Neogenomics Inc Q1 2025 Earnings Call Transcript

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

Question: Andrew Brackman - William Blair & Company, LLC - Analyst : Hi guys, good morning. Thanks for taking the questions. Tony, maybe to start where you sort of left off there, can you maybe just sort of talk to us about the last 30 days at the helm? Is there anything that maybe made you more optimistic about the business or its outlook? And I guess conversely to that, any areas of the business that you think maybe need a little bit more attention than you thought coming in here. Thanks.

Question: Andrew Brackman - William Blair & Company, LLC - Analyst : Perfect. And then maybe just on NGS here, I think more and you caught out five new products drive 22% of the clinical revenue. You maybe just unpack that a little bit for us. Is that sort of broad based across the 5 tests, or is there maybe one or two that drive that and related there as we sort of think about these new product launches later this year in particular, PanTracer LBx, is this the type of growth trajectory that we should anticipate over the next couple of years for that product, or is it going to be something different? Thank you.

Question: Andrew Brackman - William Blair & Company, LLC - Analyst : Great, thank you.

Question: Dan Brennan - T D Cowen - Analyst : Great, thank you. Maybe the first question would just be on the farmer business. You talked a lot about some of the headwinds that are happening right now. Maybe you could just walk through, the full year guide. I think you said declined, so maybe just elaborate on kind of what's expected in Q2 for the rest of the year on the farm and kind of what your visibility is on reaching those goals.

Question: Dan Brennan - T D Cowen - Analyst : Okay, got that. And then maybe just on the guide itself, you just mentioned, sorry about that. Speaker, yeah, you just mentioned Pathline $17 million, that is below the $20 million, so just that conservatism, just kind of what's going on with Pathline and if you think about the Q2 guide, just how much of Pathline is in that Q2 guide versus the underlying core Neo and. I know you cited some headwinds this quarter with leap year and a tough comp. Are there any things we should be thinking about for Q2 in terms of any factors that might influence the Q2, clinical numbers? Thank you.

Question: Dan Brennan - T D Cowen - Analyst : Okay, I'll get back in the queue. Thank you.

Question: Tejas Savant - Morgan Stanley - Analyst : Hey guys, good morning, and thanks for the time. Maybe, just one on the balance sheet, after paying down the convert, looks like you have about $150 million in cash. So there's another, I think $340 million convert in Jan 28. Just walk us through how you're thinking about sort of flexibility to invest in the business, in this, the multiple NGS launches, plus MRD development coming up, and also, you've got, an organic [tuckins] that you've talked about in the past, potentially. So just walk us through, the capital deployment and internal investment flexibility here in the context of the converts and where you'll be on after the pay down.

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. That's super helpful. And then maybe a couple on the pipeline for either Tony or Warren here. On the PanTracer liquid biopsy launch, can you just share like how many of your customers do you see eventually ordering both Neo-comprehensive and PanTracer concurrently, or should we just think of these as, The comprehensive offering first in cases is not available, then you're going to reflex to the LBx assay and then second, on the MRD sort of timelines that you that you laid out, is there anything you can do to pull forward that sort of Next-Gen assay timeline and are you at this point done with clear validation of radar 1.1? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 12:30PM, NEO.OQ - Q1 2025 Neogenomics Inc Earnings Call

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Super helpful guys. Thank you.

Question: Mike Matson - Needham & Company - Analyst : Yeah, good morning. I guess, Tony, I just want to ask about your comments on M&A, you have already done your one since you've joined the company, or I guess become CEO with Pathline, so should we expect to pick up in M&A activity over the next couple of years?

Question: Mike Matson - Needham & Company - Analyst : Okay, got it. And then just as far as the annual guidance, I mean, you're effectively maintaining the organic guidance, but you do have sort of an increased headwind from the non-clinical side. I understand that you expect upside on the clinical business to offset that, but I mean, should we be modelling things maybe at the lower end of the range now, just given that kind of incremental headwind in that the non-clinical business.

Question: Mike Matson - Needham & Company - Analyst : Okay, got it. Thank you.

Question: Matt Sykes - Goldman, Sachs & Co - Analyst : Hi, good morning. Thanks for taking my questions. Maybe just one on the average revenue per test, noted that the sequential step down in Q1. You've made a lot of progress over the past year on that. But just from a modelling, perspective, like how should we think about average revenue per test as we move to the year, have we hit sort of a ceiling in the near term in terms of what you can do, or is there still room to improve that any puts and takes for the sequential step down this quarter?

Question: Matt Sykes - Goldman, Sachs & Co - Analyst : Got it. Thanks, Jeff. Very helpful. And then one for you, Warren, just with the commercial and operations under your leadership, could you maybe call out some of the potential synergies you could sort of apply to that both being under your leadership, whether it's sort of ease of ordering for providers that will help your commercial team or other kind of examples of how you can drive some synergies now that those are both under your leadership.

Question: Matt Sykes - Goldman, Sachs & Co - Analyst : Great, thank you very much.

Question: David Westenberg - Piper Sandler - Analyst : Hi, thank you for taking the question. So first I just want to talk about or ask about the salesforce maturity and on average how long does it take for your salesforce to reach a full kind of productivity and where are we at right now with the with the sales ads?

Question: David Westenberg - Piper Sandler - Analyst : Got it. So if we're just thinking about contributions here, from salesforce as an isolated variable, I mean we should probably look at this as like kind of a Q4 and maybe even into to 26 is kind of the acceleration point.

Question: David Westenberg - Piper Sandler - Analyst : Got it. Great. And then just a really quick question for Jeff here. Can you talk about is was there any impact of wildfires in Southern California? I think of, you've made the acquisition of Genoptics, Clarion. I'm guessing you have a very high percentage of revenue in Southern California. And if that is indeed the case, could you see any benefits in the later half of the year because you know cancer testing doesn't just go away, it just gets pushed back. Thank you.

Question: Mason Carrico - Stephens - Analyst : Hey guys, thanks for the questions. Maybe going back to a prior question here on ASP and asking it a different way. I realized Pathline is going to be dilutive to ASP near term, but have your expectations around the runway for core Neo's ASP changed at all compared to maybe a quarter ago? I think last quarter when you guys gave guidance, you talked about clinical revenue growth this year being driven by a similar mix of volume and ASP growth as it was last year.

Question: Mason Carrico - Stephens - Analyst : Got it. Okay. And then could you also just talk about how quickly you'll expect to begin driving adoption of the broader portfolio with Pathline customers? It seems like, and correct me if I'm wrong here, but that's more of a 2026 opportunity. Just could you give us a sense of how much of that benefit is baked in this year, why it shouldn't be playing out more materially in the back half if it's not really baked in any details there?

Question: Mason Carrico - Stephens - Analyst : Got it thank you.

Question: Andrew Cooper - Raymond James - Analyst : Hi everybody, thanks for the questions. Let me just first to stick on MRD and you talked about queuing up for operational readiness for 1.1. Maybe just remind us some of the hurdles there and how you think about that launch as the October trial nears and kind of what thresholds or stage gates you need to get through before we see that out commercially?

Question: Andrew Cooper - Raymond James - Analyst : Okay, helpful. And then just maybe one on the P&L a little bit, at least for us our numbers, R&D was a little higher, sales and marketing a little bit lower for the quarter. So just maybe some context to think about the jumping off points there. I know Warren, you mentioned the Salesforce ramp is largely in place at least now. Should we think about build from the 12 levels and maybe what magnitude, and kind of same question on R&D would be great, and then I'll jump back in the queue.

Question: Andrew Cooper - Raymond James - Analyst : Great. I appreciate the questions.

Question: Mark Massaro - BTIG, LLC - Analyst : Hey guys, thank you for taking the questions. So I wanted to ask about the partnership with Adaptive. I think many people recognize the value of clonoSEQ as, perhaps one of the fastest growing tests in the heme space, but I'm, I would love to get some clarity around how this partnership will be additive to you and so, I appreciate that you're planning to launch in Q3. I believe that this is tied into your compass and chart menu, but I'm trying to get a sense for how it will be incremental to Neogenomics. Should we expect any revenue contribution in in 2025 or 2026, and just strategically, can you remind us how this sort of is beneficial to NO?

Question: Mark Massaro - BTIG, LLC - Analyst : Thanks. Okay, fantastic. Just a quick clarification question. So you submitted PanTracer liquid to MolDx for reimbursement coverage. Is that something that you think can come in maybe at the end of this year and just give us a sense if you're expecting a draft or a final to come in? I'm just wondering if you think you can go straight to final.

Question: Mark Massaro - BTIG, LLC - Analyst : Great thanks guys.

Question: Puneet Souda - Leerink Partners - Analyst : Yeah, hi guys. Thanks for the question. So, first one, correct me if I'm wrong, but the way you're pointing out to the NGS growth, it does appear to be lower versus before, I'm just trying to understand is that just largely comp or is there, do you, what is the longer term NGS growth expectation, and more importantly, the AUP, the core AUP is that lower beyond just the path line dilution. What I'm trying to get to is, how should we think about the overall growth for clinical volumes and revenue for Neogenomics going forward and longer term because I think that's the really the key question here, core to your business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 12:30PM, NEO.OQ - Q1 2025 Neogenomics Inc Earnings Call

Question: Puneet Souda - Leerink Partners - Analyst : Okay, and then just go ahead, sorry, just a quick follow up on the cost if I may, what are other initiatives that you have in place, in order to lower the cost just given the, NGS growth, is a bit softer near term second half it does recover, and lower core AUP growth.