Neogenomics Inc at Morgan Stanley Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tejas Savant - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>Maybe, Chris, just to kick things off, could you just outline NeoGenomics' accomplishments this year in your view against a decidedly tough macro backdrop. What are you particularly proud of?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Yes. Maybe let's start with the clinical side of things. You've demonstrated really good ability to improve AUP. I think last quarter was the 13th consecutive quarter where AUP went up. As you look to next year, what do you think are the main levers you intend to pull? Is it predominantly that NGS mix? Or do you see room from the RCM initiatives as well?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Makes sense. You talked about NGS being as a percent of the clinical services -- could reach north of 50% down the road. Everyone wants to know the slope of that versus the 25% or so you're at today. What are the main drivers of adoption that you're focused on? And as we think about the next, say, three years, are there sort of step function increases that you envision? Or is this one of those situations where every year, it should go up by, I don't know, maybe like 3% to 4%? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 2:45PM, NEO.OQ - Neogenomics Inc at Morgan Stanley Global Healthcare Conference

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. Maybe talking about sort of your leadership position within heme. Can you speak a bit to how you're leveraging that there to expand into new accounts within the community setting and also using that to drive further adoption of the rest of your NGS portfolio?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. One, maybe -- this one's for you as well. Talk to us about just how much further investing in the commercial team you need to do? And I think, Chris, you talked about using AI tools for increasing the sales force effectiveness. Talk to us about where you are on that journey and how much more you can do there?

Question: Tejas Savant - Morgan Stanley - Analyst : Fair enough. One on the nonmolecular side of things, what's the status [power] on just the price degradation to anticipate going forward? And could we see you rationalize the offering there as you focus more heavily on NGS? Or does the importance of being a true leader of comprehensive one-stop shop outweigh the benefit, particularly in the community setting? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 2:45PM, NEO.OQ - Neogenomics Inc at Morgan Stanley Global Healthcare Conference

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Switch to -- which you mentioned, Warren just now. What differentiates [Pantry] serve from the other liquid biopsy CGP tests in the market? Is what you just said about the portfolio approach and then being a one-stop shop, enough of a hook to get physicians to try you and switch eventually their liquid biopsy needs over to you?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. What's the degree of concurrent testing that you see today between -- well, I guess, a bit of an unfair question because you're not really live in liquid yet. But eventually, what do you expect to see in terms of the overlap between tissue plus liquid? And then what about sort of RNA testing in addition to tissue? Because both of those seem to be increasingly ordered together?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. Quickly on the MolDX process on Pantai, where do things stand? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 2:45PM, NEO.OQ - Neogenomics Inc at Morgan Stanley Global Healthcare Conference

Question: Tejas Savant - Morgan Stanley - Analyst : Maybe on just the launch of a bunch of these new tests that you have in the hopper. How are you thinking about the impact to margins when they initially launch and scale up? Will you be sort of gearing volumes ahead of broad reimbursement? Or do you think there's some merit in building mind share so that once the reimbursement comes, you're already live and people are aware of the offering?

Question: Tejas Savant - Morgan Stanley - Analyst : Jeff, one for you and just you've done a bunch of restructuring activities in advanced diagnostics and you now expect to return to year-over-year growth. What gives you confidence in that outlook in the remainder of this year and then to '25? From our customers, still seem to be grappling with budget constraints and reprioritizing pipelines. There's some sort of renewed IRA and patent cliff concerns that some of the preclinical CROs have been talking about as well in June and July. So just talk to us about that.

Question: Tejas Savant - Morgan Stanley - Analyst : Got it.

Question: Tejas Savant - Morgan Stanley - Analyst : Chris, switching to MRD, everyone agrees it's great market to be in, lots of exciting development there and payer front as well sooner than a lot of folks had expected. How do you think about Neo's right to win in MRD, right? I mean it's a complicated market in terms of all the litigation that's going on. But even beyond that, there seems to be an emphasis placed by oncologists and lots of publications and especially as more and more test launch in the market, that becomes a bigger differentiator. So just talk to us about the journey there for you over the next few years.

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. So Chris, on the sort of future versions of RaDaR, where do things stand in terms of development timelines? When can we expect to see perhaps some more lead data?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Speaking of IP, I mean, [Twinsran] has had some success asserting their duplex sequencing IP against companies in the space using cell-free DNA-based liquid biopsy tests. Is this something you're keeping an eye on? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 2:45PM, NEO.OQ - Neogenomics Inc at Morgan Stanley Global Healthcare Conference

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. I want to switch gears a little bit to the digital transformation that's underway. Talk to us about any improvement you've seen in account stickiness or perhaps even integration with customers EMRs?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Chris, talk to us about your internal data lake. What proportion of it is multimodal data that's matched with patient outcomes versus just test results? And how are you thinking about monetizing your data lake beyond working with pharma customers as a clinical trial vendor?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. Jeff, a couple of quick ones for you to wrap it up on the guide and the outlook. Second half of this year, how do you think about the upside drivers there? What are you baking in for a biopharma uptick in the fourth quarter and new product contributions?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. And then, Chris, one for you on just the margin outlook, right? You've bumped your sort of long-term growth targets, ex-MRD as well. So as we think about the margin expansion opportunity, what are the biggest levers? Is it all essentially a function of mix shift with a little bit more from efficiency initiatives?

Question: Tejas Savant - Morgan Stanley - Analyst : So the mix is going to be a driver of that, but also RCM pricing, that's 100%...

Question: Tejas Savant - Morgan Stanley - Analyst : Perfect. 10 seconds, Chris, strategic acquisitions. I mean, you've talked about that a little bit of late. Where is your head at? And what do you see in the pipeline?

Question: Tejas Savant - Morgan Stanley - Analyst : Fair enough. Great place to leave it at. So thank you so much, guys for...