SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Nevada

74-2897368

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer

~~incorporation or organization)~~

Identification No.)

12701 Commonwealth Drive,

Suite 9,

Fort Myers,

Florida

33913

(Address of principal executive offices)

(Zip Code)

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑S No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted p~~ursuant~~pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submitsuch files). Yes ☑S No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑S

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock ($0.001 par value)

NEO

~~NASDAQ~~The Nasdaq Stock Market LLC

As of ~~May 3, 2019,~~April 24, 2020, the registrant had ~~95,341,186~~105,335,242 shares of Common Stock, par value $0.001 per share outstanding.

FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report on Form 10-Q contains “forward-looking statements” and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the “Securities Act”, and Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, changing reimbursement levels from government payers and private insurers, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission “SEC” on February ~~26, 2019 and as amended and filed with the SEC on May 8, 2019.~~28, 2020.

Forward-looking statements include, but are not limited to, statements about:

•Our ability to respond to rapid scientific change;

•The risk of liability in conducting clinical trials and the sufficiency of our insurance to cover such claims;

•Our ability to implement our business strategy;

•The expected reimbursement levels from governmental payers and private insurers and proposed changes to those levels;

•The application, to our business and the services we provide, of existing laws, rules and regulations, including without limitation, Medicare laws, anti-kickback laws, Health Insurance Portability and Accountability Act of 1996 regulations, state medical privacy laws, international privacy laws, federal and state false claims laws and corporate practice of medicine laws;

•Regulatory developments in the United States including downward pressure on health care reimbursement;

•Our ability to maintain our license under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”);

•Food and Drug Administration, or FDA regulation of Laboratory Developed Tests (“LDTs”);

•Failure to timely or accurately bill for our services;

•Our ability to expand our operations and increase our market share;

•Our ability to expand our service offerings by adding new testing capabilities;

•Our ability to meet our future capital requirements;

•~~The impact of internalization of testing by customers;~~

•Our ability to manage our indebtedness;

•Our ability to protect our intellectual property from infringement;

•~~Our ability~~The anticipated impact to ~~successfully integrate Genoptix into NeoGenomics including consolidating systems~~our business operations, customer demand and ~~facilities;~~supply chain due to the recent global pandemic of a novel strain of the coronavirus (COVID-19);

•Our ability to integrate future acquisitions and costs related to such acquisitions;

•The effects of seasonality on our business;

•Our ability to maintain service levels and compete with other diagnostic laboratories;

•Our ability to hire and retain sufficient managerial, sales, clinical and other personnel to meet our needs;

•Our ability to successfully scale our business, including expanding our facilities, our backup systems and infrastructure;

•Our handling, storage and disposal of biological and hazardous materials;

•The accuracy of our estimates regarding reimbursement, expenses, future revenues and capital requirements; and,

•Our ability to manage expenses and risks associated with international operations, including anti-corruption and trade sanction laws and other regulations, and economic, political, legal and other operational risks associated with foreign jurisdictions.

Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(in thousands, except share ~~and per share~~ amounts)

~~(unaudited)~~


	March 31, 2020 (unaudited)		December 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	86,254	$	173,016

Accounts receivable, net	99,972		94,242
Inventories	20,286		14,405
Prepaid assets	6,884		6,327
Other current assets	2,046		2,748
Total current assets	215,442		290,738
Property and equipment (net of accumulated depreciation of $74,441 and $68,809, respectively)	83,392		64,188
Operating lease right-of-use assets	49,084		26,492

Intangible assets, net	128,289		126,640
Goodwill	210,833		198,601
Restricted cash, non-current	38,738		—
Prepaid lease asset	3,316		—
Other assets	3,153		2,847
Total assets	$	732,247	$	709,506
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	20,453	$	19,568
Accrued compensation	20,810		21,365
Accrued expenses and other liabilities	8,966		7,548
Short-term portion of financing obligations	4,941		5,432
Short-term portion of operating leases	4,505		3,381

Short-term portion of term loan	5,000		5,000
Pharma contract liability	2,974		1,610
Total current liabilities	67,649		63,904
Long-term liabilities
Long-term portion of financing obligations	2,428		3,199
Long-term portion of operating leases	45,910		24,034

Long-term portion of term loan, net	90,605		91,829
Other long term liabilities	4,235		3,566
Deferred income tax liability, net	16,377		15,566
Total long-term liabilities	159,555		138,194
Total liabilities	227,204		202,098
Stockholders' equity
Common stock, $0.001 par value, (250,000,000 shares authorized; 105,396,057 and 104,781,236 shares issued and outstanding, respectively)	105		105
Additional paid-in capital	525,929		520,278
Accumulated other comprehensive loss	(2,656)		(1,618)
Accumulated deficit	(18,335)		(11,357)
Total stockholders’ equity	505,043		507,408
Total liabilities and stockholders' equity	$	732,247	$	709,506

ASSETS March 31, 2019 December 31, 2018
Current assets
Cash and cash equivalents $ 13,195 $ 9,811
Accounts receivable, net 82,585 76,919
Inventories 9,670 8,650
Prepaid assets 7,504 7,727
Other current assets 2,991 561
Total current assets 115,945 103,668
Property and equipment (net of accumulated depreciation and amortization of $54,512 and $50,127, respectively) 60,696 60,888
Operating lease right-of-use assets 19,734 —
Intangible assets, net 137,844 140,029
Goodwill 196,298 197,892
Other assets 2,826 2,538
Total assets $ 533,343 $ 505,015
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable 16,514 17,779
Accrued compensation 18,851 19,062
Accrued expenses and other current liabilities 18,327 8,986
Current portion of finance leases and obligations 6,501 6,298
Current portion of operating lease liabilities 3,620 —
Current portion of loans 7,873 7,873
Pharma contract liability 1,017 927
Total current liabilities 72,703 60,925
Long-term liabilities
Long-term portion of finance leases and obligations 5,253 5,250
Long-term portion of operating lease liabilities 16,648 —
Long-term portion of loans, net 85,995 87,880
Revolving credit facility 5,000 5,000
Other long term liabilities 3,740 3,060
Deferred income tax liability, net 20,156 22,457
Total long-term liabilities 136,792 123,647
Total liabilities 209,495 184,572
Commitments and contingencies - see Note L
Stockholders' equity
Common stock, $0.001 par value, (250,000,000 shares authorized; 95,303,510 and 94,465,440 shares issued and outstanding, respectively) 95 94
Additional paid-in capital 378,571 372,186
Accumulated other comprehensive income (loss) (1,136) (579)
Accumulated deficit (53,682) (51,258)
Total stockholders’ equity 323,848 320,443
Total liabilities and stockholders' equity $ 533,343 $ 505,015

See the accompanying notes to the unaudited consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

See the accompanying notes to the unaudited consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME~~LOSS


	Three Months Ended March 31,
	2020		2019
NET LOSS	$	(6,978)	$	(2,424)

OTHER COMPREHENSIVE LOSS:

Loss on effective cash flow hedges	(1,038)		(557)
Total other comprehensive loss	(1,038)		(557)
COMPREHENSIVE LOSS	$	(8,016)	$	(2,981)

See the accompanying notes to the unaudited consolidated financial statements.

CONSOLIDATED STATEMENTS OF ~~REDEEMABLE PREFERRED STOCK AND~~ STOCKHOLDERS' EQUITY

(unaudited, in thousands, except share amounts)

See the accompanying notes to the unaudited consolidated financial ~~statements~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES 2019 2018
Net (loss) income $ (2,424) $ 644
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation 5,271 3,633
Amortization of intangibles 2,559 1,413
Amortization of debt issue costs 150 113
Loss (gain) on disposal of assets 156 (7)
Non-cash stock based compensation 2,139 1,624
Non-cash operating lease expenses 1,141 —
Changes in assets and liabilities, net:
Accounts receivable, net (5,795) 2,299
Inventories (1,019) (41)
Prepaid expenses (250) (1,990)
Other current assets (265) (158)
Accounts payable, accrued and other liabilities 4,434 6,782
Net cash provided by operating activities 6,097 14,312
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (3,196) (4,666)
Net cash used in investing activities (3,196) (4,666)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of equipment and other loans (1,797) (1,394)
Repayment of term loan (1,968) (6,338)
Issuance of common stock, net 4,248 483
Net cash provided by (used in) financing activities 483 (7,249)
Effects of foreign exchange rate changes on cash and cash equivalents — (45)
Net change in cash and cash equivalents 3,384 2,352
Cash and cash equivalents, beginning of period 9,811 12,821
Cash and cash equivalents, end of period $ 13,195 $ 15,173
Supplemental disclosure of cash flow information:
Interest paid $ 1,696 $ 1,396
Income taxes paid, net $ 8 $ 7
Supplemental disclosure of non-cash investing and financing information:
Equipment acquired under loan obligations $ 2,003 $ 3,355
Property and equipment included in accounts payable $ 1,175 $ 660


	Three Months Ended March 31,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(6,978)	$	(2,424)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	6,240		5,271
Loss on disposal of assets	17		156

Amortization of intangibles	2,452		2,559
Amortization of debt issue costs	70		150
Non-cash stock-based compensation	2,186		2,139
Non-cash operating lease expense	2,021		1,141

Changes in assets and liabilities, net
Accounts receivable, net	(5,722)		(5,795)
Inventories	(5,348)		(1,019)
Prepaid assets	270		(250)
Prepaid lease asset	(3,316)		—
Other current assets	(16)		(265)
Accounts payable, accrued and other liabilities	1,191		4,434
Net cash (used in) provided by operating activities	(6,933)		6,097
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(4,708)		(3,196)
Business acquisition	(37,000)		—
Net cash used in investing activities	(41,708)		(3,196)
CASH FLOWS FROM FINANCING ACTIVITIES



Repayment of equipment financing obligations	(1,598)		(1,797)

Repayment of term loan	(1,250)		(1,968)

Issuance of common stock, net	3,465		4,248

Net cash provided by financing activities	617		483

Net change in cash, cash equivalents and restricted cash	(48,024)		3,384
Cash, cash equivalents and restricted cash, beginning of period	173,016		9,811
Cash, cash equivalents and restricted cash, end of period	$	124,992	$	13,195

Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheets:
Cash and cash equivalents	$	86,254	$	13,195

Restricted cash, non-current	38,738		—
Total cash, cash equivalents and restricted cash	$	124,992	$	13,195

Supplemental disclosure of cash flow information:
Interest paid	$	1,136	$	1,696
Income taxes paid, net	$	2	$	8
Supplemental disclosure of non-cash investing and financing information:

Equipment acquired under financing obligations	$	—	$	2,003
Property and equipment included in accounts payable	$	1,844	$	1,175

See the accompanying notes to the unaudited consolidated financial ~~statement~~s

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Unaudited~~(unaudited)

Note ~~A –~~1. Nature of Business and Basis of Presentation

NeoGenomics, Inc., a Nevada corporation, and its subsidiaries (the “Parent”, “Company”, or “NeoGenomics”), operates as a certified, high complexity clinical laboratory in accordance with the federal government’s Clinical Laboratory Improvement Act, as amended (“CLIA”), and is dedicated to the delivery of clinical diagnostic services to pathologists, oncologists, urologists, hospitals, and other laboratories as well as providing clinical trial services to pharmaceutical firms.

The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These accompanying consolidated financial statements include the accounts of the Parent and its subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements.

Certain information and footnote disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes have been condensed or omitted in these accompanying interim consolidated financial statements and ~~footnotes~~.footnotes. Accordingly, the accompanying interim consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2018. The year-end consolidated balance sheet~~ ~~informationhas been~~ ~~derived from~~ ~~our~~ ~~audited consolidated financial statements~~ ~~in the annual report~~ ~~as of December 31, 201~~8~~, but does not include all the disclosures required by accounting principles.~~2019.

The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited consolidated financial statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein.

The Company reports its activities in ~~two~~2 operating segments; the Clinical Services Segment and the Pharma Services Segment. These reportable segments deliver testing services to hospitals, pathologists, oncologists, clinicians, pharmaceutical firms and researchers and represent 100% of the Company’s consolidated assets, net revenues and net income ~~(loss)~~ for each period presented. For further financial information about these segments, see Note N.11. Segment Information, in the accompanying notes to the consolidated financial statements.

Note ~~B –~~2. Recently Adopted and Issued Accounting Guidance

Effective January 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective method and using the optional transition method to apply the new lease accounting standard prospectively as of January 1, 2019, rather than as of the earliest period presented. Therefore, the adoption of the new lease accounting standard did not change our previous reported financial statements. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed the Company to carry forward the historical lease classification and not reassess whether a contract is or contains a lease, or determination of initial direct costs. Adoption of this standard resulted in the recording of net operating lease right-of-use (“ROU”) assets of $9.7 million and corresponding operating lease liabilities of $10.1 million. We elected the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. Additionally, we elected the hindsight practical expedient to determine the reasonably certain lease terms for existing leases. The adoption did not materially impact the Company’s Consolidated Statements of Operations or Cash Flows. Refer to Note C herein for further details regarding the impact of the adoption of Topic 842 and other information related to the Company's lease portfolio.

~~In June 2016, the FASB issued~~ Accounting ~~Standards Update (“ASU”)~~ ~~No. 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 326)~~: ~~Measurement of Credit Losses on Financial Instruments~~, which modifies the measurement and recognition of credit losses for most financial assets and certain other instruments. The new standard requires the use of forward-looking expected credit loss models based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount, which may result in earlier recognition of credit losses under the new standard. This new standard also requires that credit losses related to available-for-sale debt securities be recorded as an allowance through net income rather than reducing the carrying amount under the current, other-than-temporary-impairment model. The standard is effective for public business entities for annual periods beginning after December 15, 2019, and interim periods within those years. The Company plans to implement the new standard in the first quarter of 2020, and is in the process of reviewing its credit loss models to assess the impact of the adoption of the standard on its consolidated financial statements.

~~NEOGENOMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Unaudited~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. This new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-14 is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company does not expect the impact of the adoption of the standard to have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which changes the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The implementation costs should be presented as a prepaid asset on the balance sheet and expensed over the term of the hosting arrangement. The Company adopted this pronouncement on January 1, 2020 and the impact was not material to the Company's Consolidated Financial Statements.

In August 2018, the FASB also issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which adds and modifies certain disclosure requirements for fair value measurements. Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies ~~will be~~are required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in other comprehensive income. ~~This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods, and early adoption is permitted.~~ Certain provisions of the ASU must be adopted retrospectively, while others must be adopted prospectively. The Company ~~does not expect~~adopted this pronouncement on January 1, 2020 and the impact ofwas not material to the ~~adoption of the standard to have a material impact on its consolidated financial statements.~~Company's Consolidated Financial Statements.

In ~~August 2018,~~November 2016, the FASB issued ASU ~~2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, or ASU 2018-15,~~No. 2016-18, Statement of Cash Flows (“Topic 230”): Restricted Cash. The new guidance requires that ~~changes~~ the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The implementation costs should be presented as a prepaid asset on the balance sheet and expensed over the termreconciliation of the ~~hosting arrangement. The standard is~~beginning-of-period and end-of-period amounts shown in the statement of cash flows include cash, cash equivalents and restricted cash. ASU 2016-08 was effective for ~~annual periods,~~fiscal years beginning after December 15, 2017, including interim periods within those ~~annual~~ periods, using a retrospective transition method to each period presented. As a result, restricted cash of approximately $38.7 million as of March 31, 2020 is included with cash and cash equivalents when reconciling the beginning and ending balances in the Consolidated Statements of Cash Flows. Please refer to Note 3. Leases, for

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

additional information regarding the use of restricted cash. There were no restricted cash balances in any reportable period prior to January 2020.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (“Topic 326”): Measurement of Credit Losses on Financial Instruments, as modified by subsequently issued ASUs 2018-19 (issued November 2018), 2019-04 (issued April 2019), 2019-05 (issued May 2019), 2019-11 (issued November 2019), 2020-02 (issued February 2020) and 2020-03 (issued March 2020). Topic 326 modifies the measurement and recognition of credit losses for most financial assets and certain other instruments. The standard was effective January 1, 2020 and requires the use of forward-looking expected credit loss models based on historical experience, current economic conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount, which may result in earlier recognition of credit losses under the new standard. It also requires that credit losses related to available-for-sale debt securities be recorded as an allowance through net income rather than reducing the carrying amount under the current, other-than-temporary-impairment model. The standard required a modified retrospective approach with a cumulative effect adjustment to retained earnings. The Company adopted and applied the standard as of January 1, 2020. Based on management’s analysis, Topic 326 is applicable to the Company’s trade receivables as well as contract assets recognized within the Pharma Services segment. An assessment was performed on historical trends, current economic conditions, supportable forecasts, and customer and credit risks. The adoption of Topic 326 did not result in a material impact on the Company's Consolidated Financial Statements.

Accounting Pronouncements Pending Adoption

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (“Topic 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides for temporary optional expedients and exceptions to the current guidance on certain contract modifications and hedging relationships to ease the burdens related to the expected market transition from the London Inter-bank Offered Rate (“LIBOR”) or other reference rates to alternative reference rates. The guidance is effective upon issuance and can be applied through December 31, 2022. The Company is currently evaluating the impact of this standard on the Company’s Consolidated Financial Statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (“Topic 321”), Investments-Equity Method and Joint Ventures (“Topic 323”) and Derivatives and Hedging (“Topic 815”) (ASU 2020-01). ASU 2020-01 clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for the equity method investments in Topic 323 and the accounting for certain forward contracts and purchased options in Topic 815. ASU 2020-01 is effective for fiscal years beginning after December 15, ~~2019. Early~~2020 and early adoption is permitted. The Company is incurrently evaluating the ~~process~~impact of ~~assessing~~this standard on the Company’s Consolidated Financial Statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes (“Topic 740”), which simplifies the accounting for income taxes, eliminates certain exceptions within Topic 740 and clarifies certain other aspects of the current guidance to promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted. The Company is currently evaluating the impact of the ~~adoption~~provisions of ~~the~~this standard on ~~its consolidated financial statements as well as whether to early adopt~~ the ~~new standard.~~Company’s Consolidated Financial Statements.

Note ~~C –~~3. Leases

The Company ~~is a lessee of~~leases corporate ~~office,~~offices and laboratory space ~~and equipment~~ throughout the world, ~~nearly~~ all of which are classified as operating leases expiring at various ~~dates. The Company determines if an arrangement qualifies as a lease at lease inception.~~dates and generally have terms ranging from 1 to 15 years. Leases with an initial term of 12 months or less are not recorded inon the balance sheet. ~~Operating~~

Some of the Company’s real estate lease agreements include options to either renew or early terminate the lease. Leases with renewal options allow the Company to extend the lease term typically between 1 and 5 years. When it is reasonably certain that the Company will exercise an option to renew or terminate a lease, these options are considered in determining the classification and measurement of the lease.

Lease liabilities are recorded based on the present value of the future lease payments over the lease term and assessed as of the commencement date. ~~The Company’s real estate leases, which are comprised primarily of office~~Incentives received from landlords, such as reimbursements for tenant improvements and ~~laboratory space, represent~~rent abatement periods, effectively reduce the ~~vast majority of our operating~~total lease ~~liabilities and generally have a lease term between 1 and 10 years. The remaining leases consist primarily of machinery and equipment used in the lab and office equipment, each with various lease terms. The vast majority of the Company's leases are comprised of fixed lease payments.~~ payments owed for leases.

Certain real estate leases also include executory costs such as common area maintenance (non-lease component), as well as property insurance and property taxes (non-components). Lease payments, which may include lease components, non-lease components and non-components, are included in the measurement of the Company’s lease liabilities to the extent that such payments are either fixed amounts or variable amounts based on a rate or index (fixed in substance) as stipulated in the lease contract. Any actual costs in excess of such amounts are expensed as incurred as variable lease cost.

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~Substantially all of our operating lease agreements do not specify an implicit borrowing rate, and as such, the~~The Company utilizes its incremental borrowing rate by lease term in order to calculate the present value of our future lease payments. The discount rate represents a risk-adjusted rate on a secured basis, and is the rate at which the Company would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term. On January 1, 2019, the discount rate used on existing leases at adoption was determined based on the remaining lease term using available data as of that date. For new or renewed leases starting in 2019, theThe discount rate is determined using ~~available data~~the incremental borrowing rate at lease commencement and based on the lease term.

Some of the Company's lease agreements, primarily related to real estate, include options for the Company to either renew (extend) or early terminate the lease. Leases with renewal options allow the Company to extend the lease term typically betwee~~n 1 and 5 years. Renewa~~l options are reviewed at lease commencement to determine if such options are reasonably certain of being exercised, which could impact the lease term. When determining if a renewal option is reasonably certain of being exercised, the Company considers several factors, including but not limited to, the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, or specific characteristics unique to the particular lease that would make it reasonably certain that we would exercise such option. In most cases, the Company has concluded that renewal and early termination options are not reasonably certain of being exercised by the Company (and thus not included in our ROU asset and lease liability) unless there is an economic, financial or business reason to do so.

~~NEOGENOMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Unaudited~~

~~For the three months ended March 31, 2019, total operating~~Operating lease ~~cost was $1.5 million, which includes~~costs include an immaterial amount of variable lease cost, and isare recorded in cost of revenue and general and administrative expenses, depending on the nature of the leased asset. ~~Other than~~Aside from variable lease ~~cost,~~costs, operating lease ~~cost is~~costs represent fixed lease payments recognized on a straight-line basis over the lease term. ~~The following summarizes: (i)~~

As of March 31, 2020, the ~~future minimum undiscounted~~maturities of our operating lease ~~payments under non-cancelable leases for the remainder of 2019 as well as each of the next five years~~liabilities and ~~thereafter, incorporating the practical expedient to account for lease and non-lease components as a single lease component for our existing real estate leases, and (ii)~~ a reconciliation ~~of the undiscounted lease payments~~ to the present value of ~~the~~ lease liabilities ~~recognized~~were as ~~of March 31, 2019~~follows (in thousands):

Year Ended December 31, Operating Leases
2019 (excluding the three months ended March 31, 2019) $ 4,043
2020 2,833
2021 2,811
2022 2,121
2023 2,032
2024 1,993
Thereafter 12,377
Total future minimum lease payments 28,210
Less imputed interest (7,942)
Total present value of future minimum lease payments $ 20,268


	Remaining Lease Payments
Remainder of 2020	$	4,850
2021	7,486
2022	5,358
2023	5,253
2024	5,309

Thereafter	37,340
Total remaining lease payments	65,596
Less: imputed interest	(15,181)
Total operating lease liabilities	50,415
Less: current portion	(4,505)
Long-term operating lease liabilities	$	45,910
Weighted-average remaining lease term (in years)	12.1
Weighted-average discount rate	4.4		%

The following summarizes additional supplemental data related to our operating ~~leases:~~leases (in thousands):

Three Months Ended
March 31, ~~2019: (in thousands)~~2020

Operating lease costs

~~Operating cash flows from operating leases~~

~~1,257~~2,105

Three Months Ended
March 31, 2020

Right-of-use assets obtained in exchange for operating lease liabilities

~~11,169~~24,071

Cash paid for operating leases

~~As of March 31, 2019:~~

~~Weighted Average Remaining Lease Term (years)~~

~~9.11~~

~~Weighted Average Discount Rate~~

~~6.4~~ $

%1,553

Lease contracts that we have been executed but ~~which~~ have not yet commenced ~~as of March 31, 2019~~ are excluded from the tables above.

As ~~previously disclosed in our 2018 Annual Report on Form 10-K and under~~of March 31, 2020, the ~~previous lease accounting standard, future~~Company has entered into $33.8 million of contractually binding minimum lease payments for ~~operating~~ leases ~~having initial~~executed but not yet commenced. This amount relates to the lease of the laboratory and headquarters facility in Fort Myers, Florida that is expected to commence in 2021. In addition to the minimum lease payments, the Company will pay approximately $25.0 million relating to the construction of the underlying assets and approximately $17.0 million in leasehold improvements. These amounts were placed into separate construction disbursement escrow accounts and are initially classified as restricted cash, non-current, on the Consolidated Balance Sheets. Disbursements to the landlord will take place from time to time to pay for the costs of the Landlord’s work. These disbursements will be classified as a prepaid lease asset or ~~remaining noncancellable~~leasehold improvements, as appropriate, until the lease ~~terms~~commences. Upon lease commencement, the prepaid lease asset will be included in ~~excess~~the calculation of ~~one year would have been as follows (in thousands):~~

Years ending December 31,
2019 $ 5,247
2020 2,798
2021 1,082
2022 453
2023 92
Thereafter —
Total minimum lease payments $ 9,672
the right-of-use asset and the leasehold improvements will be placed in service. Construction of the infrastructure of this facility commenced in the first quarter of 2020. The Company is not expected to control the underlying assets during the construction period and therefore is not considered the owner of the underlying assets for accounting purposes.

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Unaudited~~(unaudited)

Note ~~D –~~4. Revenue Recognition and Contractual Adjustments

The Company has ~~two~~2 operating segments for which it recognizes revenue; Clinical Services and Pharma Services. ~~Our~~The Clinical Services segment provides various clinical testing services to community-based pathology practices, oncology practices, hospital pathology labs and academic centers with reimbursement from various payers including client direct billing, commercial insurance, Medicare and other government payers, and patients. ~~Our~~The Pharma Services segment supports pharmaceutical firms in their drug development programs by providing testing services and data analytics for clinical trials and research.

Clinical Services Revenue

The Company’s specialized diagnostic services are performed based on a written test requisition form or electronic equivalent. The performance obligation is satisfied and revenues are recognized once the diagnostic services have been performed and the results have been delivered to the ordering physician. These diagnostic services are billed to various payers, including ~~Medicare,~~client direct billing, commercial insurance, ~~companies,~~Medicare and other ~~directly billed healthcare institutions such as hospitals~~government payers, and ~~clinics, and individuals.~~patients. Revenue is recorded for all payers based on the amount expected to be collected, which considers implicit price concessions. Implicit price concessions represent differences between amounts billed and the estimated consideration the Company expects to receive based on negotiated discounts, historical collection experience and other anticipated adjustments, including anticipated payer denials. Collection of consideration the Company expects to receive typically occurs within 30 to 60 days of billing for commercial insurance, Medicare and other governmental and self-pay payers and within 60 to 90 days of billing for client payers.

Pharma Services Revenue

The Company’s Pharma Services segment generally enters into contracts with pharmaceutical ~~and biotech~~ customers as well as other Contract Research Organizations (“(“CROs”) to provide research and clinical trial services ranging in duration from one month to several years. The Company records revenue on a unit-of-service basis based on number of units completed and the total expected contract value. The total expected contract value is estimated based on historical experience of total contracted units compared to realized units as well as known factors on a specific contract-by-contract basis. Certain contracts include upfront fees, final settlement amounts or billing milestones that may not align with the completion of performance obligations. The value of these upfront fees or final settlement amounts is usually recognized over time based on the number of units completed, which aligns with the progress of the Company towards fulfilling its obligations under the contract.

The Company also enters into other contracts, such as validation studies, for which the sole deliverable is a final report that is sent to sponsors at the completion of contracted activities. For these contracts, revenue is recognized at a point in time upon delivery of the final report to the sponsor. Any contracts that contain multiple performance obligations and include both units-of-service and ~~point in time~~point-in-time deliverables are accounted for as separate performance obligations and revenue is recognized as previously disclosed. The Company negotiates billing schedules and payment terms on a contract-by-contract basis. While the contract terms generally provide for payments based on a unit-of-service arrangement, the billing schedules, payment terms and related cash payments may not align with the performance of services and, as such, may not correspond to revenue recognized in any given period.

Amounts collected in advance of services being provided are deferred as contract liabilities on the ~~balance sheet.~~Consolidated Balance Sheets. The associated revenue is recognized and the contract liability is reduced as the contracted services are subsequently performed. Contract assets are established for revenue that has been recognized but not yet billed. These contract assets are reduced once the customer is invoiced and a corresponding ~~account~~ receivable is recorded. Additionally, certain costs to obtain contracts, primarily for sales commissions, are capitalized when incurred and are amortized over the term of the contract. Amounts capitalized for contracts with an initial contract term of twelve months or less are classified as current ~~assets and all~~assets. All others are classified as non-current assets.

Most contracts are terminable by the customer, either immediately or according to advance notice terms specified within the contracts. All contracts require payment of fees to the Company for services rendered through the date of termination and may require payment for subsequent services necessary to conclude the study or close out the contract.

The following table summarizes the values of contract assets, capitalized commissions and contract liabilities as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Unaudited~~(unaudited)

Current pharma contract assets ⁽¹⁾

Long-term pharma contract assets ⁽²⁾

Current pharma capitalized commissions ⁽¹⁾

Long-term pharma capitalized commissions ⁽²⁾

Long-term pharma contract liabilities ⁽³⁾

⁽¹⁾ Current pharma contract assets and Current pharma capitalized commissions are classified as “Other current assets” on the Consolidated Balance Sheets.

⁽²⁾ Long-term pharma contract assets and Long-term pharma capitalized commissions are classified as “Other assets” on the Consolidated Balance Sheets.

⁽³⁾ Long-term pharma contract liabilities are classified as “Other long-term liabilities” on the Consolidated Balance Sheets.

Pharma contract assets increased ~~$0.3~~$0.2 million, or ~~72%~~15%, from December 31, ~~2018.~~2019 to March 31, 2020. Pharma contract liabilities increased ~~$0.4~~$0.7 million, or ~~14%~~26%, ~~from December 31, 2018~~during the same period, while capitalized commissions ~~also increased~~decreased slightly by ~~$0.2 million,~~$29 thousand, or ~~17%~~3%. ~~These increases are due to higher upfront fees driven by increases in the volume of Pharma contracts in process.~~ Revenue recognized for the three months ended March 31, ~~2019~~ 2020 and March 31, ~~2018~~ 2019 related to P~~harma~~Pharma contract liability balances outstanding at the beginning of the period was ~~$1.3~~$1.2 million and ~~$0.9~~$1.3 million, respectively. Amortization of capitalized commissions for ~~the three months~~both three-month periods ended March 31, ~~2019~~2020 and March 31, ~~2018~~ ~~were~~2019 was $0.2 ~~million and $0.1 million, respectively.~~million.

Disaggregation of Revenue

The Company considered various factors for both its Clinical Services and Pharma Services segments in determining appropriate levels of homogeneous data for its disaggregation of revenue, including the nature, amount, timing and uncertainty of revenue and cash flows. For Clinical Services, the categories identified align with our type of customer due to similarities of billing method, level of reimbursement and timing of cash ~~receipts at this level.~~receipts. Unbilled amounts are accrued and allocated to payor categories based on historical experience. In future periods, actual billings by payor category may differ from accrued amounts. Pharma Services revenue was not further disaggregated as substantially all of our revenue relates to contracts with large pharmaceutical and biotech customers as well as other CROs for which the nature, timing and uncertainty of revenue and cash flows is similar and primarily driven by individual contract terms.

The following table details the disaggregation of revenue for both the Clinical and Pharma Services Segments (in thousands):

Note ~~E –~~5. Acquisition

On December 10, 2018 (“the Acquisition Date”), the Company acquired all of the issued and outstanding shares of common stock of Genesis Acquisition Holding Corp (“Genesis”), and its wholly owned subsidiary, Genoptix, Inc. (“Genoptix”, and collectively with its subsidiaries and Genesis, referred to herein as "Genoptix"), for a purchase price consisting of (i) cash consideration of approximately $127.0 million, which included approximately $2.0 million in estimated working capital adjustments and adjustments for estimated cash on hand of Genoptix on the Closing Date and (ii) 1.0 million shares of NeoGenomics’ common stock pursuant to an Agreement and Plan of Merger dated October 23, 2018 (the “Merger Agreement”).

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Unaudited~~(unaudited)

~~Cartesian Medical Group,~~On January 10, 2020 (the “Acquisition Date”), the Company acquired the Oncology Division assets of Human Longevity, Inc. (“~~Cartesian”~~HLI - Oncology”) isfor a ~~California professional corporation that provided hematopathology~~purchase price consisting of cash consideration of $37.0 million. Acquisition and ~~other pathology services~~integration costs related to ~~Genoptix~~HLI - Oncology were approximately $1.3 million for the three months ended March 31, 2020 and are reported as ~~an independent contractor. Cartesian was consolidated into Genoptix as a variable interest entity. Subsequent to December 31, 2018, the professional services agreement between Genoptix~~general and Cartesian was terminated and the Company entered into separate medical services agreements with the entities owned by the physicians who were previously employees of Cartesian. The termination of the agreement with Cartesian did not have any impact onadministrative expenses in the Company's ~~consolidated financial statements.~~Consolidated Statements of Operations.

~~The Company issued approximately 1.0 million shares of common stock as consideration~~HLI - Oncology performs Next Generation Sequencing for ~~the~~pharmaceutical customers. The acquisition of ~~Genoptix. This common stock was issued as uncertificated shares, which carries a minimum six-month holding period before they may be sold~~HLI - Oncology adds whole exome and whole genome sequencing capabilities to the ~~public. We estimated the fair value of the common stock consideration using inputs not observable~~Company's current Pharma Services offerings. Revenue related to HLI - Oncology is reported in the market and thus represents a Level 3 measurement. The key assumption in the fair value determination was a 5 percent discount due to lack of marketability of the common stock as a result of the restrictions imposed on the holder.Pharma Services segment. The acquisition ~~date fair value~~included assets, primarily consisting of ~~common stock transferred~~lab equipment, inventory, maintenance agreements for acquired equipment, backlog contracts with HLI - Oncology's customers, as well as HLI - Oncology’s molecular workforce that is ~~calculated below (in thousands, except share and per share amounts):~~


~~Common Stock Valuation~~	~~Amount~~
~~Shares of common stock issued as consideration~~	~~1,000,000~~
~~Stock price per share on closing date~~	$	~~13.94~~
~~Value of common stock issued as consideration~~	$	~~13,940~~
~~Issue discount due to lack of marketability~~	$	~~(697)~~
~~Fair value of common stock at December 10, 2018~~	$	~~13,243~~

experienced with Next Generation Sequencing.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date of December 10, 2018 and measurement period adjustments recorded during the first quarter of 2019. For the quarter ended March 31, 2019, the Company recorded a $2.4 million working capital adjustment to the original cash consideration, as defined within the Merger Agreement, of which $0.4 million is payable in cash and the remainder is payable as a return of shares. Additionally, certain other measurement period adjustments were recorded related to property and equipment and accounts receivable during the first quarter of 2019. The Company is in the process completing its valuation of certain assets and liabilities, primarily related to accounts receivable and accounts payable assumed; thus, the provisional measurements of current assets and current liabilities are subject to change.

Long-term liabilities⁽¹⁾

⁽¹⁾ ~~Includes $14.7 million and $14.5 million as initially reported and as adjusted, respectively, in deferred tax liabilities associated with tangible and intangible assets acquired.~~

Of the $72.2 million of acquired intangible assets, $56.9 million was provisionally assigned to customer relationships which are being amortized over fifteen years, $0.7 million was provisionally assigned to the Genoptix trade name which is being amortized over one year, and $14.6 million was provisionally assigned to trade marks which are assigned as indefinite-lived assets.

The goodwill arising from the acquisition of Genoptix includes revenue synergies as a result of our existing customers and Genoptix’ customers having access to each other’s testing menus and capabilities and also from the new product lines which Genoptix adds to the Company’s product portfolio, including the use of COMPASS and CHART trademarks. None of the

~~NEOGENOMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Unaudited~~

~~goodwill is expected to be deductible for income tax purposes. The provisional fair value of accounts receivable acquired is approximately $16.6 million, net of a $1.5 million fair value adjustment.~~

~~The following unaudited pro forma information~~Acquisition Date (in thousands) have been provided for illustrative purposes only and are not necessarily indicative of results that would have occurred had the acquisition of Genoptix been in effect since January 1, 2017, nor are they necessarily indicative of future results.:


	~~Three Months Ended March 31, 2018~~January 10, 2020
~~Revenue~~Inventory	$	~~87,703~~534
~~Net (loss)~~Prepaid assets	185
Property and equipment	16,839
Internally developed software	3,110
Customer relationships ⁽¹⁾	4,100
Long-term assets	346
Goodwill ⁽²⁾	12,232
Total assets acquired	$	~~(420)~~37,346
Long-term liabilities	(346)
Net ~~(loss) available to common shareholders~~assets acquired	$	~~(3,275)~~37,000

⁽¹⁾
Acquired intangible assets consisted of customer relationships which are amortized over seven years.

⁽²⁾The ~~unaudited pro forma consolidated results have been prepared by adjusting our historical results to include~~goodwill arising from the acquisition of ~~Genoptix~~HLI - Oncology is the amount the Company paid in excess of the fair value of the net assets acquired was primarily for (i) the expected future cash flows derived from the existing business capabilities and infrastructure, (ii) expanding the Company's scientific expertise as ~~if it occurred on January 1, 2017. These unaudited pro forma consolidated historical results were then adjusted~~a leading provider of Pharma Services and Next Generational Sequencing and (iii) an enhanced Pharma Services menu including germline, whole exome and whole genome sequencing. All of the goodwill resulting from the acquisition of HLI - Oncology is expected to be deductible for ~~certain items, primarily~~income tax purposes.

The above purchase price and purchase price allocation are preliminary and subject to future revision as the acquired assets and liabilities assumed are dependent upon the finalization of the related ~~to: a net increase in~~valuations. The fair values assigned to assets acquired and liabilities assumed for HLI - Oncology are based upon management's best estimates and assumptions as of the reporting date, and are considered preliminary.

Note 6. Goodwill and Intangible Assets

Goodwill as of March 31, 2020 and December 31, 2019 was $210.8 million and $198.6 million, respectively.

Intangible assets consisted of the following as of (in thousands):

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company recorded amortization expense ~~during~~of intangible assets of approximately $2.5 million and $2.6 million for the three months ended March 31, ~~2018 due to higher intangible assets recorded related to the acquisition of Genoptix~~2020 and ~~a reduction in interest expense during the three months ended March 31, 2018 as we did not acquire the existing debt.~~

~~Note F – Goodwill and Intangible Assets~~

~~Goodwill as of March 31,~~ 2019, ~~and December 31, 2018 was $196.3 million and $197.9 million,~~ respectively. ~~In 2019, we recorded measurement period adjustments of $1.6 million. Refer to Note E~~ ~~herein~~ ~~for further detail.~~

~~Intangible assets as of March 31, 2019 and December 31, 2018 consisted of the following (in thousands):~~

~~We recorded approximately $2.6 million and~~ ~~$1.4 million~~ ~~in straight-line amortization expense of intangible assets for the three month period~~s ~~ended March 31, 2019 and 2018, respectively~~. The Company records amortization expense as a general and administrative expense.

~~NEOGENOMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Unaudited~~

The estimated amortization expense related to amortizable intangible assets for each of the ~~five~~four succeeding fiscal years and thereafter as of March 31, ~~2019~~2020 is as follows (in thousands):

The following table summarizes the long term debt, net at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):

The carrying value of the Company’s ~~long-term~~ ~~finance~~term loan and financing obligations ~~and term debt~~ approximates ~~its~~ fair value based on the current market conditions for similar instruments.

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Senior Secured Credit Agreement

On ~~December 22, 2016,~~June 27, 2019 (the “Closing Date”), the Company entered into a c~~redit~~ a~~greement~~new senior secured credit agreement (the “New Credit Agreement”) with ~~Regions~~PNC Bank ~~(the “Credit Agreement”~~ National Association (“PNC”), as administrative agent, and ~~collateral agent.~~the lenders party thereto. The New Credit Agreement ~~provided~~provides for a ~~$75~~$100.0 million revolving credit facility (the “Revolving Credit Facility”), a $100.0 million term loan facility (the “Term Loan Facility”), and a ~~$75~~$50.0 million ~~revolving credit facility (the “Revolving Credit Facility”).~~ ~~On June 21, 2018, the Company entered into an amendment to the Credit Agreement (the “Amendment”) which provided for an additional~~delayed draw term loan inwhich has an availability period beginning on the ~~amount of $30 million, for which revised terms are included below.~~

~~On March 31, 2019~~Closing Date and ending on December ~~31, 2018, the Company had current outstanding borrowings under the~~27, 2020 (the “Delayed Draw Term ~~Loan~~ ~~Facility, as amended, of approximately $7.9 million~~, ~~and long-term outstanding borrowings of approximately $86.0 million and $87.9 million, net of unamortized debt issuance costs of~~ ~~$0.9 million~~ ~~and~~ ~~$1.0 million, respectively. The~~se ~~costs were recorded as a reduction in the carrying amount of the related liability and are being amortized over the life of the loan.~~

Loan”). The Term Loan Facility ~~bears~~and amounts borrowed under the Revolving Credit Facility are secured on a first priority basis by a security interest in substantially all of the tangible and intangible assets of the Company.

Borrowings under the New Credit Agreement bear interest at a rate per annum equal to an applicable margin plus, at ~~NeoGenomics’~~the Company’s option, either (1) the Adjusted LIBOR rate for the relevant interest period,, as defined within the ~~Credit Agreement~~,agreement (2) an alternate base rate determined by reference to the greatest of (a) the ~~prime lending rate of Regions, (b) the~~ federal funds rate for the relevant interest period plus 0.5% per annum, (b) the prime lending rate of PNC and (c) the ~~one month~~daily LIBOR rate plus 1% per annum, or (3) a combination of (1) and (2). The applicable margin will range from ~~2.25%~~1.25% to ~~4.00%~~2.25% for LIBOR loans and ~~1.25%~~0.25% to ~~3.00%~~1.25% for base rate loans, in each case based on NeoGenomics’ ~~consolidated leverage ratio~~Consolidated Leverage Ratio (as defined in the New Credit ~~Agreement and revised in the Amendment)~~Agreement). Interest on borrowings under the New Credit Agreement is payable on the last day of each month, in the case of each base rate loan, and on the last day of each interest period (but no less frequently than every three months), in the case of ~~Adjusted~~ LIBOR loans. The Company has previously entered into an interest rate swap agreements to hedge against changes in the variable rate for a portion of ~~both the Term Loan Facility and the Amendment.~~our long term debt. See Note H~~-Derivative~~8. Derivative Instruments and Hedging Activities, for more information on these instruments.

The ~~Term Loan~~Revolving Credit Facility ~~and amounts borrowed~~includes a $10.0 million swing loan sublimit, with swing loans bearing interest at the alternate base rate plus the applicable margin. Any principal outstanding under the Revolving Credit Facility ~~are secured~~is due and payable on ~~a first priority basis by a security interest in substantially all~~June 27, 2024 or such earlier date as the obligations under the New Credit Agreement become due and payable pursuant to the terms of the ~~tangible~~New Credit Agreement. No amounts were outstanding under Revolving Credit Facility as of March 31, 2020.

Principal payments on the Term Loan Facility are due on the last day of each fiscal quarter with an annual principal amortization of 5% in the first year, 5% in the second year, 7.5% in the third year, 7.5% in the fourth year, and ~~intangible assets~~10% in each year thereafter, with the remainder due upon maturity on June 27, 2024 or such earlier date as the obligations under the New Credit Agreement become due and payable pursuant to the terms of ~~NeoGenomics.~~ the New Credit Agreement.

On March 31, 2020, the Company had current outstanding borrowings under the Term Loan Facility of approximately $5.0 million, and long-term outstanding borrowings of approximately $90.6 million, net of unamortized debt issuance costs of $0.6 million. These costs were recorded as a reduction in the carrying amount of the related liability and are being amortized over the life of the loan.

In addition to paying interest on outstanding principal under the New Credit Agreement, the Company will be required to pay a commitment fee in respect of the unutilized portion of the commitments under the Revolving Credit Facility and the Delayed Draw Term Loan. The commitment fee rate ranges from 0.15% to 0.35% depending on NeoGenomics’ Consolidated Leverage Ratio. The Company will also pay customary letter of credit and agency fees.

The Term Loan Facility contains various ~~affirmative and negative~~ covenants including entering into certain indebtedness; ability to incur liens and encumbrances; make certain restricted payments, including paying dividends on its equity securities or payments to redeem, repurchase or retire its equity securities; enter into certain ~~restrictive~~burdensome agreements; make investments, loans and acquisitions; merge or consolidate with any other person; dispose of assets; enter into certain sale and leaseback transactions; engage in transactions with its affiliates, and materially alter the business it

~~NEOGENOMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Unaudited~~

conducts. In addition, the Company must meet certain maximum leverage ratios and fixed charge coverage ratios as of the end of each fiscal ~~quarter~~. ~~The Company was in compliance with all financial covenants as of March 31, 2019.~~quarter.

The Term Loan Facility ~~and Amendment have a maturity date of December 22, 2021. The Credit Agreement~~ requires ~~NeoGenomics~~the Company to mandatorily prepay the Term Loan Facility and amounts borrowed under the Revolving Credit Facility with (i) 100% of net cash proceeds from certain sales and dispositions, subject to certain reinvestment rights, and (ii) 100% of net cash proceeds from certain issuances or incurrences of additional ~~debt, (iii) beginning with the fiscal year end~~edDecember 31, 2018, 75% of consolidated excess cash flow (as defined) if NeoGenomics’ consolidated leverage ratio is greater than or equal to 3.25:1.0 or 50% of consolidated excess cash flow (as defined) if NeoGenomics’ consolidated leverage ratio is less than or equal to 3.25:1.0 but greater than or equal to 2.75:1.0 and (iv) 100% of net cash proceeds from issuances of permitted equity securities by NeoGenomics made in order to cure a failure to comply with the financial covenants. NeoGenomics is permitted to voluntarily prepay the Term Loan Facility and amounts borrowed under the Revolving Credit Facility at any time without penalty.debt.

~~Revolving Credit Facility~~

~~During the fourth quarter of 2018, $5.0 million was drawn from the revolving credit facility, resulting in outstanding borrowings of $5.0 million as of December 31, 2018 and March 31, 2019.~~

The Revolving Credit Facility includes a $10.0 million swingline sublimit, with swingline loans bearing interest at the alternate base rate plus the applicable margin. Any principal outstanding under the Revolving Credit Facility is due and payable on December 22, 2021 or such earlier date as the obligations under the Credit Agreement become due and payable pursuant to the terms of the Credit Agreement. The Revolving ~~Credit~~ ~~Facility bears interest at a rate per annum equal to an applicable margin plus, at NeoGenomics’ option, either (1)the Adjusted LIBOR rate for the relevant interest period,~~ ~~as defined within the Credit Agreement~~ (2) an alternate base rate determined by reference to the greatest of (a) the prime lending rate of Regions, (b) the federal funds rate for the relevant interest period plus 0.5% per annum and (c) the one month LIBOR rate plus 1% per annum, or (3) a combination of (1) and (2). The applicable margin will range from 2.25% to 4.00% for Adjusted LIBOR loans and 1.25% to 3.00% for base rate loans, in each case based on NeoGenomics’ consolidated leverage ratio. Interest on the outstanding principal of the Term Loan Facility will be payable on the last day of each month, in the case of each base rate loan, and on the last day of each interest period (but no less frequently than every three months), in the case of LIBOR loans.

~~The Credit Agreement, as amended~~, requires NeoGenomics to mandatorily prepay the Term Loan Facility and amounts borrowed under the Revolving Credit Facility with (i) 100% of net cash proceeds from certain sales and dispositions, subject to certain reinvestment rights, (ii) 100% of net cash proceeds from certain issuances or incurrences of additional debt, (iii) beginning with the fiscal year ended ~~December 31, 2018, 75%~~ of consolidated excess cash flow (as defined) if NeoGenomics’ consolidated leverage ratio is greater than or equal to 3.25:1.0 or 50% of consolidated excess cash flow (as defined) if NeoGenomics’ consolidated leverage ratio is less than or equal to 3.25:1.0 but greater than or equal to 2.75:1.0 and (iv) 100% of net cash proceeds from issuances of permitted equity securities by NeoGenomics made in order to cure a failure to comply with the financial covenants. NeoGenomics is permitted to voluntarily prepay the Term Loan Facility and amounts borrowed under the Revolving Credit Facility at any time without penalty, subject to customary “breakage” costs with respect to prepayments of Adjusted LIBOR rate loans made on a day other than the last day of any applicable interest period.

~~Other Finance~~Financing Obligations

The Company has entered into loans with various banks to finance the purchase of laboratory equipment, office equipment and leasehold improvements. These loansmature at various dates through ~~2021~~2022 and the weighted average interest rate under such l~~oans~~loans was approximately 4.82%at as of March 31, ~~2019~~2020 and ~~4.56% at~~4.64% as of December 31, ~~2018~~.

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Unaudited~~(unaudited)

Maturities of Long-Term Debt

Maturities of long-term debt atas of March 31, ~~2019~~2020 are summarized as follows (in thousands):

~~NEOGENOMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Unaudited~~

In ~~December of 2016 and~~ June of 2018, the Company entered into an interest rate swap ~~agreements~~agreement to reduce the Company~~the Company's~~’s exposure to interest rate fluctuations on the Company~~the Company's~~’s variable rate debt obligations. ~~These~~This derivative financial ~~instruments are~~instrument is accounted for at fair value as a cash flow ~~hedges,~~hedge, which effectively modifies the ~~Company's~~Company’s exposure to interest rate risk by converting a portion of its floating rate debt to a fixed rate obligation, thus reducing the impact of interest rate changes on future interest expense.

Under ~~these agreements, we receive~~the hedging agreement, the Company receives a variable rate of interest based on LIBOR and we pay a fixed rate of interest. The following table summarizes the interest rate swap agreements.

December 2016 Hedge June 2018 Hedge
Notional Amount $50 million $20 million (1)
Effective Date December 30, 2016 June 29, 2018
Index One month LIBOR One month LIBOR
Maturity December 31, 2019 December 31, 2021
Fixed Rate 1.59 % 2.98 %

⁽¹⁾~~The notional amount increases to $70 million upon maturity of December 2016 hedge on December 31, 2019.~~


	June 2018 Hedge
Notional Amount	$	70	million
Effective Date	June 29, 2018
Index	One month LIBOR
Maturity	December 31, 2021
Fixed Rate	2.98		%

The fair value of the interest rate ~~swaps will be~~swap is included in other ~~long term~~ assets or liabilities, when applicable. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the fair value of the derivative financial instruments included in other long-term assets ~~were $0.3 million and $0.5 million, respectively.~~was $0 for both periods. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the fair value of the derivative financial instruments included in other long-term liabilities were ~~$1.3~~$3.3 million and ~~$0.9~~$2.0 million, respectively. Fair value adjustments are recorded as an adjustment to ~~accumulated other comprehensive earnings,~~AOCI, except that any gains and losses on ineffectiveness of the interest rate swap would be recorded as an adjustment to other expense (income), net. Fair value adjustments will be reclassified to interest expense in the period during which the hedged transaction affects earnings, whether upon termination or maturity. Hedge effectiveness is assessed quarterly. The Company determined that the interest rate ~~swaps are~~swap is highly effective and, thus, there is no impact to the ~~Company's consolidated statements~~Company’s Consolidated Statements of ~~operations.~~Operations from changes in fair value. Upon maturity or termination, ~~of the interest rate swap agreement, we will reclassify~~ gains or losses, if any, on this derivative instruments from accumulated other comprehensive income (“AOCI”) to earnings. If the swap were terminated, based on interest rates in effect at March 31, 2019, we estimate that we would reclassify approximately $1.0 millioninstrument will be reclassified from AOCI to ~~earnings during the next twelve months as the anticipated cash flows occur. Amounts~~earnings. There were no amounts reclassified for gains or losses on derivative instruments during the first quarter of ~~2019 were not material.~~ 2020.

~~NEOGENOMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Unaudited~~

On December 30, 2015, the Company issued 14,666,667 shares of its Series A Redeemable Convertible Preferred Stock ("Series A Preferred Stock") as part of the consideration for the acquisition of Clarient. The Series A Preferred Stock had a face value of $7.50 per share for a total liquidation value of $110 million. On December 22, 2016, the Company redeemed 8,066,667 shares of the Series A Preferred Stock for $55.0 million in cash. The redemption amount per share equaled $6.82 ($7.50 minus the liquidation discount of 9.09%). In December 2017, the Company issued 264,000 additional shares of preferred stock as a paid-in-kind dividend, resulting in a balance of 6,864,000 shares of Series A Preferred Stock outstanding at March 31, 2018.

~~On June 25, 2018, the Company redeemed the remaining outstanding~~ p~~referred~~ stock for an aggregate redemption amount of $50.1 million, prior to consideration of any transaction related expenses. The shares were redeemed at $7.30 per share, representing the applicable 4.55% redemption discount on the original liquidation preference plus an additional $0.14 per share in respect of accrued and unpaid dividends for 2018. Following the redemption, no shares of p~~referred~~ s~~tock remain outstanding.~~

~~The gain or loss was calculated as the carrying value of the shares of~~ p~~referred~~ stock before the redemption of $37.8 million plus the amount of the beneficial conversion feature originally recorded with the redeemed shares of $21.3 million, as compared to the total consideration being paid, in this case the $50.1 million.

The Company recorded ~~the Series A Preferred Stock at a fair value of~~ approximately ~~$73.2 million, or $4.99 per share, on the date of issuance. The difference between the fair value of $73.2~~$2.2 million and the liquidation value of $110 million represents a discount of $36.8 million from the initial face value representing the impact the rights and features of the instrument had on the value to the Company. After the partial redemption, the Series A Preferred stock had a fair value of approximately $32.9 million, or $4.99 per share. The difference between the fair value of $32.9 million and the liquidation value of $49.5 million represented a discount of approximately $16.6 million.


PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)						5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						2623
Item 3. Quantitative and Qualitative Disclosures About Market Risk						3935
Item 4. Controls and Procedures						3935
PART II OTHER INFORMATION
Item 1. Legal Proceedings						4036
Item 1A. Risk Factors						4036
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						4036
Item 3. Defaults Upon Senior Securities						4037
Item 4. Mine Safety Disclosures						4037
Item 5. Other Information						4037
Item 6. Exhibits						4138
SIGNATURES						4239


		Three Months Ended March 31,							Three Months Ended March 31,
		2019		2018			2020		2019
NET REVENUE
NET REVENUE:						NET REVENUE:
Clinical Services	Clinical Services	$	86,210	$	56,971	Clinical Services	$	92,982	$	86,210
Pharma Services	Pharma Services	9,367		6,452		Pharma Services	13,048		9,367
Total Revenue		95,577		63,423
Total revenue						Total revenue	106,030		95,577

COST OF REVENUE	COST OF REVENUE	48,462		36,120		COST OF REVENUE	59,661		48,462

GROSS PROFIT	GROSS PROFIT	47,115		27,303		GROSS PROFIT	46,369		47,115
Operating expenses:	Operating expenses:					Operating expenses:
General and administrative	General and administrative	32,142		17,067		General and administrative	36,344		32,142
Research and development	Research and development	1,209		956		Research and development	2,060		1,209
Sales and marketing	Sales and marketing	11,216		6,775		Sales and marketing	13,258		11,216
Total operating expenses	Total operating expenses	44,567		24,798		Total operating expenses	51,662		44,567
INCOME FROM OPERATIONS		2,548		2,505
(LOSS) INCOME FROM OPERATIONS						(LOSS) INCOME FROM OPERATIONS	(5,293)		2,548
Interest expense, net	Interest expense, net	1,826		1,486		Interest expense, net	819		1,826
Other expense (income)		5,169		(63)
Income (loss) before taxes		(4,447)		1,082
Income tax (benefit) expense		(2,023)		438
NET INCOME (LOSS)		(2,424)		644
Deemed dividends on preferred stock		—		1,003
Amortization of preferred stock beneficial conversion feature		—		1,853
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	(2,424)	$	(2,212)
Other (income) expense						Other (income) expense	(223)		5,169
Loss before taxes						Loss before taxes	(5,889)		(4,447)
Income tax expense (benefit)						Income tax expense (benefit)	1,089		(2,023)
NET LOSS						NET LOSS	$	(6,978)	$	(2,424)

INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
NET LOSS PER SHARE						NET LOSS PER SHARE
Basic	Basic	$	(0.03)	$	(0.03)	Basic	$	(0.07)	$	(0.03)
Diluted	Diluted	$	(0.03)	$	(0.03)	Diluted	$	(0.07)	$	(0.03)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING						WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	Basic	94,740		80,507		Basic	104,484		94,740
Diluted	Diluted	94,740		80,507		Diluted	104,484		94,740


	For the Three Months Ended March 31,
	2019		2018
NET INCOME (LOSS)	$	(2,424)	$	644

OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustments	—		(124)
(Loss) gain on effective cash flow hedges	(557)		623
Total other comprehensive (loss) income	(557)		499
COMPREHENSIVE INCOME (LOSS)	$	(2,981)	$	1,143


	March 31, 2019		December 31, 2018
Current pharma contract asset	$	192	$	86
Long-term pharma contract asset	417		268
Total pharma contract asset	$	609	$	354


Current pharma capitalized commissions	$	310	$	271
Long-term pharma capitalized commissions	766		650
Total pharma capitalized commissions	$	1,076	$	921


Current pharma contract liability	$	1,017	$	927
Long-term pharma contract liability	1,935		1,652
Total pharma contract liability	$	2,952	$	2,579


	March 31, 2020		December 31, 2019
Current pharma contract assets ⁽¹⁾	$	1,127	$	1,000
Long-term pharma contract assets ⁽²⁾	199		153
Total pharma contract assets	$	1,326	$	1,153


Current pharma capitalized commissions ⁽¹⁾	$	141	$	133
Long-term pharma capitalized commissions ⁽²⁾	761		798
Total pharma capitalized commissions	$	902	$	931


Current pharma contract liabilities	$	2,974	$	1,610
Long-term pharma contract liabilities ⁽³⁾	526		1,171
Total pharma contract liabilities	$	3,500	$	2,781


☑☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Series A Redeemable Convertible Preferred Stock				Common Stock						Additional Paid-In		Accumulated Other Comprehensive			Accumulated				Common Stock								Additional Paid-In Capital			Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
		Shares	Amount		Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance, January 1, 2018		6,864,000	$	32,615	80,462,574	$	80	$	230,030	$	274	$	(58,422)	$	171,962
Common stock issuance ESPP Plan		—	—		38,620	—		267		—		—		267
Stock issuance fees and expenses		—	—		—	—		(97)		—		—		(97)
Foreign currency translation adjustments		—	—		—	—		—		(45)		—		(45)
Gain on effective cash flow hedge		—	—		—	—		—		270		—		270
Issuance of common stock for stock options		—	—		67,259	1		215		—		—		216
Deemed dividends on preferred stock		—	1,003		—	—		—		—		(1,003)		(1,003)
Amortization of beneficial conversion feature		—	1,853		—	—		—		—		(1,853)		(1,853)
ESPP expense		—	—		—	—		54		—		—		54
Stock based compensation expense - options and restricted stock		—	—		—	—		1,570		—		—		1,570
Net income		—	—		—	—		—		—		644		$	644
Balance, March 31, 2018		6,864,000	$	35,471	80,568,453	$	81	$	232,039	$	499	$	(60,634)	171,985
																		Shares	Amount				Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance, December 31, 2018	Balance, December 31, 2018	—	$	—	94,465,440	$	94	$	372,186	$	(579)	$	(51,258)	$	320,443	Balance, December 31, 2018		94,465,440	$	94	$	340,291
Common stock issuance ESPP Plan	Common stock issuance ESPP Plan	—	—		36,032	—		419		—		—		419		Common stock issuance ESPP Plan		36,032	—		419				—			—			419
Stock issuance fees and expenses	Stock issuance fees and expenses	—	—		—	—		(66)		—		—		(66)		Stock issuance fees and expenses		—	—		(66)		—			—			(66)

Loss on effective cash flow hedge	Loss on effective cash flow hedge	—	—		—	—		—		(557)		—		(557)		Loss on effective cash flow hedge		—	—		—		(557)			—			(557)
Issuance of restricted stock		—	—		182,502	—		—		—		—		—
Issuance of restricted stock, net of forfeitures																Issuance of restricted stock, net of forfeitures		182,502	—		—		—			—			—
Issuance of common stock for stock options																Issuance of common stock for stock options		619,536	1		3,893		—			—			3,894

ESPP expense																ESPP expense		—	—		119		—			—			119
Stock based compensation expense - options and restricted stock																Stock based compensation expense - options and restricted stock		—	—		2,020		—			—			2,020
Net loss																Net loss		—	—		—		—			(2,424)			(2,424)
Balance, March 31, 2019																Balance, March 31, 2019		95,303,510	$	95	$	346,676	$	(1,136)		$	(21,787)		$	323,848

Balance, December 31, 2019																Balance, December 31, 2019		104,781,236	$	105	$	520,278	$	(1,618)		$	(11,357)		$	507,408
Common stock issuance ESPP Plan																Common stock issuance ESPP Plan		34,330	—		796		—			—			796
Stock issuance fees and expenses																Stock issuance fees and expenses		—	—		(15)		—			—			(15)

Loss on effective cash flow hedge																Loss on effective cash flow hedge		—	—		—		(1,038)			—			(1,038)
Issuance of restricted stock, net of forfeitures																Issuance of restricted stock, net of forfeitures		76,618	—		(212)		—			—			(212)

Issuance of common stock for stock options	Issuance of common stock for stock options	—	—		619,536	1		3,893		—		—		3,894		Issuance of common stock for stock options		503,873	—		2,897		—			—			2,897
ESPP expense	ESPP expense	—	—		—	—		119		—		—		119		ESPP expense		—	—		194		—			—			194
Stock based compensation expense - options and restricted stock	Stock based compensation expense - options and restricted stock	—	—		—	—		2,020		—		—		2,020		Stock based compensation expense - options and restricted stock		—	—		1,991		—			—			1,991
Net loss	Net loss	—	—		—	—		—		—		(2,424)		(2,424)		Net loss		—	—		—		—			(6,978)			(6,978)
Balance, March 31, 2019		—	$	—	95,303,510	$	95	$	378,571	$	(1,136)	$	(53,682)	$	323,848
Balance, March 31, 2020																Balance, March 31, 2020		105,396,057	$	105	$	525,929	$	(2,656)		$	(18,335)		$	505,043


Year Ended December 31,	Operating Leases
2019 (excluding the three months ended March 31, 2019)	$	4,043
2020	2,833
2021	2,811
2022	2,121
2023	2,032
2024	1,993
Thereafter	12,377
Total future minimum lease payments	28,210
Less imputed interest	(7,942)
Total present value of future minimum lease payments	$	20,268


Years ending December 31,
2019	$	5,247
2020	2,798
2021	1,082
2022	453
2023	92
Thereafter	—
Total minimum lease payments	$	9,672


	December 10, 2018 (As Initially Reported)		Measurement Period Adjustments		December 10, 2018 (As Adjusted)
Current assets	$	22,172	$	2,257	$	24,429
Property and equipment	21,029		(428)		20,601
Identifiable intangible assets	71,792		374		72,166
Goodwill	50,873		(1,593)		49,280
Long-term assets	170		—		170
Total assets acquired	$	166,036	$	610	$	166,646
Current liabilities	(10,769)		(892)		(11,661)
Long-term liabilities⁽¹⁾	(15,265)		282		(14,983)
Net assets acquired	$	140,002	$	—	$	140,002


		March 31, 2020
	Amortization Period	Cost		Accumulated Amortization		Net


Customer Relationships	84-180 months	143,371		28,529		114,842
Trade Name - Indefinite-lived	—	13,447		—		13,447
Total		$	156,818	$	28,529	$	128,289


Remainder of 2019		$	7,549
2020		9,467
Remainder of 2020				Remainder of 2020	$	7,403
2021	2021	9,467		2021	9,870
2022	2022	9,467		2022	9,870
2023	2023	9,467		2023	9,870
2024				2024	9,870
Thereafter	Thereafter	77,868		Thereafter	67,959
Total	Total	$	123,285	Total	$	114,842


	March 31, 2019		December 31, 2018
Term Loan Facility	$	94,782	$	96,750
Revolving Credit Facility	5,000		5,000
Other finance obligations	11,754		11,548
Total Debt	$	111,536	$	113,298
Less: Debt issuance costs	(914)		(997)
Less: Current portion of long-term debt and other finance obligations	(14,374)		(14,171)
Total Long-Term Debt, net	$	96,248	$	98,130


	March 31, 2020		December 31, 2019
Term loan	$	96,250	$	97,500

Financing obligations	7,369		8,631
Total debt	$	103,619	$	106,131
Less: Debt issuance costs	(645)		(671)
Less: Current portion of long-term debt and financing obligations	(9,941)		(10,432)
Total long-term debt, net	$	93,033	$	95,028


	Number of Shares	Weighted Average Exercise Price
Options outstanding at December 31, 2018	6,839,417	$	7.63
Options granted	688,084	$	19.12
Less:
Options exercised	635,257	$	6.23
Options canceled or expired	2,500	$	8.04
Options outstanding at March 31, 2019	6,889,744	$	8.84
Exercisable at Exercisable at March 31, 2019	2,584,373	$	6.84


	Number of Shares	Weighted Average Exercise Price
Options outstanding at December 31, 2019	5,318,759	$	9.97
Options granted	571,316	$	28.36
Less:
Options exercised	504,127	$	7.58
Options canceled or expired	51,210	$	14.61
Options outstanding at March 31, 2020	5,334,738	$	12.14
Exercisable at March 31, 2020	2,535,621	$	8.35


		Term Loan and Revolving Credit Facility		Finance Obligations		Total Long-Term Debt			Term Loan		Financing Obligations		Total Long-Term Debt
Remainder of 2019		$	5,905	$	5,077	$	10,982
2020		7,873		4,729		12,602
Remainder of 2020								Remainder of 2020	$	3,750	$	3,893	$	7,643
2021	2021	86,004		1,888		87,892		2021	6,250		2,732		8,982
2022	2022	—		60		60		2022	7,500		744		8,244
2023								2023	8,750		—		8,750
2024								2024	70,000		—		70,000
		99,782		11,754		111,536
Total Debt								Total Debt	96,250		7,369		103,619
Less: Current portion of long-term debt	Less: Current portion of long-term debt	(7,873)		(6,501)		(14,374)		Less: Current portion of long-term debt	(5,000)		(4,941)		(9,941)
Less: Debt issuance costs	Less: Debt issuance costs	(914)		—		(914)		Less: Debt issuance costs	(645)		—		(645)
Long-term debt, net	Long-term debt, net	$	90,995	$	5,253	$	96,248	Long-term debt, net	$	90,605	$	2,428	$	93,033


	Three Months Ended March 31, ~~2019~~2020
Expected term (in years)	~~3.0~~4.0 - ~~4.5~~5.5
Risk-free interest rate (%)	~~2.5%~~	0.9%
Expected volatility (%)	~~38.9%~~39.9% - ~~44.0%~~44.5%
Dividend yield (%)	—
Weighted average fair value/share at grant date	$~~5.64~~ 8.90


		Number of Restricted Shares	Weighted Average Grant Date Fair Value			Number of Restricted Shares	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2018		282,508	$	9.01
Nonvested at December 31, 2019					Nonvested at December 31, 2019	335,298	$	15.75
Granted	Granted	182,502	$	19.20	Granted	88,736	$	28.36
Vested	Vested	—	$	—	Vested	(37,674)	$	19.29
Nonvested at March 31, 2019		465,010	$	13.01
Forfeited					Forfeited	(4,585)	$	19.66
Nonvested at March 31, 2020					Nonvested at March 31, 2020	381,775	$	18.29


	Three Months Ended March 31,
($ in thousands)	2020			2019			% Change
Cost of revenue:
Clinical Services	$	48,923		$	42,651		14.7	%
Pharma Services	10,738			5,811			84.8	%
Total cost of revenue	$	59,661		$	48,462		23.1	%
Cost of revenue as a % of revenue	56.3		%	50.7		%

Gross profit:
Clinical Services	$	44,059		$	43,559		1.1	%
Pharma Services	2,310			3,556			(35.0)	%
Total gross profit	$	46,369		$	47,115		(1.6)	%
Gross profit margin	43.7		%	49.3		%


	Three Months Ended March 31, 2019
	2019		2018
Net Income (Loss) (GAAP)	$	(2,424)	$	644
Adjustments to Net Income:
Interest expense, net	1,826		1,486
Income tax (benefit) expense	(2,023)		438
Amortization of intangibles	2,559		1,413
Depreciation	5,271		3,633
EBITDA	$	5,209	$	7,614
Further Adjustments to EBITDA:
Acquisition and integration related expenses	1,266		—
Other significant non-recurring expense	5,145		—
Non-cash, stock-based compensation	2,139		1,624
Adjusted EBITDA (non-GAAP)	$	13,759	$	9,238


	Three Months Ended March 31,
(in thousands)	2020		2019
Net loss (GAAP)	$	(6,978)	$	(2,424)
Adjustments to net income:
Interest expense, net	819		1,826
Income tax expense (benefit)	1,089		(2,023)
Amortization of intangibles	2,452		2,559
Depreciation	6,240		5,271
EBITDA (non-GAAP)	$	3,622	$	5,209
Further adjustments to EBITDA:
Acquisition and integration related expenses	1,296		1,266

Other significant non-recurring expenses	(30)		5,145
Non-cash, stock-based compensation expense	2,186		2,139
Adjusted EBITDA (non-GAAP)	$	7,074	$	13,759


	Three Months Ended March 31,
	2019		2018
Net cash provided by (used in):
Operating activities	$	6,097	$	14,312
Investing activities	(3,196)		(4,666)
Financing activities	483		(7,249)

Effects of foreign exchange rate changes on cash and cash equivalents	—		(45)
Net change in cash and cash equivalents	3,384		2,352
Cash and cash equivalents, beginning of period	$	9,811	$	12,821
Cash and cash equivalents, end of period	$	13,195	$	15,173
Working Capital,⁽¹⁾ end of period	$	43,242	$	44,468


Period of Repurchase	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2020 - January 31, 2020	—	$	—	—	—
February 1, 2020 - February 29, 2020	—	—		—	—
March 1, 2020 - March 31, 2020	7,533	28.19		—	—
Total	7,533	$	28.19	—	—


EXHIBIT NO.						DESCRIPTION

10.1						~~Medical Services~~Asset Purchase Agreement, dated ~~December 5, 2018 between Lawrence Weiss, M.D., INC.~~January 10, 2020, by and among Human Longevity, Inc. and NeoGenomics Laboratories, Inc.

~~10.2~~						~~Employment Agreement, dated April 14, 2017 between NeoGenomics, Inc. and William Bonello~~

~~10.3~~						~~Letter Agreement, dated May 6 ,2019 between NeoGenomics, Inc. and Steven C. Jones~~(Incorporated by reference to the Company 's Current Report on Form 8-K as filed with the SEC on Jan uary 13, 2020.)

31.1						Certification by Principal Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification by Principal Financial Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification by Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101						The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2019,~~2020, formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Comprehensive Income (Loss) and (v) related notes