Smaller Esoteric Labs Heading in Different Financial Directions

Earnings data from some of the smaller esoteric laboratories paint a stark picture of the directions those enterprises are heading. Florida-based NeoGenomics is the most successful of these labs. It reported net income of just over $1 million for the fourth quarter ending Dec. 31, up from $857,000 in the year-ago quarter. Revenue rose 36 percent to $25 million. Although calendar 2014 net income dropped to $1.1 million from $2 million in 2013, revenue was up by nearly a third, to $87.1 million from $66.5 million. According to Chief Executive Officer Douglas Van Oort, the company launched 48 new molecular and FISH-based tests and converted another 23 assays to next-generation sequencing. The revenue growth was achieved despite reimbursement cuts for FISH assays. NeoGenomics said organic test volume grew 29 percent during the year. And while the average revenue per test declined by 4.2 percent, costs were reduced by 4.7 percent, leading to a slight boost in the gross profit margin. Rosetta Genomics, a New Jersey-based laboratory with development operations in Israel, reported revenue of $1.3 million for calendar 2014, more than triple the $405,000 it reported in 2013. The company did not break out quarterly data. The company posted a loss of $14.5 million, compared to $12.9 million in 2013. Rosetta develops and distributes tests that sequence microRNA materials, primarily for analysis of kidney and lung cancer, particularly mesothelioma. “This growth highlights the traction our commercial team is gaining and demonstrates that we are making good progress enhancing awareness and increasing demand for our testing services,” said Rosetta Chief Executive Officer Kenneth Berlin in a press release. By contrast, Massachusetts-based Interleukin Genetics is trying to fend off dramatic contraction. It reported a fourth quarter loss of $1.6 million on revenue of $322,000. That compares to a fourth quarter 2013 loss of $1.9 million on revenue of $671,000. The company markets an assay that focuses on dental health, but it is also developing a cardiac health test. Revenue for 2014 was $1.8 million, down from $2.4 million in 2013. A statement issued by Interleukin indicated that employees had left the company and sales commissions were reduced. However, it had secured $10 million in financing that it would use for product marketing and to enter into agreements with potential distribution partners. Takeaway: The smaller esoteric labs are on dramatically different financial trajectories.