• Revenue: $172 million for Q4, marking the ninth consecutive quarter of double-digit growth.
• Clinical Testing Volumes: Increased by 9% year-over-year.
• Revenue per Test: Increased by 5%.
• Adjusted Gross Margin: Improved to 48%, the highest in 20 quarters.
• NGS Revenue Growth: 24% for Q4 and 34% for the year, now over 30% of total revenue.
• Adjusted EBITDA: Improved by 27% for Q4, marking the sixth consecutive quarter of positive adjusted EBITDA.
• Full-Year Revenue: $661 million, up 12% from the prior year.
• Full-Year Adjusted Gross Margin: 47%, an improvement of 245 basis points.
• Cash and Marketable Securities: $387 million at the end of Q4.
• Cash Flow from Operations: Positive $10 million for Q4, $7 million for the full year.
• 2025 Revenue Guidance: $735 million to $745 million, representing 11% to 13% growth.
• 2025 Adjusted EBITDA Guidance: $55 million to $58 million, an improvement of 38% to 45%.

• Warning! GuruFocus has detected 3 Warning Signs with NEO.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NeoGenomics Inc (NASDAQ:NEO) achieved double-digit revenue growth for the ninth consecutive quarter, with Q4 revenue reaching $172 million.
• Clinical testing volumes increased by 9% year-over-year, with a 5% increase in revenue per test.
• Adjusted gross margins improved to 48%, marking the highest level in 20 quarters.
• NGS (Next-Generation Sequencing) revenue grew by 24% in Q4 and 34% for the year, now representing over 30% of total revenue.
• NeoGenomics Inc (NASDAQ:NEO) served nearly 700,000 patients in 2024, positioning the company well to achieve its goal of serving 1 million patients annually by 2028.

Negative Points

• The pharma segment did not experience the expected year-end budget flush, leading to a softer quarter for that business line.
• NeoGenomics Inc (NASDAQ:NEO) faced limitations in selling new RaDaR contracts due to ongoing litigation, impacting revenue potential.
• The company anticipates a weaker Q1 2025 due to typical seasonality and increased investments in the first half of the year.
• Despite growth in NGS, the overall non-clinical revenue, including pharma, was down 7% for the year.
• The ongoing RaDaR litigation poses a risk, with a jury trial scheduled for October 2025, potentially affecting future business operations.

Q & A Highlights

Q: Can you discuss the potential upside and risks for NeoGenomics' 2025 revenue guidance? A: Chris Smith, CEO, highlighted the strong momentum in NGS, with a 24% growth in the quarter and 34% for the year. He emphasized the launch of liquid biopsy in the first half and the increased field presence as key opportunities. Risks include challenges in the pharma business and the ongoing RaDaR litigation, which could impact new contract sales.

Q: How does the Adaptive partnership affect NeoGenomics' strategy for in-licensing and partnerships? A: Chris Smith, CEO, and Kareem Saad, Head of Strategy and Transformation, stated that the Adaptive partnership has not changed their criteria for evaluating opportunities. They focus on strategic fit, leveraging commercial channels, and ensuring financial accretiveness. The partnership is expected to go live in the second half of the year.

Q: What are the expectations for the PanTracer liquid biopsy product and its impact on gross margins? A: Jeff Sherman, CFO, noted that PanTracer is considered a high-value test, expected to be competitive in reimbursement and accretive to gross margins. Warren Stone, CCO, added that the product is designed to complement existing solid tumor tests and leverage NeoGenomics' broad menu to consolidate testing.

Q: Can you provide an update on the RaDaR 1.1 and 2.0 timelines and competition in the MRD space? A: Chris Smith, CEO, mentioned that RaDaR 1.1 is on track for CLIA validation by late Q1 or early Q2, with a trial scheduled for October 2025. He expressed confidence in NeoGenomics' position in the MRD market, emphasizing their expertise and ongoing development of next-gen MRD solutions.

Q: How does NeoGenomics plan to achieve its 2028 target of serving 1 million patients annually? A: Jeff Sherman, CFO, clarified that the target includes both clinical and pharma patients. The growth strategy involves a balanced approach of volume growth and increased revenue from higher-value tests, RCM initiatives, and pricing gains.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.