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NEO Neogenomics

Participants
Doug VanOort Chairman and CEO
Steve Jones Executive Vice President
George Cardoza Senior Vice President and CFO
Bill Bonello Treasurer and Director, Corporate Development
Rob Shovlin President, Clinical Services Division
Kathryn McKenzie Vice President, Finance and Principal Accounting Officer
Jessica King Director, External Reporting
Maher Albitar Senior Vice President, Chief Medical Officer and Director, R&D
James Rutherford Stephens, Inc.
Kevin Ellich Craig-Hallum
Nick Jansen Raymond James
Paul Knight Janney Montgomery Scott
Raymond Myers The Benchmark Company
Joe Munda First Analysis
Jeff Bernstein Cowen
Mathew Arens First Light Asset Management
Call transcript
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Operator

Greetings, and welcome to NeoGenomics’ Fourth Quarter and Full Year 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Doug VanOort, Chairman and Chief Executive Officer for NeoGenomics. Thank you, Mr. VanOort.

begin. may You

Doug VanOort

much. you very call. everyone. like I’d Thank to Good NeoGenomics welcome all conference fourth to you morning quarter XXXX

Joining and Corporate Cardoza, Division; Dr. Myers Executive McKenzie, me Bill Clinical Director Bonello, and Principal Fort Albitar, President our Services Steve Finance Accounting our and President, Officer; Reporting. of Jessica Shovlin, from is joining our Director President Treasurer Vice Jones, and our of Chief of and headquarters Financial Vice Rob Senior Kathryn our is Senior George Aliso our Vice us External Officer from California. Director Maher Development; in R&D President President; Officer; our King, our Medical our Vice Chief Lab Viejo of of

our will Before about prepared standard language Jones statements. remarks, the Steve forward-looking read we begin

Steve Jones

risks such assumptions update Should those and of to circumstances after and of materialize reflect more statement only these the forward-looking the This obligation speaks forward-looking current underlying today. our in statements. statements financial statements by which nature to we are call substantial conference no expectations operations, any certainties as indicated involve our These their forward-looking and that certain and today, one made growth may could call events should differ prove performance, statements, uncertainties, or control. or are outcomes forward-looking our are Any historical actual facts beyond from undertake incorrect, or and which opportunities. results this statements condition about represent materially of statements or contain on of risks beliefs statements. not Any

website this everyone transcript after Doug, we the is I Before a be call Investor of on that completed. call turning know the for available copy our section will of Relations it want to shortly making to let our morning’s back

people a order that want this more hour chance call. the has one for to questions questions within going person we per in everyone to also ask are to We the two limit let know that to allotted give of number been to

Doug VanOort

I’d comment on some key briefly you Steve. our XXXX. share you, our quarter with like review our Thank to underlying and and business plans trends four for performance,

very are fourth pleased Let’s begin for from by the was division grew quarter with and mix revenue Consolidated was adjusting sale the our by especially pathologic performance. XX.X% product strong last a and increased momentum fourth year’s in business. XX%. we volume financial underlying of quarter, the NeoGenomics performance in XX.X% our revenue up million $XX.X very test good growth with our was of We healthier. clinical

is revenue team XX% sales quarters although conversion revenue Our getting to in former fourth large winning in quarter. back gains with share. be division market of last pleased by we and contracts had from quarter levels signed of reported we in are previous productivity compared and quarter-to-quarter, year’s Pharma its backlog can We had projects are to convert high obviously revenue four. have uneven to the many increased

increased last the again XX% year contracts ended signed higher of than backlog Our year. once and

those on revenue Adjusted improvement record was $XX.X lower This were high increases. million. despite to profitability test. profitability per able reached also achieved better price EBITDA We drive a in

levels over per cost of our by employees lowered we again at operated XX% and once laboratory As test record productivity.

we Although, in experienced elevated made included collection, year had challenges are debt us. earlier that adjusted cash bad we levels EBITDA billing strong high record the some the of behind sure as expense,

our to we we our days lowest some underlying since best quarter bear the four expressed nearly at strong call to about we of far are growth see and mid-XXXX. clinical business told like very the outstanding performance was by positive fourth terms levels their on was Importantly, division in for I’d start volume receivable the improved XX% fundamentals All-in-all sales Fourth clinical accounts ended quarter dynamics now of quarter comment affecting net division. and results. last financial of our by year. reviewing fundamental with pleased fruit in our those of during underlying you financial

accelerating was Importantly, in our growth more momentum that balanced core disciplines. with testing

explained we PD-LX previously, as biomarker quarter has that As in companion was ever testing, performed since the NeoGenomics of identified XXXX. of much test fourth a diagnostic country’s the

areas nearly business. commercial me, not volume excuse overall testing resulted an balanced about high-level growth sales a see price our While that growth. in PD-LX of once average profit winning the reported test testing growth much core earlier we per of revenue excluding PD-LX, very our year, last in little We was up higher and focused trends, PD-LX XX%, on When year with that analyze reflects sales a it fourth ago. successful effort. volume did more compared the new in excluding at PD-LX call our quarter’s has again forces quarter test, growth result higher XX% or in $XXX drove in This we

efforts their molecular, fact, flow growth of the year for yielded with In and levels highest the FISH testing. cytometry quarterly

testing Our comprehensive off all offering. shop in needs offer service oncology one-stop as strategy many new our paying a tests clients is for to are requesting

managed XX continue team XXXX, care confident, five efforts efforts during dozen signed new across over for partnership new helped our people country the our focused country. and these sales is gain and recently across sales to clients team’s well-trained. division. team and sales people now hospital agreements us experienced Our strategic were added The and the three aided on by to talented We to clinical have sales

primarily which believe that area. market Atlanta, small focus In share evidenced services levels addition, in based we of of expectations to to surveys, Georgia, our by scale, our deliver very demonstrated retention we on service. believe to the during test most our We also offering our and regular These offering, of levels rates high test rate high response comprehensive of clients we strong customer very retention, from are with customer levels of analysis consistently the gains lab recent is In adding and meet flow service by the oncology overall high customer in XX.X% industry about control, our and was are rapid in and scores for retention. are not their found cytometry are retention capacity a turnaround our our number focused providing customer that to our on construction customer either or the our was customers of lost retirement services for due to acquisition. or that to losses nearly XX%. year of within provide is decision customer past Adjusting half the

those one even and us lost customers course, our to are to loss customer Of working unacceptable get few back. is teams

into us also are These new and in their of a will a gives And It are Once with development partner ending reasons. and revenue most those drugs, us and Services by division, clinical drugs developing. demonstrated of our XX% in it window also variety signed reported $XX test leading, put again The now help pharma The into as to Pharma practice. programs. contracts biotech XX% us during division, Let’s million. this the is $XX the oncology new year-over-year companies record to the attention to quarter with newly this allows drug innovative Services and business as turn Pharma a discover $X.X growth strategically of of we million. important up is to business innovators million what quarter division. backlog for biomarkers help with clinical those to fuel we approved them our health to advances

addition the growth segment. business our market into diversifies high In company another

investing As a we of firm adding are result, this by business in building capacity.

in facility Rhône. in and a Switzerland the business first new As older both located very in in our lab Geneva, just and process clinical came November in result the a outside our pharma an units. promised, to lab replace And Clearly, NeoGenomics of opportunities Texas we to Houston, European have are now that as we Clarient opened we many momentum growth strong of acquisition. constructing

NeoGenomics and there in are exception. challenges However, is no any business

to of reimbursement are in continuing with challenges there year, has the clinical One this with. And issues we are division. our several dealing do

physician physician with less cytometry schedule, revenue. the and using reduced revenue. reimbursed on certain to immunohistochemistry than test authorization mix our X.X% increasing fee less clinical is less by implementation payers, of $X less In changes Based is the in Our the than in of schedule. the for particular discussed our clinical orders. of subjected a our we million, X.X% impact this the to fee flow impact immunohistochemistry million of cytometry flow XXXX, to we tests, the effect tests of last of than headwind specifically XX% of FISH, or CMS case, prior clinical of than fee potential schedule amounting certain test minor, as reimbursement result rates is be dealing lab new entire than requirements are call, and expect to with On by amounting be PAMA from $X headwinds XXXX. our relatively less expected of Many to industry of impact

have set see deal We as do volume time result a of billing at a we on and not major reimbursement requirement. processes this this with this impact or new ordering levels requirement, up to test and

rule for Another in directly caused are of XX-day NeoGenomics certain very Under tests. recent and hospital this in like days any of these setting. now reference can bill reimbursement the Medicare required This within rule for hospital sample tests longstanding a XXXX, clients so-called bill Medicare such changes settings XX procurement labs pathology as tests effect non-hospital is challenge instead for outpatient new to by from molecular in NeoGenomics rule. rule laboratory performed in performed XX-day labs the non-hospital reference hospital excluded directly

CMS this result many that molecular shifts have the poor and gene of to of policy hospital for the complex, additional a to bill tests the years historically details single government. will by is rule believe recent of is and accountability less cost does We this implication clients. as Although will opposite billed it ordering change in now been are Medicare quite for policy NeoGenomics that

a lobbied American this enacted even by the despite change for smaller was expressed Clinical concerns However, and Association. it few Laboratory and NeoGenomics labs

X.XX% get patients patients Cancer treatments among fight reimbursement their to are NeoGenomics coverage are harmful industry challenges potentially results our care. ambiguous labs test rule determinations Medicare the changes survive. other getting are are and potential to $X.X not and for difficulty While clients collecting we for today, have some on of this also by information difficult greater tests. rule confusion what X% There and about will reimbursement revenue. $X and to expect impact we to we among to complexity the and to million to in and determinations, most Based recent is right critical clinical chance the of but the and the key caused XX-day in these molecular estimate be, by innovative available best to or other impact million patient in approximately other quickly the vulnerable proposed access newer exactly XXXX estimate to are final, reduce

keeping We impact to limitations these in X.X% are coverage a headwinds of clinical X% commenting revenue. total, industry. watch along expect that and many known we with our potential will close on In reimbursement approximately

and been has other continues this reimbursement reimbursement industry expectations. disclosed to challenge be with While and for a our previously participants, reduction is consistent us

our to a of revenue XXXX directly Fortunately, us. to was for under is were of them. bills only and directly total about individual billed solution sent with approximately our contracts as hospitals XX% more our preferable situation XX% Medicare, Contracting with hospitals

XXXX the order. hospital for Our testing sharing prepared my our and what based patients, they values high see building with to and they you and success we performance. the plans for conclude we directly of is they of value our by them company, pay will teammates to XXXX, significant provide careers As deal for cancer a the to in clients remarks purpose further the and and our focusing with expectations initiatives a driven rewards I culture. even continue on create In are world-class develop one teamwork for factors, better clearly critical

providing We of clients. uncompromising this even more attention to our are our on also year focusing quality

Our will all training require employees. leadership initiatives for and here

to As are least automation quality process X% bar leads believe high raise test on at we lower X% that and again on once productivity. intended for focus cost, to by our the to initiatives to cost lower

growth. about our from in intend competitors satisfaction. to Our ourselves third apart to a levels of engage client is clients exceptionally further set We high of focus area in with XXXX process

are and focusing on to We legislative also reimbursement profitable growth. initiatives deliver

$X invest in million variety of to to $X long-term growth We expect a mid initiatives. to million

exciting business, for area XX% with growth clinical for consistent growth. both goals complex a our of expected Our growth testing pharma this contribution XXXX oncology our XX% to clinical in and demand revenue that increase. - mid-teens growth XX% XX% to in of pharma and business in business, with company incremental to are pharma the for financial EBITDA volume continues are generate Clearly rates for divisions wide precision on revenue the medicine our volume long-term growth our plans our

are opportunities. market-leading, confident will to to and uniquely As XXXX guidance. business. Bonello laboratory we and an review to ability the meet exciting are more full-service results that oncology-focused Bill our fourth we We floor grow growth pursuing and the remain even our Steve more positioned then to our turn to I’ll in Jones build quarter aggressively detail demand now in review

Steve Jones

quarter testing quarter This more Services increase consolidated prior XX% increase the by Gross margin by X.X% the year. from XXX the prior Fourth XXXX. This revenue our per grew After basis gross of the reduction were million, $X.X in Pharma incremental since a from revenue revenue sale gross the by of the or from clinical was from $X.X XX% a increase increased revenue year. decrease test X.X% $XXX, adjusting the increased Pharma from improvement as clinical year highest year-over-year. million cost as to point XX.X% Average Services revenues Doug. $XX.X XX.X%. revenue year. well and represents increased for of was test profit level basis year. from a in points a XX.X% million genetic prior prior of Consolidated Clinical total than last XXX the Thanks improved the second XX.X%, genetic year. by XX.X% PathLogic, growth per margin prior driven

fourth last a $X.X As million quarter $X.X because assets. expenses to write-off press by impairment from non-cash mentioned X% in charge included SG&A or XXXX’s release, certain intangible year, the consolidated decreased million

of a only that receivables in million. in four effects increased expense gross XX.X%. the $X.X allowance by was year. the but report of $X.X debt On things increase driven by this to charge, up year bad such quarter expenses debt closely, to prior I four million XXXX increased percentage million. Excluding at impairment look $X.X to am basis, quarter increase our write-offs versus debt which those who $XX.X we million, as by bad Total X.X%, able pleased $X or SG&A Thus, was for were million $X.X to were full million a a you of in bad

the to $X.X million increase increase compared XXXX. For increase context, decrease million, of revenue Fourth an loss to versus we estimate quarter incremental level shareholders GAAP income common fourth Adjusted per year. was EBITDA and in result represented integration adjusted prior XX.X% available the that this and the in XXXX’s fourth approximately per share half EBITDA the $X.X $X.XX million of million $X.XX that This bad the of compared in net XXXX, $X.X of overall $XX.X share was year. in growth quarter will to net of Clarient the diluted a was from was of loss million XX.X% of $XX.X debt quarter. the of or prior to a income of

million GAAP And $X.X to to our net earnings to those and calculated adjusted per was compare $X.X income table net charge a share. how income it company loss appropriate income four appropriate exclude net However, September XXXX consistent to The our per quarter $X.X associated common related charge income non-cash periods, XXXX. applicable, Tax basis adjusted a these is a to Jobs increased this and costs. more contract order includes with debt. share, Act, XX, It with to believe available of refer as true deal Cuts fourth unchanged net benefit items, the the in quarter We of and four are In in press a full-time a the of to periods. reported the per versus reported share net and $X.XX have is includes measure income in to to quarter, share in across release. volumes. as million, adjust XXX the employees, was of the adjust personnel and included year. per $X.XX $X.X four operations on XX, refinancing temps majority quarter And with one-time if testing impairment release, or in the shareholders, across certain XXXX, as tax $X.X bank with a connection basis, million We net the that earnings adjusted XXXX, income, million we equivalent mentioned and of XXX with doctors diluted diluted laboratory to were and prior the on additions We fourth million adjusted compared December increases from finished the the X,XXX XXXX. quarter as EPS in

an my role months other you of a operating XX members. transition process many ago, XXXX, As began duties team that I’ve I Neo and at to since had know, day-to-day to

guidance I every opportunity each who in to Over part that and have the clients just to over outstanding I this employees investors one eight first the After be of testing work him revenue deeply $XXX as in consultant be to arise. also time, And that may Corporate to take members the feel XX it role remain for million and appropriate the Director was role your Investor will our floor XXXX grew to their weeks, that Neo a done thus board of answer say appreciative member. next Bonello, have any I’ll to are to United board of President Director shortly, It my we know questions year this I duties cancer I of and we when support this and in years. to without will that all labs period. company a the will blessed would present premier take you. six Bill thank and and honor I analysts like taking the couldn’t in we been in with part-time building Vice been confidence our of from Bill our Indeed, to one handing employees I and Relations $XX,XXX it over States. as over off now turn Development, have vision. this support incredibly in Bill. I for over team dedication has will our over our and and April. high felt the of speak of Since

Bill Bonello

Thanks Steve.

review this me XXXX issued the guidance we Let morning. briefly

of For the be of it as XXXX, reduction ASC new the this bad a previously range This debt administrative section guidance Under will we all million to and as for be expense to revenue general separately in the adoption XXX. $XXX accounted expect income to million. statement. revenue $XXX accounting standard, reported was reflects expense our in of where

to a XXX revenue we million result, expect the of in $XX by $XX million ASC reduce As adoption reported XXXX. to

Now, billing XX% represents integration to of debt related the level expected from bad issues XX% this the to decrease levels. Clarient us, behind a XXXX that are

a Our to of growth assuming XX% January forma XXXX pro XXX guidance PathLogic all XXXX. revenue for XXXX and X, on over basis, to effective equates the of excluding XXXX adoption XX% of ASC contribution

adjusted of excluding XX%, of expect year-over-year which range be XX% the million to XXXX to $XX EBITDA growth we the $XX in PathLogic. to XXXX, million, to equates deficits For from EBITDA

Importantly, that a than do up year-over-year in in be from that vary lower on would but We will division still ASC basis. considerably We expect Services adjusted remind the material margin revenue in QX QX, everybody of Pharma our a adoption gross impact quarter-to-quarter. Services have not and Pharma will revenue on XXX EBITDA can

to guidance, of now press get Our reconciliation including EPS to measures adjusted EPS non-GAAP lead Q&A. hand us GAAP. XXXX and to and our a back a includes will comprehensive ranges summary through release I Steve more of morning this

Steve Jones

listeners. matter open are sjones@neogenomics.com your for would email webcast-only questions At feel and at you please like conference session, the the will if end question, like if this our call-in to us to it via already a Incidentally, listening been we submit and Q&A to free during would this subject up point, the to addressed by at we call questions. address hasn’t

may hour to we ask to keep the from for everyone like hear within now call. two, As this allotted for that you questions. Operator, may to call still questions so this of open up beginning mentioned, the would limit call, their each the at and we person

Operator

from [Operator comes Our Stephens, with question. of first line Instructions] question with Drew your the Please Jones Inc. proceed

James Rutherford

taking Drew. for This Rutherford is James for Thanks questions. the in

know one The assumption is first related us And the can exposure some interest what is rising for give rate just in that on rate you XXXX question, a kind risk you’re there rate your environment? commentary EPS of interest model your using and guide. you a

Doug VanOort

to about taking quarter, our see is of amortization fourth costs. $XX was our that’s the million leases are statement instrument region’s there all fixed and hedged the X.XX%, and interest a of the out our debt For through capital on interest well. you income of expense actually again subtracting, debt averaged hedge as

much number in So, X% expect we up XXXX. don’t that X.X%, move to very

James Rutherford

on then And excluding for growth, very helpful. extra thanks - just PD-LX, clinical that’s the the volume detail

PD-LX the deceleration are and Just thinking PD-LX? for are what digging then growth, what volume but into there? you assuming given expecting the you for XXXX I’m guidance, comp, non- assuming you that pricing are what

Doug VanOort

to be James volume growth expect our XXXX mid-teens clinical volume growth would consistent division. our in our long-term guidance for with We

historically we haven’t the to PD-LX divisions, out from do we terms having that specificity did continue balanced in to to into so of across are guidance. testing. our that future probably in level other quarter confidence get are going to going give and growth our this all not you but of that of We We broken just not

Operator

line your question the next Our with proceed from Ellich question. Kevin with of comes Please Craig-Hallum.

Kevin Ellich

that you should and give we back integration, guess us levels in normalized as more in your you bit working we that been bad improve debt, appreciate luck It’s talk it XXXX. will made expect in I get and Steve, about off, future. the know could much you the expect improvement of in color to comments bit congratulations prepared it’s I and came pre-Clarient little from you. guess And a we best how that Can good little half of with remarks, to starting to great the XXXX? I a Clarient to

Doug VanOort

take talk I’ll you can thing, next. about the the first Well, and

And year guidance see would you at we look million ASC had the $XX.X and mid-point in bad range, which be if you’ll of guidance, pre $XX delta the debt between full million. million. you was XXX XXX take ASC if its to XXXX million $XX.X the just $XX that the the So post

of bad So, million the estimated a somewhere on debt basis. to in reduction $X order forward moving in is XXXX be the on

Kevin Ellich

And guess know guidance then PAMA, went moving that all I reimbursement, Do impact you include from your in XXXX through you as to fee physician first assumptions XX-day any changes pieces Doug the the was included scheduled rule. as of Nextgen sequencing reimbursement, well?

Doug VanOort

rule Yes, things are unknown. like this are few a finalized there of to all are is are there are the next changes That determination us, included, but of national coverage all known I for generation - for quantify is that for yet one those sequencing known the described we certain you. challenges that those a and I tests. know, other as tried rules have so-called you mentioned Kevin not

Operator

Please line James. of with with the Jansen proceed Raymond comes from question your Nick next Our question.

Nick Jansen

is I I In how just that terms know the projection on not going through the that quarter. still offense sales really it that detail that mid-teens a level gives every throughout going mentioned the you’ve sense think you’re if non-PD-LX XXXX? you for ‘XX, we confidence growth, But back safe providing of progressed about assume be and help of accelerate force that the of year to as get the to

Doug VanOort

That’s Nick. exactly right,

team very have at retaining as mode were really each that were year, during quarter at we far our that time. And four they back in of the beginning to sales year you tell growth - through the labs testing result we integration completed got and gone put volume that we of disciplines. integration the our the PD-LX best you’ll difficult sales as into clients end back was of core quarter selling the get involved as have selling the as we our excluding team going the quarter and tried through together, think was see seen by as of one, was to quarter that XXXX, that I

in did each but up So excluding really quarter it that accelerate growth nicely PD-LX four. jumped quarter

Nick Jansen

Pharma that Services. about European revenue the think thing of opening investment also there, How the ‘XX of necessary? a backlog ahead terms existing revenue been where roughly the do the as in back today, ultimately could that about then in lab are synergies trajectory about in $XX think we of The and The about growth the expectations. clinical you numbers term a encouraging. just your XQ. think level intermediate business? associated And of step opportunity Maybe testing million go with take business Certainly, and

Doug VanOort

We we are it. investing like very that much business and in

You’re for business and expect million to was us in revenue increases XXXX about $XX right, we a it backlog. you’ve in that grow, the seen

We in in capacity business. this investing are

laboratory prospects yet projects into happen progresses. year the But that November and very, don’t that’s So well, XXXX lab, projects for we but of as - facility going that’ll the is there very you as and XXXX investment know started of the strong. in as in lot because we have a

also would in are facility the for us beginning expense We that investing Houston investment be and our a in XXXX. net of

investing in in instrumentation people, also We are are in that business. we investing

that are who have proprietary we investing technology in pharmaceutical companies had our got is growth immuno-oncology drugs. growth The which have MultiOmyx, lot from come terrific has of opportunities. for We in a really

had growth molecular We in in also and other in we well. but have as disciplines immunohistochemistry, opportunities

pharma very So are bullish business we long-term. on the

Nick Jansen

terms a in just transactions ‘XX appetite, third and on solid be role in bigger squeeze post-Clarient. tuck-in where your you’re M&A And ‘XX? of a if and like X I now one, standing you you’re could feel years that could Do a now

Doug VanOort

Yes.

We are interested M&A. in

Operator

question from with line your Our Knight Paul proceed of question. next comes Scott. the with Janney Montgomery Please

Paul Knight

foreseeable the obligations any have on future you GE Do pick the in products?

Doug VanOort

it? with want Steve, Thanks you question, to deal for the Paul.

Steve Jones

actually year the - so So, at our Paul, their it have as we you at convertible to on another redeem know, the we GE where until have opt is not their option preferred, XXXX, option choosing. basically

on we GE if anything it, definitive and are is about with our board when what their and a all time other do dialogues to in we anything having incremental cash do we very respectful not or time are on Now what of said don’t internal we wishes any flow. GE than are foregone that, have that GE’s from just wishes debt we conclusion plans and yet. are But would and it’s

we discount, little year at up that still an it day, So be if out obligation the year, of this it will we respectful year, take have really GE’s incentives further way. to don’t we year. that are this it down but And have some go X.X% to a end so of this redeem the there comes desires be next if we bit

Paul Knight

notice price has I count increase. risen with the What’s guidance basic obviously your share count? your XXXX for assumption share then on And share

Steve Jones

count effectively, because share the position, Cut profitable, position, if and again, don’t shares which have largely shares was QX bring your to driven The and those we Jobs into count a Tax shares. add you to you do loss the profit in flip share by Act, calculation. we obviously in are When other the in were a you rose preferred

Doug VanOort

I diluted mark I adjusted $XX think around would so. million And something to for the your EPS something look or number,

Paul Knight

who you do solid what hear in there regarding is it? lastly competition market, the then out to at and tests you as Is see it we real guys? FMI, it What is out tumor the And FMI. risk

Doug VanOort

and have traditionally and we with know the competitors. you we molecular would are had industry as players. others a there lot big I well. labs as say And area all The competed some has quite have big competitive players, this strong a very very well those pretty strong competitor very are Well we and FMI in of strong is competitors have the for a time.

numbers FDA in on are some We of that, we a are you exploring XXXX test investments. in to included potential approvals In for our we of those watch lot we tests. there’s we think the FDA guidance our in provided and we movement own of have that and type interested their terms invest keeping that expense laboratory oversight by in close developed some but may our FDA potentially

Paul Knight

clinical line, the line services lastly And affects correct? not then the XXX diagnostics the, clinical line not the

Doug VanOort

side. doesn’t affects do revenue Pharma want at XXX very Paul, really division affect the to it much on all clinical the the elaborate? division, George, Services you

George Cardoza

method. doing contracts. are some But It a can retrospective the affect timing we full of

bit of little deferred basically that the a time. a have but balance, of will more revenue goes we back beginning to So

would net the if you at very small. have look So XXXX impact been in really it

Operator

the with your Company. The Our with proceed Myers Raymond from comes next Benchmark question line question. of Please

Raymond Myers

first Clarient. years since expect in me two you we a synergies you or XXXX acquisition, in Do been bit over it’s acquired still the ask about Clarient now future? Let Clarient the

Doug VanOort

Yes, as expect a synergies result will in XXXX Ray, some for we Clarient our of and embedded acquisition. the are guidance

of quarter the As labs we of integration merging of labs, XXXX. you in completed know, the one the the

some So XXXX there relative XXXX. carryover in impact to is

will be So comparatively that year-to-year. synergy

some cost resulting that in have though are think more Clarient We also that and is what from labs, scale. but acquisition is acquisition importantly synergies to this providing I us various more, the continue point, at

lot a provide as accounts, us are want with groups we So and all of hospital scale, deal to helping member to hospitals it’s these that of win becoming can hospitals. larger new have to service a accounts, new They their laboratory larger.

the and cost of But are with acquisition. the benefits Clarient real now. a so of tailing benefits lot And are down us. benefits very synergies and much are A other the scale there of lot

Raymond Myers

the the issues that testing quarter? In that indeed you at quarter me fourth in unusual the all anything or and resolved, fourth had we Is about And the the quarter. quarter, affect let else completely third did QNS affect hurricanes fourth ask effect.

Doug VanOort

and recovered forecast events. issue But guess. I had we Well, the in few from completely those are really have quarter is in that the no and - thankfully three none we us, the next hurricanes behind fourth QNS quarter, fully

George Cardoza

tax four quarter benefit. one-time $X.X in was Jobs new from and item the Tax million Cuts benefit unusual a It’s only The Act. the

Operator

next from Please Analysis. with Munda your proceed Joe First question question. the with line Our of comes

Joe Munda

you real rule, payer the Bill, mix and couple roughly talked George about or XX-day or A XX%. guys here, Steve quick.

XX% had like you the - about they from XX% from on in overall you higher give had I talked Medicare sense said some You think, Were DSOs look Can Medicare? of the business? what than us XXXX. that

Steve Jones

reserves things line aside and in Medicare from as they is also age typically also in we of it’s with see put terms what how overall the business we out.

with now how our calculate DSOs, is based So, comparable we aging it formula overall mix. the our on Medicare

Joe Munda

through this So them plan for when amongst in you this, Or mean, you how about customers mean, see guiding you to do with it customers. guess, on that, landscape? response comes to Doug, preparing how I do the playing and I dealing I out? talked reimbursement confusion

Doug VanOort

requirements, requirements educating that right that whether trying with so more to an Dealing can we defining new patient outpatient now that Joe, what we non-patient doing bill appropriately. a or inpatient rigorous about about understands clients are rules a and is everyone is, what or an make are, sure the

some there the So is confusion in marketplace.

get volume important very in changes right first that laboratory, we are high processes the time. these a As

terms when in in, of identified it’s correctly to appropriately. demographics sort not for comes of that our build processes we more have go to and requisition So if get of then through patient in all thing to try that order

what is care. and rule that it order, of important since confusion one for innovative tests. Medicare for issues both we pay the not some our that’s XXXX. they some the have and clients. oriented we I for of with order impact for that causing And that’s XX-day reimbursement they as for they’re they so also accountable what’s frankly benefit are but is they there And directly because the of know And billing described, hospitals it. patient in impact will just they for us be And some process dealing pay molecular know does The it,

Joe Munda

will? Okay. A couple if more you

Doug VanOort

got you if it to just we No, more mind. one don’t limit

Joe Munda

Sure, no problem.

lab about to you the new backlog, of the So tied talked how just that up wondering, you that Europe I $XX was there? much opened and million. is

Doug VanOort

Yes. contracts… The new

Joe Munda

in million new $XX contracts…

Doug VanOort

bookings, of bit new but $XX higher. a in contracts, is the Just that the don’t of million backlog the I new think the we $XX some of clearly typically quite nature a sort disclose to as have U.S.. in perform our to Europe. Europe, we favorably good clients as relates projects to we capacity very And studies the well are - added former the have reacting that across million

So, a the I think good. there prospects are

Operator

of Our Cowen. the proceed question. with Bernstein question Please next your Jeff with comes from line

Jeff Bernstein

and for future Steve, pursuits. time just thanks to and your wanted congratulations in over the all good luck help say

Just one. quick a real

number have do growth? pathologic, revenue growth, you sans clinical that just the On

Doug VanOort

You’re talking about just genetic - clinical genetic testing?

Jeff Bernstein

Just year-to-year.

George Cardoza

Yes.

the Excluding pathologic, quarter. four total revenue grew X.X% on

Operator

next Ellich from Our with of Craig-Hallum. proceed question. Kevin your follow-up with the is question a line Please

Kevin Ellich

- investments. Is that lab your So comments in can really bit to you you’re into? Doug, I that more to it I you���ll a new investing know, million on money think color to Atlanta, back some $XX you was mid the you Houston little the building or long-term related to wanted remarks be in prepared made provide - of in what as

Doug VanOort

Kevin. Yes,

$X million facilities. of million investments is to Some that in $X

got will in So one key $X really investment to million of our the facility our division. importantly, expanding looking continued we and clinical are are mid we we spoke investment for the have that, more labs investment become for strategy. in to our Pharma Services which Houston Houston, $X that we have But serve Rolle, of long continued we a of to forward term fair division, a that’s amount will

that pieces and and The other new that piece investments and is our in testing technologies I big tests is in the the in tests briefly. one of of spoke of itself investments initiatives of testing FDA

that we there. in know and undertake know terms requirements to in that we particular make meet systems need have can and FDA a got processes standards sense work of you that you of we So fair amount the to sure

of. to $X that that million investment spoke we of nature the $X that’s So

Kevin Ellich

a cost impact the know In you should then same test the been tests you revenue press cost guys how know were being some sort per test is of we there of able release lowering to also your than molecular talked you on we that nicely, And guess throughout you expecting. bit then lower little services? to much And top about more really keep average affected, for I have was reduce you per XXXX? of runway your

Doug VanOort

then the cost unit and take or Steve Bill average on comment price. maybe me ask Let the I’ll side to

per our in to targeting lowering the test or XX% more I was kind a XX% number and we and cost reduction X% Clarient historically range been fortunate are able were behind for pretty as normalized approach. been now of in on have X% think to cost In that We are test the XXXX, operating we XXXX, pretty we synergies successful cost are some that reduction. us from in realize of of and

new kinds or come other to well. in continue we initiatives, of And we think Bill? perform explore the cost as the into to technologies. those to Now we got sequencing that generation as pathology testing think and XXXX, investments technology digital reductions from future is to will we believe to ways automation next X% continue doable test per we have runway really reduce X% or and

Bill Bonello

adoption think bit to XXX. broad on approximately be an of responsible then on of is on guidance. a there to encompass with we other to pressure would it there fee X, of X. revenue which of Kevin, per of ASC our range from some baked from into effect the lab test. took to be and XXX after impact the Doug through modest, as the is have of to but walked implementation to of in $XXX little adoption our kind effect guidance a January which There XXX more impact an equates tried PAMA the issues of a prior took a be per the January schedules outcomes physician to Remember here range which the potential is isn’t We XXX some - $XXX assumption ASC test

Operator

with follow-up your Jones question is Drew from proceed a next question. of line Our the with Please Inc. question Stephens,

James Rutherford

This again in is Drew. James for

the You just organizations. help and spoke - understand forward? is signing those perhaps to those Can healthcare national preferred your more us of nature about what some how of growth those important you remind with are relationships those us the going deals just

Doug VanOort

systems purchasing organizations. There plans agreements in, are sign of plans a number those we where large hospital of with that national or we’ll some hospital are type engage

been hospital, where into that plans. example are the allow and through in to group in or to growth. Some people with of penetration care fee network schedule system we already purchasing the those have or for that know bill we vetted would managed national the helps - here and I and with have in - geographies, I the say walk it able you essentially a managed plans process well our fee our And it’s because are various very provide and can the establish both be sort hospital we to important so appropriate. those service And have us say, They good is are schedules been cases, already we care of us insurance very think to to when people. with these are we have level organization companies as that corporate

we to sign I sign important of team are in more are XXXX. agreements in mentioned these very a continue quite to these So and continued we a that looking have terrific continue few and to we us. to XXXX,

Operator

Proceed Asset next Our with line First Management. of Johnson Light Brett the your with question from comes question.

Mathew Arens

This for is Matt Brett. in

the Steve, if wanted as you’ll Just been continue involved some be to to us off sunset but here. operating comment line know of just is to want I years a know Neo many comment that the your story company you the forward, with be going that and comments. for I echo your special previous I’ll that position, who’ve wouldn’t for we contributions. not the I of those company the it for around drop many

you forward. wish wanted all best just going that thank you I to So, for and the

Steve Jones

much Thank of Matt, kind very that’s you very you.

Operator

There to I’d are further management for call like to comments. closing the no hand the back queue. questions in

Doug VanOort

a on comment. I’d bit little Matt’s you. Thank to like back take And you

want was call, dedication to end it little fortunate the company for for consultant member. just we to years company are and really colleague going over Steve had about with us great years. recognize I Steve as that the me we work Steve certainly and his as past XX has nine continue and these a board the do when past Steve our nothing, really Before start help very to trusted and did a revenue, is been very for a to NeoGenomics

testing building you and for genetics accounting earnings X, XXXX around quarter XXXX, want country him dedication ASC I around quarter commitment held world also new which So, XXX I first let entire joining our too a rules. approximately want the On NeoGenomics will behalf recognize will call to thank under NeoGenomics we you to letting our to their our May the your X,XXX that this cancer us class know team, first on be or be morning time are of and far. for team company. not members the go

company. listening thank Goodbye. investment in those that we you For in your are of investors an interest you for are considering NeoGenomics, or our

Operator

this teleconference. your Thank today’s does participation. gentlemen, for and Ladies you conclude

your wonderful time. You may this disconnect And at day. a have lines