FT. MYERS, Fla., April 27, 2016 /PRNewswire/ -- NeoGenomics, Inc. (NASDAQ: NEO), a leading provider of cancer-focused genetic testing services, today reported its results for the first quarter of 2016.
First Quarter 2016 Highlights:
- 159% increase in consolidated revenue to a record $59.7 million
- 442% increase in consolidated Adjusted EBITDA(1) to record $8.2 million
- 175% increase in consolidated clinical genetic testing volume(2)
- Adjusted Diluted EPS(1) of $0.03 per share and Diluted EPS of ($0.07) per share
Consolidated Revenue for the fourth quarter was $59.7 million, an increase of 159% over the same period last year. Clinical genetic test volume(2) grew 175% driven by the inclusion of Clarient’s results as well as a 36% year over year increase in base(3) NeoGenomics genetic test volume. Average revenue-per-test for clinical genetic tests decreased by 6% to $390, 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 45.5% as compared to 41.5% in last year’s first quarter. Gross margin improved due to a 13% reduction in average cost-of-goods-sold per clinical genetic test (“Cost per Test”) compared with last year.
Consolidated selling, general and administrative expenses increased by $15.2 million, or 150%, from the first quarter of last year primarily as a result of the Clarient acquisition. Non-cash amortization of intangibles related to the Clarient acquisition and non-cash variable stock-based compensation expenses accounted for $2.2 million of this increase.
Interest expense for the quarter increased by $1.4 million as a result of the bank debt incurred to finance the Clarient acquisition. Cash provided by operating activities was a record high $6.8 million, and the full $10.0 million balance on the revolving credit facility was paid down during the quarter.
Consolidated Adjusted EBITDA(1) was $8.2 million, an increase of 442% over the prior year. Adjusted Net Income(1) in the first quarter was $2.9 million versus a loss of ($0.3 million) in the prior year. Adjusted Diluted EPS(1) was $0.03 per share as compared to $0.00 per share in Quarter 1 2015.
First quarter net loss available to common shareholders was ($5.4 million), or ($0.07) per share, versus a net loss of ($0.7 million), or ($0.01) per share, in the first quarter of last year. Non-cash “deemed preferred dividends” and amortization of the “beneficial conversion feature” related to the preferred stock accounted for $5.6 million of the net loss available to common shareholders.
Douglas M. VanOort, the Company’s Chairman and CEO, commented, “We are very pleased with our first quarter performance. The acquisition of Clarient is providing scale advantages and we’re beginning to realize synergies as planned. Customer retention has been excellent as a result of continued strong service levels. In addition, we achieved very strong core volume growth even as we engaged deeply in integration activities. Current and potential clients have responded exceptionally well to the acquisition, and our sales pipeline is very strong.”
“Integration planning has now been completed, and our teams have begun to execute plans with speed and rigor. Although we’ve just begun to execute our integration plans, we’re already achieving benefits. The significant gain in gross margin and over 400% increase in Adjusted EBITDA reflect some of the benefit of operating synergies. We expect to realize additional cost synergies as the year progresses driven by advances in our laboratory information systems, adoption of best practices, consolidation of facilities and other integration activities. We’re also beginning to realize revenue synergies as we cross sell our Molecular testing services and Clarient’s strong IHC menu.”
Mr. VanOort continued, “Although we’re deeply involved with integrating Clarient, we’re also continuing to invest in growth opportunities. We’ve added resources in our BioPharma business, and we are further building our Sales and Marketing team to leverage our expanding and comprehensive oncology-focused test menu. We expect new testing services for immunotherapy, our expanding line of liquid biopsy tests, and greater market adoption of advanced molecular testing to add to our growth prospects. Importantly, these new tests have the potential to improve the quality of patient care while lowering costs for health care systems.”
Mr. VanOort concluded, “We exited the first quarter with strong momentum, and we’re increasing both our revenue and adjusted EBITDA guidance by $2 million. We believe NeoGenomics is exceptionally well positioned for the balance of 2016 and beyond.”
Full-Year 2016 Financial Outlook:
NeoGenomics also revised upward its guidance for fiscal year 2016 today. The Company now expects full year 2016 revenue to be in the range of $242 - $252 million, Adjusted EBITDA(1) to be in the range of $35 - $40 million, Adjusted Net Income(2) to be in the range of $8 - $13 million, and Adjusted Diluted EPS to be in the range of $0.08 - $0.13 per share.
2016 net income available to common stockholders calculated in accordance with GAAP will be impacted by certain non-cash charges, including: (i) expenses related to variable stock-based compensation, (ii) approximately $7.3 million of expense related to the amortization of customers lists and other intangibles from the Path Logic and Clarient acquisitions, (iii) approximately $7.4 million of deemed preferred stock dividends, and (iv) approximately $14.9 million of related to the amortization of the beneficial conversion feature related to the preferred stock issued in connection with the Clarient acquisition. These non-cash charges have been included in GAAP net income (loss) available to common shareholders and GAAP net income (loss) per share; however, they have been removed from Adjusted Net Income and Adjusted Diluted Net Income per Share. As a result, the Company expects 2016 diluted net loss per share calculated in accordance with GAAP to be $0.35 - $0.40 per share lower than 2016 Adjusted Diluted Net Income per Share.
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