Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Nature of Business and Basis of Presentation

v3.19.3.a.u2
Nature of Business and Basis of Presentation
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Business and Basis of Presentation Nature of Business and Basis of Presentation
NeoGenomics, Inc., a Nevada corporation (the “Parent”, “Company”, “NeoGenomics”, “we” or “our”), and its subsidiaries operates as a certified high complexity clinical laboratory in accordance with the federal government’s Clinical Laboratory Improvement Act, as amended, and is dedicated to the delivery of clinical diagnostic services to pathologists, oncologists, urologists, hospitals, and other laboratories as well as providing clinical trial services to pharmaceutical firms.
The accompanying Consolidated Financial Statements include the accounts of the Parent, all subsidiaries, and the accounts of any variable interest entities where the Company has determined it is the primary beneficiary. All intercompany accounts and balances have been eliminated in consolidation.
Segment Reporting
The Company reports its activities in two operating segments; the Clinical Services segment and the Pharma Services segment. These reportable segments deliver testing services to hospitals, pathologists, oncologists, clinicians, pharmaceutical firms and researchers and represent 100% of the Company’s consolidated assets, net revenues and net income for each of the three years ended December 31, 2019, 2018 and 2017, respectively. For further financial information about these segments, see Note R, Segment Information.
Reclassifications
Certain immaterial reclassifications have been made to the prior period financial statements to conform to the current period presentation. For further details regarding the impact of these new accounting standards see Note B, Summary of Significant Accounting Policies.
Immaterial Restatement and Reclassification
Subsequent to the issuance of the December 31, 2018 Consolidated Financial Statements, during the third quarter of 2019 the Company identified that the gain on redemption of preferred stock for the year ended December 31, 2018 of $9.1 million was incorrectly presented as a loss on redemption with an offsetting decrease to additional paid in capital in the Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity. As a result, the Company has revised the presentation of the impact of the redemption on the carrying value of the preferred stock in the Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity for the year ended December 31, 2018. There was no impact to the beginning and ending balances of preferred stock as a result of this error.
In addition, the Company identified that it has historically incorrectly classified deemed dividends, amortization of the beneficial conversion feature (“BCF”) and redemption value measurement adjustments on preferred stock as adjustments to its accumulated deficit. As a result, the Company has corrected the historical presentation of all amounts of deemed dividends, amortization of BCF and redemption value measurement adjustments for the years prior to December 31, 2016 as a cumulative reduction of additional paid-in capital as of December 31, 2016 and other applicable periods as further disclosed within the table below.
The adjustments to correct for these errors have no impact to the previously reported Consolidated Statements of Operations, comprehensive income, or cash flows. The adjustments to correct for these errors also have no impact to total preferred stock or total stockholders’ equity as presented within the Consolidated Balance Sheets or Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity. Management has considered these errors from a qualitative and quantitative perspective and believes the impact of these errors is not material to previously issued Consolidated Financial Statements. The Company has restated its accompanying Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity and Consolidated Balance Sheets to correct for these immaterial errors for the applicable periods presented in this Form 10-K.
Additionally, the Company made certain other presentation reclassifications to previously reported information related to the redemption of preferred stock in June 2018, including reclassifying $21.3 million of deemed dividends on preferred stock and amortization of beneficial conversion feature to redemption of Series A preferred stock within additional paid-in capital in the accompanying Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity for the year ended December 31, 2018. Such presentation reclassifications have no impact to total additional paid-in capital for any period.
The following table shows the amounts of additional paid-in capital, accumulated deficit, deemed dividends on preferred stock and amortization of BCF, and gain on redemption of preferred stock for the applicable periods, as previously reported and as corrected in the Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity and Consolidated Balance Sheets (in thousands):
As Previously Reported As Corrected
Additional Paid-in Capital Accumulated Deficit Additional Paid-in Capital Accumulated Deficit
Balance at December 31, 2016 $ 216,104    $ (53,867)   $ 191,308    $ (29,071)  
Deemed dividends on preferred stock and amortization of beneficial conversion feature 805    (10,547)   (9,742)   —   
Balance at December 31, 2017 230,030    (58,422)   194,687    (23,079)  
Deemed dividends on preferred stock and amortization of beneficial conversion feature* 419    (5,627)   (5,208)   —   
Gain on redemption of preferred stock —    9,075    9,075    —   
Balance at December 31, 2018 372,186    (51,258)   340,291    (19,363)  

*The deemed dividends on preferred stock and amortization of beneficial conversion feature within additional paid-in capital as previously reported as shown here reflects a $21.3 million reclassification to the redemption of Series A preferred stock within additional paid-in capital. As discussed above, such presentation reclassifications have no impact to total paid-in capital for any period.
The following table shows the amounts of the redemption of preferred stock, deemed dividends on preferred stock and amortization of BCF, and gain on redemption of preferred stock for the applicable periods, as previously reported and as currently reported in the Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity (in thousands):

As Previously Reported As Currently Reported
Series A Redeemable Convertible Preferred Stock Immaterial Correction of an Error Reclassification Series A Redeemable Convertible Preferred Stock
Balance at December 31, 2017 $ 32,615    $ —    $ —    $ 32,615   
Redemption of Series A Preferred Stock (50,096)   —    12,273    (37,823)  
Deemed dividends on preferred stock and amortization of beneficial conversion feature 8,406    18,150    (21,348)   5,208   
Gain on redemption of preferred stock 9,075    (18,150)   9,075    —   
Balance at December 31, 2018 $ —    $ —    $ —    $ —