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NeoGenomics Reports 181% Increase in Adjusted EBITDA on 38% Revenue Growth and Achieves Profitability in 2012

February 14, 2013

FT. MYERS, Fla., Feb. 14, 2013 /PRNewswire/ — NeoGenomics, Inc. (NASDAQ: NEO), a leading provider of cancer-focused genetic testing services today reported its results for the fourth quarter and full year 2012.

Fiscal Year 2012 Highlights:

  • 50% Test Volume Growth
  • 38% Revenue Growth
  • 181% Increase in Adjusted EBITDA
  • Net Income of $65K, or $0.00 per Share

Revenue for the full year 2012 was $59.9 million, a $16.4 million or 38% increase over 2011 revenue of $43.5 million on test volume growth of 50%. Average revenue-per-test decreased by 8% as a result of the expiration of the TC Grandfather Clause on June 30th, which resulted in the loss of approximately $2.6 million of revenue in the second half of the year. Despite this major regulatory change, gross margin improved slightly to 44.8% on a full-year basis from 44.7% in 2011. Total operating expenses increased by 29% from 2011, primarily as a result of a $1.7 million increase in R&D expenditures related to new test development, as well as increased personnel, depreciation and bad debt expense associated with the revenue growth. As a percentage of revenue, operating expenses improved to 42.8% in 2012 from 45.6% in 2011. Net income for 2012 was $65,000 or $0.00 per share versus a net loss of $1.2 million or ($0.03) per share in 2011. Adjusted EBITDA for the year improved by $3.9 million or 181% to $6.0 million from $2.1 million in 2011.

Fourth Quarter 2012 Highlights:

  • 35% Test Volume Growth
  • 16% Revenue Growth
  • 36% Increase in Adjusted EBITDA
  • Net Loss of $113K, or ($0.00) per Share

Revenue for the fourth quarter 2012 was $14.9 million, a $2.0 million or 16% increase over fourth quarter 2011 revenue on test volume growth of 35%. Gross profit increased to $6.5 million, a 10% increase from the fourth quarter 2011. Total operating expenses increased by $780,000 or 14% from last year’s fourth quarter, primarily as a result of a $320,000 increase in R&D expenditures related to new test development and increased personnel and depreciation expense. Net loss for the quarter was ($113,000), or ($0.00) per share, versus net income of 152,000, or $0.00 per share in last year’s fourth quarter. Adjusted EBITDA improved 36% to $1.4 million versus $1.1 million in the prior year.

Douglas M. VanOort, the Company’s Chairman and CEO commented, “We are very proud of our full-year 2012 results. Our industry-leading 50% growth in test volume indicates that we are clearly winning market share. Although the TC Grandfather expiration reduced revenue by $2.6 million in the second half of the year, we were still able to increase revenue by $16 million or 38% versus 2011 with just 18 sales representatives. As importantly, productivity and process improvements allowed us to grow Adjusted EBITDA by 181% versus 2011, or almost five times the revenue growth rate, and post a modest profit for the year. Our team did a phenomenal job of delivering outstanding service, attracting new clients, reducing costs, and introducing important new tests. We believe we can continue to make progress in each of these important areas in 2013.”

Mr. VanOort continued, “We are also proud of our 4(th) quarter results. We continued to make substantial improvements in lab productivity and operating efficiency in the quarter and came very close to returning to quarterly profitability. Lab productivity increased by 15% and Adjusted EBITDA grew by 36% from last year’s fourth quarter. The improvements were also significant compared with Quarter 3, 2012 as we reduced our net loss by $800,000 with only a $700,000 increase in revenue.”

Mr. VanOort concluded, “We are particularly proud of the level of innovation and new test development that we are accomplishing. In 2012, we introduced 29 new molecular tests, most of which use bi-directional Sanger sequencing, and built our molecular test menu to be one of the most comprehensive in the lab industry. We also launched 10-color flow cytometry and became the first lab in the country to offer this exciting new service on both a global and tech-only basis. In addition, we vastly improved our immunohistochemistry offering with dozens of new antibodies and brought up a new digital imaging platform. We also continued to expand our comprehensive FISH menu with several new test offerings including a promising new test to aid in the diagnosis of Barrett’s Esophagus. We expect these new tests to drive substantial growth in 2013, and we expect that continued R&D investments will result in the commercialization of a number of new and innovative genetic tests.”

2013 Financial Outlook
The Company also issued preliminary guidance for the full year and fiscal first quarter of 2013 today. For the full year 2013, the Company expects revenue of $68 – $73 million and net income of $0.03 – $0.05 per share. For the fiscal first quarter, the Company expects revenue of $15.3 – $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 is based on the assumption that there will be no material reimbursement changes during the balance of 2013. 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.

____________________
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, other extraordinary or non-recurring charges, such as the costs related to moving our California facility and non-cash stock-based compensation expenses. See table for a reconciliation to net income.

Conference Call
The Company has scheduled a web-cast and conference call to discuss their Q4 and full year 2012 results on February 14, 2013 at 11:00 AM EST. Interested investors should dial (800) 374-1317 (domestic) and (404) 665-9940 (international) at least five minutes prior to the call and ask for Conference ID 97486925. An archive of the conference call will be available at https://us.reg.meeting-stream.com/neogenomicsinc_021413/ for a period of one year from the date of the conference call. The web-cast may be accessed on the homepage of our website at http://www.neogenomics.com or https://us.reg.meeting-stream.com/neogenomicsinc_021413/.

About NeoGenomics, Inc.
NeoGenomics, Inc. is a high-complexity CLIA-certified 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.

Interested parties can also access investor relations material from Hawk Associates at http://www.hawkassociates.com or neogenomics@hawk.com and from Zack’s Investment Research at http://www.zacks.com or scr@zacks.com.

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, Actual results could differ materially from such statements expressed or implied herein. Factors that might cause such a difference include, among others, the company’s ability to continue gaining new customers, offer new types of tests, and otherwise implement its business plan. As a result, this press release should be read in conjunction with the company’s periodic filings with the SEC.

                                     NeoGenomics, Inc.

                           CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (Unaudited, in thousands)

                                            ---

    ASSETS
                                                December 31,             December 31,
                                                        2012                     2011
    ---                                                 ----                     ----

      Cash, cash equivalents                                      $1,868               $2,628

      Restricted Cash                                      -                      500

      Accounts Receivable (net of
       allowance for doubtful                                     14,034                7,894
         accounts of $3,002 and $2,150,
          respectively)

      Other Current Assets                                         2,679                2,156
                                                                   -----                -----

    TOTAL CURRENT ASSETS                                          18,581               13,178

    PROPERTY AND EQUIPMENT (net of
     accumulated                                                   8,607                6,642
       depreciation of $10,289 and
        $6,653, respectively)

    INTANGIBLE ASSETS (net of
     accumulated amortization                                      2,800                    -
    of $182 and $-, respectively)

    OTHER ASSETS                                                      83                  129
                                                                     ---

        TOTAL                                                    $30,071              $19,949

    LIABILITIES AND STOCKHOLDERS'
     EQUITY
    -----------------------------

    CURRENT LIABILITIES                                          $17,758              $11,444

    LONG TERM LIABILITIES                                          3,097                2,608
                                                                   -----                -----

        TOTAL LIABILITIES                                         20,855               14,052

    STOCKHOLDERS' EQUITY                                           9,216                5,897
                                                                   -----                -----

       TOTAL                                                     $30,071              $19,949

                                                  NeoGenomics, Inc.

                                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (in thousands, except per share amounts)
                                                     (unaudited)

                                                         ---

                                                            For the Three-Months
                                                            Ended December 31,           For the Twelve-Months Ended
                                                                                         December 31,
                                                                                         ------------
                                                             2012                  2011                2012                    2011
                                                             ----                  ----                ----                    ----

    NET REVENUE                                           $14,893               $12,893             $59,867                 $43,484
    COST OF REVENUE
                                                  8,460                 7,060              33,031                    24,056
                                                  -----                 -----              ------                    ------
    GROSS PROFIT
                                                            6,433                 5,833              26,836                  19,428
                                                            -----                 -----              ------                  ------

    OPERATING EXPENSES
    General and administrative                              4,097                 3,530              15,843                  12,331
    Research and development                                  448                   128               2,281                     543
    Sales and marketing                                     1,692                 1,800               7,501                   6,963
                                                            -----                 -----               -----                   -----
       Total operating expenses                             6,237                 5,458              25,625                  19,837

    INCOME (LOSS) FROM                                        196                   375               1,211                    (409)
    OPERATIONS

    INTEREST AND OTHER                                       (309)                 (223)             (1,146)                   (768)
    INCOME (EXPENSE) - NET

    NET INCOME (LOSS) BEFORE TAXES                           (113)                  152                  65                  (1,177)

    INCOME TAXES                                      -                     -                   -                         -
                                                    ---                   ---                 ---                       ---

    NET INCOME (LOSS)                                       $(113)                 $152                 $65                 $(1,177)

    NET INCOME (LOSS) PER SHARE                            $(0.00)                $0.00               $0.00                  $(0.03)
    - Basic

    - Diluted                                              $(0.00)                $0.00               $0.00                  $(0.03)

    WEIGHTED AVG NUMBER                                    45,273                43,104              45,027                  42,758
    OF SHARES OUTSTANDING
    - Basic

    - Diluted                                              45,273                45,270              48,715                  42,758
                                                           ======                ======              ======                  ======

                                    NeoGenomics, Inc.

                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (Unaudited, in thousands)

                                           ---
                                                 For the                      For the
                                               Year Ended                   Year Ended
                                              December 31,                 December 31,
                                                      2012                         2011
                                                      ----                         ----

    NET CASH
     (USED) IN
     OPERATING
     ACTIVITIES                                                     $(492)                 $69

    NET CASH (USED) IN
     INVESTING ACTIVITIES                                          (3,652)                (897)

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES                                           3,384                2,359
                                                                    -----                -----

       NET INCREASE (DECREASE)
        IN CASH AND CASH                                             (760)               1,531
       EQUIVALENTS

    CASH AND CASH
     EQUIVALENTS, BEGINNING
     OF PERIOD                                                      2,628                1,097

    CASH AND CASH
     EQUIVALENTS,
     END OF
     PERIOD                                                        $1,868               $2,628

    SUPPLEMENTAL DISCLOSURE
     OF CASH FLOW
     INFORMATION:

    Interest paid                                                  $1,108                 $735

     SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND  FINANCING ACTIVITIES:

         Purchase of
          licenses                                                 $1,945                   $0

         Equipment
          leased under
          capital
          lease and
          equipment
          loans                                                    $2,782               $2,950

                                                      NeoGenomics, Inc.

                           RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA AND ADJUSTED
                                                            EBITDA
                                                  (Unaudited, in thousands)

                                                             ---
                                                         For the Three-Months
                                                              Ended                        For the Years Ended
                                                            December 31,                         December 31,
                                                            ------------                         ------------
                                                        2012                      2011                 2012         2011
                                                        ----                      ----                 ----         ----

    Net income (loss)
     (Per GAAP)                                        $(113)                     $152                  $65      $(1,177)

    Adjustments to Net Loss:
       Interest expense (income),
        net                                              309                       223                1,146          768
       Amortization of intangibles             56                         -                    182             -
       Depreciation                                    1,088                       601                3,637        2,086
                                                       -----                       ---                -----        -----
     EBITDA                                            1,340                       976                5,030        1,677

    Further Adjustments to
     EBITDA:                                    -                         -                    170             -
      Other non-recurring items
      Non-cash stock-based
       compensation                                       99                        79                  798          457
                                                         ---                       ---                  ---          ---
     Adjusted EBITDA
      (non-GAAP)                                      $1,439                    $1,055               $5,998       $2,134
    Non - GAAP Adjusted EBITDA
     Definition

    "Adjusted EBITDA" is defined by
     NeoGenomics as net income (loss)
     from continuing operations
     before (i) interest expense,
     (ii) tax expense and therapeutic
     discovery tax grants, (iii)
     depreciation and amortization
     expense, (iv) non-cash stock-
     based compensation and warrant
     amortization expense and (v)
     other extraordinary or non-
     recurring charges, such as the
     costs related to moving our
     California facility. NeoGenomics
     believes that Adjusted EBITDA
     provides a more consistent
     measurement of operating
     performance and trends across
     reporting periods by excluding
     these cash and non-cash items
     of expense not directly related
     to ongoing operations from
     income. Adjusted EBITDA also
     assists investors in performing
     analysis that is consistent with
     financial models developed by
     research analysts.

    Adjusted EBITDA as defined by
     NeoGenomics is not a measurement
     under GAAP and may differ from
     non-GAAP measures used by other
     companies. There are limitations
     inherent in non-GAAP financial
     measures such as Adjusted EBITDA
     because they exclude a variety
     of charges and credits that are
     required to be included in a
     GAAP presentation, and do not
     therefore present the full
     measure of NeoGenomics recorded
     costs against its net revenue.
     Accordingly, investors should
     consider non-GAAP results
     together with GAAP results in
     analyzing NeoGenomics financial
     performance.

    ---

                                                                                                                            NeoGenomics, Inc.

                                                                                             Supplemental Information on Customer Requisitions Received and Tests Performed
                                                                                                       (Unaudited, in thousands, except test and requisition data)
                                                                                                       ----------------------------------------------------------
                                                                                                                                                                                                                                                                         For the
                                                                                                                                                                                                                                                                      Three-Months
                                                                                                                                                                                                                                                                          Ended        For the
                                                                                                                                                                                                                                                                      December 31,   Three-Months   % Inc                    For the      For the     % Inc
                                                                                                                                                                                                                                                                                                    (Dec)                                             (Dec)
                                                                                                                                                                                                                                                                              2012      Ended                                 Year      Nine-Months
                                                                                                                                                                                                                                                                      December 31,                              Ended         Ended
                                                                                                                                                                                                                                                                              2011                          December 31,  December 31,
                                                                                                                                                                                                                                                                                                                    2012          2011
                                                                                                                                                                                                                                                                                                                                  ----

    Requisitions Rec'd (cases)                                                                                                                                                                                                                                              19,971         14,240     40.2%                     73,773       49,235      49.8%
    Number of Tests Performed                                                                                                                                                                                                                                               30,513         22,557     35.3%                    114,606       76,288      50.2%
    Avg. # of Tests / Requisition                                                                                                                                                                                                                                             1.53           1.58    (3.5%)                       1.55         1.55       0.3%

    Total Testing Revenue                                                                                                                                                                                                                                                  $14,893        $12,893     15.5%                    $59,867      $43,484      37.7%
    Avg Revenue/Requisition                                                                                                                                                                                                                                                $745.74        $905.43   (17.6)%                    $811.50      $883.20     (8.1)%
    Avg Revenue/Test                                                                                                                                                                                                                                                       $488.09        $571.59   (14.6)%                    $522.37      $570.00     (8.4)%

SOURCE NeoGenomics, Inc.


Source: PR Newswire