NEO 10-Q

Neogenomics Inc (NEO)

10-Q 2023-11-06 For: 2023-09-30

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Added on April 10, 2026

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Nevada		74-2897368
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9490 NeoGenomics Way,	Fort Myers,
Florida		33912
(Address of principal executive offices)		(Zip Code)


PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)						5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						27
Item 3. Quantitative and Qualitative Disclosures About Market Risk						37
Item 4. Controls and Procedures						37

PART II OTHER INFORMATION
Item 1. Legal Proceedings						38
Item 1A. Risk Factors						38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						38
Item 3. Defaults Upon Senior Securities						38
Item 4. Mine Safety Disclosures						38
Item 5. Other Information						38
Item 6. Exhibits						40
SIGNATURES						41


	(unaudited) September 30, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	306,239	$	263,180
Marketable securities, at fair value	96,025		174,809
Accounts receivable, net	132,640		119,711
Inventories	24,053		24,277
Prepaid assets	18,676		15,237

Other current assets	9,317		8,077
Total current assets	586,950		605,291
Property and equipment (net of accumulated depreciation of $154,840 and $131,930, respectively)	94,517		102,499
Operating lease right-of-use assets	87,131		96,109
Intangible assets, net	381,910		408,260
Goodwill	522,766		522,766




Other assets	4,967		5,109
Total non-current assets	1,091,291		1,134,743
Total assets	$	1,678,241	$	1,740,034
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	16,819	$	20,510
Accrued compensation	47,594		40,141
Accrued expenses and other liabilities	18,679		15,070
Current portion of equipment financing obligations	4		70
Current portion of operating lease liabilities	6,213		6,584


Contract liabilities	3,617		7,557
Total current liabilities	92,926		89,932
Long-term liabilities
Convertible senior notes, net	537,475		535,322

Operating lease liabilities	62,007		68,952


Deferred income tax liabilities, net	25,370		34,750
Other long-term liabilities	13,035		13,055
Total long-term liabilities	637,887		652,079
Total liabilities	$	730,813	$	742,011
Commitments and contingencies (Note 11)
Stockholders’ equity
Common stock, $0.001 par value, (250,000,000 shares authorized; 127,261,476 and 126,913,992 shares issued and outstanding, respectively)	$	127	$	127
Additional paid-in capital	1,181,876		1,160,882
Accumulated other comprehensive loss	(1,846)		(3,899)
Accumulated deficit	(232,729)		(159,087)
Total stockholders’ equity	$	947,428	$	998,023
Total liabilities and stockholders’ equity	$	1,678,241	$	1,740,034


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
NET REVENUE
Clinical Services	$	127,553	$	106,162	$	365,578	$	310,588
Advanced Diagnostics	24,401		22,620		70,513		60,435
Total net revenue	151,954		128,782		436,091		371,023

COST OF REVENUE	89,643		79,889		259,075		239,952

GROSS PROFIT	62,311		48,893		177,016		131,071
Operating expenses:
General and administrative	61,486		64,282		183,343		188,481
Research and development	5,285		7,312		20,182		23,651
Sales and marketing	17,610		16,809		52,770		50,179
Restructuring charges	2,125		—		9,883		—
Total operating expenses	86,506		88,403		266,178		262,311
LOSS FROM OPERATIONS	(24,195)		(39,510)		(89,162)		(131,240)
Interest (income) expense, net	(2,840)		139		(6,831)		2,366
Other expense (income), net	96		(25)		(520)		212


Loss before taxes	(21,451)		(39,624)		(81,811)		(133,818)
Income tax benefit	(2,935)		(2,772)		(8,169)		(12,255)
NET LOSS	$	(18,516)	$	(36,852)	$	(73,642)	$	(121,563)






NET LOSS PER SHARE
Basic	$	(0.15)	$	(0.30)	$	(0.59)	$	(0.98)
Diluted	$	(0.15)	$	(0.30)	$	(0.59)	$	(0.98)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	125,687		124,425		125,358		124,055
Diluted	125,687		124,425		125,358		124,055


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
NET LOSS	$	(18,516)	$	(36,852)	$	(73,642)	$	(121,563)

OTHER COMPREHENSIVE INCOME (LOSS):

Net unrealized gain (loss) on marketable securities, net of tax	726		(1,048)		2,053		(4,466)


Total other comprehensive income (loss), net of tax	726		(1,048)		2,053		(4,466)
COMPREHENSIVE LOSS	$	(17,790)	$	(37,900)	$	(71,589)	$	(126,029)


☒			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


	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total
		Shares			Amount
Balance, December 31, 2022		126,913,992	$	127		$	1,160,882	$	(3,899)	$	(159,087)	$	998,023
Issuance of common stock for ESPP		96,733	—			811		—		—		811
Issuance of restricted stock, net of forfeitures		114,738	—			(147)		—		—		(147)
Issuance of common stock for stock options		75,028	—			751		—		—		751
Stock issuance fees and expenses		—	—			(4)		—		—		(4)
Stock-based compensation expense - ESPP		—	—			275		—		—		275
Stock-based compensation expense - options and restricted stock		—	—			4,483		—		—		4,483
Net unrealized gain on marketable securities, net of tax		—	—			—		1,065		—		1,065

Net loss		—	—			—		—		(30,795)		(30,795)
Balance, March 31, 2023		127,200,491	$	127		$	1,167,051	$	(2,834)	$	(189,882)	$	974,462
Issuance for common stock for ESPP		78,302	—			1,029		—		—		1,029
Issuance of restricted stock, net of forfeitures		(194,448)	—			(1,527)		—		—		(1,527)
Issuance of common stock for stock options		60,073	—			610		—		—		610
Stock issuance fees and expenses		—	—			(18)		—		—		(18)
Stock-based compensation expense - ESPP		—	—			255		—		—		255
Stock-based compensation expense - options and restricted stock		—	—			5,450		—		—		5,450
Net unrealized gain on marketable securities, net of tax		—	—			—		262		—		262

Net loss		—	—			—		—		(24,331)		(24,331)
Balance, June 30, 2023		127,144,418	$	127		$	1,172,850	$	(2,572)	$	(214,213)	$	956,192
Issuance for common stock for ESPP		64,785	—			863		—		—		863
Issuance of restricted stock, net of forfeitures		(35,670)	—			(41)		—		—		(41)
Issuance of common stock for stock options		87,943	—			1,026		—		—		1,026
Stock issuance fees and expenses		—	—			(1)		—		—		(1)
Stock-based compensation expense - ESPP		—	—			279		—		—		279
Stock-based compensation expense - options and restricted stock		—	—			6,900		—		—		6,900
Net unrealized gain on marketable securities, net of tax		—	—			—		726		—		726

Net loss		—	—			—		—		(18,516)		(18,516)
Balance, September 30, 2023		127,261,476	$	127		$	1,181,876	$	(1,846)	$	(232,729)	$	947,428


Supplemental disclosure of cash flow information:
Interest paid	$	2,121	$	2,145
Income taxes paid, net	$	175	$	155
Supplemental disclosure of non-cash investing and financing information:




Purchases of property and equipment included in accounts payable	$	636	$	1,144


	September 30, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Financial Assets:
Short-term marketable securities:
U.S. Treasury securities	$	25,850	$	—	$	(175)	$	25,675

Yankee bonds	2,605		—		(37)		2,568
Agency bonds	6,041		—		(98)		5,943
Municipal bonds	12,731		—		(828)		11,903
Commercial paper	2,973		—		—		2,973
Asset-backed securities	9,235		—		(90)		9,145
Corporate bonds	38,977		—		(1,159)		37,818
Total	$	98,412	$	—	$	(2,387)	$	96,025


	September 30, 2023
(in thousands)	One Year or Less		Over One Year Through Five Years		Over Five Years		Total
Financial Assets:
Marketable Securities:
U.S. Treasury securities	$	25,675	$	—	$	—	$	25,675

Yankee bonds	2,568		—		—		2,568
Agency bonds	3,572		2,371		—		5,943
Municipal bonds	2,962		8,941		—		11,903
Commercial paper	2,973		—		—		2,973
Asset-backed securities	9,145		—		—		9,145
Corporate bonds	25,210		12,608		—		37,818
Total	$	72,105	$	23,920	$	—	$	96,025


	September 30, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash equivalents:
Money market funds	$	299,539	$	—	$	—	$	299,539


Marketable securities:
U.S. Treasury securities	25,675		—		—		25,675

Yankee bonds	2,568		—		—		2,568
Agency bonds	5,943		—		—		5,943
Municipal bonds	11,903		—		—		11,903
Commercial paper	—		2,973		—		2,973
Asset-backed securities	—		9,145		—		9,145
Corporate bonds	—		37,818		—		37,818
Total	$	345,628	$	49,936	$	—	$	395,564


		September 30, 2023
	Amortization Period (years)	Cost		Accumulated Amortization		Net


Customer Relationships	7 - 15	$	143,101	$	63,062	$	80,039
Developed Technology	10 - 15	310,226		49,108		261,118
Marketing Assets	4	549		342		207
Trademarks	15	31,473		4,797		26,676
Trade Name	2.5	2,584		2,161		423
Trademark - Indefinite lived	—	13,447		—		13,447
Total		$	501,380	$	119,470	$	381,910


Remainder of 2023	$	8,783
2024	33,447
2025	33,343
2026	33,308
2027	32,758

Thereafter	226,824
Total	$	368,463


	Number of Shares	Weighted Average Exercise Price
Outstanding at December 31, 2022	4,214,617	$	16.48
Granted	1,644,070	$	17.17

Exercised	(223,044)	$	10.70
Forfeited	(1,142,470)	$	21.11
Outstanding at September 30, 2023	4,493,173	$	15.84
Exercisable at September 30, 2023	1,126,578	$	21.05


			Nine Months Ended September 30, 2023
Expected term (in years)			4.0 - 6.5
Risk-free interest rate (%)			3.3% - 4.4%
Expected volatility (%)			53.3% - 67.9%
Dividend yield (%)			—
Weighted average grant date fair value per share			$9.04


	Number of Restricted Shares	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2022	1,994,861	$	12.71
Granted	986,142	$	16.90
Vested	(548,543)	$	14.00
Forfeited	(385,489)	$	15.72
Nonvested at September 30, 2023	2,046,971	$	13.79


			Nine Months Ended September 30, 2023
Expected term (in years)			3.0
Risk-free interest rate (%)			3.6% - 4.0%
Expected volatility (%)			68.4% - 69.9%
Dividend yield (%)			—
Weighted average grant date fair value per share			$21.83


	Severance and Other Employee Costs		Facility Footprint Optimization		Consulting and Implementation Costs		Total
Balance as of December 31, 2022	$	559	$	—	$	960	$	1,519
Restructuring charges incurred	3,105		913		106		4,124
Impairment of facility related assets	—		560		—		560

Cash payments and other adjustments(1)	(1,285)		(564)		(346)		(2,195)
Balance as of March 31, 2023	$	2,379	$	909	$	720	$	4,008
Restructuring charges incurred	1,893		271		581		2,745
Impairment of facility related assets	—		329		—		329

Cash payments and other adjustments(1)	(1,634)		(306)		(1,007)		(2,947)
Balance as of June 30, 2023	$	2,638	$	1,203	$	294	$	4,135
Restructuring charges incurred	362		641		896		1,899
Impairment of facility related assets	—		226		—		226

Cash payments and other adjustments(1)	(1,613)		(234)		(642)		(2,489)
Balance as of September 30, 2023	$	1,387	$	1,836	$	548	$	3,771
Current liabilities							$	3,771
Long-term liabilities							—
							$	3,771


	Number of Stock Units	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2022	—	$	—
Granted	305,105	$	21.83
Vested	—	$	—
Forfeited	—	$	—
Nonvested at September 30, 2023	305,105	$	21.83


	September 30, 2023		December 31, 2022
Current contract assets (1)	$	424	$	1,898
Long-term contract assets (2)	—		31
Total assets	$	424	$	1,929


Current capitalized commissions (1)	$	937	$	800
Long-term capitalized commissions (2)	257		715
Total capitalized commissions	$	1,194	$	1,515


Current contract liabilities	$	3,617	$	7,557
Long-term contract liabilities (3)	—		19
Total contract liabilities	$	3,617	$	7,576


	Three Months Ended September 30,						Nine Months Ended September 30,
($ in thousands)	2023		2022		% Change		2023		2022		% Change
Cost of revenue:
Clinical Services(1)	$	73,994	$	65,261	13.4	%	$	213,032	$	197,563	7.8	%
Advanced Diagnostics(2)	15,649		14,628		7.0	%	46,043		42,389		8.6	%
Total cost of revenue	$	89,643	$	79,889	12.2	%	$	259,075	$	239,952	8.0	%
Cost of revenue as a % of revenue	59.0%		62.0%				59.4%		64.7%

Gross profit:
Clinical Services	$	53,559	$	40,901	30.9	%	$	152,546	$	113,025	35.0	%
Advanced Diagnostics	8,752		7,992		9.5	%	24,470		18,046		35.6	%
Total gross profit	$	62,311	$	48,893	27.4	%	$	177,016	$	131,071	35.1	%
Gross profit margin	41.0%		38.0%				40.6%		35.3%


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
July 1, 2023 - July 31, 2023	471	$	16.10	—	—
August 1, 2023 - August 31, 2023	141	$	17.15	—	—
September 1, 2023 - September 30, 2023	2,035	$	14.85	—	—
Total	2,647			—	—