NeoGenomics expands with Pathline acquisition

FT. MYERS, Fla. - NeoGenomics, Inc. (NASDAQ:NEO), a prominent cancer diagnostics company with a market capitalization of $1.3 billion and annual revenue of $660 million, announced today the acquisition of Pathline, LLC, a New Jersey-based laboratory that specializes in a wide range of pathology services. This strategic move is expected to boost NeoGenomics’ presence in the Northeastern United States, a region where the company has sought to increase its market share. According to InvestingPro data, the company has maintained strong revenue growth of nearly 12% over the last twelve months, despite challenging market conditions.

Pathline, founded in 2009, has built a solid client base, primarily in the Northeast, where it generates approximately 98% of its revenue. The company is known for its subspecialty pathology services, including histopathology, immunohistochemistry, cytology, cytogenetics, flow cytometry, fluorescence in situ hybridization (FISH), and molecular pathology. This acquisition comes at a time when NeoGenomics’ stock has experienced significant volatility, with InvestingPro analysis showing the stock has declined over 35% in the past six months, potentially presenting an opportunity for investors interested in the company’s expansion strategy.

Warren Stone, Chief Commercial Officer at NeoGenomics, highlighted the significance of the acquisition by stating that Pathline’s New York State approvals, combined with NeoGenomics’ rapid turnaround times and customer service, will drive growth in an area that has been historically underpenetrated. He emphasized that the company has seen higher penetration rates in regions where they have a lab in close proximity, such as California, Florida, and Texas.

Dr. Zach Liu, Chief Medical Officer and Laboratory Director at Pathline, expressed enthusiasm about joining NeoGenomics. He noted that Pathline’s expertise in oncology testing will now reach a broader patient base and healthcare providers, ultimately improving cancer care.

NeoGenomics anticipates that the integration of Pathline’s operations into its national network will enhance its ability to support oncologists and healthcare institutions in the Northeast. The company also expects the acquisition to contribute to incremental topline revenue growth, with operational consolidation and synergies projected to yield significant annual cost reductions. These financial benefits are anticipated to be accretive to AEBITDA starting in 2026. InvestingPro data reveals the company maintains a healthy gross profit margin of 44% and analysts expect profitability to return this year. For deeper insights into NeoGenomics’ financial health and growth prospects, investors can access the comprehensive Pro Research Report, which provides detailed analysis of the company’s performance metrics and future outlook.

It is important to note that this press release contains forward-looking statements, which involve risks and uncertainties. These include the company’s ability to implement financial and operational initiatives, recruit executive candidates, gain new customers, integrate acquisitions, and execute its business plan. Investors are cautioned not to place undue reliance on these forward-looking statements and are encouraged to review the company’s SEC filings for a discussion of potential risks and uncertainties.

The information in this article is based on a press release statement from NeoGenomics, Inc.

In other recent news, NeoGenomics has reported its fourth-quarter 2024 earnings, showcasing an 11% year-over-year revenue growth to $172 million, though slightly below the forecast of $173.05 million. Despite the revenue miss, the company exceeded earnings per share (EPS) expectations with a reported $0.04 against a forecast of $0.03. For the full year, NeoGenomics’ revenue increased by 12% to $661 million, with a significant improvement in adjusted EBITDA, which surged to $40 million from a negative $48 million in 2022. Looking ahead, the company has set its 2025 revenue guidance between $735 million and $745 million, anticipating an 11-13% growth, with adjusted EBITDA expected to improve by 38-45%.

Analyst firms have adjusted their outlooks on NeoGenomics. BTIG and Morgan Stanley both reduced their price targets to $17 from $18, with BTIG maintaining a Buy rating and Morgan Stanley keeping an Equalweight rating. Needham also lowered its price target to $18 from $19 while maintaining a Buy rating, citing a revenue shortfall despite an EBITDA figure that surpassed expectations. The company’s clinical services revenue grew by 15% year-over-year in Q4 2024, attributed to a 9% rise in volume and a 5% hike in pricing.

NeoGenomics is set to launch its NEO Pan Tracer liquid biopsy blood test panel in the first half of 2025, which is expected to drive future growth. The company is also focusing on the clinical validation of its RaDaR 1.1 minimal residual disease (MRD) test, although this is not included in the 2025 revenue projections. Despite recent challenges, including a CEO transition, analysts highlight the company’s strong fundamentals and strategic initiatives as potential growth drivers.

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