NEO - Earnings call transcript Q3 2020

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Operator

Please standby. Good day, ladies and gentlemen. And welcome to your NeoGenomics’ Third Quarter 2020 Earnings Call. All lines have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation.

As a reminder, today’s call is being recorded. time, to my CEO, your this the to Mr. At over floor host Instructions] it pleasure is turn [Operator Chairman and Doug VanOort. is Sir, floor the yours.

Doug VanOort

thank conference call. I’d morning, all Well, NeoGenomics’ and welcome to XXXX to you everyone. Quarter third Melinda, you, like good

Kathryn Division; Doug our our Division; President are of our President Services President George our me Relations. our in Bill from our Informatics Officer; social of language Eidson, Bonello, precautions and Officer; Strategy Charlie Charlie Cardoza, Services standard Development Myers Clinical Fort Joining Manager Chief Brown, our with Financial Corporate forward-looking headquarters distancing place McKenzie, Shovlin, Pharma Rob the of Chief Investor statements. about will and read of Division;

Charlie Eidson

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

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

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

Doug VanOort

by commenting of you, will we Well, thank provide business areas the Charlie. financial including results three level are This results. strategic encouraging Kathryn a and a trends our more then provide quarter some on key of in investment. review core seeing then detailed review will begin I we will high morning market of

XX% in challenging revenue we and some up Services on Following Kathryn’s reported will Doug also Services services both July review, our trajectory COVID make core quarter, to record last as and is business, improved EBITDA as help before form its comments to occurred year-over-year about with capacity other The testing NeoGenomics our of growth revenue shortage will I with high will Pharma despite our segment in V ever worked during comments some George and the for make Cardoza investments questions-and-answers. commentary provide within some our in-depth our closing challenging open quarter year-over-year and quarter. momentum it testing Brown in revenue adjusted the strategy the three to provide added Revenue shaped investments. in oncology and level Revenue growing segments. our from develop the we about clock Oncology oncology In to X% of year revenue XX% in in grew while core quarter, quarter. from encouragingly growth XX% and Clinical quality to our business its year-over-year. last U.S. COVID-XX very highest rebounded million, Clinical and In throughout XX% grew we business as environment. gained $XXX revenue somewhat strongly approximately revenue our quarter same around XX% a basis. August. XX% grew Pharma business oncology rebound sequentially very sequentially the the and significant a XX% we last core quarter which second in reporting compared a PCR

in are by we segment quarter weeks sequential Clinical and oncology we business. business are pleased ended to in the we momentum quarter continue rebound within also our quarter Both throughout clear encouraged While core saw our the three, the and and our the Oncology quarter by continuing stronger. Pharma with much grow momentum X% the nearly over of daily test Oncology In Clinical September. throughout volumes The daily positive to first the up business, volume test as has month improved in volume quarter the test July increased from September. our average of three October, the approximately continued XX%

growing this quarter sequencing product positive next-generation volume. higher approximately testing overall year. growth also October in volume as line volume daily three, continued Next-generation was strong tests Clinical the growth particularly momentum in volumes Test tests XX% has than sequencing with quarter The last than faster for in improved progressed.

a trial revenue XX% the accelerated Next-generation reopened In Services we was nicely by revenue. and sequencing represents revenue our ended. majority our clinical as Pharma currently sites momentum experienced of strengthening, clinical and nearly three trials to resume. activity shift clients the trial Clinical from The division as driven of total quarter quarter in segment clinical begins rebound the

also year segment. of saw something been Services trials, extremely Pharma the and Inter which Informatics-related is start quarter also two. quarter new in we services Pharma remained research-related see in positive trends have clinical strong strong. revenue We did were the not all has

for fact Pharma month on In division. the largest the record was revenue September Services

the China. range from That demand contracts as included throughout Although, exome to quarter year Pharma covering new three geographic continue has services, strong Informatics to to and as sign steady demand this continues work. quarter. the and and sequencing sign new whole U.S. pandemic, revenue future locations we is in These and from we for the Europe to of Singapore strong of contracts remained million business affected by wide Pharma a products our $XX in

quarter Services oncology than revenue. is signed of a XXth, $XXX of growth greater know, of in second high our at representing where of contracts XX% core million, the year-over-year Pharma new As and September Also XX% stood a our backlog row a watermark. this represented

Just this competitively be had we no ago, well-positioned. have and since business, essentially that to Pharma we Services time business five systematically a continually years built

to expect demonstrate to business fourth testing growth for rates greater core and future few The in significant the percentage a investments promising profitability. George of in an add even contribution of our to We represent improved along will capabilities total our segment a growth minutes. business PCR with recent recovery quarter. share oncology oncology this from revenue in COVID-XX core faster significantly some

adjusted despite companies, protections the and and to effect work-from-home significant productivity. profitability on workplace, million many disruption quarter profitable our on In the business. had of we Like extensive Remarkably, in measures other place fact, quarter three and occurred change was EBITDA $XX recovery put most record. an our

our to volumes were days invested our the lands reward XXxX. pandemic very what also the their in oncology good about again of regain and to as open our efforts strength. hiring and people to We keep We darkest now mode decision through retain are hopefully all feel retain our test employees of core

with. and pandemic and challenging quarter we invested During are testing quality, as overall, lab considerable to a of the a quarters sequencing the the that in No resources three to Services, efforts. high up set high next-generation and dealing was But, question, invest pleased Pharma commercialization we operationally are second third all continue we with company’s result capacity COVID-XX performance.

of in by oncology at the three. core not volume are year, at we recovery levels, our the budgeted testing which beginning are we While we encouraged quarter yet

Chief three day are our the with path to I We McKenzie, are towards on discuss Financial of Kathryn over more the confident results. will guidance. financial of growth turn a quarter consistent historical we to some that call every levels details long-term steady our now Officer

Kathryn McKenzie

Doug, morning, you, good and everyone. Thank

Clinical XX% COVID-XX boosted by $XXX, PCR As Doug overall down revenues volumes up testing. year-over-year contribution from and improved highlighted, million. sequentially. month-to-month sequentially revenue Division and X% to Clinical as tests COVID-XX quarter excluding revenue increased X% Division XX% the per Clinical Division year-over-year XX% the increased year-over-year grew and testing X% year-over-year, significantly was test progressed. $XXX

Informatics, travel significantly additional our trade to fixed The a $XX Neo year-over-year to of the X% gross revenue million La full to in recovery on approximately premiums a a reflecting per core year-to-date HLI-Oncology, and $XXX adjusted rebounded contribution of $XXX the per as level and X% strength. consistent Pharma, Clinical this success now reduced record or $XX we record and of X,XXX infrastructure. recovery of at of X% beyond. our revenues and expenses. per of COVID-XX Pharma business is research-related our during X% million continue to marketing and we XXXX as sales to million basis year-over-year XX%, by and increases the in businesses revenue declined front, test test increased nicely PCR of million Our partially long-term revenue returning Clinical like Jolla. strong investments driven Overall, to million. a the costs increased show is of to $XX in in guidance record from on Pharma forward strength and are due test show optimistic by achieved trial were level with we and a refer quarter We Services XX% to EBITDA in both the With continued year sequentially a a which annually. and to QX, largely offset volumes backlog expenses about increased look Operating revenue margins below points $XXX revenue work very $X QX testing. improved acquisition insurance strong

earlier of our the This to in minority funding quarter, million the this the securities, cash Nevada announced we in In Fort construction an and XXX we balance Florida. Turning days. we cash of global million sheet, designated additional investments and in $XX.X that marketable headquarters Nevada. which in year. days and with up to state-of-the-art restricted quarter sequentially investment second shareholder excludes three DSO the our $XXX laboratory $XX million for also to XX new completes our exited Myers, decreased funded

three unusual revenue of quarter. quarter, expected of timing DSOs second experienced reversal the reflect the during the As

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

experienced in remains, over that downstream Doug back given in cases the now the COVID-XX I about and are States recent a have call and months the the to While will we recovery we turn VanOort. trajectory, United abroad, encouraged impact. in and resurgence have for potential recognized potential that uncertainty

Doug VanOort

you, thank Well, Kathryn.

like Now, George to I’d introduce Cardoza.

XX about in for has been Chief Division. the our years Services many As Financial and our you having know, as Pharma as of Officer President leader years last served three senior a of NeoGenomics for George

are that is and For we was some about a have this investments Services strategic we during George X.X quarter first for Pharma than it XXXX and quarter our review excited Services. times opportunities will Pharma higher of revenue the past prospects. perspective, in future in

George Cardoza

platform years recent to investments together with am Services today strategic discuss early the of investment areas have and I our a international we excited made Doug. testing continued our expansion The growth. made opportunity to Pharma to create HLI-Oncology discuss infrastructure. business. our have big us like January for investments, you, in in planned investments in helped additional we differentiated Three Thank of we have acquisition would have our initiatives,

California. in last add our excited alliance work. XXXX up which as invested trials. capabilities month, and to Suzhou, PPD announced support years lab of to RFPs operational global increasing the in few open XXXX opening a our in certain lab in the Greater important our will with we conjunction strong growth recent strategic are was market, purchase acquisition we Europe ability in in despite talent Oncology partnership global this growth to we activity lab global quarters this Along partner range about bookings a to strategy Singapore our investments beautiful and Human us importance sequencing we of China clinical Over to potential opened our the the as have footprint, in with expand broad XXXX. have a with lab international is can’t new Asia-PAC course is horsepower a China been global service of The for whole Asia-Pac would based have Switzerland exome in announced right proving lab you that plans China. our and in strategic fortunate sequencing. including very in pandemic internationally, This also well in is enough Longevity be and to able in earlier to and year. molecular focus critical Jolla, a earlier global has management sales that January technologies, add update of proved China, expand impressive lab Singapore invested to for This and we the post in are the an clinical next-generation bringing to understated trial strategy. with on XXth, to numbers in Division an instrumental participate The slated on trials Greater in one. clinical and the be On built like Human laboratory we of and expansion of Inc. been the the Longevity incredible La identify and completed display we strong the I evidence our

us, a molecular in research clinical attractive tests a of This for fit two, talent and the new purpose and lab talented of to factor sequencing team populations. opportunity to While of the both major was companion and to attractive our reasons. diagnostic One, two And development was solutions is the clients development. platforms customized unique development patient for also Pharma for trials testing acquisition key is add the purchase.

NeoGenomics from platforms by and platforms. Human to with we business company-wide had utilized As integration Longevity this transition infrastructure a any

that this is primary goal team HLI-Oncology been Xst, pleased and are now our to We has met lab. molecular say integrated serving Pharma the as Services on and fully September

of that One capabilities team key the to the sequencing. Neo whole was brought exome Longevity Human

We sponsors. been reach successful capabilities of leveraging with in these our Pharma have broader

clients. solution panels bio development for longer of of panels. a analytic clients in unique select Modern offering smaller exome stronger by and capabilities modifications provide to much Pharma now derived many ask our smaller burden focused than be are from patients interest panels molecular increasing the larger of with no Small our Pharma defined for broader and mutational range whole With molecular Pharma continues sponsors targets. can drug oncology sufficient and what human our groups sequencing for a

genes price showing continues XXX. Pharma’s than exome sequencing whole XX,XXX rather is a a As response just of point to fall, looking increasingly preference at

in team has and Our on team been we contracts working backlog based Jolla their our signed La extremely several have current our on busy from sales work. in proposals

that We La do remain very laboratory NEO Human growth excited we be would calling be which anticipated future the the on and our not margins gross a a for us. are drag acquisition So we we about accelerator very anymore. a this our temporary actually business, is -- actually XXXX, we in for Longevity believe bright will Jolla have

the was dedicated Pharma As growth in reached back have XXXX, business we on prior to discussed Services scale our invest determined anticipated in where of earnings the had with half Pharma our sufficient call, timing appropriate that infrastructure. we a along testing

the margins in the Services off anticipated decision to decouple long-term. we and Clinical, is pressure While due divisions of the project to testing levels service scale, temporary to Pharma on diseconomies should benefit expected pay over both Pharma for and both

While has we playing are we the have position from as in quickly would COVID-XX to to from we benefit pandemic delayed timing continue liked, investment. a margins rebound of as that believe in the our great the out

recent has $XXX million well backlog been bookings quarters new Our never outpaced revenue. higher at in and have

and putting the high pressure on right a out trajectory Overall, the growth that Clinical continue to in to have rapid Pharma in Pharma the that we have a levels process. dedicated believe recent years been made service Division we build investments ones. strategic move our put has Our position us our in infrastructure without

We it’s also that we business been than development. stronger believe therapy are for ever to Pharma oncology environment capitalize is on our a well-positioned robust and

back in over where will accelerate We Services to new have become over turn our also numerous Pharam now projects VanOort. our division growth to help tasks, I Division. instances which from seen Doug Clinical it

Doug VanOort

you, thank Well, George.

and obviously can see Services our excited starting our Pharma are are to investments We about opportunities you payoff.

Brown. Doug to like introduce I’d Now

for joined number of been Relations. Doug advisor he’s for our our of As will adding has Doug become recently areas value Strategy our years a of to lot as process. Investor also Chief a close a many of has of strategic and to some know, responsible other in NeoGenomics investment. and NeoGenomics February you review Officer Doug strategic

Doug Brown

Thank outsider years about morning. as Over you, opportunities as and joining those its external spent good company. company’s many an I and always Prior excited I have the Doug, advisor was the growth. NeoGenomics, in, very strategy years to for an looking to

update I Now invest outsized investment Myers. strategy growth laboratory specific creating the nearly decision including growth growth, President already Informatic to for right our constructed initiatives, and our growth of this priorities. now growing data. testing, ever working to from after our offering more testing to year clients. we the before. oncology like on drive dedication position biopsy these our now a company. of in are on team commercial And investing Fort it used and with areas areas I’d is last liquid VanOort real rewards value Today, for division finding include our a we Informatics our exciting increase a off. discuss for which our in paying be Informatics, Bill The Informatics opportunities being NeoGenomics one most year, focused global the our opportunities data of headquarters existing of to inside to formal of on new with a our in and strategic number development marketing for Nevada in investors. with see is for and team and than are encouraging Bonello, Early leads a and for world and continue strategic relationship Doug efforts our brief Then up research XX our cases wrap professionals here competitive

two hires and we marketing now to our operations business, novel precision hires for Officer Given the led considerable and medicine Marketing cancer experience team our to enhanced Earlier brings who for team, Infomatics, hiring Pharma significantly team. make Chief made this optimism commercial additional product therapies. year new our this plans by we in product launches have capabilities having

initiatives a on plan updating of exciting initiatives. coming marketing we investors and highly strategic been developing view and these number their built have stronger the have team marketing on investment We impact over in a as We quarters. already much

liquid our has tests our While we of suite Initial about steadily are launched early in of believe the adoption innings increase feedback on are over NeoGenomics, we the the and still comprehensive offerings quality this at of high to in excited biopsy year. time. of will encouraging having from we been physicians middle that continue

coordination minimal has and great the on talented our minority of progress monitored continue We about exercising MRD to InVisionFirst-Lung will the at we pan-cancer we monitor progress to Inivata. of been team with uptake the and strong. company’s the and as Inivata or assay, consider promising investment our option partnership Our development the test residual purchase disease feel

In external exploring addition opportunities collaboration our to we our invest in to internal research including partnership with Inivata, own development continue activities. and

technology, We state-of-the-art be are DNA-based will assays. currently for new assay believe RNA-based fusion superior tumors employing which validating a we solid to

We will into for assay. also probes current be fusion using validating neoplasms hematologic, our assays new already built

and submission be soon NGS-based will Our going FDA is initiating validation well active we studies.

NGS-based soon I my very hope these Chief from me aside as one AML. assessing opportunities, NGS-based AML assure active assay we MRD regarding in keeps role a as Finally, an investment well you strategic have inorganic can rapid that I NeoGenomics. opportunities for Officer today, redeveloping growth to outlined at as And Strategy other assay, note areas, for

position I competitive strong of now or company testing assets. strategic buyer Our in it will oncology us the VanOort. on puts industry radar as very sematic the Doug strategic a much the to turn leading back as country partner

Doug VanOort

Doug. Thanks, Okay.

on you completion is which our by along well. Before track and on a We three for to headquarters we prepared want XXXX. global laboratory remarks, quarter update of Myers coming we Fort construction, conclude remain our very

and company. delivering continue progress. lab to Fort facility Myers We triple which to our is potential. in remain our updates the molecular look strategic as footprint are investments believe differentiator to lab will We our a the The what is we growth for providing core and our we current state-of-the-art that how and we just strategy enormous to forward quarterly highlighted committed on see

Charlie Eidson

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

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

Operator

Thank we Nowak And Alex first Group. our go Craig-Hallum you. take [Operator from with Please Instructions] Capital question ahead. the

Alex Nowak

I market morning, everyone. Good broader talk just testing. to Great. Hope in well. for doing you are here a cancer want

Clinical before broader Neo the to only flat broader You in for metrics the business. share of was market, was the were cancer pandemic. the What recovery year-over-year kind taking for Cancer QX pace but also market, the year-over-year of not the

XX% taking closer and is So was think do during pandemic? still this XX%, is that thus you the market the down to somewhat share Neo down proof

Doug VanOort

thank for sorry, lot Alex, and difficult metrics Well, good to you a of gauge that us for out the there. morning question. of kinds different It’s there are

and about Wall various we the in the has think The we of I were what kinds level has data the same what year. suggest that, article you cases morning, Journal last an would know think And been. I in cancer are recovery approaching and was most those Street that been as this there volume about

we demand, are increasing that market taking cases that there growing suggest that that that we and would -- are because share. there’s are the is pent-up still market know Now cancer

therapy lot So and we of and think this we starting and diagnosis our we the patients a monitoring cancer I come in and said, volume, was all see that back for that as are that. to selection delay there cancer and is think reflecting and essential obviously postponement are activity

Alex Nowak

as Neo treatment play company liquid expect and or cancer the is monitoring? mean I in getting by Would this later-stage such a had Okay. early-stage lot screening, parts screening benchmarks. you Thrive, had Illumina, acquired And coming screening Got GRAIL recurrence with acquiring morning CMS a screening to selection Exact biopsy role it. some going liquid out of biopsy moving you tests, with to on you stick then,

George Cardoza

in liquid early to biopsy, It’s into is is activity in biopsy, really Inivata and there really launch tests. Doug interest as very of not in residual hot with for therapy and commitment our our interesting kinds and minimal a testing market of a lot including the and NeoGenomics focused, market. This recent disease But on about, investment time. own a detection, our liquid interest we of biopsy three and I liquid Yeah. move that’s time the we selection, diagnosis at present sweet think, but are will this spot at talked

Alex Nowak

for would just more, expect is and businesses change at in that markets to That’s ahead And equilibrium at molecular testing you market seeing -- thus, market. point COVID how Okay. to helpful. then business molecular one tests point? would down get have come are to your I you going expect some revenue increase QX, the that the antigen in PCR the of some the since you of COVID here

Doug VanOort

Yeah. testing and reduce did us July COVID August, The business somewhat. then and was and for strong revenue it in very

in are marketplace throughout resurgence It’s PCR if greater ACLAs commercial a in we tests. country. are by look benchmarks tests of the the rapid not increasing addition tests now the penetration a what as number that to the COVID think is think, being at major seeing like more much metrics in performed I you labs. rapid of as really offered of I And

capability good very PCR a is So, we COVID, have capability, testing terrific. our time for turnaround for

testing core the very and are if in not business have to oncology. really increases. focused We ability meet we it’s it our But demand

Alex Nowak

much. very you Thank it. Appreciate great. That’s

Operator

go William ahead. Please go Weinstein with Brian we to Blair. Next

Griffin Soriano

Good morning. is This Soriano guys. for Hey, Griffin on Brian.

looking in offering here, were business stronger that services the start us and to to when that question recovery, that you a certain sense to your quick be to volume core than looks others and about a back in the better your release just oncology the there numbers, think V-Shape obviously at anything recovery? offer you give there guys Just you mentioned came note areas a different of

Doug VanOort

was pretty to and based broad recovery October. the progress quarter as continuing and into strengthen and Yeah. is The really really did strengthen ended

in next-generation natural been we over us that the most mentioned grow area has sequencing last kinds three. lot sequencing prepared next-generation the has number products quarters we as and that the of quarter pace in forward. strengthened I our even next-generation expect think for been of remarks. really has a in There sequencing And of outsized at to an continued going would growth

Griffin Soriano

also, And one pent-up a is trials for and sense more the going? bolus more give nice much us that it -- And recovery coming can maybe a that you. of just clinical driven of color How trial here, Thank $XXX is of million how little backlog, Great. a you by makeup back? clinical was a the color demand on Services. of quarter more Pharma

Kathryn McKenzie

Yeah. No...

George Cardoza

patients enrolling If you things are volume the were trial trials at really We to of a existing XX XX, really look mean second lot our we happen. patients that three a saw month. quarter, saw I two shrink. a month, we enrolling two

But unlike of trials time, July first and August sort in we started come the July patients on in for literally continued the into into existing that So first really second and trials quarter, continued we back. the saw few getting September. on and what a

trials maybe a eventually back trial for the mean normal the more demand well to remained of So sign it the Pharma the starting. as new was with through numbers, as existing has finally all this returning sort sponsors us. strong. of I contracts enrollment continue combination to But

are seeing strong. be we demand So the

but I we COVID, access clearly underlying do good think think I there to about issues related the really some demand. were feel

Griffin Soriano

Great. Thank you.

Operator

Next SVB Please line Souda we Puneet go with ahead. Leerink. the of go to

Puneet Souda

question. the for thanks Doug, Hi, Yeah.

liquid your the could expectation the is -- liquid introduced introduced. longer the that therapy and here just that from if NGS and assays term what sort given of walk being improvement AUP first what into if ask you potentially the to -- I of into improvement, for Doug test reach mean, and being on biopsy is for through the pace is NGS, that -- So, sort and where could can that biopsy here what takes puts I of Kathryn? either AUP, on introduced one other and management, test Overall, being what’s or

Kathryn McKenzie

a and lot have comes of when Yeah. AUP. We Thanks growth definitely for opportunity the NGS question, it Puneet. our to for

we we on As as imagine, in coming rates. new tests those Medicare addition continuing the looking payers in market are with reimburse are the to to other you to alternatives benefits, as the per market, are test and as especially well at working Clinical can talk through revenue the

we only pressure, have opportunity X%. there also X% that of that is that as on that not to NGS, an forward continued do pricing some for we but So pressure go

mix, how will pressure with reminder, is we So costs the tests AUP see margins, that the payers, rate, and to are commercial higher we we by in these with and little from broader looking a and were see as opportunities priced also those when margin this are some in now it higher that a could become working bit change we market, encouraged in at our reimbursement coverage and until our team our our a prominent you get the more managed especially perspective, on of very will growth AUP. but care of with efforts continue come

Puneet Souda

for expectation for that the And what potentially? InVisionFirst your get what’s FDA for Solid FDA NeoLAB -- Okay. recently the to as are those receive comments approval? up respective NGS plans as could marketplace two well are there I potentially into FDA panel, received tests -- the can the If approvals too. follow or when also queue And the on your I margin thanks you am assay wondering approval if that multi-gene the with for assays. on in Tumor

Doug VanOort

we some for been been I saying Puneet. the know we on that working the Thanks time FDA have have for question, panel and have. we Yeah. Well,

FDA. with we with conversations we FDA on very have think like have it very, been diligently. a And given now pathway our We working the clear I the feel

And are validating of clear a that think initiate approved of several one think over the we we panel will pathway, now you FDA right it. feel so family and studies tests next validation for good have approved years that NeoGenomics we pretty about perhaps the we see and it’s we initiating FDA

platform existing guess, for have actually NeoLAB our assay that. using we Thermo is don’t I Fisher we are Now because well, it pan-cancer the approved for plans to,

it’s we and other good So we on to are a continuing validate pan-cancer that genes test. panel think

Puneet Souda

Doug, given here. anything and and of now how recovering have your back at months performance on but recovery What’s same if the next at that transpired you Appreciate you the provide Just time, have work a are recovery times and one, couple of of pace the can where and give how forward the a said the just last on been the to of we you things last continue sort to And looking? Okay. emerge look questions of getting can holidays, sense we it. the us Great. we expectation as two the timing overall as of business COVID in into months COVID? can from you number

Doug VanOort

within disrupted what’s that Puneet. encouraged behavior what are the for very environment that, Well, for happening we would the thanks, been because I say has customer still talked be, happening in try are lot to are are we with could volume to our have We seeing, continues is business. workforce. both place we of by our be encouraged put business of transparent what’s in about say, it in we by that disrupted, the precautions would quarter environment the and the somewhat, productivity about chains business four. The and I supply not our be challenging. Pharma kind and Clinical -- trends October what with we But what been

to four strong be quarter in expecting are Pharma. quite We

very a Clinical got backlog trends and the there strong our pretty have in look business. good We

tell of our can from But are So we that that haven’t we because I the reinitiated are in. you remarks environment guidance we think optimistic.

Puneet Souda

Great. Okay.

Okay. Thank you.

Operator

go go line we the Tejas ahead. of Morgan Next Please Stanley. with to Savant

Tejas Savant

trends and you basis October. from resurgence Hey, at can more States improve in share Doug, volume in month-over-month on in or improvement. the Have the infections you Clinical sequential second of color following you are sort week-over-week? on couple we seen grew of and linearity any held seeing the points here noted But also mentioned quarterly guys. that of I sort a up some impact wave know Good essentially weekly a all to potential you here continued have a morning.

Doug VanOort

that had are an quarter look hospital going even have open in are at like our Yeah. this are long difficult our procedures that, But in maybe they and COVID as that in will say that environment not learned we to a clients for with is think the we deal at appears and oncology the the back expect sort a remain think it two. clients I it are at even it. They clients that week-over-week Hey. little it’s it patients, somewhat remains business. a to Actually, this lockdowns and seeing basis. as It’s granular us for about to our and higher, to comment so level day-by-day. of level, we performing hospital we I on which pandemic that handling manageable

we kind has that So I trends seeing, been the to see and Tejas, that of the we we strong. are that I recently experiencing same been optimistic trends continue growth have October said, we are going think as to and relatively are

Tejas Savant

And pipeline on biopsy then the one Got liquid here. it.

MRD RaDaR -- in plans sort to terms of you the that movement you seen the Palmetto. timelines sort in In from terms assay consider in of them of it just light of bring to to line draft the have in for market, Inivata’s and accelerate of with place here of of LCD would some working

time a guess have on be by you of sort peers couple market I U.S. will the guys who to RaDaR to of bring the plan the You

are accelerate to So you can levers any there path? pull that there

Doug VanOort

collaborative Well, we relationship very their serve a on have Inivata. good We Board. with

interest. a minority have We

we to lot talk how that, well working the As a as progress test you InVisionFirst-Lung very and on penetration very, both know, together and accelerate are our that well MRD. as of teams and

Inivata. Now, minimal we disease are product excited very at residual about the

that with number our that the by working laboratory different working are that of with includes in through mentioned. Jolla way we La of ways. Neo them are whole a process, we exome George Part sequencing them -- We

as are for happen. to going in to working a assume we patients we and make We hard together for be accelerating product yeah, interested us, we it much that a it’s all in terrific terrific and can MRD. very can are product So, you validation as think work

Tejas Savant

Got least monetizing your your it. around Fair us can just enough. structure monetizing you and there customers of can sort you walk And then, business? for one add? among But for final of to one sort offering, excitement for on seems what Informatics plans your there scaling here you obviously, for, are headcount be Bill. through us that Can walk the Pharma through a around plans Informatics lot like prospects at the perhaps formalizing that of

Bill Bonello

the Sure. very much, Thank you for question. Tejas,

be trials, both we site were and active sciences trends a certain front. is might purposes activities. market already generating support annotated are we do therapeutics out small. are think of patients business. of or are size We today that engagements interest an to clinical from activities. research commercial is significant as those Today in imaging life to haven’t projects which for related span projects we do fact our an number different the utilizing selection but done commercial terms though or well. and basic also opportunity of Those we diagnostic on with likely in digital that companies year have we a So revenue breadth expectations in in training have There Clinical on To-date, There terms support, with working projects in other exceeded is that or images are in lot recruitment companies relatively one identifying for to revenue the helping significantly the figure where backlog. other research, our supporting opportunity from

interacting future portals in of those would probably XXXX there we have how with of with number stakeholder to of signed at working backlog stakeholders that on. will launch contracts you of will take facing around be a our back healthy and by kinds some Informatics. so activities. course look and places the are the are can I that to do we you more saying, and color should a we actually end We those things So over more we we are on quarter come a specifics

Tejas Savant

the Got it. time morning. this Thanks. Appreciate

Operator

next Our go David comment line Please ahead. of with Westenberg or comes from question Securities. the Guggenheim

David Westenberg

you a Thank the point, regionally so percentage, maybe belabor versus want recovery practice? different Hi. you taking to academic to is for of it I questions of to then NeoGenomics? I getting if in maybe that, those the us in give in maybe volume terms in talk terms ask way. macro the private to for markets Can don’t color recovery I percentage am kind and just but there about versus wanted of exposure on end any question. community Or differences some

Doug VanOort

Yeah.

color are add to We that to going some try one, ask Rob to to David.

Rob Shovlin

Yeah.

we you have differences others and across more access that to easier seems have were which then recently. geographical those Oncology started to were have have into of little to the and tighter bit that and And geographies is because loosened to is, reopen cycles. slower the from pathology the to and faster and an What what were of where around seen meetings. recently. groups we you obviously, as a country a give into consolidated a hospital But think room. away access a more suite some I bit that little to seems we remained have waiting for markets get pathology new a more little in look patients have seen you seen are hospitals seen there of concentration significant the as salespeople patients and open on have practices be slower markets are more that open more start to more up have team easier access the sales to our point to have that

we there are seeing three access more we through into good with So October. some and momentum quarter more as went

David Westenberg

Are there, the any Thanks a pipeline, hit change in of have you $XXX then, of very million. at guys sure with they terms am more are they accessing maybe too, were are and -- probably getting for difficulty Great. well-capitalized more are they are I Brown, capital terms And seeing you regional liquidity or labs? concerns I deal terms dynamics maybe question there volume in mean color. I the in having small Doug just for of

dynamics, my in that’s Thank kind of you. should any and we think last about those one. changes Just

Doug Brown

but Yeah. statistically to think do anecdotally I it’s have you, anything don’t that reasonable a we and I tell point. hear

regional really We acquisitions. on tuck-in some these of are focused not sort of small

share taking labs. are perhaps Informatics. Pharma spending for of we time and do these some But We we are think more smaller in

Operator

to Next the line Jacob Please ahead. go Johnson with we of go Stephens.

Jacob Johnson

give both Services update companion there. think Hey. right you represents these Pharma on a in companion having Services? diagnostics and and Clinical a efforts in you us on are Pharma synergy the of picture I Services, many a how an bigger key Thanks. Maybe Can on working now maybe just maybe question strategy diagnostics

Doug VanOort

Sure.

it lead me Let this. about off comments I have and and each think, George maybe Rob then,

pipeline companion diagnostic So in of we Pharma terrific have projects. a Services,

list keeps I think and that we XX working growing. on are different it’s the like something projects

lot have We of a interest in that.

in We to can Services the the once help because have up Pharma is flip and also relatively the ability also getting running. have because and regulatory division is commercialize Clinical approved we assay and Companion we in the therapy to test the are agency it the interested, rapidly, therapy program, with by our now but only because we not over help that

add? to trend In have diagnostics really a fact, today programs, sponsored of number for companion that of will we we are continue. testing some think that George, which and anything

George Cardoza

yesterday the diagnostics. Yeah. of No. We in it’s and companion mean from remarkable call I are had amount team our sales our pipeline again and opportunities

And if too want we great us. is of this want NeoGenomics even working if work for run, an with if to lags, the them, out go they while on so partner, has of Pharma can, can to are part the the to we oncology sort Our short work sponsors and can PMA, with the they they to FDA an sort really wanting optionality we IVD share LDT go FDA a single-site approval, create in in they approval with of approval.

with us the the demand benefits strong. the think I Pharma So these working is extremely are of for definitely realizing and

Rob Shovlin

our programs the seen pathologists. oncologists Pharma us I do we real some for channel and to it’s to competitive then previous advantage access have our and clinically Yeah. projects the and Services a sponsored development able testing and through offer to work think with And on be success it side

Jacob Johnson

I I it. Got billing then But Clinical amount an Genoptix, you are in on pandemic been your Services of have have area a the focused Clinical integrated that focus admittedly for areas that time. of and on And is there Services anything always midst operational think you but side, Thanks a disproportionate recently any is COVID-XX in the else? all collecting color. of imagine up after taking maybe

Doug VanOort

focus lab, Well, we -- NeoGenomics I COVID we that, despite us that very, that’s busy. in been they basis have we our on have, focused a supply oncology think have which that very the going did the this have service can a see on focused even kind have we But demand yeah, to we of our getting that. don’t and primary past for I capability in position offer, the we back though and that team been because on whole that allow take our would and to up and and possibly think forward we busy best I market a that, in very currently. is it’s a areas, lot we disruption really continue which of say differentiate line think going chains we to a testing are can share in other setting very in is has team terrific to I as

Jacob Johnson

Doug. Thanks, Right.

Operator

we the Please Ma Bank Next Ivy ahead. of go of America. to with line go

Ivy Ma

question. follow this the little understand the on to for taking you morning. up recovery to Thank I V-Shape Good wanted Hi. a better.

Could for future help uncertainties then So expectations and impact about COVID volume a seems base a the recovery repeated these when your you. we think for on unemployment business, rates Thank about your trend? foreseeable around base you think going what’s be how would rate potential to us while. the

Doug VanOort

and that they many issue. really we uncertainty. issue, There country. as are a because general business, trends, disruption we want our see the Clinical cases, Well, in COVID had reduced a at and despite hospitals have though in we be for anymore. to out recently business also strong that resurgence of every to hours some continues really almost access, levels this George is Pharma it’s Clinical in that What say and our don’t are at doesn’t we some our seem seeing really continuing have sort resurgence well-publicized Clinical access been trends physician is kind example, know even the unemployment in affecting and seem our didn’t an this would of we our Unemployment thing. doesn’t very, is -- had oncology and business practices that very that, business. it in to that throughout are said, in but been a I or that of that Pharma, to see it’s are be recovering. In The been either. venture day-by-day watching factor is seeing But basis business business we sort patients obviously is the their an current there on

Ivy Ma

very That’s on And Great. testing. one helpful. then second COVID

and earlier that. follow-up wanted turnaround terrific mentioned to on You I

so repricing is So rate update rate, given if turnaround which your rate rent, there just contracted I am on in recent days, XXXX would quicker to quarters, two of CMS’ wondering average trending rate depends or one time any course, you the is way for appreciate color couple you. the if or if on visibility? Thank have any of and next any other, test of utilization the

Doug VanOort

mean, maybe I say, couple a that would of one. Well, I things on

laboratory for $XX testing of is First within that around reimbursement. requiring well regularly CMS this COVID timeframe our all, extra tests the turns

-- not at oncology. testing with business that’s COVID we our just primary not is that issue is primary an mention our I So and all. would us business

capability. have We the

seeing enough right now needs testing and other testing serving lot are an of are COVID America a the today. for we seems laboratory our But not overflow there in capacity it. laboratories demand the for so we have that to be if for capacity system, We really as

that’s Now that situation. but may change the

Ivy Ma

very your helpful. Appreciate time. That’s Great.

Doug VanOort

you, Ivy. Thank

Operator

the go of go Next with ahead. Unger Steve line to Please we Needham.

Steve Unger

is reimbursement new in payer contracts is contract new this you environment agreements? Doug, regarding XXXX, And challenging relationships then, gain Thanks. anything highlight into it or changes or heading there or Hi. want to pricing? to customer

Doug VanOort

say, was first have reimbursement, question. think, Kathryn did see said, And should thanks we we dynamics mix to than other really have of mean, priced of are I the Well, that long-term might in that XXXX. what I other here, next-generation about got for assays I already affecting where Puneet One guidance we higher asked discussed that don’t have all, would we that. sequencing these AUP, of earlier Steve, on the anything of it. X% got affecting you we X% but -- expect impact a our decline in variety

better I of think, have We and the doing, And impacts frankly. also. collecting for that dynamic another do a AUP got work we are that that job we that’s

So number in but I don’t a there, that -- no surprises for AUP. any of would we point anything think there’s that to currents cross XXXX

gaining of second about access question terms said, your oncology some our customers, somewhat of constrained Rob sales from In customers to some in of the our is practices. still people

have people shows gaining our going about and recently, to to up loosened gotten pretty actually without trade without them. that’s customers darn visiting be good Although,

into they think can’t So have, is maybe of competitors get mean I are other wallet it from although either. it customers still not bit are will what and the customers share that new been, have customers and acquisition gaining we our customer same has gaining be also I activity what a new a the of because problem, we the we

So cases, relationship in the some and like biopsy. we with got that things already liquid us even helps

we present time. where at that’s So the are

Kathryn McKenzie

having it’s we and The and very thinking be only we in how proactive for virtual Brown Doug going customers trade think about and to retention we is, thing are to a we to client this I’d we forefront sure lot going of the that really rethink and creative of bit. and way marketing everyone’s a forward acquisition marketing in with a are I shows and make ourselves in different way strategic positioning what that add like at do the environment forward marketing there looks sure are interact making we investing being our are how and client going mentioned, playbook because are this and

Steve Unger

revenue gross gross stream? that super as That’s margin just especially helpful. revenue the the lastly margins there, on higher And goal it. or a guess business, in margins Pharma the is assume Pharma far higher Services, that’s the considering progress gross then a Got for I implications Informatics what great Understood. of Services, I as

George Cardoza

clearly We had capacity. Yeah.

even sites laboratory we a said would in La to aren’t have large laboratory our capacity backlog. exciting our a though be a of because XXXX, capacity us fully Human That’s we on margins that drag Some is in Jolla for that though yet, international either. up Longevity

expecting even the certainly, saw will margin in you the So, in rebound you see third we certainly and fourth quarter are to progress more that hopefully and quarter.

point get are Clinical that said where and if division. so we large. We that up long-term to capacity. where can again, we we separate just fill certainly to now own our anticipating we But expect XX% around the So, We projects our had build have margin still from the them was our infrastructure. were our to right had grew to Clinical we

So but into run, that our certainly, we margins the we expect have. depressed capacity grow short in to the

Doug VanOort

we ought And in you come are right, Informatics at to go forward. gross margins as higher

So margins areas. those in improved looking are we forward to

Steve Unger

Great. Okay. you Thank very much.

Doug VanOort

Okay.

Operator

line the Andrew to go Cooper of we Next James. Raymond with

Andrew Cooper

sort in me drill about and kind you were the to us to my exited sneaking If core a doing of volumes I in double-digit it, maybe kind for what think as on math been X% type But dramatically late higher little with they change because don’t lot’s it will trajectory. here, quick asked. October of a of I in COVID. Thanks keep back X% should a am month-over-month, quarter, get bit just more guys. right growth

outside then that range a that’s maybe we as hardest I and of part be about coming places lot testing oncology, back. me look of utilization confirm to last folks just think But that XX%, know leg So of and about, not kind other in outside in talking seems XX% at of ways. are the help that

what on through we fourth great. XXXX like any be continue what thoughts it the look as just and quarter would takes So or that might

Doug VanOort

Sure.

you and mentioned crack are try that, improving, question, correct. our that. take at me Let stats say a would are no the that volumes I

there Now our some in seasonality is business.

So September. on higher rate October a a is typically daily than bit

of consideration have too. will But double-digit that hope to that into moving move firmly that are So certainly growth and into take the we we range. more you into range that

we terms pre-COVID back of volume We levels what yet not in to are expected. test

budgeted, So kind would that are we in long-term of are a in when when to yet and level, volume to we XX% growth guidance XX% our the the but not at moving we year, expect direction. range early be gave we we in that Clinical

Andrew Cooper

when of then, margins on core just one, maybe segment. Testing like And much maybe hey, think you last that helpful. things sort piece and about, procedural and moving of help other parts volume How much [Audio the think Services you we in might be Can as of deconsolidation versus Okay. the obviously, is back That’s about Gap] we Pharma impact of drilling mix got of that one just out that. and kind from how in of the Clinical overhead some some sort mix us versus,

Operator

please Speakers, ahead. go

Doug VanOort

lost the so are we call, Well, rejoining, sorry. we

Operator

go Mr. ahead, put I the you and back queue in could could so you Mr. could Cooper, if Cooper. question. re-signal, finish you please your Please

Andrew Cooper

the more much how of help Yeah. think just in look I about us core Services the should -- Pharma a we think versus have mix obviously Testing the was what’s and kind already and decoupling talked trajectory, the about? forward, how pricing out is that about the you when of the operational we separating Clinical headwind of of at asking components understanding just Services sort kind margin we gross piece Clinical business, could in headwinds in about nature if going

Kathryn McKenzie

Yeah.

that efficiency some last to decoupled. seeing expecting margin short-term. some go as fully XXXX, we But the you of the impact as think we was I into forward. the we expect would So that of have quarters couple forward indicative that over has gain going that you Clearly, are seen are we pretty what that in are able

at QX our from looking over was there. by really QX improvement of the but XXXX, because impacted se, QX and QX I more back indicative not pandemic, you was expectations if short-term and to XXXX look So of definitely per think

Andrew Cooper

Great.

Doug VanOort

Okay. think, Operator, wrap it up. to we going I are

Operator

Okay.

return will finishing, We VanOort to comments. Mr. for me, excuse for final

Doug VanOort

program. you. to joining of you listening their to an team investment of oncology world And are our in want for company. right. NeoGenomics we a the you considering whole that you in time for those team, investors to and or morning Thank our the thank All behalf approximately for your our I this us members X,XXX your NeoGenomics, company thank dedication I’d for world-class recognize like on around diagnostics and building commitment the to interest and Good-bye.

Operator

you teleconference. lines you for time. We Thank you. today’s This a and your at disconnect does participation great this day. may conclude Have thank your

NeoGenomics (NEO) 27 Oct 202020 Q3 Earnings call transcript