NEO - Earnings call transcript Q3 2019

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Operator

Good day, ladies and gentlemen, and welcome to the NeoGenomics Third Quarter 2019 Earnings Release Conference Call. [Operator Instructions] After the presentation, there will be a question-and-answer session. [Operator Instructions]

At this time, it's my pleasure to turn the floor over to Mr. Doug VanOort, Chairman and CEO. Mr. yours. is floor the VanOort,

Doug VanOort

Thank you, welcome call. I'd to morning, and to Neogenomics good everyone conference everyone. third like Tom, quarter XXXX

Joining and George Chief Myers of me Bonello, McKenzie, Chief Pharma Fort our Rob Corporate Bill Investor from President Development Relations; and Shovlin, Kathryn Officer Services headquarters Division; our of President Accounting Cardoza, is Division; Officer. Strategy of Director our Clinical our and

language prepared our Bill will about remarks, forward-looking standard statements. Before we begin read Bonello the

Bill Bonello

represent which and statements, current forward-looking are which statements and contain fact may call statements. statements, operations, control. are condition our conference beliefs beyond are and financial made that These risks our uncertainties, historical by growth our certain about statements call This expectations Any of their of not forward-looking substantial on nature, performance, this opportunities. involve

of materially such the should and Should speaks we reflect obligation today, and risks one any underlying results to those undertake actual statements. events no as to or of forward-looking from could forward-looking indicated incorrect, after assumptions more materialize today. or the circumstances Any outcomes update uncertainties or or statements differ only these prove statement in

after be our call let call the Doug, a turning to we the the Investor I making on prepared our available of will shortly want is know of Before copy remarks website back for that morning's to call everyone this section Relations completed.

hour we're been the a call. going want ask people order limit the chance of more that has also allotted to everyone within person to a know question that this two in give We one to to let for questions number per limit to

Doug VanOort

you, Thank Bill.

initiatives more and results; quarter briefly review three with to near-term provide will Kathryn you and then share the and long-term financial investments today's that several growth. making of the drive then review we're highlights; For both I'll detailed McKenzie I'll some call, a

and We questions will then have answers. time for

momentum significant we $XX organic growth Adjusted end divisions the results had revenue Both Quarter year-over-year strong heading year. were once of excellent, performance. XX% than with to Revenue with have quarter three greater highlights. three million begin year-over-year increased million. XX%. into XX% again Let's and the $XXX very increased EBITDA to

company XX% test growth accelerated division Genoptix volumes late modalities. with increased drove quarter approaching all year. combined again Year-over-year testing year-over-year since volume each rates XX%. growth organic last growth have We once across Clinical acquiring

Next high retention steady reflect We growth sequencing XX%. rates and rates we in accelerated, customer well growth believe market customer testing and molecular the rates also increase of and legacy Genoptix both a are excess in those very with Neogenomics in generation share of base. the

quarter basis. year-over-year per test addition Clinical Genoptix $XXX, which marking That has XX% fifth per straight division the change favorable mix of a and revenue in reflects increased to test volume. test of increase in the on primarily increased revenue the a

expected. expected, at As transition per to terms work favorable sequentially due than revenue more rates continue contract slightly increased the and through Genoptix managed test care as Neogenomics to we reimbursement

$XX Pharma Services million. XX% revenue increased to year-over-year

quarter and studies increases year-over-year outstanding we We to result. our cytometry record in than new opened $XXX in and track strong the achieved the more were as on We the $XX increased XX% immunohistochemistry. office New bookings in in expansion during million very a a a increases our global revenue quarter are Singapore million. backlog and global remains third flow as winning

is robust has capitalize oncology momentum to great on environment and development. positioned business well for Pharma therapy The a

year-over-year XXX Importantly, basis basis sequentially saw margin to Gross and points increased also nearly significant profitability. XX.X%. growth we XX points and

our profitability, and with EBITDA of Adjusting in our the to since the contribution the business from XX% particularly contribution XX% the Genoptix R&D -- EBITDA the EBITDA. to business, on growth. very XX% $XX for in incremental contribution line with Adjusted approximated significantly increased we're revenue guidance spending EBITDA long-term impact dilutive is XX% grew to pleased million, EBIT quarter Genoptix in the and initially we increase

future. In our summary, we the about are pleased with the quarter feel and three for outlook results good

now our quarter I Chief Kathryn turn to to discuss details the results. some call financial of Officer, McKenzie, three the Accounting over of will

Kathryn McKenzie

Thank you, touched Doug. of points some already profitability. of the Doug high revenue on and

I So, the commentary will my other on some metrics the of financial quarter. focus in important

despite sold on our as also average decreased a Our to year-over-year pro approximately per known net cost goods employees forma new during X% per the test $XXX, of test, adding cost XXX basis quarter. clinical

to automation increasing process scale, from We continue benefit and improvement.

Cost On as sequentially, a our hired increased Genoptix. panels. cost to to the addition to the due test growth reported priced basis, during of the of per year-over-year rapid well impact quarter shifting employees higher X% mix and NGS support XX% reflecting higher test increased as per our test cost additional

next While generation test mitigated expect be sequencing some may forward, we continue drive to to cost to higher in panels. cost to by reductions reductions per the continued test shift going mix extent

have level upgrade sequencing these revenue higher made and products capabilities sequencing to also be margin. quarter. generation a our decline investment the due QX next of growth higher and the next panels to test accommodate reminder, high As in Also generation during may year-over-year the per lower-than-normal and

to hires, due XX% General G&A new expense investments influx and million and $X related to by other growth one-time administrative year-over-year incremental largely to the the of sequentially, $XX $XX addition expenses of increased million, million items. increased due or primarily Genoptix.

to the XX% sales and acquisition size of Genoptix and Sales our the expanded year-over-year business. marketing of the and pharma both of $XX on the costs driven side teams clinical million, by increased

sequencing including in new Research and development, continued our nearly costs increased development by initiatives. five-fold, driven next-generation and FDA investments test

million with $XXX million cash and We exited $XXX debt. in in QX

of in $XXX to days from quarter. day four XX were at our and availability million as for approximately was especially DSOs the million year-over-year declined credit one operations sequentially collections have the on flow facilities. Cash We cash quarter. days $XX strong strong

range EBITDA guidance $XXX in The $XXX to to our reflects million and $XXX million. quarter increase versus be previous million million now guidance growth be guidance. range better-than-expected We our earnings We adjusted guidance $XXX third increasing the XXXX million revenue to million. expect the are of year of consolidated million $XX previous expect of of million $XX results momentum. now to to full in our to revenue in We $XX versus and $XX the our

back turn over Doug now key the commentary will I provide to call initiatives. to on our growth

Doug VanOort

you, Thank Kathryn.

your some thoughts about Before I'll addressing questions, share our business.

future. States, results, is that cancer likely very can you and quarterly are leading from divisions, As high we to the our as experiencing growth foreseeable where continue for tell the in from our provider benefit growth suggest continue position we United that testing in both outlook our to the

added Pharma of practices and largest hospital recognizable with robust. contracts business some the the pipeline us. most country, front of In our that systems oncology most in business, and backlog remains And the recently still Services than the our signed Clinical is division, larger ever in of in we've and of

two like as to comments on key my focus topics. that background, With I'd

First, the actions high final our well focus investments the phase that to we're growth, of continue to high we including levels and and are taking level Genoptix accommodate into operations making second, the future. of fortify to integration; enable to of -- growth high levels of those

focus service deliver number expected on fortifying consistently exceptional of to a In ensure the we execution a to that actions recently taken us. is of of our laser terms we've maintain that operations, and

accommodate the The service. in us First, pathologists growth to and quarter. additional has a technical we put better staff hired while an employees full-time position maintaining onboarded much during continued almost XXX exceptional

completed capacity Second, have in existing and is until allow Aliso This to additional Myers and and in us the office we space in facility accommodate much Fort needed lab headquarters added capacity XXXX. volume Viejo. new Myers is Fort facility and providing lab to

Third, chemistry pipeline. assays our to and quarter. instruments, optimized our next significantly during our the upgraded our sequencing instrumentation throughput assays generation high we upgraded NovaSeq and We the moved

reports. well also and and further the tumor panels, these are XX%, With higher our the mutational that's to TMB, microsatellite our us instability, streamline quality automate capacity, MSI much We into our of most upgraded NGS growth rates ability with upgrades workflow needed burden list and incorporated processes. over updated providing gene and and NGS physician

by more client NeoGenomics process. feel Genoptix integration. is months. additional to the for systems delayed and and seamless to processes very thoroughly teams the Fourth, of migration Genoptix our planned time we We plans finalize This about migration good prepare the a three customers providing

integration While decision we on with other are all are track delay, synergies and tracking we activities to made a expected. as

and Customer during period the retention so good. is so integration far top our priority

the In and over, beginning have occurring volume at already decline the organic of growth the company has business fact combined we took year. stemmed than when expected we the the been better for we

passed on been opportunities our teams. also several We which to a have distraction could smaller M&A

efficiency. Genoptix higher greater great feel these operation With seamlessly shape levels and ready complete is lab accept integration our the to with actions volume productivity we'll be of and in we to that

future. morning. well of investments to growth attention our high a highlight I'll making enable few just continue turn are let's the to this investments of to Now, we levels into these

invest development, continue to First, in test next generation we sequencing. particularly new in

are profile, tumor for NGS We and genomic sequencing a of development stages based a a cancer, generation solid for residual minimal next various comprehensive suite with biopsy panels, gene profile in including XXX liquid several a offerings plus of disease. hematologic test

capability well-defined execute before. much it a and plan deeper ever organizational than have broader to and We a

Second, we continue companion invest in to diagnostics.

companion capability new tests a diagnostic with diagnostic help the develop drug to to to have powerful quickly approvals and unique of companion respond launch We and and validate timely test.

Clinical our labs is markets, and of continuum data. scope broad important specific same clinical reach from and most and result the to test Pharma and of companion the oncology an across wide oncology pathologists, a a to have diagnostic market. Among our access the development ability across trials through and into take test capabilities oncologists scale massive quantity to those Few

clearly our operation both a both focused Services Pharma operating Clinical clients. oncology, Pharma the in Clinical and of are and Services is capability increasingly This of to and services interest synergy

winning by first Pharma Services companion of and because with Clinical Services diagnostic market our test. companion capabilities share market are We to boosting currently diagnostic our business, being

give record pan-TRK and inhibitor four panel including panel, FISH immunohistochemistry and have quickly to fusion I'll already track We new assay. including of responding NTRK, for a and drug you a NTRKX have approvals. recent several examples. screening NTRKX NTRKX, offerings NTRKX small NTRKX, TRK We therapies, incorporating and several a NTRKX,

into We sequencing incorporated NTRK have our also next generation panels. neo-type

assay We for of lung for with neoplasms, the indications. new been world's and if triple-negative other leading as breast market provider, have for well PD-LX to SPXXX quick testing the leading as provider were we cancer and assays also cancer not other a

have at better for even which We have uptake about companion and Novartis the that Piqray, length PIKXCA, seen diagnostic than expected. we is talked is

our quick several We RET of have into to in some already panels our RET QIAGEN companion bladder carcinoma were incorporated included fusion also into market FGFR of testing diagnostic for metastatic offerings. therascreen neo PCR and assay the small and with we have type

for projects and signed two addition, we over the assays are discussions and add in in dozen companies, our of variety increasingly have of to diagnostic a pharma In companion pipeline to pipeline. biotech

initial Finally, we data begun in to had investments make informatics. and

the quite possibilities are about We excited here.

a companies Over related number payers, year, of approached initiatives. us the leading informatics to have data pharma and and services partner providers on past

our develop our We to have begun have and capabilities developed and our and investing to team, strategy plans, products. are build initial

and create and company. future companion us for anticipate will that informatics The of research clinical investments support, Areas and need an our leadership continued Services, on position the of be and to market Clinical diagnostics trials clinical decision oncology for exciting rapidly. diagnostics competitive exciting that and for is eventually, company. analytics, matching incremental include and We market for the informatics and potential data technologies, growth particular believe growing our interest have We several world for advanced source enhance opportunities other in precision based both in Pharma real ideas. revenue changing

feel into heading three good In about were the our of summary, and year. the momentum quarter we extremely results rest strong,

position position importantly, that significant further is future and and over to proving we in in our today More remain competitive leading time. the offer to market committed advantages the sustainable strengthening

now over the to period. to back us answer Bill question call lead hand I'll through and a Bonello

Bill Bonello

free webcast listening we'd to and bill.bonello@neogenomics.com, this call, the the at end your been we like question, would the At by for only Q&A us a during call-in up open listeners. like email call of conference at you're question if Incidentally, via our addressed the please this to to matter hasn't submit and to will questions. point, feel session, the address already subject call if

the two, we each still to to may hear of As for to the within this their from hour this person beginning like we everyone questions call, would at limit ask so allotted that and keep mentioned call.

open may the for questions. call Operator, you now

Operator

Souda sir. go to you, Instructions] Thank [Operator Leerink. We'll first with Puneet SVB

Puneet Souda

Hi, on Yes. quarter Doug. impressive here. Congrats an

on touch I raise and Genoptix. hoping to So first question if I the was could, guidance

the throughout the mean, Genoptix, capacity is growth of expansion, effort, the hiring, the NGS guidance clear it's accelerating. and You recent proceed phase have steadily year, increased that I final as here the in your

So, I point pause looks here is terms conservative, points. wanted there to you a in quarter guide of to seeing the implied that would we're that still you term? touch the mean, near anything on two what that bit gives fourth anything in a

secondly And your last much on in to more then could at if on elaborate It's left point of been then integration? Genoptix, sort integration. what's you smoother compared this

those So just help just follow-up. have quick two me and on points, a I

Doug VanOort

versus I raise Great, which guidance from think. the our EBITDA incremental is raise the is of thanks. guidance midpoint the the of XX% our to is our is guidance in Relative the about consistent of guidance, two, approaching at on Puneet. quarter incremental raise Well, long-term last range XX% midpoint contribution, raise to the EBITDA the our with the guidance, the growth, implicit At revenue in XX%, initial in EBITDA which and EBITDA XX%. is the

So, consistent. I think it's quite

The little a than three expected, we up. quarter guidance we take quarter -- the better was did so

As are in the we the Genoptix you integration. out, midst still of point

to prudent to we be our In four, sequencing. generation investments expect in we next guidance. continued with make do So, want quarter

informatics, are momentum no I is our but as confidence. mentioned We in in There in pause I reflects investing, as our the about feel good and script, prudence very the business. well as guidance we think

division. of the leading effort the here. Rob In along the with He integration, Clinical terms is integration is Shovlin Genoptix

So I'll address that. ask Rob to

Rob Shovlin

Puneet. morning, Good

XXX QX implemented tremendous and integration-related. nearly think year, of I progress going lots is of to. really we contributing is were of projects. So completed this made QX, Through XXX the as the nearly it acquisition IT well. different a -- which We've two-thirds system was really IT quarter expected user we integration we stories,

every integration, this waves to week. So, ensure release of of the did are final and We did client clients which decide systems move QX the stabilized time before XXXX. allow an to is IT -- for we're migration to basically doing phase last of We changes. out our that impacting to with implemented

point, from client your aggressive little learned a afterwards. then we lesson a was the it and integration to And where too we migration, got this with Clarient had that stabilized

that applied we're ready learned allowing systems and be in we client So for stabilize and the migration to lesson QX.

this synergies to grow that business just distractions we too the been our sales quarter. see has team revenue So point. little great to without it's see yet, also integration to early the some continued have but to cost It's a in any seen synergies realized

Puneet Souda

if is great. And for That's NGS, could, a clearly Doug, well. becoming both. Thanks. and Thank as the market this increasingly on for you, focus I you,

You quarter. highlighted strong this again quarter, last growth

seems business is is for a the expectation So, any just larger that market of overall to a piece of longer sort view to just taking Again NGS right about of it story us NGS get is sort so, longer-term sort longer-term? contribution just think And becoming wanted the contribution What's the growth? your term? And to be here. way here, it? the or here test away of the current situated from NGS it and help the get in a

Doug VanOort

right It to way is think it, about the Puneet.

it's the I still momentum. becoming and and a our of rates part during think, of mentioned in a relatively I very mix, molecular excess but continuation of were is strong the that NGS greater quarter low. growth NGS XX% that's

offering tumor over market, to that at We But I single grow every testing, generally increased far NGS eye test menu, as test discipline. you some taking share, the And think quarter, I so relative FISH an as modalities pace have think comprehensive we're we and other of market indicates, in time traditional our during to the know modality continue every a take as NGS that from will the area. we're away to interestingly, outsized FISH expect my can solid particularly mix see. but

Operator

question We'll Ellich next with take our from Kevin Craig-Hallum.

Kevin Ellich

there, a the of ultimately lot become, you and this for Thanks you're investments what morning. data for informatics long -- but company? of revenue convert it Doug, sense thanks go in making. to the that into take detail you in the to more taking will commentary, back I could give wanted to information how Can Good the for guess the questions.

Doug VanOort

for informatics, is and actually informatics leading he questions Thanks our in Bill Kevin. Yes, the here, strategy development is and Bonello about efforts.

Pharma this. independent great would an see address has and existing to thoughts our anything upfront and both general to just time will have it over money add. that informatics if develop lot say And is here. in with Bill I'll in a businesses we So, that, a just revenue of plans developing Clinical Bill lot we energy to we've me our and stream, and let that turn The idea invested strengthen and he and got of strategy.

Bill Bonello

have Yes. Kevin, of and it's the as Doug very as I data obviously requests from our to various initiatives. We provider clients would do our payers clients on as collaborate still early days. say on pharma clients lots well including mentioned call,

sort really our in actually organization is products number that revenue a up of is road that's place getting and with make to have and which generating, some in that our and do sure robust needs. various of that We of have today importantly, on are are right revenue now, place meeting their projects, pretty develop products to those want of a time pipeline additional have develop, and a our projects not customers generating. map We but hugely we pilot focused more we working energy in we're fashion and albeit of where

will it position do revenue standpoint. in our be mover before probably little be divisions. it's it's already but will both there bit, a needle meantime, won't the of significant of from we think strategic our revenue. in break reinforcing In out the a will term, a it near that but -- bit a We a little So, help bit

Kevin Ellich

I and more Thanks the you [indiscernible] you question, much helpful. informatics? combined And investments have made how the guess, that that, front? about that do hiring Bill. what you detail during you also position you you add? made, of on investments, you in the to then side, do the for clearly guess, you R&D guys much a I want And guess top investing left fill plan to making of you That's there, did kind and on talked on are what quarter the on are want do do capabilities I

Doug VanOort

to we time. This I our exciting in company to a growth-related is focus in some We're Kevin, growth is think is precision, will of investments. we growing of the we make business, rapidly. think it's prudent continued company, in of evolution very part this for on area and oncology investments which operating the medicine and at

continue going we're to to So do that.

people. We times I couple mentioned, now heavily during folks the part-time we generation sequencing quarter. We're a the as and and hired full-time XXX in investing about capacity. in in next we investing mentioned of investing script. in We're also are

people lot our we've in keep year, growth, think far new also to is so I with hired and investing current are up capabilities. a over XXX this we but volume that

a new team increased is in know, division. Singapore. capability that new our U.S. we're you informatics the in We've our that lab business outside a example, Pharma For development pretty pretty We're Globally, investing in significantly. Services put in. in Pharma we heavily investing

We've resources way. a added in big technical

about Variant to piece scientists, year from increasing molecular a intend reflect I an where our ago. we four outsized hiring growth is of that. our business. I just think by pathologists. think bioinformaticians, This number about were We're continue a area and in we've times investments increased pathologists grow to We the the of

Kevin Ellich

Thanks, a nice congrats quarter. and on Doug,

Doug VanOort

Kevin. Thanks,

Operator

Weinstein question take We'll next our Brian William Blair. from with

Brian Weinstein

taking the for thanks questions. guys, Hey,

kind better I of First, can test as just Obviously, can pricing, about -- well little continue you of not recognized molecular traditional NGS average think on mix the get as bit versus goes of and impact on how a test would average understanding what higher, more think to here? talk per longer where more a And trend see give are revenue specific about the sustainability the contribution you you term? but here? Why methodologies? revenue there testing on

Doug VanOort

average a price. unit Well, there Brian, lot are of in crosscurrents,

prices You rates, average at we mix will growth and unit quarters, in has next average increase grown consecutive has very price. has But unit can in our generation five part that's think been sequencing price, up Genoptix, mentioned continue high at that -- -- mix. that come it's is Genoptix impacted our test and they I our to and higher of overall impact

collections, quarter also and We have financial at the our unit that results. average our a look you chance price in because some see will you benefit cash gotten have when of in to good

very sales days operations will and strong, that. Kathryn sort You cash from mentioned, outstanding as see of was reflects our

on unit mix has a opportunities So average but AUP cash the we I think can fluctuated, lot beyond track do. collecting work and improve plain we we're right have with for of fluctuate fashion old of price and a just good the to it heck further test that

a We of opportunity lot have to do that.

Brian Weinstein

Okay. developing bit that one, to that team continue time can Thanks. backlog to bringing backlog second any more And to just side? are a terms us on add George revenue? little to that? the the in see details How you making nature that to on bit the can the of And to a services in and get other that efforts that you provide describe of and little building more then the you're detail you

Doug VanOort

will a new me about in of in. sales make of record. are also products then The really a brief would lot in and $XX I backlog good we good again fill and really George a Clinical excited let Services and got Pharma terrific progress in sales our We've Services, demand. team in was increase. infrastructure. We've but our Pharma one it say that million are Yes, comment, the made

to So, it? George, you take want

George Cardoza

we're again. record backlog, a pleased have obviously, to Yes,

winning which a longer than quick Phase We nature more X or maybe X X Phase Phase project a research studies and by are are study.

out of has gone pretty basically. a timing backlog we backlog the So, bit, our but our describe

policy. endowment rigorous very a have We

they you've So that seen see. the I don't think XX% of that come you we in things growth convert the that year-to-date and growth revenue out backlog feel the real to backlog do are our

year backlog. Europe, business global two nice about that win excited growth. very winning bullish backlog is we a winning business we're a we're on for time studies now remain So future the and very or so couldn't really Certainly, now we're ago, in the we

Operator

is next from please We'll question button. with mute Mr. take check Steve open, line Needham. your your Unger our Unger,

Steve Unger

Whoop, that. sorry and color was large there? about you talked And you were untapped, groups I Doug, some if these -- provide and health about with wins oncology was additional systems that wondering I could and wondering briefly. relatively

Doug VanOort

Yes, I can provide additional color there. our capabilities I would services, informatics say to of players. that are more increasingly our comprehensive interesting capabilities are large our scope emerging our menu,

So large for example, let's systems. take hospital

us number clients, penetrating through are think to big we've just hospital their of capability got and somewhat their systems monitor land And that's testing, a and their have grow their systems cost hospitals. activities. and as We scope across a wide lot of to I understand unique them nationally regionally even them or those to their of so standardize serve helped hospital help we to a room practices,

just from but think large people better them. been of for that. as think to oncology offer multiple benefit and to partnerships over to is are other Switching a or testing quick their variety which And services well internalizing their to might oncology we've allow do some our certain to offer We've as group or capabilities even getting can I interest data within and groups started group practices turnaround to the that got oncology them nationally as somewhat serve regionally them around a I understanding larger, ability are time, opportunity quite testing to us side, practices penetrating most regionally with know, unique. offices group some continue of -- oncology state of we which many to as practices, them -- we've well, some tests, be

Steve Unger

that the the long of a Great. complete concerned, it as drain I how as the is And or take -- on operations? moment? is how you do drain EBITDA then change to initiative will your compliance guess, sort you as And think FDA far FDA lab far a as at to

Doug VanOort

I We this are of and of money investing made and a must time process, We've in resource lot lot a say. progress. FDA

that because documentation is FDA requires by So of validation the including compliant a that's not and point the of areas. and to largely we assays that bring is in -- feet, a validation FDA heck to documentation our for the infrastructure at way, intend a systems small those lot this

we made progress excellent think I there. So

We money make resources that a to have in happen. lot of invested

taking through labs the process, In validation than FDA. working require most kind which subject used on with of under terms FDA just all we're of regulatory labs, as the different cap test The environment, that about still to know, you the clear assays a we're are to.

And we're so working with through FDA. the that

that because tests allows the our us in to consider think but FDA little bit and future to do FDA, got advantage. to the assay more through most we intend bring stress I we've appropriate multiple if bring that the to work a I that important, with be is would through the we the infrastructure that to opinion in our

Steve Unger

dynamic per there just perhaps should the guess, is one of increase there wondering that just or test and facilities trend, and the sort as test a in tests is per the mix of that last And was your issue sophistication that I cost to mix. sometime is where we the XXXX? rise on -- I people. XXXX realized of beyond if hiring and Is sort people staff lot of a still in hiring know incremental know that in time a point in cost this you're one, expect the I -- normalizes, I there and an but a of lots is the also I staff you're of hiring additions

Kathryn McKenzie

per cost of Yes. selling lot had is basis, decreased forma Steve, X% pro year-over-year. this progress Kathryn. a We've On test. a we've

do you increase so And Genoptix. that see with

seeing forward, increase people go investment the a lot investment in in And I opportunity. and see to with of as our think, we our still continue we You're technology.

we see should that have those additional think impact including there growth see coming that lot I different is mix in quarters. things that you'll opportunity and test NGS the but of are We and going that headcount, your a going forward, to cost per

Doug VanOort

through Kathryn initiatives, so does per Steve, reduce as is initiatives, we opportunity integration, volume automation got of test. forth, get are initiatives. a our role the because volume we of And Once think we once on we lot really growth growth lean the same a cost test Genoptix platform. to everything have we've chops reducing just cost to in said, addition looking lot a play per in and here

Steve Unger

Thanks. Excellent.

Operator

next our Raymond with take James. from We'll question Hsu John

John Hsu

like the if go to seems everything you. we trending Thank back guidance again, it Doug, could just is well.

there, you then quarter. losses extend mentioned accelerate every is organic the You volume the volumes and actually, Genoptix

of terms range? a So us ago, there? I on there low November, said instance, at on revenue drive decline the kind know, Is again, conservatism that if type of of the think just in any sequential implied another For would can speak were -- What help so perhaps the midpoint? in maybe about anomalies you some year of the way, testing the scenario some in there end side, conservatism to? you can the volume the

Doug VanOort

Well, first our in all, of guidance. we be prudent, try to

division. the review a And asked about a division And and pause market, is raised every of see we our prudent. that. really George have give just here. had wise quarter relatively guidance it's a I just a pipeline don't before. going results in We We be representative we and good feeling would anything pharma our we very I in lot -- think it's the think for year, yesterday similar were reviewed know, as just on very this someone competitive have each we ago. you Clinical had this a while every, meeting Services But us Pharma to and But, just that gosh, the all in

long-term but the have short growth feel and very, the of in prospects may we very of think divisions some I are our So pretty about darn both fluctuations good strong, term, we it.

John Hsu

dynamics? those Okay. some then this think there? focus CFO Great. laser could maybe -- on preclude can given from process. search at the just that update you quick And provide you would Thank about on would you maybe I a search say help you. comments given your deployment? us point, on Any mean Just the color capital provide of you the execution,

Doug VanOort

about search. Yes, for CFO thanks asking the

firm response to a of through on So very We've have we to search. in I are going question, in financial deep staff now timely and the interviews here. do everyone had initial some recruiting process and we want -- recruiting good basis. we're mention we've hired the a your to very, a CFO and that executive midst

So, division we who the for is Clinical the terrific, terrific. have a CFO Pharma CFO who division a is for

You got been she's years terrific. and heard two-and-a-half guess, great Kathryn for new us now, We've here. Treasurer. with Kathryn a I has

CFO, So or in manner, is not else. in impeding strong or analysis organization no deployment very a we a kind decisions very, capital have that financial any anything having of --

So think, things I'm that. about are moving worried -- not along, well, very don't I I and

John Hsu

Thanks, again. Great. Okay.

Operator

Bruce with Benchmark from question Company. The next Jackson our take We'll

Bruce Jackson

horizon? some business for thanks and diagnostics morning, Maybe in the little for on on the moment, and there about a pipeline. bit that the near-term you've anything companion question. launch Good taking talk the a notable got focus my we projects could If you XX is could cadence

Doug VanOort

normal or use, to and approved ourselves with diagnostic of companion partner drugs more. two in and the our that I of new a two Bruce. would add I have say test excess some but of of launching companion year see of those work division projects think the I now. might number diagnostic would Thanks, I get times, in you a Actually, in and George, companion course anything? importantly, right said the Services you division. say, our as develop diagnostic a launch sometimes we're in a quarters. as want will a diagnostics think take companion suppliers company these our that by We're us diagnostic will companion we developing I couple lot Pharma do next in Clinical

George Cardoza

they of I with the They as one to think a a we're NeoGenomics, Well, I you and Pharma day then No, for see us readiness the good the of and success from example Pharma can PIKXCA. is commercialize that the see away very mean have that one we've the the every ready side, for get and up the came projection mean Services great compelling on service that program to it. we Services we Yes. division certainly day I pre-approval Pharma value customers. blown that.

continue few we offering continuum certainly have that a very a to companies that that is NeoGenomics So reason business. and that why unique have it's we it's win

Bruce Jackson

and Great. Thank you, congratulations on quarter. the

Doug VanOort

Thanks, Great. Bruce.

Operator

Analysis. to Joe with we'll First Munda go And next

Joe Munda

me you Can morning. hear guys OK? Good

Doug VanOort

We can, Joe. Thanks.

Joe Munda

due you prepared -- Doug, questions expanding quick, there. about Real capacity your Two in remarks talked demand. capacity to

expect could sense If give break some prior? and on new update versus to capacity us you the of the -- facility increase of maybe how ground? much when And then progress you an

Doug VanOort

asking capacity, Joe. Yes. Thanks about for

I of guess, capacity, In capacity. kinds two are terms there of

One plain lots about kinds, talk two. are different but there just capacity. people While of I'll is

good So, in have, people trained work just it's business, do not to they're find. the it our that we to easy and takes skilled --

of And and the are recruiting over onboarding it's people actually thrilled so now, have to stuff. recruiting in quarter, getting training, we're all we -- XXX a productive and and machine sort we have people that hired

in would people. have we increasing we say are that terms So momentum, -- capacity of good I

here terms space. freed open less little did facilities, another Fort but In maybe in up facility that's a of positive, some we Myers

looking on, Aliso We be we folks of have lab some capacity are working to Viejo as to lot do and I that We we'll say moving optimize. have within in Carlsbad capacity which around in a well Viejo. we're would another in month, Aliso the add capacity, facility

getting will not before us Our Houston being frankly, covered to lab full is ago. because lab you year that remember a and that close was you've full

and stead Fort probably that. good fall, to enable progress. So will facility we're will have capacity I lab up good Myers business XXXX, in a And and lot In us think hold of side, I number by capacity, for free we us operational. the new and a that think in of on the years after headquarters move around making

and next One think. break roads called going and here think the the Avenue, Assay of of I names road is the way in have Fort months. We couple in we're Myers, called ground I to is other NeoGenomics

Joe Munda

would a wants to but Okay. -- as well, street I'm And have guess, for Steve I guess I buying he guess I Jones been of name there sure sorry, a then, have.

And the business, that result stronger? result seen a wondering so talk bit side? about Any about little flipping the us as the would PPD signed to can any script here, on the bit you a a the Have as business Pharma or of incremental little you collaboration? revenue side George, the pricing if relationship? was be Pharma then I on a great? talk color could And getting of Is you're Thanks. you it there seeing

George Cardoza

data, quite And we're Yes, contracts, them. a couple yesterday with we got so and where with a located us where second to now. them. alliance break certainly, of relationship we're from out very Singapore, year go of were we've we a to continues don't it very the customer in it mean literally but, well won good hall tremendous help PPD also even I the into pleased They the across over individual right

were For our months, their people room. about of conference three out working

want help have write valuable and the have bifurcate with Pharma a that that their they want very a sort think everything want solution for to just is strategically, wants one one customer CRO been important partner very and don't So of strategically just centrally. check ability and to our really I -- us, contract, managed just people to that

continue quite a partner, will be pleased good with that. to So PPD we're and really

really we see don't -- So

always there In terms competition. some pricing is environment, of overall

assays we our able our to do do maybe end the things probably We and a is little very is really to bit important most about of compete assays higher of lot to fairly we custom a Speed firms. than were bring tend of customers. One a quickly. division custom our

lot big of the So we to competition, faster do eliminates because move that also guys. pricing than a of sort tend

generally, the bit competition science the trends. market from going opposed is maybe little as in I to think our we're positioning us in in it always through procurement I anything really does we the a there seen coming again, And high significant sort the market, side So, of haven't overall terms shield of door. because at a lot but really of the think

Joe Munda

you. Thank Okay.

Operator

And our question... that final is

Doug VanOort

Didn't you way. to the NeoGenomics mean off Joe throw with

Operator

I'd to closing the call our final That VanOort for comments. turn is question Mr. to back like for any today. over

Doug VanOort

Thanks very John. much. Okay,

everyone world-class the members to thank behalf the approximately here our recognize your to the call, As we oncology company. end X,XXX team, NeoGenomics this of a want commitment diagnostics their world to joining dedication for time, And and around morning. on building us for I'd I NeoGenomics like team

that investors your For are are Goodbye. considering or company. in NeoGenomics, those in thank investment we of interest our you listening for an you

Operator

lines and disconnect teleconference, gentlemen participation, does appreciate and your a we that day. now today's have your you Ladies may conclude great

NeoGenomics (NEO) 29 Oct 192019 Q3 Earnings call transcript