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NEOGENOMICS INC (NEO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 11% year-over-year to $172.0M; adjusted gross margin reached 48.0%, the highest in 20 quarters, with adjusted EBITDA of $11.9M .
  • Clinical KPIs remained strong: tests performed up 9% YoY to 321,679 and average revenue per test increased 5% to $465 .
  • Management reaffirmed FY2025 guidance: revenue $735–$745M, adjusted EBITDA $55–$58M, GAAP net loss $(85)–$(76)M; Q1 expected to be ~23% of full-year revenue and 8–10% of FY adjusted EBITDA, reflecting front‑loaded investments and back‑half growth .
  • Stock-relevant catalysts: accelerating NGS adoption (Q4 +24%; FY +34%), impending clinical launch of PanTracer liquid biopsy (H1 2025) and HRD expansion, plus long‑range plan targeting 12–13% annual revenue growth and 100–150 bps yearly gross margin expansion .

What Went Well and What Went Wrong

What Went Well

  • Highest adjusted gross margin in five years (48.0%) and sixth consecutive quarter of positive adjusted EBITDA, supported by automation, mix shift to higher-value tests and RCM initiatives .
  • Robust NGS growth: +24% in Q4 and +34% for FY; NGS now represents over 30% of total revenue, underpinning AUP gains and margin expansion .
  • Strong balance sheet and liquidity: cash and marketable securities of $387M; plan to retire May 2025 convertible notes ($201M principal) with cash on hand .
    • “Adjusted gross margins improved to 48%, the highest in 20 quarters or 5 years” — CEO Chris Smith .
    • “We still intend to pay off our May 2025 convertible notes… using existing cash and marketable securities” — CFO Jeff Sherman .

What Went Wrong

  • Advanced Diagnostics softness in Q4 due to lack of customary pharma year-end “budget flush” and constraints on new RaDaR contracts, tempering revenue in that segment .
  • GAAP net loss of $15.3M (vs. $14.3M in Q4 2023) amid higher compensation, technology costs, and depreciation; operating expenses up 11% YoY to $95.7M .
  • Ongoing MRD litigation: preliminary and permanent injunctions on RaDaR 1.0; trial on RaDaR 1.1 patents scheduled for October 2025, creating near‑term uncertainty for new MRD revenues .

Financial Results

Quarterly Trend (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$164.5 $167.8 $172.0
GAAP Diluted EPS ($)$(0.15) $(0.14) $(0.12)
Adjusted Diluted EPS ($)$0.03 $0.05 $0.04
Gross Margin % (GAAP)44.1% 44.6% 44.9%
Adjusted Gross Margin %47.3% 47.8% 48.0%
Adjusted EBITDA ($USD Millions)$10.9 $13.4 $11.9

Year-over-Year (Q4 2023 vs Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$155.6 $172.0
GAAP Diluted EPS ($)$(0.11) $(0.12)
Adjusted Diluted EPS ($)$0.03 $0.04
Gross Margin % (GAAP)43.5% 44.9%
Adjusted Gross Margin %46.7% 48.0%
Adjusted EBITDA ($USD Millions)$9.3 $11.9

Segment Breakdown (structure change in Q4)

MetricQ3 2024Q4 2024
Clinical Services Revenue ($USD Millions)$145.8 Segment reporting unified; total revenue $172.0
Advanced Diagnostics Revenue ($USD Millions)$22.0 Segment reporting unified; total revenue $172.0

Note: In Q4 2024, the company streamlined operations and combined Clinical Services and Advanced Diagnostics under a single segment .

KPIs

KPIQ2 2024Q3 2024Q4 2024
Clinical Tests Performed (#)311,670 314,564 321,679
Avg. Revenue per Test ($)$454 $463 $465
Cash + Marketable Securities ($USD Millions)$388 $388 $387
Total Operating Expenses ($USD Millions)$94.4 $96.1 $95.7

Q4 2024 vs Estimates (S&P Global)

MetricQ4 2024 ActualConsensus (S&P Global)
Revenue ($USD Millions)$172.0 Unavailable
GAAP Diluted EPS ($)$(0.12) Unavailable
Adjusted Diluted EPS ($)$0.04 Unavailable

Consensus estimates were unavailable at the time of query.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)FY 2025$735–$745 (Jan 15) $735–$745 (Feb 18) Maintained
Adjusted EBITDA ($M)FY 2025$55–$58 (Jan 15) $55–$58 (Feb 18) Maintained
GAAP Net Loss ($M)FY 2025N/A$(85)–$(76) Introduced
Adjusted Diluted EPS ($)FY 2025N/A$0.15–$0.19 (reconciliation) Introduced

Additional color: Management expects Q1 to be ~23% of FY revenue and 8–10% of FY adjusted EBITDA given front‑loaded investments and back‑end ramp, consistent with historical seasonality .

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
AI/Tech & LIMS modernizationLIMS project hit key milestone; digital portal planned First LIMS module live; >350k cases accessioned; margin expansion via automation Continued LIMS migration; one single system; efficiencies blending clinical/pharma workflows Improving
NGS/Product performanceNGS +~40% YoY; ~30% clinical revenue; AML Express slated; PanTracer pharma launch NGS +26%; solid tumor & myeloid panels lapping; AML Express launched; NY approval for Neo Comprehensive NGS +24% Q4; +34% FY; PanTracer clinical launch H1; HRD add; NGS >30% of revenue Positive momentum
Pharma/ADx macroADx stabilizing; sequential improvement; margin optimization ADx -10% YoY; expected 4Q acceleration; informatics opportunity No year-end budget flush; limited new RaDaR; ADx modest growth expected in 2025 Mixed
Regulatory/legal (MRD)MolDX approval for H&N indication; injunction path updates Permanent injunction on RaDaR 1.0; CLIA validation for 1.1 in H1 2025 Trial for RaDaR 1.1 scheduled Oct 2025; strategy to run 1.1 and next-gen in parallel Ongoing; cautious
Commercial expansionSales force expansion planned; productivity initiatives Continued expansion; hospital wins; Helix digital experience in early 2025 ~140 salespeople target; push into community oncology; interfaces up 3x; NPS improved Strengthening
Biomarker legislation & RCMRCM driving pricing/denial reductions Biomarker legislation tailwind, but payer adoption slow; multiyear RCM opportunity AUP mix: ~60% NGS; remainder price/mix/RCM; payer pull-through still trench work Gradual tailwind
Weather/regional impactsn/aMinimal Q3 impact; some slowness early Q4; expected to recover Weather delays disrupt timing but operations flexible across labs Stable operational resilience

Management Commentary

  • “We have now grown revenue double-digits for 9 consecutive quarters and… turned around adjusted EBITDA from a negative $48 million in 2022 to a positive $40 million in 2024.” — CEO Chris Smith .
  • “We… drove over 240 basis points of gross margin improvement in the second half and full year of 2024 versus prior year.” — CFO Jeff Sherman .
  • “We believe the company has the potential to continue to grow the NGS business by 25% annually… we see about 100 to 150 basis points of [gross margin] expansion each year.” — CEO Chris Smith (long‑range plan) .
  • “We saw 24% growth in NGS in the quarter and 34% for the year. NGS now represents over 30% of our total revenue.” — CEO Chris Smith .
  • “We will launch NEO PanTracer liquid biopsy… in the first half of this year… and an upgrade to our Neo Comprehensive NGS panel to include HRD.” — CIO Andrew Lukowiak .

Q&A Highlights

  • Guidance cadence: Q1 to represent ~23% of FY revenue and 8–10% of FY adjusted EBITDA; investments in sales/R&D in H1 enable H2 acceleration .
  • AUP drivers: Expect similar volume/AUP mix to 2024; ~60% of AUP increase driven by NGS, balance from price/mix/RCM .
  • PanTracer economics/strategy: High‑value test expected to be gross margin accretive; includes TMB/MSI; concurrent tissue+liquid testing to drive share in community oncology .
  • MRD roadmap: CLIA validation for RaDaR 1.1 targeted late Q1/early Q2; plan to run 1.1 for surveillance and next‑gen for higher sensitivity settings; jury trial in Oct 2025 .
  • Pharma/ADx outlook: No traditional Q4 budget flush; expect modest growth in pharma, better in Oncology Data Solutions (informatics) .

Estimates Context

  • S&P Global consensus for Q4 2024 revenue and EPS was unavailable at time of query; thus, we cannot quantify beat/miss versus Street. Management’s reaffirmed FY2025 guidance ($735–$745M revenue; $55–$58M adjusted EBITDA) and back‑half weighting suggest potential for estimate revisions toward H2 contributions as PanTracer and HRD enhancements roll out .

Key Takeaways for Investors

  • Mix shift to NGS is durable: Q4 +24% and FY +34% with NGS >30% of revenue; supports continued AUP and margin expansion .
  • Margin trajectory intact: Adjusted gross margin hit 48.0% (20‑quarter high); management targets 100–150 bps annual gross margin expansion and 250–300 bps annual adjusted EBITDA margin improvement long term .
  • Near‑term growth cadence: Expect softer Q1 and back‑half acceleration tied to sales force ramp and new product launches (PanTracer; HRD expansion) .
  • Liquidity and de‑risking: $387M cash/marketable securities and intention to retire May 2025 convert with cash strengthen balance sheet and reduce financing risk .
  • ADx/informatics is a watch item: Q4 softness due to lack of budget flush and RaDaR constraints; management expects modest pharma growth and better momentum in data solutions .
  • Litigation overhang persists but execution plan in place: CLIA validation path for RaDaR 1.1 and next‑gen MRD, with trial scheduled Oct 2025; strategy to segment use cases by sensitivity/cost .
  • Commercial execution improving: Expanded sales resources (~140 reps), stronger interfaces (3x), and higher NPS should sustain share gains in community oncology .