NEO - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen and welcome to your NeoGenomics Second Quarter 2020 Earnings call. All lines have been placed on a listen-only mode and the floor will be opened for your questions and comments following the presentation. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host Mr. Doug VanOort. Sir, the floor is yours.

Doug VanOort

[Karen]. you Thank everyone. Good morning like XXXX to NeoGenomics would everyone welcome call. quarter conference second I to

Joining Fort Chief from and and place, Shovlin, me Director our of Bill are precautions social President Relations. our Kathryn in Bonello, distancing of President McKenzie, Informatics Clinical Investor our our Financial of Rob Myers Officer; Division; headquarters, Division with

Brown, Dr. Joining our Officer; of our President are George the call Cardoza, Corporate Medical and via Strategy Chief phone Services Chief from Larry Division; Development locations and our Doug across the country Weiss, Pharma Officer.

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

Bill Bonello

conference are our our which risks represent operations, not which the materialize fact are or statements This to on more These opportunities. or after materially our of about one only condition should forward-looking of are financial beyond made beliefs growth of by substantial and historical and may involve call statements. their obligation nature today. forward-looking performance, Any and could forward-looking indicated contain that results current outcomes from such and statements Should prove statements. to or those differ certain statements statement today undertake call in we statements, these uncertainties uncertainties incorrect, as control. forward-looking statements expectations any events speaks and the no actual or underlying update Any reflect risks of assumptions circumstances this

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

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

Doug VanOort

a review to results, have strategic you, I comments actions on Bill. two some taken will Kathryn accelerate some have our of answers. our in McKenzie for the results. quarter detailed for outlook times two morning with we'll then will questions I for growth on then growing operations quarter some thoughts three. business and up Thank more provide and with quarter and strategy This time and financial we begin will these the wrap difficult summary

third financial pandemic. the Those the six stronger the As decisions significant. by to COVID-XX would to by challenging. like fully to Revenue in quarter we expect We There trend. expected way our put business in long-term are recovery and invest drive show near-term caused quarter two our also in a and growth. several below and strong results profit/loss with that noteworthy volume pandemic beginning financial made and second share us in strategic results by the in revenue results were a made decisions despite strategic and were decisions to were and position was we decisions you. competitive Margins The rapid are investments affected lower to already quarter. we the

on place crisis. COVID steadily business steady testing and the volume to third than currently culture June anticipate people, in up day of perform throughout do to to lab further. for up crisis. of stream of capacity tests employees have considerably a testing the employees decided and weeks. capacity we latter scale ramped more we quarter. COVID XX,XXX the a our and part which during we of have in in we to We a skilled process level We have of part eight capacity that past the begin per started July a build and may demonstration retained as available value help to our we minimal built the with First, the all With We now

our front-end COVID-XX Our logistics and the this reporting. strategy gathering performing for our partners well and network we sample to testing labs. testing commercial client perform as back-end as leverage but molecular hospital, for by In as the way labs serve is lab for expertise reference our the a laboratory

COVID a full As our will service lower laboratories test costs other see our be but you result lower. also might be what performing average revenue per from this than testing will

supplies, sizable We have and made this equipment to systems training lab investments in R&D, operational. people get

this financially service our overall nature we not from with term a in while in oncology we testing, as us the testing. are revenue strategy and benefiting part as For associated of COVID-XX short view leader

to the this partner lab with to the help is crisis. country combat intent industry Our

we uncertainty third is and the quarter and well. and amount volume result and testing. as to testing of quarter there expect about employees COVID that in XX hired Although so fourth and this the profit time, into we high is throughout demand perform the COVID-XX revenue duration to temporary have demand of employees At redeployed incremental trained

our we COVID staff Should testing volume improve. we resources our expect months, will testing testing fall, continue to the those demand scale COVID-XX to oncology back our core redirect will several oncology business. of Over some core back dedicated next and testing

We our successfully and proceeds hedge are flexibility available proceeds Second, proceeds for the loan offering stock term used company. and in creating of fund remainder by resulting balance our investments associated terminate rate convertible of and the significantly acquisitions. our completing approximately interest of $XXX mergers for and $XXX we increased The net to financial repay to strategic million common the an our of securities million fortified sheet company.

Third, made technology. million $XX leader we a formed in biopsy investment testing a and collaboration liquid Inivata, a minority strategic in

company. have we the to option and the As entire exclusive part of directors on the buy deal Inivata of a seat board our

to insurance currently have biopsy the Lung specific generation liquid commercialize test test competitive the testing the tumor and drivers and right DNA liquid NGS-based or we test a a first just accomplished comprehensive with of which The next liquid all biopsy Fourth, various that commercialize expected U.S. help The lung QIAGEN therascreen assay biopsy PIKXCA sequencing with launch cancer. tests suite for targeted payers lung is solid network biopsy InVision cell test PIKXCA in minimal by is that lung rate. being PIK schedule. non-small test disease and private two launched as to had We genomic liquid previously The a genes to as test in the Tumor the InVision of before We FDA-approved covered Solid diagnostic biopsy First cancer cell is residual one tumor mid-year liquid coverage. on InVision that is Tumor therascreen NeoLAB non-small and their cancer. therapies FDA-approved envision test national also well development. for we circulating companion Lung liquid highly for genomic the care XX highly Medicare is tests sensitive is covers Solid cancer and to First Medicare Lung specific relevant recommended and the guideline of advanced was and the First biopsy MCCN validated including plasma. we for pan NGS assay an profiling. announced test it NeoLAB

business. continued biopsy PIKXCA may you sponsored their to with have program on tissue services biopsy Fifth, our As we and PIKXCA diagnostic we test. The existing know, them. testing worked accompanies invest in test the pharma test liquid Novartis tissue-based a have with companion

with and to sales pharma-specific PPD testing lab operational people expected further progressed of in During our collaboration strategic end development by the which business our China additional capabilities, and we with in is the this hired quarter partner established Asia year. be and Europe

existing enrollment see revenue as in COVID the from well quarter pharma by you reduced pandemic impacted our results, delays as As two trials. trial negatively was resulting from

However, $XX backlog in while patient growth access signed bookings way was net high the our pave strong of million during of next with several million the new business current revenue demand an for were over Clearly the $XXX over is contracts contracts quarter. signed for quarters. of the all-time signed and issue, there an services at should strong

our in Finally, we continue informatics business. to invest

pharma continue and payers have providers We some had substantial from already success. and have early engagement commercial to companies,

we vast beginning data real-world of As the our just for the to of in help value information. harness leader cancer and positioned and patients are and to are testing we testing the amounts customers data use to valuable our our solve for problems oncology true uniquely

but get with positioned invest the combination June in June in oncology to quarter revenue business in not the a XX% are be essentially pre-COVID growth our of early and and revenue To Based to Volume July week about back in now volume we opportunities for recovery. impact XXXX sense each organic two our maintain growth testing quarter we core and core statistics confidence down last to with testing. workforce from recovery April XX% quarter. organic by testing The did has strong nearly thought the June. a volume line May yet recover our volume most as better in few a oncology in in XXXX well a continued quarter might was report in below year-over-year in Volume for volume COVID-XX our decisions trends three. current expectations. as though modest some expectations. to to better give three a XX% to expect the of volume began it Volume week we COVID was Our in June our helpful driven with in and excess still recover growth share of related outlook, trends Neogenomics quarter on be our In pace pre-COVID recovery to total, boost you of in This have year-over-year severe further three of on trends. year-over-year. growth will growth

we is quarter as great which recovery have actions due Officer In confident financial a the deal resurgence COVID statement, in than trend of volume I Financial response results are positioned for in a believe for the pandemic. there were we results. and Kathryn of our details about long-term a are the to the have reflected Nevertheless, three our in prospects is We our pace experienced our strong to similar continued to Chief a now position impact turn business. the infections of still growth. given of quarter that and expectations discuss the summary, company financial pharma services two ever. quarter some poor Obviously our pandemic will uncertainty call McKenzie, stronger in expected two growth we of recovery competitive to the that over the took

Kathryn McKenzie

will the brief financial quarter give everyone. and COVID-XX good Consolidated to year-over-year a Doug the I impact overview pandemic. you, XX% million results. reflecting second of revenue $XX morning declined Thank of

excluding For low Consistent the division -- per tests COVID-XX previously we the clinical our declined between quarter XX% volume XX% year-over-year. the tests represented April for month. of declined as quarter discussed, in and testing day clinical what XX% test overall, with

encouraged especially Fortunately both better week the The week are in XXXX than XXXX. Volume sequentially last week revenue in and this division than test that we June Clinical was last to during of was from reflects last X% of synoptics. related May legacy June per better revenue experienced XXXX the and quarter XXXX. down non-contractor a in year June June sequential $XXX. the was on and the each improvement revenue of lower $XXX down claims test year-over-year per of we

AUP synoptics months integration after test low note the result We unusually from pandemic. to a was distractions now that per we just like XX in the or the As would despite have the revenue COVID quarter. completed

a processes next a and over quarters. several efficiencies we the in now in including position result As billing increased to improvements are drive collections

strong Research our oriented We increased be synergy expected. projections continue by revenue that Pharma services X% million. remains of will realized to as to year-over-year the revenue acquisition growth HLI-Oncology. believe $XX bolstered original

in COVID-XX we backlog clinical trial the Jolla, work giving pharma reminder activity a the grow signed down pressures trials contracts contracts. the sign environment and a us this NGS California Despite in significantly lab January year to around world. the state-of-the-art was the the as of Clinical La new capabilities. on result of team NGS continued As acquired of challenging advanced

fact new the were backlog to signed the $XX contracts in signed $XXX the million yet quarter highest contracts increased representing million. of number and year-over-year quarterly In XX%

X% increased year-over-year show result services year-over-year million volume due of margin a offset expenses. growth COVID-XX and $X Operating in and to cost initiatives the the growth declined and the impact marketing lower quarter, by second informatics, XX.X% HLI-Oncology. to significantly pharma to as or increases the trade were reduced commissions, pandemic. of of $XX The decreased travel investments partially acquisition million expenses and For

delayed evaluating to we in While growth our expenses and we reduced capital our other controlling and or fund appropriate. where costs operating we and disciplined continue key and remain expenses initiative have certain expenditures

investments previously in volume COVID-XX noted which quarter $X.X for also important other we a strong experienced of strategic recovery. the believe as EBITDA initiatives Second was adjusted made our us million negative reflecting impact related declines significant and and other pandemic to people challenges the and positions we

excluding significantly with We in Fort We concurrent construction a be raising million balance the in total laboratory We were continues loan busy headquarters the by in state-of-the-art and Florida. in exited enhanced related $XX offerings late our on of quarter. approximately Construction retire to April. from track $XXX approximately to Myers, in sheet our position $XXX convertible term our fall Turning facility global utilized these debt that quarter of for cash proceeds opening million and $XXX new net our restricted we of this and financial million million. portion proceeds designated outstanding cash for hedge of two equity in to XXXX. for

investment minority we invested in strategic Additionally, a a with announced million million Nevada in that and alliance total of May. we as $XX late in part $XX

in $X.X in disbursements weighted increased the with the XX being under received provider June. sequentially towards six quarter revenue million distribution the of of to heavily days was outstanding CARES July. Days primarily our during Act in remainder received due also quarter the million the received to $X second We sales which early days

As financial in XXXX year full X, a guidance April reminder light COVID-XX pandemic. of on withdrew our the XXXX we

second While to potential back our cases will we in turn half the given provide commentary the to and growth are downstream calls over now I uncertainty the the on expecting remains key impacts. we in resurgence year recognize COVID initiatives. Doug that recovery of

Doug VanOort

Kathryn. you, Thank

to were disputing the reduced We but results we quarter to much. as costs of opportunities to in As growth as no a think the two. I volume. invest the for made quarter difficult that our expected were financial response short-term the up noted in quite is reduction COVID these rather beginning decisions at We a decision long-term strategic decisions. than right call two cutting fact earnings stand There the testing

but we been quarter is the first providing only prove uptake quarter We will end of that in that – several very see believe to has testing considerably the do However, to at volume COVID the grown three. weeks testing have right and prudent. an not started in thing to financially of the two

also midst impact the the despite clients volume retain to the group. highest supports and had that profit on One average this our higher service received data the long has the believe during Net thing is decision cultural We our tenfold our nearly recent score but company customer patients quarter. Our rate in peer score pandemic also surveyed customer our do employees with pandemic survey score than most we is term Score. belief point benefits and Promoter we this clients significant and was decline of Again right the response a that ever highest serve. in and for the the to for and a

based unchanged. satisfaction drives drives is and believe engagement of change that values of high we and model which We in culture high and have driven lead remains to and business try returns. to our levels strategies levels competitive that employee that to a customer with retention fundamental turn shareholder continue purpose but We evolve continue

our Finally, is we in our and believe both long term pay positioning strategic invest that near growth competitive dividends to decisions in and will the enhancing term.

tests portfolio which we liquid full We our even further fact, and that before sequencing for our a the menu. suite better growth have next In biopsy comprehensive than oncology believe we hit. generation now are pandemic of positioned were strengthens test product we solidifies

strong further We also M&A. have to sheet a balance support

already All well-positioned for for run are to that contracts are looking long we initiatives increasingly our to a accomplished. have an forward team we all pharma and services and has backlog excited and of growth the presence. global continue informatics in a about advancing our large We we what business future. very run signed very with are And are bright

Bill Bonello

open to like questions call we'd point incidentally. this At the for

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

call within two hear you for up the call. their mentioned open we of may we'd questions. to each that so ask and to may still the hour allotted the As beginning limit at to questions keep this Operator for like everyone person the now call from

Operator

gentlemen is sir. and Instructions] Ladies floor go the Nowak take question you. Thank Craig-Hallum. from questions. open now Please we'll [Operator for this ahead time our At first Alex with

Alex Nowak

some within was morning to education could the sort the with these or newer adding details hoping you Good here? working demand some provide the higher how I do the physicians be Do expect just that you'll Great. lift biopsies tests everyone. clinic rolling of simply Doug, to to some the you liquid accounts. menu you're out to level more of enough with need tests you'll in list

Doug VanOort

and many a morning I of in a actually have and hospitals. of they liquid education do. bit our for a would thanks of lot Alex with product tissue many marketing time more providing typically have much we clients. based; than team the normal In pathologists serve These and say course suite this as clients do liquid-based oncologists of have are experimented tests that are we Good we're tests liquid little education biopsy in liquid we as but not a We with different and versus as our even for with business the the our question. past of because provide tests but community launching case the spent launches quite

doing of fair that. education to us that we're and help that we terrific a there Inivata collaboration with have So a is with amount

Alex Nowak

environment of you little can't diagnosis macro cancer broader than some And defer bit then is on really disease different where Okay. indefinitely. a the here Understood. others just a

is just here aren't difference delta to primary back that's your about people Neo’s when and a go the back that you're so as some levels come will to their screened primary real So care thinking of volume diseases these and getting getting a really is for it then just to pre-COVID and compared screened and the result? going in function volume just driving people getting of if physicians,

Doug VanOort

patients don't Well, immune but have up are don't is surgeries. that pandemic know and cancer believe right that We've this country the is seen about frankly concerned this patients this canceled worried as getting cases we're in, advice visits. or time. many COVID-XX. postponed We're care but you we first there have problem pent physicians you are and there for that their all that are in for and quite throughout demand aren't our that patients and Their where compromised a our patients we of particularly that some systems or that eases their there as been levels clinical and vulnerable cancer to cases they're a will that will to have come that semi-annual delayed the groups that from we have many if have have number volume come oncology sites are trial to again cancer getting physicians and have been experienced. the pre-COVID There back so access either of believe

Alex Nowak

Okay you. understood. Thank

Operator

question Our Puneet Please Leerink. next go SVB ahead. with comes Souda from

Puneet Souda

COVID Yes. Hi. the serve times. doing you're thanks thanks and what to community Thanks obviously with for details for Dough and in these testing the

mid-teens like guide contribution given capacity your we tests core end your organic guide there the to parse go, organic it's recovering the is XX% normal us us Is and of Help expect back the First you've levels you something traditionally the by given much help seems quarter? clinical level have potentially out growth. out delivered XX% number. that third revenue that and of still of just to traditionally it that could a the parse how business of past left can you can recovery you one is but sort tell some XX,XXX in us but here

Doug VanOort

business expect We it you, we that that I that and the of Puneet of first growth for fair we today confidence continues say that we can about said easily revenue have filled parsing at we the provided is feel the but would Thank amount oncology be rate. we XX,XXX core recovering capacity XX% number if in day out able say build demand actually XX% would there Thank a the something I the lot should growth you some demand capacity we to that, we that uncertainty continue is question. that we'll have, for have modest but we if we is per accomplish numbers. is would if a year-over-year fill to as COVID there tests said that in, growth the

we that in confident a growth So of of components about given XX% detail why there's but more lot the that's haven't uncertainty numbers. we the feel

Bill Bonello

XX% the I that in our consisted just reiterate want to script that oncology modest growth organic business. of in did say the we core

about like people in what So I want runaway QX. look growth volume would oncology just, I don't have to the in business expectations core

Puneet Souda

Okay. that clarification. I appreciate

the and sort what provided into the haven't on what serve front, into margin ASP COVID elaborate to the can On gross business? you appreciate and volume to employees margin expect testing maybe overall Is here facilities investments towards you and just during on but of expect that? I the sort Is contribution these COVID driven recovery? largely clinical from but market this we should the times you of and I capabilities the that know

Kathryn McKenzie

Yes.

our lower the based bringing in yes the we margin, on profile based margin the up clinical the way on overall COVID that and than structure the testing. testing cost just the, just is business have normal So testing COVID

lower that testing margin on than be So your historical you expect should that will margin. the clinical

Puneet Souda

maybe collected in biopsy that and of that? we can is time in. Okay. if referring have have the at on expectations increasing there the can for samples there that that's running potentially liquid samples that is as than can are you'll from through into seen biopsy and chime this obviously in and you more coming existing given Thanks. more this to expect still entrant time help across And faster us biopsy growth HLI's significant front into should a over think on liquid NGS and trial contribution growth the we potentially in biopsy and too, quarter you what were this this quarter liquid Just pharma and liquid an your you understand product biopsy you there you with pharma third possible leading grow and the that year seemed liquid number think like assay. biopsy. been line I or obviously if could services, if do Dr. point samples in for that quantify market of then case the could need next that that recovery new the launches year, if And What the ask solid market levels were liquid were the Weiss market those be or is here. happens services could base some for fresh of to the it and the Pharma tumor assay already I'm by that NeoLAB the you

Kathryn McKenzie

over the one, in questions the going to XX biopsy and then turn question. on the with start it HLI mastered officially liquid I'm I'll you've Puneet,

trials. So be consistent the and are clinical breaking we plan showing projects research we the strength That for being more contribution HLI separately assure to we're but will oriented out HLI that the said that say acquisition. to with it's the research HLI announced capabilities not oriented that relative I are going

through talk kind was can induce Doug the little related liquid services the contribution what on biopsy the a do there want you bit? pharma to to So of you HLI.

Doug VanOort

you, to you comment Weiss like should me Dr. to or a would take would about that care Yes. make it? you

Larry Weiss

I Sure, can try.

the the number the in a are of of there liquid is mentioned early this. think offerings you early innings already and biopsy we're day I market but As still in out

with over liquid our Doug? we expect them do little I growth we the not would out to our I in late more guidelines to line roll game. high than too we and a tumor, consensus just our offerings tissue see products think the are next products as we are have solid years. expectations think and biopsy coming two changing of I our for

Doug VanOort

Weiss, that perfect. to Dr. it's anything add can't I

Puneet Souda

All right. you. Great. Thank

Operator

Thank you.

comes question ahead. Please Weinstein next with William Our from Brian Blair. go

Brian Weinstein

Hey questions. guys the thanks for taking

on expect liquid more biopsy. portfolio talk the and for you differentiation about versus to Just expect are talk the other us? really highlight what bit you you a differentiation biopsy how liquid Can some compete in you to kind of on in piggybacking the one how that is last market about little and that of people the that today? Can the

Doug VanOort

Yes Brian. question. for you the Thank

I would comment of is market growing. that the First all

So we the tests they of because as and and very and because I with about and testing for country there's biopsy as our we quality have in are, with and biopsy partner first, many and we oncology lot market many shop compete they're high with hospitals that of we oncologists position a I shop our is one-stop we second, very stages do this growth the penetration pathologists, we've market will for trusted a said have the clients early liquid here. published the to good that. our and with their test we as talked of they people That is opportunity a most a strong a the menu think clients around comprehensive also having, of continue needs on basis use that think, think have use and us will as one-stop believe for a cancer liquid test

is have very thing third liquid biopsy that, that think The our tournament. I good tests

have turnaround we days be even uptake particularly, an for where seven as have COVID-XX, expect we a frankly and they environment be there before. a more and less that time biopsy may the in noted you high think tests quality or than liquid very So to we have

Larry Weiss

liquid tissue have I'd insufficient like results recommend minority our to we add another of a reflex reason to specimens our and that that that can the products. for is easily biopsy

Brian Weinstein

also has curious pandemic perfect there the Yes. your sense. differently. of then environment either All you pops. be just Thank you may anybody far through for you're they those guys an and to some the what presenting you smaller you of right as competitive the your testing out a Curious that's take any seeing for you. of potentially there any responding now have heard services. that how M&A if but competition more you opportunities? broadly act share and caused call impacted Thank about then of Are sort out kind or them mom seeing of of curious it of competitors all as lot be to to I'm taking makes some to large and versus We've from by and we'll businesses opportunity this just

Doug VanOort

would commercial capacity our I a the probably all think the half building for a I'm performed COVID first have mean laboratories tell say start or done COVID daily of fabulous standing of and laboratories testing least industry proud XXX,XXX to I tests from industry, ago. Brian. I at Thanks and there's that, now and particularly right truth. the XXX,XXX think performing of whole those months job four are commercial basis on a I

industry So I'm and they're the what very of proud doing.

think I industry a need, the enormous of this their time this amounts the fulfilling have and in players lot focused to attention of demand.

change. In smaller that and the be change there terms haven't yet expect lot of will competition seen of really a we I frankly

for the Our many industry I over an and naturally pandemic in be is COVID-XX consolidation. this ways more years consolidated that accelerant think may

environment have think to sheet an balance continue be to there couple we Kathryn as I to and consolidator As one. more be we might a fortified for in our a be commented which of purposely ago competition months want know and been we prepared

Brian Weinstein

much. Great. Thank you so

Operator

Steve ahead Unger go question Please comes from with Needham. next Our sir.

Steve Unger

challenging a in job environment. Great Thanks.

is a pharma composition question. how some you on as additional I what That's my the expansion? wondering of bookings; the your color first lines and very bookings question services have on if far then second as service question just and you strong provide sort are of could on and First I'm international doing that

Doug VanOort

Well, very on and I will have we Cardoza the comment George briefly call.

but we all want they of first business will would terrific and to how a a I comment portfolio he further pharma shocked are. So of and I and services, development say products team by continually am surprised have effective terrific

a and broad. fill different signing Europe kinds internationally. lot hired lot in different and very built of up testing Asia capacity review contracts actually So have and labs. There's we a signing yesterday we've and We've just to and And Singapore in of there and that strong. modalities very in of frankly our had lot of is a that a clients our teams both Geneva a those service, are they're hired lot the we I where they're think

part may on as this detail. to you So but want George very more focused expansion we are provide international of

George Cardoza

That's and I in I strength our right. the starting mean informatics there. the certainly to value pharma across our has NGS, think initiative been really Yes. multiomics, Doug board about are really talked teams see certainly the

number lot So was it of that the across modalities. of kind really broad-based a

were by rebound COVID clearly to Our June international and of sort back Geneva be a there. coming our to July labs lab continue similar seen but up impacted They with in we've running. ought and volumes

cap newer December. accredited actually Our Singapore in just lab got is it

So in last mentioned the of China working the PPD sort on for of as there. we're phase and our piece then almost that's puzzle we really still startup plans the hard and is us with

the comes revenue you'll strong back yes extremely quarter really obviously the I see access once side conversion there. think So booking on the and

Steve Unger

some stabilizing just, you've revenue now far sort there's there Thanks guidance in as question is you and per Is the you of the year? see us what some or realize Great. integration that I in of form half genoptics of completed the color and been can the test. provide second variability second as

Kathryn McKenzie

specifically with following most vast definitely to genoptics had of that per the those integration. so We be the now our majority the variability and some claims Yes. going of revenue non-contracted in test around in are network claims

we're them test to as stability really per all some one we're contracted door. out the Going expecting claims forward those billing system have definitely more our and revenue get able in in

Doug VanOort

So to flexibility a Carlsbad on testing. common in move information a system and the Kathryn clients frankly ability some mentioned about which testing our around not to laboratory system that, XX sales be were as caused of billing the our our Kathryn we our months to think a despite work us completed is in genoptics that around to able to network integration creates on tests we now I folks we and also move the common tests we add of have visit as folks would. facility done to redeploy pandemic that or will said all normally able just for lot the I they What have as COVID

did XX and very all in we're months very great integration complete all the team job. good that we we're able So a in pleased to The it. feel about

Steve Unger

likely the a I be mean from this just lowest, And here? we're so is follow-up revenue per test Great. quarter higher the moving to

Kathryn McKenzie

to expect would go going AUP. low it's unusually I Yes. higher. is This an

Steve Unger

it. Got

Kathryn McKenzie

I be and remember the yes door going depending but timing when it on of the you some think about AUP in type revenue that's there's higher going should forward. volatility to continue just to coming be

Steve Unger

appreciate Thanks, it.

Operator

ahead next Please Jacob Stephens. go our from Johnson take We'll question with sir.

Jacob Johnson

and like about taking of you business the of does degree effort customer environment here? what just are suite competitive to on of areas add all then and informatics Hey mean, the about I differentiation thanks or talk services of service this line? questions. it's there the to services, for a differentiation full offerings pharma for Maybe the can clinical kind kind

George Cardoza

one? that like George would you to take

George Cardoza

Yes. Absolutely.

us with clearly right. absolutely common [$XX,XXX very is You're service. It's pharma for start to about It projects. in services $XXX,XXX] –

You have yourself. prove to

the show You into a then good them hopefully multi-million scale clients. them goes turn up have do dollar then over time you a to job you obviously that and

with largest because clinical diagnostics a approval, very clinics to commercialize work value So can very FISH- that serving there fuel front, to we Certainly with smaller we're test proposition compelling becoming have companion oncology but can testing you go uniquely to We us have -- of of clients We growth. on you versus we the certainly we and players. ability work is of is every also We and this cytometry. that with but have ability suite a hospitals the say familiar helping the of that the and you we thousands get the them compelling certainly phases. need NGS that handle the can global nature platform market. full really argument service the very got trials oncology lot in is trial business operations to try we help and their and once you and the share focused, FDA terms can to receive the positioned of needs. up we've for are our immunohistochemistry whether with in have work or try also they're flow We and it's demanding certainly they'll the their we then that's other which is assay

So our is think It's diagnostics it's companion I our our platform. It's exciting. what's certainly happening service. the there informatics and

information year of to starting future are I some think that we a of going unlocking great for from think well really tests is think potential doing some the us well. I to I cancer that have the bode and as a million we harness in

Jacob Johnson

Thanks George on that. with congrats for And maybe backlog strong services. the sticking and pharma

all for XX% revenues backlog you to think three environment over expectations I translate in that years. of at we're the near term? change Does the to expect maybe that typically your in

George Cardoza

near Honestly yes. in term, the

we some think I seen have push trials out.

hard weren't the couple consent in a July We have a to the out seen process. trials typically visitors. they up have It's can't were of set up informed accepting about to lot Certainly site, very in of start have encouraging. which when clinical to train They is travel site. a the QX trial sites talk we go very seeing people to

seen we to that slide easing So bit have seems out. be but things a

still an will and do sort we So going drag time us some we get to return QX but into normalcy of impact in have the short-term on QX. QX to COVID by in be is more this see hopefully QX I and think still there

Jacob Johnson

taking the questions. Got it. for Thanks

Operator

Andrew will We ahead next sir. Please take go with from James. our Cooper Raymond question

Andrew Cooper

Thanks. A asked. lot's been already

in of think adding kind up and here just OpEx those XQ of lines the having through little T&E and of both everybody moving a lot standing just think parts. a us term, perhaps about you think different intentionally bit some longer short about would you flavor and to as inform sort of give if great? anything will moving like changed cost for and for what didn't it liquid keeping about cost then folks we out of less able that's take that, certainly all do just think lines on you and I parts things in but new COVID keep necessarily, us but trainings XQ that biopsy Maybe of there of being some thinking be So those virtual. when how about terms that of Is of terms could to our that you those give you

Kathryn McKenzie

the Thanks for Yes. question.

That of analyst favorability from environment make sure Zoom which our said also home we're keeping that we a work and an cyber measures alternatives. interesting and definitely it the a where as a we've actually and being our going fortifying comes aback see and bit where IT we're and mix in place we're little data and is when a our good be cost, to that have appropriate sure from we're great home. effectively and OpEx on seeing so of are change our Webex that decided from there of to to So in security employees forward and working comes will seeing making and investor that an cost even perspective travel conferences that sure and making it safe operating

offsetting savings see is as to marketing. cost There other OpEx lines those sales so and And well certain and costs the you'll well.

it can we and are need the investing the OpEx. and perspective clear as and it's don't to in OpEx at spend we being term as the strategic not that that's discipline we so are can as if of we very and diligent from continue in back We we a where sure where forefront evaluating going we'll pulling through being are that our short one on keep making of our in urgent we're

Doug VanOort

are to invest there might perfect some and expenses. a build it That's by strategic that we saying areas just continuing are affecting Yes. which are answer I on operating

pharma continuing our in division. to invest in to continuing in marketing the We're are services our team and sales continue We'll we informatics. to invest division. invest clinical example, frankly team For building our in

expense oriented possible. of they're think but growth a be to trying number Kathryn said the are and line operating strategic there we're So that will I as disciplined investments quite as impact as

Andrew Cooper

Great. I will Appreciate there. stop it.

Operator

of Ivy America. Instructions] Our from Please with question ahead. go Ma [Operator Bank next

Ivy Ma

Hi. Good question. morning. taking Thank the you for

that So first on the on you the margins. about. question talked expenses color to appreciate just I tied COVID

profile. lower COVID mentioned has margin also testing You a

on and if the talked gross considerations faster say business on share recovery margin with color the appreciated. any margin saving breakdown test cost you if volumes higher and that about are the there's you EBITDA or wonder the base the impact can both with trends and just combined what's be would us So noticeable I and recovering margin improvements of

Kathryn McKenzie

the you thank for Ivy. question So

to similar think that uncertainty the of like what there's on mix to year. going still discussed back how half I lot in look of a the earlier we is

improvement historical our will comes volume core modest We business to both a are in margins as our which it pharma margin for back. some clinical with similar and that seeing carry clinical

staffed for we we However, volume. had up do that we and pre-COVID employees have have

going expect that slightly we be that pressure to still volumes of and margin is margins. COVID-XX to pre-COVID return the more on stable top than profile there's until would I lower our historical So margin

the couple quarters, be have you're our to of our historical looking expect next when margins continue I over would margins what lower will So than been. that

come going the levels. Over we're those continue to Similar the near expenses the OpEx. on you're impact We're in long can going the that come to be lower with going we term Dough? margin. a EBITDA there we Is you should as see would see volumes through of come add the back in but normalized as to invest margin to more anything back to term try as operating to strategically disciplined

Doug VanOort

thing trying would network as have marketing the testing to of to that that's because and the is and other sales maybe improve as we of the with that. more our couple a COVID-XX COVID-XX COVID-XX add continuing and we say we're operating associated where expenses with we automate testing add. are are don't Yes. I great a nature One are lab, just margins the is that I G&A the maybe we testing to so of Kathryn. process there would, I would experienced get things and

to line. margins business the gross to the COVID gross the fall right in there to are the tend EBITDA margins extent So they down

Ivy Ma

more Any volumes you you how impact healthcare building color. the you. for question more hospital you stimulus capabilities general post-COVID term picture, on we labs oncology and bigger of longer And outsourcing funding see your and going the Do parts Thank plans oncology more envision second into that? do up Thank Great. as other testing so forward? you of maybe system? see in see going more do basically business

Doug VanOort

the for Well, question thanks Ivy.

of of now, is shift kinds a dispersed that testing. I least so right directed and is think money now of fundamental our most at has look really at stimulus so much terms COVID at the see testing or right I other not contemplated oncology I industry as either in been performing don't at the at testing, clients more

to tended they've In some they've with other work extent refer inundated been things fact, to out us. and to

would So sense. I have think the we in positioning advantages before had same continue that and competitive that

Ivy Ma

you Thank much. very Great.

Operator

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

Bruce Jackson

my Two for questions. thanks taking questions on Hi, COVID-XX.

if it First, something for base if could you've get advantage any low got prevalence the areas. with was dollar low samples of from talked about you've like geographic secondly we prevalence amount if Was that? second could labs a $X got customer $X pooling some that quarter? your million, you take that's $X considering wondering have million, then I and areas you're million

Kathryn McKenzie

for the Thanks question. Yes.

weeks came June. COVID So as ramped and mentioned few we in back testing the end of for really up volume last in the before June our of the really

for pooling? quarters, the little but million to quarter will for it’s So minimal it about was fairly the a bit you I talk about $X Doug have

Doug VanOort

in areas is and approach an which Pooling good that there's for is as prevalence been you've seen a Yes. a approving EUA recent low. approach the

of more we COVID-XX then it's increase the that I and in for and the so where positivity a think to of it rate it pull the I digits pooling running know to are not good contemplating that's our pooling and I think this could number at think a where think a population can something us do capability but is other come I makes high rates will So sense certainly I and when in they potentially the level time labs down and capacity approach. exists single that appropriate has been sample positivity testing

Bruce Jackson

I will That's right. Thank All hop very in you back much. helpful. queue.

Operator

ahead. to we Needham. question Unger next go Steve our Please will return with For

Steve Unger

to in Texas, Are consider doing here. testing Georgia. your thought and I I it's great, doing Texas in in you're Hey COVID in California just is testing you COVID would it's in lab could in California, you wanted get sneak Florida, I footprint in clarify not? just it's if

Doug VanOort

amount Carlsbad. it square Steve, to our easier lucky was space space in not We just a the facility. talent California for performing we fair probably XX,XXX were space We've of up to us that had it; the COVID we the we bring had and in Carlsbad feet but are there. devoted testing we it only and had

up for I Fort of Texas Houston, our reasons a more it to facility. Myers or bring those difficult think either in lot it in would be

not we're So right now that. contemplating

Steve Unger

Thank Great. you. it. Got

Operator

the that that's time. have And queue the this questions all we at in

Doug VanOort

Okay. for and very questions much everyone. the Thank all thanks you

Neogenomics Neogenomics team our in Neogenomics we considering team and As thank end country. dedicated the for I On like for committed your our building members us diagnostics company that of we morning, who joining to we are or those investment of behalf you want our the investors our to for in to around listening thank the are performing company. you world time you your world-class an a call this would interest X,XXX COVID-XX testing approximately and oncology recognize for

Operator

participation. and conclude you This your thank for Thank gentlemen. you teleconference. ladies today's We does

your disconnect great at have time may lines and You this a day.

NeoGenomics (NEO) 28 Jul 202020 Q2 Earnings call transcript