NeoGenomics, Inc. Announces Results for the Fourth Quarter and Full Year FY 2006
FT. MYERS, Fla., March 14 /PRNewswire-FirstCall/ -- NeoGenomics, Inc. today announced its results for the fourth quarter and full year of fiscal 2006. Significant accomplishments during the fourth quarter and year included the following:
Fourth Quarter 2006 Accomplishments: -- 135% year-over-year increase in revenues in Q4 06 vs. Q4 05 -- 10% sequential increase in revenues in Q4 06 vs. Q3 06 -- The announcement of an industry first Tech-Only FISH product -- The doubling of our national sales-force Full Year 2006 Accomplishments: -- 243% increase in revenues during FY '06 vs. FY '05 -- Requisitions increased 221% to 9,563 requisitions in FY '06 from 2,982 in FY '05 -- Avg. Revenue/Requisition increased 7% to $677.19 in FY '06 from $632.23 in FY '05 -- Test volume increased 215% to 12,838 tests in FY '06 from 4,082 in FY '05 -- Avg. Revenue/Test increased 9% to $504.44 in FY '06 from $461.86 in FY '05 -- The acquisition of the Center for Cytogenetics in Nashville, TN -- The build-out of a NeoGenomics clinical laboratory facility in Irvine, CA -- The roll-out of our Genetic Pathology Service (GPS) product
Robert Gasparini, the Company's President, stated, "2006 was a breakout year for NeoGenomics Laboratories. We expanded our geographic footprint into two new locations with the acquisition and expansion of our Tennessee facility and the investment in a new California laboratory location which just received its license in February. We now have a truly bi-coastal presence. We continue to actively pursue additional geographic locations and capacity to complete our national network of regional laboratories."
Mr. Gasparini added, "As a result of our new geographic locations and the significant additional capacity that we added in our Fort Myers, FL location, we increased our overall capacity 4-5 fold during FY 2006. This allowed us to more than triple the number of requisitions we processed in 2006 while maintaining our industry leading turn-around times in the 3-5 day range throughout the entire year. More importantly however, we believe that we still have significant excess capacity, which should allow us to further increase our revenues before having to add more capacity. This is important because our new Tech-Only FISH product that we announced in December has met with terrific demand and we are seeing many new customers for this product."
Mr. Gasparini went on to say, "We have also made significant progress in building a national sales force. In addition to the four very talented senior sales personnel that we hired in the fourth quarter, we have also made three other key hires since December 31st. Dr. Rob Feeney joined us on January 2nd as our VP, Sales & Marketing and we have hired two other senior sales representatives since then as well. We now have a sales force of nine across the country, seven of which are new to the Company since November 1st."
"Our investments in infrastructure, new products and increased sales personnel during the fourth quarter caused our bottom-line to temporarily suffer for the quarter, but these investments are already paying handsome dividends in Q1 '07. We have already added almost twice as many new clients during the first quarter than our previous quarterly record and we are only half way through March. Based on where we are today, we currently expect that revenues for Q1 will be up 20-25% sequentially from Q4 '06. Importantly, our investments in infrastructure have allowed us to handle this surge in volume without impacting our turn-around times."
Mr. Gasparini concluded by saying, "We are also making significant progress in defining the business model for the Contract Research Organization that we previously announced. Although we have only been licensed in California for a few weeks, I am pleased to report that we are already in negotiations to perform testing on a subcontract basis for other research organizations. We expect to make a further announcement on our plans for the CRO sometime in the second quarter."
Steven Jones, the Company's acting Chief Financial Officer and a Director, stated, "During 2006, we began to see considerable economies of scale. Our revenue increased by 243% over FY '05, and our gross margin increased to 57.4% of revenue from 39.9% in FY '05. The increases in revenue were a result of a 215% increase in the volume of tests performed and a 9.2% increase in the average revenue per test. Our gross margin increases were primarily a result of spreading our fixed cost of goods sold over a greater number of tests. Our general and administrative expenses increased by 130% to $3,577,000 in FY '06 from $1,553,000 in FY '05. This was primarily related to additional headcount, professional and consulting fees, and bad debt reserves related to our large revenue increase for the year. For the year, our net loss decreased by approximately 87% to $130,000, or $0.00/share in FY '06 from $997,000 or $0.04/share in FY '05."
Mr. Jones added, "During the fourth quarter, we increased revenues by approximately 135% to $1,763,000 from $751,000 during 4Q '05, largely as a result of a greater number of tests being performed for our customers. Average revenue per test increased approximately 9.1% to $522.01 in Q4 '06 from $478.58 in 4Q '05. We are particularly pleased that gross margins increased to 58.3% of revenue in the fourth quarter versus 35.5% in Q4 '05 and 55.0% in Q3 '06. This continued expansion of our gross margin highlights the operating leverage implicit in our business. General and administrative expenses increased in the fourth quarter by approximately 148% to $1,418,000 from $571,000 in 4Q '05. This increase was largely as a result of increased headcount, professional and consulting fees, and bad debt reserves related to higher revenues. Our net loss of $429,000 or $0.02/share for 4Q '06 increased by approximately 19%, or $68,000, versus a net loss of $361,000 or $0.02/share for 4Q '05."
Mr. Jones went on to say, "During the fourth quarter, we implemented a new billing system that we believe will allow our business to continue to scale rapidly in 2007. This is never an easy process when you are growing as fast as we are, and we experienced several issues relating to breaking in the new system and training our personnel. As part of this process, a number of claims had to be resubmitted for payment. As a result, a number of payments from the fourth quarter were delayed beyond our historical average and thus our Days Sales Outstanding increased to approximately 76 days by the end of the fourth quarter. We believe we have now fixed these issues, however, there may continue to be some remaining impacts in our Days Sales Outstanding at the end of the first quarter as well."
Mr. Jones concluded by saying, "During the fourth quarter, we made many investments in order to be able to continue to scale during FY 2007. These investments are all starting to bear fruit, and we would like to reiterate our 2007 guidance at this time. We believe we can achieve FY '07 revenue of approximately $14.0 - $16.0 million and we can achieve net income in the range of $1.3 - $1.7 million. We are increasing our guidance with respect to gross margins for FY '07 from "55% area" that we released in November to 55-60% with the average trending towards the higher end of the range towards the end of the year. We are also increasing our guidance with respect to capital expenditures by $500,000 to approximately $1.5 - $2.0 million for FY '07 and we believe that we can lease finance a large portion of this."
"The above guidance is based only on organic growth in our current business, and we reserve the right to adjust this guidance at any time as a result of acquisitions or other strategic initiatives we may undertake and/or based on the ongoing execution of our business plan. By no means should these estimates be construed as a guarantee of future performance, and current and prospective investors are encouraged to perform their own due diligence before buying or selling any of our securities."
The Company has also scheduled a web-cast and conference call to discuss these fourth quarter and full year results later today (Wednesday, March 14, 2007) at 11:00 AM EDT. Interested investors should dial (877) 407-0778 (domestic) and (201) 689-8565 (international) at least five minutes prior to the call. A replay of the conference call will be available until March 28, 2007 until 11:59 PM and can be accessed by dialing (877) 660-6853 (domestic) and (201) 612-7415 (international). The playback account number will be 286 and the playback pin number is 233199. The web-cast may be accessed under the Investor Relations section of the NeoGenomics website at http://www.neogenomics.org or at http://www.hawkassociates.com/ngnmmore.aspx . An archive of the web-cast will be available until 11:59 PM EST on June 11, 2007.
About NeoGenomics, Inc.
NeoGenomics, Inc. is a high-complexity CLIA-certified 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, morphology studies, anatomic pathology and molecular genetic testing. Headquartered in Fort Myers, FL, NeoGenomics has labs in Nashville, TN, Irvine, CA and Fort Myers and services the needs of pathologists, oncologists, urologists, hospitals and other reference laboratories throughout the United States. For additional information about NeoGenomics, visit http://www.neogenomics.org .
Interested parties can also access additional investor relations material, from the American Microcap Institute at http://www.americanmicrocapinstitute.com/ngnm/ or from Hawk Associates at http://www.hawkassociates.com . An investment profile about NeoGenomics may be found at http://www.hawkassociates.com/ngnmprofile.aspx .
Forward Looking Statements
Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are forward-looking statements. These forward looking statements involve a number of risks and uncertainties that could cause actual future results to differ materially from those anticipated in the forward looking statements, including, but not limited to, the Company has incurred significant losses since its inception and has experienced negative operating margins and negative cash flows from operations, any adverse effect or limitations caused by governmental regulations, the company's ability to attract and retain qualified personnel, to initiate and develop client relationships, to gain market acceptance of service offerings, as well as other risks described from time to time in the company's filings with the Securities and Exchange Commission. Although the Company has used its best efforts to be accurate in making those forward-looking statements, there can be no assurance that the assumptions made by management will materialize. In addition, the information set forth in the Company's most recently filed Form 10-KSB describes certain additional risks and uncertainties that could cause actual results to vary materially from the future results covered in such forward-looking statements. The company undertakes no obligation to publicly revise or update the forward-looking statements to reflect new information, subsequent events or otherwise.
NeoGenomics, Inc. CONSOLIDATED BALANCE SHEET AS OF December 31, 2006 (unaudited) ASSETS CURRENT ASSETS $ 1,895,558 PROPERTY AND EQUIPMENT (net of accumulated depreciation of $494,942) 1,202,487 OTHER ASSETS 33,903 TOTAL $ 3,131,948 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES $ 2,628,437 LONG TERM LIABILITIES 448,997 TOTAL LIABILITIES 3,077,434 STOCKHOLDERS' EQUITY 54,514 TOTAL $ 3,131,948 NeoGenomics, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) For the For the For the For the Twelve- Twelve- Three- Three- Months Months Months Months Ended Ended Ended Ended December December December December 31, 2006 31, 2005 31, 2006 31, 2005 REVENUE $ 6,475,996 $ 1,885,324 $ 1,762,824 $ 750,895 COST OF REVENUE 2,759,190 1,132,671 735,711 484,180 GROSS PROFIT 3,716,806 752,653 1,027,113 266,715 OPERATING EXPENSES: Selling, general and administrative 3,576,812 1,553,017 1,418,341 571,456 Interest (income) expense, net 269,655 196,796 38,017 55,951 Total operating expenses 3,846,467 1,749,813 1,456,358 627,407 NET INCOME (LOSS) $ (129,661) $ (997,160) $ (429,245) $ (360,692) NET INCOME (LOSS) PER SHARE - Basic and Diluted $ (0.00) $ (0.04) $ (0.02) $ (0.02) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and Diluted 26,166,031 22,264,435 26,981,171 22,601,478 NeoGenomics, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) For the For the Twelve- Twelve- Months Months Ended Ended December December 31, 2006 31, 2005 NET CASH USED IN OPERATING ACTIVITIES $ (733,996) $ (902,051) NET CASH USED IN INVESTING ACTIVITIES (398,618) (117,628) NET CASH PROVIDED BY FINANCING ACTIVITIES 1,247,936 918,075 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 115,322 (101,604) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,944 112,548 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 126,266 $ 10,944 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 269,316 $ 136,936 Income taxes paid $ - $ - SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Equipment leased under capital lease $ 578,660 $ - NeoGenomics, Inc.
Supplemental Information on Customer Requisitions Received and Tests Performed
For the For the For the For the Twelve- Twelve- Three- Three- Months Months Months Months Ended Ended % Inc Ended Ended % Inc December December (Dec) December December (Dec) 31, 2006 31, 2005 31, 2006 31, 2005 Requisitions Received (cases) 9,563 2,982 220.7% 2,750 1,094 151.4% Number of Tests Performed 12,838 4,082 214.5% 3,377 1,569 115.2% Avg. # of Tests / Requisition 1.34 1.37 (2.1%) 1.23 1.44 (14.4)% Total Testing Revenue $6,475,996 $1,885,324 243.5% $1,762,824 $750,895 134.8% Avg Revenue/ Requi- sition $677.19 $632.23 7.1% $641.02 $686.36 (6.6%) Avg Revenue/ Test $504.44 $461.86 9.2% $522.01 $478.58 9.1%
NeoGenomics, Inc.CONTACT: Steven C. Jones, Director of Investor Relations, +1-239-325-2001,sjones@neogenomics.org; Frank N. Hawkins or Julie Marshall, Hawk andAssociates, Inc., +1-305-451-1888, Info@hawkassociates.com