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NeoGenomics Reports Record Revenue of $18.3 Million, Adjusted EBITDA of $2.7 Million and Net Income of $0.02 per Share for the Fourth Quarter 2013

February 19, 2014

Company Set to Launch Next Generation Sequencing Services in March 2014

FT. MEYERS, Fla., Feb. 19, 2014 /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 of 2013.

Fourth Quarter 2013 Highlights:

    --  Revenue growth of 23%
    --  Test volume growth of 28%
    --  Gross Profit Margin of 50.0% versus 43.2% last year
    --  Adjusted EBITDA((1)) growth of 90%
    --  Net Income of $0.02 per share versus $0.00 last year

Revenue for the fourth quarter was $18.3 million, a 23% increase over fourth quarter 2012 revenue. Test volume increased by 28%, while average revenue per test declined by 3.7%. Average cost of goods sold per test declined by 15.3% driven by continued productivity improvements, increased leverage from higher volumes, and other cost containment initiatives. As a result, gross profit increased by 42% to $9.2 million and gross margin increased to 50.0% from 43.2% in the prior year.

Total operating expenses increased by 27.6% from last year’s fourth quarter, primarily as a result of additional sales representatives, increases in billing and information technology costs, and an increase in stock-based compensation expense related to the increase in the Company’s stock price in the fourth quarter 2013.

Net income for the quarter was $857,000, or $0.02 per share, versus a net loss of $(113,000), or $(0.00) per share, in last year’s fourth quarter. Adjusted EBITDA((1)) improved by 90% to $2.7 million in Quarter 4 from $1.4 million last year.

For fiscal year 2013, revenue was $66.5 million, an 11% increase from 2012. Test volume increased by 20%, while average revenue per test declined by 7.3%. Revenue growth was driven by an expanded menu of tests and an increasing client base. Average cost of goods sold per test declined by 12.2%. As a result, gross profit increased by 18% to $31.7 million and gross margin increased to 47.8% from 44.8% in 2012.

Total operating expenses for fiscal year 2013 increased by 11.5% from 2012, primarily as a result of additional sales representatives and increases in billing and information technology expenses. Net income for 2013 was $2.0 million, or $0.04 per share, versus $0.00 per share in 2012. Adjusted EBITDA((1)) improved by 42% to $8.5 million in 2013 from $6.0 million in 2012.

Douglas M. VanOort, the Company’s Chairman and CEO commented, “We are very proud of both our fourth quarter and full year results. Despite continued pressure on reimbursement, we achieved strong revenue growth and sharply increased gross margins. Our stream of innovative new tests and consistently high service levels is attracting new clients, and we are gaining market share. We have also been successful at increasing productivity and reducing costs. As a result, we were able to drive 80% of the year-over-year revenue increase to gross profit in the fourth quarter, and increase net income by almost $1.0 million, despite a 3.7% reduction in average revenue-per-test over the same period.”

Mr. VanOort continued, “Our brisk pace of innovation continues. During 2013, we launched approximately 40 new molecular tests and NeoTYPE cancer profiles. With 68 new molecular tests launched over the last two years, we now have one of the broadest molecular testing menus in the world. Our comprehensive test menu is attracting the interest of both traditional clients and of the pharmaceutical industry.”

He added, “We are very enthusiastic about our growth plans for 2014. We expect to launch Next Generation Sequencing testing in March, and we are making significant progress developing our new NeoSCORE(TM) Prostate Cancer Test. The preliminary results of our first trial have now been published online in the Genetic Testing and Molecular Biomarkers Journal and we recently completed a second trial which has largely confirmed the results of the first trial. In addition, we are off to a good start in our new strategic alliance with Covance, and expect growth of our clinical trials business as the year progresses.

Mr. VanOort concluded, “Although there is uncertainty regarding new guidance from CMS’ National Correct Coding Initiative (NCCI) on how to properly bill for FISH testing for Medicare beneficiaries, we believe reimbursement for the rest of our testing and from our non-Medicare payers will remain reasonably stable in 2014. We also expect to reduce costs per test by another 8-10% this year. In addition, we are increasingly focused on exploring mergers and/or acquisitions as a means to increase our scale and to diversify our portfolio.”

First Quarter and Full-Year 2014 Financial Outlook:

The Company also issued preliminary guidance for the full year and fiscal first quarter of 2014 today. Before factoring in any potential impacts from a negative resolution of the NCCI FISH edit issue (see below), which currently remains unresolved, the Company expects revenue of $73 – $77 million and net income of $0.05 – $0.07 per share in FY 2014. For the fiscal first quarter, the company expects revenue of $18.8 – $19.3 million and net income of $0.01-$0.02 per share.

While NeoGenomics is still determining the impacts that might arise from a negative resolution of the NCCI FISH edit issue, the Company preliminarily estimates that it may result in a reduction of approximately $3 million of revenue and $0.04 per share of net income for the full year 2014 with the impact concentrated more in the first half of the year. For the first quarter of 2014, a negative resolution of this issue may result in a reduction of approximately $1.0 million of revenue and $0.02 per share of net income.

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.

Recent Guidance from the National Correct Coding Initiative on FISH Testing

In December 2013, the Centers for Medicare and Medicaid Services (CMS) issued new guidance through their National Correct Coding Initiative (NCCI) Policy Manual which could potentially change how laboratories account for the quantity of FISH probes being billed to CMS. The Company issued a Form 8-K with the SEC this morning discussing this issue in detail, and there is now a link on the homepage of the Company’s website with a more complete discussion of the issue as well as a copy of a recent letter to the Medical Director of the NCCI requesting clarification on the issue.

____________________

(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, non-recurring moving expense for the move of our facility in Irvine, California in 2012, 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 2013 and full year 2013 results on Wednesday February 19, 2014 at 11:00 AM EST. 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 13574927. A replay of the conference call will be available until 11:59 PM on March 5, 2014 and can be accessed by dialing (877) 660-6853 (domestic) and (201) 612-7415 (international). The playback conference ID Number is 13574927. 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=172163. An archive of the web-cast will be available until 11:59 PM on May 19, 2014.

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, pharmaceutical firms, 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,

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

      Cash, cash
       equivalents                                            $4,834               $1,868

      Accounts Receivable (net
       of allowance for
       doubtful                                               18,653               14,034

         accounts of $4,540 and
          $3,002, respectively)

      Other Current Assets                                     4,004                2,679
                                                               -----                -----

    TOTAL CURRENT ASSETS                                      27,491               18,581

    PROPERTY AND EQUIPMENT
     (net of accumulated                                       9,694                8,607

       depreciation of $14,478
        and $10,289,
        respectively)

    INTANGIBLE ASSETS (net
     of accumulated
     amortization of $405
     and $182, respectively)                                   2,577                2,800

    OTHER ASSETS                                                 154                   83
                                                                 ---

        TOTAL                                                $39,916              $30,071

    LIABILITIES AND
     STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES                                      $14,323              $17,758

    LONG TERM LIABILITIES                                      3,882                3,097
                                                               -----                -----

        TOTAL LIABILITIES                                     18,205               20,855

    STOCKHOLDERS' EQUITY                                      21,711                9,216
                                                              ------                -----

       TOTAL                                                 $39,916              $30,071


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

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

                                               For the           For the Year
                                               Three-                        Ended
                                               Months
                                               Ended
                                              December
                                                        31,

                                                                        December 31,
                                                                        ------------

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

     NET
     REVENUE                               $18,323         $14,893           $66,467         $59,867

    COST
     OF
     REVENUE

                                    9,160           8,460            34,730           33,031
                                    -----           -----            ------           ------

     GROSS
     PROFIT

                                             9,163           6,433            31,737          26,836
                                             -----           -----            ------          ------

     OPERATING
     EXPENSES

     General
     and
     administrative                          4,823           4,097            17,397          15,843

     Research
     and
     development                               649             448             2,440           2,281

     Sales
     and
     marketing                               2,487           1,692             8,726           7,501
                                             -----           -----             -----           -----

        Total
        operating
        expenses                             7,959           6,237            28,563          25,625

     INCOME
     FROM                                    1,204             196             3,174           1,211

    OPERATIONS

     INTEREST
     AND
     OTHER
     INCOME
     (EXPENSE)
     -
     NET                                      (241)           (309)             (989)         (1,146)
                                              ----            ----              ----          ------

     INCOME
     (LOSS)
     BEFORE
     TAXES                                     963            (113)            2,185              65

     INCOME
     TAXES                            106               -               152                -
                                      ---             ---               ---              ---

     NET
     INCOME
     (LOSS)                                   $857           $(113)           $2,033             $65

     NET
     INCOME
     (LOSS)
     PER
     SHARE                                   $0.02          $(0.00)            $0.04           $0.00

    -
     Basic

    -
     Diluted                                 $0.02          $(0.00)            $0.04           $0.00

     WEIGHTED
     AVG
     NUMBER                                 49,021          45,273            48,263          45,027

    OF
     SHARES
     OUTSTANDING

    -
     Basic

    -
     Diluted                                53,638          45,273            52,775          48,715
                                            ======          ======            ======          ======



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

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

                                           For the                For the

                                         Year Ended             Year Ended

                                          December               December
                                           31, 2013               31, 2012
                                           --------               --------

    NET CASH PROVIDED BY
     (USED IN) OPERATING
     ACTIVITIES                                         $2,227                 $(492)

    NET CASH USED IN
     INVESTING ACTIVITIES                               (2,011)               (3,652)

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES                                2,750                 3,384
                                                         -----                 -----

       NET INCREASE (DECREASE)
        IN CASH AND CASH
        EQUIVALENTS                                      2,966                  (760)

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

    CASH AND CASH
     EQUIVALENTS, END OF
     PERIOD                                             $4,834                $1,868

    SUPPLEMENTAL DISCLOSURE
     OF CASH FLOW
     INFORMATION:

    Interest paid                                       $1,073                $1,108

        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                               $3,249                $2,782


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

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

                                                 For the               For the
                                                  Three-                 Year
                                                  Months                Ended
                                                                       December
                                                                            31,
                                                   Ended
                                                 December
                                                     31,
                                                 ---------

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

    Net income
     (loss) (Per
     GAAP)                                        $857       $(114)      $2,033        $65

    Adjustments to
     Net Income
     (Loss):

       Interest
        expense
        (income), net                              241         311          989      1,146

       Amortization of
        intangibles                                 56          56          223        182

       Income tax
        expense                            106           -          152           -

       Depreciation                              1,074       1,088        4,189      3,637
                                                 -----       -----        -----      -----

     EBITDA                                      2,334       1,341        7,586      5,030

    Further
     Adjustments to
     EBITDA:

      Non-recurring
       costs                                 -           -            -         170

      Non-cash
       stock-based                                 399          99          929        798

                compensation

     Adjusted
      EBITDA
      (non-GAAP)                                $2,733      $1,440       $8,515     $5,998

    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                   % Inc                     For the             For the
                                                                                            (Dec)
                                  Three-Months                  Three-Months                                            Year                Year

                                     Ended                         Ended                                               Ended               Ended

                                  December 31,                  December 31,                                        December 31,        December 31,        % Inc
                                                 2013                           2012                                               2013                2012 (Dec)
                                                 ----                           ----                                               ----                ----  ----

    Requisitions Rec'd (cases)                 25,215                         19,971               26.3%                         88,431              73,773        19.9%

    Number of Tests Performed                  38,987                         30,513               27.8%                        137,317             114,606        19.8%

    Avg. # of Tests / Requisition                1.55                           1.53                1.2%                           1.55                1.55         0.0%

    Total Testing Revenue                     $18,323                        $14,893               23.0%                        $66,467             $59,867        11.0%

    Avg. Revenue/Requisition                  $726.69                        $745.74              (2.6)%                        $751.63             $811.50       (7.4)%

    Avg. Revenue/Test                         $469.99                        $488.09              (3.7)%                        $484.04             $522.37       (7.3)%

    Total Cost of Revenue                      $9,160                         $8,460                8.3%                        $34,730             $33,031         5.1%

    Avg. Cost/Requisition                     $363.29                        $423.60             (14.2)%                        $392.73             $447.73      (12.3)%

    Avg. Cost/Test                            $234.96                        $277.25             (15.3)%                        $252.92             $288.21      (12.2)%
    --------------                            -------                        -------             ------                         -------             -------      ------

SOURCE NeoGenomics, Inc.


Source: PR Newswire



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