10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on November 5, 2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2024
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-35756
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes S No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
S |
Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller Reporting Company | ||||||||||||
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No S
As of November 1, 2024, the registrant had 128,360,871 shares of common stock, par value $0.001 per share outstanding.
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intends,” “may,” “plan,” “potential,” “project,” “will,” “would,” and similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements address various matters, including the Company’s strategy, future operations, future financial position, future revenues, changing reimbursement levels from government payers and private insurers, projected costs, prospects and plans, and objectives of management. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2024, and in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.
The forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this report, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
3
Glossary
Throughout this Quarterly Report on Form 10-Q, we may use certain abbreviations, acronyms and terms which are described below:
ACA | The Patient Protection and Affordable Care Act | |||||||
ACLA | American Clinical Laboratory Association | |||||||
AKS | Anti-Kickback Statute | |||||||
CAP | College of American Pathologists | |||||||
CDx | Companion Diagnostic | |||||||
CLIA | Clinical Laboratory Improvement Amendments of 1988 | |||||||
CMS | Centers for Medicare and Medicaid Services | |||||||
CRO | Contract research organizations | |||||||
DHS | Designated health services | |||||||
FCA | The federal False Claims Act | |||||||
FDA | U.S. Federal Drug Administration | |||||||
FISH | Fluorescence In-Situ Hybridization | |||||||
GAAP | U.S generally accepted accounting principles | |||||||
GDPR | The European Union’s General Data Protection Regulation | |||||||
HIPAA | The Health Insurance Portability and Accountability Act of 1996 | |||||||
IHC | Immunohistochemistry | |||||||
LDT | Laboratory developed tests | |||||||
LIMS | Laboratory Information Management System | |||||||
MolDx | Molecular Diagnostic Services Program | |||||||
MRD | Minimal residual disease | |||||||
NGS | Next-generation sequencing | |||||||
OIG | The Office of Inspector General of the Department of Health and Human Services | |||||||
PCR | Polymerase chain reaction | |||||||
PHI | Protected health information |
4
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEOGENOMICS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited) September 30, 2024 |
December 31, 2023 | |||||||||||||
ASSETS | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Marketable securities, at fair value | ||||||||||||||
Accounts receivable, net | ||||||||||||||
Inventories | ||||||||||||||
Prepaid assets | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property and equipment (net of accumulated depreciation of $ |
||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Intangible assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Other assets | ||||||||||||||
Total non-current assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
Current liabilities | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued compensation | ||||||||||||||
Accrued expenses and other liabilities | ||||||||||||||
Current portion of operating lease liabilities | ||||||||||||||
Current portion of convertible senior notes, net | ||||||||||||||
Contract liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term liabilities | ||||||||||||||
Operating lease liabilities | ||||||||||||||
Convertible senior notes, net | ||||||||||||||
Deferred income tax liabilities, net | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Total long-term liabilities | ||||||||||||||
Total liabilities | $ | $ | ||||||||||||
Commitments and contingencies (Note 11) | ||||||||||||||
Stockholders’ equity | ||||||||||||||
Common stock, $ |
$ | $ | ||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated other comprehensive loss | ( |
( |
||||||||||||
Accumulated deficit | ( |
( |
||||||||||||
Total stockholders’ equity | $ | $ | ||||||||||||
Total liabilities and stockholders’ equity | $ | $ |
See the accompanying notes to the unaudited Consolidated Financial Statements.
5
NEOGENOMICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
NET REVENUE | |||||||||||||||||||||||
Clinical Services | $ | $ | $ | $ | |||||||||||||||||||
Advanced Diagnostics | |||||||||||||||||||||||
Total net revenue | |||||||||||||||||||||||
COST OF REVENUE | |||||||||||||||||||||||
GROSS PROFIT | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
Restructuring charges | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
LOSS FROM OPERATIONS | ( |
( |
( |
( |
|||||||||||||||||||
Interest income | ( |
( |
( |
( |
|||||||||||||||||||
Interest expense | |||||||||||||||||||||||
Other (income) expense, net | ( |
( |
( |
||||||||||||||||||||
Loss before taxes | ( |
( |
( |
( |
|||||||||||||||||||
Income tax benefit | ( |
( |
( |
( |
|||||||||||||||||||
NET LOSS | $ | ( |
$ | ( |
$ | ( |
$ | ( |
|||||||||||||||
NET LOSS PER SHARE | |||||||||||||||||||||||
Basic | $ | ( |
$ | ( |
$ | ( |
$ | ( |
|||||||||||||||
Diluted | $ | ( |
$ | ( |
$ | ( |
$ | ( |
|||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
See the accompanying notes to the unaudited Consolidated Financial Statements.
6
NEOGENOMICS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
NET LOSS | $ | ( |
$ | ( |
$ | ( |
$ | ( |
||||||||||||||||||
OTHER COMPREHENSIVE INCOME: | ||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | ||||||||||||||||||||||||||
Total other comprehensive income, net of tax | ||||||||||||||||||||||||||
COMPREHENSIVE LOSS | $ | ( |
$ | ( |
$ | ( |
$ | ( |
See the accompanying notes to the unaudited Consolidated Financial Statements.
7
NEOGENOMICS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except share data)
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2023 | $ | $ | $ | ( |
$ | ( |
$ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | ( |
— | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( |
( |
|||||||||||||||||||||||||||||
Balance, March 31, 2024 | $ | $ | $ | ( |
$ | ( |
$ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | — | ( |
— | — | ( |
||||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | |||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( |
( |
|||||||||||||||||||||||||||||
Balance, June 30, 2024 | $ | $ | $ | ( |
$ | ( |
$ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | — | ( |
— | — | ( |
||||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( |
( |
|||||||||||||||||||||||||||||
Balance, September 30, 2024 | $ | $ | $ | ( |
$ | ( |
$ |
8
NEOGENOMICS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except share data)
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | $ | $ | $ | ( |
$ | ( |
$ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | — | ( |
— | — | ( |
||||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( |
( |
|||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | ( |
$ | ( |
$ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | ( |
— | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( |
( |
|||||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | ( |
$ | ( |
$ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | ( |
— | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( |
— | — | ( |
|||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( |
( |
|||||||||||||||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | ( |
$ | ( |
$ |
See the accompanying notes to the unaudited Consolidated Financial Statements.
9
NEOGENOMICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30, | ||||||||||||||
2024 | 2023 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||
Net loss | $ | ( |
$ | ( |
||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||
Depreciation | ||||||||||||||
Amortization of intangibles | ||||||||||||||
Stock-based compensation | ||||||||||||||
Non-cash operating lease expense | ||||||||||||||
Amortization of convertible debt discount | ||||||||||||||
Amortization of debt issue costs | ||||||||||||||
Loss on disposal of assets, net | ||||||||||||||
Impairment of assets | ||||||||||||||
Other adjustments | ||||||||||||||
Changes in assets and liabilities, net | ||||||||||||||
Accounts receivable, net | ( |
( |
||||||||||||
Inventories | ( |
( |
||||||||||||
Prepaid and other assets | ( |
( |
||||||||||||
Operating lease liabilities | ( |
( |
||||||||||||
Deferred income tax liabilities, net | ( |
( |
||||||||||||
Accrued compensation | ( |
|||||||||||||
Accounts payable and other liabilities | ( |
|||||||||||||
Net cash used in operating activities | ( |
( |
||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
Purchases of marketable securities | ( |
|||||||||||||
Proceeds from maturities of marketable securities | ||||||||||||||
Purchases of property and equipment | ( |
( |
||||||||||||
Net cash provided by investing activities | ||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||
Repayment of equipment financing obligations | ( |
|||||||||||||
Issuance of common stock, net | ||||||||||||||
Net cash provided by financing activities | ||||||||||||||
Net change in cash and cash equivalents | ||||||||||||||
Cash and cash equivalents, beginning of period | ||||||||||||||
Cash and cash equivalents, end of period | $ | $ |
Supplemental disclosure of cash flow information: | ||||||||||||||
Interest paid | $ | $ | ||||||||||||
Income taxes paid, net | $ | $ | ||||||||||||
Supplemental disclosure of non-cash investing and financing information: | ||||||||||||||
Purchases of property and equipment included in accounts payable | $ | $ |
See the accompanying notes to the unaudited Consolidated Financial Statements.
10
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Nature of the Business
NeoGenomics, Inc., a Nevada corporation (the “Company,” or “NeoGenomics”), and its subsidiaries provide a wide range of oncology diagnostic testing and consultative services which includes technical laboratory services and professional interpretation of laboratory test results by licensed physicians who specialize in pathology and oncology. The Company operates a network of cancer-focused testing laboratories in the United States and the United Kingdom.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim Consolidated Financial Statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information. All intercompany transactions and balances have been eliminated in the accompanying Consolidated Financial Statements.
The accounting policies of the Company are the same as those set forth in Note 2. Summary of Significant Accounting Policies, to the audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, except for new accounting standards discussed under Recent Accounting Pronouncements.
Unaudited Interim Financial Information
Certain information and footnote disclosures normally included in the Company’s annual audited Consolidated Financial Statements and accompanying notes have been condensed or omitted in the accompanying interim Consolidated Financial Statements and footnotes. Accordingly, the accompanying interim unaudited Consolidated Financial Statements included herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited Consolidated Financial Statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein.
Use of Estimates
The Company prepares its Consolidated Financial Statements in conformity with GAAP. These principles require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the Consolidated Financial Statements. Actual results and outcomes may differ from management’s estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these Consolidated Financial Statements include, but are not limited, to those related to revenues, accounts receivable and related allowances, contingencies, useful lives and recovery of long-term assets and intangible assets, income taxes and valuation allowances, stock-based compensation, impairment analysis of goodwill, and restructuring reserves. These estimates, judgments, and assumptions are reviewed periodically and the effects of material revisions in estimates are reflected on the Consolidated Financial Statements prospectively from the date of the change in estimate.
Sales and Marketing Expenses
Restructuring charges
Accounting Pronouncements Pending Adoption
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures. This update requires entities to disaggregate operating expenses into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. ASU
11
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
2024-03 may be applied retrospectively or prospectively. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update requires entities to consistently categorize and provide greater disaggregation of information in the rate reconciliation and to further disaggregate income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 may be applied retrospectively or prospectively. The Company is currently evaluating the impact of this standard on its annual disclosures.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update requires entities to disclose significant segment expenses by reportable segment if they are regularly provided to the Chief Operating Decision Maker (CODM) and included in each reported measure of segment profit or loss and requires disclosure of other segment items by reportable segment and a description of its composition. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this standard on its annual disclosures.
Note 3. Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy has been established based on three levels of inputs, of which the first two are considered observable and the last unobservable.
Level 1: Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.
Level 2: Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily available pricing sources for comparable instruments.
Level 3: Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
The Company measures certain financial assets at fair value on a recurring basis, including its marketable securities and certain cash equivalents. The Company considers all securities available-for-sale, including those with maturity dates beyond 12 months, and therefore these securities are classified within current assets on the Consolidated Balance Sheets as they are available to support current operational liquidity needs. The money market accounts are valued based on quoted market prices in active markets and are included in cash and cash equivalents on the Consolidated Balance Sheets. The marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs such as interest rates and yield curves) based on information provided by independent third-party pricing entities, except for U.S. Treasury securities which are valued based on quoted market prices in active markets.
The following tables set forth the amortized cost, gross unrealized gains, gross unrealized losses and fair values of the Company’s marketable securities accounted for as available-for-sale securities as of September 30, 2024 and December 31, 2023.
September 30, 2024 | ||||||||||||||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Short-term marketable securities: | ||||||||||||||||||||||||||
Agency bonds | $ | $ | $ | ( |
$ | |||||||||||||||||||||
Municipal bonds | ( |
|||||||||||||||||||||||||
Corporate bonds | ( |
|||||||||||||||||||||||||
Total | $ | $ | $ | ( |
$ |
12
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
December 31, 2023 | ||||||||||||||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Short-term marketable securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | ( |
$ | |||||||||||||||||||||
Yankee bonds | ( |
|||||||||||||||||||||||||
Agency bonds | ( |
|||||||||||||||||||||||||
Municipal bonds | ( |
|||||||||||||||||||||||||
Asset-backed securities | ( |
|||||||||||||||||||||||||
Corporate bonds | ( |
|||||||||||||||||||||||||
Total | $ | $ | $ | ( |
$ |
The Company had $1.4 million and $1.7 million of accrued interest receivable at September 30, 2024 and December 31, 2023, respectively, included in other current assets on its Consolidated Balance Sheets related to its marketable securities. There were no realized gains or losses on marketable securities for the three and nine months ended September 30, 2024 and September 30, 2023.
The following tables set forth the fair value of available-for-sale marketable securities by contractual maturity at September 30, 2024 and December 31, 2023.
September 30, 2024 | ||||||||||||||||||||||||||
(in thousands) | One Year or Less | Over One Year Through Five Years | Over Five Years | Total | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Marketable Securities: | ||||||||||||||||||||||||||
Agency bonds | $ | $ | $ | $ | ||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
December 31, 2023 | ||||||||||||||||||||||||||
(in thousands) | One Year or Less | Over One Year Through Five Years | Over Five Years | Total | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Marketable Securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | ||||||||||||||||||||||
Yankee bonds | ||||||||||||||||||||||||||
Agency bonds | ||||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
The following tables set forth the Company’s cash equivalents and marketable securities accounted for as available-for-sale securities that were measured at fair value on a recurring basis based on the fair value hierarchy as of September 30, 2024 and December 31, 2023.
13
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
September 30, 2024 | ||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Marketable securities: | ||||||||||||||||||||||||||
Agency bonds | ||||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
December 31, 2023 | ||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Marketable securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | ||||||||||||||||||||||||||
Yankee bonds | ||||||||||||||||||||||||||
Agency bonds | ||||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
There were no transfers of financial assets or liabilities into or out of Level 1, Level 2, or Level 3 for the three and nine months ended September 30, 2024 and September 30, 2023.
The carrying value of cash and cash equivalents, accounts receivable, net, accounts payable, accrued expenses and other liabilities, and other current assets and liabilities, are considered reasonable estimates of their respective fair values at September 30, 2024 and December 31, 2023 due to their short-term nature.
Note 4. Goodwill and Intangible Assets
The following table summarizes the carrying amounts of goodwill by segment at September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024 | December 31, 2023 | |||||||||||||
Clinical Services | $ | $ | ||||||||||||
Advanced Diagnostics | ||||||||||||||
Total | $ | $ |
14
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Intangible assets consisted of the following (in thousands):
September 30, 2024 | ||||||||||||||||||||||||||
Amortization Period (years) |
Cost | Accumulated Amortization |
Net | |||||||||||||||||||||||
Customer Relationships | $ | $ | $ | |||||||||||||||||||||||
Developed Technology | ||||||||||||||||||||||||||
Marketing Assets | ||||||||||||||||||||||||||
Trademarks | ||||||||||||||||||||||||||
Trade Name | ||||||||||||||||||||||||||
Trademark - Indefinite lived | — | — | ||||||||||||||||||||||||
Total | $ | $ | $ |
December 31, 2023 | ||||||||||||||||||||||||||
Amortization Period (years) |
Cost | Accumulated Amortization |
Net | |||||||||||||||||||||||
Customer Relationships | $ | $ | $ | |||||||||||||||||||||||
Developed Technology | ||||||||||||||||||||||||||
Marketing Assets | ||||||||||||||||||||||||||
Trademarks | ||||||||||||||||||||||||||
Trade Name | ||||||||||||||||||||||||||
Trademark - Indefinite lived | — | — | ||||||||||||||||||||||||
Total | $ | $ | $ |
The Company records amortization expense within cost of revenue and general and administrative expense on the Consolidated Statement of Operations. The following table summarizes the amortization expense for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Amortization of intangibles included in cost of revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Amortization of intangibles included in general and administrative expenses | ||||||||||||||||||||||||||
Total amortization of intangibles | $ | $ | $ | $ |
The estimated amortization expense related to amortizable intangible assets for each of the following periods as of September 30, 2024 is as follows (in thousands):
Remainder of 2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total | $ |
Note 5. Debt
2028 Convertible Senior Notes
On January 11, 2021, the Company completed the sale of $345.0 million of Convertible Senior Notes with a stated interest rate of 0.25 % and a maturity date of January 15, 2028 (the “2028 Convertible Notes”), unless earlier converted, redeemed, or repurchased.
The last reported sales price of the Company’s common stock was not greater than or equal to 130.0 % of the conversion price of the 2028 Convertible Notes on at least 20 of the last 30 consecutive trading days of the quarter ended June 30, 2024. Based
15
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
on the terms of the 2028 Convertible Notes, the holders could not have converted all or a portion of their 2028 Convertible Notes in the third quarter of 2024. The last reported sales price of the Company’s common stock was not greater than or equal to 130.0 % of the conversion price of the 2028 Convertible Notes on at least 20 of the last 30 consecutive trading days of the quarter ended September 30, 2024. Based on the terms of the 2028 Convertible Notes, the holders cannot convert all or a portion of their 2028 Convertible Notes in the fourth quarter of 2024. The value of the 2028 Convertible Notes, if-converted, does not exceed the principal amount based on a closing stock price of $14.75 on September 30, 2024.
The interest expense recognized on the 2028 Convertible Notes includes $0.2 million, $0.4 million and $8,500 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the three months ended September 30, 2024. The interest expense recognized on the 2028 Convertible Notes includes $0.6 million, $1.1 million and $26,000 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the nine months ended September 30, 2024. The interest expense recognized on the 2028 Convertible Notes includes $0.2 million, $0.4 million and $8,500 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the three months ended September 30, 2023. The interest expense recognized on the 2028 Convertible Notes includes $0.6 million, $1.1 million and $26,000 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the nine months ended September 30, 2023. The effective interest rate on the 2028 Convertible Notes is 0.70 %, which includes the interest on the 2028 Convertible Notes and amortization of the debt discount and debt issuance costs. The 2028 Convertible Notes bear interest at a rate of 0.25 % per annum, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2021.
At September 30, 2024, the estimated fair value (Level 2) of the 0.25 % Convertible Senior Notes due 2028 was $285.9 million. At December 31, 2023, the estimated fair value (Level 2) of the 0.25 % Convertible Senior Notes due 2028 was $262.4 million.
2025 Convertible Senior Notes
On May 4, 2020, the Company completed the sale of $201.3 million of Convertible Senior Notes with a stated interest rate of 1.25 % and a maturity date of May 1, 2025 (the “2025 Convertible Notes”), unless earlier converted, redeemed, or repurchased. As of June 30, 2024, the 2025 Convertible Notes were classified as current liabilities on the Consolidated Balance Sheets.
The last reported sales price of the Company’s common stock was not greater than or equal to 130.0 % of the conversion price of the 2025 Convertible Notes on at least 20 of the last 30 consecutive trading days of the quarter ended June 30, 2024. Based on the terms of the 2025 Convertible Notes, the holders could not have converted all or a portion of their 2025 Convertible Notes in the third quarter of 2024. The last reported sales price of the Company’s common stock was not greater than or equal to 130.0 % of the conversion price of the 2025 Convertible Notes on at least 20 of the last 30 consecutive trading days of the quarter ended September 30, 2024. Based on the terms of the 2025 Convertible Notes, the holders cannot convert all or a portion of their 2025 Convertible Notes in the fourth quarter of 2024. The value of the 2025 Convertible Notes, if-converted, does not exceed the principal amount based on a closing stock price of $14.75 on September 30, 2024.
The interest expense recognized on the 2025 Convertible Notes includes $0.6 million, $0.3 million and $38,700 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the three months ended September 30, 2024. The interest expense recognized on the 2025 Convertible Notes includes $1.9 million, $0.9 million and $0.1 million for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the nine months ended September 30, 2024. The interest expense recognized on the 2025 Convertible Notes includes $0.6 million, $0.3 million and $37,900 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the three months ended September 30, 2023. The interest expense recognized on the 2025 Convertible Notes includes $1.9 million, $0.9 million and $0.1 million for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the nine months ended September 30, 2023. The effective interest rate on the 2025 Convertible Notes is 1.96 %, which includes the interest on the 2025 Convertible Notes and amortization of the debt discount and debt issuance costs. The 2025 Convertible Notes bear interest at a rate of 1.25 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year, which began on November 1, 2020.
At September 30, 2024, the estimated fair value (Level 2) of the 1.25 % Convertible Senior Notes due 2025 was $196.2 million. At December 31, 2023, the estimated fair value (Level 2) of the 1.25 % Convertible Senior Notes due 2025 was $197.3 million.
16
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 6. Stock-Based Compensation
The Company recorded stock-based compensation on the Consolidated Statement of Operations for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
Total stock-based compensation | $ | $ | $ | $ |
Stock Options
A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2024 is as follows:
Number of Shares |
Weighted Average Exercise Price | |||||||||||||
Outstanding at December 31, 2023 | $ | |||||||||||||
Granted | $ | |||||||||||||
Exercised | ( |
$ | ||||||||||||
Forfeited | ( |
$ | ||||||||||||
Outstanding at September 30, 2024 | $ | |||||||||||||
Exercisable at September 30, 2024 | $ |
The fair value of each stock option award granted during the nine months ended September 30, 2024 was estimated as of the grant date using a Black-Scholes model with the following assumptions:
Nine Months Ended September 30, 2024 |
|||||
Expected term (in years) | |||||
Risk-free interest rate (%) | |||||
Expected volatility (%) | |||||
Dividend yield (%) | |||||
Weighted average grant date fair value per share | $ |
As of September 30, 2024, there was approximately $14.5 million of unrecognized stock-based compensation expense related to stock options that will be recognized over a weighted-average period of approximately 1.5 years.
Restricted Stock
A summary of the restricted stock activity under the Company’s plans for the nine months ended September 30, 2024 is as follows:
Number of Restricted Shares |
Weighted Average Grant Date Fair Value | |||||||||||||
Nonvested at December 31, 2023 | $ | |||||||||||||
Granted | $ | |||||||||||||
Vested | ( |
$ | ||||||||||||
Forfeited | ( |
$ | ||||||||||||
Nonvested at September 30, 2024 | $ |
As of September 30, 2024, there was approximately $16.5 million of unrecognized stock-based compensation expense related to restricted stock that will be recognized over a weighted-average period of approximately 1.6 years.
17
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Performance-Based Restricted Stock Units
In the nine months ended September 30, 2024, the Company granted 194,257 PSUs subject to a performance condition and 194,256 PSUs subject to a market condition with an aggregated grant date fair value of approximately $3.1 million and $3.6 million, respectively. If the performance targets are achieved, the awards will vest at the end of the three-year requisite service period so long as the employee remains employed with the Company through the applicable vesting date. For PSUs subject to a performance condition, compensation cost is recognized straight-line over the requisite service period if the achievement of the performance condition is probable. As of September 30, 2024, the Company has determined it is probable that the performance condition will be met. For PSUs subject to a market condition, compensation cost is recognized straight-line over the requisite service period, regardless of when, if ever, the market condition is satisfied.
A summary of the PSU activity under the Company’s plans for the nine months ended September 30, 2024 is as follows:
Number of Stock Units | Weighted Average Grant Date Fair Value | |||||||||||||
Nonvested at December 31, 2023 | $ | |||||||||||||
Granted | $ | |||||||||||||
Vested | $ | |||||||||||||
Forfeited | ( |
$ | ||||||||||||
Nonvested at September 30, 2024 | $ |
The fair value of each PSU granted subject to a market condition during the nine months ended September 30, 2024 was estimated as of the grant date using a Monte Carlo with the following assumptions:
Nine Months Ended September 30, 2024 |
|||||
Expected term (in years) | |||||
Risk-free interest rate (%) | |||||
Expected volatility (%) | |||||
Dividend yield (%) | |||||
Weighted average grant date fair value per share | $ |
As of September 30, 2024, there was approximately $8.4 million of unrecognized stock-based compensation expense related to nonvested PSUs that will be recognized over a weighted-average period of approximately 2.1 years.
Modification of Stock Option and Restricted Stock
In the three months ended June 30, 2024, upon the departure of an executive and in accordance with the terms of their employment agreement, in addition to the retirement of a director of the Company and with approval from the Culture and Compensation Committee of the Company’s Board of Directors, the vesting of 69,049 shares of previously granted time-based vesting stock options and 41,693 shares of previously granted time-based vesting restricted stock was accelerated. The Company accounted for the effects of the accelerated vesting of these stock awards as modifications and recognized $0.6 million of stock-based compensation which consisted of $0.3 million and $0.3 million for the acceleration of stock options and restricted stock, respectively, within general and administrative expenses on the Consolidated Statements of Operations for the nine months ended September 30, 2024. There were no such amounts for the three months ended September 30, 2024.
In the three months ended June 30, 2023, upon the departure of certain executives from the Company and in accordance with the terms of each of their respective employment agreements, the vesting of 101,937 shares of previously granted time-based vesting stock options and 61,746 shares of previously granted time-based vesting restricted stock accelerated. The Company accounted for the effects of the accelerated vesting of these stock awards as modifications and recognized $0.9 million of stock-based compensation which consisted of $0.3 million and $0.6 million for the acceleration of stock options and restricted stock, respectively, within general and administrative expenses on the Consolidated Statements of Operations for the nine months ended September 30, 2023. There were no such amounts for the three months ended September 30, 2023.
18
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 7. Revenue Recognition
The Company’s two reportable segments for which it recognizes revenue are (1) Clinical Services and (2) Advanced Diagnostics. The Clinical Services segment provides various clinical testing services to community-based pathology practices, oncology practices, hospital pathology labs, reference labs, and academic centers with reimbursement from various payers including client direct billing, commercial insurance, Medicare and other government payers, and patients. The Advanced Diagnostics segment supports pharmaceutical firms in their drug development programs by providing testing services and data analytics for clinical trials and research.
Clinical Services Revenue
The Company’s specialized diagnostic services are performed based on a written test requisition form or an electronic equivalent. The performance obligation is satisfied and revenues are recognized once the diagnostic services have been performed and the results have been delivered to the ordering physician. These diagnostic services are billed to various payers, including client direct billing, commercial insurance, Medicare and other government payers, and patients. Revenue is recorded for all payers based on the amount expected to be collected, which considers implicit price concessions. Implicit price concessions represent differences between amounts billed and the estimated consideration the Company expects to receive based on negotiated discounts, historical collection experience, and other anticipated adjustments, including anticipated payer denials.
Advanced Diagnostics Revenue
The Company’s Advanced Diagnostics segment generally enters into contracts with pharmaceutical and biotech customers as well as other CROs to provide research and clinical trial services. Such services also include validation studies and assay development. The Company records revenue on a unit-of-service basis based on the number of units completed towards the satisfaction of a performance obligation. In addition, certain contracts include upfront fees and the revenue for those contracts is recognized over time as services are performed.
Additional offerings within the Advanced Diagnostics portfolio includes Informatics, which involves the licensing of de-identified data to pharmaceutical and biotech customers in the form of either retrospective records or prospective deliveries of data. Informatics revenue is recognized at a point in time upon delivery of retrospective data or over time for prospective data feeds. The Company negotiates billing schedules and payment terms on a contract-by-contract basis, and contract terms generally provide for payments based on a unit-of-service arrangement.
Amounts collected in advance of services being provided are deferred as contract liabilities on the Consolidated Balance Sheets. The associated revenue is recognized and the contract liability is reduced as the contracted services are subsequently performed. Contract assets are established for revenue recognized but not yet billed. These contract assets are reduced once the customer is invoiced and a corresponding receivable is recorded. Additionally, Advanced Diagnostics incurs sales commissions in the process of obtaining contracts with customers. Sales commissions that are payable upon contract award are recognized as assets and amortized over the expected contract term. The amortization of commission expense is based on the weighted average contract duration for all commissionable awards in the respective business in which the commission expense is paid, which approximates the period over which goods and services are transferred to the customer. For offerings with primarily short-term contracts, such as Informatics, the Company applies the practical expedient which allows costs to obtain a contract to be expensed when incurred, if the amortization period of the assets that would otherwise have been recognized is one year or less. Contract assets and capitalized commissions are included in other current assets and other assets on the Consolidated Balance Sheets.
Most contracts are terminable by the customers, either immediately or according to advance notice terms specified within the contracts. All contracts require payment of fees to the Company for services rendered through the date of termination and may require payment for subsequent services necessary to conclude the study or close out the contract.
The following table summarizes the values of contract assets, capitalized commissions and contract liabilities (in thousands):
19
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
September 30, 2024 | December 31, 2023 | ||||||||||
Current contract assets (1)
|
$ | $ | |||||||||
Total contract assets | $ | $ | |||||||||
Current capitalized commissions (1)
|
$ | $ | |||||||||
Long-term capitalized commissions (2)
|
|||||||||||
Total capitalized commissions | $ | $ | |||||||||
Current contract liabilities | $ | $ | |||||||||
Long-term contract liabilities (3)
|
|||||||||||
Total contract liabilities | $ | $ |
(1) Recorded within other current assets on the Consolidated Balance Sheets.
(2) Recorded within other assets on the Consolidated Balance Sheets.
(3) Recorded within other long-term liabilities on the Consolidated Balance Sheets.
Revenue recognized for the three and nine months ended September 30, 2024 related to contract liability balances outstanding at the beginning of the period was $0.1 million and $1.5 million, respectively. Revenue recognized for the three and nine months ended September 30, 2023 related to contract liability balances outstanding at the beginning of the period was $1.4 million and $4.9 million, respectively. Amortization of capitalized commissions for the three and nine months ended September 30, 2024 was $0.3 million and $0.8 million, respectively. Amortization of capitalized commissions for the three and nine months ended September 30, 2023 was $0.2 million and $0.7 million, respectively.
Disaggregation of Revenue
The Company considered various factors for both its Clinical Services and Advanced Diagnostics segments in determining appropriate levels of homogeneous data for its disaggregation of revenue, including the nature, amount, timing, and uncertainty of revenue and cash flows. Clinical Services categories align with the types of customers due to similarities of billing method, level of reimbursement, and timing of cash receipts. Unbilled amounts are accrued and allocated to payer categories based on historical experience. In future periods actual billings by payer category may differ from accrued amounts. Advanced Diagnostics relate to contracts with large pharmaceutical and biotech customers as well as other CROs. Because the nature, timing, and uncertainty of revenue and cash flows are similar and primarily driven by individual contract terms, Advanced Diagnostics revenue is not further disaggregated.
The following table details the disaggregation of revenue for both the Clinical Services and Advanced Diagnostics Segments (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Clinical Services | ||||||||||||||||||||||||||
Client direct billing | $ | $ | $ | $ | ||||||||||||||||||||||
Commercial insurance | ||||||||||||||||||||||||||
Medicare and Medicaid | ||||||||||||||||||||||||||
Self-Pay | ||||||||||||||||||||||||||
Total Clinical Services | $ | $ | $ | $ | ||||||||||||||||||||||
Advanced Diagnostics | ||||||||||||||||||||||||||
Total Revenue | $ | $ | $ | $ |
Note 8. Restructuring
In 2022, the Company embarked on a restructuring program to improve execution and drive efficiency across the organization. This program is a framework for identifying, prioritizing and executing operational improvements. Restructuring charges incurred consist of severance and other employee costs, costs for optimizing the Company’s geographic presence (“Facility Footprint Optimization”), and consulting and other costs.
20
NEOGENOMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table summarizes the changes in the Company’s accrued restructuring balance (in thousands):
Severance and Other Employee Costs | Facility Footprint Optimization | Consulting and Other Costs | Total | |||||||||||||||||||||||
Balance as of December 31, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||
Restructuring charges incurred |