NeoGenomics Inc. (NGNM) Announces First Quarter Results for 2011
Seeking Alpha Analyst Since 2008
NeoGenomics, Inc., an operator of cancer-focused testing laboratories in the US and Caribbean, recently released its first quarter results for the year 2011.
Revenue for the first quarter of 2011 was $8.8 million, a 5% increase over the first quarter revenue of 2010, which was $8.4 million. Test volumes surged by approximately 10% over the comparable quarter of last year. Severe weather also had severe impacts on results for January and February, but volume increased steadily throughout the remaining half of the quarter. After adjusting for internalization of testing by one major client in 2010, revenue and test volume from all other clients increased by 11% and 19%, respectively.
Average price-per-test fell by 5% from the first quarter of 2010. This decline was mainly caused by a 50% decrease in the Company’s average reimbursement for bladder cancer FISH testing as a result from Medicare and various commercial insurance carries limiting reimbursement, which began in January 2011. Bladder cancer FISH testing now consists of 4% of total revenue compared to about 7% of revenue for the fourth quarter in 2010.
Average price decline was also affected by the 1.75% decrease in the reimbursement given by Medicare for all tests covered by the Clinical Lab Fee Schedule. The Company’s larger Medicare carriers decreased the maximum allowable number of markers reimbursable for flow cytometry testing in late 2010. This 5% decline in average unit prices declined revenue and gross profit by almost $425,000, compared with the first quarter of last year.
Sales and marketing expenses remained flat compared with the previous year. General and Administrative expenses fell by $79,000, or 3%, mainly as a result of a decline in R&D expenditures. The company continues to mainly focus on the management of general and administrative costs and the number of fill time employees was the same for both first quarters of 2010 and 2011. Net loss for the quarter was $839,000, or ($0.02)/share, versus the net loss of $750,000, or ($0.02)/ share, for the first quarter 2010.
Doug VanOort, the Company’s Chairman and CEO, commented, “We are generally pleased with our first quarter results. Although revenue was impacted by adverse weather during the first two months and a meaningful decline in average unit price, we finished the quarter very strong. Indeed, the number of tests reported per day in March was 17% higher than it was in January. We expect sales momentum to continue to build as 2011 unfolds as a result of the significant investments we made to improve our sales force productivity over the last year.”
Mr. VanOort continued, “The declines in average unit price in the first quarter were slightly higher than we anticipated, and had a disproportionately large impact on our profitability. We believe these price declines negatively impacted Adjusted EBITDA and net income by approximately $400,000 in the quarter. Moving forward in 2011, we do not expect any more significant pressure on average unit price other than potential impacts due to changes in our test mix. Thus, we should begin to see our gross margin increase as test volumes rise.”
Mr. VanOort concluded, “We have started to actively explore listing on the either the NASDAQ Capital Market or the NYSE AMEX exchange. Our goal is to complete a listing on either exchange by the end of this year.” The Company also issued preliminary guidance for the second quarter 2011 today.
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