NeoGenomics at TD Cowen Conference: CEO Transition and Growth Plans

On Tuesday, 04 March 2025, NeoGenomics (NASDAQ: NEO) presented at the TD Cowen 45th Annual Healthcare Conference, outlining its strategic vision amid a CEO transition. The company highlighted impressive revenue growth and future plans, while addressing concerns about leadership changes. Despite challenges, NeoGenomics remains focused on innovation and operational efficiency to drive future success.

Key Takeaways

• NeoGenomics reported a 12% increase in full-year revenue for 2024, reaching $661 million.
• Chris Smith steps down as CEO, with Tony Zook taking over on April 1, 2025.
• The company provided 2025 revenue guidance of $735 million to $745 million.
• New product launches and sales force expansion aim to boost growth in oncology.
• Focus on operational efficiency with investments in automation and customer experience.

Financial Results

• 2024 Consolidated Revenue: $661 million, a 12% rise from 2023.
• Q4 2024 Revenue: $172 million, up 11% from Q4 2023.
• 2024 Adjusted EBITDA: $40 million, a significant increase from $3 million in 2023.
• Net Loss: $79 million for 2024, improved from $88 million in 2023.
• 2025 Revenue Guidance: Expected to be between $735 million and $745 million.

Operational Updates

• Leadership Transition: Chris Smith will hand over the CEO role to Tony Zook, who praised the company’s strong management and strategic direction.
• Sales Force Expansion: A 30% increase in sales force to enhance product adoption and market reach.
• Product Launches: Introduction of PanTracer liquid biopsy and solid tumor HRD tests to strengthen the oncology portfolio.

Future Outlook

• Long-Term Growth Plan: Aims for annual revenue growth of 12-13%, driven by a 25% increase in NGS.
• Margin Expansion: Targeting adjusted EBITDA improvements of 250-300 basis points annually.
• Operational Efficiencies: Investments in LIMS and automation to improve service delivery and customer satisfaction.

Q&A Highlights

• PanTracer Opportunity: Targeting community oncologists with a competitive liquid biopsy solution.
• NGS Growth: Expected to grow by 25%, comprising 30% of clinical revenues.
• Advanced Diagnostics: Restructuring to align with therapy types, supporting clinical trials and patient selection.

NeoGenomics’ detailed strategic plans and financial guidance underscore its commitment to growth and innovation. For more insights, refer to the full transcript below.

Full transcript - TD Cowen 45th Annual Healthcare Conference:

Dan Brennan: Good afternoon. Dan Brennan here. Welcome. Day two of the TD Counting Care Conference. I follow Tools and Diagnostics and pleased to be joined here on the stage with the management team of NeoGenomics.

My immediate left, I have Tony Zook, who’s board member and incoming CEO. To his left, we have Jeff Sherman, who’s a chief financial officer. To his left, we have Warren Stone, Chief Murph’s Officer. And then to the far left, we have Chris Smith, who’s a current CEO. Terrific, gentlemen, welcome, and thank you for being here.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Thanks, Travis. Yeah.

Dan Brennan: It’s the full firepower we have. This is terrific.

Chris Smith, CEO, NeoGenomics: I was gonna say, just keep moving these till I’m right off.

Warren Stone, Chief Murph’s Officer, NeoGenomics: First. You chose that too.

Chris Smith, CEO, NeoGenomics: Yeah. Well, that way, I could look at it.

Dan Brennan: So, yes, listen, we got a long list of questions to get through here in the next thirty minutes. A couple of overriding issues, I think, kind of sit atop a lot of the questions here, which hopefully we can address. Both are intertwined. The first is, obviously, business trends in the outlook, critical. You know, the company missed fourth quarter for the first time in over three years.

We’re talking a modest amount, but stock has been punished since then. So I wanna dig through kind of what’s happening in the core business. Right? Secondarily, CEO of transition. Obviously, Chris Smith has been at the helm for a couple you know, over over two years.

You know, he’s departing very soon. Tony Zook to my left, is gonna be coming on board. And I think it’s critical to understand that transition and Tony’s approach, and we’ll dig into both of those. So maybe I’ll start with a high level of Christian to Chris, excuse me. Kind of why is now the right time for you to depart?

What are some of the critical changes that you made? How do you feel Nio is set up for success under Tony? Yes. Thanks, Dan. Look, I think when, if

Chris Smith, CEO, NeoGenomics: you go back to ’twenty two, when I decided to take the role with the company, there was really the mantra from the board was really two things. This company was not growing. So that’s a pretty easy one, grow the business and really grow at double digits. And we were losing in that year, we lost $50,000,000 to $48,000,000 to almost $50,000,000 of adjusted EBITDA. And that was really it from the board.

And I said, look, my understanding is I think it’ll probably take three to four years to do this to turn around, but it was really there were goalposts that we agreed to target. And I think a couple of things happened, Dan. I would say, first of all, we were able to rebuild the whole leadership team by that January. So from August to January, everybody that’s now reporting to me was not. So we were able to bring in the leadership team, I think much quicker.

I think the second thing was we were able to put rigor and discipline and identify the key strategies quicker. And so we just finished our ninth consecutive quarter of double digit growth and we made $40,000,000 in 2024. And so really what I was what I agreed to the board I would do, we’ve done. Now did it happen sooner than four years? It did.

And so but based on that and just some personal things in my own life, I just decided it was a good time to step away. I think you have a really good management team. The fundamentals of business are fantastic. Cancer is growing 8% and we’re growing faster than most modalities. So it just it felt that it was a good time.

Now I don’t love the fourth quarter. It’s interesting you said we missed the fourth quarter. We actually hit right in the middle of guidance. Right. As you know, it’s kind of interesting how the world we’ve historically beat consensus.

So I think to be fair, a lot of people probably thought that, but we hit guidance and we did miss the consensus by about $1,000,000 which for the year was less than really 1% of revenue. And a lot of that had to do with the timing of the turnaround of pharma and in Canada that has taken a little bit longer than we thought, but that pharma revenue is for years, it is only is less than 10%. And if we had even been flat last year, we would have grown probably 13 instead of 14. So I mean 13 instead of 12. So I feel like, we’ve been punished because of a minor miss, but probably more to do with the transition and why it happened so fast.

And I think getting into that with Tony here, I think it’s great that he’s here and he can talk about that.

Dan Brennan: Terrific. Thank you. And a great segue. I

Chris Smith, CEO, NeoGenomics: know you wanted to talk a little bit about quarter too, but anything Sure.

Jeff Sherman, Chief Financial Officer, NeoGenomics: I mean, I mean, happy to add. I think, you know, we talked about really, in pharma in particular that we just didn’t see the budget flush that we normally see. And that you don’t really have that happen until the last four or five weeks of the quarter. And it’s been very predictable, and it just didn’t happen in the fourth quarter of this year. But, again, our earnings were at the top end of our revised guidance range.

I mean, remember, we start the year at 21 to 20 4 million in adjusted EBITDA was our original guide, and we finished the year at 40,000,000, which was the top end of our second revised earnings adjustment, you know, during the year. So, you know, almost doubling our adjusted EBITDA for the year from where we started the year. And I think as we talked about in the fourth quarter call, we did see our pharma bookings, you know, increase materially as we started the year. Now those bookings will, you know, take two to three years to really hit our revenue line. So we’ll see some of it hit in 2025, but that did give us confidence about the overall repositioning of our pharma go to market strategy and that we are seeing, you know, big pharma in particular starting to spend more on pharma.

So again, if you think about our 2024 year, we grew our clinical revenue 15% in the fourth quarter, ’15 percent for the year. If we had just been flat on the nonclinical revenue, as Chris said, that would have been like 13% growth. So we’ll expect continued momentum in the clinical side of our business in ’twenty five and expect to see growth starting to return in the nonclinical side of our business, which really helps us get to our revenue growth number for the year.

Dan Brennan: Terrific. That was a great I mean, that was some great input there. Thanks, Jeff. So maybe moving over to Tony, just first terrific to meet you. You have extensive leadership experience in pharma by your background, been on the board for the past couple of years.

To play devil’s advocate, the CEO prior to Chris was a pharma leader, really good background from AstraZeneca and probably other before that. Nio’s core diagnostics business struggled materially under his watch. So how will your background experience serve you well as a new incoming CEO and which parts of the business do you think your skill set is best matched? Sure.

Tony Zook, Board Member and incoming CEO, NeoGenomics: I would probably say a couple of things on the topic. First off, the scenario that I find myself as I’m entering Nio is remarkably different than the scenario Mark had to deal with. He was coming into a company that was having some serious transition issues, COVID hit. I think it’s fair to say they had lost their way and needing to redirect and coming into that cold without a lot of experience, I think in the diagnostic area, it was a hurdle, right? Contrast that with my scenario.

I’m coming on board with the management team and leadership body that Chris put in place that not just stabilized the business, they’ve been growing at double digit, right? They put financial discipline into the company, you know, we’re focusing on margin improvement and profitability, and they just got so many of the fundamentals correct. And then to be able to be on the board for two years and see that, right, to be part of the budget process, to be part of the AOP, I don’t feel like I’m coming into a new entity. I feel like I’ve been part of it. Now I’m a first moving from second cousin to a family member.

So I feel this scenario is just very different. And then second is your skill question. My first two thirds of my career was spent growing up in commercial organizations. I sold, I carried the bag, I sold in the hospital. I led selling organizations that sold within the hospital environment.

So I know what it’s like to sell undifferentiated products in the hospital as well as differentiated products. So when Chris and the team talk about win the customer experience, I know that battle firsthand and I know the effort that they’ve put into winning that. I’ve also sold products extensively into the oncology sector, So I know what it takes from across the organization to not just get that lead indication, but then build it out over time. So I think that suits my skill set from the commercial background. And then the last third of my career, I was interfacing, I was the head of R and D for a number of our companies.

And it’s no secret that I believe our future is going to be based on getting those innovative products into the marketplace and that interface between commercial and development is vital. So I think that explains a little bit how my scenario is different and then my skill sets coming in.

Dan Brennan: Terrific. Maybe the next series of questions I had up top were kind of on 4Q. Jeff, I think you kind of went through that. But maybe when we think about the guide then, the 25 guidance calls for 11% to 13% growth. It’s a modest acceleration from the reported growth this year at 11.6%.

But as you mentioned, clinical was 15%. You have a reputation for, as Chris mentioned, consistently like coming forth and not only delivering but coming ahead of, you know, where people think. I guess, how would you characterize the guidance? Are there any of the management team members want to speak on it? Clinical growth is implied around 13% to 14% with advanced diagnostics, you know, growing low single digits.

Chris Smith, CEO, NeoGenomics: You want to take that, Jim?

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yes. So again, going back to, you know, we’ve had strong growth in clinical ’twenty three and ’twenty four. So we expect that strong growth to continue. We we are adding to the sales force. So we’re adding another 30% to our sales force.

So coming out of Q3 and really into the beginning of twenty twenty five, we will have added another 30% to our sales force. In addition to that, we have new products coming out, liquid biopsy as well as solid tumor HRD as well. So a combination of continuing to our strategy of protect, expand, acquire in the clinical business, adding new sales team members as well, and then new products. We see good momentum in the clinical business, so we have a lot of confidence in that business. And I think just, you know, stabilizing the pharma business, we’ve said that was a work in progress.

We have a new go to market strategy. It’s been under Warren’s leadership for about three quarters now. It is a longer sales process and Warren can go into more detail on kind of some of the changes he’s made. But that gives us confidence that business can return to some modest growth in ’twenty five and start accelerating growth after that. So I think as we think about the business, you know, q four was a very strong quarter.

It was one of our strongest volume quarters up 9%, you know, strong growth across all modalities. We had some weakness, you know, in in the nonclinical and particularly in pharma. We’re seeing that starting to stabilize and that really gives us confidence of achieving our revenue growth in 2025.

Dan Brennan: Great. I have some questions, Tony, big picture planning. I’m going to stay tactical right now just on clinical for a little bit and then we’ll come back. Maybe just speak to the oncology opportunity here with PanTracer. So I know you’ve kind of beefed up the oncology sales force, you have PanTracer coming out maybe some other new products.

Just speak to where you stand with your oncology presence and kind of what kind of impact Pan Tracer can have?

Warren Stone, Chief Murph’s Officer, NeoGenomics: Yes. So thanks, Dan. I think importantly, and you’ve noted that we’ve made the investments, the community oncologist segment with the recent addition of the 35 plus sales resources that Jeff said. And that was by design for two purposes. We recognize that we need to increase our reach and our frequency into that community oncology segment.

And secondly, we need those feet on the street to be able to drive adoption of the new products we bring into market. And Pentracer liquid falls right within that sweet spot. The community oncologist is the target setting. Although we are not first to market, we believe in in a number of factors that this is, a, a very competitive test. It had has all of the sort of attributes that community oncologists would be looking for, including TMB and MSI, which is becoming increasingly important around immune response therapy.

Secondly, we feel that we’re gonna offer a probably best in class turnaround time, something that we become synonymous within the marketplace in terms of the value that we bring and it ties into the customer service. And the third aspect is the portfolio effect. Today, we get told by numerous community oncologists that they’re disappointed in the fact that we don’t have a a liquid solution because the adoption of liquid as a a testing solution has rapidly accelerated. And this is a formidable gap, which is limiting them in terms of partnering holistically with NeoGenomics. So we we feel we’re very well placed with the added resources and and the attributes that this test will bring to be able to to drive accelerated growth within NGS and within the community oncology segment as well.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Maybe you want to touch on concurrent testing?

Warren Stone, Chief Murph’s Officer, NeoGenomics: Yes. And maybe that’s a good point. Thanks, Jeff. You’d be really getting to get the narrative here. So I mean, what we’re seeing here is that concurrent testing is becoming increasingly important, and it’s in the guidelines now for early lung cell lung cancer.

And that’s basically where you would run both a liquid test and a solid tumor test concurrently together and will be reimbursed accordingly. And we probably anticipate that other indications will move into the guidelines as well in in the future. But ultimately, we feel that the very strong position that we have in our near comprehensive, the solid tumor test that we launched in March of twenty twenty three in combination with PanTracer liquid is going to be a formidable combination in the marketplace.

Dan Brennan: How big is Neo comprehensive now? Have you guys said that?

Jeff Sherman, Chief Financial Officer, NeoGenomics: We haven’t broken it out. We’ve said I mean, NGS continues to grow. So it is growing. You know, we’re expecting it to grow 25%, and it’s 30% of our clinical revenues today. And and, obviously, as we started 2024, we saw significant growth in NGS because we had that solid tumor test that we released in ’23 really starting to ramp.

And so I think, you know, we’re expecting to see good growth in the ramp and liquid biopsy in the back half of this year and and and really rotating into 2026 as well.

Dan Brennan: And do you feel for the pan tracer opportunity? Is it more hospitals are doing it themselves? They’re sending out to Garden or Tempest or to Foundation? Or they’re just running another type of test, like a panel or they’re running something else and now they need this liquid test? I’m just wondering

Warren Stone, Chief Murph’s Officer, NeoGenomics: It’s a combination of all three. There is certainly many, community oncologists that are not using liquid yet. It’s recently been included in the guidelines for early cell lung, early lung cancer, but, so there’s still a big portion of the market that doesn’t use it. That’s the first. There is very few institutions that run this internally even in the academic setting.

It’s typically a send out test. And in that case, they would be using one of the competitors that you have articulated.

Dan Brennan: So and maybe one more there. So do you feel like for the opportunity this year and next is most of the opportunity share gain displacing one of the incumbent vendors or they’re just not doing it today?

Warren Stone, Chief Murph’s Officer, NeoGenomics: I would say yes. Yes to both. I think it’s a combination of both. Like I said, we’ve had numerous ordering physicians already expressed their desire for us to include this in our portfolio because they’re having to partner with other providers, and because we don’t have it. And I will say we’re seeing increasingly, and I saw this just yesterday while I was out at some customers, that the administrative burden on these practices is becoming just overwhelming.

And consolidating the number of send out vendors that they’re making use of is a way to reduce that burden. And with our broad portfolio of 500 plus tests, which is now being very well rounded out in both diagnosis and in therapy selection, it places us in a very strong position to sort of be that preferred send out partner. And when we wrap that around with interfaces and we spoke in Q4 earnings about the three thirty interfaces we brought live in 2024, it really starts to significantly reduce that admin burden, improve the overall end to end experience and ultimately drive adoption. Yes, I think just

Chris Smith, CEO, NeoGenomics: to carry that on, Dan. So if you think about this business, it truly is a service business, right? Technology is without question is important. But if you get a liquid biopsy, you’re going to get a result from multiple vendors. And if you’re going to win on service, it is around kind of that customer experience.

So I think the share gains of our existing customers will keep it. But the other one is remember a lot of our businesses in the community and a lot of people in Paducah, Kentucky aren’t necessarily running liquid yet. It’s still early days as this expands. So I think it will actually be both. I think you’ll see the market grow as we bring it into the community where a lot of these companies don’t play, but you also definitely move share.

Got it.

Dan Brennan: And you guys haven’t broken out what the impact is in the 25% growth from the interest rate? Yes. Okay. Maybe just one on the core business, ex NGS, it’s in that business did well. I think volumes have grown over 4% a year in the last couple of years.

Pricing has been pretty powerful. It’s over 300 basis points in our model. Just maybe speak to the underlying corex NGS business and what’s been driving that?

Chris Smith, CEO, NeoGenomics: Yes, I think go ahead. No, please. You’re the guy driving.

Warren Stone, Chief Murph’s Officer, NeoGenomics: I think a couple of factors. I think first and foremost, you know, sort of in the early days 2023, we made some investments into what we call TBN Territory Business Managers. That was our first set of field resources that we invested in to ensure that we had a significant enough presence addressing that that core business that you referred to. That’s largely in the hospital space targeting pathologists. So that was the first thing we did.

The second is we came up with a very simplistic but effective commercial strategy of and you’ve heard me speak about this before, the protect, expand, acquire. And one of the biggest things that we focused in on is is protecting existing business, narrowing that hole in the bucket. And that comes back to the experience that Chris was talking about. If you’re providing a good experience, which is creating value, people are less likely to switch. So as we started to lose less and execute the strategy of expand, so you can increase share of wallet and acquire new customers, that became incremental business versus in the past, we were winning new business, but we were losing as quickly as we were winning it.

So ultimately, it created a net gain. So it’s simplistically been around the fact that we have, in some instances, rounded out our portfolio, but more importantly, we invested in the commercial resources that we needed and we’ve executed the protect, expand, acquire strategy effectively, which has resulted in this consistent volume growth above market.

Chris Smith, CEO, NeoGenomics: Yes. And we also pivoted even the way we compensate our commercial organization to driving growth, right. And before we all came together, that wasn’t the case. So look, our view is that there’s a lot of market share there that we don’t have. And so our thing from day one was we will grow every modality faster than the market to our team.

And fortunately, we’ve been able to do that. And the reason being is that we are very aggressively we go out and move market share, but then we make sure we don’t lose what we have.

Dan Brennan: Maybe a question on advanced diagnostic and we’ll jump over to Tony and big picture and then we’ll hit MRD after that. But just on advanced diagnostic, so maybe look underneath the hood about why pharma customers are coming to today, if kind of a runoff with the existing MRD that you can run, but just what is it that they’re tapping into you guys have this big heme portfolio? What type of studies are they running with you? Like how has it been restructured and what type of the bookings that you’re seeing? Like why are they coming here to do what?

Warren Stone, Chief Murph’s Officer, NeoGenomics: Well, there’s a lot of questions in there. So let me start in terms of what we offer. So we have a lot of the modalities that we offer in the clinical setting we offer to pharma. So FISH, FLOW, molecular, but we also offer additional modalities, particularly multi omics is probably the one which is unique to pharma that we don’t actually offer in the clinical space. And we offer a solution both across heme and solid tumor to pharma customers for patient selection, patient screening, and patient enrollment.

And then phase one through phase three clinical trials is where we operate both across solid tumor and heaps. So pretty diverse broad set of services. What we’ve done as we’ve pivoted and relaunched this in January of this year is we’ve taken those modalities that we offer, but we’ve actually aligned them to the different therapy types that pharma is now looking to bring to market. So think of CAR T, think of antibody drug conjugates, think of of immune response, etcetera, and said, you’re bringing this type of product to market. Here’s our solution that we can support you with versus coming to them with our our modalities, etcetera.

So that’s the first thing that we’ve done. The second is we’ve actually to help them standardize on their workflows, etcetera. We’ve come up with standardized workflows for them to consider from a trial perspective. And that’s simplified the the sales process and the buying process on the side of the customer significantly. And the third thing that we’ve done is we’ve changed the deployment strategy of our pharma sales team to a classical hunter pharma model because we noticed that our business was coming from a fairly narrow set of pharma customers, a couple of hundred, where the actual opportunity is a couple of thousand.

And if we wanted to grow, we needed to ensure we address new customers. So we’ve we’ve deployed the resources against existing customers from a pharma perspective and resources against new new business opportunities, which are the hunters. And we believe the combination of that deployment model plus sort of repositioning our offering to the pharma customers around the types of therapies that they’re looking to bring to market is going to significantly increase the value proposition.

Dan Brennan: Okay. Interesting. So maybe we can jump to Tony and we can come back to some of the business questions too. But maybe Chris and Tony might be more appropriate for Chris, but some people have thought like issuing the LRP before Tony took over might have been premature. Like why do you think that was the right time to do it in January?

Chris Smith, CEO, NeoGenomics: Yeah. Look, and by the way, we did it in discussion with the board. So I think that’s kind of important. We had started that process with the board. We have every year we have a July strategy session and we worked through with the board.

So that LRP was under development for a while with the board. I think, look, to be fair because of the announcement, I think some investors were concerned about is there the bones of the business, how is it? And I think it was just to give, we’re going to release it always during Q1 earnings. We decided to do it at JPMorgan because we felt it helped to give confidence to investors on the long term growth. And Tony had kind of been kind of part of that process.

So look, I think whether we did it in January, we did in February earnings, we were always planning to do it because I think if you go back to when we started, we said seven percent to 9% was the growth for the long term guide and then we said 10% plus. And I think one of the things you got to do as a company, you just can’t keep doing this. And I think as we learned the business significantly better and had confidence, we want to come out and kind of say, look, this is what we think it’s going to be. I think it’s also hard to constantly keep doing that beat and raise and moving it. So we just said look this is where the LRP is.

So that was kind of the reasoning behind it.

Tony Zook, Board Member and incoming CEO, NeoGenomics: The only thing I would add to that is Chris has made it a process where it’s been very open right at the Board level we challenge strategy, we challenge LRAP, we challenge annual budgets. And so I had every opportunity to challenge both the budget and the LRAP and anything that was underpinning it. And so I feel very, very comfortable. So I guess one of the questions behind the question is do I fully support the L ROP? The answer is yes.

I don’t see coming in now we’re changing this, we’re changing that. It’s a good plan. I believe in that plan.

Dan Brennan: Maybe just on that then, so 12%, thirteen % is like you said, Chris, up from 7% to 9% only a few years ago with NGS being probably the biggest delta or the delta. But it’s a I believe it’s like a five year plan, similar to other long term guide. So I’m not sure if there’s been a time period, a patch, but I guess it’d be the first question. And then B, you know, I have heard this from investors that, you know, does imply a bit of a step up from where you guys were in 2024, and from, you know, 2025, the guide. So you’re assuming the long term, you’re going to be better than both.

Warren, you may just say it’s the advanced diagnostics turnaround, but just give us a sense of the underpinnings of that, which bakes in pretty robust NGS growth over that time. So since you’re underlining it, maybe just give some thoughts on that.

Tony Zook, Board Member and incoming CEO, NeoGenomics: Well, I’m happy to and then they can go into much more detail. The confidence I take into it is also based on the last few years performance. I mean you see the very strong operating performance for the clinical team. You see the growth in the NGS portfolio. You see the addition of new products coming into that portfolio and then you see the add on of additional selling resources that I think are going to position us equally strong within the community oncology framework as we are in the community hospital setting.

And so you start to look at those things combined with the market growth, there should be no reason we can’t outperform market growth. So I think some of the underpinnings of it, I’m fully aligned with.

Chris Smith, CEO, NeoGenomics: Yes, I think it’s a really fair point. I mean, look, I think bringing on new products, as you bring new products to market, it gives you confidence. The other thing is we’ll be have about 30% more people selling by the second half of this year than we did a year ago. So you have a lot more people out selling in the market. And I definitely think the strategy is right now for pharma, where I don’t think we had it right.

It’s definitely taken longer for us to turn that around than we thought. But I think we feel really good on it. And remember, in that guide too, there’s no MRD or radar. So we still continue to believe that that would provide upside.

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yeah. And we’re still focusing on the operational drivers and execution that helped us get there. So turnaround time operating efficiencies, putting in the LIMS system is going to help. It’s actually going to give more real time visibility to our clients and where their samples are, you know, investing in automation, as well are all going to be factors that help us in investing in more interfaces as well, as Warren said, are all factors we think are going to help us drive stickiness as we continue to add products to our large already, you know, broad menu and the strong distribution channel we have continuing to add resources there, it’s all kind of reinforcing kind of the momentum as we as we think about the long term growth trajectory. And then certainly, you know, seeing the the nonclinical pharma kind of returning back to growth is going to be a long term driver as well.

Mhmm.

Dan Brennan: So maybe one on the long term margin expansion. I’m going to ask Tony a few and then we’ll kind of wrap up maybe MRD. So just the margin expansion, you know, when companies go from not making money to making money over the next few years, like, the the numbers can look not silly, but all of a sudden the margins aren’t going up and you look at them on paper. But two fifty two fifty to three fifty basis points of EBITDA margin expansion here is material. Right?

The guide this year implies 160 basis points at the midpoint. So what is key to see the acceleration? And if you can give us any color underneath about the building blocks, pricing, operating leverage, things like that?

Jeff Sherman, Chief Financial Officer, NeoGenomics: Yeah. I’ll start. No, I just can’t.

Dan Brennan: Yeah. So I would say

Jeff Sherman, Chief Financial Officer, NeoGenomics: if you look at our business, we really have inherent operating leverage in our business just for getting volume growth. So the only truly linear cost we have is supplies. We can add we have a lot of capacity. We just built on an, you know, a new lab in in RTP, North Carolina. So we have a lot of capacity to pump volume into and get incremental margin out of that just just straight with volume.

Then you start adding mix or our NGS. It’s higher value, higher margin test, so that’s gonna continue to drive margins. We’re getting pricing increases. We’re seeing RCM initiatives help us get, you know, dollar for dollar. We’re getting paid for a test today that we weren’t yesterday.

That’s 100% accretive to revenue, gross margin, and adjusted EBITDA. And then we have all the operating efficiency things we’re working on, like LIMS, you know, etcetera. So in 2025, we are ramping up sales, sales and marketing with the expansion. We are ramping up r and d as well for radar one point one, for liquid biopsy, for next gen, MRD as well. And so, really, again, it’s that balanced approach of continuing to vest for earnings, but also investing for long term growth that that gives us confidence in ’25 as well as in the out years in the plan.

Dan Brennan: Okay. And maybe one on number d. Summary, we could spend the whole a lot of time with. Right? But just when you think about you have 1.1 and you have 2.2 o.

And with 1.1, you’ve got a couple of different things coming up in 2025. Maybe just in terms of, I guess, when do you think will will will the market really have a view whether 1.1 is the one that can move forward or not? I know you’ve got an IPR talent. You have a court case or there’s different, but maybe just give us a sense on that. And if it is 1.1 or two point zero, how much of a difference will it make?

If we’re sitting here two years from now and it’s one or the other, will the performance be very different between the two? Will the opportunities have to be different?

Chris Smith, CEO, NeoGenomics: Yes. So look, 1.1 is kind of here and now where we were completing clear validation will go to will submit to MaldiX all that will happen through the first three quarters of this year, which leads us to the court case, which is in October. And I think, if that court case goes in our favor, which we feel really good and we feel incredibly strong about that mainly because of some prior art, we will be outselling. And I think that product will take us a long that is a long runway with that product. It will still be more sensitive than the product that’s out on the market today.

That’s the market leader. I think we already have multiple indications that we’ve got Modyx approval for. We’re going to have a significantly expanded sales force. I think a lot of things go well. Look outside of that, it’s really about the next gen, like what’s the next generation.

And I think there’s multiple things to come over the next several years as far as MRD. One would be organically developing it. I think we have an amazing group of people that we inherited through the Innovana acquisition, but also we’re spending a lot of time in BD. And there’s a lot of innovative companies that have great technologies that have no distribution channel. And so it’s not just about tumor informed MRD, there’s multiple places to go.

And so I think we feel really good about our ability to get back on the market.

Dan Brennan: Great. Maybe Tony in the wrap up here. April 1, when you take over, kind of what stays the same, what starts to change?

Tony Zook, Board Member and incoming CEO, NeoGenomics: Well, I’d say what stays the same is the fundamental strategy, stays the same. I’ve been part of it and I think it’s working. And so this constant drive towards achieving customer excellence and winning that customer experience stays the same. Investing in our sales force where it’s the right thing to do stays the same. The financial discipline stays the same.

I mean all the underpinnings of everything we’ve done looking for lab efficiencies every opportunity with the LIMS program and others that stays the same. I think what begins to evolve versus change because the team can only do so much in the first couple of years right. I think what evolves is added focus now on the product launches moving forward and really building up our R and D capability because I see a future where NeoGenomics is equally well known for its deep product portfolio, but as well the innovation that it brings to the marketplace. And I think we can make big inroads in that innovative space with some of the leaders that we brought on board and with our foundation at MRT.

Dan Brennan: So then last question, stocks down about 50% since news of the Chris transition. I’ll ask both of you guys kind of what’s the message to current and aspiring shareholders about the stock reaction

Chris Smith, CEO, NeoGenomics: and you know My thing is you can’t be in cancer if you don’t own NIO, right. I mean we’re the we have more we have the broadest portfolio. We kind of own the community where 80% of all test testing occurs. And I think that the LRP gives good confidence in where the business is going.

Tony Zook, Board Member and incoming CEO, NeoGenomics: The business foundation is very solid, very little has changed other than an announcement. When you look to the underlying business, I think it’s extremely strong. I think the building blocks have been put in place are outstanding. The people that we’ve onboarded are fantastic and the future is very bright.

Dan Brennan: And maybe final one, given the management team that you built up, like how good does Jeff and Warren and the team feel? Obviously, I’m sure you feel good under Tony, but like the like the certainty and the stickiness of that team, any any changes to envision as you have a CEO change you think or no?

Jeff Sherman, Chief Financial Officer, NeoGenomics: Look, I think we we’ve built Chris has done a great job building great team. The team works very well together. We’ve built a lot of team members underneath us as well. And I think we have good momentum in the business and we expect that to continue.

Warren Stone, Chief Murph’s Officer, NeoGenomics: Yes. I mean, anything I’d add to that, I mean, we work to put depth within the organization as well. It’s not just that direct reports of Chris. We’ve all worked to ensure that the levels below us have sort of upskilled and up talented. So I think there’s great depth through the organization, which is sort of ready to take us through this next part of the journey.

Terrific. Well, thank

Dan Brennan: you all for being here. Thanks everyone for joining

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