NeoGenomics Company Overview 07/24/2014
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The document presents an overview of NeoGenomics, a fast-growing cancer genetics lab, highlighting its commitment to improving patient care through exceptional genetic testing services. It includes financial metrics indicating strong revenue growth, increased productivity, and operating leverage, as well as insights on their strategic client partnerships and industry positioning. Additionally, it outlines the company's management team and future priorities, emphasizing innovation and market expansion.
NeoGenomics Company Overview 07/24/2014
- 1. 1 NASDAQ: NEO Company Overview Presentation July 2014 Time Matters. Results Count! “Improving Patient Care through exceptional cancer genetic testing services!”
- 2. 22 Forward-looking Statements This presentation contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act, as amended; Section 21E of the Securities Exchange Act of 1934; and the Private Securities Litigation Reform Act of 1995. The words “may”, “would”, “could”, “will”, “expect”, “estimate”, “anticipate”, “believe”, “intend”, “plan”, “goal”, and similar expressions and variations thereof are intended to specifically identify forward-looking statements. All statements that are not statements of historical fact are forward- looking statements. Investors and prospective investors are cautioned that any such forward- looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The risks that might cause such differences are identified in our filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise the forward looking statements made in this presentation to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events.
- 3. 33 Investment Highlights • Fast growing cancer genetics lab servicing Oncologists, Pathologists and Hospitals • Strategic client partnerships created by “Tech-Only” model • Dynamic, rapidly-growing and consolidating industry • Industry-leading revenue & test volume growth • Strong productivity and operating leverage leading to accelerating cash flow and net income • Strong Management Team with large cap lab experience
- 4. 44 Consistent Historical Growth 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tests Performed $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Annual Revenue ($, 000s)
- 5. 55 Accelerating Cash Flow & Earnings ($, 000's) 2011 2012 2013 Total Revenue 43,484$ 59,867$ 66,467$ % Growth 26.5% 37.7% 11.0% Total Gross Margin 19,428 26,836 31,737 Gross Margin % 44.7% 44.8% 47.7% Sales & Marketing Exp as a % of Rev 16.0% 12.5% 13.1% Gen & Admin Exp as a % of Rev 28.4% 26.5% 26.2% R&D Exp as a % of Rev 1.2% 3.8% 3.7% SG&A Expenses 19,837 25,624 28,563 Total SG&A as a % of Rev 45.6% 42.8% 43.0% Adjusted EBITDA 2,134$ 5,997$ 8,515$ % Growth NA 181.0% 42.0% Net Income/(Loss) (1,177)$ 65$ 2,034$ Diluted EPS ($0.03) $0.00 $0.02 Summary Operating Metrics % Growth in Tests Performed 33.1% 50.2% 19.8% Avg. Revenue/Test 570$ 522$ 484$ % Change -4.9% -8.4% -7.3% Avg. Cost of Goods Sold/Test 315$ 288$ 253$ % Change -2.7% -8.6% -12.2%
- 6. 66 Adjusted EBITDA Metrics -$566 $2,134 $5,998 $8,515 -15.8% 29.6% 23.6% 38.1% $(2,000) $- $2,000 $4,000 $6,000 $8,000 $10,000 FY 2010 FY 2011 FY 2012 FY 2013 -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Adjusted EBITDA & Incremental Adjusted EBITDA as % of Incremental Revenue Adjusted EBITDA Incremental Adjusted EBITDA as % of Incremental Revenue
- 7. 77 Management Team • Douglas VanOort, Chairman & CEO Operating Partner, Summer Street Capital Partners; Chief Operating Officer, Quest Diagnostics • Maher Albitar, M.D., Chief Medical Officer & Director of R&D Med. Dir. for Hematopathology & Oncology and Chief of R&D, Quest Nichols Institute; Director of Leukemia and Molecular Laboratory, MD Anderson Cancer Center • Robert Gasparini, Director & Chief Scientific Officer Director of Genetics, U.S. Labs; Worldwide Marketing Mgr., Ventana Medical Systems; Asst. Director, Prenatal Diagnostic Center (Harvard) • Steven Jones, Director, EVP – Finance, & Chief Compliance Officer Chairman, Aspen Capital Group; Managing Member, Medical Venture Partners; Vice President, Merrill Lynch Investment Banking • George Cardoza, Chief Financial Officer CFO, Protocol Global Solutions; Controller, Central Region, Quest Diagnostics • Robert Horel, Vice President, Sales & Marketing Regional Mgr., US Labs; Product Specialist, Ventana Medical Systems; Pilot, U.S. Navy • Steven Ross, Chief Information Officer Vice President Technology, Chico’s FAS, Inc.
- 8. 88 U.S. Cancer Testing Market Size $10-12 Billion Hematopoietic Cancers Solid Tumor Cancers Total Testing Market: $3 - 4 Billion $7 - 8 Billion Est. Genetic Mkt. (TAM) ~$2 - 3 Billion ~$2 - 3 Billion Patients in Treatment: 850,000 7.0 million New Diagnoses/Yr.: 150,000 1.45 million Specimen Types: Bone Marrow (350K/Yr) Per. Blood (150K/Yr) Lymph Nodes Tiss. Biopsies (8-10MM) Fine Needle Aspirates Other Bodily Fluids Neo Revenue Split: ~80% ~20%
- 9. 99 NeoGenomics’ Cancer Testing Services Key Testing Methodologies Cytogenetics: chromosome analysis - “Neighborhood view of 46 houses from 1000 feet” Flow Cytometry & IHC: cell surface marker analysis - “Single house view from 500 feet” Fluorescence in-situ Hybridization (FISH): gene analysis - “Door and window view of one house” Molecular testing: DNA/RNA analysis -“View of serial number on door lock”
- 10. 1010 Customer Targets Pathologists & Hospital Pathology Groups (about 72% of Revenue) • Enable community Pathologists to practice using sophisticated tools and tests • Innovative technical component (TC or “tech-only”) services – Flow, FISH, IHC • Outstanding Web-based Lab System & extensive training programs Oncologists & Clinician Groups (about 25% of Revenue) • Includes Hematologists, Oncologists, Dermatologists, Urologists • Disease Panels and comprehensive molecular menus • Increasing Opportunity to service larger practices with Tech-only model Clinical Trials & Other (about 3% of Revenue) • Contract research/clinical trial support work for Pharma clients
- 11. 1111 Covance Strategic Alliance • Exclusive 5 year Agreement, with a two year renewal option. • Leverages Pathologists expertise, Lab systems, Tech-only model, comprehensive menus for new segment. • Ability to expand into world-wide markets • Potential for developing companion diagnostics • NEO provides professional interpretations for all AP and Histology testing ordered with new trials • NEO provides technical component services for all U.S. based testing that is not otherwise performed by Covance’s Lab-within-a-Lab (LWL) facility at NEO - NEO does all TC FISH for U.S. based testing
- 12. 1212 NV OR WA MT MN NE SD ND ID WY OK KS COUT TX NM SC FL GAALMS LA AR MO IA VA NC IN KY IL MI WI PA WV VT ME RI NH AZ OH DE MD NY CA NJ CT MI MA Irvine, CA 25k sf Nashville, TN 7k sf Ft. Myers, FL 45k sf States sending specimens in 2014 Tampa, FL 5k sf A Growing Commercial & Facility Footprint
- 13. 1313 2011 4 molecular tests 3 FISH FL – IHC menu 2012 10-color Flow Cytometry Implemented State-of-the-art MolDx platform in lieu of Kits 28 new Molecular Assays Proprietary method for increasing sensitivity of Sanger sequencing 7 NeoTYPE MolDx Panels New Aperio Digital Image Analysis SVM for FISH (Patent App) Barrett’s Esoph. FISH (Patent App) NeoARRAY/SNP Cytogenetics Internalized 99% of send-outs 2013 40 new Molecular tests Add’l NeoTYPE Panels Next Generation Sequencing (48 genes) ROS1 FISH NeoSITE Melanoma FISH Plasma/Urine-based Prostate Test (Patent App) SVM-based Cytogenetics Analysis System SVM-based Automated FISH Analysis System v2 Accelerating Pace of Innovation
- 14. 1414 Solid Tumor Assays* Hematopoietic Assays* 90+ New Assays Launched Since January 2012 Molecular Assays: 1. IDH1 & IDH2 Mutation Analysis 2. c-KIT Mutation Analysis 3. PIK3CA Mutation Analysis 4. NRAS Mutation Analysis 5. TP53 Mutation Analysis 6. NeoARRAY SNP/Cytogenetic Profile 7. KRAS Mutation Analysis 8. BRAF Mutation Analysis 9. EGFR Mutation Analysis 10. Microsatellite Instability Analysis 11. NeoTYPE Breast Profile 12. NeoTYPE Colorectal Profile 13. NeoTYPE Gastric Profile 14. NeoTYPE Lung Profile 15. NeoTYPE Solid Tumor (Other) Profile 16. TPMT Genotyping 17. UGT1A1 Genotyping 18. Kit/PDGFRa Mutation Analysis 19. HRAS Mutation Analysis 20. PTEN Mutation Analysis 21. HOXB13 Genotyping 22. GNAS Mutation Analysis 23. MLH1 Promoter Methylation Analysis 24. MGMT Promoter Methylation Analysis 25. Next Gen Sequencing Solid Tumor Profile 26. ATRX Gene Mutation Analysis FISH/ISH Assays: 1. ISH – Kappa ISH 2. ISH – Lambda ISH 3. NeoSITE Barrett’s Esophagus FISH 4. ROS1 FISH 5. NeoSITE Melanoma FISH 6. 1p/19q Deletion FISH Test 7. RET Gene Amplification 8. MET Gene Amplification Molecular Assays: 1. BCR-ABL1 Translocation, t(9;22) 2. ABL1 Kinase Domain Mutation Anal 3. IgVH Mutation Analysis 4. FLT3 Mutation Analysis 5. NPM1 Mutation Analysis 6. JAK2 V617F Mutation Analysis 7. JAK2 Exon 12-14 Mutation Anal 8. BCL2 Translocation, t(14;18) 9. BCL1 Translocation, t(11;14) 10. MPL Mutation Analysis 11. MPN Reflex Panel 12. DNMT3A Mutation Analysis 13. RUNX1-RUNX1T1 (AML1-ETO) Translocation, t(8;21) 14. SF3B1 Mutation Analysis 15. B-Cell Gene Rearrangement 16. T-Cell Gene Rearrangement 17. CBFB/MYH11 Translocation, inv(16) 18. PML-RARA Translocation, t(15;17) 19. CEBPA Mutation Analysis 20. WT1 Mutation Analysis 21. NeoTYPE CLL Prognostic Profile 22. NeoTYPE AML Prognostic Profile 23. ETV6-RUNX1 (TEL-AML1) Translocation, t(12;21) 24. CARD11 Mutation Analysis 25. CD79B Mutation Analysis 26. MYD88 Mutation Analysis 27. RUNX1 Mutation Analysis 31. NOTCH1 Mutation Analysis 32. EZH2 Mutation Analysis 33. Chimerism/DNA Fingerprinting Analysis 34. TET2 Mutation Analysis 35. CBL Mutation Analysis 36. ASXL1 Mutation Analysis 37. PTPN11 Mutation Analysis 38. CSF3R Mutation Analysis 39. PTPN11 Mutation Analysis 40. STAT3 Mutation Analysis 41. ETV6 Mutation Analysis 42. NeoTYPE Lymphoma Profile 43. NeoTYPE MDS/CMML Profile 44. NeoTYPE Spliceosome Profile 45. Calreticulin Mutation Analysis 46. SETBP-1 Mutation Analysis 47. C-MET Mutation Analysis 48. Next Gen Sequencing MDS Profile FISH/ISH Assays: 1. NHL FISH Panel (Revised) 2. MYC/IgH t(8;14) 3. CLL FISH Panel (Revised) 4. MDS FISH Panel (Revised) 5. MPN FISH Panel (Revised) 6. AML FISH Panel (Revised) 7. Eosinophilia FISH Panel 8. IGH/MAFB FISH 9. PTEN FISH BOLD = Multi-assay tests customizable to meet client needs (assays may also be ordered individually). * Certain assays may be useful in both solid tumor and hematopoietic cancers. Each assay listed in area of primary use.
- 15. 1515 2014 Priorities • Next Gen Sequencing • Develop Prostate Cancer Test • Launch New Products •Grow Clinical Trials •Optimize Covance partnership •Higher Productivity •Lower Costs •Become a “Digital Lab” •Expand Sales Team •Add new clients •Improve Informatics Growth Get LEAN InnovateDiversify
- 16. 1616 Increasing Margins Despite Lower Average Unit Prices (1) Productivity calculated as the average number of lab tests completed per month per laboratory FTE. (2) The expiration of the Medicare Technical Component (TC) Grandfather Clause took effect on 7/1/12 and resulted in an ~11% YoY Reduction in Avg Rev/Test. 47.3% 48.4% 46.1% 44.7% 44.6% 43.9% 44.5%44.8% 45.2% 47.1% 47.2% 41.5% 43.2% 46.3% 45.9% 48.4% 50.0% 47.9% 49.5% -25.9% 55.9% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Gross Margin % Cum Change in Avg Rev/Test(2) Cum Change in Productivity(1) (2)
- 17. 1717 Operating Cost per Test & Adj. EBITDA Margin Cost Management & Operating Leverage $723 $642 $642 $671 $649 $618 $576 $565 $555 $531 $512 $526 $482 $478 $464 $466 $439 $459 $442 -12% -1% -2% -5% 0% -1% 5% 6% 8% 12% 12% 6% 10%11% 12% 13% 15% 9% 10% -15% -10% -5% 0% 5% 10% 15% 20% $0 $100 $200 $300 $400 $500 $600 $700 $800 Cogs Cost/Test G&A Net of R&D Cost/Test S&M Cost/Test R&D Cost/Test Total Cost/Test Adj EBITDA Margin %
- 18. 1818 Quarterly Financial Information ($, 000's) Q2 13 (1) Q3 13 Q4 13 Q1 14 (2) Q2 14 (2) Total Revenue 15,603$ 16,884$ 18,323$ 18,182$ 20,670$ % Growth (YoY) -0.1% 18.9% 23.0% 16.1% 32.5% Total Gross Margin 7,157 8,171 9,163 8,710 10,240 Gross Margin % 45.9% 48.4% 50.0% 47.9% 49.5% Sales & Marketing Exp 1,971 2,336 2,487 2,633 3,158 General & Administrative Exp 4,064 4,334 4,823 5,054 5,870 Research & Development Exp 616 340 649 628 633 Total SG&A (Incl R&D) Expenses 6,651 7,011 7,959 8,316 9,661 SG&A as a % of Rev 42.6% 41.5% 43.4% 45.7% 46.7% Net Income/(Loss) 273$ 900$ 858$ 102$ 274$ Diluted EPS $0.01 $0.02 $0.02 $0.00 $0.01 Adjusted EBITDA 1,825$ 2,163$ 2,733$ 1,685$ 2,114$ Summary Operating Data % Growth in Tests Performed (YoY) 12.7% 19.1% 27.8% 20.7% 39.8% Avg. Revenue/Test 480$ 501$ 470$ 469$ 455$ % Change (YoY) -11.3% -0.2% -3.7% -3.8% -5.3% Avg. COGS/Test 260$ 258$ 235$ 245$ 229$ % Change (YoY) -9.1% -12.0% -15.3% -6.7% -11.7% (1) YoY comparisons impacted by a reduction in revenue of $1.3 MM/Qtr as a result of the expiration of the TC Grandfather Clause. (2) Q1 & Q2 2014 Revenue Impacted by Company's Election to Account for Medicare FISH Revenue using a worst case interpretation of the recent NCCI Guidelines, which CMS has yet to clarify.
- 19. 1919 Key Financial Information Recent Share Price (7/24/14): $ 5.18 Common Shares Outstanding: 50.4 M Current Market Cap: $261.1 M Fully Diluted Shares: 56.9 M 52 Week Low/High: $2.05/$5.77 Avg. Daily Trading Volume (3 Mos.): 509,865
- 20. 2020 NeoGenomics Summary • Emerging leader in fastest-growing segment of lab testing industry • Robust competitive advantages and product portfolio • Strong Management Team with outstanding industry experience • Accelerating profitability driven by growth and operating leverage • Recent Guidance(1): Q3 2014(2) FY 2014(2) Revenue ($, MMs) $22.0 - $23.5 $83.0 - $86.0 EPS $(0.01) – $0.01 $0.00 - $0.03 (1) Guidance includes the impacts from the acquisition of Path Logic on 7/8/14, and is before factoring any potential impacts from a positive resolution of the issues regarding the National Correct Coding Initiative FISH edits. See 8-K filed on 2/19/2014 for additional information on this topic. (2) NeoGenomics preliminarily estimates that a positive resolution of the NCCI FISH edits issue would increase revenue by approximately $3.5 million and net income by approximately $0.04 - $0.05 per share in FY 2014. Q3 revenue and EPS would be increased by approximately $1 million and $0.01 -$0.02/share in the event of a positive resolution.