NeoGenomics Reports 51% Revenue Growth to $105 Million in the Third Quarter

Third-Quarter Highlights:

Consolidated revenue increased 51% to $104.7 million
Clinical Services revenue increased 56% to $92.6 million
Pharma Services revenue increased 26% to $12.1 million
Pharma Services backlog increased 22% to $118.3 million
Gross profit increased 57% to $50.8 million
Full-year 2019 guidance increased

FORT MYERS, FL / ACCESSWIRE / October 29, 2019 / NeoGenomics, Inc. (NASDAQ:NEO) (the "Company"), a leading provider of cancer-focused genetics testing services, today announced third-quarter and nine-month results for the period ended September 30, 2019.

Douglas M. VanOort, the Company's Chairman and CEO, commented, "Our Company's third-quarter results were excellent. Our Clinical Services Division reported accelerating volume growth, and average revenue-per-test increased on a year-over-year basis for the fifth consecutive quarter. We also continued to drive efficiencies in our laboratory operations. Our Pharma Services Division reported record new business wins and our backlog of signed contracts is at an all-time high.

During the quarter, we made significant investments in research and development, including substantial upgrades to our next-generation sequencing offerings and capabilities. We also hired nearly 200 full-time employees to accommodate our growth and ensure that we maintain industry leading quality and service. Finally, we continued to make good progress with our integration of Genoptix and look forward to that work being substantially complete by the middle of next year.

We are pleased with our performance this year, are investing to expand our capabilities, and remain confident in our outlook for future growth."

Third-Quarter Results

Consolidated revenue for the third quarter of 2019 was $104.7 million, an increase of 51% over the same period in 2018. Clinical test volume(1) increased by 35% year over year. Average revenue per clinical test ("revenue per test") increased by 15% to $369, primarily due to the acquisition of Genoptix, and the impact of favorable test mix. Clinical Services revenue was $92.6 million resulting in a 56% increase over the third quarter of 2018. Pharma Services revenue was $12.1 million, which represented a 26% increase over the third quarter of 2018.

Gross profit improved by $18.5 million, or 57%, compared to the third quarter of 2018, to $50.8 million. Gross margin improved by approximately 180 basis points year-over-year to 48.6%. Gross margin improvement reflects the impact of volume growth, higher revenue per test, productivity gains, and cost efficiencies. Average cost of goods sold per clinical test ("cost per test") increased by 12% year over year, reflecting the impact of the Genoptix acquisition, partially offset by continued efficiencies.

Operating expenses increased by $18.8 million, or 66%, compared to the third quarter of 2018, primarily due to the Genoptix acquisition, investments in research and development, and growth initiatives.

Net income for the quarter was $2.1 million compared to net income of $2.0 million for the third quarter of 2018.

Adjusted EBITDA(2) was $14.9 million for the quarter, a 32% improvement from the prior year. Adjusted Net Income(2) was $7.5 million compared to $4.6 million in the third quarter of 2018.

Cash and cash equivalents were $178.9 million at the end of the third quarter, primarily reflecting the proceeds from the equity offering that occurred in the second quarter of 2019 as well as strong cash flow in the third quarter. Days sales outstanding ("DSO") decreased 1 day to 80 days when compared to the second quarter of 2019.

2019 Financial Outlook:

The Company is increasing its recently revised full-year 2019 guidance, initially issued on February 19, 2019.

(in millions)

 
Initial Guidance
 
 
Q1 Revised Guidance
 
 
Q2 Revised Guidance
 
 
Q3 Revised Guidance
 

Consolidated revenue

 
 
 
$379 – $395
 
 
 
$384 – $400
 
 
 
$388 – $402
 
 
 
$401 – $406
 

Net (loss)/income

 
 
 
($3) – $3
 
 
 
($3) – $1
 
 
 
($1) – $3
 
 
 
$1 – $3
 

Adjusted EBITDA(2)

 
 
 
$49 – $53
 
 
 
$52 – $56
 
 
 
$54 – $58
 
 
 
$56 – $58
 

Please also refer to the tables reconciling forecasted Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS to their closest generally accepted accounting principles ("GAAP") equivalent in the section of this report entitled "Reconciliation of Non-GAAP Financial Guidance to Corresponding GAAP Measures."

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 webcast and conference call to discuss its third quarter results on Tuesday, October 29, 2019 at 08:30 AM EDT. Interested investors should dial (844) 602-0380 (domestic) and (862) 298-0970 (international) at least five minutes prior to the call. A replay of the conference call will be available until 08:30 AM EST on November 5, 2019, and can be accessed by dialing (877) 481-4010 (domestic) and (919) 882-2331 (international). The playback conference access code is 49691. The webcast may be accessed under the Investor Relations section of our website at http://neogenomics.com/. An archive of the webcast will be available until 08:30 AM EST on January 29, 2020.

About NeoGenomics, Inc.

NeoGenomics, Inc. specializes in cancer genetics testing and information services. The Company's Clinical Services division provides one of the most comprehensive oncology-focused testing menus in the world for physicians to help them diagnose and treat cancer. The Company's Pharma Services division serves pharmaceutical clients in clinical trials and drug development.

Headquartered in Fort Myers, Florida, NeoGenomics operates College of American Pathologists ("CAP") accredited and Clinical Laboratory Improvement Amendments ("CLIA") certified laboratories in Fort Myers and Tampa, Florida; Aliso Viejo, Carlsbad and Fresno, California; Houston, Texas; Atlanta, Georgia; Nashville, Tennessee; Rolle, Switzerland, and Singapore. NeoGenomics serves the needs of pathologists, oncologists, academic centers, hospital systems, pharmaceutical firms, integrated service delivery networks, and managed care organizations throughout the United States, and pharmaceutical firms in Europe and Asia. For additional information about NeoGenomics, visit http://neogenomics.com/.

Forward Looking Statements

Certain information contained in this press release constitutes forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995, including the information set forth in the "Full-Year 2019 Financial Outlook". 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 as the result of the Company's ability to continue gaining new customers, offer new types of tests, integrate its acquisition of the Genoptix business and otherwise implement its business plan, as well as additional factors discussed under the heading "Risk Factors" and elsewhere in the Company's Annual Report on Form 10-K filed with the SEC on February 26, 2019, amended by a 10K/A filed with the SEC on May 8, 2019. As a result, this press release should be read in conjunction with the Company's periodic filings with the SEC. In addition, it is the Company's practice to make information about the Company available by posting copies of its Company Overview Presentation from time to time on the Investor Relations section of its website at http://ir.neogenomics.com/.

Forward-looking statements represent the Company's estimates only as of the date such statements are made (unless another date is indicated) and should not be relied upon as representing the Company's estimates as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if its estimates change.

For further information, please contact:

NeoGenomics, Inc.

William Bonello
Chief Strategy and Corporate Development Officer
Director, Investor Relations
(239)690-4238 (w) (239)284-4314 (m)
bill.bonello@neogenomics.com

NeoGenomics, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

ASSETS

 
September 30, 2019 (Unaudited)
 
 
December 31, 2018
 

Cash and cash equivalents

 
$
178,891
 
 
$
9,811
 

Accounts receivable, net

 
 
91,133
 
 
 
76,919
 

Inventories

 
 
12,632
 
 
 
8,650
 

Other current assets

 
 
9,345
 
 
 
8,288
 

Total current assets

 
 
292,001
 
 
 
103,668
 

Property and equipment (net of accumulated depreciation of $64,165 and $50,127, respectively)

 
 
62,488
 
 
 
60,888
 

Operating lease right-of-use assets

 
 
25,797
 
 
 
–
 

Intangible assets, net

 
 
129,084
 
 
 
140,029
 

Goodwill

 
 
198,571
 
 
 
197,892
 

Other assets

 
 
3,214
 
 
 
2,538
 

TOTAL ASSETS

 
$
711,155
 
 
$
505,015
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and other current liabilities

 
$
53,380
 
 
$
46,753
 

Short-term portion of financing obligations

 
 
12,000
 
 
 
14,172
 

Short-term portion of operating leases

 
 
3,527
 
 
 
–
 

Total current liabilities

 
 
68,907
 
 
 
60,925
 

Long-term portion of financing obligations

 
 
97,009
 
 
 
98,130
 

Long-term portion of operating leases

 
 
23,870
 
 
 
–
 

Deferred income tax liability, net

 
 
19,688
 
 
 
22,457
 

Other long-term liabilities

 
 
4,674
 
 
 
3,060
 

Total long-term liabilities

 
 
145,241
 
 
 
123,647
 

TOTAL LIABILITIES

 
 
214,148
 
 
 
184,572
 

TOTAL STOCKHOLDERS' EQUITY

 
 
497,007
 
 
 
320,443
 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 
$
711,155
 
 
$
505,015
 

NeoGenomics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)

 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 

 
2019
 
 
2018
 
 
2019
 
 
2018
 

NET REVENUE:

Clinical Services

 
$
92,565
 
 
$
59,449
 
 
$
267,757
 
 
$
175,960
 

Pharma Services

 
 
12,107
 
 
 
9,647
 
 
 
34,205
 
 
 
24,306
 

Total revenue

 
 
104,672
 
 
 
69,096
 
 
 
301,962
 
 
 
200,266
 

COST OF REVENUE

 
 
53,840
 
 
 
36,775
 
 
 
155,049
 
 
 
110,111
 

GROSS PROFIT

 
 
50,832
 
 
 
32,321
 
 
 
146,913
 
 
 
90,155
 

Operating expenses:

General and administrative

 
 
33,054
 
 
 
21,055
 
 
 
94,773
 
 
 
59,106
 

Research and development

 
 
2,611
 
 
 
446
 
 
 
6,407
 
 
 
2,475
 

Sales and marketing

 
 
11,508
 
 
 
6,900
 
 
 
35,048
 
 
 
21,355
 

Total operating expenses

 
 
47,173
 
 
 
28,401
 
 
 
136,228
 
 
 
82,936
 

INCOME FROM OPERATIONS

 
 
3,659
 
 
 
3,920
 
 
 
10,685
 
 
 
7,219
 

Interest expense, net

 
 
203
 
 
 
1,873
 
 
 
3,333
 
 
 
4,766
 

Other (income) expense

 
 
(35
)
 
 
(30
)
 
 
5,124
 
 
 
31
 

Loss on extinguishment of debt

 
 
–
 
 
 
–
 
 
 
1,018
 
 
 
–
 

Income before taxes

 
 
3,491
 
 
 
2,077
 
 
 
1,210
 
 
 
2,422
 

Income tax expense (benefit)

 
 
1,348
 
 
 
54
 
 
 
(500
)
 
 
135
 

NET INCOME

 
$
2,143
 
 
$
2,023
 
 
$
1,710
 
 
$
2,287
 

Deemed dividends on preferred stock and amortization of beneficial conversion feature

 
 
–
 
 
 
–
 
 
 
–
 
 
 
5,627
 

Gain on redemption of preferred stock

 
 
–
 
 
 
–
 
 
 
–
 
 
 
(9,075
)

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

 
$
2,143
 
 
$
2,023
 
 
$
1,710
 
 
$
5,735
 

INCOME PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

Basic

 
$
0.02
 
 
$
0.02
 
 
$
0.02
 
 
$
0.07
 

Diluted

 
$
0.02
 
 
$
0.02
 
 
$
0.02
 
 
$
0.06
 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

Basic

 
 
103,899
 
 
 
87,253
 
 
 
99,149
 
 
 
87,381
 

Diluted

 
 
107,880
 
 
 
90,899
 
 
 
102,766
 
 
 
89,925
 

NeoGenomics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

 
Nine Months Ended September 30,
 

CASH FLOWS FROM OPERATING ACTIVITIES

 
2019
 
 
2018
 

Net income

 
$
1,710
 
 
$
2,287
 

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

 
 
15,200
 
 
 
11,477
 

Loss on disposal of assets

 
 
451
 
 
 
278
 

Loss on debt extinguishment

 
 
1,018
 
 
 
–
 

Amortization of intangibles

 
 
7,482
 
 
 
4,255
 

Amortization of debt issue costs

 
 
323
 
 
 
392
 

Non-cash stock based compensation

 
 
7,727
 
 
 
5,148
 

Non-cash operating lease expense

 
 
3,224
 
 
 
–
 

Changes in assets and liabilities, net

 
 
(17,125
)
 
 
5,496
 

Net cash provided by operating activities

 
$
20,010
 
 
$
29,333
 

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

 
 
(13,953
)
 
 
(11,091
)

Acquisition adjustment

 
 
399
 
 
 
–
 

Net cash used in investing activities

 
$
(13,554
)
 
$
(11,091
)

CASH FLOWS FROM FINANCING ACTIVITIES

Advances on revolving credit facility

 
 
–
 
 
 
10,000
 

Redemption of preferred stock

 
 
–
 
 
 
(50,096
)

Repayment of revolving credit facility

 
 
(5,000
)
 
 
(35,400
)

Repayment of equipment and other loans

 
 
(5,481
)
 
 
(4,774
)

Proceeds from term loan

 
 
100,000
 
 
 
30,000
 

Repayment of term loan

 
 
(96,750
)
 
 
(3,187
)

Payments of debt issue costs

 
 
(1,051
)
 
 
(576
)

Issuance of common stock, net

 
 
10,132
 
 
 
6,535
 

Proceeds from equity offering, net

 
 
160,774
 
 
 
134,910
 

Net cash provided by financing activities

 
$
162,624
 
 
$
87,412
 

Effects of foreign exchange rate changes on cash and cash equivalents

 
 
–
 
 
 
(35
)

Net change in cash and cash equivalents

 
$
169,080
 
 
$
105,619
 

Cash and cash equivalents, beginning of period

 
 
9,811
 
 
 
12,821
 

Cash and cash equivalents, end of period

 
$
178,891
 
 
$
118,440
 

Use of Non-GAAP Financial Measures

The Company's financial results and financial guidance are provided in accordance with GAAP and using certain non-GAAP financial measures. Management believes that the presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company's core operating results and comparison of core operating results across reporting periods. Management also uses non-GAAP financial measures for financial and operational decision making, planning and forecasting purposes and to manage the Company's business. Management believes that these non-GAAP financial measures enable investors to evaluate the Company's operating results and future prospects in the same manner as management. The non-GAAP financial measures do not replace the presentation of GAAP financial results and should only be used as a supplement to, and not as a substitute for, the Company's financial results presented in accordance with GAAP. There are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation, and do not present the full measure of the Company's recorded costs against its net revenue. In addition, the Company's definition of the non-GAAP financial measures below may differ from non-GAAP measures used by other companies.

Definitions of Non-GAAP Measures

Non-GAAP Adjusted EBITDA

"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 expense, and, if applicable in a reporting period, (v) acquisition and integration related expenses, (vi) non-cash impairments of intangible assets, (vii) debt financing costs, (viii) and other significant non-recurring or non-operating (income) or expenses.

Non-GAAP Adjusted Net Income

"Adjusted Net Income" is defined by NeoGenomics as net income available to common shareholders from continuing operations plus: (i) non-cash amortization of customer lists and other intangible assets, (ii) non-cash stock-based compensation expense, (iii) non-cash deemed dividends on preferred stock, (iv) non-cash amortization of preferred stock beneficial conversion feature, and, if applicable in a reporting period, (v) acquisition and integration related expenses, (vi) non-cash impairments of intangible assets, (vii) debt financing costs, (viii) and other significant non-recurring or non-operating (income) or expenses.

Non-GAAP Adjusted Diluted EPS

"Adjusted Diluted EPS" is defined by NeoGenomics as adjusted net income divided by adjusted diluted shares outstanding. Adjusted diluted shares outstanding is the sum of diluted shares outstanding and the weighted average number of common shares that would be outstanding if the preferred stock were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period. In addition, if GAAP net income is negative and adjusted net income is positive, adjusted diluted shares will also include any options or warrants that would be outstanding as dilutive instruments using the treasury stock method.

Reconciliation of GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA
(Unaudited)
(In thousands)

 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 

 
2019
 
 
2018
 
 
2019
 
 
2018
 

Net income (GAAP)

 
$
2,143
 
 
$
2,023
 
 
$
1,710
 
 
$
2,287
 

Adjustments to net income:

Interest expense, net

 
 
203
 
 
 
1,873
 
 
 
3,333
 
 
 
4,766
 

Income tax expense (benefit)

 
 
1,348
 
 
 
54
 
 
 
(500
)
 
 
135
 

Amortization of intangibles

 
 
2,380
 
 
 
1,421
 
 
 
7,482
 
 
 
4,255
 

Depreciation

 
 
4,848
 
 
 
4,034
 
 
 
15,200
 
 
 
11,477
 

EBITDA (non-GAAP)

 
$
10,922
 
 
$
9,405
 
 
$
27,225
 
 
$
22,920
 

Further adjustments to EBITDA:

Acquisition and integration related expenses

 
 
334
 
 
 
–
 
 
 
2,143
 
 
 
–
 

Loss on extinguishment of debt

 
 
–
 
 
 
–
 
 
 
1,018
 
 
 
–
 

Other significant non-recurring expense

 
 
364
 
 
 
670
 
 
 
5,509
 
 
 
2,486
 

Non-cash, stock-based compensation

 
 
3,275
 
 
 
1,191
 
 
 
7,727
 
 
 
5,148
 

Adjusted EBITDA (non-GAAP)

 
$
14,895
 
 
$
11,266
 
 
$
43,622
 
 
$
30,554
 

Reconciliation of GAAP Net Income Available to Common Stockholders to Non-GAAP Adjusted Net Income and GAAP EPS to Non-GAAP Adjusted EPS
(Unaudited)
(In thousands, except per share amounts)

 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 

 
2019
 
 
2018
 
 
2019
 
 
2018
 

Net income attributable to common stockholders (GAAP)

 
$
2,143
 
 
$
2,023
 
 
$
1,710
 
 
$
5,735
 

Adjustments to net income , net of tax:

Amortization of intangibles

 
 
1,880
 
 
 
1,123
 
 
 
5,911
 
 
 
3,362
 

Deemed dividends on preferred stock

 
 
–
 
 
 
–
 
 
 
–
 
 
 
10,198
 

Amortization of preferred stock beneficial conversion feature

 
 
–
 
 
 
–
 
 
 
–
 
 
 
(13,646
)

Non-cash stock-based compensation expenses

 
 
2,960
 
 
 
941
 
 
 
6,939
 
 
 
4,068
 

Acquisition and integration related expenses

 
 
264
 
 
 
–
 
 
 
1,669
 
 
 
–
 

Other significant non-recurring expenses

 
 
288
 
 
 
530
 
 
 
4,352
 
 
 
1,964
 

Loss on extinguishment of debt

 
 
–
 
 
 
–
 
 
 
804
 
 
 
–
 

Adjusted net income (non-GAAP)

 
$
7,535
 
 
$
4,617
 
 
$
21,385
 
 
$
11,681
 

Net income per common share (GAAP)

Diluted EPS

 
$
0.02
 
 
$
0.02
 
 
$
0.02
 
 
$
0.06
 

Adjustments to diluted income per share:

Amortization of intangibles

 
 
0.02
 
 
 
0.01
 
 
 
0.06
 
 
 
0.04
 

Deemed dividends on preferred stock

 
 
–
 
 
 
–
 
 
 
–
 
 
 
0.11
 

Amortization of preferred stock beneficial conversion feature

 
 
–
 
 
 
–
 
 
 
–
 
 
 
(0.15
)

Non-cash stock based compensation expenses

 
 
0.03
 
 
 
0.01
 
 
 
0.07
 
 
 
0.05
 

Acquisition and integration related expenses

 
 
–
 
 
 
–
 
 
 
0.02
 
 
 
–
 

Other significant non-recurring expense

 
 
–
 
 
 
0.01
 
 
 
0.04
 
 
 
0.02
 

Loss on extinguishment of debt

 
 
–
 
 
 
–
 
 
 
0.01
 
 
 
–
 

Rounding and impact of stock options in adjusted diluted shares in net loss periods (3)

 
 
–
 
 
 
–
 
 
 
(0.01
)
 
 
–
 

Adjusted diluted EPS (non-GAAP)

 
$
0.07
 
 
$
0.05
 
 
$
0.21
 
 
$
0.13
 

Weighted average shares used in computation of adjusted diluted EPS:

Diluted common shares (GAAP)

 
 
107,880
 
 
 
90,899
 
 
 
102,766
 
 
 
89,925
 

Options and restricted stock not included in GAAP diluted shares (using treasury stock method)

 
 
9
 
 
 
28
 
 
 
69
 
 
 
69
 

Adjusted diluted shares outstanding (non-GAAP)

 
 
107,889
 
 
 
90,927
 
 
 
102,835
 
 
 
89,994
 

Reconciliation of Non-GAAP Financial Guidance to Corresponding GAAP Measures

"Net income (GAAP)" in 2019 will be impacted by certain charges, including: (i) expense related to the amortization of customer lists and other intangibles, (ii) non-cash stock based compensation (iii) acquisition and integration related expenses and non-recurring charges, (iv) other one-time charges. These charges have been included in GAAP net income available to common shareholders and GAAP net income per share; however, they have been removed from "Adjusted net income (non-GAAP)" and "Adjusted diluted EPS (non-GAAP)."

The following table reconciles our 2019 outlook for net income and EPS to the corresponding non-GAAP measures of "Adjusted net income (non-GAAP)", "Adjusted EBITDA (non-GAAP)" and "Adjusted diluted EPS (non-GAAP)" (in thousands except per share amounts):

 
Year Ended December 31, 2019
 

 
Low Range
 
 
High Range
 

Net income (GAAP)

 
$
1,000
 
 
$
3,000
 

Amortization of intangibles

 
 
9,000
 
 
 
9,000
 

Non-cash, stock-based compensation (4)

 
 
9,000
 
 
 
9,000
 

Acquisition and integration related expenses

 
 
2,000
 
 
 
2,000
 

Other one-time expenses

 
 
5,000
 
 
 
5,000
 

Adjusted net income (non-GAAP)

 
$
26,000
 
 
$
28,000
 

Interest and taxes

 
 
9,000
 
 
 
9,000
 

Depreciation

 
 
21,000
 
 
 
21,000
 

Adjusted EBITDA (non-GAAP)

 
$
56,000
 
 
$
58,000
 

Net income per diluted common share (GAAP)

 
$
0.01
 
 
$
0.03
 

Adjustments to diluted (loss) income per share:

Amortization of intangibles

 
 
0.09
 
 
 
0.09
 

Non-cash, stock based compensation expenses

 
 
0.09
 
 
 
0.09
 

Acquisition and integration related expenses

 
 
0.02
 
 
 
0.02
 

Other one-time expenses

 
 
0.05
 
 
 
0.05
 

Rounding and impact of stock options in adjusted diluted shares in net loss periods

 
 
(0.01
)
 
 
(0.01
)

Adjusted diluted EPS (non-GAAP)

 
$
0.25
 
 
$
0.27
 

Weighted average assumed shares outstanding in 2019:

Diluted common shares (GAAP)

 
 
104,500
 
 
 
104,500
 

Options and restricted stock not included in diluted shares

 
 
–
 
 
 
–
 

Adjusted diluted shares outstanding (non-GAAP)

 
 
104,500
 
 
 
104,500
 

Supplemental Information
Segment Revenue, Cost of Revenue and Gross Profit
(Unaudited)
(In thousands)

 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 

Clinical Operations:

 
2019
 
 
2018
 
 
% Change
 
 
2019
 
 
2018
 
 
% Change
 

Clinical Revenue

 
$
92,565
 
 
$
59,449
 
 
 
55.7
%
 
$
267,757
 
 
$
175,960
 
 
 
52.2
%

Cost of revenue

 
 
47,526
 
 
 
31,509
 
 
 
50.8
%
 
 
136,557
 
 
 
94,586
 
 
 
44.4
%

Gross Profit

 
$
45,039
 
 
$
27,940
 
 
 
61.2
%
 
$
131,200
 
 
$
81,374
 
 
 
61.2
%

Pharma Operations:

Pharma Revenue

 
$
12,107
 
 
$
9,647
 
 
 
25.5
%
 
$
34,205
 
 
$
24,306
 
 
 
40.7
%

Cost of revenue

 
 
6,314
 
 
 
5,266
 
 
 
19.9
%
 
 
18,492
 
 
 
15,525
 
 
 
19.1
%

Gross profit

 
$
5,793
 
 
$
4,381
 
 
 
32.2
%
 
$
15,713
 
 
$
8,781
 
 
 
78.9
%

Supplemental Information
Clinical (5) Requisitions Received, Tests Performed, Revenue and Cost of Revenue
(Unaudited)

 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 

Clinical Operations:

 
2019
 
 
2018
 
 
% Change
 
 
2019
 
 
2018
 
 
% Change
 

Requisitions (cases) received

 
 
145,312
 
 
 
108,467
 
 
 
34.0
%
 
 
427,406
 
 
 
323,682
 
 
 
32.0
%

Number of tests performed

 
 
250,518
 
 
 
185,738
 
 
 
34.9
%
 
 
735,165
 
 
 
551,721
 
 
 
33.2
%

Average number of tests/requisitions

 
 
1.72
 
 
 
1.71
 
 
 
0.7
%
 
 
1.72
 
 
 
1.70
 
 
 
0.9
%

Average revenue/requisition

 
$
637
 
 
$
548
 
 
 
16.2
%
 
$
626
 
 
$
544
 
 
 
15.2
%

Average revenue/test

 
$
369
 
 
$
320
 
 
 
15.4
%
 
$
364
 
 
$
319
 
 
 
14.2
%

Average cost/requisition

 
$
327
 
 
$
290
 
 
 
12.6
%
 
$
320
 
 
$
292
 
 
 
9.3
%

Average cost/test

 
$
190
 
 
$
170
 
 
 
11.8
%
 
$
186
 
 
$
171
 
 
 
8.3
%

_____________________

(1) Clinical tests exclude tests performed for Pharma Services customers.

(2) The Company has provided adjusted financial information that has not been prepared in accordance with GAAP, including Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS. Each of these measures is defined in the section of this report entitled "Use of Non-GAAP Financial Measures." See also the tables reconciling such measures to their closest GAAP equivalent.

(3) This adjustment is for rounding and, in those periods in which there is a net loss attributable to common shareholders, will also compensate for the effects of including the Series A Preferred Shares on an as-converted basis and the treasury stock impact of outstanding stock options in the "Adjusted diluted shares outstanding (non-GAAP)", both of which are not included in GAAP diluted shares outstanding.

(4) Forecasts of non-cash, stock-based compensation expense assume consistency in the Company's stock price in 2019 and no further stock-based awards requiring variable accounting in accordance with ASU 2018-07.

(5) Clinical tests exclude tests performed for Pharma Services customers.

SOURCE: NeoGenomics, Inc.

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