NeoGenomics Q1 Revenue and Gross Margin Increases, Company Achieves Profitability

First Quarter 2009 Highlights:

• Revenue of $6.9 million, an increase of 66% year-over-year from Q1 08
• 16.8% sequential increase in revenues from Q4 08
• 55.3% gross margin up from 53.1% in Q4 08
• 9.8% sequential increase in Avg. Revenue/Requisition to $900 from $820 in Q4 08
• 6.0% sequential increase in Avg. Revenue/Test to $661 from $624 in Q4 08
• SG&A expenses declined to 53.2% of revenue from 56.1% in Q4 08

Company Overview
NeoGenomics, Inc. is a high-complexity, clinical laboratory that specializes in cancer genetics diagnostic testing, the fastest growing segment of the laboratory industry.  The company services oncologists, pathologists, and hospitals throughout the United States and offers four primary types of testing services:  FISH testing (Fluorescence in situ Hybridization), which analyzes abnormalities at the gene level; cytogenetics testing, which analyzes human chromosomes; flow cytometry testing, which analyzes clusters of differentiation on cell surfaces, and molecular testing, which analyzes abnormalities in DNA. NeoGenomics state-of-the-art genetic testing is provided at three facilities in Ft. Myers, Florida; Nashville, Tennessee; and Irvine, California.   Each of NeoGenomics’ laboratories is fully licensed under the Clinical Laboratories Improvement Act, as amended (CLIA), and is accredited by the College of American Pathology (CAP).  NeoGenomics is competitive through intense client focus, differentiated products and markedly faster turnaround times. 

NeoGenomics Primary Services

1. Cytogenetics testing is the study of the structure of chromosome material:
   • Acute Leukemias, lymphomas, chronic myeloid, and lymphoid disorders are examined cytogenetically in order to establish the exact nature of the acquired genetic change
   • Turnaround time: 3-5 days vs. industry Avg of 7-10 days
2. Fluorescence in situ Hybridization (FISH) testing includes the following:
   • Bone marrow testing for hematological cancers such as leukemia and lymphoma
   • Solid tumor testing such as HER2 for breast cancer, UroVysion for bladder cancer, and cervical cancer testing
   • Lymph node testing
   • Peripheral blood testing
   • FISH Turnaround Times: 24-72 hours vs. industry Avg of 3 – 5 days
3. Flow cytometry testing is a rapid way to measure the characteristics of individual cells:
   • Hematopoietic cells (blood, bone marrow, core biopsies, lymph nodes) are labeled with selective florescent antibodies and quantified according to their antigens
   • Turnaround time is 12-24 hours vs. industry average of 24-72 hours

Competitive Advantages

• Fastest turnaround times in the industry
• Highly focused, after-test support to physicians requesting consultation
• Differentiated products provide significant advantage versus competition.
• Advanced testing algorithms expedite accurate diagnostic and prognostic genetic test results
• Laser focused on addressing the cancer genetics market, the fastest growing segment of the laboratory testing industry

Genetics Testing Market

• Medical testing laboratory market is composed of three primary segments: clinical laboratory testing, anatomic pathology testing, and genetic/molecular testing
  • Genetic testing segment is estimated to be growing in excess of 25% per year, key drivers include the following:
  • Cancer is primarily a disease of the elderly and 3-4 million baby boomers/year will turn 60 every year for the next 15 years in the US (6-8 people/minute on average) and one of every four senior citizens is diagnosed with some form of cancer.
  • The discovery of new genes linked to cancer every year is driving rapid development of new tests.
  • Genetic tests are highly accurate (99%+ accurate and the medical community has embraced their efficacy).
  • Genetic tests often allow for earlier diagnoses, which allows for more cost effective treatment options to be explored.
• Total cancer testing market is estimated to be $10 billion to $12 billion nationwide
  • NeoGenomics currently addresses approximately 40-50% of this market, or $4-6 billion