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NeoGenomics Laboratories

TICKER: NEO:NASDAQ

NeoGenomics Laboratories is a high-complexity cancer genetics laboratory servicing the anatomic pathology and oncology markets. Its testing services are designed to answer questions related to diagnosis, prognosis and therapy selection for hematologic and solid tumor cancers.


The information provided below is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.

Expert Comments:

Debjit Chattopadhyay, ROTH Capital Partners (9/10/14) "For 2014 and 2015, we expect core business test volume growth of ~25% and ~18%, respectively, for NeoGenomics Laboratories. . .we believe that the company's comprehensive product menu and the Covance Inc. partnership have been instrumental in some key business wins. . .emerging data from the non-invasive prostate cancer test continues to look good. . .in our opinion, NeoGenomics is one of the best-positioned and managed high-complexity oncology reference labs on the brink of significant revenue acceleration, even despite its reimbursement headwinds."

Debjit Chattopadhyay, ROTH Capital Partners (8/21/14) "For 2014 and 2015, we expect test volume growth of ~25% and ~18%, respectively, from NeoGenomics Laboratories' core business; our growth assumption excludes contributions from Pathology Laboratories, noninvasive prostate cancer test (NeoSCORE) and Covance (CVD-NC). While we expect the next few quarters to be noisy as the Pathology Laboratories business gets internalized, it does not impact our long-term thesis on NeoGenomics."

Debjit Chattopadhyay, ROTH Capital Partners (8/15/14) "NeoGenomics Laboratories bolstered its balance sheet with ~$30M (net of fees) through a secondary offering priced at $4.60/share. The strengthened balance sheet offers management significant flexibility to invest in its noninvasive prostate cancer test and, most importantly, expand geographic presence through opportunistic tuck-in acquisitions."

Debjit Chattopadhyay, ROTH Capital Partners (8/4/14) "The pace of technology evolution has led to rapid dissemination of laboratory developed tests. The FDA believes that gaps in regulating these tests could compromise patient care, hence the FDA is proposing changes necessitating reporting, approval, and oversight. . .we anticipate a smooth transition for NeoGenomics Laboratories Inc.: Based on the flexibility being shown by the FDA, the company's extensive track record of growing test volume, its high client retention rates and significant in-house medical expertise, we do not expect any disruptions to the normal course of business."

The Life Sciences Report interview with Debjit Chattopadhyay (7/24/14) "Let's start with NeoGenomics Laboratories' management team. The CEO, Doug VanOort, has been on board for the last four years, and has done a stellar job in positioning the company. VanOort, during his tenure with Corning Life Sciences Inc., was instrumental in acquiring, merging and rationalizing over 100 different companies. . .he has an enormous amount of expertise in merger and acquisition (M&A) strategy and operations. That makes NeoGenomics unique compared to its peers. . .

The whole sector has experienced rate cuts from the Centers for Medicare and Medicaid Services. Since 2012, NeoGenomics has seen its average revenue per test decline by over $130. However, it has managed to reduce average cost per test by more than that number, resulting in rising gross margin. The company has a market cap of more than $250M right now, but a couple of weeks ago the market cap was $130–140M. For a company of this size to manage that level of rate cuts through improved efficiency shows Doug's expertise in managing through adversity. The company has seen significant volume growth because it is being perceived as a one-stop shop in cancer diagnostics. NeoGenomics is well positioned to drive operating leverage, and we see significant earnings growth during 2015. . ." More >

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Tony Schwartz, Seeking Alpha (7/23/14) "In Q2/14, NeoGenomics Laboratories posted record revenue of $20.7M, up 32% from Q2/13. The company expects to further reduce cost per test by another 8–10%. . .due to strong fundamentals and record revenue, we have raised our price target to $8/share from $7."

Grant Zeng, Zacks Small-Cap Research (7/21/14) "NeoGenomics Laboratories is attracting new clients and gaining market share due to its stream of innovative new tests and consistently high service levels; the company has been successful at increasing productivity and reducing costs. . .with the strong balance sheet, NeoGenomics will be able to focus on its long-term growth strategy without concern about short term cash strain. We continue to rate NeoGenomics shares Outperform and raise our price target to $8/share from the previous $7/share. NeoGenomics is an emerging leader in the genetic/molecular cancer testing market and holds numerous competitive advantages over its competitors. . .it is becoming America's premier cancer testing laboratory."

Robert Wasserman, Dawson James Securities (7/18/14) "Investors in NeoGenomics Laboratories have a lot to look forward to in the future. On the product research and development front, the company is diving deep into the next-generation sequencing market with its recent launch of 23 new NeoTYPE brand Cancer Profiles. . .and is making progress on its clinical trials services joint venture with Covance Inc. . .with a solid balance sheet, its first acquisition completed, recent technological advances in its product offerings. . .and a growing clinical trials business. . .we are maintaining our Buy rating on NeoGenomics shares and 12–18 month price target of $6/share."

Amanda Murphy, William Blair (7/18/14) "NeoGenomics Laboratories reported Q2/14 results that were in line with preannounced guidance, although underlying fundamentals were better than expected. . .we are encouraged by the underlying volume growth of 40% and the company's ability to expand gross margin (lowered cost of goods sold 12%), despite facing meaningful reimbursement changes related to fluorescence in-situ hybridization."

Amanda Murphy, William Blair (7/17/14) "NeoGenomics Laboratories reported second quarter results on July 17, 2014. . .the company increased full-year revenue guidance to $83–86M with EPS guidance of $0.00–0.03. . .Q2/14 revenue was $20.7M; EPS were $0.01. . .the firm reported revenue growth of 32.5%, driven by volume growth of 40.6%, and we are encouraged by the underlying volume growth of the company. . .the company reported solid cash flow from operations of $4.3M. . .gross profit margin increased to 49.5% (in line with our estimate), up from 45.9% a year ago."

Debjit Chattopadhyay, ROTH Capital Partners (7/15/14) "NeoGenomics Laboratories is one of the best-positioned high-complexity oncology reference labs on the brink of significant revenue acceleration, and is well-positioned to diversify its revenue base away from the Centers for Medicare and Medicaid Services (CMS). By our estimates, the CMS, which accounts for 25% of the company's current revenue, could see its contribution dwindle to 14% over the next 24 months, significantly reducing reimbursement-associated stock volatility. We reiterate our Buy rating and $7/share price target. . .NeoSCORE could be an $85M annual revenue stream for the firm, which would more than double the company's current revenue base."

Amanda Murphy, William Blair (7/11/14) "NeoGenomics Laboratories announced the launch of 23 next-generation sequencing (NGS) based panels. . .in our view, an expanded NGS menu further solidifies the company as a provider to the community and hospital-based pathologist. . . we continue to believe that NeoGenomics, with its tech-only model and focus on blood-based cancer, is well positioned in the space due to positive demographics and trends and given its model of enabling pathologists to participate in the diagnostic process."

Amanda Murphy, William Blair (6/23/14) "Before the markets opened Monday, June 23, NeoGenomics Laboratories preannounced positive results for Q2/14, which the company expects to report July 17. Revenue is expected to be $20–$20.5M (suggesting 30% growth at the midpoint), up from its previous estimate of $18.8–$19.3M (versus our estimate and StreetAccount consensus of $18.9M)."

Debjit Chattopadhyay, ROTH Capital Partners (6/9/14) "We recently hosted a series of investor meetings with NeoGenomics Laboratories' management. In our opinion, investor focus on Centers for Medicare & Medicaid Services-related reimbursement challenges ignores the continuously improving business fundamentals, and we continue to believe that our above-consensus estimates for 2015 could become the consensus; we reiterate our Buy rating and $6 price target."

Debjit Chattopadhyay, ROTH Capital Partners (5/12/14) "NeoGenomics Laboratories, a high-complexity oncology reference lab, is on the brink of significant revenue acceleration despite reimbursement headwinds. Shares of the company are currently trading at a price/sales multiple of 1.7 (peer group at 3.3) our above-consensus 2015 revenue estimate of $87.4M; we initiate coverage on NeoGenomics with a Buy rating and $6 price target."

Grant Zeng, Zacks Small-Cap Research (4/24/14) "NeoGenomics Laboratories just reported another strong quarter of financials for Q1/14; as a result, we have increased our revenue and earnings estimates for Q2/14 and FY14. The balance sheet remains strong. . .we continue to rate the company's shares Outperform based on NeoGenomics' strong fundamentals." -Zacks Small-Cap Research

Amanda Murphy, William Blair (4/23/14) "NeoGenomics Laboratories Inc. reported Q1/14 results that were above expectations. . .we are encouraged by the company's ability to expand its gross margin (average cost of goods sold per test decreased 6.5%), launch next-generation sequencing testing, and continue to win new accounts. Revenue of $18.2M was above consensus projections of $17.7M."

The Life Sciences Report Interview with Grant Zeng (4/17/14) "NeoGenomics Laboratories is a molecular diagnostic company providing molecular testing for cancer patients. The company grew revenue from $11.5M in 2007 to $66.5M in 2013, a 34% annual compound growth rate to date. The revenue will continue to grow to $145M in fiscal 2017, according to my model. The company is focused on the cancer-testing niche market, a huge market. There is great potential for the company to grow in the future." More >

Debjit Chattopadhyay, Emerging Growth Stocks (3/4/14) "NeoGenomics Laboratories became the exclusive oncology clinical reference lab for Covance central laboratory services, a division of Covance Inc. . .we estimate between 30–40% of Covance's central laboratory revenue is potentially derived from oncology clinical trials. If low- to mid-single digits flow through to NeoGenomics' centralized facilities, the company's top line could grow between $5.5–12M for FY/15 and FY/16, respectively, over and above the low-teen growth rate expected from its core business."

The Life Sciences Report Interview with Debjit Chattopadhyay (2/27/14) "The reference lab company that I currently follow is NeoGenomics Laboratories. . .every box on my laundry list of factors—and then some—is checked for this company. . .the company has been implementing internal control strategies, making its processes more efficient, and simultaneously benefiting from volume-driven operating leverage, allowing it to absorb the rate cuts and not see an impact on gross margins. For example, during Q4/13, test volume increased by 28% YOY, and despite an average revenue/test decline of 3.7%, the company delivered a 15.3% decrease in average cost of goods sold/test. As a result, NeoGenomics delivered 80% of the YOY revenue increase to gross profit during Q4/13, and increased net income by almost $1M.

NeoGenomics is now in the process of launching next-generation sequencing (NGS) for the clinical trial market. It's also in the process of launching a lab-developed, patient-paid plasma- and urine-based prostate cancer test. It also has an agreement with Covance Inc., a contract research organization (CRO), to do clinical studies for pharmas. . .it's important to note that pharma is primarily focused on molecularly targeted therapies. To use those you need to identify which patients have that specific chromosomal translocation or particular gene mutation. You must have the most sophisticated molecular diagnostic assays, the kind that NeoGenomics can provide. CROs are not set up to handle that, so the deal with Covance sets the stage for NeoGenomics to go to the next level." More >

Grant Zeng, Zacks Small-Cap Research (2/20/14) "NeoGenomics Laboratories just reported record revenue for Q4/13, the highest in the company's history; Q4/13 revenue also beat our estimate. The balance sheet remains strong. . .we continue to rate NeoGenomics shares Outperform based on the company's strong fundamentals." -Zacks Small-Cap Research

Drew Jones, Stephens Inc. (2/14/14) "NeoGenomics Laboratories is a very attractive investment for small-cap health care investors as the company is poised to continue its recent robust growth trends via share gains, menu expansion, increased direct sales efforts and potential mergers and acquisitions activity. Additionally, NeoGenomics will also begin to show meaningful penetration of the contract research organization opportunity. . .we are therefore initiating coverage on it."

Amanda Murphy, William Blair (1/8/14) "NeoGenomics Laboratories is one of the only labs to offer comprehensive tech-only services in blood-based cancer, which enables community- and hospital-based pathologists to participate in the diagnostic process. . .we see upside potential to the multiple and are initiating coverage with an Outperform rating."

Debjit Chattopadhyay, Emerging Growth Stocks (10/24/13) "We reiterate our Buy and are increasing our target to $5 (from $3.90) on NeoGenomics Laboratories. . .for Q3/13, the company reported revenue of $16.88M versus our expectation of $16.76M (up ~19% year over year)."

Grant Zeng, Zacks Small-Cap Research (10/13/13) "NeoGenomics Laboratories just reported record revenue for Q3/13 that also beat our estimate. The balance sheet remains strong and management has done a great job. . .the company is well poised for long-term growth. "NeoGenomics Laboratories just reported record revenue for Q3/13 that also beat our estimate. The balance sheet remains strong and management has done a great job. . .the company is well poised for long-term growth. We continue to rate shares Outperform based on the company's strong fundamentals."

Grant Zeng, Seeking Alpha (9/30/13) "As of this writing, share price for NeoGenomics Laboratories has almost tripled. We are still optimistic about the prospects for the company and think there is still a plenty of room for price appreciation in the next 12 months. . .NeoGenomics is continuing to progress in achieving its financial goals for 2013 and beyond. The company recorded record revenue for H1/13, despite the Technical Component Grandfather Clause expiration and significant Medicare reimbursement changes as compared to last year. The reimbursement challenge affects the whole industry, but NeoGenomics' management is doing a great job to manage its negative impact on both top line and bottom line for the company."

Grant Zeng, Zacks Small-Cap Research (7/31/13) "NeoGenomics Laboratories just reported Q2/13 financial results, which are in line with our expectations in spite of the expiration of technical component grandfather clause; management has done a great job to limit the impact of the technical component grandfather clause expiration and Medicare reimbursement by increasing test volume, launching new products and saving costs. The company is well poised for long term growth; we continue to rate NeoGenomics shares Outperform based on the company's strong fundamentals." -Zacks Small-Cap Research

The Life Science Report with Kevin DeGeeter (5/30/13) "NeoGenomics Laboratories is a good name. We continue to look at the business and note the company is operating very strongly. The stock has had a tremendous run, from the $1.50 range around this time last year up as high as $4. It has pulled back a little now, below $4. From an operating metrics standpoint, the company continues to take costs out of the business and lower its cost of goods per test. Its target for this year is a 20% reduction in cost of goods per test, and it has made a lot of headway in Q1/13.

NeoGenomics is dealing with some reimbursement pressure, like a lot of other diagnostic companies, but it has been able to continue to grow the topline nicely and maintain margins of more than 45%, despite the reimbursement headwinds. The key has been laboratory efficiencies. I think that going forward, we can expect the company to be cash-flow positive and earnings-per-share positive. Having the company reinvest that cash can be a central point for investors to consider as we think about the longer-term growth potential of the business." More >

Grant Zeng, Zacks Small-Cap Research (4/26/13) "NeoGenomics Laboratories just reported record revenue for Q1/13, a 3.3% growth from Q4/12 in spite of the expiration of the technical component (TC) grandfather clause. Management has done a great job to limit the impact of the clause's expiration by increasing test volume, launching new products, and saving costs. . .the company is well poised for long-term growth. We continue to rate NeoGenomics shares Outperform based on its strong fundamentals."

The Life Sciences Report Interview with Grant Zeng (4/4/13) "I cover NeoGenomics Laboratories because I like the diagnostics business. . .NeoGenomics is targeting the large clinical lab-testing market, which has been growing quickly in recent years due to advancements in genomics and proteomics (protein) research. The market continues to grow dramatically due to the rapid growth of personalized medicine. This small but focused diagnostic company holds numerous competitive advantages over its competitors. We are especially impressed by its industry-leading turnaround times, unique tech-only business model, state-of-the-art lab information system and extensive client education programs, all of which are key to attracting clients.

"Financial performance has been solid in the last five years, and the outlook is very strong for the next five. Top-line will grow from $43.5M in 2011 to $110M in 2015, a CAGR of 36%. At the same time, the company has achieved operating leverage with reduced SG&A expenses as a percentage of total revenue. The company will turn profitable in Q1/13 and EPS will grow to $0.18 in 2015. NeoGenomics' growth strategy has been well executed in the past, and we have a high confidence in management's ability to lead the company to the next level of growth in the next five years." More >

Mark Zinski, 21st Century Equity Research (2/15/13) "NeoGenomics Laboratories' sales in Q4/12 grew nearly 16% year over year to $14.9M and topped our estimate of $14.75M. Market share gains and strong organic growth undergirded sales growth. . .we reiterate our Strong Buy rating."

Matt Hewitt, Craig-Hallum Capital (2/15/13) "NeoGenomics Laboratories rounded out the year on a positive note. . .reporting Q4/12 revenue and EPS both ahead of our and the consensus expectations driven by increased test volume and new offerings (29 tests were launched during the year). These new tests, as well as a robust developmental pipeline, position the company to reaccelerate growth in the back half of this year. . .we believe that NeoGenomics is exceptionally situated to grow above market rates (through share gains and expansion into new markets) while continuing to expand margins and increase profitability."

Kevin DeGeeter, Ladenburg Thalmann (2/14/13) "NeoGenomics Laboratories reported Q4/12 financial results ahead of our forecast and $0.01 above consensus on stronger-than-expected test volume growth. . .management indicated an increasing interest in exploring bolt-on acquisitions to leverage new products and extend geographic reach; we believe most acquisitions would likely offer meaningful operating synergies and potential for near term EPS accretion. . .NeoGenomics grew test volumes 35.3% in Q4/12, which suggests the company continues to gain market share."

Kevin DeGeeter, Ladenburg Thalmann (2/5/13) "In the intermediate term, we envision further consolidation in molecular testing providers and a gradual rebound in reimbursement, which we view as potential positives for strong operators such as NeoGenomics Laboratories. . .strong customer service and commitment to a technical-component (TC) business model should drive market share gains through both upswings and declines in reimbursement. As with changes to the TC grandfather clause in 2012, we expect these market share gains and related growth in test volumes to drive operating efficiencies and gross margin expansion as NeoGenomics grows through volatility in reimbursement levels. . .we reiterate our Buy rating and $3.50 price target."

Grant Zeng, Zacks Investment Research (12/28/12) "On Dec. 17, 2012, NeoGenomics Laboratories announced that it has validated and launched a laboratory developed fluorescent in situ hybridization (FISH) assay NeoSite for the surveillance of patients with Barrett's esophagus. The test is highly sensitive for the detection of the presence of esophageal cancer or high grade dysplasia indicative of precancerous changes. . .with the commercial launch of NeoSite, NeoGenomics becomes the first lab in the U.S. to offer this important FISH test on a national basis. The new test will further grow its top line in the coming quarters." -Zacks Equity Research

Grant Zeng, Zacks Investment Research (12/28/12) "On Dec. 6, 2012, NeoGenomics Laboratories' common stock was approved for listing on the NASDAQ capital market and commenced trading on the NASDAQ capital market on Dec. 10, 2012. . .the transition to the NASDAQ capital market is a significant milestone for the company and reflects the strong revenue and operating income growth NeoGenomics has achieved over the last several years. We think the upgrading is important to it and its shareholders." -Zacks Equity Research

The Life Sciences Report Interview with Kevin DeGeeter (11/29/12) "One of the companies I liked back when we last spoke has performed well, and I continue to like it. NeoGenomics Laboratories is a specialty lab focused on oncology testing. Bringing innovative new products to market continues to be a challenging proposition in terms of winning reimbursement. Doctors can think a test is wonderful—the most useful in the world—but it's not going to get wide adoption until reimbursement is in place. NeoGenomics doesn't have to worry about the vagaries of trying to win reimbursement for a new test. Most of its revenue comes from tests that others may perform. But this company's focus on fast turnaround time and customer service has allowed the business to gain market share in healthy markets with strong growth rates. . .I'm still rating it a Buy. . .NeoGenomics currently has a run rate of about $65M/year in revenue, and I believe the company may step up to $100M over the next couple of years. Then NeoGenomics may appear on the radar screen of larger players.

The nature of the model shares the economics of analyzing a sample between the lab and the pathologist—NeoGenomics performs analysis of the sample and the pathologist interprets the result. The gross economics are smaller for the lab company. This type of business model generates a 45–50% gross margin, as opposed to the 60–70% margin that may be found in other parts of the industry. Overall it's an extremely attractive model. . .NeoGenomics was able to demonstrate its strong revenue growth rate was sustainable. We began seeing an acceleration in Q4/11, after it made changes to its sales model and changes in its senior commercial leadership. Another meaningful piece of the company's performance was greater visibility as it moved closer to that magic revenue number of $100M."

Kevin DeGeeter, Ladenburg Thalmann (11/14/12) "We continue to believe NeoGenomics Laboratories is well positioned to be among the leaders in the high growth cancer testing specialty lab market. We reiterate our Buy rating. . .over the past 24 months the company has successfully moved the majority of its private pay business from out of network to in network. . .we expect the pace of reimbursement changes will further accelerate, creating opportunities for flexible and efficient operators such as NeoGenomics to gain market share."

Grant Zeng, Zacks Investment Research (11/5/12) "NeoGenomics Laboratories reported 26% of revenue growth for Q3/12. . .going forward, revenue will continue to grow in Q4/12 and beyond. The company is well poised for long term growth. We continue to rate NeoGenomics shares Outperform based on the company's strong fundamentals." -Zacks Equity Research

Matt Hewitt, Craig-Hallum Capital (11/1/12) "We believe NeoGenomics Laboratories represents an attractive investment opportunity in the fastest growing segment of the laboratory services market. With prospects for +20% growth to continue, we see a large and exploitable disconnect with the company's current $124M market value. As such, we reiterate our Buy rating on the shares of NeoGenomics."

Laura McGuigan, B. Riley & Co. (11/1/12) "We expect NeoGenomics Laboratories to continue its rapid pace of growth, characterized by innovation and laboratory efficiencies and propelled by the secular growth in personalized medicine. . .the company continues to expand is molecular diagnostics menu with the addition of several cancer profile panels in the quarter, resulting in +100% in the segment year over year in the quarter. Additionally, the company launched the first 10 color flow cytometry platform offered by a national laboratory on a technical only basis."

Laura McGuigan, B. Riley & Co. (10/3/12) "We are initiating on NeoGenomics Laboratories with a Buy rating and a $4.60 price target; the company, a cancer genetics reference laboratory, has carved out an attractive niche within the industry, allowing it the opportunity to participate in the outsized growth in esoteric testing while remaining insulated from many of the competitive pressures associated with the laboratory space. We expect NeoGenomics to continue its rapid pace of growth, characterized by innovation and laboratory efficiencies and propelled by the secular growth in personalized medicine."

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