• Revenue: $168 million for Q1 2025, an 8% increase over the prior year.
• Adjusted EBITDA: $7.1 million, marking the seventh consecutive quarter of positive adjusted EBITDA.
• Clinical Testing Volumes: Increased by 8% compared to the prior year.
• Revenue per Test: Increased by 3%.
• NGS Revenue Growth: 18% growth in Q1 2025.
• Adjusted Gross Margin: Improved by 146 basis points to 47%.
• Adjusted Gross Profit: $79 million, up 11% from the prior year.
• Sales and Marketing Expense: $23 million, a 12% increase.
• R&D Expense: Increased by 34% to $10 million.
• G&A Expense: $68 million, driven by higher technology and compensation costs.
• Cash and Marketable Securities: $358 million, a 7% decrease from the prior year.
• Cash Flow from Operations: Negative $25 million, a 2% improvement over Q1 2024.
• Full Year 2025 Revenue Guidance: Revised to $747 million to $759 million, representing 13% to 15% growth.
• Pathline Acquisition Contribution: Expected to contribute $12 million to $14 million in revenue for 2025.

• Warning! GuruFocus has detected 3 Warning Signs with NEO.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NeoGenomics Inc (NASDAQ:NEO) reported a solid start to the year with revenues of $168 million and adjusted EBITDA of $7.1 million, marking the seventh consecutive quarter of positive adjusted EBITDA.
• Clinical testing volumes increased by 8% compared to the previous year, with a 3% increase in revenue per test.
• The acquisition of Pathline is expected to expand capabilities and accelerate growth, contributing to incremental top-line revenue this year.
• NeoGenomics Inc (NASDAQ:NEO) launched five new NGS products, which now account for 22% of total clinical revenue, demonstrating strong market penetration.
• The company is expanding its commercial resources, with approximately 140 salespeople, to drive market penetration into community oncology and support new product launches.

Negative Points

• The non-clinical business, which accounts for around 10% of total revenue, is facing macroeconomic challenges, including reduced pharma and biotech spending.
• Recent tariffs and potential cuts in NIH funding are anticipated to result in reduced R&D spending across the non-clinical customer base.
• The Pathline acquisition is expected to lower average unit price (AUP), adjusted gross margins, and adjusted EBITDA for the remainder of 2025.
• There is heightened uncertainty around pharma and biotech spending, which is expected to lead to a decline in pharma revenue this year.
• The integration of Pathline and the validation of NeoGenomics Inc (NASDAQ:NEO)'s existing tests in the Pathline lab will take time, with minimal benefit expected this year.

Q & A Highlights

Q: Tony, can you talk about your first 30 days as CEO? Any surprises or areas needing more attention? A: I haven't encountered any surprises. My observations have been confirmed, and I've enjoyed engaging with the management team and leadership. The business performance was strong, with high volumes and NGS growth. There were expected headwinds in the pharma sector, but overall, it's been a positive experience.

Q: Can you elaborate on the NGS products driving 22% of clinical revenue? Is this growth broad-based or concentrated in a few products? A: The five NGS products all contribute meaningfully to the 22% revenue. The success is due to both the products and strategic investments in our sales force. We are optimistic about continued penetration into community oncology, especially with the upcoming PanTracer liquid biopsy launch.

Q: Regarding the pharma business, what are the expectations for the full year, and what visibility do you have on reaching those goals? A: We expect a similar decline in pharma revenue as last year, around $7 million. However, clinical revenue growth will offset this. The Pathline acquisition will contribute $12 million to $14 million in 2025, and we anticipate revenue growth acceleration in the second half of the year driven by NGS and liquid biopsy.

Q: How are you thinking about capital deployment and investment flexibility, especially with upcoming NGS launches and MRD development? A: We expect to produce positive free cash flow in 2026, providing options for the 2028 converts. Our cash liquidity will support investments in licensing, partnerships, and strategic acquisitions. Our guide already includes R&D growth, particularly for radar 1.1 and Next-Gen MRD.

Q: Can you discuss the PanTracer liquid biopsy launch and its potential impact on customer ordering behavior? A: We anticipate concurrent testing for lung cancer due to guideline changes. Physicians may prefer liquid biopsy for faster turnaround and less invasive procedures. The PanTracer suite simplifies ordering and provides flexibility, aligning with physician preferences.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.