NeoGenomics' revenue increases 36% to $25.0 million in fourth quarter 2014

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 2014.

Fourth Quarter 2014 Highlights:

• Consolidated Revenue growth of 36%
• Base Revenue growth of 23%
• Base Test volume growth of 23%
• Adjusted EBITDA of $2.8 million
• Net Income of $0.02 per share

Revenue for the fourth quarter was $25.0 million, a 36% increase over fourth quarter 2013 revenue. The PathLogic acquisition, completed on July 8, 2014, accounted for $2.5 million or 13% of this revenue growth. Organic growth in the base business, excluding PathLogic, was 23%, and average revenue per test was unchanged compared with last year's fourth quarter.

Consolidated operating expenses increased by 27.6% from last year's fourth quarter, primarily as a result of expanding our sales force, increasing billing and information technology costs, and the inclusion of PathLogic's operating expenses. Increases in these operating expenses were partially offset by a decrease in bad debt expense.

Net income for the quarter was $1.05 million, or $0.02 per share, up from net income of $857,000, or $0.02 per share, in last year's fourth quarter. Adjusted EBITDA was $2.8 million for the fourth quarter of 2014, versus $2.7 million in the prior year.

For fiscal year 2014, consolidated revenue was $87.1 million, a 31% increase from 2013. Revenue from the base business increased by $15.7 million, or 24%, from 2013, and PathLogic revenue accounted for $4.9 million of the consolidated revenue. Organic test volume growth in the base business was 29%, and average revenue per test declined by 4.2%. Average cost of goods sold per test in the base business declined by 4.7%, which resulted in gross profit margin in the base business increasing to 48% from 47.8% in the prior year. Consolidated gross profit margin, including PathLogic, was 46.8%.

Consolidated operating expenses for fiscal year 2014 increased by 34.8% from 2013. Operating expenses from the base business increased by $7.8 million, or 27%, from 2013, and PathLogic operating expenses accounted for $2.1 million of this increase. Net income (loss) attributable to the base business and PathLogic in 2014, were $1.9 million and ($773,000), respectively. Consolidated net income was $1.1 million, or $0.02 per share, versus $2.0 million, or $0.04 per share in 2013.

Adjusted EBITDA from the base business and PathLogic in 2014 were $9.8 million and ($628,000), respectively. Consolidated Adjusted EBITDA improved to $9.2 million in 2014 from $8.5 million in 2013. Cash flow from operations was $9.5 million in 2014, an increase of 324% from 2013.

Douglas M. VanOort, the Company's Chairman and CEO commented, "We are very proud of both our fourth quarter and full year results. Despite a $4.5 million reduction in revenue from the NCCI FISH edits in 2014, we still achieved excellent revenue growth as a result of continued strong gains in market share. In addition, we increased gross margins in our base business and improved Adjusted EBITDA to a record level. We are particularly pleased with the robust growth in cash flow from operations as we reduced our DSO's by over 18 days from year-end 2013."

Mr. VanOort continued, "Our brisk pace of innovation continues. During 2014, we launched approximately 48 new molecular and FISH based tests and converted another 23 tests to Next-Generation Sequencing. With over 90 new molecular tests launched over the last three years, we now have one of the broadest clinical, oncology-based molecular-testing menus in the world, and we are increasingly attracting high-profile clients, including academic institutions and pharmaceutical companies. Molecular-testing capabilities are fueling our growth as molecular revenue grew by 63% in 2014."

Mr. VanOort concluded, "As we enter 2015, we believe we are exceptionally well positioned to commercialize the many scientific breakthroughs occurring in molecular testing. We are making significant progress developing our new NeoLAB™ (Liquid Alternative to Biopsy) Prostate Cancer Test, and we expect to make continued investments to develop cutting-edge molecular tests for our physician and pharmaceutical clients. In addition, we are increasingly focused on exploring mergers and acquisitions as a means to increase our scale and diversify our business. We continue to be enthusiastic about the prospects for our business."

Full-Year 2015 Financial Outlook:

The Company also issued preliminary revenue guidance for fiscal year 2015 today. The Company expects 2015 revenue of $103 - $108 million. This guidance includes an estimated $6 - $8 million reduction in revenue from all payers as a result of billing the new AMA FISH CPT codes that were effective as of January 1, 2015. The Company expects to provide FY 2015 earnings guidance after it is able to more accurately quantify the earnings impacts of the FISH reductions.

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.