NEOGENOMICS INC Q3 FY2024 earnings call

• Acknowledged resilience of communities in NC and FL post-hurricanes and thanked NEO teammates. • Discussed the community oncology translation platform with three layers: customer experience, automated production, and data interoperability. • Q3 highlights: total revenues up 10%, clinical revenue up 14%, NGS growth 26% (31% of volume/revenue), adjusted EBITDA up $10 million (305% y-o-y). • Invested in commercial team, launched NEO AML Express and NEO Comprehensive solid tumor, improved turnaround time, upgraded LIMS system, and settled litigation with Natera.

In Q3 2024, total revenues grew 10% to $168 million. Clinical services revenue was $146 million, up 14% y-o-y, driven by 9% volume growth and higher value NGS tests. NGS increased 26% and represented 31% of total clinical volume and revenue. Adjusted EBITDA improved by $10 million or 305% from prior year, marking five consecutive quarters of positive adjusted EBITDA.

• Revised adjusted EBITDA guidance to $37 million to $40 million, up from previous range of $33 million to $37 million. • Plan to provide updated long-term revenue growth target in February 2025 when reporting full-year 2024 results.

• Industry dynamics affecting pharma business. • Potential pricing pressures. • Payer relations challenges. • Market competition.

Q: Andrew Brackman asked about balancing investment in growth and expanding margins, and Q4 margin decline.

A: Strategically, focusing on ops improvements and automation, with Q4 margin decline due to salesforce expansion and product development. Jeff added on net revenue conversion and Q4 investments.

Q: Unidentified Analyst asked about pharma business dynamics, pricing, and payer challenges.

A: Pharma business saw slowing, bottomed out, and starting to recover, no increased price sensitivity, biomarker legislation helpful for payer relations.

Q: David Westenberg asked about capital deployment, acquisitions, and buybacks.

A: Finished Q3 with ~$390M cash, plan to retire convertible note, Kareem leading corporate development for acquisitions, focus on investing in business with potential buybacks.

Q: Mike Matson asked about hurricane impact and PanTracer/AML Express market opportunity.

A: Minimal Q3 impact, Q4 timing issue, PanTracer liquid launch in H1 2025 with large TAM, AML Express saw early demand.

Q: Matthew Hewitt asked about new tests' contribution and 2025 growth.

A: New tests contributed, NGS driving AUP, new products to impact 2025 growth.

Q: Prashant Kota asked about R&D spend for new radar.

A: Radar 1.1 to clear CLIA in H1 2025, focus on R&D for market opportunities, Andrew leading innovation efforts.

Q: Mark Massaro asked about Advanced Diagnostics recovery in 2025.

A: Business under pressure, but gross margin expansion, new commercial strategy under Warren, market dynamics improving.

Q: Mason Carrico asked about ordering patterns and liquid assay impact.

A: Community oncologists sticky with good management, liquid assay to drive NEO Comprehensive volume.

Q: John Kim asked about NGS timeline and Informatics uptake.

A: No clear timeline, Informatics data licensing early, majority clinical revenues direct client bill.