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NEOGENOMICS INC (NEO)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue $168.0M (+8% YoY), GAAP gross margin 43.6%, adjusted gross margin 46.8%, adjusted EBITDA $7.1M, diluted EPS -$0.20; record clinical volume 326,163 tests and AUP $459 .
  • FY 2025 guidance raised on revenue to $747–$759M (from $735–$745M) while adjusted EBITDA held at $55–$58M; Q2 2025 guide: revenue $183–$187M and adjusted EBITDA $9–$11M .
  • Strategic catalysts: PanTracer LBx liquid biopsy analytical validation completed with MolDX submission and EAP oversubscribed; EPIC integration signed to accelerate interfaces; Pathline acquisition expands Northeast footprint .
  • Non-clinical/pharma headwinds (tariffs, NIH grant uncertainty) weighed on growth; management expects pharma revenue to decline in 2025, partly offset by clinical growth; Pathline near-term margin/AUP dilution anticipated .
  • Liquidity intact post quarter; company paid off $201.25M 1.25% converts on May 1 using cash on hand (post-quarter) .

What Went Well and What Went Wrong

What Went Well

  • NGS momentum: Q1 NGS revenue growth +18%; five NGS products now ~22% of clinical revenue; targeting ~25% annual NGS growth over LR plan .
  • Profitability improvement: Q1 adjusted EBITDA +102% YoY to $7.1M; seventh consecutive quarter positive adjusted EBITDA; adjusted gross margin up ~146 bps to 46.8% .
  • Commercial scale and digital connectivity: ~140 salespeople approaching 1:1 hospital/community oncology coverage; EPIC interface deal to embed ordering/data and reduce payer friction; >300 new interfaces in 2024 .
  • Management tone: “Solid start…record number of results…improving our adjusted EBITDA by over 100%” – Tony Zook (CEO) .
  • Product pipeline: PanTracer LBx validation, PanTracer Tissue upgrade (HRD option), next-gen MRD research program initiated; collaboration with Ultima Genomics for UG100 platform .

What Went Wrong

  • Non-clinical softness: revenue declined $3.4M (-15.8%) YoY; pharma trials using RaDaR 1.0 largely wrapped; inability to sell new RaDaR 1.0 contracts post settlement .
  • Macro headwinds: tariffs/trade and possible NIH funding cuts expected to reduce non-clinical R&D spend .
  • Near-term dilution: Pathline expected to lower blended AUP and adjusted margins in 2025 with negative adjusted EBITDA impact (-$2M in Q2; additional -$1M for remainder) before turning accretive in 2026 .
  • Tough comps: Leap year impact and strong Q1 2024 comp (13.9% revenue growth) constrained reported growth rates this quarter .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$167.824 $172.000 $168.035
Gross Profit ($USD Millions)$74.880 $77.257 $73.246
GAAP Gross Margin %44.6% 44.9% 43.6%
Adjusted Gross Margin %47.8% 48.0% 46.8%
GAAP Diluted EPS ($)-$0.14 -$0.12 -$0.20
Adjusted Diluted EPS ($)$0.05 $0.04 —
Adjusted EBITDA ($USD Millions)$13.374 $11.873 $7.070

Segment context (historical):

  • Q3 2024 Clinical Services revenue $145.783M; Advanced Diagnostics revenue $22.041M . Note: Company reported as a single segment in Q4 2024 and Q1 2025 .

KPIs

KPIQ3 2024Q4 2024Q1 2025
Clinical Tests Performed (#)314,564 321,679 326,163
Average Revenue per Test ($)$463 $465 $459
NGS Revenue Growth YoY (%)26% 24% (quarter); 34% (year) 18%
Cash + Marketable Securities ($USD Millions)$388 $387 $358

Vs. Estimates (Wall Street consensus)

  • S&P Global quarterly consensus estimates for Q1 2025 were unavailable; therefore “vs. estimates” comparison could not be performed (Values intended from S&P Global but unavailable).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Revenue ($M)FY 2025$735–$745 $747–$759 Raised
Adjusted EBITDA ($M)FY 2025$55–$58 $55–$58 Maintained
GAAP Net Loss ($M)FY 2025$(85)–$(76) $(85)–$(77) Tightened (high end slightly lower)
Revenue ($M)Q2 2025N/A$183–$187 New
Adjusted EBITDA ($M)Q2 2025N/A$9–$11 New
Pathline Revenue ($M)FY 2025N/A$12–$14 New
Pathline Adj. EBITDA Impact ($M)FY 2025N/A-$2 (Q2) and additional -$1 remainder New

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
NGS growth trajectory+26% NGS rev growth; ~31% of clinical revenue +24% NGS in Q4; +34% FY; NGS >30% of revenue +18% NGS; targeting ~25% annual growth Near-term deceleration vs tough comps; long-term acceleration targeted
Liquid biopsy (PanTracer LBx)Clinical launch planned 1H 2025 Launching 1H 2025 Validation completed; MolDX submission; EAP oversubscribed; expect coverage after 2 MolDX “turns” (60–90 days each) by year-end Advancing toward commercial and reimbursement
MRD (RaDaR 1.1/Next-gen)Settlement; CLIA validation 1H 2025; trial Oct 2025 CLIA validation on track; next-gen MRD research underway 1.1 analytical validation complete; bridging to MolDX; next-gen MRD target launch ~2027 Development progressing; multi-pronged strategy
EPIC/EMR, LIMS, interfacesLIMS module launched; operational upgrades >300 new interfaces; NPS improved; single LIMS pathway EPIC integration signed; bidirectional workflows to activate H2 2025 Scaling digital connectivity; stickiness increasing
Macro/tariffs/pharma spendPharma softness bottoming; no major pricing pressure No year-end pharma budget flush; non-clinical down Tariffs/NIH cuts expected to dampen non-clinical; pharma revenue decline in 2025 offset by clinical Persistent headwinds; clinical growth offset
Regional expansionN/ABroader commercial expansion ongoing Pathline acquisition expands Northeast presence Geographic reach broadening

Management Commentary

  • Tony Zook (CEO): “Our business is off to a solid start in 2025…delivering a record number of results…improving our adjusted EBITDA by over 100%” .
  • Warren Stone (President & COO): “Clinical volumes grew 8%…NGS revenue growth of 18%…~140 salespeople…EPIC interfaces to scale bidirectional integration in H2” .
  • Andrew Lukowiak (Chief Innovation Officer): “PanTracer LBx analytical validation completed…submitted to MolDX…EAP oversubscribed in 5 days; next-gen MRD research aims for 2027 launch” .
  • Jeff Sherman (CFO): “Adjusted EBITDA +102% YoY to $7M…Q2 revenue $183–$187M and adjusted EBITDA $9–$11M…Pathline near-term AUP, margin, EBITDA dilution; accretive in 2026+” .

Q&A Highlights

  • Pharma trajectory: Non-clinical revenue (incl. pharma) expected down ~similar to last year’s ~$7M decline; informatics expected to grow; clinical to offset .
  • Pathline integration: ~$3–$4M revenue expected in Q2 with minimal clinical portfolio benefit until validations complete; broader adoption expected Q4/Q1 2026 .
  • AUP outlook: Core AUP growth continues by modality; overall AUP diluted near term by Pathline mix and lower-value modalities; volume to drive more of 2025 revenue growth .
  • Balance sheet and converts: Plan to retire May 2025 notes with cash; options for 2028 converts include paydown/refinance; positive FCF expected in 2026 .
  • MRD validation and reimbursement: RaDaR 1.1 analytical validation complete; bridging studies to MolDX for indications; operational readiness ongoing .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2025 revenue and EPS was unavailable. Values intended from S&P Global but not returned; no beat/miss assessment possible this quarter.

Key Takeaways for Investors

  • Revenue raised; EBITDA maintained: FY 2025 revenue guidance increased to $747–$759M while adjusted EBITDA remains $55–$58M, signaling confidence in top-line drivers and investment cadence .
  • Near-term earnings drag, long-term accretion: Pathline will dilute AUP/margins and reduce adjusted EBITDA in Q2 (-$2M) and the remainder of 2025 (-$1M) but is expected to accelerate volume, revenue, and earnings from 2026 .
  • Liquid biopsy catalyst: PanTracer LBx launch with MolDX submission and strong EAP demand should add therapy-selection revenue in H2 and improve NGS mix; management expects competitive reimbursement and accretive margins .
  • Clinical strength offsets pharma softness: Ongoing macro/tariff/NIH headwinds imply non-clinical decline in 2025; expanded sales force, state biomarker legislation tailwinds, and NGS adoption should sustain clinical growth .
  • Digital enablement driving stickiness: EPIC integration and >300 customer interfaces increase ordering efficiency, reduce payer friction, and correlate with higher revenue per integrated account .
  • Liquidity and de-risking: Post-quarter payoff of $201.25M converts reduces near-term debt overhang; multiple options remain for 2028 converts as earnings and cash flow scale .
  • Monitoring points: Q2 execution amid Pathline integration, PanTracer reimbursement timeline (MolDX two-turn process), MRD 1.1 bridging and October 2025 trial, and pharma demand stabilization .

Appendix: Additional Q1 2025 Items

  • FY 2025 non-GAAP guidance reconciliation: Adjusted net income $20–$25M; adjusted EBITDA $55–$58M; adjusted diluted EPS $0.16–$0.20 .
  • Non-GAAP reconciliations and definitions provided for adjusted gross profit/margin, adjusted EBITDA, adjusted net (loss) income, and adjusted diluted EPS .

Notes:

  • Revenue change printed as “8%” in press release headline; detailed table shows +7.5% due to rounding .
  • S&P Global estimates were unavailable for Q1 2025; “vs. estimates” comparison omitted for this quarter. Values intended from S&P Global but unavailable.