1. August 15, 2016
Target Price: $7.15
Recent Price: $2.17
Analyst: Thomas Pfister Email: Thomas@redchip.com Phone #: 407-644-4256
Market Data
Fiscal Year December 31
Industry Healthcare
Market Cap $35.0M
Price/Earnings (ttm) N/A
Price/Book (mrq) 1.2x
EV/Sales (ttm) 1.3x
Insider Ownership 22.5%
Institutional Ownership 16.5%
Shares Outstanding 16.1M
Float 9.7M
Avg. Daily Vol. (3 mos.) 98,350
As of August 12, 2016
Income Snapshot
TTM
Revenue $22.6M
Gross Profit $6.3M
Gross Margin 28.0%
EBITDA ($19.8M)
Net Loss ($20.2M)
Balance Sheet Snapshot
MRQ
Cash $10.6M
Debt $5.6M
Cancer Genetics, Inc.
(NasdaqCM: CGIX)
2Q16 Revenue Up 67% YoY and 15% QoQ; Biopharma
Services and Margin Expansion Driving Improved
Operating Results
Strong 2Q16 revenue growth of 67% YoY and 15% QoQ; Biopharma Services expected
to drive revenue growth in 2H16 and 2017. 2Q16 revenue grew 67% YoY to $7.0 million.
This growth was driven primarily by increases in Biopharma services revenue, which grew
58% YoY and 26% QoQ to $4.2 million. Looking forward, we anticipate Biopharma services
revenue to continue to show significant growth, driven by overall increases in the # of clinical
trials and a greater number of later stage clinical trials.
2Q16 revenue from Clinical services increased 103% YoY and 4% QoQ to $2.5 million. We
are currently projecting modest QoQ growth through 2017, although our assumptions could
change if we see meaningful volume increases in some of the Company’s proprietary tests.
We believe that FHACT and the Tissue of Origin test are the most likely candidates to show
volume increases over the near-term. 2Q16 gross margins improved to 39%, showing
significant improvements as compared to 32% in 1Q16 and 26% in 2Q15. We expect gross
margin to continue to improve going forward, as test volumes increase. Net loss in 2Q16 was
$4.0 million, or ($0.28) per diluted share, which represented an improvement over net losses
of $5.1 million in 1Q16 and $5.0 million in 2Q15. We are projecting further improvements in
net losses throughout 2H16 and 2017, as Biopharma services revenue increase and operational
improvements and expense reductions are implemented. Gross margins have shown significant
and continued improvements in recent quarters, and the hiring of new EVP of Finance and
COO Jay Roberts should help to further optimize operations and lower the Company’s cash
burn rate. We are projecting CGIX to essentially reach breakeven in 3Q17 (with a projected
net loss of $0.3 million and revenue of $11.8 million).
Current expected revenue from biopharma contracts of over $47 million; we expect this
to increase as # of trials and trial complexity both increase. CGIX’s current expected
revenue from biopharma contracts is over $47 million (this revenue is expected to be realized
between 2016-2018). CGIX continues to aggressively expand its biopharma services, and in
particular almost doubled its immuno-oncology trials to 20 in 2Q16, up from 12 in 1Q16. The
immuno-oncology market is expected to reach over $35 billion by 2024 (source: IMS Health),
and impact up to 60%-70% of cancer patients. Given the expected significant growth in
immuno-oncology over the next decade, providing services for immuno-oncology clinical
trials should drive consistent revenue growth for biopharma services, along with providing
significant long-term revenue potential in clinical services. As more immunotherapies are
approved for use in the clinic, we anticipate clinical demand for multi-gene NGS panels to
increase. CGIX’s current focus on Biopharma services should generate a positive impact both
for current results and longer-term potential in clinical services and companion diagnostics.
Continuing to build test portfolio, infrastructure, and intellectual property/knowledge;
we believe that this backbone will translate into near-term revenues in biopharma and
set up an eventual longer-term opportunity in clinical revenues. CGIX has continued to
build its intellectual property and test portfolio. Main highlights include the launch of the NGS
panel FOCUS::LymphomaTM
with CLIA validation, the offering and distribution of multiple
PD-L1 tests, the announcement of results at ASCO with HTG, Keck School of Medicine at

2. 2
REDCHIP RESEARCH NOTE
USC, and Japan Clinical Cancer Research Organization of using immune-related genes to identify particular subtypes of colorectal
cancer, and the acceptance of the presentation of the Tissue of Origin (TOO) test for presentation at USCAP. CGIX is also focusing
on developing multi-gene panels using liquid biopsies for kidney and lung cancer.
CGIX has over 11 genomic tests commercially launched, 15 research collaborations with leading institutions, and over 100 patents
globally. Further R&D development should lead to the launch of additional tests and improvements to current test offerings. This
should pay dividends in near-term growth in biopharma revenues and eventually longer-term in clinical services.
We are applying a 2.5x EV/S multiple to our FY17E revenue of $45.0 million to derive a target price of $7.15. CGIX has built a
significant backbone of intellectual property and proprietary genomic tests. This expertise has enabled the Company to grow its
Biopharma services business, and we believe will eventually lead to significant growth in Clinical services. In particular, we think that
the Company’s rapid increase in immuno-oncology trials is very promising, as immuno-oncology is considered by many top analysts
to have a huge impact on future cancer treatment.
Long-term, we believe a huge opportunity exists in the clinical services side of the business. However, as noted by industry participants,
improvements in clinical revenue and reimbursement rates have materialized much slower than was anticipated. Near-term, we have
clinical services revenue growing at a modest rate, although this could be adjusted depending on data presentations and sales and
marketing efforts of some of the Company’s proprietary tests, in particular FHACT and TOO. Longer-term, we believe that
reimbursement rates and clinical adoption will improve significantly. As more immunotherapies and targeted therapies are approved,
it is apparent that genomic information that can only be given by sophisticated, multi-gene panels will be required to effectively utilize
these therapies. In particular, we believe that a strong economic case will be given for the use of NGS testing alongside
immunotherapies, especially given the high cost of treatment of these therapies (typically $100k+), and the increasing evidence of the
need for variable treatment regimens dependent on specific patient characteristics. CGIX’s strong, disease focused knowledge base
should prove valuable as immunotherapies and targeted therapies are approved for indications where the Company has developed
expertise. Any companion diagnostic approvals should greatly increase clinical services revenue. Ultimately, we believe that the
clinical services opportunity is a matter of “when”, not “if.”
Given this backdrop, we view the Company’s focus on moving toward breakeven to be a strong strategic move. Strong improvements
have already been seen in gross margins, and the hiring of new EVP of Finance and COO Jay Roberts should further help this initiative.
We are estimating CGIX reaches breakeven in 3Q17. We are not currently modeling any additional capital raises, although a small
capital raise could be needed depending on how long it takes CGIX to reduce costs. Controlling costs ensures that the Company
minimizes dilution while the clinical opportunity develops.

3. 3
REDCHIP RESEARCH NOTE
1Q152Q153Q154Q15FY151Q162Q163Q16E4Q16EFY16E1Q17E2Q17E3Q17E4Q17EFY17E
Revenue:
BiopharmaServices3,331,0902,675,0002,608,4272,950,00011,564,0003,350,0004,219,0004,851,8505,579,62818,000,4786,416,5727,379,0578,485,9169,758,80332,040,348
ClinicalServices873,0411,251,0001,149,2412,377,0005,651,0002,456,0002,542,0002,628,4282,717,79510,344,2232,810,2002,905,7463,004,5423,106,69611,827,184
DiscoveryServices166,196259,000242,664157,000825,000262,000240,000247,200254,6161,003,816262,254270,122278,226286,5731,097,175
TotalRevenue4,370,3274,185,1474,000,3325,484,00018,040,0006,068,0007,001,0007,727,4788,552,03829,348,5169,489,02610,554,92611,768,68313,152,07244,964,707
Costofrevenues3,141,7353,097,4373,103,2274,755,60114,098,0004,103,0004,285,0004,404,6624,532,58017,325,2434,668,6014,876,3765,084,0715,287,13319,916,181
GrossProfit1,228,5921,087,710897,105728,3993,942,0001,965,0002,716,0003,322,8164,019,45812,023,2734,820,4255,678,5506,684,6127,864,93925,048,526
OperatingExpenses
ResearchandDevelopment1,277,9261,255,4961,801,8131,147,7655,483,0001,532,0001,680,0001,777,3201,881,4486,870,7681,992,6952,110,9852,236,0502,367,3738,707,103
GeneralandAdministrative2,986,8973,061,5843,487,2425,031,27714,567,0004,318,0003,658,0003,492,8203,352,39914,821,2193,292,6923,240,3623,201,0823,182,80112,916,937
SalesandMarketing1,115,8131,184,4311,242,8031,725,9535,269,0001,298,0001,379,0001,406,4011,428,1905,511,5911,442,3321,446,0251,471,0851,775,5306,134,972
TotalOperatingExpenses5,380,6365,501,5116,531,8587,904,99525,319,0007,148,0006,717,0006,676,5416,662,03827,203,5796,727,7196,797,3726,908,2177,325,70427,759,013
(Loss)IncomefromOperations(4,152,044)(4,413,801)(5,634,753)(7,176,596)(21,377,000)(5,183,000)(4,001,000)(3,353,725)(2,642,580)(15,180,305)(1,907,294)(1,118,822)(223,605)539,235(2,710,486)
Interestexpense(33,967)(81,553)(111,620)(116,860)(344,000)(126,000)(107,000)(107,000)(107,000)(447,000)(107,000)(107,000)(107,000)(107,000)(428,000)
Interestincome12,61812,7644,90618,71249,0004,00013,00013,00013,00043,00013,00013,00013,00013,00052,000
Debtconversioncosts000000000000000
Changeinfairvalueofacquisitionnotepayable(89,914)(316,253)315,453359,714269,00034,00067,00000000000
Changeinfairvalueofwarrantliability(15,000)(181,000)214,00017,00035,00017,00000017,00000000
Changeininvestorsconsideration000000000000000
Totalotherincome(expense)(126,263)(566,042)422,739278,5669,000(71,000)(27,000)(94,000)(94,000)(387,000)(94,000)(94,000)(94,000)(94,000)(376,000)
(Loss)incomebeforeincometaxes(4,278,307)(4,979,843)(5,212,014)(6,898,030)(21,368,000)(5,254,000)(4,028,000)(3,447,725)(2,736,580)(15,567,305)(2,001,294)(1,212,822)(317,605)445,235(3,086,486)
Incometaxprovision000(1,184,000)(1,184,000)0000000000
Netincome(loss)(4,278,307)(4,979,843)(5,212,014)(5,714,030)(20,184,000)(5,254,000)(4,028,000)(3,447,725)(2,736,580)(15,567,305)(2,001,294)(1,212,822)(317,605)445,235(3,086,486)
Basicnet(loss)pershare(0.44)(0.51)(0.54)(0.47)(1.96)(0.39)(0.28)(0.21)(0.17)(1.03)(0.12)(0.07)(0.02)0.03(0.19)
Dilutednet(loss)pershare(0.44)(0.51)(0.54)(0.47)(1.96)(0.39)(0.28)(0.21)(0.17)(1.03)(0.12)(0.07)(0.02)0.02(0.19)
Weightedaverageshares-basic9,703,5769,714,8289,726,06712,047,52810,298,00013,547,00014,538,00016,120,09416,120,09415,081,29716,200,69416,281,69816,363,10616,444,92216,322,605
Weightedaverageshares-diluted9,703,5769,714,8289,727,59712,047,52810,299,00013,547,00014,538,00016,120,09416,120,09415,081,29716,200,69416,281,69816,363,10620,248,92216,322,605
YoYRevenueGrowth-Biopharma578.1%554.0%35.1%6.5%106.5%0.6%57.7%86.0%89.1%55.7%91.5%74.9%74.9%74.9%78.0%
YoYRevenueGrowth-Clinical-7.0%13.4%-7.2%112.2%28.4%181.3%103.2%128.7%14.3%83.1%14.4%14.3%14.3%14.3%14.3%
YoYRevenueGrowth-Discovery356.0%45.7%412.4%57.6%-7.3%1.9%62.2%21.7%0.1%12.6%12.6%12.6%9.3%
YoYRevenueGrowth205.5%176.9%24.2%35.9%76.9%38.8%67.3%93.2%55.9%62.7%53.2%
QoQRevenueGrowth-Biopharma20.3%-19.7%-2.5%13.1%13.6%25.9%15.0%15.0%15.0%15.0%15.0%15.0%
QoQRevenueGrowth-Clinical-22.1%43.3%-8.1%106.8%3.3%3.5%3.4%3.4%3.4%3.4%3.4%3.4%
QoQRevenueGrowth-Discovery54.2%55.8%-6.3%-35.3%66.9%-8.4%3.0%3.0%3.0%3.0%3.0%3.0%
QoQRevenueGrowth8.3%-4.2%-4.4%37.1%10.6%15.4%10.4%10.7%11.0%11.2%11.5%11.8%
GrossMargin28.1%26.0%22.4%13.3%21.9%32.4%38.8%43.0%47.0%41.0%50.8%53.8%56.8%59.8%48.1%
OperatingMargin-95.0%-105.5%-140.9%-130.9%-118.5%-85.4%-57.1%-43.4%-30.9%-51.7%-6.0%
R&D%ofRev29.2%30.0%45.0%20.9%30.4%25.2%24.0%23.0%22.0%23.4%21.0%20.0%19.0%18.0%19.4%
G&A%ofRev68.3%73.2%87.2%91.7%80.7%71.2%52.2%45.2%39.2%50.5%34.7%30.7%27.2%24.2%28.7%
S&M%ofRev25.5%28.3%31.1%31.5%29.2%21.4%19.7%18.2%16.7%18.8%15.2%13.7%12.5%13.5%13.6%

4. 4
REDCHIP RESEARCH NOTE
Additional Information
Legal: Lowenstein Sandler LLP
Auditor: McGladrey LLP
Transfer Agent: Continental Stock Transfer & Trust Co.
Company Website
Company Information

5. 5
REDCHIP RESEARCH NOTE
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Cancer Genetics, Inc. (CGIX) was a client of RedChip Companies, Inc. CGIX had previously agreed to pay RedChip Companies, Inc., a
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Company Contact Info:
Cancer Genetics, Inc.
201 Route 17 North, 2nd
Floor
Rutherford, NJ 07070
(201) 528-9200
www.cancergenetics.com
Investor Contact Info:
RedChip Companies, Inc.
1017 Maitland Center Commons Blvd.
Maitland, FL 32751
(407) 644-4256
www.redchip.com