NeoGenomics Reports Revenue of $121 Million in the Third Quarter

04 Nov 2021
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Third-Quarter 2021 Results and Highlights: Consolidated revenue of $121 million, comprised of Clinical Services revenue of $102 million and Pharma Services revenue of $19 million Consolidated revenue decreased 3% due to the discontinuation of prior year COVID-19 revenue; consolidated revenue increased 12% when excluding prior year COVID-19 revenue Announces plan to double its Clinical Services sales and medical affairs teams to further support RaDaR™ and drive the next phase of the Company's growth FT. MYERS, FL / ACCESSWIRE / November 4, 2021 / NeoGenomics, Inc. (NASDAQ:NEO) (the " Company "), a leading provider of cancer-focused genetics testing services and global oncology contract research services, today announced its third-quarter results for the period ended September 30, 2021. "In the third quarter, our Clinical Services revenue increased 11% when excluding COVID-19 PCR testing revenue in prior year. We also had record bookings for Pharma despite challenges the COVID-19 Delta variant surge presented for our business. These challenges were particularly impactful in our home state of Florida where the related incidence was hardest felt," said Mark Mallon, CEO of NeoGenomics. "While this dynamic impacted near-term results and our sales teams' access to clients, we remain excited about our longer-term growth prospects across the company and today we are announcing a major step towards accelerating that growth by sharing our intent to double our sales team to support RaDaR™. It is clear to us that RaDaR™ is a special asset and we are committed to making the investments necessary to realize its sizable Clinical and Pharma market opportunities for minimal residual disease and recurrence testing." Third-Quarter Results Consolidated revenue for the third quarter of 2021 was $121 million, a decrease of 3% over the same period in 2020. Clinical Services revenue of $102 million was a decrease year-over-year of 6%. Excluding COVID-19 PCR testing, Clinical Services revenue increased by 11% year-over-year. Clinical test volume (1) increased by 7% year-over-year. Average revenue per clinical test ("revenue per test") increased by 4% to $375. Pharma Services revenue increased by 14% to $19 million compared to the third quarter of 2020, primarily due to an increase in revenue related to research studies and informatics. Consolidated gross profit for the third quarter of 2021 was $47 million, a decrease of 12.6%, compared to the third quarter of 2020. This decrease was the result of the termination of COVID-19 PCR testing, amortization of acquired Inivata developed technology intangibles and higher payroll and payroll-related costs. Consolidated gross profit margin, including amortization of acquired Inivata developed technology intangible assets, was 38.9%. Adjusted Gross Profit Margin (2) , excluding amortization of acquired Inivata developed technology intangible assets, was 42.9%. Operating expenses increased by $38 million, or 76%, compared to the third quarter of 2020, which includes significant operating expenses related to 2021 acquisitions of Inivata and Trapelo Health subsidiaries. Operating expenses in the third quarter of 2021 also a included loss contingency for the regulatory matter, legal and strategic deal expenses, higher commissions, and payroll and payroll-related costs to support the Company's strategic growth initiatives, including Informatics and Pharma. Net loss for the quarter was $20 million compared to net income of $3 million for the third quarter of 2020. The net loss for the third quarter of 2021 includes an $18 million gain related to the acquisition of Inivata Limited, a private limited company incorporated in England and Wales, and respective prior loan receivable. Net loss for the quarter when excluding this gain was $38 million. Adjusted Net Loss (2) was $10 million compared to Adjusted Net Income (2) of $7 million in the third quarter of 2020. Adjusted EBITDA (2) was negative $3 million compared to positive $17 million in the third quarter of 2020, which includes negative Adjusted EBITDA of $9 million attributable to Inivata and Trapelo Health. COVID-19 PCR testing contributed significant Adjusted EBITDA in the third quarter of 2020. Cash and cash equivalents, including restricted cash, and marketable securities totaled $546 million at quarter end. Days sales outstanding ("DSO") was 80 days at the end of the third quarter of 2021. Operational Updates The Company's data generation efforts in our Inivata subsidiary continued to progress during the quarter and the Company presented new data in early breast cancer at the European Society for Medical Oncology (ESMO) Congress, highlighting RaDaR™ as a highly sensitive, personalized assay for the detection of residual disease and recurrence. Additionally, in October the Company announced clinical collaborations with Princess Margaret Cancer Center in Toronto, Canada for the use of RaDaR™ and InVisionFirst-Lung™ in two separate prospective lung cancer studies. To further support the upcoming clinical launch of RaDaR™ as well as support InVisionFirst-Lung™, the Company today also announced plans to double the size of its Clinical Services sales team through the addition of 50 Precision Medicine Managers as well as plans to hire an additional 10 Medical Science Liaisons. Additionally, during the third quarter NeoGenomics began transitioning its Fort Myers operations into our new headquarters and laboratory facility and has successfully moved its administrative functions into the new space. The laboratory operations will be transitioning into the new facility over the upcoming months, which provides significant additional capacity for future growth. 2021 Financial Outlook The Company revised its full-year 2021 guidance, initially issued on May 5, 2021. (in millions) Initial Guidance (3) Revised Guidance Consolidated revenue $490 - $510 $482.5 - $487.5 Net (loss) income $(70) - $(65) $(0.8) - $4.2 Adjusted EBITDA $10 - $15 $(2.5) - $2.5 Please refer to the tables reconciling forecasted Adjusted EBITDA, Adjusted Net (Loss) Income and Adjusted Diluted EPS to their closest generally accepted accounting principles ("GAAP") equivalent in the section of this report entitled "Reconciliation of Non-GAAP Financial Guidance to Corresponding GAAP Measures." The Company reserves the right to adjust this guidance at any time based on the ongoing execution of its business plan. Current and prospective investors are encouraged to perform their own due diligence before buying or selling any of the Company's securities, and are reminded that the foregoing estimates should not be construed as a guarantee of future performance. (1) Clinical tests exclude requisitions, tests, revenue and costs for Pharma Services and COVID-19 PCR tests. (2) The Company has provided adjusted financial information that has not been prepared in accordance with GAAP, including Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted Diluted EPS, Adjusted Cost of Revenue, Adjusted Gross Profit, and Adjusted Gross Profit Margin. Each of these measures is defined in the section of this report entitled "Use of Non-GAAP Financial Measures." See also the tables reconciling such measures to their closest GAAP equivalent. (3) Due to the issue date of initial guidance, these ranges excluded the impact of amortization of 2021 acquired Inivata developed technology intangible assets and the impact of the net gain on investment in and loan receivable from non-consolidated affiliate upon acquisition. Conference Call The Company has scheduled a webcast and conference call to discuss their third quarter results on Thursday, November 4, 2021 at 8:30 AM EDT. Interested investors should dial (888) 506-0062 (domestic) and (973) 528-0011 (international) at least five minutes prior to the call. A replay of the conference call will be available until 8:30 AM EST on November 18, 2021, and can be accessed by dialing (877) 481-4010 (domestic) and (919) 882-2331 (international). The playback conference ID number is 43244. The webcast may be accessed under the Investor Relations section of our website at An archive of the webcast will be available until 08:30 AM EDT on November 4, 2022. About NeoGenomics, Inc. NeoGenomics, Inc. specializes in cancer genetics testing and information services, providing one of the most comprehensive oncology-focused testing menus in the world for physicians to help them diagnose and treat cancer. The Company's Pharma Services Division serves pharmaceutical clients in clinical trials and drug development. We routinely post information that may be important to investors, including copies of our Company Overview Presentation, on the Investors section of our website at . NeoGenomics is committed to connecting patients with life altering therapies and trials. We believe that, together, with our partners, we can help patients with cancer today and the next person diagnosed tomorrow. In carrying out these commitments, NeoGenomics strives to adhere to all relevant data protection laws, provides transparency and choice to patients regarding the handling and use of their data through our Notice of Privacy Practices, and has invested in leading technologies to seek to ensure the data we maintain is secured at all times. Headquartered in Fort Myers, FL, NeoGenomics operates CAP accredited and CLIA certified laboratories in Fort Myers and Tampa, Florida; Aliso Viejo, Carlsbad and San Diego, California; Research Triangle Park, North Carolina; Houston, Texas; Atlanta, Georgia; Nashville, Tennessee; and CAP accredited laboratories in Cambridge, United Kingdom; Rolle, Switzerland; and Singapore. NeoGenomics serves the needs of pathologists, oncologists, academic centers, hospital systems, pharmaceutical firms, integrated service delivery networks, and managed care organizations throughout the United States, and pharmaceutical firms in Europe and Asia. Forward Looking Statements Certain statements contained in this press release constitute forward-looking statements. Forward-looking statements generally can be identified by the use of words such as "anticipate," expect," plan," "could," "would," "may," "will," "believe," "estimate," "forecast," "goal," "project, "guidance," "plan," "potential" and other words of similar meaning, although not all forward-looking statements include these words. These forward-looking statements address various matters, including the Company's 2021 financial outlook. These forward-looking statements involve a number of risks and uncertainties that could cause actual future results to differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include the Company's ability to continue gaining new customers, respond to the effects of the COVID-19 outbreak, offer new types of tests, integrate its acquisitions, including the Inivata acquisition, and otherwise implement its business plan, as well as additional factors discussed under the heading "Risk Factors" and elsewhere in the Company's Annual Report on Form 10-K filed with the SEC on February 25, 2021, as such information has been updated in subsequent SEC filings. As a result, this press release should be read in conjunction with the Company's periodic filings with the SEC. Forward-looking statements speak only as of the date such statements are made (unless another date is indicated) and should not be relied upon as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. NeoGenomics, Inc. Doug Brown Chief Strategy and Corporate Development Officer T: 239.768.0600 x2539 M: 704.236.2064 doug.brown@neogenomics.com Charlie Eidson Director, Investor Relations and Corporate Development T: 239.768.0600 x2726 M: 952.221.8816 charlie.eidson@neogenomics.com NeoGenomics, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, 2021 (unaudited) December 31, 2020 ASSETS Cash and cash equivalents $ 340,565 $ 228,713 Marketable securities, at fair value 202,144 67,546 Accounts receivable, net 104,964 106,843 Inventories 21,834 29,526 Prepaid assets 14,618 11,547 Assets held for sale 10,050 - Other current assets 15,755 4,555 Total current assets 709,930 448,730 Property and equipment (net of accumulated depreciation of $112,185 and $92,895, respectively) 107,172 85,873 Operating lease right-of-use assets 102,310 45,786 Intangible assets, net 450,802 120,653 Goodwill 525,802 211,083 Restricted cash 3,161 21,919 Investment in non-consolidated affiliate - 29,555 Prepaid lease asset - 20,229 Other assets 7,210 4,503 Total non-current assets $ 1,196,457 $ 539,601 TOTAL ASSETS $ 1,906,387 $ 988,331 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and other current liabilities $ 84,185 $ 65,375 Current portion of equipment financing obligations 1,564 2,841 Current portion of operating lease liabilities 6,988 4,967 Total current liabilities 92,737 73,183 Convertible senior notes, net 531,779 168,120 Operating lease liabilities 72,336 42,296 Deferred income tax liabilities, net 57,706 5,415 Other long-term liabilities 14,584 5,023 Total long-term liabilities 676,405 220,854 TOTAL LIABILITIES $ 769,142 $ 294,037 TOTAL STOCKHOLDERS' EQUITY $ 1,137,245 $ 694,294 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,906,387 $ 988,331 NeoGenomics, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 NET REVENUE: Clinical Services $ 102,227 $ 108,733 $ 300,119 $ 275,599 Pharma Services 19,113 16,711 58,478 42,852 Total revenue 121,340 125,444 358,597 318,451 COST OF REVENUE 74,101 71,379 216,794 190,011 GROSS PROFIT 47,239 54,065 141,803 128,440 Operating expenses: General and administrative 63,839 36,128 158,953 107,085 Research and development 7,409 1,964 13,360 6,129 Sales and marketing 15,704 11,304 46,677 34,757 Total operating expenses 86,952 49,396 218,990 147,971 (LOSS) INCOME FROM OPERATIONS (39,713 ) 4,669 (77,187 ) (19,531 ) Interest expense, net 1,296 2,458 3,375 4,825 Other income, net (89 ) (11 ) (431 ) (7,639 ) Gain on investment in and loan receivable from non-consolidated affiliate, net (17,750 ) - (109,260 ) - Loss on extinguishment of debt - - - 1,400 Loss on termination of cash flow hedge - - - 3,506 (Loss) income before taxes (23,170 ) 2,222 29,129 (21,623 ) Income tax benefit (2,822 ) (335 ) (4,283 ) (10,378 ) NET (LOSS) INCOME $ (20,348 ) $ 2,557 $ 33,412 $ (11,245 ) Adjustment to net (loss) income for convertible notes in diluted EPS (4) NET (LOSS) INCOME (20,348 ) 2,557 33,412 (11,245 ) Convertible note accretion, amortization, and interest, net of tax - 1,975 - - NET (LOSS) INCOME USED IN DILUTED EPS $ (20,348 ) $ 4,532 $ 33,412 $ (11,245 ) NET (LOSS) INCOME PER SHARE Basic $ (0.17 ) $ 0.02 $ 0.28 $ (0.10 ) Diluted $ (0.17 ) $ 0.04 $ 0.28 $ (0.10 ) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 122,559 110,461 119,087 107,605 Diluted 122,559 119,191 121,356 107,605 (4) This adjustment compensates for the effects of the if-converted impact of convertible notes in net income. Since an entity using the if-converted method assumes that a convertible debt instrument was converted into common shares at the beginning of the reporting period, net income is adjusted to reverse any recognized interest expense (including any amortization of discounts). NeoGenomics, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended September 30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 33,412 $ (11,245 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 21,807 18,705 Amortization of intangibles 14,683 7,387 Non-cash stock-based compensation 12,396 7,536 Non-cash operating lease expense 6,167 6,365 Gain on investment in and loan receivable from non-consolidated affiliate, net (109,260 ) - Amortization of convertible debt discount and debt issue costs 2,037 2,843 Loss on debt extinguishment - 1,400 Loss on termination of cash flow hedge - 3,506 Write-off of COVID-19 PCR testing inventory and equipment 6,061 - Other non-cash items 997 371 Changes in assets and liabilities, net 4,753 (41,393 ) Net cash used in operating activities (6,947 ) (4,525 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of marketable securities (180,961 ) (53,396 ) Proceeds from sales and maturities of marketable securities 44,736 3,000 Purchases of property and equipment (52,155 ) (17,591 ) Business acquisitions, net of cash acquired (419,404 ) (37,000 ) Loan receivable from non-consolidated affiliate (15,000 ) - Investment in non-consolidated affiliate - (25,600 ) Net cash used in investing activities (622,784 ) (130,587 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of equipment financing obligations (2,537 ) (4,331 ) Repayment of term loan - (97,540 ) Cash flow hedge termination - (3,317 ) Issuance of common stock, net 12,110 10,761 Proceeds from issuance of convertible debt, net of issuance costs 334,410 194,466 Premiums paid for capped call confirmations (29,291 ) - Proceeds from equity offerings, net of issuance costs 408,133 127,293 Net cash provided by financing activities 722,825 227,332 Net change in cash, cash equivalents and restricted cash 93,094 92,220 Cash, cash equivalents and restricted cash, beginning of period 250,632 173,016 Cash, cash equivalents and restricted cash, end of period $ 343,726 $ 265,236 Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheets: Cash and cash equivalents $ 340,565 $ 233,233 Restricted cash, non-current 3,161 32,003 Total cash, cash equivalents and restricted cash $ 343,726 $ 265,236 Use of Non-GAAP Financial Measures The financial results and financial guidance include the use of certain non-GAAP financial measures. Management believes that the presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the core operating results and comparison of core operating results across reporting periods. Management also uses non-GAAP financial measures for financial and operational decision making, planning and forecasting purposes and to manage the business. Management believes that these non-GAAP financial measures may assist investors in evaluating the operating results and future prospects. The non-GAAP financial measures do not replace the presentation of GAAP financial results and should only be used as a supplement to, and not as a substitute for, the financial results presented in accordance with GAAP. There are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation, and do not present the full measure of the recorded costs against its net revenue. In addition, the definition of the non-GAAP financial measures below may differ from non-GAAP measures used by other companies. Definitions of Non-GAAP Measures Non-GAAP Adjusted EBITDA "Adjusted EBITDA" is defined by NeoGenomics as net (loss) income from continuing operations before: (i) interest expense, (ii) tax (benefit) or expense, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation expense, and, if applicable in a reporting period, (v) acquisition and integration related expenses, (vi) write-off of COVID-19 PCR testing inventory and equipment, (vii) new headquarters moving expenses, (viii) gain on investment in and loan receivable from non-consolidated affiliate, net, (ix) loss contingency for regulatory matter, and (x) other significant or non-operating (income) or expenses, net. Non-GAAP Adjusted Cost of Revenue, Adjusted Gross Profit and Adjusted Gross Profit Margin "Adjusted cost of revenue" is defined by NeoGenomics as cost of revenue before: (i) amortization expense of acquired Inivata developed technology intangibles, and (ii) the write-off of COVID-19 PCR testing inventory equipment. "adjusted gross profit" is defined by NeoGenomics as total revenue less adjusted cost of revenue. "Adjusted gross profit margin" is defined by NeoGenomics as adjusted cost of revenue divided by total revenue. Non-GAAP Adjusted Net (Loss) Income "Adjusted net (loss) income" is defined by NeoGenomics as net (loss) income from continuing operations plus: (i) non-cash amortization of intangible assets, (ii) non-cash stock-based compensation expense, and, if applicable in a reporting period, (iii) acquisition and integration related expenses, (iv) write-off of COVID-19 PCR testing inventory equipment, (v) new headquarters moving expenses, (vi) gain on investment in and loan receivable from non-consolidated affiliate, net, (vii) loss contingency for regulatory matter, and (viii) other significant or non-operating (income) or expenses. If GAAP net (loss) income is negative and adjusted net (loss) income is positive, adjusted net (loss) income will also be adjusted to reverse any recognized interest expense (including any amortization of discounts) on the convertible notes using the if-converted method unless the effect of this adjustment on both the adjusted net (loss) income and weighted average diluted common shares outstanding would be anti-dilutive. If GAAP net (loss) income is positive and adjusted net (loss) income is negative, adjusted net (loss) income will also be adjusted to reverse any recognized interest expense (including any amortization of discounts) on the convertible notes using the if-converted method. Non-GAAP Adjusted Diluted EPS "Adjusted diluted EPS" is defined by NeoGenomics as adjusted net (loss) income divided by adjusted diluted shares outstanding. If GAAP net (loss) income is negative and adjusted net (loss) income is positive, adjusted diluted shares outstanding will also include any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period, until the effect of these adjustments are anti-dilutive. If GAAP net (loss) income is positive and adjusted net (loss) income is negative, adjusted diluted shares outstanding will exclude any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period. Reconciliation of GAAP Net (Loss) Income to Non-GAAP EBITDA and Adjusted EBITDA (Unaudited) (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net (loss) income (GAAP) $ (20,348 ) $ 2,557 $ 33,412 $ (11,245 ) Adjustments to net (loss) income: Interest expense, net 1,296 2,458 3,375 4,825 Income tax benefit (2,822 ) (335 ) (4,283 ) (10,378 ) Amortization of intangibles 8,474 2,468 14,683 7,387 Depreciation 8,178 6,528 21,807 18,705 EBITDA (non-GAAP) $ (5,222 ) $ 13,676 $ 68,994 $ 9,294 Further adjustments to EBITDA: Acquisition and integration related expenses 1,533 446 13,345 1,852 Write-off of COVID-19 PCR testing inventory and equipment - - 6,061 - New headquarters moving expenses 775 - 1,143 - Non-cash stock-based compensation expense 5,237 2,715 12,396 7,536 Gain on investment in and loan receivable from non-consolidated affiliate, net (17,750 ) - (109,260 ) - Loss contingency for regulatory matter 10,500 - 10,500 - Other significant expenses (income), net (5) 1,814 (105 ) 2,445 (2,100 ) Adjusted EBITDA (non-GAAP) $ (3,113 ) $ 16,732 $ 5,624 $ 16,582 (5) Other significant expenses (income), net, includes strategic deal costs, CEO transition costs, reimbursements received related to the CARES Act, cash flow hedge termination fees, debt retirement fees, and certain non-recurring items. Reconciliation of GAAP Cost of Revenue, Gross Profit and Gross Profit Margin to Non-GAAP Adjusted Cost of Revenue, Adjusted Gross Profit and Adjusted Gross Profit Margin (Unaudited) (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change Total revenue (GAAP) $ 121,340 $ 125,444 (3.3 )% $ 358,597 $ 318,451 12.6 % Cost of revenue (GAAP) $ 74,101 $ 71,379 3.8 % $ 216,794 $ 190,011 14.1 % Adjustments to cost of revenue (6) (4,824 ) - (10,853 ) - Adjusted cost of revenue (non-GAAP) $ 69,277 $ 71,379 (2.9 )% $ 205,941 $ 190,011 8.4 % Gross profit (GAAP) $ 47,239 $ 54,065 (12.6 )% $ 141,803 $ 128,440 10.4 % Adjusted gross profit (non-GAAP ) $ 52,063 $ 54,065 (3.7 )% $ 152,656 $ 128,440 18.9 % Gross profit margin (GAAP) 38.9 % 43.1 % 39.5 % 40.3 % Adjusted gross profit margin (non-GAAP) 42.9 % 43.1 % 42.6 % 40.3 % (6) Cost of revenue adjustment for the three months ended September 30, 2021 includes $4.8 million of amortization of acquired Inivata developed technology intangible assets. Cost of revenue adjustments for the nine months ended September 30, 2021 includes $5.6 million of amortization of acquired Inivata developed technology intangible assets and write-offs of $5.3 million for COVID-19 PCR testing inventory. Reconciliation of GAAP (Loss) Income to Non-GAAP Adjusted Net (Loss) Income and GAAP EPS to Non-GAAP Adjusted EPS (Unaudited) (In thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Adjustment to net (loss) income for convertible notes in diluted EPS Net (loss) income (GAAP) $ (20,348 ) $ 2,557 $ 33,412 $ (11,245 ) Adjustments to net (loss) income, net of tax: Amortization of intangibles 8,474 1,949 14,683 5,836 Acquisition and integration related expenses 1,533 353 13,345 1,463 Write-off of COVID-19 PCR testing inventory and equipment - - 6,061 - New headquarters moving expenses 775 - 1,143 - Non-cash stock-based compensation expense 5,237 2,185 12,396 6,233 Gain on investment in and loan receivable from non-consolidated affiliate, net (17,750 ) - (109,260 ) - Loss contingency for regulatory matter 10,500 - 10,500 - Other significant expenses (income), net (7) 1,814 (83 ) 2,445 (1,659 ) Adjusted net (loss) income (non-GAAP) $ (9,765 ) $ 6,961 $ (15,275 ) $ 628 Net (loss) income per common share (GAAP) Diluted EPS $ (0.17 ) $ 0.04 $ 0.28 $ (0.10 ) Adjustments to diluted (loss) income per share: Amortization of intangibles 0.07 0.02 0.12 0.05 Acquisition and integration related expenses 0.01 - 0.11 0.01 Write-off of COVID-19 PCR testing inventory and equipment - - 0.05 - New headquarters moving expenses 0.01 - 0.01 - Non-cash stock-based compensation expense 0.04 0.02 0.10 0.06 Gain on investment in and loan receivable from non-consolidated affiliate, net (0.14 ) - (0.90 ) - Loss contingency for regulatory matter 0.09 - 0.09 - Other significant expenses (income), net (7) 0.01 - 0.02 (0.02 ) Rounding and impact of diluted shares in adjusted diluted shares (8) - (0.02 ) (0.01 ) 0.01 Adjusted diluted EPS (non-GAAP) $ (0.08 ) $ 0.06 $ (0.13 ) $ 0.01 Weighted average shares used in computation of adjusted diluted EPS: Diluted common shares (GAAP) 122,559 119,191 121,356 107,605 Dilutive effect of options, restricted stock, and converted shares (9)(10) - - (2,269 ) - Adjusted diluted shares outstanding (non-GAAP) 122,559 119,191 119,087 107,605 (7) Other significant expenses (income), net, includes strategic deal costs, CEO transition costs, reimbursements received related to the CARES Act, cash flow hedge termination fees, debt retirement fees, and certain non-recurring items. (8) This adjustment is for rounding and, in those periods in which GAAP net (loss) income is negative and adjusted net (loss) income is positive or GAAP net (loss) income is positive and adjusted net (loss) income is negative, also compensates for the effects of additional diluted shares included or excluded in adjusted diluted shares outstanding for the treasury stock impact of outstanding stock options and restricted stock and the if-converted impact of convertible notes. (9) In those periods in which GAAP net (loss) income is negative and adjusted net (loss) income is positive, this adjustment includes any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period, until the effect of these adjustments are anti-dilutive. (10) In those periods in which GAAP net (loss) income is positive and adjusted net (loss) income is negative, this adjustment excludes any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period. Reconciliation of Non-GAAP Financial Guidance to Corresponding GAAP Measures (Unaudited) (In thousands, except per share amounts) GAAP net (loss) income in 2021 will be impacted by certain charges, including: (i) expense related to the amortization of intangible assets, (ii) non-cash stock based compensation, (iii) acquisition and integration related expenses, (iv) write-off of COVID-19 PCR testing inventory equipment, (v) gain on investment in and loan receivable from non-consolidated affiliate, net, (vi) loss contingency for regulatory matter, and (vii) other one-time expenses. These charges have been included in GAAP net (loss) income available to common shareholders and GAAP net (loss) income per share; however, they have been removed from adjusted net loss and adjusted diluted net loss per share. The following table reconciles the Company's 2021 outlook for net loss (income) and EPS to the corresponding non-GAAP measures of adjusted net loss, adjusted EBITDA and adjusted diluted EPS: For the Year Ended December 31, 2021 Low Range High Range Net (loss) income (GAAP) $ (800 ) $ 4,200 Amortization of intangibles 24,000 24,000 Non-cash, stock-based compensation 18,000 18,000 Acquisition and integration related expenses 14,000 14,000 Write-off of COVID-19 PCR testing inventory and equipment 6,100 6,100 Gain on investment in and loan receivable from non-consolidated affiliate, net (109,300 ) (109,300 ) Loss contingency for regulatory matter 10,500 10,500 Other one-time expenses 3,000 3,000 Adjusted net loss (non-GAAP) $ (34,500 ) $ (29,500 ) Interest and taxes 1,000 1,000 Depreciation 31,000 31,000 Adjusted EBITDA (non-GAAP) $ (2,500 ) $ 2,500 Net (loss) income per diluted common share (GAAP) $ (0.01 ) $ 0.04 Adjustments to diluted (loss) income per share: Amortization of intangibles 0.20 0.20 Non-cash, stock based compensation expenses 0.15 0.15 Acquisition and integration related expenses 0.12 0.12 Write-off of COVID-19 PCR testing inventory and equipment 0.05 0.05 Gain on investment in and loan receivable from non-consolidated affiliate, net (0.91 ) (0.91 ) Loss contingency for regulatory matter 0.09 0.09 Other one-time expenses 0.03 0.03 Rounding and impact of diluted shares in adjusted diluted shares (11) (0.01 ) (0.02 ) Adjusted diluted EPS (non-GAAP) (12) $ (0.29 ) $ (0.25 ) Weighted average assumed shares outstanding in 2021: Diluted common shares (GAAP) 120,000 120,000 Options, restricted stock, and converted shares not included in diluted shares (12) - - Adjusted diluted shares outstanding (non-GAAP) 120,000 120,000 (11) This adjustment is for rounding and, in those periods in which GAAP net (loss) income is negative and adjusted net (loss) income is positive, also compensates for the effects of additional diluted shares included in adjusted diluted shares outstanding for the treasury stock impact of outstanding stock options and restricted stock and the if-converted impact of convertible notes. (12) In those periods in which GAAP net (loss) income is negative and adjusted net (loss) income is positive, this adjustment includes any options or restricted stock that would be outstanding as dilutive instruments using the treasury stock method and the weighted average number of common shares that would be outstanding if the convertible notes were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period, until the effect of these adjustments are anti-dilutive. Supplemental Information Segment Revenue, Cost of Revenue and Gross Profit (Unaudited) (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change Clinical Services: Revenue $ 102,227 $ 108,733 (6.0 )% $ 300,119 $ 275,599 8.9 % Cost of revenue (13) 59,560 60,607 (1.7 )% 178,358 158,287 12.7 % Gross profit $ 42,667 $ 48,126 (11.3 )% $ 121,761 $ 117,312 3.8 % Gross profit margin 41.7 % 44.3 % 40.6 % 42.6 % Pharma Services: Revenue $ 19,113 $ 16,711 14.4 % $ 58,478 $ 42,852 36.5 % Cost of revenue 14,541 10,772 35.0 % 38,436 31,724 21.2 % Gross profit $ 4,572 $ 5,939 (23.0 )% $ 20,042 $ 11,128 80.1 % Gross profit margin 23.9 % 35.5 % 34.3 % 26.0 % (13) Clinical Services cost of revenue for the three months ended September 30, 2021 includes $4.3 million of amortization of acquired Inivata developed technology intangible assets. Clinical Services cost of revenue for the nine months ended September 30, 2021 includes $5 million of amortization of acquired Inivata developed technology intangible assets and write-offs of $5.3 million for COVID-19 PCR testing inventory. Pharma Services cost of revenue for the three and nine months ended September 30, 2021 includes $0.5 million of amortization of acquired Inivata developed technology intangible assets. Supplemental Information Clinical (17) Requisitions Received, Tests Performed, Revenue and Cost of Revenue (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2021 % Change Clinical (14) : Requisitions (cases) received 159,625 147,518 8.2 % 473,898 406,250 16.7 % Number of tests performed 272,732 255,458 6.8 % 815,008 710,678 14.7 % Average number of tests/requisitions 1.71 1.73 (1.2 )% 1.72 1.75 (1.7 )% Average revenue/requisition $ 640 $ 622 2.9 % $ 630 $ 632 (0.3 )% Average revenue/test $ 375 $ 359 4.5 % $ 366 $ 361 1.4 % Average cost/requisition $ 347 $ 342 1.5 % $ 349 $ 361 (3.3 )% Average cost/test $ 203 $ 197 3.0 % $ 203 $ 206 (1.5 )% (14) Clinical tests exclude requisitions, tests, revenue and costs of revenue for Pharma Services, COVID-19 PCR tests and the amortization for acquired Inivata developed technology intangible assets. SOURCE: NeoGenomics, Inc. View source version on accesswire.com:
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