NeoGenomics’ first quarter results saw revenue growth, but sales came in below market expectations, leading to a significant negative market reaction. Management attributed the quarter’s performance to strong clinical test volume growth and increased adoption of next-generation sequencing (NGS) products, partially offset by continued headwinds in the non-clinical pharma segment. CEO Tony Zook described the quarter as confirming existing strengths, highlighting, “The NGS growth above market…was confirmatory for me coming in.” Management also noted that new product launches and the expansion of the commercial sales force were key operational focuses.
Is now the time to buy NEO? Find out in our full research report (it’s free).
NeoGenomics (NEO) Q1 CY2025 Highlights:
- Revenue: $168 million vs analyst estimates of $170.9 million (7.5% year-on-year growth, 1.7% miss)
- Adjusted EPS: $0 vs analyst estimates of -$0.01 (in line)
- Adjusted EBITDA: $7.07 million vs analyst estimates of $5.27 million (4.2% margin, 34.3% beat)
- The company lifted its revenue guidance for the full year to $753 million at the midpoint from $740 million, a 1.8% increase
- EBITDA guidance for the full year is $56.5 million at the midpoint, above analyst estimates of $55.63 million
- Operating Margin: -16.6%, up from -19.6% in the same quarter last year
- Market Capitalization: $902.1 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions NeoGenomics’s Q1 Earnings Call
- Andrew Brackman (William Blair) asked CEO Tony Zook about his early impressions as CEO and whether any business areas required more attention; Zook responded that recent performance largely confirmed his prior expectations, citing no major surprises.
- Dan Brennan (TD Cowen) questioned CFO Jeff Sherman on the outlook for the struggling pharma segment and the timing of Pathline’s revenue contribution. Sherman clarified that pharma would likely see another annual decline, with Pathline integration ramping gradually through 2025.
- Tejas Savant (Morgan Stanley) requested details on the company’s capital flexibility following convertible note repayments. Sherman explained that free cash flow is expected to turn positive in 2026, supporting continued investment and potential future M&A.
- Matthew Sykes (Goldman Sachs) asked about trends in average revenue per test. Sherman noted that test mix, especially from lower-priced Pathline business, will dilute near-term averages but that higher-value modalities like NGS continue to trend upward.
- David Westenberg (Piper Sandler) inquired about the sales force’s productivity ramp. President and COO Warren Stone indicated that full productivity is typically reached in 6–9 months, with most recent hires expected to contribute meaningfully in the second half of the year and into 2026.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the commercial launch and physician adoption rates of PanTracer liquid biopsy and tissue tests, (2) the pace and success of Pathline integration and cross-selling efforts in the Northeast, and (3) stabilization or improvement in the pharma segment amid ongoing macro headwinds. Execution on new commercial partnerships and operational efficiencies will also be important indicators.
NeoGenomics currently trades at $7.21, down from $9.97 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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