FT. MYERS, Fla., Feb. 19, 2019 (GLOBE NEWSWIRE) -- NeoGenomics, Inc. (NASDAQ: NEO), a leading provider of cancer-focused genetic testing services, today reported its results for the fourth quarter and full year 2018.

Fourth Quarter 2018 Highlights:

  • Consolidated revenue increased 24.5% to $76.5 million
  • Consolidated revenue increased 17.0% to $71.8 million, excluding Genoptix
  • Clinical Services revenue increased 23.3% to $65.9 million
  • Pharma Services revenue increased 32.6% to $10.6 million
  • Gross profit increased 38.7% to $37.1 million
  • Gross margin increased approximately 500 basis points to 48.5%

Douglas M. VanOort, the Company’s Chairman and CEO, commented, “Fourth quarter results were excellent, and a strong finish to a great year for our company.  We reported record revenue and EBITDA for the quarter, with high-teens organic revenue growth for the second consecutive quarter and continuing improvements in profitability and cash flow.

Both the Clinical and Pharma Services divisions performed well in Quarter 4.  Clinical division growth of 23% was driven by strong organic revenue growth and fueled by the acquisition of Genoptix which was completed on December 10th.  Key fundamental measures of test volume, revenue-per-test and cost-per-test all improved.  Pharma Services division revenue grew by 33% and the backlog of signed contracts is at record levels.

We are also excited about our opportunities in the near and long-term. The integration of Genoptix is well underway, and we are more convinced than ever of the benefits of this combination.   We continue to sign a number of big contracts with oncology practices, hospitals, payors, group purchasing organizations, and leading pharma and biotech companies, and our pipelines remain robust.  The opportunities for future growth are strong, and we believe that NeoGenomics is in better competitive and financial position than ever before.”

Fourth Quarter Results

Consolidated Revenues for the fourth quarter of 2018 were $76.5 million, an increase of 24.5% over the same period in 2017, including $4.6 million related to the acquisition of Genoptix which was completed on December 10, 2018. Clinical genetic test volume(1) increased by 13.3% year over year.  Average revenue per clinical test (“Revenue per Test”) increased by 8.8% to $333.  Excluding the impact of Genoptix, Revenue per Test increased by 5.6% to $323.

Consolidated gross profit improved by $10.3 million, or 38.7%, compared to the fourth quarter of 2017, to $37.1 million and consolidated gross margin improved by approximately 500 basis points year-over-year to 48.5%. Gross margin improvement was primarily driven by productivity gains, and cost efficiencies.  Average cost-of-goods-sold per clinical genetic test (“Cost per Test”) decreased by 0.6%.  Excluding the impact of Genoptix, Cost per Test decreased by 2.7%.

Consolidated operating expenses increased by $11.2 million, or 48.7% from the prior year, primarily due to higher payroll and payroll related costs as a result of an increased number of employees, increases in professional fees and $2.3 million related to transaction costs associated with the acquisition of Genoptix. 

Net income in Quarter 4 was $0.4 million compared to net income of $4.5 million in the prior year’s fourth quarter. 

Adjusted EBITDA(2) was $13.0 million in Quarter 4, a 30.3% increase from the prior year. Adjusted Net Income(2) was $5.5 million compared to Adjusted Net Income(2) of $3.2 million in the prior year.

Cash collections remained strong and clinical Days Sales Outstanding (“DSO”) improved by 7 days from the third quarter of 2018 to 77 days.

Full Year Results

Consolidated revenues for 2018 were $276.7 million, an increase of 15.2% over 2017, including $4.6 million related to the acquisition of Genoptix which was completed on December 10, 2018. Net income for 2018 was $2.6 million compared to net loss of $0.4 million in 2017.  Adjusted EBITDA(2) for 2018 was $43.6 million, a 29.6% increase from the prior year. Adjusted Net Income(2) for 2018 was $17.9 million compared to Adjusted Net Income(2) of $7.9 million in the prior year.


    Impact of Genoptix (in thousands)
    Three Months Ended December 31, 2018
    Consolidated       Genoptix   Legacy NEO
Revenue   $ 76,475       $ 4,629   $ 71,846
Clinical Revenue per Test 1    333       573   323
Cost of Revenue   39,364       2,029   37,335
Clinical Cost per Test 1    170       257   167
Clinical Test Volume 1    198,181       7,907   190,274
Net Income (Loss)   353       (334)   687
Adjusted EBITDA   12,998       288   12,710

2019 Financial Outlook:

NeoGenomics also issued 2019 guidance today (in millions, except per share amounts)

          Guidance        
  Consolidated Revenue   $379 - $395  
  Net Income Available to Common Stockholders   ($3) - $3  
  Adjusted EBITDA(2)    $49 - $53  

Please also refer to the tables reconciling forecasted Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA to their closest GAAP equivalents 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.
____________________

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

(2) NeoGenomics 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,” and the basis for using these measures is explained in the section entitled “Basis for Non-GAAP Adjustments.”  See also the tables reconciling such measures to their closest GAAP equivalent.

Conference Call
The Company has scheduled a web-cast and conference call to discuss their fourth quarter and full year results on Tuesday, February 19, 2019 at 8:30 AM EST.  Interested investors should dial (866) 682-6100 (domestic) and (862) 298-0702 (international) at least five minutes prior to the call.  A replay of the conference call will be available until 8:30 AM on February 26, 2019, and can be accessed by dialing (877) 481-4010 (domestic) and (919) 882-2331 (international). The playback conference ID Number is 42068.  The web-cast may be accessed under the Investor Relations section of our website at www.neogenomics.com or https://www.investornetwork.com/event/presentation/42068.  An archive of the web-cast will be available until 08:30 AM on May 19, 2019.

About NeoGenomics, Inc.
NeoGenomics, Inc. specializes in cancer genetics testing and information services. The Company 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, FL, NeoGenomics operates CAP and CLIA certified laboratories in Ft. 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. 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 March 13, 2018. 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
(Unaudited, in thousands)

ASSETS   December 31,
2018
  December 31, 2017
(Restated)
Cash and cash equivalents   $ 9,811   $  12,821
Accounts receivable   76,919   60,427
Inventory   8,650   7,474
Other current assets   8,288   5,153
Total current assets   103,668   85,875
Property and equipment (net of accumulated depreciation of $50,127 and
$40,530, respectively)
  60,888   36,504
Intangible assets, net   140,029   74,165
Goodwill   197,892   147,019
Other assets   2,538   891
TOTAL ASSETS   $ 505,015   $ 344,454
         
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS’ EQUITY
       
Accounts payable and other current liabilities   $ 46,753   $ 27,482
Short-term portion of capital leases and senior debt   14,172   8,989
Total current liabilities   60,925   36,471
         
Long-term portion of capital leases and senior debt   98,130   96,435
Income tax liability, net   22,457   6,688
Other long-term liabilities   3,060   283
Total long-term liabilities   123,647   103,406
TOTAL LIABILITIES   $ 184,572   $ 139,877
         
Series A Redeemable Convertible Preferred Stock     32,615
Stockholders' Equity   320,443   171,962
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
  $ 505,015   $ 344,454


NeoGenomics, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)

    For the Three Months
Ended December 31,
  For the Year Ended
December 31,
    2018   2017
(Restated)
  2018   2017
(Restated)
Net Revenue:                
Clinical testing   $ 65,913   $ 53,456   $ 241,873   $ 213,097
Pharma services   10,562   7,966   34,868   27,154
Total revenue   76,475   61,422   276,741   240,251
                 
Cost of revenue   39,364   34,660   149,476   138,295
Gross Profit   37,111   26,762   127,265   101,956
                 
Operating Expenses:                
General and administrative   25,717   16,642   84,822   70,359
Research and development   526   556   3,001   3,636
Sales and marketing   8,047   5,859   29,402   24,001
Loss on sale of PathLogic         1,058
Total operating expenses   34,290   23,057   117,225   99,054
Income From Operations   2,821   3,705   10,040   2,902
                 
Interest expense, net   1,464   1,368   6,230   5,540
Other (income) expense   (46)   12   (14)   12
Income (loss) before taxes   1,403   2,325   3,824   (2,650)
Income tax expense (benefit)   1,050   (2,224)   1,184   (2,254)
Net Income (Loss)   353   4,549   2,640   (396)
                 
Deemed dividends on preferred stock     911   10,198   3,645
Amortization of preferred stock beneficial conversion feature     1,780   (4,571)   6,902
Gain on redemption of preferred stock       (9,075)  
Net Income (Loss) Attributable to Common Stockholders   $ 353   $ 1,858   $ 6,088   $ (10,943)
                 
Income (Loss) per Common Share:                
Basic   $ 0.00   $ 0.02   $ 0.07   $ (0.14)
Diluted   $ 0.00   $ 0.02   $ 0.07   $ (0.14)
                 
Weighted Average Shares Used in Computation of
Earnings per Common Share:
               
Basic   93,270   86,676   85,618   79,426
Diluted   96,874   88,611   91,568   79,426


NeoGenomics, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)

    For the Year Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES   2018   2017 (Restated)
Net income (loss)   $ 2,640   $ (396)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
       
Depreciation   15,804   15,596
Amortization of intangibles   5,928   6,995
Amortization of debt issue costs   542   440
Loss on disposal of assets   404   253
Loss on sale of Path Logic     1,058
Stock based compensation   6,955   6,441
Changes in assets and liabilities, net   12,513   (12,350)
NET CASH PROVIDED BY OPERATING ACTIVITIES   44,786   18,037
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Acquisition of business, net of cash acquired   (125,377)  
Purchases of property and equipment   (14,310)   (13,690)
NET CASH USED IN INVESTING ACTIVITIES   (139,687)   (13,690)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
(Payments) advances on revolving credit facility   (20,400)   2,496
Redemption of preferred stock   (50,096)  
Repayment of capital lease obligations, loans   (6,563)   (5,424)
Repayment of term loan   (4,500)   (3,753)
Proceeds from term loan   30,000  
Payments of debt issue costs   (576)  
Issuance of common stock, net   144,094   2,586
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   91,959   (4,095)
Effects of foreign exchange rate changes on cash and cash equivalents   (68)   44
NET CHANGE IN CASH AND CASH EQUIVALENTS   (3,010)   296
         
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   12,821   12,525
CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 9,811   $ 12,821
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Interest paid   $ 6,511   $ 5,155
Income taxes paid, net of refunds   $ (31)   $ 284
         
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING INFORMATION:
       
Equipment acquired under capital lease/loan obligations   $ 7,569   $ 5,728

Use of Non-GAAP Financial Measures

The Company's financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States of America (GAAP) and using certain non-GAAP financial measures. Management believes that 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 our 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 therefore 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-related transaction 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 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-related transaction 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.

Basis for Non-GAAP Adjustments

NeoGenomics’ basis for excluding certain expenses (income) from GAAP financial measures, are outlined below:

Amortization of intangible assets - The intangible assets that give rise to this amortization expense relate to acquisitions, and the amounts allocated to such intangible assets and the terms of amortization vary by acquisition and type of asset. NeoGenomics excludes these items to provide a consistent basis for comparing operating results across reporting periods, pre- and post-acquisition.

Deemed dividends on preferred stock - GAAP accounting for the unique structure of the Series A Redeemable Preferred Stock requires the Company to assume that such preferred stock would be outstanding for its entire ten-year term. In addition, GAAP requires that the escalating preferred dividend rate over time be accelerated for accounting purposes and amortized on a straight-line basis over the ten-year life of the instrument, irrespective of the minimal contractual requirements for "paid in kind" stock dividends in the early years. Since such implied dividends were not paid in cash, and since the Company believed that such preferred stock would have been redeemed within the first three years it was outstanding, before any significant dividends accrued under the contractual terms, the Company believed these non-cash expenses were not meaningful in evaluating the operating performance of the Company and it would have been misleading to not adjust for such expenses across reporting periods.

Amortization of preferred stock beneficial conversion feature - This non-cash expense is also a direct result of the complex GAAP accounting requirements for our Series A Redeemable Preferred Stock. The Company believes this expense is not meaningful in evaluating the operating performance of the Company, distorts comparisons across reporting periods, and that it would be misleading to not adjust  for such expenses across reporting periods.

Loss on sale of business – The impact of disposals of assets or businesses have been excluded as these losses represent infrequent transactions that impact the comparability between operating periods. We believe the adjustment of these losses supplements the GAAP information by providing a measure that may be used to assess the sustainability of our operating performance.

Non-cash, stock-based compensation expenses - Because many of the company's full-time physicians reside in California, state regulations against the corporate practice of medicine require us to retain their professional service corporations rather than hire them as employees. Prior to ASU 2018-07, which we adopted in the second quarter of 2018, GAAP provided that variable stock- based compensation treatment be applied for non-employee service providers. This variable accounting treatment can cause significant fluctuations in quarterly expense based on changes in the Company's stock price from one quarter to the next and result in large positive or negative impacts to total operating expenses. Without adjusting for these non-cash expenses, the Company believes it would be difficult to compare financial results from core operations across reporting periods on a consistent basis.

Moving expenses - These expenses include costs associated with the move of our Houston, Texas facility in 2018 and the move of our Irvine, California facility in 2017 as well as restoring these facilities back to their original condition at the end of the lease terms. We are adjusting for these costs in Adjusted EBITDA as the moves were related to the Clarient acquisition and will not be annually recurring. Without adjusting for these expenses, the Company believes it would be difficult to compare financial results from operations across reporting periods on a consistent basis.

Acquisition and integration expenses - We incurred significant expenses in connection with our recent acquisition of Genoptix related to transaction costs and integration expenses.  These expenses include acquisition-related transaction costs, consultants, severance, systems integration and conversion expenses, and other costs related to integration activities. In order to compare across periods on a consistent basis we believe it is appropriate to exclude these expenses.

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

  For the Three Months
Ended December 31,
  For the Year Ended
December 31,
  2018   2017
(Restated)
 
  2018   2017
(Restated)
 
Net Income (Loss) (GAAP) $ 353   $ 4,549   $ 2,640   $ (396)
Adjustments to Net Income (Loss):              
Interest expense, net 1,464   1,368   6,230   5,540
Income tax expense (benefit) 1,050   (2,224)   1,184   (2,254)
Amortization of intangibles 1,672   1,794   5,928   6,995
Depreciation 4,327   3,856   15,804   15,596
EBITDA 8,866   9,343   31,786   25,481
Further Adjustments to EBITDA:              
Facility moving expenses/other     2,486   620
Loss on sale of business       1,058
Acquisition and integration related expenses 2,325     2,325  
Non-cash, stock-based compensation 1,807   629   6,955   6,441
Adjusted EBITDA (non-GAAP) $ 12,998   $ 9,972   $ 43,552   $ 33,600


Reconciliation of GAAP Net Income Available to Common Stockholders to Non- GAAP Adjusted Net Income
and GAAP Earnings per Share to Non-GAAP Adjusted Earnings per Share

(Unaudited, in thousands except per share amounts)

  For the Three Months
Ended December 31,
  For the Year Ended
December 31,
  2018   2017
(Restated)
 
  2018   2017
(Restated)
 
Net Income (Loss) attributable to common stockholders (GAAP) $ 353   $ 1,858   $ 6,088   $ (10,943)
Adjustments to Net Income (loss) net of tax:              
Amortization of intangibles 1,321   1,184   4,683   4,617
Deemed dividends on preferred stock   911   10,198   3,645
Amortization of preferred stock beneficial conversion feature   1,780   (13,646)   6,901
Non-cash stock-based compensation expenses 1,695   470   6,534   5,566
Loss on sale of business       698
Income tax benefit   (3,012)     (3,012)
Acquisition and integration related expenses 2,116     2,116  
Facility moving expenses/other     1,964   409
Adjusted Net Income (non-GAAP) $ 5,485   $ 3,191   $ 17,937   $ 7,881
               
Net income (loss) per common share  (GAAP)              
Diluted EPS $ 0.00   $ 0.02   $ 0.07   $ (0.14)
Adjustments to diluted income (loss) per share:              
Amortization of intangibles 0.01   0.01   0.05   0.05
Deemed dividends on preferred stock   0.01   0.11   0.04
Amortization of preferred stock beneficial conversion feature   0.02   (0.15)   0.08
Non-cash stock based compensation expenses 0.02   0.01   0.07   0.06
Loss on sale of business       0.01
Income tax benefit   (0.03)     (0.03)
Acquisition and integration related expenses 0.02     0.02  
Facility moving expenses/other     0.02  
Rounding and impact of including preferred shares and
stock options in Adj. Diluted Shares in net loss periods (3)
0.01     0.01   0.02
Adjusted Diluted EPS (non-GAAP) $ 0.06   $ 0.04   $ 0.20   $ 0.09
               
Weighted average shares used in computation of
adjusted diluted earnings per share:
             
Diluted Common Shares (GAAP) 93,270   88,611   85,618   79,426
Dilutive effect of options, restricted stock and preferred shares 3,604     5,950   8,179
Adjusted Diluted Shares outstanding (non-GAAP) 96,874   88,611   91,568   87,605

_________________

(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, both of which are not included in GAAP Diluted Shares outstanding.

Reconciliation of Non-GAAP Financial Guidance to Corresponding GAAP Measures

GAAP net income available to common stockholders 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 and Adjusted Diluted Net Income per Share.         

The following table reconciles our 2019 outlook for Net Income and EPS to the corresponding non-GAAP measures of Adjusted Net Income, Adjusted EBITDA and Adjusted Diluted EPS:

    For the Year Ended
December 31, 2019 
    Range 
Net income (loss) attributable to common stockholders (GAAP)   $ (3,000)   $ 3,000
Amortization of intangibles   11,000   11,000
Non-cash, stock-based compensation (4)   8,000   7,000
Acquisition and integration related expenses   4,000   2,000
Other one-time expenses   2,000   1,000
Adjusted Net Income (non-GAAP)   $ 22,000   $ 24,000
Interest and taxes   9,000   6,000
Depreciation   22,000   19,000
Adjusted EBITDA (non-GAAP)   $ 53,000   $ 49,000
         
Net income (loss) per diluted common share (GAAP)   $ (0.03)   $ 0.03
Adjustments to diluted loss per share:        
Amortization of intangibles   0.12   0.12
Non-cash, stock based compensation expenses   0.08   0.07
Acquisition and integration related expenses   0.04   0.02
Other one-time expenses   0.02   0.01
Adjusted Diluted EPS (non-GAAP)   $ 0.23   $ 0.25
         
Weighted average assumed shares outstanding in 2019:        
Diluted Common Shares (GAAP)   95,511   95,511
Options and restricted stock not included in diluted shares     2,650
Adjusted diluted shares outstanding (non-GAAP)   95,511   98,161

___________________
(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.

Supplemental Information
Pharma Revenue, Cost of Revenue and Gross Margin

  Three Months Ended December 31,   Year Ended December 31,
Pharma Operations: 2018   2017
(Restated)
  %
Change
  2018   2017
(Restated)
  %
Change
Pharma Revenue $ 10,562   $ 7,966   32.6 %   $ 34,868   $ 27,154   28.4 %
Cost of Revenue $ 5,654   $ 4,730   19.5 %   $ 21,179   $ 16,510   28.3 %
Gross Margin $ 4,908   $ 3,236   51.7 %   $ 13,689   $ 10,644   28.6 %


Supplemental Information

Clinical Genetic(5) Requisitions Received, Tests Performed, Revenue and Cost of Revenue
(Unaudited, in thousands, except test and requisition data)

  Three Months Ended December 31,   Year Ended December 31,
Clinical Operations: 2018   2017
(Restated)
  %
Change
  2018   2017
(Restated)
  %
Change
Requisitions received (cases) 115,915   102,714   12.9 %   439,597   394,520   11.4 %
Number of tests performed 198,181   174,918   13.3 %   749,902   657,394   14.1 %
Average number of tests/requisition 1.71   1.70   0.4 %   1.71   1.67   2.4 %
                       
Total clinical genetic testing revenue $ 65,913   $ 53,457   23.3 %   $ 241,873   $ 209,584   15.4 %
Average revenue/requisition $ 569   $ 520   9.3 %   $ 550   $ 531   3.6 %
Average revenue/test $ 333   $ 306   8.8 %   $ 323   $ 319   1.2 %
                       
Cost of revenue $ 33,710   $ 29,930   12.6 %   $ 128,296   $ 117,838   8.9 %
Average cost/requisition $ 291   $ 291   (0.2) %   $ 292   $ 299   (2.3) %
Average cost/test $ 170   $ 171   (0.6) %   $ 171   $ 179   (4.5) %

_____________________

(5)  Clinical genetic tests exclude tests performed for Pharma Services customers and tests performed by PathLogic.


Supplemental Information

Quarterly Impact of ASU 606 Adoption
(in thousands)

  As Previously Reported 
  Q1 2017   Q2 2017   Q3 2017   Q4 2017   Total 2017
Net Revenue                   
Clinical Testing  $ 56,690   $ 59,791   $ 56,186   $ 59,079   $ 231,748
Pharma Services
4,986   6,299   6,866   8,713   26,863
Total Revenue  61,676   66,090   63,052   67,792   258,611
Gross Profit  27,196   31,178   28,810   33,132   120,316
Total operating expenses  27,311   29,864   32,172   28,645   117,992
Income (Loss) from Operations  (115)   1,314   (3,362)   4,487   2,324
Interest expense  1,364   1,411   1,398   1,368   5,540
Other expense        265   265
Income tax (benefit) expense  (825)   (54)   340   (2,096)   (2,635)
Net Income (Loss)  $ (654)   $ (43)   $ (5,100)   $ 4,950   $ (846)
                   
  Adjustments due to adoption of accounting standard 
  Q1 2017   Q2 2017   Q3 2017   Q4 2017   Total 2017
Net Revenue                   
Clinical Testing  $ (3,783)   $ (4,244)   $ (4,999)   $ (5,623)   $ (18,651)
Pharma Services  (465)   418   1,084   (747)   291
Total Revenue  (4,248)   (3,826)   (3,915)   (6,370)   (18,360)
Gross Profit (Loss)  (4,248)   (3,826)   (3,915)   (6,370)   (18,359)
Total operating expenses  (3,783)   (4,353)   (5,213)   (5,588)   (18,937)
Income (Loss) from Operations  (465)   527   1,298   (782)   578
Interest expense         
Other expense        253   253
Income tax (benefit) expense  46   1   462   (128)   381
Net Income (Loss)  $ (511)   $ 526   $ 836   $ (401)   $ 450
                   
  As Restated
  Q1 2017   Q2 2017   Q3 2017   Q4 2017   Total 2017
Net Revenue                   
Clinical Testing  $ 52,907   $ 55,547   $ 51,187   $ 53,456   $ 213,097
Pharma Services  4,521   6,717   7,950   7,966   27,154
Total Revenue  57,428   62,264   59,137   61,422   240,251
Gross Profit  22,948   27,352   24,895   26,762   101,957
Total operating expenses  23,528   25,511   26,959   23,057   99,055
Income (Loss) from Operations  (580)   1,841   (2,064)   3,705   2,902
Interest expense  1,364   1,411   1,398   1,368   5,540
Other expense        12   12
Income tax (benefit) expense  (779)   (53)   802   (2,224)   (2,254)
Net Income (Loss)  $ (1,165)   $ 483   $ (4,264)   $ 4,549   $ (396)

 

NeoGenomics.jpg

Source: NeoGenomics, Inc.