Earnings call transcript: NeoGenomics Q2 2025 sees EPS beat, stock drops

NeoGenomics (NASDAQ:NEO) reported its Q2 2025 earnings on July 29, revealing a notable earnings per share (EPS) beat but missing revenue expectations. The company posted an EPS of $0.03, surpassing the forecast of $0.02 by 50%. However, revenue came in at $181 million, slightly below the anticipated $183 million. Despite the EPS beat, the market reacted negatively, with NeoGenomics’ stock dropping 15.33% in pre-market trading to $5.23, close to its 52-week low of $5. According to InvestingPro data, the company maintains a healthy current ratio of 2.05, indicating strong short-term liquidity. InvestingPro subscribers have access to 8 additional key insights about NEO’s financial health and market position.

Key Takeaways

• NeoGenomics reported a 50% EPS surprise, with actual EPS at $0.03 versus a $0.02 forecast.
• Revenue fell short of expectations at $181 million, a 0.92% miss.
• The company revised its full-year 2025 revenue guidance to $720-$726 million.
• NeoGenomics’ stock dropped significantly by 15.33% in pre-market trading.
• The Pan Tracer Liquid Biopsy is set for commercial launch.

Company Performance

NeoGenomics demonstrated a solid year-over-year revenue growth of 10% in Q2 2025, driven by a 16% increase in clinical revenue. Despite this growth, the company faced challenges in meeting revenue forecasts, attributed partly to macroeconomic headwinds affecting its pharma services segment. The company remains focused on innovation, with new product launches like the Pan Tracer Liquid Biopsy and the Pelletra AI-powered spatial proteomics platform.

Financial Highlights

• Revenue: $181 million, a 10% increase year-over-year.
• EPS: $0.03, a 50% surprise over the forecast.
• Adjusted EBITDA: $10.7 million, a 2% decrease from the previous year.
• Cash and marketable securities: $164 million.

Earnings vs. Forecast

NeoGenomics exceeded EPS expectations, reporting $0.03 compared to the $0.02 forecast, marking a 50% surprise. However, revenue fell short by 0.92%, coming in at $181 million against the $183 million forecast. This mixed performance reflects the company’s ongoing challenges in certain market segments, despite strong clinical revenue growth.

Market Reaction

Following the earnings announcement, NeoGenomics’ stock experienced a significant decline, dropping 15.33% in pre-market trading to $5.23. This reaction indicates investor concerns over the revenue miss and ongoing challenges in the pharma services sector. The stock’s current price is nearing its 52-week low, highlighting market skepticism despite the EPS beat. InvestingPro analysis suggests the stock is currently undervalued, with analyst price targets ranging from $8 to $15. The stock’s beta of 1.62 indicates higher volatility than the broader market, presenting both risks and opportunities for investors. Get detailed valuation analysis and more insights with InvestingPro’s comprehensive research report, available for over 1,400 US stocks.

Outlook & Guidance

NeoGenomics revised its full-year 2025 revenue guidance to $720-$726 million, reflecting a 9-10% growth expectation. This aligns with the company’s historical performance, as InvestingPro data shows a consistent revenue CAGR of 10% over the past five years. The company, currently valued at $704 million by market cap, remains optimistic about its product pipeline, with the Pan Tracer Liquid Biopsy launch scheduled and continued investment in therapy selection and MRD testing. However, it remains cautious about pharma services revenue for the remainder of the year.

Executive Commentary

CEO Tony Zook emphasized the company’s commitment to its long-term plan, stating, "We are not backing off of our long range plan." He acknowledged the need to deliver consistent results, saying, "It’s up to us to now deliver quarter on quarter and regain that confidence in our delivery." These comments reflect management’s focus on operational efficiency and strategic growth.

Risks and Challenges

• Pharma Services Headwinds: The segment faces significant macroeconomic challenges, impacting revenue.
• NIH Funding Uncertainty: Potential fluctuations in funding could affect research and development initiatives.
• Drug Pricing Pressures: Changes in pricing regulations may impact profitability.
• Clinical Trial Enrollments: Uncertainties in trial enrollments could delay product development.
• MRD Market Competition: The $30 billion MRD market presents both opportunities and competitive pressures.

Q&A

During the earnings call, analysts questioned the revised guidance, particularly the impact of pharma services weakness. Management expressed confidence in the upcoming Pan Tracer Liquid Biopsy launch and addressed ongoing MRD litigation with Natera. The focus remains on improving operational efficiency and enhancing margins, despite current challenges.

Full transcript - NeoGenomics Inc (NEO) Q2 2025:

Tom, Conference Call Operator: Good morning, and welcome to the NeoGenomics second quarter two thousand twenty five financial results call. At this time, all participants are in listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded. I will now turn the call over to Kendra Webster, vice president of investor relations.

Kendra Webster, Vice President of Investor Relations, NeoGenomics: Thank you, Tom, and good morning, everyone. Welcome to the NeoGenomics second quarter twenty twenty five financial results call. With me today to discuss the results are Tony Zook, Chief Executive Officer and Jeff Sherman, Chief Financial Officer. Additional members of the management team will be available for the Q and A portion of our call. This call is being simultaneously webcast, and we will be referring to the slide presentation that has been posted to the Investors tab on our website at ir.neogenomics.com.

During this call, we will make forward looking statements regarding our future performance, business strategy, and financial guidance. We caution you that the actual events or results could differ materially from those expressed or implied by the forward looking statements. These forward looking statements made during the call speak only as of the original date of this call, and we undertake no obligation to update or revise any of these statements. Please refer to the information disclosed under the heading Risk Factors in our most recent Forms 10 ks, 10 Q, and eight ks that we filed with the SEC to identify important risks and other factors that may cause our actual results to differ from the forward looking statements. These documents can be found in the Investors section of our website or on the SEC’s website.

During this call, we refer to certain non GAAP financial measures that involve adjustments to GAAP results. The non GAAP financial measures presented should not be considered an alternative to the financial measures required by GAAP, should not be considered measures of liquidity, and are unlikely to be comparable to non GAAP financial measures provided by other companies. Any non GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measures in a table available in the press release we issued this morning and available in the Investors section of our website. I will now turn the call over to Tony.

Tony Zook, Chief Executive Officer, NeoGenomics: Thanks, Kendra. Good morning, everyone, and I thank you for joining us today. I’m pleased to leave this call having now completed my first quarter as CEO. Since becoming CEO in April, I’ve engaged with the business including sales, operations and R and D, and reexamined our strategic initiatives and financial targets from a more in-depth perspective than I could as a director. I’ve also met existing and potential partners at various industry conferences, and had conversations with many of our shareholders to better understand their perspectives.

These conversations reinforced the significant opportunities to drive value for our customers, patients, and shareholders. Cancer testing continues to be a large and attractive market. Most of our business today is in diagnostic testing, though recently we have accelerated our offerings in therapy selection with the launch of several NGS products. In addition, our RADAR 1.1 technology and R and D work in next generation MRD enable us to participate in a market that’s underpenetrated and rapidly growing. I acknowledge that our delivery this quarter was below expectations.

While I remain extremely optimistic about the future of NeoGenomics, our team and I are doubling down on our efforts to focus the business on execution excellence, as we build upon our disciplined financial and operational foundation. But before we talk about our plans moving forward, let’s spend time on the quarter. We had a solid second quarter in the core clinical business, posting significant volume and share gains in key segments. However, our non clinical revenue was below expectations. Revenue for Q2 was $181,000,000 slightly below our second quarter guidance range, though still representing double digit growth of 10% year over year.

Our clinical business continues to expand with organic growth of 13%. Strength in our clinical business was offset by continued weakness in our non clinical revenue, driven by lower revenue from pharma and biotech customers. In the second quarter, we saw a sequential improvement in AUP, a record quarter for test volumes and NGS growth at 23%, slightly below our 25% target, but well ahead of the low to mid teens NGS market growth rate. We can continue to capture market share and clinical revenue, but we made a conscious decision to leverage the learnings from our pan tracer liquid biopsy EAP to establish an even stronger product profile for launch. This meant we delayed our launch, which resulted in lower revenue and a lower than targeted NGS growth rate.

I’m excited to confirm that pan tracer liquid biopsy will launch commercially tomorrow, and believe that our approach to bringing this product to market will positively impact patients treated in the community and our NGS growth rate later this year. We’re projecting lower than planned revenue from pharma customers for the remainder of the year, as well as a negative impact to revenue associated with lower than planned volumes for PANTRASER liquid biopsy and NGS mix. As a result, we’ve updated our 2025 financial guide, which Jeff will provide more insight on in a moment. I am confident that NEO can continue to achieve double digit annual growth, build product gaps through organic and inorganic activities, and capture additional market share. The leadership team and I have drilled down to align our cost structure with revenues, reestablish our consistent execution, and rebuild credibility with our shareholders.

Investments we are making in operating efficiencies this year, including the LIMS project and digital pathology position us well to achieve more operating leverage in the back half of this year. I think it’s important to spend some time discussing our Q2 results and how we intend to accelerate growth and drive value. The pharma macro environment conditions contributed to the revenue shortfall in the quarter versus our expectations. Specifically, market uncertainty surrounding NIH funding, drug pricing, patient enrollment and clinical trials and potential tariffs are leading directly to investment volatility and creating significant headwinds for both our pharmaceutical and biotech clients. This is resulting in budget restrictions, reprioritization and consolidation of assets and postponed or canceled projects specific to our pharma services line that are more pronounced than we’ve experienced over the last two years.

As we have shared in past quarters, RADAR one point zero was a growth driver for pharma revenue and also provided a call point to sell other testing modalities. As a result of the negotiated settlement, these RADAR one point zero contracts are no longer producing pharma revenue in 2025. We are adding additional testing capabilities in our portfolio to make our menu more attractive to our pharma and biotech customers, such as Pelletra, our AI powered spatial proteomics platform, which launched in June. While we have updated our pharma go to market strategy and made key changes in leadership, it is taking longer than anticipated to yield results. How do we plan to respond to these challenges?

Our strategic drivers are focused on three areas, the customer experience, the community channel and new products. Optimizing and winning the customer experience continues to be our competitive strength. We’ve earned a market leadership position in Heene through our heavy investments in community hospitals. And we continue to invest in the community oncology setting. To win the customer experience, we focus on investments in our sales force effectiveness and efficiency, bi directional interfaces and ordering portals, well as automation and digital pathology in the lab.

Last quarter, we announced our plans for epic integrations, which we believe will begin to impact our revenue in late twenty twenty five. We’re also continuing our multi year process of integrating our multiple limbs into one single limbs, which will allow us to sunset eight legacy systems. We believe this will give us operational efficiency, enable us to further improve our turnaround times, and further enhance our data asset to fuel more robust growth in our oncology data solutions business. In terms of enhancing our community channel strength, we leverage our business development capabilities to establish effective, compelling partnerships, like the one with adaptive around delivering industry leading EMR tests to our customers, which we have started to bring to market through a control pilot earlier this month. Our pipeline of future opportunities continues to grow as we capitalize on the recognized strength and the unique brand recognition of our channel in the community space, coupled with our sales effectiveness.

A key growth driver for clinical lymphoma is focusing our R and D and business development efforts on new next generation precision guided products. We believe MRD and therapy selection NGS provide the biggest market opportunities and represent the largest associated unmet need. The 30,000,000,000 MRD market specifically represents significant unmet clinical needs, particularly in low shedding cancers. MRD has the potential to transform cancer care by enabling earlier detection of recurrence, more more precise treatment decisions and better outcomes for patients. This also makes MRD highly relevant to biopharma partners to advance targeted therapies.

We intend to make further progress here and evolve our product portfolio to be more comprehensive across the cancer care continuum. Simultaneously, we will continue building on our deep relationships with the community hospital pathologists and growing relationships with community oncologists, providing us with an even wider competitive moat and reinforcing our responsibility to inform treatment decisions with actionable insights. As I mentioned at the outset of this call, I’ve met with many of our shareholders to better understand their perspectives. They challenged us to rethink our confidence levels and to be transparent in our guidance, incorporating the risks and uncertainties inherent in our industry and our business. We take this feedback seriously, and I want our shareholders to know they have been heard.

Revising our 2025 guidance reflects the headwinds I’ve discussed while at the same time, acknowledging the efforts we’ve implemented to best position the company for the future. I’m confident we can achieve these forecasts. And if we execute on our action plan, I’m just as confident that there is additional upside we can capture as well. We intend to prove that one quarter at a time. As a member of the board of directors, I approved the update to the long range plan we communicated earlier this year.

As CEO, one of my primary objectives has been to oversee the execution of the strategy behind the plan and proactively identify opportunities to improve upon it. Here’s how I think about our long range plan. It’s just that long range. While the plan covers the company’s execution of certain key metrics during the next five years, this does not guarantee that the plan is going to correlate exactly to our guidance for the coming year and there will be variability from year to year. My confidence in the long range plan is based on three key assumptions.

First, we believe that the core business, which now includes Pathline, will continue to grow at a 10% plus rate, even with the headwinds affecting our pharma revenue. Second, our business development activities will add incremental revenue that materializes gradually with significant growth in the out years. But the timing will be lumpy, depending on deal terms and structures. Finally, as we increase our investments in R and D and launch pantries or liquid biopsy and future products like next gen MRD, we expect to generate incremental revenue through consistent improvement in NGS mix and growth. Beyond that, to the extent the pharma headwinds subside, there is upside.

As we progress into the back half of 2025, we will continue to monitor the impact of the recently passed federal budget bill, changes in the pharma landscape and the success of our liquid biopsy launch. Consistent with our historical practice, we will release our 2026 guidance when we report our 2025 full year earnings in February 2026. Going forward, like many in our industry, we will not be providing external updates on our progress against the long range plan, and will instead focus on our near term guidance targets. Based on my experience these last four months, I’m more optimistic than ever about NEO’s future. And with that, I’ll hand it over to Jeff to further discuss our results from the quarter.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Thanks, Tony, and good morning. Second quarter total revenue growth accelerated from Q1 and increased 10% over prior year to 181,000,000. Total clinical revenue continued with double digit growth and increased by 16% from prior year. Organic clinical revenue was 160,000,000 representing growth of 13% driven by a 10% increase in test volumes and a 3% increase in a. The second quarter, NGS testing accounted for 32% of total clinical revenue and grew by 23% over prior year.

The strong clinical growth was partially offset by non clinical revenue declining by 26% over prior year, driven by weakness in the pharma revenue. Tony spoke about the second quarter was also a difficult comp with prior year pharma revenue of $18,700,000 or 10% higher than the average pharma revenue per quarter in 2024. Adjusted gross profit improved by $4,600,000 or 6% over prior year. Adjusted EBITDA was $10,700,000 down 2% from prior year, while delivering our eighth consecutive quarter of positive adjusted EBITDA. The decrease was due primarily to the acquisition of Pathline as the business is ramping.

Excluding path line adjusted, even improved by 1,400,000.0 to 12,300,000.0 or 13% from prior year average revenue per clinical test increased by 2% to $461 from the prior year and increased sequentially from Q1, even with the lower AUP Pathline volume. Excluding Pathline, AUP grew 3% over prior year due to increased ordering of higher value tests, including NGS and strategic reimbursement initiatives. As I noted on the first quarter call, we have successfully renegotiated several managed care agreements in the second quarter, which will positively impact revenue in the 2025. Q2 results include a non cash impairment charge of $20,000,000 associated with the upcoming replacement of our IVF L test with pan tracer liquid biopsy and the write down of Trepelo and assets held for sale. While we remain focused on 2025, our full year our revised full year guidance reflects the challenges of the current pharma environment and its impact on customer demand as well as the delay in launching PANTRACER liquid biopsy.

At the time of our first quarter earnings call, we believe that clinical would make up for the initially projected 7,000,000 shortfall in pharma, but demand for services has proven to be weaker than anticipated. As a result, the 7,000,000 gap will increase and we no longer believe that clinical can make up the pharma services shortfall for 2025. For full year 2025, we now anticipate revenue of $7.20 to $726,000,000, representing 9% to 10 growth for the year with adjusted EBITDA of 41,000,000 to $44,000,000 The Pathline integration is on track and progressing well with the potential impact to adjusted EBITDA of negative $1,000,000 for the remainder of the year. We remain well positioned to invest in our business and capitalize on the growth opportunities in our strategic plan. We significantly reduced our debt in the second quarter with the retirement of the $2.00 $1,000,000 convertible notes due in May out of our existing cash.

Cash flow from operations in the second quarter was a positive $20,000,000 an improvement of $6,000,000 or 44% over the prior year. And we ended the quarter with cash and marketable securities of 164,000,000 Our balance sheet has no near term debt maturities and we continue to balance capital deployment between organic growth investments, business development and improving operating efficiencies. Our balanced approach towards capital generation and allocation reflects our commitment to our strategic focus areas. Specifically, our investments will be focused on filling gaps in our broad menu, including ultra sensitive liquid biopsy and whole genome sequencing solutions. We have improved the financial health of our business dramatically over the last several years and we continue to progress in Q2.

We are focused on executing our plan to achieve long term sustainable and profitable growth and delivering shareholder value. To illustrate our confidence in our strategy and path forward, I along with Tony Warren and additional management team members as several as well as several directors on our board recently purchased additional shares. Now, I will hand it back to Tony to wrap up.

Tony Zook, Chief Executive Officer, NeoGenomics: Thanks Jeff to recap. We have strong relationships in the community setting where eighty percent of cancer patients are treated Operational capacity and network footprint and financial discipline and flexibility to expand our reach and generate value for our patients and shareholders alike. We will remain guided by our strategic drivers and committed to our mission and vision while focusing on generating meaningful growth and enhancing value while improving patient care. Thank you for your continued interest in NeoGenomics. And now I’ll pass it over to Kendra for questions.

Kendra Webster, Vice President of Investor Relations, NeoGenomics: Thanks, Tony. Alright, Tom. Let’s go ahead and open the line for questions.

Tom, Conference Call Operator: Certainly. The floor is now open for questions. If you would like to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speakerphone this morning that you pick up your handset to provide optimal sound quality. Once again, please press 1 to join the queue at this time to ask a question.

Please hold a moment while we poll for questions. And our first question this morning is coming from Andrew Brackmann from William Blair. Andrew, your line is live. Please go ahead.

Andrew Brackmann, Analyst, William Blair: Hi, guys. Good morning. Thanks for taking the questions. Tony, maybe to start on setting guidance. You know, we we’ve seen several updates on both near and long term updates so far this year.

This is yet another one. So from a high level perspective and now that you’re four months into the CEO seat, can you maybe just sort of talk about the process and philosophy for setting guidance, maybe how that’s changed? And I guess maybe even more points of here, what are some of the things that you’re committed to doing to rebuild credibility with the investor base? Thanks.

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah. Thanks, Andrew. I do appreciate the question. First off, guess, what have been my learnings now that I’ve had the opportunity, as you say, to sit in a chair. I will tell you, there is a big difference in seeing the company at a 10,000 foot view as a director versus the opportunity to dig deep as the CEO.

And I have had a significant amount of learning. I’ve had the opportunity to do deep dives with R and D, with our business development teams, with R and D operations and our commercial groups, and with the management team as well to be able to construct, reconstruct, deconstruct the budgets and long range plans to understand all of the key pieces that underpin that Andrew. So that I certainly have a deeper understanding of that. I’ve had the opportunity to meet with a lot of our investors and get their own feedback. And I can tell you, they have not been shy about sharing their own thoughts with us and made it

Jeff Sherman, Chief Financial Officer, NeoGenomics: very

Tony Zook, Chief Executive Officer, NeoGenomics: clear that just hitting a guide is insufficient. That’s the same as admits. And we need to be more realistic, a more balanced approach to how we can fade the business. I’ve been told that it is absolutely appropriate to speak with confidence on the underpinnings of your core assumptions and to express other areas as upsides. So I think that was a great learning for me as well.

So I take that very seriously to heart. I’ve had the opportunity as well to speak with a number of our partners and potential partners. At ASCO for example, I can tell you that there have been a real influx of opportunistic advances by companies to see if we can work together to leverage our strength combined with theirs. And so it certainly has been a learning. As far as what do I need to do, I think I need to speak with confidence and be transparent with how we view the business and to share that openly with people.

And the biggest thing Andrew, we now need to deliver. We missed our revenue guide this quarter. It’s unacceptable. We understand that and take responsibility for it. And now moving forward, we just have to hit and exceed our goals quarter on quarter.

Does that help?

Andrew Brackmann, Analyst, William Blair: That’s very helpful. Thanks for all that color, Tony. Maybe, you know, what your comments and talking about the underpinnings of core assumption, maybe as it relates to 2025 guidance, can you maybe just talk about some of the levers towards the guide down, maybe bridge the prior guidance to this guidance in terms of some of the key areas that you talked about? Thanks.

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah, will focus primarily on two of them Andrew. I mean, mix is always an issue with a company of our size, the portfolio of our breadth, right? When you’re trying to manage 500 products across a landscape, you are going to see subtle shifts in mix. So that’s always an issue for us to manage. But I would say that there were probably two large areas that are reflected in the guide.

First and foremost, the pharma side, the impact of the macro environment came at a speed that I don’t think we fully accounted for relative to our original guide. The combination of tariffs with pricing challenges, with NIH funding declines, all of those things factored into an environment for our pharma and biotech customers that created uncertainty. And I think that in large part translated into a delay in projects or reassessment of projects, and sometimes stopping of projects. And so I would tell you that that is probably the single largest contributor to the change in guidance for the year, probably representing almost two thirds of it. As I said in my opening comments as well, we made a conscious decision to leverage our pan tracer liquid biopsy EAP learnings.

And by doing so, I’m glad we did it. I believe we end up with a better product profile. And I believe we took the right requirements to improve that product profile moving forward. But not having PANTRACER in the portfolio in May, as opposed to our opportunity to start the commercial launch tomorrow. We’re excited by the launch tomorrow, but that is a three month delay Andrew.

And so that does affect our overall mix and revenue for the year. And then I guess maybe a final piece is, we are quite proud of our NGS penetration rate. We did 23% growth for the month, I mean for the quarter, but it’s still a little bit behind the 25%. And we acknowledge all those factors, think in the guide moving forward, not least of which was as well the feedback from some of our shareholders saying speak with confidence. What can you deliver?

And if there’s opportunity for upside then surprises later.

Andrew Brackmann, Analyst, William Blair: Great. Appreciate the update. Thanks guys.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Thanks Andrew.

Tom, Conference Call Operator: Thank you. Your next question is coming from Yuko Oku from Morgan Stanley. Yuko, your line is live. Please go ahead.

Yuko Oku, Analyst, Morgan Stanley: Hello. Thank you for taking my question. Given the focus around rolling out the pan tracer lineup and NGS tests in general being growth driver of the company, do you see opportunities for portfolio pruning? How do you balance being one stop shop for your customers versus focusing on allocating your resources to the most profitable products?

Tony Zook, Chief Executive Officer, NeoGenomics: I’m sorry, could you just repeat the last part?

Yuko Oku, Analyst, Morgan Stanley: Oh, how do you balance, being one stop shop for your customers versus allocating your resources to the most profitable products?

Tony Zook, Chief Executive Officer, NeoGenomics: Okay, it’s a great question. First, let’s start with pan tracer liquid biopsy. As say, we are looking forward to the launch tomorrow. We believe we have a very competitive product to bring to market. It’s one that our customers have actually asked us for because it complements that our family of pan tracer products.

It’ll be a comprehensive panel over 500 genes. We’ll include TMB and MSI that guides immunotherapies. We’ve been able to lower our input requirements so that we get better collection methods and yielding strong, very strong QNS profile. We’ve been able to support a turnaround time that we believe will be less than seven days and think that factors into a pretty good value proposition for our customers. And as you say, we look to the depth of the portfolio and we believe we have solid offerings, not just in the PAN tracer liquid biopsy family of products, but across the spectrum of products.

Warren, any comment?

Warren, Management Team Member, NeoGenomics: Yeah, let me add to that. So first and foremost, I’d say that our broad portfolio is absolutely a strength. When we think about labs sending out their oncology testing, they’re looking to consolidate vendors that they want to send their testing to. And this puts NeoGenomics in a very unique position that we’re able to address most of their needs. Having said that, yes, our strategy is to protect our position on the diagnosis side but invest significantly in therapy selection and MRD, which are the areas where we see faster growth’s larger TAMs.

So with that, we definitely see opportunities to simplify the portfolio, which we have done in 2025 and will continue to do for the rest of the year and into the future. But our strategy is to provide a holistic solution to our oncology physicians from a diagnosis perspective, therapy selection, and MRD point of view.

Jeff Sherman, Chief Financial Officer, NeoGenomics: And then I would say from an overall portfolio perspective, you should expect we’re continuing to evaluate the whole portfolio. And as Lauren said, it’s an ongoing process of pruning and refining based upon customer needs.

Yuko Oku, Analyst, Morgan Stanley: Great. Thank you for that color. And then a follow-up question. Could you also provide us with an update regarding RADR ID litigation? I think there was a recent order on motion to expedite.

What does it mean for the trial expected to occur, I think, in the October timeframe?

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah, first relative to the litigation, you can appreciate this. I’m not going to go into detail nor will members of the team with any ongoing litigation. What I can update you on is that the trial is slated for October. Either way, I can tell you though, we are committed to the MRD space. As you’ve seen, we are partnering with Adaptive to bring forward a great MRD heme product into the marketplace and we’re proud to do that.

We get benefit from that by being in the marketplace and taking those learnings and the added benefit to the rest of our portfolio. We’re gonna continue to invest in our next gen MRD. So that is built into our R and D plans moving forward. We have done our preparatory work behind the scenes, so we have completed and submitted our bridging study to MolotDX. And we are doing all the prep work we need for launch.

And so I will tell you that we are prepared and ready. Now recently, Natera has filed a motion for a bench trial. We oppose that motion. We believe that we have a constitutional right under the Seventh Amendment for jury trial. And the court has yet to rule on that motion.

So I would tell you stay tuned, you’ll know when we know. But we are coming into this space and we are committed to the space.

Yuko Oku, Analyst, Morgan Stanley: Thank you.

Tony Zook, Chief Executive Officer, NeoGenomics: You’re welcome.

Tom, Conference Call Operator: Thank you. Your next question is coming from Subbu Namdi from Guggenheim Securities. Subbu, your line is live. Please go ahead.

Mike Matson, Analyst, Needham and Company: Hi. This is Thomas Vondervelin on for Subu. Thanks for taking the questions. Just to start, can you get us comfortable with the second half ramp, specifically with NGS now that Pantracer was delayed a bit? And also with the continued pharma pressures, where do you feel the guide is most aggressive still and where is it most derisked?

Tony Zook, Chief Executive Officer, NeoGenomics: I actually think that we have a much more confident and balanced guide in the second half. I would tell you the greatest risk to the guide was on the pharma side. And so we have further reduced the pharma business plan. And by the way, not just in revenue, we’ve also taken some hard decisions relative to the cost base associated with pharma as well. So I would tell you that was the largest risk to the plan.

As far as the biggest growth drivers in the plan for the second half, as you know, we’ve invested in our selling force and we monitor that very, very closely. We expect to see increased effectiveness and efficiency with that investment in our sales force to help us further penetrate the NGS segment. Certainly pan tracer liquid biopsy plays a big role in the second half, in addition to just the normal back half year increase that we see historically. The Adaptive partnership is also an opportunity for us in the second half of the year. And I would also tell you that we are well on plan with our Pathline integration.

And that started first and foremost with just getting the integration correct, getting it done right, and making sure that there were no hiccups along the way. But as you will recall, that was of more strategic value to us. And we wanna see the opportunity to further drive share of our ongoing business in the second half of the year up into the Northeast. And so Beth and Warren on their commercial teams are focusing hard there. And then finally, we are working hard on interfaces with our customer base.

We think that that has an opportunity for us in the second half of the year as well, because when those interfaces go live, you have a better opportunity for increased penetration, because it just makes it so much easier for customers to do business across our portfolio. So thanks for the question.

Mike Matson, Analyst, Needham and Company: Thank you. And then just for my follow-up, last quarter you talked about, I think it was five products meaningfully contributing to NGS revenue. Did you have a similar concentration this quarter? And can you talk about if you expect that to evolve at all over the, balance of the year? Thank you.

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah. We we thanks again for the follow-up. We do expect it to evolve. We expect it to evolve and increase. The five concentrated products that we spoke to, again, we talked about their ability that they represented almost 21% of our clinical revenue.

That has continued to grow, and we saw in this quarter that’s up to about 23%. And relative to the broader business, all of our NGS products now have eclipsed about 30% of our total revenue. And so this is an important growth driver for us. We monitor it closely, and it’s one of the biggest opportunities for us over the medium and long term as well. But thanks for the follow-up.

Tom, Conference Call Operator: Thank you. Your next question is coming from Mike Matson from Needham and Company. Mike, your line is live. Please go ahead.

Mike Matson, Analyst, Needham and Company: Yeah. Thanks. So just wanna clarify the the comments on the the long range plan. So you’re talking about double digit growth now. Just to be clear, are you backing off the 12% to 13% target that you set earlier this year?

So you’re expecting kind of 10% plus over the next few years?

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah, Mike, thanks for the question. First off, we are not backing off of our long range plan. But what I am trying to do, Mike, is create added transparency so that there is no ambiguity of what is in it and how I view the business. And so that’s why I’m trying to drive for more clarity. My conversations with investors, they ask for that because what’s in, what’s out, and how do you get there from here was a big question for So let me once again just reiterate it if you don’t mind, so that everybody can be clear.

I look at this as our base business today. What do we have in our bag to sell, to bring to our customers now? That is a proven, I have it. That base business, in my mind, that is a 10% growth business over the planning period. So that is our anchor position.

Now, you’ve heard us talk time and time again, we are not standing still as we sit here today. We are investing, we’re doing it responsibly, but we are investing in R and D. We do plan to have more products in therapy selection and MRD. And those opportunities create incremental value above that base plan, and I’m acknowledging that that comes later in the cycle. There’s

Mike Matson, Analyst, Needham and Company: a lot of

Tony Zook, Chief Executive Officer, NeoGenomics: things we can do, I can’t compress the time continuum, and so those just come later in the cycle. And then the other area that we’re not going to stand still on is business development. We believe that there are plenty of opportunities for us to supplement our portfolio. We have seen that they can add incremental growth into our business in top and bottom line performance, but I also acknowledge that they’re lumpy. You can’t predict the exact time of those.

And so from my vantage point, the long range plan starts with your anchor position of the 10% growth in our current portfolio. We build from there with business development and of course new product development, And that’s the plan. I also want to just reemphasize that to me the long range plan is just that, it’s a long range plan. It is never intended to be a forecasting vehicle for any given year. And I plan to deemphasize these conversations around the long range plan, just like our peers do.

I’m going to focus our energies on our short term delivery. What can we deliver quarter over quarter and in that given year, and not be focusing our energies and discussion points around a long range plan. Is that helpful?

Mike Matson, Analyst, Needham and Company: Yeah. That that definitely makes a lot clearer. And then just on the non clinical business, I mean, the the steep declines we’re we’re seeing now. I mean, would it would it be possible to exit that business? Is there some kind of synergies with the the clinical side?

And then, you know, what would that you know, how profitable is that part of the business? Is it maybe an issue where, you know, more profitable than the the clinical side, and then, you know, you’d be giving you’d be hitting the bottom line too hard if you were to exit it?

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah, thanks again for the follow-up, Mike. Are there synergies across the lines that the answer for the operations team is yes, there are opportunities for that. But I think the bigger question is, are we committed to the space? Right? And I can tell you that we are.

We do believe in the space. It is of strategic value to us. It provides the opportunity for us to identify and to validate biomarkers early. It provides the possibility of the development of companion diagnostics. It keeps us at the forefront of emerging technologies, so that we can stay not just current, but a step ahead of where we might take our own activities.

It also does play a role, Mike, in accelerating the launch of new products. You don’t have the same reimbursement hurdles in that space that you might across other parts of the business. And so we believe in the pharma space over time, that it does help create value. But I also need to be reflective of the short term impact to that, and we have adjusted our revenue lines there. And I do not personally anticipate that these changes in the environment are going to subside anytime soon, And we reflected that in our business plan moving forward.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yeah, and I would add to that. I think, we still have excess capacity in our footprint as well as continuing as we’ve talked about our lens integration, which will allow us to increase our operating efficiencies with our pharma business as well. We don’t break it out separately now, but we used to break out advanced diagnostics previously and prior periods, and then had a had a lower margin profile overall than the company. But as we look at excess capacity, the business development and R and D opportunities as Tony spoke about and then the lens work, We still think it’s going be a viable business for us going forward. And we think that will be a plateauing out at some point in the future, which we can build upon from a perspective.

Mike Matson, Analyst, Needham and Company: Okay, understand. Thank you.

Tom, Conference Call Operator: Thank you. Your next question is coming from Mark Massaro from BTIG. Mark, your line is live. Please go ahead.

Mark Massaro, Analyst, BTIG: Hey, guys. This is Vivian on for Mark. Thanks for taking the questions. So maybe just one on Pathline. Just help us understand how the contribution in the quarter was tracking relative to your internal expectations.

And then I know you’ve cited an intended benefit of cross selling the broader portfolio with PATHline customers in the past. So just curious how you’re seeing that dynamic play out. Thanks.

Tony Zook, Chief Executive Officer, NeoGenomics: Sure. I’d be happy to start that, and Warren can jump in any time. As far as the integration and the intended results versus actual, we are right on plan with the Pathline integration. The revenues were right in line with our expectations. And so we feel very, very good about the shape of that acquisition and the shape of the business.

As you rightfully say, it’s not just a business benefit relative to Pathline alone, there was strategic value associated with the acquisition. We saw the opportunity to enhance our footprint and therefore our speed of delivery to key customers in certain segments of our market in the Northeast. And so it is our plan to continue to drive the current pad line business, but as well take advantage of our more in-depth portfolio and bring NGS products up and through into the Northeast with greater rigor and speed. That was always intended to take place in the latter half of this year with that benefit being more realized in 2026. And of course, we will do everything in our power to pull as much of that forward as possible.

And I’ll look to Warren if you want to add some additional color. Yeah, thanks, Dan.

Warren, Management Team Member, NeoGenomics: I think you covered most of the key points. I think one of the key elements for us to really enable this capability in the Northeast was to further validate tests within this lab. And that was always planned to take place in the second quarter. And again, just to remind everybody, we closed this acquisition in the early part of the second quarter as well. So, we’ve actually concluded the validation requirements for these additional tests that we wanted to move into the Northeast to round out the portfolio that’s required in that lab.

And now we are actively addressing sort of these opportunities to drive additional share of wallet and pull through. The sort of opportunity funnel looks robust and certainly expect to see many of those come to fruition in the second half of the year. And as Tony said, that would be an upside for us in the second half and certainly something that would drive material value for us in 2026 and beyond. Thank you.

Tom, Conference Call Operator: Thank you. Your next question is coming from David Westenberg from Piper Sandler. David, your line is live. And please go ahead.

David Westenberg, Analyst, Piper Sandler: Thank you for taking the question. So I actually wanted to talk about the 10% volume growth and that was organic, I believe. Can you talk about what that might mean for share gains versus the market? Can you give us any context to what historical volume growth is in the market? Help us really evaluate the overall strength in the business?

Tony Zook, Chief Executive Officer, NeoGenomics: Well, would say first and foremost, as you rightfully note, the growth was 10% Across our business, we have made good growth across all the various modalities. So we continue a storyline that while our focus has been in NGS and making sure that we grow that important segment of our business. In fact, across all of our modalities, we continue to make great progress and we see share gains across all the modalities. And so it’s quite a positive for us moving forward. As you also rightfully have seen in earnings release, it’s also record high volumes for us across the business.

And so for us, we see the opportunity to continue to grow volume. We do see the opportunity to grow share in our key segments. And that is what we are focused in doing.

Jeff Sherman, Chief Financial Officer, NeoGenomics: I would say, if you look at it from a modality perspective, we’re seeing growth rates depending on the modality in the 2% to 3% to 5% range. And I would say kind of across the board, we’re growing significantly faster than that.

Warren, Management Team Member, NeoGenomics: Maybe I want to build on that just from a commercial execution perspective. And I think the development from a volume perspective is testament to a strong commercial strategy well executed. And coming back to the fact that we have our territory business managers that are looking at the pathology business and the oncology sales specialists looking more at the community oncologist from a therapy selection point of view, that really drives towards providing a solution to these ordering positions. And although we do prioritize certain products, it’s very much around providing a holistic solution across their needs, and this is what’s driving the incremental volume across all modalities. And we’re seeing growth, greater than market, as Jeff and Tony said, against each of the modalities.

But we do over index on NGS because of the desire to move to the right into therapy selection as well, and we do that through sort of incentive compensation and other focusing mechanisms. But it really is the testimony of a strong commercial strategy being well executed that seeing this volume growth across all modalities.

Jeff Sherman, Chief Financial Officer, NeoGenomics: And I think seeing 23% NGS growth without our liquid biopsy product is, again, continuing to see very strong growth there, above market growth there, and now adding what we believe to be a very new and important product is going to help drive more growth in the back half of the year.

David Westenberg, Analyst, Piper Sandler: Perfect. And then as we I mean, I know you’re not giving second 2026 guidance, but if you can maybe talk long term Tony about how you think about operating margins in 2026 and beyond. Is there any kind of planning on growing EBITDA faster than revenue in the years out? Is that kind of the mission here? And then back to Jeff, can you talk about some of this cash flow and operating margin seasonality that you kind of see in the business?

And I’ll take it from there. Thank you. Well,

Tony Zook, Chief Executive Officer, NeoGenomics: I will obviously wait for ’26 to talk about ’26, which we will do in February. But to just give you a sense over the longer term plan, do we still see that there is operating leverage for us as an organization? The answer to that is yes. We will continue to make the right investments in our operations sites. We have made a really good progress with the LIMS project and we look forward to having a one common LIMS system that we can retire eight legacy systems.

There are opportunities for us to do the same thing in a number of different areas through automation, through digital pathology. So we do expect that we can increase efficiencies and effectiveness in our margins, and that in turn will lead to solid growth over time. And we also believe that there are going to be some midterm opportunities for us that we’ll talk about in more detail, that we can create more value for the company. So we have a strong financial discipline embedded in the company. We’re going to build on that.

And we do see plenty of opportunities for us to continue to cost reduce, find efficiencies and improve margins.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yeah, I would add to that. And I would still characterize, we think we’re in early innings of really capitalizing on both the lens integration as well as investing in automation and really think we have an opportunity to drive operating efficiencies there. And then from a cash flow perspective, generally, Q1 is our biggest cash burn and that played out again this year and we start building from there. So we had a very strong cash third quarter. We’re actually free cash flow positive this quarter.

And as I said in my prepared remarks, cash flow from operations was up over 40% in the second quarter. We are still very focused on revenue cycle management and making sure we’re collecting what we generate from a revenue perspective and expect that cash balance will build as the year progresses with normal seasonality with the back half growth we’re expecting that we’ve seen historically.

Tony Zook, Chief Executive Officer, NeoGenomics: Thank you.

Tom, Conference Call Operator: Thank you. Your next question is coming from Dan Brennan from TD Securities. Dan, your line is live. Please go ahead.

Kendra Webster, Vice President of Investor Relations, NeoGenomics0: Great. Thank you. Thanks for the questions. Maybe just one to start on the nonclinical business. You know, it’s been a continued weak spot for you.

I think it was down, I think you said 26% in the second quarter. I know you don’t break out guidance, but just to ideally remove or minimize the risk that more shortfalls here depressed results in the back half of the year end or the stock? Is down 40%, 50%? Like how can you help us frame any sense of how we think about the back half of the year, kind of what’s baked into the new guidance? Like if we punch in down 50%, we would get to the midpoint of your range, not changing our clinical assumptions.

I’m just wondering if you can help us do that bridge.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yeah, I think on the pharma side, I would expect a similar performance as we had in the first half of the year. We generally see a little bit stronger performance in the fourth quarter in our data business, our business. So, I would expect expect that as well. But but pretty, pretty consistent with the first half with with some upside and our business in the fourth quarter is how I’d characterize what we’re contemplating.

Kendra Webster, Vice President of Investor Relations, NeoGenomics0: Okay, and on the pan tracer side, did you and I’m sorry if I missed this. Did you give an update on where reimbursement stands? Then I know you talked about delayed the launch due to learning from the EAP. So could you share any insights from that?

Tony Zook, Chief Executive Officer, NeoGenomics: Dan, what I would tell you is that we are in ongoing conversations with MolDX. And we will share the final outcomes of those. We are confident in our path forward towards reimbursement. And that’s why we are launching tomorrow.

Kendra Webster, Vice President of Investor Relations, NeoGenomics0: Got it. Anything on the learnings in terms of the EAP, Tony? And did you guys break out how to think about kind of what you’ve put in the contribution for the back half year? Ideally, it’s modest to give you room for beats, but just wondering on those two factors.

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah, we haven’t given a specific forecast for PanTracer in the second half of the year. Relative to the learnings, Dan, I think we found that there was opportunity for us to improve the profile of the product. We’re excited by it. We’ll have a very low QNS profile. We have verified a really exciting turnaround time that our customers are going to welcome, and we believe that we have a very comprehensive test that we bring forward.

And so for us, it was the right decision to take, and we feel more confident about when Pantracer hits the market. But as far as specific ramp ups, I don’t think we’re going to be talking about that indirectly. Other

Jeff Sherman, Chief Financial Officer, NeoGenomics: than I would just add, it’s a new product, so it will incorporate a new product ramp.

Warren, Management Team Member, NeoGenomics: Yeah. And Dan, maybe just adding to it. Think once we sort of revised EAP that we went live with probably a month ago or so, the demand that we saw with the revised target product profile was significant and very encouraging in terms of what we expect to see post commercial launch tomorrow.

Kendra Webster, Vice President of Investor Relations, NeoGenomics0: Got it. And I know there was one question on MRD. I know you discussed Nueterra looking to have a jury trial. Could you just remind us, would you mind just kind of zooming out since the next quarter and the back half of year, we’re going to get some of these key events on your MRD strategy, whether or not you can kind of launch with your existing platform and have to move on? Just kind of could you just reframe how to think about the various outcomes as we move into the back half of the year on MRD?

Tony Zook, Chief Executive Officer, NeoGenomics: Well, again, what I would tell you, there are some things that are more concrete than others, right? What we will definitely be doing in the second half of the year is our adaptive partnership with HEAM MRD. We are in the early days of a pilot with adaptive. We want to make sure that the partnership is seamless to our customers and that we’ve tested everything end to end. So that is going to happen.

We are working through those pilots now and we look forward to a more complete launch when both companies are satisfied that our customers see this as a great partnership. And that should be closer to the back half of the year. Relative to the radar litigation, I would tell you that right now the trial is slated for October. I can’t speculate on what the results will be or when they will be. I can tell you that we have done all the back office work in preparation to be able to launch.

So our bridging work and everything has been submitted. So all of that is on track. I would remind everyone that we didn’t have any of those radar revenues in our guide nor in our plan. So if we are successful there, that represents upside. And another area that we are doing, Dan, we are investing in next generation MRD with Andrew and his team.

We said that this would be a year where we’re really specking those out. ’twenty six would be a year of more active product development, and we look forward to those market opportunities in ’twenty seven and beyond. So that’s kind of what I can give to you relative to MRD landscape times.

Kendra Webster, Vice President of Investor Relations, NeoGenomics0: Perfect. Great. Thanks, Tony.

Tony Zook, Chief Executive Officer, NeoGenomics: You’re welcome, Dan.

Tom, Conference Call Operator: Thank you. Your next question is coming from Tycho Peterson from Jefferies. Tycho, your line is live. Please go ahead.

Kendra Webster, Vice President of Investor Relations, NeoGenomics1: Hi, team. This is Lauren on for Tycho. A quick one from me going back to the NGS growth. You guys talked about how you achieved 23 regardless of the delay in the commercial launch with PANTRASER. Could you talk a little bit about how much of that is being driven by Tessmist mix shift versus true market expansion and kind of how sustainable that cadence is into 2026?

Thanks.

Warren, Management Team Member, NeoGenomics: The majority of that is through market expansion. I mean, naturally, there is a mixed benefit and it’s common knowledge that the NGS has a higher AUP than the rest of our portfolio. But if we look at true sort of volume growth, that remains significantly higher than what we’re experiencing or what we’re from a market growth perspective. And really, again, this comes back to the commercial strategy where we have our dedicated sales team of oncology sales specialists who spend the majority of their time focused on the sale of NGS related products within the therapy selection part of the business. And again, we’re gaining traction in this space, and this is really what’s driving the share gains that we are seeing.

And we believe the addition of PANTRASER Liquid as of tomorrow will further accentuate that.

Kendra Webster, Vice President of Investor Relations, NeoGenomics1: Great. Thank you.

Tony Zook, Chief Executive Officer, NeoGenomics: Thank

Tom, Conference Call Operator: you. Your next question is coming from Michael Ryskin from Bank of America. Michael, your line is live. Please go ahead.

Kendra Webster, Vice President of Investor Relations, NeoGenomics2: Great. Thanks for squeezing me in, guys. I got just a couple of small follow ups on topics that people touched on before. So hopefully, really rapid fire. One is on PANTRACE.

So just kind of confirming that no change to your planned ramp or planned execution in the first couple of months or first couple of quarters out of the gate. Yes, there’s a delay, but the the plan going forward is the same and nothing’s really changed on that.

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah. From point of launch, the plan remains the same, but of course, that point of launch had experienced about a three month delay.

Kendra Webster, Vice President of Investor Relations, NeoGenomics2: Okay. Okay. Just making sure. And then on the the pharma services, I mean, totally hear you on on what you’re seeing in the end market. And, not surprising given what we’ve seen elsewhere, but still the results have lagged some of the others in the space a little bit and we just haven’t seen the same extent of weakness and it is a little bit more protracted.

So I was just wondering if you could comment on your competitive positioning there. It is a relatively crowded market and there’s more and more players offering some of these services. So could you just sort of, you know, analyze your portfolio and your offerings? Maybe there’s something there that that you’re missing on pharma services or maybe from the commercial side?

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah. Relative to pharma, I think, you know, as I had mentioned earlier, think portfolio does play a role. Our inability to, you know, sell radar certainly led to what radar one point zero was certainly led to some of this fall off in revenue and our inability to have a kind of a launch point within those discussions, I think is real. And so portfolio does have a role, and that’s why we were excited to bring Poletro into the marketplace. But Michael, we also recognize that these are long selling cycles.

And so while there might be some early signs there that look encouraging, I don’t believe that they’re gonna meaningfully impact our shape for the short term. And as you talk with other companies, yeah, I would tell you that there will be differences by companies. Lot depends on what are the services that they are bringing forward. Some companies have CROs. Some companies do different types of mixes.

I can only react to our portfolio. And in our portfolio, I see risk in that pharma business this year, and I don’t anticipate that we’re going to see any leveraging or any deleveraging of those issues for the remainder of this year and into 2026.

Kendra Webster, Vice President of Investor Relations, NeoGenomics2: Okay, thanks. And then the last one, if I could squeeze one more in, would be on cash balance and just sort of future use of cash. I know you used the $200,000,000 each quarter to pay down the current part of the converts as you previously talked about, but you still got a sizable chunk of the convert going forward. And now you’ve got this revised fiscal year guide. I there’s a near term versus long term dynamic.

Just talk us through cash balance going forward, just confidence in the run rate for the next couple of years as you get to that the remaining $350,000,000 on the convert? Thanks.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yeah, we expect that we’ll be generating free cash flow next year still and the cash balance will grow consistent with our earnings growth over the plan. So certainly, we have a lot of confidence that we will continue to delever as our earnings increase and we’ll be in a very strong position in the future to deal with the 2028 converts from a position of strength.

Kendra Webster, Vice President of Investor Relations, NeoGenomics2: Okay. Thanks.

Andrew Brackmann, Analyst, William Blair: Thanks, Michael.

Tom, Conference Call Operator: Thank you. Your next question is coming from Mason Carico from Stephens Inc. Mason, your line is live. Please go ahead.

Mike Matson, Analyst, Needham and Company: Hey, guys. Two for me here. One, it seems like Pathline may have outperformed slightly in the quarter. And sorry if I missed this in the first question, but could you update us on your expectations for Pathline revenue this year and whether the contribution built into guidance has changed at all?

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yeah, we haven’t, I would say, line, I would say, slightly ahead of our initial expectations, but we haven’t, we’re not changing the overall guidance for pipeline.

Mike Matson, Analyst, Needham and Company: Got it. And then on the pharma side, how much visibility do you typically have in that business in terms of revenue flowing through? Is it a single quarter, two quarters? How has that visibility changed given the backdrop? And could you just talk to your confidence in that segment being adequately derisked this year?

Warren, Management Team Member, NeoGenomics: Yes. I think I’ll add to that. I think it is a challenging space, especially with a big part of our business, US based, and lots of uncertainty with regards to patient enrollment within The US for clinical trials. And that really limits the line of sight that we’ve got. So it’s less than a quarter, believe it or not, in terms of if you want a high degree of accuracy and it rapidly erodes if you go beyond that.

And I think that’s why we’ve taken a pretty conservative or prudent approach to the forecast for the remainder of this year for the pharma services business.

Mike Matson, Analyst, Needham and Company: Got it. Thanks.

Tom, Conference Call Operator: Thank you. Your next question is coming from Andrew Cooper from Raymond James. Andrew, your line is live. Please go ahead.

Kendra Webster, Vice President of Investor Relations, NeoGenomics3: Hey, everybody. Thanks for the questions. A lot’s already asked. Maybe just a little more kind of diving into the guidance math. I think Tony, you talked about a 30,000,000 revenue cut, about two thirds or almost two thirds from pharma.

So there’s an incremental 10 or 12 clinical part presumably pan tracer, but I know that’s not the full amount. So is there anything else explicit to think about in terms of that step back or is this, hey, we really just want to de risk, we want to make sure we’re in a good spot as the second half of the year plays out?

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah, I would say, Andrew, we certainly have heard and we wanna make sure that we give you with confidence what we believe we can deliver. And so that does factor in. But I would tell you that the pharma, as you mentioned, rightfully so, delay in pan tracer liquid biopsy that does contribute to that remaining piece. And then there is a slight mix effect that also would be there. And I’ll ask Jeff if he wants to add anything.

Yeah, just

Jeff Sherman, Chief Financial Officer, NeoGenomics: within NGS, the mix of testing between blood versus solid tumor can change from quarter to quarter. And so I think we’re seeing growth with some lower, lower Modalities from the side, lower growth modalities. So, I think that’s just that mix element hard to predict quarter to quarter, but the overall growth growing 23%, still think we’re going see good growth there, but the mix will impact the revenue as well. Play out the rest of the year.

Kendra Webster, Vice President of Investor Relations, NeoGenomics3: Okay, thanks and then maybe just lastly, I think Dan tried to ask on this, but can you give us sort of an explicit what the updated PanTracer LBX looks like relative to the initial product that you did in that first EAP? Is it the turnaround time that improved? Is it QNS? Is it both? And kind of how we think about, are you matching what’s out there competitively?

Do you feel like this latest iteration puts you ahead? And if so, on what particular metrics?

Warren, Management Team Member, NeoGenomics: Yeah, so I’ll build on that. I think there was a number First of all, we were able to lower our input threshold. That allowed us to reduce the QNSTMP levels that we were experiencing. In addition to that, by optimizing the workflow, we’re able to accelerate turnaround time.

So we’re able to offer a significant below the published turnaround time through the EAP, which was really encouraging. And we also got feedback from select customers through the EAP that we were picking up certain genes that were being missed by a number of sort of peers or competitors out in the marketplace. So, really a lot of very positive insights that came from that. And as Tony said, we believe the three month delay is going be well worth in the long run.

Kendra Webster, Vice President of Investor Relations, NeoGenomics3: Perfect. I’ll stop there. Thank you.

Tony Zook, Chief Executive Officer, NeoGenomics: Thanks, Andrew.

Tom, Conference Call Operator: Thank you. Your next question is coming from John Wilkin from Craig Hallum. John, your line is live. Please go ahead.

Kendra Webster, Vice President of Investor Relations, NeoGenomics4: Yes, I guess, I’ll try and

Tony Zook, Chief Executive Officer, NeoGenomics: keep this really quick. But if my math is right, it looks like your volume for clinical excluding NGS and excluding pass line actually accelerated a little bit in the quarter. So just wondering if you could talk at all about what’s driving that, if there’s anything underappreciated in that.

Warren, Management Team Member, NeoGenomics: Again, I think it comes back to a commercial strategy that’s being effectively executed, seeing the value of the commercial investments that we’ve made and some productivity ramps. We did speak about early in the first quarter that there was a few new client wins that we had recorded and obviously those have ramped through the last quarter or so. And that covers the entire portfolio that are making available to us, which again, I think speaks to the value of NeoGenomics and the breadth of portfolio.

Tony Zook, Chief Executive Officer, NeoGenomics: Perfect. That’s all for me. Thanks, guys.

Tom, Conference Call Operator: Thank you. Your next question is coming from Puneet Souda from Leerink. Puneet, your line is live. Please go ahead.

Kendra Webster, Vice President of Investor Relations, NeoGenomics4: Yeah. Hi, guys. Thanks for the questions here. So first one, could you elaborate a bit on the size of the oncology sales force now and how do you what’s your strategy in continuing to compete in that market? How much of the NGS sales is sort of coming from the oncologist channel versus the pathologist channel?

Maybe just help us understand that and largely because the competition here is only rising when it comes to therapy selection. You have one competitor that raised capital in the public offering. You have liquid competitors that are now launching tissue and then there are existing incumbents there. So just given all the landscape of that market, what’s your NGS growth longer term? And then could you elaborate on the oncology sales force side?

Tony Zook, Chief Executive Officer, NeoGenomics: Paul, you want to just talk a little bit about size? I would like to address this stickiness question as well.

Warren, Management Team Member, NeoGenomics: Yes, think certainly we have executed against exactly the plan that we had spoken about, in late last year, beginning of this year, getting our sales team to roughly that 135 people and and sort of 40% of those resources for within the oncology sales specialist side of things. The greater majority of the growth that we’re seeing actually is being driven by that sales team. So coming from the therapy selection, side of the business, there is some that comes through the pathology channel, etcetera, but that’s the minority portion. And actually, when we speak about these new products that contributed 23% of the business in q two, the majority of that business too is coming from the OSS side of business. So despite the increasing competitive landscape, we certainly continue to penetrate effectively, and we believe the sort of 25 or so percent growth rate that we put out there still is very much attainable, especially when we launch PANTRASE illiquid tomorrow.

Tony Zook, Chief Executive Officer, NeoGenomics: Yeah. I I just build on, Warren’s point with you had mentioned that these are competitive markets, and others have invested in those markets. And we are not naive to that. We truly appreciate that. Know, the innovators do have a degree of stickiness because they were able to get into the market first.

But I was at one of the recent conferences and I reminded people that there are other ways to create stickiness too. And that is, you know, we bring to the dance, you know, a broad portfolio. We meet customer needs across a number of different areas. We continue to invest in those relationships and we continue to invest in making it easy to do business with NeoGenomics and that also comes with a degree of stickiness. And so we respect our competitors, we respect their innovation, but we also are hungry to get into those segments.

And we have demonstrated over time that if we have a competitive profile product that we bring to market, even if it lags in time, we have been able to sufficiently grow those businesses. And so we believe in the profile that we have with Pantracer and the Pantracer family and respect our competitors, but believe we can grow in that environment.

Kendra Webster, Vice President of Investor Relations, NeoGenomics2: And then

Jeff Sherman, Chief Financial Officer, NeoGenomics: the focus on operational execution and turnaround time continuing to improve as well, I think has allowed us to grow and retain market share.

Kendra Webster, Vice President of Investor Relations, NeoGenomics4: Got it. That’s helpful. And then on the OpEx side, if I could, could you clarify if you’re expecting and apologize if I missed this, if you’re expecting any OpEx cuts in the guide for this year? And I don’t

Tony Zook, Chief Executive Officer, NeoGenomics: know if you can talk about next year yet.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yeah, we’re not talking about next year yet. I think we continue to achieve operating efficiencies and expect we’ll see some operating efficiencies in the back half of the year. And I think there’s we have a high focus on continuing to see improvements there.

Tony Zook, Chief Executive Officer, NeoGenomics: Okay, thank you. Thank you.

Tom, Conference Call Operator: Thank you. This does conclude today’s question and answer session. I would now like to turn the floor back to Tony Zook for closing comments.

Tony Zook, Chief Executive Officer, NeoGenomics: I would just like to thank everybody for joining us on the call. Do appreciate the direct questions and the opportunity to present our results and as well our direction moving forward. I would like to remind everyone though that we did do a pretty good job on that clinical side. We grew that business 16%. We had a record quarter for volumes, really exciting NGS growth rate and we are poised to continue to drive performance in the second half of the year.

As Andrew opened the call, I will close it. It’s up to us to now deliver quarter on quarter and regain that confidence in our delivery. So thank you for the time and we’ll look forward to other conversations.

Tom, Conference Call Operator: Thank you. This does conclude today’s conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.

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