases in the event the TC Grandfather Clause is not extended."
Mr. VanOort concluded by saying, "We are also re-instating our previously suspended guidance for 2012. Given Quarter 1 performance, we are increasing our revenue guidance to $57-63 million for the full year 2012, and are re-instating our original 2012 earnings guidance of $0.02 - $0.04 per share."
Second Quarter 2012 Financial Outlook
The Company also issued guidance for the fiscal second quarter today. In Quarter 2, the Company expects revenue of $15.5 - $16.0 million and net income of $0.00 to $0.01 per share. This guidance is based on organic growth in the current business, and 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 Q1 2012 results on April 25, 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 May 9, 2012 and can be accessed by dialing (877) 660-6853 (domestic) and (201) 612-7415 (international). The playback account number is 392969 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=168279 An archive of the web-cast will be available until 11:59 PM EDT on August 25, 2012.
About NeoGenomics, Inc.
NeoGenomics, Inc. is a high-complexity CLIAcertified clinical laboratory that specializes in cancer genetics diagnostic 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.