NEO - Earnings call transcript Q3 2024

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Operator

Welcome to the NeoGenomics Third Quarter 2024 Financial Results Conference Call and Webcast. [Operator Instructions] Please note, this conference is being recorded, and an audio replay will be available on the company's website.

I will now hand the call over to Kendra Sweeney, Vice President of Investor Relations.

You may begin.

Kendra Sweeney

Thank you, Jenny. welcome NeoGenomics and Financial Quarter everyone, Call. Results morning, to Third the XXXX Good to results discuss Chief today me With the Jeff Chief Executive are Sherman, Financial Officer. Officer; Smith, Chris

for Head the Montgomery, Medical; team Commercial of Head Melody Operations Andrew of of Chief of and Transformation. and Harris, Warren Officer; Lukowiak, members Additional Chief Officer; are available Innovation Strategy Stone, Q&A, and management Chief President Informatics; Saad, Officer Kareem including Dr. Nate

is being simultaneously call This webcast.

a to the referring We presentation our that at to be will posted been slide Investors website has on tab ir.neogenomics.com.

Starting on Slide X.

other events we and forward-looking factors results We on reflect X-K Please materially. results this forward-looking update may forward-looking During only XX-Q will any this SEC our could future we risks such revise best that this anticipated call of our regarding the currently performance. known cause to as the obligation no undertake call, recent statements. from differ you statements and factors or of materially or speak that Forms to make of actual and XX-K, original our actual statements. made these refer we differ during date statements to based our most with important identify call, us, statements judgment the filed to The caution to that and

measures morning. are directly an GAAP issued non-GAAP During and this this considered comparable by press call, the required The to non-GAAP results. available that to measures unlikely measures measures financial we Any reconciled financial financial comparable in should referenced are the adjustments this non-GAAP in be table call provided by we the refer non-GAAP be alternative to financial involve to to to a presented release not most financial GAAP measures GAAP, measures financial companies. on other

of I to turn Smith, will NeoGenomics. Chief Executive call the Chris now Officer over

Christopher Smith

third growth. quarter everyone, the in On discuss update an highlights performance today. strong on morning, profitable today's you and for progress and the Good sustainable of Kendra. we'll call, our provide Thanks, thank made joining us accelerating

their financial and resilience acknowledge the do for Before incredible continued headquarters to to up I'm especially teammates the patients has which Hurricane including while our It's in stepped Helene the our shown were the a our discuss one Carolina vision. of I Myers, labs and storm's our culture our to commitment take impacts was our in want increased an to Fort we following that our results, patients, ensure city communities testament employees North to grateful shelter. Florida, our covered of disruption and our and to neo throughout workload in Milton. a path the moment for minimal there mission Neo country and seeking

So thanks to of teammates. all our

work. special to I such what believe Neo makes are a place our people

business position labs the On oncology the niche sets side, companies and reference between is apart. what large our us

Our information in our from stems testing a community providers to mission the be oncology setting. value cancer patients partner proposition to serving comprehensive and

has level patients large the enabling leading center metropolitan America and the foreseeable of in cancer setting, democratization same trend we for in given convenience, NCI-designated in and to cancer to likely traditionally Approximately future seen all level patients to precision patients in of oncology the are access that XX% and to information of the as can access cancer is have effectiveness a believe be care NeoGenomics personalization in the believe testing setting. cancer to patient an cost that is that We rural community delivered persist setting. a of

layers. platform of our comprises directed investment continue is This has build vast and NeoGenomics translation will being today. the industry-leading where a X community which to oncology platform, is majority

across heme internally generalists. First, to the deliver are solution with comprehensive tumor sourced a community and solid versatility developed portfolio, and the flexibility and oncology products indications an the experience customer industry-leading fit and player that with for externally

all efficiencies automated operational increasingly and where footprint test balanced turnaround cost-effective providers. capability an geographical drives our Second, production delivers mobilities, to and and best-in-class solutions across patients times

interoperability integrated, data associated allows seamless that a clinical finally, customers. reports and to user-friendly deliver us and our layer insights And to

Combined, building platform information testing continue to oncology leading blocks believe Neo are competitive to what these we X community comprehensive lead of cancer our sustainable the for differentiation and translation as partner.

the into the on QX get highlights let's next slide. Now

and We volume the double-digit grew was -- the clinical third as was volume the representing year, and QX execute a quarter NGS continues quarter XX% last This year-over-year to revenues. of fourth our which year, revenues QX, actually quarter revenues XX% grew continue X% deliver our our goal and growth. to per and XX% this revenue in compared clinical increasing QX strongest result, excuse with I on revenue grew me, volumes X%. of of to to In last test total quarter and excuse a To was by record XXXX, growth, me, business growth. -- we test mean, total of XX% total driver revenue. by and for XX% achieve key growth top be on

We EBITDA are adjusted by making of from also year, quarters proud X that that or EBITDA. XXX% prior positive $XX we've million consecutive improved adjusted

Sales patients made experience, quarters. commercial and last on more focus seeing the in efforts, are single effectiveness the of serve few sales customer us which quarter of a in investments We the business than benefits a our before. increasing the automation to has with enabled our team force, we are ever support that over

business. last our Day on delivering has optimization Investor our set Since long-term been to core our focus growth, of sustainable this year, commercial achieving

on our business digital mix strength NGS. strategy, clinical by execute connectivity by the driven enhanced customer continues of our and commercial increased success growth, volume of deliver improved AUP, Our strategy to to

of our believe organic significant faster growth of team overall XX%, driven larger the revenue execute. modalities industry and adoption drove of with review especially across NeoGenomics of market improved our based wins, quarter panels. third on account growth NGS Growth robust in grew than by test continue volume is the lab the our competitive to mix and ops data. We the all across portfolio commercial as

invest we drive on As hospital our discussed rate quarterly taking last wins. as highest team retention key incremental is and we share. in commercial to our market volumes our quarter several to had capture continue experience This hold we and will call,

community the we drive in oncology, are market new exciting penetration commercial further time tests new joining in to coming To our very expanding into a as launch are we resources. for These Neo months. teammates look

rapid enhances October, leader to begin exceptional our when Xx heme. market Neo AML to in the test. a AML patients combined help our treatment position than with as AML diagnosed AML Express, up we their previous In test with launched Express, our customer experience, faster

approval value York gained Neo patient access conditional testing. also cost than single-gene tests, State NGS We better diagnostic broadens This Comprehensive approval in delivering effectiveness and our New for Solid Tumor. to

menu coverage in of denials to paid both scratching will having expand only we're reducing commercial to initiatives, surface penetrate continue expanded to success continuing potential accounts commercial that getting organization, comprehensive an and are oncology We testing with customers, of solutions. and we the of our we Through for ensure more and RCM existing do. we frequency work are with the and new reach

results. priority. waiting is We important while test make factor patient our growing for today know the difference business commercial the keeping top most The as in can the

QX lab So with in quarter, XX% time. time to compared improved a increase to XXXX, on premium test significant by of turnaround we I pleased turnaround am say put even our volumes. that this

patient and focus platform digital from a ], launch education. decision customer future order XXXX, patients that an on end-to-end Neo early physicians and With satisfaction Helix will [ for our supports an we intuitive customers. in Neo results, exceptional guideline-driven is to provides experience Helix support

to data. sustainable Slide talk Utilizing to technologies the Turning of on innovation. our opportunities executing about let's and a We industry future with the us growth we current look resources and growth. right for positions turbocharger believe innovation well X, is long-term for new as and the

market brought several care. last improve AML and patient In our new mentioned to to the we XX Express available upgraded just newly test. I products months,

launch clinical in liquid PanTracer patients. testing test QX, will and pharma of clinical selection test, comprehensive NEO in a complementing biopsy tumor in biopsy commercially setting, liquid half next first advanced-stage for traditional for therapy year. liquid the highly in a PanTracer, test CGP sensitive commercially the In and solid biopsy will launched the be business tissue

innovation, industry, and Andrew diagnostic I'm joined to nearly Neo pleased our that wealth With share the Lukowiak a the Innovation processes in products our has Chief Andrew market. experience accelerate innovative clinical Officer. strategic experience brings introduce as specializing programs further XX developing To regulated of to years of in to

R&D new our of Office cutting-edge integration driving and ensuring Innovation, technologies. As of continuous will new advancement while CIO, lead Andrew

quarter. the are of XXX on sustainable, efforts, Finally, initiatives investments, and gross growth. technology including profitable automation, efficiencies drove staffing deliver a of points to basis Through improvement executing margin expansion in we we combination margin

successfully Earlier In plans new LIMS we through upgrade system. the this management lab cases information year, this XXX,XXX we quarter shared improve over launched the and to and new module, our system. in first our have accessioned QX,

version being new compendium is of a multiyear process, LIMS represent to launched The has significant progress. and these one now system and is populated. Additionally, test the one single migration milestones

perspective, we the focus our we ongoing had injunction we in September, a on X.X. a a of agreed negotiated we on X.X in permanent From which as efforts, to the RaDaR Natera, with legal that litigation settlement RaDaR announced development to relating resources

stage disruption the carve-out RaDaR utilizing this X.X now of validation in preliminary already no place, the first XXXX. to feasibility of development, CLIA injunction is technology. expected and is half progressing through and to there in the through is remain Importantly, so the patients clear

to opportunities benefit and litigation enhance the bring our as new MRD develop as can patients well in-licensing Beyond our efforts for innovation pathway, we optionality arrangements to MRD to testing. assays strategic partnership to who bolster drive evaluate from and continue

and As to supporting are the the to from diagnosis we monitoring. being in we their committed throughout in MRD past, stated patients cancer journey market

let go to now it Jeff me financial over to through And results. hand the

Jeffrey Sherman

volume per to double-digit ongoing continue performance Thanks, higher to QX the of detail and Chris. our delivered the to another yet over of initiatives a strong million. growth, on shift XX% test with increasing to revenue due results prior operating improvements I'll test We revenue value tests a The more overall quarter. little revenue with RCM growth, quarter year the combination in start growth. drive $XXX clinical in for

improvement Adjusted XXX of up points $XX improved million, to basis gross by $XX million positive margins gross to an profit year Adjusted XX.X%. adjusted XXX% prior $XX from improved to million. was and EBITDA XX%

fifth As QX consecutive of adjusted positive quarter our said, was EBITDA. Chris

reimbursement revenue million to increase general travel. of year. X% summer due Volume by an a increase Services revenue XX% NGS price over is historically was tests testing and noteworthy, as volume fewer quarter, and service been interactions in in reflects increase weaker unit QX $XXX clinical a of an prior growth higher-value The average increase Clinical and has impacted initiatives. seasonally strategic provider more especially patient in

effect deeper into which growth. we are it penetrates force NGS fuel of in continue face and year, is demand Neo and higher adoption sales tests driving growth increased the community our myeloid NGS earnings. As testing, tough Despite the growth we the testing double-digit insights still in annualization of Comprehensive strong oncology which for experienced large expanded NGS our Tumor to revenue were setting, last seeing volume comps. introduced provides disorder the and of panel The

per We remain revenue contributors NGS up these including in delivered the pricing, initiatives, to the XXth improved $XXX. year over and improvements. consecutive X% testing prior quarter improvement RCM of biggest to test,

in in with pharma we announced quarter be the leadership. expected we revenue We call primarily a million. driven and on organization, RaDaR by similar that year over declining bringing services commercial lower expectations, prior QX year, and this first revenue of performance. The Warren's by year ADx to noted international our range X.X activities line revenue. were our this QX of to our site XX% our $XX Earlier decline QX under in results restructuring to QX restructuring was closures, with

and However, adjusted and of by points of expanded as growth prior led work over to year profit gross margins our a gross result XXX operations. basis standardization X% prioritization of consolidation efforts of adjusted

We expect ADx revenue fourth to begin the quarter. to accelerate in

continue we data larger looking NGS will panel expansion of research our are be produce business and a of We our tests future of also and teams business, success to the informatics pharma driver information that for. more as see

developing the monetization are comprehensive further our We opportunity data plan assets. of a to expand

XX. generating operating growth Adjusted margins. adjusted increased Looking year at our by revenue leverage, and Slide profit third XX% over a of overview quarter on as gross gross higher and result profit prior financial

for $XX sales million. expenses, million, R&D and million IP due $XX and increase prior expense payment legal year increase was G&A million a operating was was to $X was $X primarily Regarding an over G&A and expense expense professional marketing including settlement litigation. The fees, in in

marketable securities operations with QX result and flow million, third results. from expenditures. $XX last million was with $XXX from second We capital $X quarter of positive of the even million, operating ended of as year quarter the an a cash improvement Cash of flat improved with increased

of with XXXX now on current May notes are our convertible Our liabilities as the sheet. presented balance $XXX principal balance million

Given cash use securities the marketable to and plan in maintain our cash May. strong we XXXX our and position liquidity our profile, notes to existing retire

Let's our move guidance. to on revised

X to through $XX disciplined Given first adjusted guidance to and million, million our the The quarters to from $XX $XX the adjusted million our increase million. our up strong business, our in guide. performance approach operating are the to of we was of previous a position again EBITDA EBITDA guide $XX year initial

original year the and $XX guidance to the to over $XX We growth guidance midpoint. over improvement last X,XXX% of at XX% representing million, are revising from versus an further million our range

strong earnings when XXXX results provide long-term revenue year. revenue growth in of in updated our consistent year-to-date February plan XXXX Given report full to and growth target our and is next XXXX, an and year in we

And with that, to I'll hand to Chris up. wrap it back

Christopher Smith

Thanks, to expand performance sustain our Jeff. months. and in that PanTracer proud portfolio delivers strong our our We great further marketplace I'm been position of to quarter, plan the of type launch so with teammates It's in results. coming Neo the working biopsy to for liquid of the hard these strengthen a

patients to Our single broad customer menu a have and ever serve enabled in experience us more quarter. than

execute business continue on leverage In to as operating we on addition, priorities. our gain we the

of our the approach XXXX. final confident quarter to in are We

let it hand So to back over questions. Jenny for me now

Operator

[Operator William question is of Brackmann first Andrew Instructions] Blair. from Your coming

Andrew Brackmann

wanted to the here. I evolution on ask profitability

nice strides making some You're on margins. expanding

few incremental been think I last margin has growth the on the revenue quarters. about averaging XX%

a to we expanding thinking guess, it while into you balancing want bit moving be QX, on does also also And investment I of forward? that point I in should a little imply So growth margins. about how continued decline opportunities,

So it. appreciate I guess just I any thoughts there?

Christopher Smith

lot some of But And through time I'll it just couple I look, Ops, Andrew. a strategically, on doing Thanks, think take opportunity expand team I to big of let the and of was focus look, turnaround margin. Yes. first think while years, Melody the I Jeff that. the on gross a had financials. think the we improving

We beginning to new are LIMS and like just play. bring system our things now to automation

confident very we can So we continue that do to feel that.

priorities. balancing about it's think I

to opportunities and think can the that a look leadership the team, where think with I frothy we So be as what we, market, at in provide continues basically opportunity we market the we those services.

at invest So but accelerate like in so margins line. new can we in we have places bottom making to products and sure same time, driving gross the the we're that in sales, expansion

strategy to the So drop-through? to you But maybe, I think do that want color more working. Jeff, is give

Jeffrey Sherman

Yes.

as think to good we're EBITDA I we should continued continue point very line, expect I to conversion that to favorability out, have have and revenue our forward. net we Andrew, adjusted progress going

and expansion in liquid We're QX those driver a some product well. our we sales continued of making, force are The As will talk some as will QX. in investments be well. investments the as this about investing in year in we did progressed, of the biopsy development occur

impact So I think those of some QX the will numbers.

and you I continuing [indiscernible] as opportunities, at to line opportunities leverage driving of year-to-date, RCM and overall, opportunities the think had pricing, to But across margin our very improvement kind good we've volume operating this we OpEx as look with continue get performance with on conversion well. see

we we'll margins. expand So still February, our guidance and XXXX of at see look we a opportunities lot as give in in XXXX, to

Operator

Tejas from Your Stanley. next question is of Savant Morgan coming

Unknown Analyst

Yuko well prioritization cost from as customers for the you large of to the due realignment comment in dynamics? whether have on on Could of seeing from soft era. post-pandemic as call the CROs you're Several noted IRA initiatives is pharma portfolio This Tejas. demand these any

competition, And pricing then are pressures the any pricing by seeing -- given the trickle-down on Diagnostics noted from your effects separately, CROs of you Advanced within few segment?

Christopher Smith

in industry. it to mean, were business as Warren leads everybody knows, up But there's industry have think I'm I'll that Yes, high some I going that pick Warren now compression some level. that been because causing course. dynamics take I that

and R&D. XX largest XX correct if companies I -- think top pharma spenders but oncology can drugs think are I'm I it's the in of wrong, Warren on me

So going feel think I we good forward.

add to Warren, more to little do question. want you color a But the

Warren Stone

Chris. Yes. Certainly. Thanks,

many oncology market other absolutely that the opportunity. the certainly XXXX. is You're the But #X that pharma that is of pharma on the in impacted the area factors backdrop, in R&D performance XX market XX very right. companies fair and space sort of an certainly from of slowing with attractive a that CROs, to And large And have business is a the and top focus say one as a it investments. seen we growth. peers on of have it's

of of levels, at is starting those we we're sorts there return say, bottomed and our feel opportunities. early-stage that starting by looking see out that indications we're pre-pandemic of upward I'd to it's means And to terms capitalize but perspective, activity an levels and from swing. looking sort of in to of sort things, sort to no on

In bring increased at side position of we're price I terms seeing services to of I things, we're can't of say how cannot point. sensitivity this market, we in that looking pricing say the the terms particular that to we that the --

Unknown Analyst

panels for of think no you the how testing genetic on perhaps to for more Got I requirements? And have prior more using behavioral recently longer in some light broadly, you enthusiasm payers costs faced United's stringent have know private it. challenges the do spiraling also, weighing these, then cover health. don't including the multi-gene of decision that on But authorization

Christopher Smith

we've think dividend. have look going the going the I legislation at movement a in finally to biomarker and really Jeff. payer a I that's Yes. relations for with high us, with on states, I'll please let been reports level

want since add you do not Jeff, more that space? in to But we're color

Jeffrey Sherman

And doesn't in Yes, the we've get still previous the the trenches I the mean that to states that We that automatically there's calls, have do and or with passed switch have flips legislation at to the said for paid. of think, get yes, us XX just work. work kind to working legislation. fact state now biomarker a payers on passed least XX as the

our the be the diagnose used firmly us, I and to believe are we patients, for and being at we should end think day, for them. of tests treat paid

some of ahead is testing the sometimes of the guidelines. And

the as and who larger with, for overall, think more we these from further tests tests used there'll driver, over acceptance. the helpful. to to us, be I at And time, day, reimbursement. more know, panel that interact become So our being and prevalent, is think are biomarker we of for We the we legislation going be patients. treat our be to clinicians end that's going diagnose And believe, the overall

Operator

Your next question Cowen. of from is Dan coming Brennan TD

Thomas Stevens

It's on Tom Dan. for

lapping NGS impressive, I market? in today, of to Comprehensive still to I to from I deceleration, guess, competitive, you I how the gain you So about a see continue do up tighter in do guess headroom a modest Clearly, how more in quarter. forward guess, clearly, the wanted feel you and like broader looking there. market the the I environment? XX%, mean, a on more on kind but ability Neo focus stack. very had But CGP your share X-year for

Christopher Smith

think Jeff chime size is Warren look could still ways But market of as the hit or look, you the runway -- market is. a the what and the then of have a Yes. of Look, couple has maybe at Kareem of lot in when penetration or Thanks, different Tom. it I I'll well.

upside have And continue that to believe we so we big there.

QX that at strong. in growth comparable quarters, would would very launched other had say year, a when I in remember still the in I feel Now our but that compared QX we that, think then last products was had to sense you and QX, we tough look when we

And very, in community early very especially oncology still because we the days are setting.

it's solid the large of oncologists, and community coming these strong presence hospital, panels in a from. community that's the are just have where tumor but We majority

share high the share -- at have in And lot when have solid heme, that so very in have to very low a we we think probably we you tumor so a in would of look continue NGS, a runway. we

those from are our the the like we is reason buying something are buying because And that us. of that large competitors majority customers panels from other

starting this have So already we're relationship. to already don't is a want growth in multiple And buy think see that in this to from vendors. our there. in We you're volume quarter, I customers what

to So be this comprehensive I a think having menu turned out strength. has

mention Warren? know, I if don't the on to want Kareem, But Or market? you anything

Jeffrey Sherman

I -- mean things. I'll of a just a I of say would couple add couple

we've noted that -- penetration are we're the gain expand we market. better continuing organization So this commercial to into to

up a our for little revenue. And so quarter, we're almost still lower bit our in the although this was NGS XX% year NGS

growth. So I'd say robust

with products Chris some tumor solid on being still seeing on said, traction side. more as significant side introduced, and heme And new the the getting growth

to where we position market we're So there of It's I a and a where our is. grab. think incremental as an R&D like lot commercial perspective, we from investing share well think as both resources, there's

Warren Stone

a Maybe still solution, today, -- X PanTracer say year. think have additional my don't and I pan Obviously, of fuel from rapidly going perspective half certainly launch in additional underpenetrated. and the Jeff. side we is growing of space next is to element liquid from cancer an very first NGS growth our the that's would there, liquid an that's I points the

recognize we're and the Comprehensive. also attributes product so a our from importance looking attributes we -- few add to Neo Secondly, to of perspective, additional a

sort growth quarters that X the showcased us very XXXX touched to last position attractive for we've market that over to trifecta of from us the perspective, trajectory which avenues on, as beyond. the commercial year and this Jeff with organization our sort of a well that I into a think increase growing sort of as places investments numerous couple portfolio in attractiveness strong in continue a still that and the So is

Thomas Stevens

that that continue mean, to as clinical base then of guess, or years? guess the surprised And the of thesis come that business you has lack volume the standpoint. changed maybe might business. And was seeing Right. go of over continues kind -- in helpful. are follow-up that? from and and both really decelerate to I when a we base X cannibalization to with think impressive That's a why you're a I can pricing just business, view that quick market. I your be of the ago yours year I modalities X your market seeing next where new on

Christopher Smith

you want that? comment do Warren, to on

Warren Stone

Yes, certainly.

I solutions of taking think is from as that people testing these that's there certainly cannibalization multi-modality some offer place into we move sort larger panels.

So that is feel the of that happening over that that offsetting And obviously the underneath and happen will and sort numbers we're to with of growth, at. that, sort time. looking you're we continue

reality commercial what's the is, us modalities the working for of the other is But -- strategy. all

the think is growth protect side we fundamentally are losing the modality driving element than the the paying really dividends things. that's of far the strategy I less commercial business to biggest in other We had past.

of a actually, sort a sort any system to or about referenced that we base few and we're a you business, to very on and the cetera, said, et of brings which we referred slow rate historical of new health at losing top a accretive is wins, of business, lot spoke on levels. that take compared I So as layers on business

there driving that's growth seeing well. the as we're So that

to are of to and base successful the a commercially effective XXXX in of we that So And looking additional numerous the ultimately year and a combination continue but execution in we the bolster here. big the commercial at I targets is this driver think business. factors, still strategy growth that of it's rest of see

Operator

Westenberg question next from Piper Your of coming Sandler. is David

David Westenberg

now consideration are now So you a in right progress know not those is for deployment? direction. tuck-in are deployment available seeing to buybacks at as tracking others, capital like And say just numerous now? of keeps actually oncology question number outreach EBITDA positive are national example, you if you? Are less to programs are a [ the of but in about What consideration, this probably uptake the whatnot. for about -- would an acquisitions of and level? available you outreach are terms LabCorp you quarters would not thinking as a labs, in that available And I or ], think capital I

Christopher Smith

Jeff we're growth. going take to bit around capital let thing Yes, about little how thinking the a here, him deployment talk let and then I'm I'll about Kareem opportunities the for

Jeffrey Sherman

Yes.

coming to So That the we've us million a note plan a we due gives in producing liquidity, next retire And be cash year of almost with quarter that expect finished we lot with we cash. we've still $XXX to cash. said got convertible in and XXXX.

strategic opportunities. And say So I to that. Kareem I'll coming, we role priorities, corporate of I are advantage as think we've a Kareem hired comment at on there development take would think opportunities about and let

our up think lab the now, ] this lens overall this Raleigh [ we've an We're capital capital run I and year. But some got some continue from of to got plenty strategy right expanding business to liquidity in stepped year. the and deployment we've invest in expenditures expenditures business. We saw

that repeat Some of won't next year.

So be sufficient well positioned I we'll liquidity with to think invest.

We'll of side. to Board. say M&A And always with will development invest the buybacks talk I'll So now. Kareem at priority option discuss the stock let the kind corporate about as an in I be our would business those right then and and look

Kareem Saad

David. Yes.

we've talked before. think I about So this

So we've acquire been as proactively give to relates footprint, reach, to overall businesses looking leverage, especially at opportunities grow modalities. our NGS new to us it delivery geographical

out there. of plenty opportunities So there's

community we I'd terms the in. cherry which complementary the that and that our in being leverage is we are opportunities can picking. to integrate of we that We're say shine really we're channel capabilities that rapidly efficiently and channel, could selective in

in be which then testing. we've talked high portfolio, also And whether about we're also looking before, level in but that at supplement to MRD, at our product modalities of opportunities a other

in we're played tumor presence therapy testing diagnostic the slowly in much and germline getting look areas. starting today, bigger at really but selection. we heme, we're very much these space, But got haven't more So into in the -- that some in we're deliberately space modalities we've solid to now MRD and

in them them. and future. So of lot are the a you'll yes, hopefully, there we're I'd opportunities, of pursuing more And say hear

Christopher Smith

Yes.

very look -- in I turnaround think it think we a would at a say underserved especially look, maybe perspective would very, one other lab. about, time from I be areas from a to where we thing strategic, are

would -- like be you something others. that maybe So that referred to

But to get And really it in-license strong channel. the of We innovations these of there one out lot a or organizations. lot best we distribution way commercial through strategic it have of to customers. find think we a to some our have otherwise, that take it's how partners don't technology a there's about

days tell both we're early that in still the the line will line. you it's but very So top I committed process also that tuned. But to and stay bottom driving

David Westenberg

That answer. really long was a

bit So little will one hopefully, be shorter. this a

Unknown Executive

Sorry about that.

David Westenberg

no. just analyst want lot hog. don't There's No, I covering. a to of

in gotten just terms here. of have still good -- kind -- leverage lapping of the as Andrew's these really you're a question, operating operating kind comps, of tough leverage of you're really and So even getting you continuation the

been think sales we you fruit a if expanding force. how cuts that low-hanging about are on mean go-forward much in the I basis, forward? just So has -- of going of terms versus

there's necessarily reduction know -- human capital. capital in So human don't I if

considering we think about those leverage Just factors? a kind of on operating where do go-forward basis

Unknown Executive

Yes.

revenue, been higher again, margin think, So is that's business, higher a a focusing NGS, I driver. on which

been that. basically as adding that at getting look higher done efficient we've at the same wouldn't but actually costs, business. taking as value I So time, But more we've out

time. So even improved volume record a turnaround quarter, we actually saw in our was this quarter, volume where

both a are So in well increase I turnaround our throughput team level executing as automation investments. to time really operations think high increase at as our

that going LIMS think time. system help is I over to the

our in market. modalities about it, continuing and Raleigh, see We're labs. got our So I tests. faster the in pricing expand We've guess, existing initiatives. expanding think in we're higher-margin We across have RCM capacity overall and as we lab growth all to we than

I gross there's of OpEx and OpEx expand to leverage I So that getting margin. good manage the well lot can on that. side, things a trying the think as And then on we're think side operating

of time. I strong to So margins think a presents over expand us pretty runway for still combination the those

Operator

Company. from Matson coming is Mike question next Your Needham & of

Michael Matson

Yes.

the fourth I quarter? any just quarter? your there So impact impact of in to regard any do you third expect of with was first, in hurricanes, to sort revenue the Or sort the guess,

Unknown Executive

the So impact I minimal say would third quarter. in

And And in have The that some We regions, the to into that. seen, be and expect that in of predict. say some are do like constraints been some we seeing the of do we'll October them period. hard the recover would slowness particularly office will Florida opening I I hours timing are we have time capacity Carolina mean, oncologists we've patients, medical maybe other of some told. Saturday, really services, on

It's just think of will timing I bit over just quarter. the there's little impact issue. think and probably probably into play time, So of a fourth kind out even rolling out. We a that

Michael Matson

it. AML just with as Got those? the and then opportunity Express, test Okay. about just as NGS newer can market far TAM or And PanTracer the talk you maybe

Christopher Smith

Yes.

in a going want things see we markets you to Warren, about talk how bit and are little the do opportunity? So both how and those

Warren Stone

we we're TMB certainly. and very looking And a that offer able Yes, XXX as we -- greater that XXXX times on this feel to in again and and competitive earlier, launch of is genes, MSI, first this again, including turnaround this. said the confident half than to panel is

this larger a I out earlier, said And I than than the as that's there's and Actually, TAM see what was underpenetrated actually attractive market. past. more think is we been some very research the some come actually previously anticipated also made as recent that's in comments

part cancer opportunity very, a portfolio strategy. address within as the tumor So this the this supplement continuum. to of the our We within have larger gaps solid obviously of very portfolio and current ultimately we one is see our therapy significant that selection

Unknown Executive

Express? AML

Warren Stone

Certainly yes.

we a is market terms high just of a but and both very that in again, X. of within we where that diagnostic launched product a the very is side sort share, heme, So setting, AML in our have in core targeted things also of And of hospital quarter early Express as segment. towards this terms

test We've the product proposition there of up for on inpatient value operationally of that. the earlier associated economic and on seen ramping very, of very up health days demand terms is quickly the demand a very in doing as associated from expected getting perspective very well of time turnaround results the X costs sort lot sort well. to early based that with a and The

Christopher Smith

again, about the in from the hospital-based, market Maybe a not community is, way opportunity AML it's think to that test oncology. Yes.

than market to room been we've the are opportunity huge a a ] to that in always able that that test. nature, demand -- smaller is, And patients a [ it's place but the the So market and where it's oncology, by be hospitals. we big with leader, in saw for that expand

Operator

Your next question Group. is coming from Matt Hewitt of Craig-Hallum Capital

Matthew Hewitt

And over think that contributed how your commented How last upgraded particularly ones you've launches, launched you're your good going you've commented months. XX XX during to Congratulations quarter. impacting And year? should tests if new on much or growth to next you sure period? growth the number, has we that that about the the on for have not I'm but this

Christopher Smith

Yes.

X there say or products of so think were I to that extensions. were launched. I major -- some in X then I just probably frame, would genes would And single say that time some was line kind look,

it way. that So maybe think about

Look, competing in market. tumor we not solid the were

year leader market NGS coming so larger of into And would time, out of is the a long helping of last growth, say market. couple market been our one we we've I percentage heme in in because points get that a the heme, of still obviously, solid that's was big to share our plays because growth that a only have been market. have of for And

it's say helping by wouldn't I with growth. while the So growth, it's being driven the

they've You want and made? the the to impact additional about of talk products more that some

Unknown Executive

Yes.

more to AUP. both or AUP of they NGS of driver a growth of and in increase products, continues to we products. market individual said our and in driving the existing XX% roughly overall have we've these like are haven't clearly, be receptiveness, broken some our But out on pricing of and probably products the helped still So upgrades front, terms

So a move of more the coming driving but we being is mix just as I think as being certainly still higher higher-end opportunity market significant we some from it are tests there. see the revenue, those into

Christopher Smith

at products that thinking heme, tumor, myeloid growing the was lot of And we panel. think of industry the radar, undervalued the under generally solid the whole And market largest a it think about us. -- they've I driver solid, big for launched because of look dynamics XX%. solid. I we is heme you talk goes heme. We is Yes. but solid, the And if one was And a kind growth the big

but growth very think that great industry market enamored been has is with So still solid. the I market, a whole

So we probably get caught in heme. that sometimes talking than more about solid

Matthew Hewitt

team. That's the that anticipated then maybe commercial end really exiting you adds commented us year? you're QX of to a before the your And adding head count give Could you and helpful. your

Christopher Smith

Yes.

about we're that all last add people the earnings QX commercially would that the thought XX quarter we talked in So end would in we pursuing aggressively of the we say between the to XX results I that. year.

department. our forward some So try if meeting our know reps, go our of HR to you big train goal and sales sales to have January, is goal if some is our we'd those them love we to products. people good when new you -- is and late meeting to But these place our in so on

So the of that. of in we're middle kind

Operator

Goldman next question Your is Sachs. Sykes of from Matthew coming

Prashant Kota

Can this new the Prashant can spend Kota time quarter. also This the on help And talk in product? pacing of or for R&D left line RaDaR? Matt. development is you you quantify amount develop needed the to on of the R&D new Congrats the spend fully of about

Christopher Smith

an to the give talk I'll Yes. can numbers. then overview, and Jeff

on earlier on is think were went we because quicker we things and I obviously quickly one did we through talked RaDaR the settlement. -- and call look, So that we of to a X.X, about this the moving

first lot as you been CLIA financials. a believe, has heard in the into this the of so we'll cost probably we call, validation, in year's And get absorbed half. that And through

that on the us product So gets I market. think a

remember, the lot that a think on, spending and solid those the of move X.X, of as lot the I the is it we they're next liquid, it. that's some products R&D costs RaDaR PanTracer was or step we've last Look, where fall worked and big But really whether and tumors year, a of time. off

And X board has to I for think, fair, been about weeks. on Andrew, be

time through AOP in look resources. what's Andrew come and to giving able at how think to I as the be team process pipeline and able So the his allocate work and to we we with be in go

because also a looking for but invest to are. that lot it's heme, those like definitely need we But what we're turbocharger. to know going we more it's opportunities in want R&D be continue to do of to to a think time spend so MRD is we leader the fill market But solid. in gas it's One I there, or

talk...? to want you Do

Jeffrey Sherman

Yes.

add. incremental wouldn't that we've our to experiencing. level just the today expect much base would I I spend change from think been I

go As things some will Chris on. off will said, new and things fall

is I going will think where to from spend incremental direct us there those Andrew incremental the help be dollars.

to to about opportunity, we again, internal opportunities those several perspective, investments talked perspective, focus development where opportunities a over is from see and next for M&A an align R&D the having but And the with just I where be perspective also going that's we we've Andrew most when quarters. from an corporate we see our the want strategy think

Christopher Smith

We profits believe really many and you faster. faster you balanced. to it And times. margins mean, we've the you market is grow this grow said gross I revenue grow fast,

a to pivot money-losing into that and So go going a product. not we're it's from situation

best the a and leadership we're investments. identify together on as going we, best return to team where the So work opportunities, get what our are

we with but because one, learn PD, look about and also resources opportunities R&D what been at has areas. into shifting commercial So are we'll more those

Jeffrey Sherman

think just I our strong, on and I year-to-date clinical look, leveling and say, growth ADx basis. starting talked QX And has XX% to revenue out would very in to QX about finally, We've reaccelerate. over a be and Yes. that continued

to growth -- help see see, going expect revenue to that's and to into I think So rate. we going there, be do the growth drive year, next we overall

Prashant Kota

up step-up just on term, And the will, any RaDaR longer incremental color Just mentioned... a following new in of it. provide? top growth line how Got previously including

Christopher Smith

Yes.

when long-range come February So in and we're results. we going the give year-end out guidance to do

stay tuned. So

Operator

from Mark is BTIG. of Massaro coming question Your next

Mark Massaro

Yes.

just underpenetrated. with agree the therapy wanted that the start do with I selection market Warren So to is I PanTracer. NEO

curve I think wrongly it's I is there people with the saturated some and are that. growth done. that think disagree

any expect a be we I But the limit the of perhaps detection? to plan just how think compete one sensitivity of Should core comparison I metrics. would to papers you you know to on is and that show hear data? interested on

can curious think to you turn commercial? can LBX [ And ask, And do you PanTracer it ], how both CMS then on and your also I want payer contribute I'm if to coverage from quickly for revenue? you XXXX think

Christopher Smith

do have Andrew we're in as we'll trials as sensitivity then look far and what and of on is doing Warren, start? chime kind you then to test maybe And around the that... want what is of

Warren Stone

Yes. Yes.

on be of a of some is test. kind view So it than I patients one this Mark, more U.S. than to again, market. more the believe XXX,XXX get those our it's large actually in and market very patients

some penetrated the partially so or have is available. that of only XX% we and -- than data less So

attractive just So it very out there. to as we that put see

through liquid critical I'll a this actually we're after third-party the half that straight studies, with XXXX, terms payers, In our of down in We're launch CMS to selectively to first to able that knock leave we XXXX. of believe be expecting validation. going revenue the intending off in to Andrew, we is but which to studies success be will go to this going to contribute of is reimbursement to run and which after PanTracer certain

for good this to junction savings to hand cetera. to across a about Andrew sensitivity, and talk that's me et maybe So

Andrew Lukowiak

appreciate Warren. Mark, No, to reconnect. good And it, Yes. I

pleased of publication the clinical comparison, diagnostics type to have record those XXXX some conversation of kind us That's a for think these along I say kind look at a would way right to queue a kind it to the get So already orthogonal the launch. I of warrant out is coming I'm gate. of with way which of type in studies is the we probably couple think up. go of I of strong

move So I poised forward. think we're well I with to think that,

to know wants commentary I have any don't on? more Nate if

Christopher Smith

Nate. the Maybe sensitivity, on

Nathan Montgomery

Yes.

we validation the the test but to what cautious be I entirely of the about expect say wrapped sharing probably in the lower be is we'd think would until the the sensitivity sensitivity, certainly about up, competitive publicly I marketplace. on limit

And I is lot payer the the had products of going with other piece think of terms we've MolDX pathway. would add other success the only I around that piece, in through a

path so optimistic feel And the about forward we too. there,

Christopher Smith

don't portfolio, lot other these have one thing for Thanks, of Nate, with that. payer is to I for of our broad The relationships we payers time. a XXX contracts. third-party XXX -- think Yes. we long a mean because I probably have

think than some bringing any very relationship that have different they're and of out. product a type So companies I it's don't

we'll be think to well. as I able move So

Mark Massaro

against Then Excellent. follow-up. you under just you been so. real for up in what has Diagnostics Advanced potentially maybe key us of the there last levers few going the as through walk think quick elements the a easier you I 'XX? probably understand key recovery us to you'll staging are? comps, a or through just be Can pressure but walk quarters believe what be

Christopher Smith

the high give aspects But some you money remember, to business. going specific. a that a I'm was need level. I'm have get Yes, Warren losing certain mean, to was little that going or business of more to I that

went that a so made market. And conscious decision the we look, way change to very to we

[indiscernible]. So significant. we gross we kind done, But if expansion team the business the has would be margin look of it's relatively at that you that the -- foreshadowed

business I to So to is commercial footing. we're solid very handing on And that strategy think starting over root. Warren take to new create think a I then

just high about quick thinking what of give want a you to how you're level do -- Warren, But real that?

Warren Stone

encouraging scientists. of particularly of what also an Thanks, We bottomed pharma this obviously, Chris. from is think sort well, certainly. Yes, We're Mark, from this coming big increased biotech of earlier, pharma, the some is, seeing sign. smaller perspective. the levels said is which but one I happens a key think and I activity aspects and larger has as market out

as largely out which is of a here obviously control. there So market well, our dynamic is

totally think sort capability, spot model launching team that and increased our ultimately well, remix next which will also ] that sort allow and launching of [ point of technology our for year, a highlighted which and strategy with where I our we're We've as that. of profitability business sweet sales for from view, But of meeting new that focus are we into aspect -- January, at. the new got the from but fact Chris targeting we're that, within is a at looking pharma strategically, our we end will, go-to-market already our

adjusting we're and key, against model deployment sales of the business this our as that's new So actually well. resources

up pipeline all robust rolls growth XXXX. we now is the in we in around factor especially of of out, is doing road building the statements right work what of a sort that for work leading have that to but terms business within both at January. hit kind key of a opportunities, call we're us So that of also that of bookings of that driving sort And the end also

term, in business. sales for very space for think this is the a I in a me long It the attractive NeoGenomics. cycle longer is --

a quickly maybe within sort terms So I around. I turn can success. this But to to want as we how contributor expectations our just major plan, see longer-range temper in this this just of of

Operator

question is next Stephens from Inc. Mason Carrico of The coming

Mason Carrico

the one-off Just orders? trying start move shift from ask ordering? I'll seen to of that's guys? Do X they over Are to my talk all sense patterns you've a most once Could solid liquid launches. upfront they start panels you get they right. if their ordering about docs here, ordering panel volumes you for you typically that the volumes may larger tend once tumor from how

may the up products be And given how to more then that can given driving they having volume end just reflex Comprehensive Neo if could valuable both necessary? you the assay having available second, liquid those how clinicians do other, think of

Christopher Smith

tumor That will in totally business. go-to-market strategy -- like think the help meeting. been product our you've Mason, we that So for absolutely is it solid

the is answer on the one. yes first So

Listen, one. on territory and quick, one seen you've if you've just seen the seen second you've hospital, one, real one

would that, very focus people. has been have say would maybe are we look, relationships I we're where using our accounts that we say other So I and on -- much

strategy part oncologists, our historically, business, in sticky. of become this you But will community to with quickly. move is, community And oncologists have look, the especially

measure has quantities stuck. that think account then actually reps when account the we we in So our based we on

ends as that up sticky but really much customer, from as what using somebody it the do is from And we see would one I we're company being else publicly, a somebody if more metrics share managing us, a that And to else. think I that that don't of is say one one opposed ordering we good job level. or you

also So it's that and about way the organization customer. that use with our digital field we outbound with

Operator

question is from Ryskin America. of coming next of Michael Bank Your

John Kim

This is John Kim Michael. for

you've clinical the that as the perhaps NGS clear past, we in XX%? line about piece. revenues. or time XX% So a I'll initial mentioned here. from I there my the Is talked the of And in for ask uptake stand, where there are as then second well question any you feedback reaching the Has pharmas? think terms there data been licensing the informatics of to we the

Christopher Smith

Yes.

look, the today, I still So look say solid days with it's tumor. kind the license of early would on

have I'm you else want me Okay. your first tell Do add you And that? to on sorry, again anything one?

John Kim

So NGL is about...

Christopher Smith

clinical yes, revenue. Yes, Sorry.

we're today, XX%. XX%, at So

to asked X%. could I modalities go X% on really a to think the are other you the were this said, growing and XX%, we that market, XX%? anywhere to a at XX% probably call look is question growing from If NGS

that moving market way. is whole the So

So it's percent to. get of business what that predict to eventually our hard would

But comprehensive leading you one things this test. is our can't forget that of

that yes, of be But business. because one do bigger. a So of to significantly both keep we our growing to sides will NGS that's think going it's get I long time things these

and XX%, we're like haven't run. the people but will of we compete we majority a room When lot with, you of So that we XX% said we of tell XX% the think will look have revenue. at the it be I to it's you

Operator

of from question Raymond Cooper James. And coming Andrew is your next

Andrew Cooper

asked, I little rollout think including you said already could just and on you of a the Well, it you bit been the I maybe patient-facing mentioned, customer-facing new there. terms in has one, to so deeper clinical support dive in think And decision Neo technologies. Helix, the

acquired about that do pieces kind products? Trapelo? to of Or how some of monetize integrating we is the potentially ability those that any you've So over think and years those

Christopher Smith

let going you kind excited as on super of high as more that. to level I'm we're So kind about some of Melody well give it.

Melody Harris

Andrew, yes.

platform, Neo initial course a is it. our using and on hosting of support, all we some year integrating this while push not really Trapelo decision That's of is So on be it. the clinical single Helix of digital of pieces customer for capable will the it into our experience main

push Our around initial that is customer seamless really experience.

then that we've our part it's sure heard mobile-enabled. And that customers from making another is important

customer will go with be portal. So first experience to our that this to is Neo time a the able mobile full

you And want around add know that? if Warren, pieces to I additional don't commercial some

Warren Stone

Yes.

the I fantastic. -- think, Melody, up you Helix summed is

to I Helix roll And to Again, an of we've community think will the the needs then segment, where hospital-based in target the first XXXX. to will and that maybe new tailored out is the segment just really oncology first thereafter and roll be out, our this solution segment. the during area it we rollout towards. starts

Andrew Cooper

one And just in if night. sneak in more last deal I sizable quickly. There can the announced a was space

out does the potential of curious have Just change kind competitive you and do thought it thoughts. your as at deal look maybe would landscape, if landscape, And M&A that about at how that to you all? what

Christopher Smith

impact strategy. strategy our their think has system, every an will to our think on because the to the I we own Look, of business. distribution I company has we menu today to I where of and see we and look opportunities are be what's their breadth on Yes. that going and and have quickly own execute payback how go it at mean, and

-- decisions be there. we I again, probably stuff day, see see at for that tempt most the if the others them the the of we applaud, and to think we're We look, are doing out our that. But us that so of end make it's shareholders for long right term. going the best and And thing

Operator

from last Partners. your is question of Puneet Leerink Souda coming And

Puneet Souda

time, -- I'll I'll my combine Yes. the question. given just

a benefit now. the NGS least safe for Is we're assume on here, the seeing the For several XXXX? it -- to from continue baseline the AUP as to that in see increase, for side at you quarter quarters AUP

the And pressure peer recently. side clinical question then the competitor had on on that and commercial

for provide of you traditional the you had? Medicare can us you -- hospital that the is much clinical as commercial the wondering, clinical mix versus contracts Just how revenues versus

Unknown Executive

Yes.

So put in on Qs. that do we mix side, our the

coming XX% of client bill, XX% So and commercial about from about revenues in direct QX, the governmental. about XX%

over that So bill, X/X time. has consistent about direct still I think client been and pretty

Christopher Smith

Yes.

our when so than competitors. is say exposure XX% on And a lot lower it's the our commercial of I'd

you then, to take And question? do the want

Puneet Souda

XXXX? on Yes, AUP that's And the for helpful. then side, the NGS

Unknown Executive

[ we to the component time, continue think I to continues grow. over of to Yes, business particularly expect grow NGF AUP that ]

initiative. our it's And success CM to with [ overall see -- ] so continue increases see reasonable with think and and to there we'll still I over pricing growth are we having time,

see but of kind it's of to year. So to we'll grow that more into I reasonable think we'll that over as continue time, talk assume next pacing about begin

Operator

question-and-answer that's our session. I'll end back closing over now any to of hand comments. Well, for the Chris

Christopher Smith

forward time. Yes. care. kind you the insights taking Take Thanks, We color you of have great to following was the you up soon, to appreciate and guys out with answers. it everybody. Really, nice questions. and see more into the really here all the look, leadership deeper We you the to team And look give market. in

Operator

much. This very today's you conference call. conclude Thank does

have for time, you your at a wonderful and participation. lines your may You Thank disconnect phone day. this

NeoGenomics (NEO) 5 Nov 242024 Q3 Earnings call transcript