Third Quarter Revenue Increased 6% to $129 Million
FORT MYERS, FL / ACCESSWIRE / November 8, 2022 / NeoGenomics, Inc. (NASDAQ:NEO) (the "Company"), a leading provider of cancer-focused genetics testing services and global oncology contract research services, today announced its third-quarter results for the period ended September 30, 2022.
Highlights
- Consolidated revenue increased 6% to $129 million
- Clinical Services revenue increased 4% to $106 million
- Pharma Services revenue increased 18% to $23 million
"I am pleased by the progress that we made as a business during the third quarter, including improvements in turn-around time, revenue growth and gross margin. While we still have substantial opportunity ahead of us, I believe that the foundation for improvement is being set in place. Our focus for the remainder of the year is to leverage our leadership position in oncology testing and transform the business to build sustainable, long-term profitable growth," said Chris Smith, Chief Executive Officer. "I am especially impressed with our people and their deep commitment to our customers and to the patients we serve and am excited about the journey in front of us."
Third-Quarter Results
Consolidated revenue for the third quarter of 2022 was $129 million, an increase of 6% over the same period in 2021. Clinical Services revenue of $106 million was an increase year-over-year of 4%. Clinical test volume(1) decreased by 1% year-over-year. Average revenue per clinical test ("revenue per test") increased by 5% to $392. Pharma Services revenue increased by 18% to $23 million compared to the third quarter of 2021.
Consolidated gross profit for the third quarter of 2022 was $48.9 million, an increase of 4% compared to the third quarter of 2021. This increase was primarily due to an increase in revenue partially offset by higher payroll and payroll-related costs. Consolidated gross profit margin, including amortization of acquired Inivata developed technology intangible assets, was 38.0%. Adjusted Gross Profit Margin(2), excluding amortization of acquired Inivata developed technology intangible assets, was 41.7%.
Operating expenses for the third quarter of 2022 were $88 million, an increase of $1 million, or 2%, compared to the third quarter of 2021. This increase was primarily due to higher payroll and payroll-related costs to support the Company's strategic growth initiatives. The third quarter of 2022 also includedconsulting fees related to Project Catalyst (our value capture program), which were not included in the same period of 2021. The third quarter of 2021 included acquisition and integration costs related to the acquisitions of Inivata and Trapelo and a loss contingency for a regulatory matter which were not included in the same period for 2022.
Net loss for the quarter was $37 million compared to net loss of $20 million for the third quarter of 2021. The net loss for the third quarter of 2021 included an $18 million gain on the Company's prior investment in, and loan receivable from, non-consolidated affiliate due to the acquisition of Inivata.
Adjusted EBITDA(2) was negative $12 million compared to negative $3 million in the third quarter of 2021. Adjusted Net Loss(2) was $18 million compared to Adjusted Net Loss(2) of $10 million in the third quarter of 2021.
Cash and cash equivalents and marketable securities totaled $444 million at quarter end.
(1) Clinical testing excludes requisitions, tests, revenue and costs of revenue for Pharma Services.
(2) The Company has provided adjusted financial information that has not been prepared in accordance with GAAP, including Adjusted EBITDA, Adjusted Gross Profit Margin, Adjusted Net Loss, and Adjusted Diluted EPS. Each of these measures is defined in the section of this report entitled "Use of Non-GAAP Financial Measures." See also the tables reconciling such measures to their closest GAAP equivalent.
Conference Call
The Company has scheduled a webcast and conference call to discuss its third quarter 2022 results on Tuesday, November 8, 2022 at 8:30 AM EDT. Interested investors should dial (888) 506-0062 (domestic) and (973) 528-0011 (international) at least five minutes prior to the call. The participant access code provided for this call is 188444. A replay of the conference call will be available until 8:30 AM EDT on November 22, 2022, and can be accessed by dialing (877) 481-4010 (domestic) and (919) 882-2331 (international). The playback conference ID number is 46818. The webcast may be accessed under the Investor Relations section of our website at www.neogenomics.com. An archive of the web-cast will be available until 08:30 AM EDT on November 8, 2023.
About NeoGenomics, Inc.
NeoGenomics, Inc. specializes in cancer genetics testing and information services, providing one of the most comprehensive oncology-focused testing menus in the world for physicians to help them diagnose and treat cancer. The Company's Pharma Services Division serves pharmaceutical clients in clinical trials and drug development.
NeoGenomics is committed to connecting patients with life altering therapies and trials. We believe that, together, with our partners, we can help patients with cancer today and the next person diagnosed tomorrow. In carrying out these commitments, NeoGenomics adheres to all relevant data protection laws, provides transparency and choice to patients regarding the handling and use of their data through our Notice of Privacy Practices, and has invested in leading technologies to ensure the data we maintain is secured at all times.
Headquartered in Fort Myers, FL, NeoGenomics operates CAP accredited and CLIA certified laboratories in Fort Myers and Tampa, Florida; Aliso Viejo and Carlsbad, California; Research Triangle Park, North Carolina; Houston, Texas; Atlanta, Georgia; Nashville, Tennessee; and CAP accredited laboratories in Rolle, Switzerland; Singapore and China. NeoGenomics serves the needs of pathologists, oncologists, academic centers, hospital systems, pharmaceutical firms, integrated service delivery networks, and managed care organizations throughout the United States, and pharmaceutical firms in Europe and Asia.
Forward Looking Statements
This press release includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as "anticipate," "expect," "plan," "could," "would," "may," "will," "believe," "estimate," "forecast," "goal," "project," "guidance," "plan," "potential" and other words of similar meaning, although not all forward-looking statements include these words. These forward-looking statements address various matters, including statements regarding improving operational efficiency, returning to profitable growth and its ongoing executive recruitment process. Each forward-looking statement contained in this press release is subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, the Company's ability to identify and implement appropriate financial and operational initiatives to improve performance, to identify and recruit executive candidates, to continue gaining new customers, respond to the effects of the COVID-19 outbreak, offer new types of tests, integrate its acquisitions and otherwise implement its business plan, and the risks identified under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 25, 2022 as well as other information previously filed with the SEC.
We caution investors not to place undue reliance on the forward-looking statements contained in this press release. You are encouraged to read our filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this document (unless another date is indicated), and we undertake no obligation to update or revise any of these statements. Our business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.
For further information, please contact:
NeoGenomics, Inc.
William B. Bonello
Chief Financial Officer
T: 239.690.4238
M: 239.284.4314
bill.bonello@neogenomics.com
NeoGenomics, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, 2022 (unaudited) | December 31, 2021 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 266,126 | $ | 316,827 | ||||
Marketable securities, at fair value | 177,414 | 198,563 | ||||||
Accounts receivable, net | 111,994 | 112,130 | ||||||
Inventories | 23,799 | 23,395 | ||||||
Prepaid assets | 16,511 | 12,354 | ||||||
Assets held for sale | - | 10,050 | ||||||
Other current assets | 7,516 | 8,189 | ||||||
Total current assets | 603,360 | 681,508 | ||||||
Property and equipment, net | 106,818 | 109,465 | ||||||
Operating lease right-of-use assets | 98,945 | 102,197 | ||||||
Intangible assets, net | 416,848 | 442,325 | ||||||
Goodwill | 522,766 | 527,115 | ||||||
Other assets | 6,845 | 7,168 | ||||||
Total non-current assets | 1,152,222 | 1,188,270 | ||||||
Total assets | $ | 1,755,582 | $ | 1,869,778 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and other current liabilities | $ | 78,506 | $ | 79,213 | ||||
Current portion of equipment financing obligations | 118 | 1,135 | ||||||
Current portion of operating lease liabilities | 6,379 | 6,884 | ||||||
Total current liabilities | 85,003 | 87,232 | ||||||
Long-term liabilities | ||||||||
Convertible senior notes, net | 534,609 | 532,483 | ||||||
Operating lease liabilities | 70,471 | 72,289 | ||||||
Deferred income tax liabilities, net | 38,345 | 55,475 | ||||||
Other long-term liabilities | 14,166 | 14,022 | ||||||
Total long-term liabilities | 657,591 | 674,269 | ||||||
Total liabilities | $ | 742,594 | $ | 761,501 | ||||
Stockholders' equity | ||||||||
Total stockholders' equity | $ | 1,012,988 | $ | 1,108,277 | ||||
Total liabilities and stockholders' equity | $ | 1,755,582 | $ | 1,869,778 | ||||
NeoGenomics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
NET REVENUE | ||||||||||||||||
Clinical Services | $ | 106,162 | $ | 102,227 | $ | 310,588 | $ | 300,119 | ||||||||
Pharma Services | 22,620 | 19,113 | 60,435 | 58,478 | ||||||||||||
Total net revenue | 128,782 | 121,340 | 371,023 | 358,597 | ||||||||||||
COST OF REVENUE | 79,889 | 74,101 | 239,952 | 216,794 | ||||||||||||
GROSS PROFIT | 48,893 | 47,239 | 131,071 | 141,803 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 64,282 | 63,839 | 188,481 | 158,953 | ||||||||||||
Research and development | 7,312 | 7,409 | 23,651 | 13,360 | ||||||||||||
Sales and marketing | 16,809 | 15,704 | 50,179 | 46,677 | ||||||||||||
Total operating expenses | 88,403 | 86,952 | 262,311 | 218,990 | ||||||||||||
LOSS FROM OPERATIONS | (39,510 | ) | (39,713 | ) | (131,240 | ) | (77,187 | ) | ||||||||
Interest expense, net | 139 | 1,296 | 2,366 | 3,375 | ||||||||||||
Other expense (income), net | (25 | ) | (89 | ) | 212 | (431 | ) | |||||||||
Gain on investment in and loan receivable from non-consolidated affiliate, net | - | (17,750 | ) | - | (109,260 | ) | ||||||||||
(Loss) income before taxes | (39,624 | ) | (23,170 | ) | (133,818 | ) | 29,129 | |||||||||
Income tax benefit | (2,772 | ) | (2,822 | ) | (12,255 | ) | (4,283 | ) | ||||||||
NET (LOSS) INCOME | $ | (36,852 | ) | $ | (20,348 | ) | $ | (121,563 | ) | $ | 33,412 | |||||
NET (LOSS) INCOME PER SHARE | ||||||||||||||||
Basic | $ | (0.30 | ) | $ | (0.17 | ) | $ | (0.98 | ) | $ | 0.28 | |||||
Diluted | $ | (0.30 | ) | $ | (0.17 | ) | $ | (0.98 | ) | $ | 0.28 | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||||
Basic | 124,425 | 122,559 | 124,055 | 119,087 | ||||||||||||
Diluted | 124,425 | 122,559 | 124,055 | 121,356 | ||||||||||||
NeoGenomics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net (loss) income | $ | (121,563 | ) | $ | 33,412 | |||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Depreciation | 25,894 | 21,807 | ||||||
Amortization of intangibles | 25,470 | 14,683 | ||||||
Non-cash stock-based compensation | 20,009 | 12,396 | ||||||
Non-cash operating lease expense | 7,375 | 6,167 | ||||||
Gain on investment in and loan receivable from non-consolidated affiliate, net | - | (109,260 | ) | |||||
Amortization of convertible debt discount and debt issue costs | 2,125 | 2,037 | ||||||
Gain on sale of assets held for sale | (2,048 | ) | - | |||||
Loss on disposal of assets, net | 3,066 | 166 | ||||||
Write-off of COVID-19 PCR testing inventory and equipment | - | 6,061 | ||||||
Other adjustments | 1,428 | 831 | ||||||
Changes in assets and liabilities, net | (24,064 | ) | 4,753 | |||||
Net cash used in operating activities | (62,308 | ) | (6,947 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchases of marketable securities | (73,973 | ) | (180,961 | ) | ||||
Proceeds from sales and maturities of marketable securities | 89,812 | 44,736 | ||||||
Purchases of property and equipment | (26,357 | ) | (52,155 | ) | ||||
Proceeds from assets held for sale | 12,098 | - | ||||||
Business acquisitions, net of cash acquired | - | (419,404 | ) | |||||
Loan receivable from non-consolidated affiliate | - | (15,000 | ) | |||||
Net cash provided by (used in) investing activities | 1,580 | (622,784 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Repayment of equipment financing obligations | (706 | ) | (2,537 | ) | ||||
Issuance of common stock, net | 10,733 | 12,110 | ||||||
Proceeds from issuance of convertible debt, net of issuance costs | - | 334,410 | ||||||
Premiums paid for capped call confirmations | - | (29,291 | ) | |||||
Proceeds from equity offering, net of issuance costs | - | 408,133 | ||||||
Net cash provided by financing activities | 10,027 | 722,825 | ||||||
Net change in cash, cash equivalents and restricted cash | (50,701 | ) | 93,094 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 316,827 | 250,632 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 266,126 | $ | 343,726 | ||||
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheets: | ||||||||
Cash and cash equivalents | $ | 266,126 | $ | 340,565 | ||||
Restricted cash, non-current | - | 3,161 | ||||||
Total cash, cash equivalents and restricted cash | $ | 266,126 | $ | 343,726 | ||||
Use of Non-GAAP Financial Measures
In order to provide greater transparency regarding our operating performance, the financial results and financial guidance in this press release refer to certain non-GAAP financial measures that involve adjustments to GAAP results. Non-GAAP financial measures exclude certain income and/or expense items that management believes are not directly attributable to the Company's core operating results and/or certain items that are inconsistent in amounts and frequency, making it difficult to perform a meaningful evaluation of our current or past operating performance. Management believes that the presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors by facilitating the analysis of the Company's core test-level operating results across reporting periods and when comparing those same results to those published by our peers. These non-GAAP financial measures may also assist investors in evaluating future prospects. Management also uses non-GAAP financial measures for financial and operational decision making, planning and forecasting purposes and to manage the business. These non-GAAP financial measures do not replace the presentation of financial information in accordance with U.S. GAAP financial results, should not be considered measures of liquidity, and are unlikely to be comparable to non-GAAP financial measures provided by other companies.
Definitions of Non-GAAP Measures
Non-GAAP Adjusted EBITDA
"Adjusted EBITDA" is defined by NeoGenomics as net (loss) income from continuing operations before: (i) interest expense, (ii) tax (benefit) or expense, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation expense, and, if applicable in a reporting period, (v) acquisition and integration related expenses, (vi) write-off of COVID-19 PCR testing inventory and equipment, (vii) gain on investment in and loan receivable from non-consolidated affiliate, net, (viii) CEO transition costs, (ix) loss contingency for regulatory matter, and (x) other significant or non-operating (income) or expenses, net.
Non-GAAP Adjusted Cost of Revenue, Adjusted Gross Profit and Adjusted Gross Profit Margin
"Adjusted cost of revenue" is defined by NeoGenomics as cost of revenue before: (i) amortization expense of acquired Inivata developed technology intangible assets, and (ii) the write-off of COVID-19 PCR testing inventory equipment.
"Adjusted gross profit" is defined by NeoGenomics as total revenue less adjusted cost of revenue.
"Adjusted gross profit margin" is defined by NeoGenomics as adjusted cost of revenue divided by total revenue.
Non-GAAP Adjusted Net (Loss) Income
"Adjusted net (loss) income" is defined by NeoGenomics as net (loss) income from continuing operations plus: (i) non-cash amortization of intangible assets, (ii) non-cash stock-based compensation expense, and, if applicable in a reporting period, (iii) acquisition and integration related expenses, (iv) write-off of COVID-19 PCR testing inventory equipment, (v) gain on investment in and loan receivable from non-consolidated affiliate, net, (vi) loss contingency for regulatory matter, (vii) CEO transition costs, and (viii) other significant or non-operating (income) or expenses, net. If GAAP net (loss) income is negative and adjusted net (loss) income is positive, adjusted net (loss) income will also be adjusted to reverse any recognized interest expense (including any amortization of discounts) on the convertible notes using the if-converted method unless the effect of this adjustment on both the adjusted net (loss) income and weighted average diluted common shares outstanding would be anti-dilutive. If GAAP net (loss) income is positive and adjusted net (loss) income is negative, adjusted net (loss) income will also be adjusted to reverse any recognized interest expense (including any amortization of discounts) on the convertible notes using the if-converted method.
Non-GAAP Adjusted Diluted EPS
"Adjusted diluted EPS" is defined by NeoGenomics as adjusted net (loss) income divided by adjusted diluted shares outstanding. If GAAP net (loss) income is negative and adjusted net (loss) income is positive, adjusted diluted shares outstanding will also include any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period, until the effect of these adjustments are anti-dilutive. If GAAP net (loss) income is positive and adjusted net (loss) income is negative, adjusted diluted shares outstanding will exclude any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period.
Reconciliation of GAAP Net (Loss) Income to Non-GAAP EBITDA and Adjusted EBITDA
(Unaudited, in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net (loss) income (GAAP) | $ | (36,852 | ) | $ | (20,348 | ) | $ | (121,563 | ) | $ | 33,412 | |||||
Adjustments to net (loss) income: | ||||||||||||||||
Interest expense, net | 139 | 1,296 | 2,366 | 3,375 | ||||||||||||
Income tax benefit | (2,772 | ) | (2,822 | ) | (12,255 | ) | (4,283 | ) | ||||||||
Depreciation | 8,973 | 8,178 | 25,894 | 21,807 | ||||||||||||
Amortization of intangibles | 8,490 | 8,474 | 25,470 | 14,683 | ||||||||||||
EBITDA (non-GAAP) | $ | (22,022 | ) | $ | (5,222 | ) | $ | (80,088 | ) | $ | 68,994 | |||||
Further adjustments to EBITDA: | ||||||||||||||||
Acquisition and integration related expenses | 197 | 1,533 | 2,479 | 13,345 | ||||||||||||
Write-off of COVID-19 PCR testing inventory and equipment | - | - | - | 6,061 | ||||||||||||
CEO transition costs | 2,792 | 11 | 4,518 | 575 | ||||||||||||
Non-cash stock-based compensation expense | 4,280 | 5,237 | 20,009 | 12,396 | ||||||||||||
Gain on investment in and loan receivable from non-consolidated affiliate, net | - | (17,750 | ) | - | (109,260 | ) | ||||||||||
Loss contingency for regulatory matter | - | 10,500 | - | 10,500 | ||||||||||||
Other significant (income) expenses, net(3) | 3,195 | 2,578 | 6,240 | 3,013 | ||||||||||||
Adjusted EBITDA (non-GAAP) | $ | (11,558 | ) | $ | (3,113 | ) | $ | (46,842 | ) | $ | 5,624 | |||||
(3) For the three months ended September 30, 2022, other significant (income) expenses, net, includes consulting fees related to Project Catalyst (our value capture program), fees related to a regulatory matter and other non-recurring items. For the three months ended September 30, 2021, other significant (income) expenses, net, includes strategic deal costs, moving costs and other non-recurring items. For the nine months ended September 30, 2022, other significant (income) expenses, net, includes fees related to a regulatory matter, consulting fees related to Project Catalyst (our value capture program), moving costs, a gain on the sale of a building and other non-recurring items. For the nine months ended September 30, 2021, other significant (income) expenses, net, includes strategic deal costs, moving costs, and other non-recurring items.
Reconciliation of Segment and Consolidated GAAP Cost of Revenue, Gross Profit and Gross Profit Margin to
Non-GAAP Adjusted Cost of Revenue, Adjusted Gross Profit and Adjusted Gross Profit Margin
(Unaudited, dollars in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||
Clinical Services: | ||||||||||||||||||||
Total revenue (GAAP) | $ | 106,162 | $ | 102,227 | 3.8% | $ | 310,588 | $ | 300,119 | 3.5% | ||||||||||
Cost of revenue (GAAP) | $ | 65,261 | $ | 59,560 | 9.6% | $ | 197,563 | $ | 178,358 | 10.8% | ||||||||||
Adjustments to cost of revenue(4) | (4,264 | ) | (4,239 | ) | (12,792 | ) | (10,267 | ) | ||||||||||||
Adjusted cost of revenue (non-GAAP) | $ | 60,997 | $ | 55,321 | 10.3% | $ | 184,771 | $ | 168,091 | 9.9% | ||||||||||
Gross profit (GAAP) | $ | 40,901 | $ | 42,667 | (4.1)% | $ | 113,025 | $ | 121,761 | (7.2)% | ||||||||||
Adjusted gross profit (non-GAAP ) | $ | 45,165 | $ | 46,906 | (3.7)% | $ | 125,817 | $ | 132,028 | (4.7)% | ||||||||||
Gross profit margin (GAAP) | 38.5 | % | 41.7 | % | 36.4 | % | 40.6 | % | ||||||||||||
Adjusted gross profit margin (non-GAAP) | 42.5 | % | 45.9 | % | 40.5 | % | 44.0 | % | ||||||||||||
Pharma Services: | ||||||||||||||||||||
Total revenue (GAAP) | $ | 22,620 | $ | 19,113 | 18.3% | $ | 60,435 | $ | 58,478 | 3.3% | ||||||||||
Cost of revenue (GAAP) | $ | 14,628 | $ | 14,541 | 0.6% | $ | 42,389 | $ | 38,436 | 10.3% | ||||||||||
Adjustments to cost of revenue(5) | (589 | ) | (586 | ) | (1,767 | ) | (586 | ) | ||||||||||||
Adjusted cost of revenue (non-GAAP) | $ | 14,039 | $ | 13,955 | 0.6% | $ | 40,622 | $ | 37,850 | 7.3% | ||||||||||
Gross profit (GAAP) | $ | 7,992 | $ | 4,572 | 74.8% | $ | 18,046 | $ | 20,042 | (10.0)% | ||||||||||
Adjusted gross profit (non-GAAP ) | $ | 8,581 | $ | 5,158 | 66.4% | $ | 19,813 | $ | 20,628 | (4.0)% | ||||||||||
Gross profit margin (GAAP) | 35.3 | % | 23.9 | % | 29.9 | % | 34.3 | % | ||||||||||||
Adjusted gross profit margin (non-GAAP) | 37.9 | % | 27.0 | % | 32.8 | % | 35.3 | % | ||||||||||||
Consolidated: | ||||||||||||||||||||
Total revenue (GAAP) | $ | 128,782 | $ | 121,340 | 6.1% | $ | 371,023 | $ | 358,597 | 3.5% | ||||||||||
Cost of revenue (GAAP) | $ | 79,889 | $ | 74,101 | 7.8% | $ | 239,952 | $ | 216,794 | 10.7% | ||||||||||
Adjustments to cost of revenue(4)(5) | (4,853 | ) | (4,825 | ) | (14,559 | ) | (10,853 | ) | ||||||||||||
Adjusted cost of revenue (non-GAAP) | $ | 75,036 | $ | 69,276 | 8.3% | $ | 225,393 | $ | 205,941 | 9.4% | ||||||||||
Gross profit (GAAP) | $ | 48,893 | $ | 47,239 | 3.5% | $ | 131,071 | $ | 141,803 | (7.6)% | ||||||||||
Adjusted gross profit (non-GAAP ) | $ | 53,746 | $ | 52,064 | 3.2% | $ | 145,630 | $ | 152,656 | (4.6)% | ||||||||||
Gross profit margin (GAAP) | 38.0 | % | 38.9 | % | 35.3 | % | 39.5 | % | ||||||||||||
Adjusted gross profit margin (non-GAAP) | 41.7 | % | 42.9 | % | 39.3 | % | 42.6 | % | ||||||||||||
(4) Clinical Services cost of revenue adjustments for both the three months ended September 30, 2022 and September 30, 2021 includes $4.3 million of amortization of acquired Inivata developed technology intangible assets. Clinical Services cost of revenue adjustments for the nine months ended September 30, 2022 include $12.8 million of amortization of acquired Inivata developed technology intangible assets. Clinical Services cost of revenue adjustments for the nine months ended September 30, 2021 include write-offs of $5.3 million for COVID-19 PCR testing inventory and $5.0 million of amortization of acquired Inivata developed technology intangible assets.
(5) Pharma Services cost of revenue adjustments for both the three months ended September 30, 2022 and September 30, 2021 include $0.6 million of amortization of acquired Inivata developed technology intangible assets. Pharma Services cost of revenue adjustments for the nine months ended September 30, 2022 and September 30, 2021 include $1.8 million and $0.6 million of amortization, respectively, of acquired Inivata developed technology intangible assets.
Reconciliation of GAAP Net (Loss) Income to Non-GAAP Adjusted Net Loss and GAAP EPS to Non-GAAP Adjusted EPS
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net (loss) income (GAAP) | $ | (36,852 | ) | $ | (20,348 | ) | $ | (121,563 | ) | $ | 33,412 | |||||
Adjustments to net (loss) income, net of tax: | ||||||||||||||||
Amortization of intangibles | 8,490 | 8,474 | 25,470 | 14,683 | ||||||||||||
Acquisition and integration related expenses | 197 | 1,533 | 2,479 | 13,345 | ||||||||||||
Write-off of COVID-19 PCR testing inventory and equipment | - | - | - | 6,061 | ||||||||||||
CEO transition costs | 2,792 | 11 | 4,518 | 575 | ||||||||||||
Non-cash stock-based compensation expense | 4,280 | 5,237 | 20,009 | 12,396 | ||||||||||||
Gain on investment in and loan receivable from non-consolidated affiliate, net | - | (17,750 | ) | - | (109,260 | ) | ||||||||||
Loss contingency for regulatory matter | - | 10,500 | - | 10,500 | ||||||||||||
Other significant (income) expenses, net(6) | 3,195 | 2,578 | 6,240 | 3,013 | ||||||||||||
Adjusted net loss (non-GAAP) | $ | (17,898 | ) | $ | (9,765 | ) | $ | (62,847 | ) | $ | (15,275 | ) | ||||
Net (loss) income per common share (GAAP) | ||||||||||||||||
Diluted EPS | $ | (0.30 | ) | $ | (0.17 | ) | $ | (0.98 | ) | $ | 0.28 | |||||
Adjustments to diluted (loss) income per share: | ||||||||||||||||
Amortization of intangibles | 0.07 | 0.07 | 0.21 | 0.12 | ||||||||||||
Acquisition and integration related expenses | - | 0.01 | 0.02 | 0.11 | ||||||||||||
Write-off of COVID-19 PCR testing inventory and equipment | - | - | - | 0.05 | ||||||||||||
CEO transition costs | 0.02 | - | 0.04 | - | ||||||||||||
Non-cash stock-based compensation expense | 0.03 | 0.04 | 0.16 | 0.10 | ||||||||||||
Gain on investment in and loan receivable from non-consolidated affiliate, net | - | (0.14 | ) | - | (0.90 | ) | ||||||||||
Loss contingency for regulatory matter | - | 0.09 | - | 0.09 | ||||||||||||
Other significant (income) expenses, net(6) | 0.03 | 0.02 | 0.05 | 0.03 | ||||||||||||
Rounding and impact of diluted shares in adjusted diluted shares(7) | 0.01 | - | (0.01 | ) | (0.01 | ) | ||||||||||
Adjusted diluted EPS (non-GAAP) | $ | (0.14 | ) | $ | (0.08 | ) | $ | (0.51 | ) | $ | (0.13 | ) | ||||
Weighted average shares used in computation of adjusted diluted EPS: | ||||||||||||||||
Diluted common shares (GAAP) | 124,425 | 122,559 | 124,055 | 121,356 | ||||||||||||
Dilutive effect of options, restricted stock, and converted shares(8)(9) | - | - | - | (2,269 | ) | |||||||||||
Adjusted diluted shares outstanding (non-GAAP) | 124,425 | 122,559 | 124,055 | 119,087 | ||||||||||||
(6) For the three months ended September 30, 2022, other significant (income) expenses, net, includes consulting fees related to Project Catalyst (our value capture program), fees related to a regulatory matter and other non-recurring items. For the three months ended September 30, 2021, other significant (income) expenses, net, includes strategic deal costs, moving costs and other non-recurring items. For the nine months ended September 30, 2022, other significant (income) expenses, net, includes fees related to a regulatory matter, consulting fees related to Project Catalyst (our value capture program), moving costs, a gain on the sale of a building and other non-recurring items. For the nine months ended September 30, 2021, other significant (income) expenses, net, includes strategic deal costs, moving costs, and other non-recurring items.
(7) This adjustment is for rounding and, in those periods in which GAAP net (loss) income is negative and adjusted net (loss) income is positive or GAAP net (loss) income is positive and adjusted net (loss) income is negative, also compensates for the effects of additional diluted shares included or excluded in adjusted diluted shares outstanding for the treasury stock impact of outstanding stock options and restricted stock and the if-converted impact of convertible notes.
(8) In those periods in which GAAP net (loss) income is negative and adjusted net (loss) income is positive, this adjustment includes any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period, until the effect of these adjustments are anti-dilutive.
(9) In those periods in which GAAP net (loss) income is positive and adjusted net (loss) income is negative, this adjustment excludes any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period.
Supplemental Information
Clinical(10) Tests Performed and Revenue
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Clinical(10): | ||||||||||||||||||||||||
Number of tests performed | 270,899 | 272,732 | (0.7) | % | 809,916 | 815,008 | (0.6) | % | ||||||||||||||||
Average revenue/test | $ | 392 | $ | 375 | 4.5 | % | $ | 383 | $ | 366 | 4.6 | % | ||||||||||||
(10) Excludes tests and revenue for Pharma Services.
SOURCE: NeoGenomics, Inc.
View source version on accesswire.com:https://www.accesswire.com/724493/NeoGenomics-Reports-Third-Quarter-2022-Results
