Why Is Cancer Genetics Test-Focused NeoGenomics Stock Trading Higher Today?

Tuesday, NeoGenomics Inc NEO reported fourth-quarter 2023 adjusted EPS of $0.03, a turnaround from a loss of $(0.06), beating the consensus of $(0.02).

The company reported sales of $155.55 million, up 12.1% Y/Y, beating the consensus of $152.54 million.

Clinical Services revenue of $130 million increased 20% Y/Y. Clinical test volume increased by 6%. Average revenue per clinical test increased by 13% to $441. 

Advanced Diagnostics revenue decreased by 17% to $25 million compared to the fourth quarter of 2022.

The adjusted gross profit margin reached 46.7%, up from 44.5% a year ago.

Also Read: US Court Prohibits NeoGenomics To Sell Type Of Diagnostic Kits To Detect Smaller Number Of Cancer Cells, Favoring Natera In Lawsuit.

Fourth quarter net loss decreased 37% to $14 million, and the adjusted EBITDA was positive $9 million, an increase of $11 million.

“NeoGenomics’ fourth quarter and full year 2023 results show the momentum and strength of our business as we continued to deliver long-term, sustainable growth on our way to becoming the leading oncology laboratory,” said Chris Smith, CEO of NeoGenomics. 

Guidance: NeoGenomics forecasts fiscal year 2024 adjusted EPS of $0.04 versus the consensus loss of $(0.08).

William Blair notes that the update presents a positive outlook, anticipating an increase in stock value due to favorable 2024 guidance and a higher growth rate in LRP. 

The management has consistently met or exceeded expectations, demonstrating effectiveness in various targets, both financial and non-financial. 

The growth potential is evident throughout the Profit and Loss statement, driven by revenue per test and volume trends in Next-Generation Sequencing (NGS) and non-NGS testing modalities.

Despite legal issues related to RaDaR litigation affecting the stock’s appeal, it is viewed as a temporary concern with no significant impact on revenue expectations in the near term. William Blair reiterates the Outperform rating on the stock.

Price Action: NEO shares are up 4.29% at $15.33 on the last check Wednesday.