NeoGenomics Q2 Earnings Call Highlights

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NeoGenomics (NASDAQ:NEO) raised its full-year 2026 revenue and adjusted EBITDA guidance after reporting second-quarter revenue growth that exceeded its prior outlook, led by higher-value clinical testing and continued expansion in next-generation sequencing.

Total second-quarter revenue rose 11% year over year to $201.7 million, approximately $4 million above the company’s previous guidance. Clinical revenue increased 14%, supported by a 12% increase in average revenue per test, or AUP, and a 2% increase in test volumes.

Chief Executive Officer Tony Zook said the company’s strategy of using its hematology testing position to expand in solid-tumor therapy selection and minimal residual disease, or MRD, testing is contributing to growth across its NGS business and supporting gross-margin improvement.

NGS Growth and Clinical Mix Shift

NGS revenue increased 26% year over year during the quarter and accounted for about one-third of clinical revenue. NGS volume grew 14%, while the company’s larger NGS panels increased by more than 20%, according to President and Chief Commercial Officer Warren Stone.

Stone said five NGS products launched since 2023 grew more than 30% and represented 26% of total clinical revenue. The company is seeing customers shift from targeted gene panels toward more comprehensive genomic profiling tests, a trend that has supported AUP growth.

Chief Financial Officer Abhishek Jain said AUP also benefited from managed-care pricing gains, improved reimbursement pull-through and price increases. He said the company believes the AUP opportunity remains durable because of both the NGS mix shift and remaining opportunities to improve payer contracts.

For the second half of 2026, Jain said clinical growth is expected to remain more heavily driven by AUP than volumes. Volume comparisons will remain affected in the third quarter by the prior-year contribution from a high-volume, low-value contract that NeoGenomics exited in late 2025. That contract represented roughly 3% to 4% of the company’s 2025 test volumes, management said.

MRD, Liquid Biopsy and Commercial Expansion

NeoGenomics continued building out its solid-tumor offerings through its PanTracer portfolio and RaDaR ST tumor-informed MRD test. Zook said the combined therapy-selection and MRD markets addressed by those products represent a $33 billion opportunity.

RaDaR ST currently has Medicare reimbursement through MolDx for HPV-negative head-and-neck cancer and a subset of breast cancers. During the second quarter, the company submitted a third additional indication to MolDx, bringing its total pending submissions to three. Stone said that approval of all five indications would provide access to more than 40% of the total addressable market for tumor-informed MRD testing.

The company expects the two previously submitted indications to receive reimbursement decisions near the end of 2026 and expects a decision on the third newly submitted indication during the latter part of the first half of 2027, Stone said.

Early RaDaR ST ordering trends included attachment to other NeoGenomics tests. About 30% of RaDaR ST orders included another test from the company’s menu, while two-thirds of orders were for indications already reimbursed by MolDx. Management said it expects more meaningful growth from RaDaR ST as reimbursement expands.

PanTracer LBx, the company’s liquid-biopsy offering, received MolDx reimbursement in early March. Stone said NeoGenomics is seeing adoption from clinicians new to liquid biopsy, competitive share gains, and a growing use of liquid and tissue testing together. The rate of concurrent liquid and solid testing was in the mid-to-high teens during the second quarter, he said.

NeoGenomics reorganized its commercial organization into separate oncology and pathology ecosystems. The company expects to have more than 160 commercial representatives during the third quarter. Stone said the structure is intended to reflect the distinct selling approaches required for pathology customers and oncology practices.

Margins, Operations and Non-Clinical Business

Adjusted gross margin was 48.1% in the second quarter, an increase of about 260 basis points from a year earlier. Adjusted gross profit rose 18% to $96.9 million, driven by higher AUP, volume leverage and efficiency gains from the company’s Lab of the Future program.

That program includes digital pathology, AI-assisted automation, instrument upgrades, laboratory information systems, procurement initiatives and laboratory-footprint optimization. During the quarter, NeoGenomics closed two dry labs, optimized administrative space, rebalanced volumes across its laboratory network, exited low-margin non-oncology business acquired with Pathline, and implemented further automation efficiencies.

The company also transitioned PanTracer LBx to the NovaSeq X platform. Jain said the liquid-biopsy transition is not expected to have a meaningful near-term gross-margin effect because the product remains a small portion of revenue. NeoGenomics plans to begin moving hematology testing to NovaSeq X over several quarters, with margin benefits expected in the latter part of 2027.

Adjusted EBITDA increased 36% year over year to $14.4 million. Sales and marketing expense rose 13% as the company expanded its commercial organization, while research and development spending increased 19%. Those increases were more than offset by an $8 million decline in general and administrative expenses.

Non-clinical revenue declined 15% to $14.5 million. Pharma revenue fell 26%, partly offset by 17% growth in oncology data solutions. Management said pharma represented roughly 5% of total revenue and that the business remains a smaller, opportunistic part of the portfolio rather than its primary growth driver.

Zook said pharma bookings increased significantly in the second quarter, though the company did not see the anticipated revenue pull-through from 2025 bookings. NeoGenomics expects the non-clinical segment to return to year-over-year growth in 2027, contingent on continued booking growth and execution.

Updated 2026 Outlook and Balance Sheet

NeoGenomics raised its 2026 revenue guidance to $802 million to $806 million from $797 million to $803 million. The revised midpoint assumes low-teens clinical growth, mid-20% NGS growth, unchanged mid-single-digit-million revenue assumptions for RaDaR ST and PanTracer liquid biopsy, and a high-single-digit decline in non-clinical revenue.

• Third-quarter revenue growth is expected to be about 10%.
• Fourth-quarter revenue growth is expected to exceed 10%.
• Full-year adjusted gross-margin expansion is projected at 100 to 150 basis points.
• Adjusted EBITDA guidance was raised to $56 million to $58 million, from $55 million to $57 million previously.

During the quarter, NeoGenomics raised $316 million through convertible senior notes due in 2032 and used part of the proceeds to retire $276 million of convertible notes due in 2028. The company also entered cap call transactions and repurchased $25 million of common stock to reduce potential dilution.

NeoGenomics generated about $20 million in operating cash flow and invested $8 million in capital purchases during the quarter. It ended the period with $145.5 million in cash and cash equivalents. Jain also said the company paid about $10 million to settle a legacy self-disclosed matter with the Department of Justice, an amount previously reserved in its financial statements that will affect third-quarter operating cash flow.

About NeoGenomics (NASDAQ:NEO)

NeoGenomics, traded on the Nasdaq under the symbol NEO, is a leading provider of cancer-focused genetic and molecular testing services. Headquartered in Fort Myers, Florida, the company operates an integrated network of CAP-accredited and CLIA-certified laboratories across the United States, Europe and Asia. NeoGenomics delivers diagnostic insights that support oncologists, pathologists and healthcare institutions in the detection, prognosis and treatment of hematologic and solid tumor cancers.

The company's core service offerings include flow cytometry, immunohistochemistry, fluorescence in situ hybridization (FISH), karyotyping and advanced molecular assays such as next-generation sequencing (NGS) panels and polymerase chain reaction (PCR) tests.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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