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NeoGenomics Reports Revenue of $15.6 Million, Adjusted EBITDA of $1.8 Million and Earnings per share of $0.01 for the Second Quarter 2013

July 31, 2013

FT. MYERS, Fla., July 31, 2013 /PRNewswire/ — NeoGenomics, Inc. (NASDAQ: NEO), a leading provider of cancer-focused genetic testing services today reported its results for the second quarter of 2013.

Second Quarter 2013 Highlights:

  • Earnings per share of $0.01 per share on net income of $273k
  • Adjusted EBITDA((1)) of $1.8 million
  • Test volume growth of 12.7%
  • Continued expansion of industry-leading molecular testing menu

Revenue for the second quarter was $15.6 million, essentially unchanged from second quarter 2012 revenue. Test volume increased by 12.7%. Year over year revenue growth was impacted by the $1.3 million reduction in quarterly revenue that resulted from the expiration of the Medicare Technical Component Grandfather Clause (TCGF) in July 2012. Revenue growth was also impacted by decreases in reimbursement for molecular testing which were finalized by CMS in the second quarter.

Average revenue per test declined 11.3% from last year, primarily as a result of the TCGF expiration. This decrease was partially offset by a 9.1% improvement in average cost of goods sold per test. As a result, gross profit margin decreased slightly to 45.9% in the second quarter from 47.2% in the prior year. Total operating expenses increased by 1.9%, from last year’s second quarter, primarily as a result of increases in R&D expenses.

Net income for the quarter was $273,000, or $0.01 per share, versus net income of $551,000, or $0.01 per share, in last year’s second quarter. Adjusted EBITDA((1)) of $1.8 million for the quarter was largely unchanged from last year’s second quarter despite the approximately $1.6 million reduction in quarterly profit resulting from the TCGF expiration and molecular reimbursement changes.

Douglas M. VanOort, the Company’s Chairman and CEO commented, “Our quarterly results were adversely impacted by Medicare’s molecular reimbursement changes and resulted in approximately $275,000 less revenue than we would have otherwise reported. In addition, approximately $150,000 of expected clinical trials work was delayed into the third quarter. These items reduced revenue from our original expectations for the second quarter.”

Mr. VanOort continued, “On the positive side, test volume continued to grow with a record number of new clients starting in June. Test volume grew despite a slight increase in in-sourcing of certain tests by a few clients. We also continued to strengthen our Sales team by adding five experienced sales professionals. We now have a total of 26 sales representatives covering the country. We expect our sales productivity to be strong for the second half of the year.”

“In addition, our steadfast focus on continuously improving laboratory operations and driving down costs is yielding results. A great number of our people are involved in Best Practice Teams, “Kaizen” events, and analysis and implementation of automation initiatives. We have also increased our investment in Information Technology and expect to make significant improvements in electronic ordering and other methods to increase efficiencies. As a result of these initiatives, we drove a 9.1% reduction in average cost-per-test over the last year and maintained gross margins of around 46% despite an 11.3% reduction in average revenue per test. We finished the second quarter with the lowest average cost-per-test we have ever reported.”

Mr. VanOort concluded, “Innovation continues to be an important focus for NeoGenomics. In the past six quarters, we developed and launched over 60 new molecular tests and now have the most comprehensive oncology-focused molecular test menu in America. Work also continues on our new plasma and urine-based, NeoSCORE(TM) prostate cancer test. There are two goals for this test, to diagnose the presence of cancer in patients with BPH (benign prostatic hyperplasia), and to distinguish high-grade from low-grade prostate cancer in patients with prostate cancer. We are excited about the potential for this test and currently expect to launch it in the first half of 2014.”

Third Quarter and Full-Year 2013 Financial Outlook:

We expect revenue of $15.8 – $16.4 million and earnings of $0.00 – $0.01 per share in Quarter 3. For the full year 2013, we expect revenue to be $63-$66 million with earnings per share of $.01 – $.04. 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 second quarter results on July 31, 2013 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 and ask for Conference ID Number 418008. A replay of the conference call will be available until 11:59 PM on August 14, 2013 and can be accessed by dialing (877) 660-6853 (domestic) and (201) 612-7415 (international). The playback Conference ID Number is 418008. The web-cast may be accessed under the Investor Relations section of our website at www.neogenomics.com or http://www.investorcalendar.com/IC/CEPage.asp?ID=171229. An archive of the web-cast will be available until 11:59 PM on October 31, 2013.

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, 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.

(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.

                              NeoGenomics, Inc.
                              -----------------

                    CONDENSED CONSOLIDATED BALANCE SHEETS

                          (Unaudited, in thousands)

    ASSETS

                                           June 30,          December 31,

                                               2013                  2012
    ---                                        ----                  ----

      Cash, cash equivalents                          $4,636               $1,868

      Accounts Receivable (net of
       allowance for doubtful                         16,005               14,034

         accounts of $4,147 and $3,002,
          respectively)

      Other Current Assets                             2,522                2,679
                                                       -----                -----

    TOTAL CURRENT ASSETS                              23,163               18,581

    PROPERTY AND EQUIPMENT (net of
     accumulated                                       8,437                8,607

       depreciation of $12,341 and
        $10,289, respectively)

    INTANGIBLE ASSETS (net of
     accumulated amortization                          2,689                2,800
       of $293 and $182, respectively)

    OTHER ASSETS                                         170                   83
                                                         ---

        TOTAL                                        $34,459              $30,071

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

    CURRENT LIABILITIES                              $12,056              $17,758

    LONG TERM LIABILITIES                              2,963                3,097
                                                       -----                -----

        TOTAL LIABILITIES                             15,019               20,855

    STOCKHOLDERS' EQUITY                              19,440                9,216
                                                      ------                -----

       TOTAL                                         $34,459              $30,071

                                   NeoGenomics, Inc.
                                   -----------------

                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                       (in thousands, except per share amounts)

                                      (unaudited)

                                               For the                  For the Six-
                                               Three-                      Months
                                               Months                       Ended
                                               Ended
                                              June 30,
                                                                         June 30,
                                                                         --------

                                              2013            2012             2013            2012
                                              ----            ----             ----            ----

    NET
     REVENUE                               $15,603         $15,611          $31,260         $30,771

    COST
     OF
     REVENUE

                                    8,446           8,244           16,857           16,261
                                    -----           -----           ------           ------

    GROSS
     PROFIT

                                             7,157           7,367           14,403          14,510
                                             -----           -----           ------          ------

     OPERATING
     EXPENSES

     General
     and
     administrative                          4,064           4,066            8,239           7,816

     Research
     and
     development                               616             528            1,451           1,025

    Sales
     and
     marketing                               1,972           1,934            3,903           3,969
                                             -----           -----            -----           -----

       Total
        operating
        expenses                             6,652           6,528           13,593          12,810

     INCOME
     FROM                                      505             839              810           1,700

    OPERATIONS

     INTEREST
     AND
     OTHER                                    (232)           (288)            (517)           (546)
     INCOME
     (EXPENSE)
     -
     NET

     INCOME
     BEFORE
     TAXES                                     273             551              293           1,154

     INCOME
     TAXES                              -               -               17                -
                                      ---             ---              ---              ---

    NET
     INCOME                                   $273            $551             $276          $1,154

    NET
     INCOME
     PER
     SHARE                                   $0.01           $0.01            $0.01           $0.03

    -
     Basic

    -
     Diluted                                 $0.01           $0.01            $0.01           $0.02

     WEIGHTED
     AVG
     NUMBER                                 48,793          44,954           47,529          44,827

    OF
     SHARES
     OUTSTANDING

    -
     Basic

    -
     Diluted                                53,744          47,650           52,297          47,501
                                            ======          ======           ======          ======


                               NeoGenomics, Inc.
                               -----------------

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (Unaudited, in thousands)

                                            For the                For the

                                           Six Months             Six Months
                                              Ended                  Ended

                                         June 30, 2012          June 30, 2012
                                         -------------          -------------

    NET CASH PROVIDED BY
     OPERATING ACTIVITIES                                 $533                   $16

    NET CASH USED IN
     INVESTING ACTIVITIES                                 (608)               (2,050)

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES                                2,843                 1,972
                                                         -----                 -----

       NET INCREASE (DECREASE)
        IN CASH AND CASH                                 2,768                   (62)
       EQUIVALENTS

    CASH AND CASH
     EQUIVALENTS, BEGINNING
     OF PERIOD                                           1,868                 2,628
                                                         -----                 -----

    CASH AND CASH
     EQUIVALENTS, END OF
     PERIOD                                             $4,636                $2,566

    SUPPLEMENTAL DISCLOSURE
     OF CASH FLOW
     INFORMATION:

    Interest paid                                         $495                  $529

        Income taxes paid                                  $17              $      -
                                                                                 ===

     SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
      FINANCING ACTIVITIES:

         Purchase of licenses                        $       -                $1,945
                                                   ===

         Equipment leased under
          capital lease and
          equipment loans                               $1,402                $2,140

                                NeoGenomics, Inc.
                                -----------------

    RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA AND ADJUSTED EBITDA

                            (Unaudited, in thousands)

                                                                                   For the Three-Months                 For the Six-Months
                                                                                        Ended                          Ended
                                                                                                                     June 30,
                                                                                      June 30,
                                                                                      --------

                                                                                        2013               2012           2013              2012
                                                                                        ----               ----           ----              ----

    Net income (Per GAAP)                                                               $273               $551           $276            $1,154

    Adjustments to Net Income:

       Interest expense (income), net                                                    232                288            517               546

       Amortization of intangibles                                                        55                 56            111                70

       Income tax expense                                                      -                  -              17                 -

       Depreciation                                                                    1,063                856          2,052             1,605
                                                                                       -----                ---          -----             -----

     EBITDA                                                                            1,623              1,751          2,973             3,375

    Further Adjustments to EBITDA:

      Non-cash stock-based                                                               202                192            646               343
      compensation

     Adjusted EBITDA (non-GAAP)                                                       $1,825             $1,943         $3,619            $3,718

    Non - GAAP Adjusted EBITDA Definition
    -------------------------------------

    "Adjusted EBITDA" is defined by NeoGenomics as net income from continuing operations before (i) interest expense, (ii) tax expense, (iii) depreciation and
     amortization expense, (iv) non-cash stock-based compensation and warrant amortization expense and (v) other extraordinary or non-recurring charges.
     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                       For the

                                  Three-Months                   Three-Months                % Inc                      For the              For the           % Inc
                                                                                             (Dec)                                                             (Dec)
                                      Ended                         Ended                                             Six-Months           Six-Months

                                  June 30, 2013                 June 30, 2012                                            Ended                Ended

                                                                                                                     June 30, 2013        June 30, 2012
                                                                                                                     -------------                                     ---

    Requisitions Rec'd (cases)                  20,875                         18,561               12.5%                          41,479               35,495        16.9%

    Number of Tests Performed                   32,519                         28,846               12.7%                          64,607               55,778        15.8%

    Avg. # of Tests / Requisition                 1.56                           1.55                0.2%                            1.56                 1.57       (0.9)%

    Total Testing Revenue                      $15,603                        $15,611              (0.1)%                         $31,260              $30,771         1.6%

    Avg. Revenue/Requisition                      $747                           $841             (11.1)%                            $754                 $867      (13.1)%

    Avg. Revenue/Test                             $480                           $541             (11.3)%                            $484                 $552      (12.3)%

    Total Cost of Revenue                       $8,446                         $8,244              (2.5)%                         $16,857              $16,261         3.7%

    Avg. Cost/Requisition                         $405                           $444              (8.9)%                            $406                 $458      (11.4)%

    Avg. Cost/Test                                $260                           $286              (9.1)%                            $261                 $292      (10.6)%

SOURCE NeoGenomics, Inc.


Source: PR Newswire