Neogenomics Inc Q3 2024 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 questions. I want to ask in the profitability evaluation here. You are making the nice try in expanding the margin, I think incremental margin on revenue growth has been averaging about 60% the last few quarters. I guess, how should we be thinking about you balancing continued investment into growth opportunities? While also expanding that moving forward. And I want to also point on Q4, it does imply a little bit of a decline in margin. So I guess just any thoughts there, I appreciate it. Thanks.

Question: David Westenberg - Piper Sandler Companies - Analyst : Hey, good morning guys. Thank you for taking the question. So, just in terms of you now are even a positive for, for a number of quarters that keeps tracking in the right direction. What are you thinking now about capital deployment? Are tuck in acquisitions available to you now? And I would say like the National Labs, for instance, question lab core are actually seeing an uptake of available, you know, outreach programs and whatnot. I know, you know, oncology outreach programs are probably not as numerous as others, but are, are those available to you? And if capital employment is not a consideration or less of a consideration, would you think about buybacks at this level? Thank you.

Question: David Westenberg - Piper Sandler Companies - Analyst : Thank you. That, that was a really long answer. So I hopefully this one will be a little bit shorter. I just don't want to hog there's a lot of analysts covering. So just in terms of a continuation of Andrew's question, you know, you really have gotten really good operating leverage and even kind of the you know, as you're lapping these tough comps, you're still kind of getting the operating leverage here. So if we think about on a go forward basis, how much of that has just been low hanging fruit in terms of cuts versus you know, going forward, I mean, you are expanding the sales force. So I don't know if there's necessarily human capital, you know, reduction in [human] capital. Just kind of what do we think about operating leverage on a go forward basis considering those factors?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got it. Thank you.

Question: Mike Matson - Needham and Company - Analyst : Yeah, thanks guys. So I guess first, just with regard to the hurricanes, was there any sort of impact to your revenue in the third quarter or do you Expect any sort of impact in the fourth quarter?

Question: Mike Matson - Needham and Company - Analyst : Okay. Got it. And then just as far as the, the newer NGS test PanTracer and AML express, can you maybe just talk about the market opportunity or TAM with those?

Question: Matt Hewitt - Craig-Hallum Capital Group - Analyst : Good morning, and congratulations on the good quarter and I'm not sure if you're going to have this number, but you, you commented that you've launched or upgraded 13 tests over the last 18 months. How much has that contributed to your growth during that period? And how should we think about new launches, particularly the ones you've commented on impacting your growth for next year?

Question: Matt Hewitt - Craig-Hallum Capital Group - Analyst : That's, that's really helpful. Thank you. And then you, you commented that you know that you're adding to your commercial team, could you give us a head count maybe exiting Q3 and your anticipated ads before the end of the year.

Question: Matt Hewitt - Craig-Hallum Capital Group - Analyst : Got it. Thank you very much.

Question: Prashant Kota - Goldman Sachs - Analyst : Hey guys, congrats on the quarter. This is Prashant Kota, on for Matt. Can you talk about the pacing or timeline of R&D spend left in the development of the new RaDaR? And can you also help quantify the amount of R&D spend needed to fully develop this new product?

Question: Prashant Kota - Goldman Sachs - Analyst : Got it. Thank you and, and just any call following up on that on how incremental of a step up in top line growth, longer term will including the new RaDaR provide as previously mentioned.

Question: Prashant Kota - Goldman Sachs - Analyst : Got it.

Question: Mark Massaro - BTIG - Analyst : Yeah, so I just wanted to start with the NEO PanTracer. You know, I do agree with Warren that the therapy selection market is under penetrated. I think there are some people that wrongly think it's saturated and the growth curve is done. I disagree with that, but I would interested to hear -- Yeah, I would be interested to hear how you think you plan to compete on sensitivity and limit of detection. I know that is one of the core metrics. Should we expect any papers just to show perhaps a comparison on the data? And then I also want to ask, how quickly do you think you can turn on payer coverage for PanTracer LBx, both from CMS and commercial. And I'm curious if you think it can contribute to your 2025 revenue. Thank you.

Question: Mark Massaro - BTIG - Analyst : Excellent. Then real quick as a follow up, you know, advanced diagnostics has been under pressure for the last few quarters or so. Can you maybe just walk us through what you believe to be the key elements of potentially staging a recovery in '25? I understand you'll be going up against probably easier comps, but just walk us through what you think the key levers there are.

Question: Mason Carrico - Stephens Incorporated - Analyst : Hey, guys, I'll ask my two upfront here if that's all right. Could you talk about the ordering patterns that you've seen from docs who start ordering the larger solid tumor panels from you guys? Are they typically one off orders? Do they tend to move most of their volumes over once they start ordering? Just trying to get a sense for how volumes may shift once the liquid panel launches. And then second, do you think that having the liquid assay could end up driving more neo comprehensive volume? Just given how having both of those products available may be valuable to clinicians given how they can reflex to the other if necessary.

Question: Mason Carrico - Stephens Incorporated - Analyst : Got it. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, NEO.OQ - Q3 2024 Neogenomics Inc Earnings Call

Question: John Kim - Bank of America - Analyst : Hello, good morning. This is John Kim for Michael. I -- so I think in the past you've talked about NGS reaching perhaps 50% of the clinical revenues. Is there a clear time line for that as we stand where we are from the 31%. And then you mentioned the Informatics piece, I'll ask my second question as well here. The has there been any initial uptake or feedback there. In terms of the licensing the data to the pharma's?

Question: John Kim - Bank of America - Analyst : Noted, all right. Thank you.

Question: Andrew Cooper - Raymond James - Analyst : Hey guys. Thanks for the question. Good morning. Lot's already been asked. So maybe just one. Could you dive in a little bit deeper on the NEO Helix? I think you said in terms of the new roll out to the customer facing and patient facing technologies. And I think you mentioned including clinical decision support there. So, is that integrating or how do we think about kind of some of those pieces that you've acquired over the years and potentially any ability to monetize those products? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, NEO.OQ - Q3 2024 Neogenomics Inc Earnings Call

Question: Andrew Cooper - Raymond James - Analyst : Great. And if I can sneak in just one more quickly, you know, there was a sizable deal announced in the space last night. Just curious kind of your thoughts and you know, as you do look out at that M&A landscape, you know, how you would have thought about that potential deal and what it does to maybe change the competitive landscape if at all.

Question: Andrew Cooper - Raymond James - Analyst : Great. I'll stop there. Thank you.

Question: Puneet Souda - SVB Leerink Partners - Analyst : Yeah, no worries Chris, I'll just given the time I'll combine my question for the AUP increase. You continue to see benefit from on the NGS side for several quarters. Now, is it safe to assume the AUP that we're seeing in the quarter here, at least as a baseline for, you know, 2025. And then on the clinical side and the on the commercial payer pressure questions that a competitor had recently, just wondering, you know, can you provide us how much of the mixes clinical revenues for you is commercial versus Medicare versus the traditional hospital contracts that you had. Thank you.

Question: Puneet Souda - SVB Leerink Partners - Analyst : That's helpful. And then on the NGS side, the up for 2025.

Question: Puneet Souda - SVB Leerink Partners - Analyst : Okay. All right. Thanks guys.