NeoGenomics, Inc. (NASD OTC Bulletin Board: NGNM), a leading provider of cancer-focused genetic testing services today reported its results for the second quarter 2010.
Second Quarter 2010 Highlights:
- Revenue growth of 14% vs. Q2 09
- Test volume growth of 28% vs. Q2 09
- Contracts with two managed care providers signed
Revenue for the three months ended June 30, 2010 was $8.5 million, a 14% increase over the $7.5 million reported in the second quarter 2009. Test volume increased by 28% over the comparable quarter last year. Sales and marketing expenses increased by $221,000, or 13% over last year, driven primarily by an increase in the number of sales representatives and sales recruiting expenses. General and administrative expenses increased by $554,000, or 25%, primarily as a result of additional management and information technology personnel. Net loss for the quarter was ($978,000) or ($0.03)/share versus net income of $8,000 or $0.00/share in the second quarter 2009.
After adjusting for the impacts caused by internalization of bladder cancer FISH testing by the Company's largest client beginning in mid 2009, revenue and test volume from all other clients grew by approximately 24% and 39%, respectively.
Second quarter revenue growth was impacted by continued pressure on average revenue per test, which was down approximately 11% versus the second quarter 2009. Approximately 60% of this decrease was due to reductions in insurance reimbursements with the remaining 40% due to changes in test mix.
Doug VanOort, the Company's Chairman and CEO, commented, "NeoGenomics continued to invest in initiatives to drive and accelerate sustainable growth. Improving the productivity of our sales force, introducing new products, and implementing a new laboratory information system were important activities during the quarter. However, both revenue and profitability were affected by significant reductions in average price."
Mr. VanOort went on to say, "Becoming an 'in-network' provider with managed care plans has been an important part of our sales and marketing strategy. Although there is downward price pressure up front, becoming an "in-network" lab eliminates the pressure our clients receive from managed care companies to curtail their use of out-of-network laboratories. It also eliminates clinicians' concerns about potential laboratory billing practices, because working with an 'in-network' lab provides them with certainty that their patients will only be billed for legitimate co-pays, deductibles and co-insurance. Thus, we believe that becoming an 'in-network' provider will result in significant sales and marketing advantages and create additional revenue opportunities with both existing and new clients over time."
Mr. VanOort concluded, "During the quarter we amended an important contract with Blue Cross/Blue Shield to allow access to several additional plans. We also signed a national contract with Aetna, which became effective on July 15th. Since we are now an in-network provider with our three largest insurance payers, less than 10% of our total revenue remains exposed to further negotiated price reductions as a result of additional managed care contracts. As a result, we believe most of the impact from managed care price reductions is now incorporated into our financials, and we expect average revenue per test to stabilize in coming quarters."
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