NeoGenomics third quarter revenue increases 30% to $11.3 million

NeoGenomics, Inc. (NASD OTC BB: NGNM), a leading provider of cancer-focused genetic testing services today reported its results for the third quarter 2011.

Third Quarter 2011 Highlights:

• 30% revenue growth
• 38% test volume growth
• Incremental profit of $1,056,000, or 40% of the year-over-year revenue increase
• Net loss reduced to $(0.00)/share from $(0.03)/share in Q3 2010
• Positive Adjusted EBITDA and operating income for the quarter

Revenue for the third quarter 2011 was $11.3 million, an increase of $2.6 million, or 30%, from the $8.7 million reported in the third quarter 2010.  Test volume increased by approximately 38%.  Average revenue per test of $567 declined approximately 6% from last year's level, but was in line with the level reported in the second quarter of 2011.    

Average cost of goods sold per test for the quarter improved by approximately 6% from last year and offset the reduction in average revenue per test.  As a result, gross margin of 44.8% in the quarter was essentially unchanged from the 44.7% reported in last year's third quarter.  

Selling, general and administrative (SG&A) expenses increased by 2.7%, or $130,000, from last year's third quarter and SG&A as a percentage of revenue fell to 44.4% from 56.3% last year.  Net loss for the quarter was $143,000 or ($0.00)/share versus a net loss of $1,198,000 or ($0.03)/share in the third quarter 2010.  Adjusted EBITDA for the quarter increased by $1.1 million to $693,000 versus ($398,000) in the third quarter 2010.

Doug VanOort, the Company's Chairman and CEO, commented, "For the second quarter in a row, we posted the largest year over year and sequential increases in quarterly revenue in our corporate history.  We are especially pleased with the approximately $850,000, or 8%, sequential growth in revenue versus the second quarter as normal seasonal reductions were offset by strong organic growth.  Continued increases in the number of new clients combined with additional work from existing clients is encouraging.  Our focus on customer service, launch of innovative products and services, and deployment of extensive training and development programs has allowed our sales and marketing team to become more productive."

Mr. VanOort continued, "We maintained good control of our costs and continued to realize significant operating leverage in the third quarter.  Even as test volume grew by 38% year over year, total SG&A expense increased by only 2.7% and allowed 40% of our incremental revenue to drop to the bottom line.  Although gross margin for the quarter remained short of our expectations, due mostly to the 6% decline in average unit prices, improvements in laboratory productivity helped reduce our average cost per test by 6%.   We remain focused on initiatives to improve gross margin and we are reiterating our previous guidance that we expect to return to profitability in the fourth quarter."

Mr. VanOort concluded, "We continue to invest in initiatives to grow our business.  We are opening a small lab facility in Tampa, FL to attract additional laboratory technologists to help keep up with growth and to reduce the number of tests we have to send out.   Our pace of new test development has increased markedly over previous years and we will have launched twelve new molecular genetic tests by year end.  In addition, we have begun to expand our immunohistochemistry product line, and are investing in new capabilities for digital pathology and image analysis.  We believe these initiatives, together with our sales, marketing, and business development programs, will allow us to continue a high level of revenue growth."  

The Company also issued preliminary guidance for the fourth quarter today.  The Company expects revenue of approximately $11.4 - $12.0 million with positive Adjusted EBITDA and net income of $0.00 to $0.01 per share.  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.