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NEOGENOMICS INC (NEO)·Q3 2025 Earnings Summary

Executive Summary

  • NeoGenomics delivered record Q3 revenue of $187.8M (+11.9% YoY) on strong clinical volumes and mix shift to higher-value NGS; GAAP diluted EPS was $(0.21), and adjusted EBITDA was $12.2M. Management reaffirmed full-year 2025 revenue, net loss, and adjusted EBITDA guidance set in July, citing clinical momentum despite anticipated non-clinical weakness .
  • Clinical engine remains the growth driver: clinical revenue +18% YoY (15% ex-Pathline), AUP +3% (+4% ex-Pathline), and NGS revenue +24% YoY, now nearly one-third of clinical revenue; non-clinical revenue represented <9% of total and remained soft as expected .
  • Profitability pressure stemmed from higher OpEx and a $7.1M impairment tied to the planned Trapelo sale; GAAP gross margin was 42.8% (adj. gross margin 45.5%), with adjusted EBITDA down 9% YoY to $12.2M .
  • Strategic catalysts into 2026: PanTracer LBx launched in late July with improved profile and 7-day TAT, MRD “RaDaR ST” received a favorable court ruling and MolDX approval in subsets (pharma launched; clinical launch planned for Q1’26), and LIMS/EPIC integrations expected to yield efficiencies from late 2026 onward .

What Went Well and What Went Wrong

What Went Well

  • Strong clinical performance and product mix: clinical revenue +18% YoY (15% ex-Pathline), AUP +3% (+4% ex-Pathline), NGS revenue +24% YoY; management highlighted “record clinical volumes” and NGS now ~one-third of clinical revenue .
  • MRD strategic advance: court granted summary judgment invalidating Natera’s asserted patents, enabling broad commercialization of RaDaR ST; biopharma launch initiated and MolDX approval received for subsets in head & neck and breast cancers; clinical launch targeted for Q1’26 .
  • Execution improvements and future leverage: AUP gains from higher-value tests and managed care pricing; LIMS consolidation and EPIC integration expected to streamline operations, with efficiencies building in 2026–2027; management emphasized a “partner of choice” positioning in the community setting .

What Went Wrong

  • Profit headwinds and impairment: GAAP net loss widened to $(27.1)M (+53% YoY) driven in part by $7.1M impairment for assets held for sale (Trapelo), and higher compensation; adjusted EBITDA declined 9% YoY to $12.2M .
  • Non-clinical softness persisted: non-clinical revenue fell and comprised <9% of Q3 revenue; management expects pharma weakness to continue into 2026 despite a seasonal Q4 uptick in the data/ODS business .
  • Gross margin pressure: GAAP gross margin slipped to 42.8% (from 44.6% LY) and adjusted gross margin to 45.5% (from 47.8% LY), reflecting cost inflation and mix, partially offset by AUP improvement .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$168.0 $181.3 $187.8
GAAP Diluted EPS ($)$(0.20) $(0.35) $(0.21)
Gross Profit Margin %43.6% 42.6% 42.8%
Adjusted Gross Margin %46.8% 45.4% 45.5%
Adjusted EBITDA ($USD Millions)$7.1 $10.7 $12.2
Net Loss ($USD Millions)$(25.9) $(45.1) $(27.1)

Q3 YoY KPIs and mix:

  • Clinical revenue growth: +18% YoY; +15% excluding Pathline .
  • Clinical tests performed (including Pathline): 360,774 (+14.7% YoY); average revenue/test $476 (+2.8% YoY) .
  • AUP ex-Pathline: +4% YoY to $481; mix shift to higher-value tests and managed care pricing drove AUP .
  • NGS revenue +24% YoY; NGS now “nearly one-third” of clinical revenue .
  • Non-clinical revenue share: <9% of total in Q3, down YoY .

Clinical test trends and AUP:

KPIQ1 2025Q2 2025Q3 2025
Clinical Tests Performed (incl. Pathline)326,163 356,630 360,774
Avg Revenue per Clinical Test (incl. Pathline)$459 $461 $476

Balance sheet and cash flow highlights:

  • Cash & equivalents: $164.1M at 9/30/25 (down from $361.9M LY); convert due May repaid in Q2; remaining convert $341.5M long-term .
  • Operating cash flow: +$3.9M for 9M’25; Q3 positive, aided by working capital and non-cash adjustments .

Guidance Changes

MetricPeriodPrevious Guidance (as of Jul 29, 2025)Current Guidance (as of Oct 28, 2025)Change
Revenue ($M)FY 2025$720 – $726 $720 – $726 Maintained
Net Loss ($M)FY 2025$(116) – $(108) $(116) – $(108) Maintained
Adjusted EBITDA ($M)FY 2025$41 – $44 $41 – $44 Maintained

Non-GAAP outlook framing: management reconciled FY25 to adjusted EBITDA $41–44M, adjusted net income $10–15M, with add-backs for amortization, SBC, and one-time items; adjusted diluted EPS guided to $0.08–$0.12 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
NGS growth & portfolio (PanTracer LBx)Q2: NGS +23% YoY; PanTracer LBx commercial launch delayed ~3 months to incorporate EAP learnings; target 7-day TAT, >500 genes; managed care price gains supporting AUP .NGS +24% YoY; NGS ~one-third of clinical revenue; PanTracer LBx launched late July with improved profile and strong early interest; expected to support continued growth into 2026 .Improving
MRD (RaDaR ST) and litigationQ2: Bridging study submitted; litigation timing uncertain; MRD part of long-term plan; Adaptive partnership pilot initiated .Court ruled Natera’s asserted patents invalid; MolDX approval for subsets in head & neck and breast; pharma launch in Q3, clinical launch planned for Q1’26; biopharma revenue more likely in 2026 with back-half weighting .Improving
Non-clinical/pharma revenueQ2: Non-clinical down 26% YoY; macro headwinds (NIH, pricing, trials, tariffs); expected continued weakness; data/ODS seasonally stronger in Q4 .Non-clinical <9% of Q3 revenue; softness to persist into 2026; data/ODS expected to improve QoQ in Q4 .Deteriorating/Bottoming
Operational efficiency (LIMS/EPIC)Q2: Single LIMS and EPIC integrations to improve TAT, workflow, data asset; multi-year efficiency opportunity .LIMS on track; EPIC “Aura” live by year-end; benefits to emerge in late 2026–2027 via retiring eight legacy LIMS and reducing leakage .Building
Pathline integrationQ2: Integration on track; strategic to improve Northeast footprint; synergy realization in 2026 .Validations completed; faster TAT in Northeast; expects growth driver in 2026; leverage core labs for NGS pull-through .Building

Management Commentary

  • CEO Tony Zook: “Total revenue of $188 million increased 12% year-over-year…NGS grew 24% year-over-year, well ahead of the low-to-mid-teens NGS market growth rate, and now accounts for nearly one-third of our clinical revenue” .
  • CFO Jeff Sherman: “Adjusted EBITDA was $12.2 million, the ninth consecutive quarter of positive earnings…A larger percentage of higher value tests including NGS as well as recent managed care pricing increases are helping to drive higher AUP” .
  • On MRD: “The ruling paves the way for us to broadly commercialize RaDaR ST…We launched RaDaR ST for biopharma customers in Q3…preparing for a robust launch…in Q1 of 2026” .
  • On operations: “We expect to deliver operating efficiencies in 2026 and 2027 through the consolidation of multiple LIMS systems and…streamlining our lab operations” .

Q&A Highlights

  • Guidance confidence and Q4 setup: Management reiterated FY25 guidance set in Q2, stating they remain on track with Q3 strength and do not require MolDX coverage for LBx to hit the guide; modest ODS uplift expected in Q4 given seasonality .
  • PanTracer LBx and AUP: LBx launched with improved input requirements, lower QNS, and sub-7-day TAT; expected to support AUP and growth, with reimbursement ramping over time (more back-half 2026 and 2027) .
  • MRD (RaDaR ST) and revenue timing: Favorable ruling; pharma launch underway with long sales cycles; clinical launch planned Q1’26; management expects MRD to contribute to revenue in 2026, back-half weighted .
  • Pharma/non-clinical outlook: Continued softness expected through 2026; portfolio expansion (LBx, RaDaR ST, Adaptive) aims to improve relevance, but long cycles temper near-term impact .
  • Efficiency initiatives: EPIC Aura go-live by YE’25; LIMS consolidation and lab automation to reduce leakage and cost per test over multi-year horizon; expected benefit ramp in 2026–2027 .

Estimates Context

  • S&P Global (Capital IQ) consensus estimates for Q3 2025 revenue and EPS were unavailable in our system at the time of analysis; as a result, we cannot provide a quantified beat/miss versus consensus for the quarter. Where forward-looking comparisons to consensus would typically appear, they are omitted due to unavailability. Values would have been retrieved from S&P Global if accessible.

Key Takeaways for Investors

  • Clinical momentum is intact and broad-based: sustained double-digit revenue growth, record volumes, and NGS mix expansion continue to drive top-line performance and AUP improvement .
  • Profitability remains constrained near term by impairment and OpEx inflation, but multi-year efficiency levers (LIMS/EPIC, automation, footprint leverage) offer margin expansion potential from late 2026 onward .
  • MRD is a 2026+ revenue catalyst: court victory and MolDX subset approvals de-risk RaDaR ST; pharma revenues should start in 2026 with back-half weighting; clinical launch targeted for Q1’26 .
  • PanTracer LBx launch improves NGS competitiveness and stickiness in community oncology, with a 7-day TAT and enhanced product profile; reimbursement build likely gradual, with larger AUP impact in late 2026–2027 .
  • Non-clinical weakness is a headwind into 2026; management’s portfolio actions (MRD, LBx, data) and seasonal Q4 ODS uplift may partially offset, but near-term growth remains clinical-led .
  • Guidance steady into year-end: reaffirmed FY25 revenue ($720–$726M), adjusted EBITDA ($41–$44M), and net loss ($(116)–$(108)M); execution in Q4 and clarity on 2026 targets in February are next catalysts .
  • Trading lens: near-term stock reaction hinges on confidence in Q4 delivery and visible traction for LBx/MRD; medium-term upside tied to MRD commercialization, NGS share gains, and operating leverage from systems integration .

Appendix: Additional Detail (Selected Disclosures)

  • Q3 non-GAAP reconciliations: Adjusted EBITDA $12.232M; adjustments include SBC ($10.3M), IP litigation costs ($3.6M), impairment ($7.1M), and acquisition/integration expenses ($1.8M) .
  • Q3 gross margin bridge: GAAP gross margin 42.8% (adj. 45.5%); cost of revenue adjustments include $4.6M intangible amortization and $0.3M SBC .
  • Supplemental clinical metrics: Q3 clinical tests 360,774; average revenue/test $476; ex-Pathline tests 347,215 and AUP $481 .