Industry Buzz: NeoGenomics Revises Guidance Upward on Strong Sales

NeoGenomics Laboratories has entered a growth spurt. The Florida-based laboratory revised its guidance upward for the second quarter, nearly a month before it is scheduled to release its earnings report on July 17. The company now forecasts that its revenues for the second quarter will be between $20 million and $20.5 million. That’s up about 7 percent from its previous guidance of between $18.8 million and $19.3 million. “We experienced exceptionally strong year-over-year volume growth in April and May driven by a continued increase in the number of new customer accounts,” said NeoGenomics Chief Executive Officer Douglas Van Oort. “The growth is geographically broad-based and is being fueled by the increased size and productivity of our sales team and by new product activity.” A year ago, NeoGenomics reported second-quarter net income of $273,000 on revenue of $15.6 million. Its revenue was down slightly compared to the second quarter of 2012. Despite the revenue growth, NeoGenomics did not raise its estimates on net income, keeping it at between nothing and 1 cent per share, essentially unchanged from the year-ago quarter. That is presumably the result of increased general and administrative expenses to help generate the additional revenue, according to analysts Amanda Murphy and J.P. McKim of William Blair & Co. William Blair raised its end-of-year revenue estimates for NeoGenomics to $77.4 million. In 2013, the company reported revenue of $66.5 million. Late last year, NeoGenomics entered into an agreement with pharmaceutical giant Covance to provide anatomic pathology and specialty laboratory testing for clinical trials. Under the terms of the agreement, NeoGenomics will provide the professional interpretation for all of Covance’s testing globally and the technical component of tests being performed outside of the United States. Although Murphy and McKim think the alliance will be greatly beneficial to NeoGenomics in the short term, they do not believe that it helped bump up sales in such a short period of time. Takeaway: NeoGenomics is in a period where revenue is expected to grow dramatically, although whether it becomes a solidly profitable company remains to be seen.