1. 1
NASDAQ: NEO
Company Overview Presentation
May 2013
Time Matters. Results Count!
“Improving Patient Care
through exceptional cancer
genetic testing services!”
2. 22
Forward-looking Statements
This presentation contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act, as
amended; Section 21E of the Securities Exchange Act of 1934; and the
Private Securities Litigation Reform Act of 1995. The words “may”, “would”,
“could”, “will”, “expect”, “estimate”, “anticipate”, “believe”, “intend”, “plan”,
“goal”, and similar expressions and variations thereof are intended to
specifically identify forward-looking statements. All statements that are not
statements of historical fact are forward-looking statements.
Investors and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements as a result of
various factors. The risks that might cause such differences are identified
in our filings with the Securities and Exchange Commission. We undertake
no obligation to publicly update or revise the forward looking statements
made in this presentation to reflect events or circumstances after the date
of this presentation or to reflect the occurrence of unanticipated events.
3. 33
Investment Highlights
• Fast growing pure-play, cancer genetics lab
• Servicing: Oncologists, Pathologists and Hospitals
• “Tech-Only” model creates strategic client partnerships
• Rapidly growing industry undergoing consolidation
• Strong Management Team with large cap lab experience
• Industry leading revenue & test volume growth driven by
new test innovation and increasing sales force productivity
• Increasing productivity and operating leverage leading to
accelerating cash flow and net income
5. 55
Accelerating Cash Flow & Earnings
($, 000's) 2010 2011 2012
Total Revenue 34,371$ 43,484$ 59,867$
% Growth 16.6% 26.5% 37.7%
Total Gross Margin 15,783 19,428 26,836
Gross Margin % 45.9% 44.7% 44.8%
Sales & Marketing Exp as a % of Rev 21.8% 16.0% 12.5%
Gen & Admin Exp as a % of Rev 31.2% 28.4% 26.5%
R&D Exp as a % of Rev 1.5% 1.2% 3.8%
SG&A Expenses 18,746 19,837 25,624
Total SG&A as a % of Rev 54.5% 45.6% 42.8%
Adjusted EBITDA (566)$ 2,134$ 5,997$
% Growth NA 181.0%
Net Income/(Loss) (3,303)$ (1,177)$ 65$
Diluted EPS ($0.09) ($0.03) $0.00
Summary Operating Metrics
Avg. Revenue/Test 600$ 570$ 522$
% Change -7.1% -4.9% -8.4%
6. 66
• Molecular diagnostics transforming lab services
industry and fueling rapid growth
– Molecular diagnostics enable physicians to better
diagnose diseases and predict therapeutic efficacy
• Clinical Benefits: Effective treatment at an early stage
increases patient survival rates
• Healthcare Savings: a) forego spending on ineffective
therapies and b) effective intervention at an early stage
generally lowers overall treatment cost
– Need for companion diagnostics being driven by rising
drug costs and an increase in targeted therapeutics
• Xalkori® - Cost of ~$90,000 annually to treat non-small cell
lung cancer. 50 – 61% effective for the ~3% of the
population with certain genetic characteristics
• Diagnostic testing can significantly lower
healthcare costs and improve clinical outcomes
– Diagnostics represents only 2-3% of total healthcare
spend but influence approximately 70% - 80% of
physician decisions
• Cancer prevalence expected to increase as U.S.
population ages
– 77% of all cancers diagnosed are in people age 55 or
older, the fastest growing segment of the US
16%
17% 16%
18%
22%
25% 25% 26%
11%
13% 12% 13%
16%
19% 20% 20%
0%
5%
10%
15%
20%
25%
30%
1980 1990 2000 2010 2020 2030 2040 2050
PercentOfPopulation
Age 60 and older Age 65 and older
Current
U.S. Population Demographics
Boomer Impact on Cancer Market
Industry Dynamics
7. 77
U.S. Cancer Testing Market: $10-12 Billion
Hematopoietic
Cancers
Solid Tumor Cancers
Total Testing Market: $3 - 4 Billion $7 - 8 Billion
Est. Genetic Mkt. (TAM) ~$1 - 2 Billion ~$1 - 2 Billion
Patients in Treatment: 850,000 7.0 million
New Diagnoses/Yr.: 150,000 1.45 million
Specimen Types: Bone Marrow (350K/Yr)
Per. Blood (150K/Yr)
Lymph Nodes
Tiss. Biopsies (8-10MM)
Fine Needle Aspirates
Other Bodily Fluids
TAM % Neo Addresses: 90-100% 30-40%
Neo Revenue Split: ~80% ~20%
8. 88
Cancer Testing Market Characteristics
• Highest growth segment of lab Industry
- ~20% annual growth in genetics testing
- 8-10% annual growth in related AP testing
• Approx. 360 Genetic Labs in the U.S.
- 2/3 affiliated with academic institutions
- Approximately 20% perform 80% of testing
- Only 15-20 labs with national reach
• High pace of consolidation - Recent examples include:
Target Acquiror TV/LTM Rev
Caris Diagnostics Miraca 3.5x
Genoptix Novartis 1.7x
Clarient GE Healthcare Svcs 5.8x
Genzyme Genetics LabCorp 2.5x
9. 99
Business Model Targets
Pathologists and Hospital Path Groups
• Innovative technical component (TC) only services – Flow, FISH, IHC
• Enables community pathologists to compete with large labs
• Rapid turnaround-time and web-based reporting
• Extensive training programs
Oncologists and Clinician Groups
• Specialized high level of service and outstanding quality for clinicians
• Genetic Pathology Solutions™ (GPS) reporting – all relevant case
data on one page report
10. 1010
NeoGenomics’ Cancer Testing Services
Key Testing Modalities
Cytogenetics: chromosome analysis
- “Neighborhood view of 46 houses from 1000 feet”
Flow Cytometry & IHC: cell surface marker
analysis
- “Single house view from 500 feet”
Fluorescence in-situ Hybridization (FISH):
gene analysis - “Door and window view of one house”
Molecular testing: DNA/RNA analysis
-“View of serial number on door lock”
11. 1111
• Hired Dr. Maher Albitar as Chief Medical Officer (Jan 12)
• Entered into exclusive worldwide license to Health Discovery Corp’s IP
relating to pattern recognition technology, biomarker discovery, and gene
& protein-based tests for cancer LDTs (Jan 12)
- Targeted initial focus areas: prostate, pancreatic and colon cancer tests;
automating cytogenetics and flow cytometry analysis
• 10 Color flow cytometry (Q2 12)
• Increased IHC menu to 140 antibodies and 21 diagnostic panels (2012)
• 49 New Molecular Assays and NeoTYPE MolDx Panels (2012 - present)
• SVM-based test for ALK lung cancer FISH (Sep 12)
• NeoARRAY/SNP Cytogenetics Test (Nov 12)
• New Aperio Digital Imaging Platform (Q4 12)
• Barrett’s Esophagus FISH Test (Dec 12)
Recent Innovation
13. 1313
Accelerating Pace of Innovation
2011
4 molecular tests
3 FISH
FL – IHC menu
2012
10-color Flow Cytometry
Implemented State-of-the-art
MolDx platform in lieu of Kits
29 new Molecular tests
NeoTYPE MolDx Panels
Digital Image Analysis
SVM for ALK FISH
Barrett Esophagus FISH
NeoARRAY/SNP Cytogenetics
Internalized 99% of send-outs
2013 (Planned)
20-30 new Molecular tests
Add’l NeoTYPE Panels
Next Generation Sequencing
ROS1 FISH
NeoSITE Melanoma FISH
Plasma/Urine-based
Prostate Test
SVM-based Cytogenetics
Analysis System
SVM-based Automated FISH
Analysis System v2
15. 1515
Industry Dynamics
& Demographics
• Aging U.S. population and
prevalence of cancer
• Diagnostic testing reduces
healthcare costs and improves
clinical outcomes
• Emergence of molecular diagnostics
• Targeted therapeutics and
companion diagnostics
• Grow existing customer base
– Salesforce productivity
– Increase share of wallet
– Promote product education
• Attract New Customers
– Promote key advantages of
“tech-only” model to community-
based hospitals
– Partner with Clinician Offices
• Sustainable revenue growth opportunity
• Significant degree of operating leverage in
the business model
New Products &
Territories
Market Share Gains
• Continue to expand test menu
• Sublicensing of HDC products
– Cytogenetics/Flow systems
– International opportunities
• Proprietary test development
• Mergers & Acquisitions
Superior Financial Model
Key Growth Drivers
16. 1616
Management Team
• Douglas VanOort, Chairman & CEO
Operating Partner, Summer Street Capital Partners;
Chief Operating Officer, Quest Diagnostics
• Maher Albitar, M.D., Chief Medical Officer & Director of R&D
Med. Dir. for Hematopathology & Oncology and Chief of R&D, Quest Nichols Institute;
Director of Leukemia and Molecular Laboratory, MD Anderson Cancer Center
• Robert Gasparini, Director & Chief Scientific Officer
Director of Genetics, U.S. Labs; Worldwide Marketing Mgr., Ventana Medical Systems;
Asst. Director, Prenatal Diagnostic Center (Harvard)
• Steven Jones, Director, EVP – Finance, & Chief Compliance Officer
Chairman, Aspen Capital Group; Managing Member, Medical Venture Partners;
Vice President, Merrill Lynch Investment Banking
• George Cardoza, Chief Financial Officer
CFO, Protocol Global Solutions; Controller, Central Region, Quest Diagnostics
• Robert Horel, Vice President, Sales & Marketing
Regional Mgr., US Labs; Product Specialist, Ventana Medical Systems; Pilot, U.S. Navy
• Steven Ross, Chief Information Officer
Vice President Technology, Chico’s FAS, Inc.
17. 1717
Productivity Increases Have Offset Changes in
Average Revenue/Test to Keep Margins Stable
(1) Productivity calculated as the average number of lab tests completed per month per laboratory FTE.
(2) The Medicare Technical Component Grandfather expiration took effect on 7/1/12, which resulted in a 7.3% sequential decrease in Avg. Unit Price.
(2)
47.3% 48.4%
46.1%
44.7% 44.6% 43.9% 44.5% 44.8% 45.2%
47.1% 47.2%
41.5%
43.2% 46.3%
-20.5%
43.4%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Gross Margin % Cum Change in Avg Rev/Test Cum Change in Productivity(1)
18. 1818
Quarterly Financial Information
($, 000's) Q4 11 Q1 12 Q2 12 Q3 12 * Q4 12 * Q1 13 *
Total Revenue 12,893$ 15,160$ 15,611$ 14,202$ 14,893$ 15,657$
% Growth (YoY) 47.3% 72.2% 49.2% 25.5% 15.5% 3.3%
% Growth (QoQ) 13.9% 17.6% 3.0% -9.0% 4.9% 5.1%
Total Gross Margin 5,834 7,144 7,367 5,892 6,434 7,246
Gross Margin % 45.2% 47.1% 47.2% 41.5% 43.2% 46.3%
Sales & Marketing Exp 1,801 2,036 1,934 1,839 1,692 1,931
General & Administrative Exp 3,530 3,750 4,066 3,930 4,097 4,175
Research & Development Exp 127 497 528 808 448 835
Total SG&A (Incl R&D) Expenses 5,459 6,283 6,528 6,576 6,237 6,942
SG&A as a % of Rev 42.3% 41.4% 41.8% 46.3% 41.9% 44.3%
Net Income/(Loss) 152$ 603$ 551$ (975)$ (113)$ 3$
Diluted EPS $0.00 $0.01 $0.01 ($0.02) ($0.00) ($0.00)
Adjusted EBITDA 1,055$ 1,775$ 1,943$ 842$ 1,439$ 1,794$
Summary Operating Data
% Growth in Tests Performed (YoY) 57.2% 74.9% 57.1% 41.7% 35.3% 19.1%
Avg. Revenue/Test 572$ 563$ 541$ 502$ 488$ 488$
* Quarterly financials impacted by a reduction in revenue of $1.3 MM/Qtr as a result of the expiration of the Medicare TC Grandfather Clause.
19. 1919
Key Financial Information
Recent Share Price (5/3/13): $ 3.67
Common Shares Outstanding: 48.7 M
Current Market Cap: $178.7 M
Diluted Shares (MRQ, Pro Forma): 50.9 M
Fully Diluted Shares: 55.8 M
Non-affiliate Float Shares: 41.1 M
52 Week Low/High: $1.55/$4.20
Avg. Daily Trading Volume (3 Mos): 228,349
20. 2020
NeoGenomics Summary
• Emerging leader in the fastest growing segment of the
lab testing industry
• Robust competitive advantages and product portfolio
• Strong Management Team with directly relevant industry
experience
• Accelerating profitability propelled by revenue growth
and increased operating leverage
• Q2 2013 guidance: $15.8 - $16.4 million of revenue
with $0.00 – $0.01 per share of net income
• Fiscal 2013 guidance: $68 - $73 million of revenue with
$0.03 - $0.05 per share of net income
