NeoGenomics, Inc.

Welcome to the Neogenomics First Quarter 2023 Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. Please note this call is being recorded and an audio replay will be available on the company's website. Kendra Sweeney, Vice President of Investor Relations, you may begin your conference.

Thank you, Paul. Good afternoon, everyone, and welcome to the Neogenomics First Quarter Financial Results Call. With me today to discuss the results are Chris Smith, NEO's Chief Executive Officer, and Jeff Sherman, NEO's Financial Officer. Additional members of the management team are available for Q&A, including Vishal Sikri, President of Advanced Diagnostics, Warren Stone, President of Clinical Services, and Melody Harris, President of Enterprise Operations. This call is being simultaneously webcast. We will be referring to a slide presentation that has been posted to the Investors tab on our website at ir.neogenomics.com. Starting on slide two, during this call, we will make forward-looking statements regarding our anticipated future performance, such as our operational and financial outlooks and projections, our assumptions for that outlook, opportunities and strategies for our products, and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to our most recent Forms 10-K, 10-Q, and 8-K we filed with the SEC to identify important risks and other factors that may cause our actual results to differ materially from those contained in or suggested by the forward-looking statements. The forward-looking statements made during this call speak only of the original date of the call, and we undertake no obligation to update or revise any of these statements. In addition, during this call, in order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures that involve adjustments to GAAP results. The non-GAAP financial measures presented should not be considered an alternative to the financial measures required by GAAP, should not be considered measures of liquidity, and are unlikely to be comparable to non-GAAP financial measures provided by other companies. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measure in a table available in the press release we issued this afternoon. I will now turn the call over to Chris Smith, Chief Executive Officer of Neogenomics.

Thanks, Kendra, and welcome, everyone. Thanks for joining us this afternoon to go through our first quarter financial results. We're going to start on slide three. We like to begin every presentation we do, whether it's to our teammates or customers or investors, with our mission and vision statement because it's what motivates our company and teammates on a daily basis. Our mission is to save lives by improving patient care. Before we dive in, I do want to thank all of our teammates for everything they do every single day to make NEO such a great place to be and to transform so many patients' lives. Now let's move to slide four and get into the first quarter financial highlights. We started the year very strong as we continued the momentum from 2022 into 2023. First quarter revenue was $137 million, a 17% increase over the prior year. Clinical services revenue increased 16%, driven by strong volumes across our modalities, and an increase in revenue per test. Notably, the first quarter was our eighth consecutive quarterly increase versus prior year in revenue per test. In addition, NGS revenue growth continued to be strong. Pharma services revenue, which includes informatics, increased 22%, driven by improved growth in high margin modalities. Adjusted EBITDA improved 63%, and adjusted growth profit was $60 million, a 38.5% increase over the prior year. Moving to slide five, the first quarter continued momentum we have seen throughout the past four quarters. Historically, our business is seasonal, with the first quarter being a little softer than others. So this year-over-year accelerated growth is a testament to the strong execution by our NEO teammates and the growing demand for our products from our existing client base as well as new customers. We are pleased with the performance as some of our operating and revenue cycle initiatives are taking hold, and we believe we have the ability to continue to drive improvements in the business throughout the remainder of 2023 and beyond. Turning to slide six, in Neogenomics, we have approximately 2,200 teammates worldwide focused on developing innovative oncology diagnostic solutions. We have a significant share of oncology patient testing volume in the U.S. and one of the largest patient oncology databases. Our belief is that everything we do starts with our patients, and if we do the right things in this underserved and growing market, we are ultimately going to create long-term shareholder value. At our investor day last month, we laid out our strategic priorities for the next 18 to 24 months, which are probably grow our core business, accelerate advanced diagnostics, drive value creation, and enhance people and culture. We have a great team at Neogenomics and continue to enhance this team, and our strong mission-driven culture is critical to our long-term success. While much of this won't be visible to outside the organization, this work is key foundation to everything else we do operationally. For today's call, I'm going to focus on our other three priorities. In Q1, we made great progress in all three. As we move to slide seven, let me touch on a few highlights in each of the focus areas. Beginning with properly growing the core business, we continue to see strong growth in our clinical volumes across all modalities. NGS revenue growth continued to be strong, a result of our product offering and ongoing Salesforce expansion and optimization, which has allowed us to reach oncologists and pathologists more effectively, as well as creating strong growth in revenue per test. Additionally, we set a record in Q1 for the highest volume of test process per quarter in the history of neogenomics, a testament to our core business growth. For our second priority, accelerating advanced diagnostics, we repositioned our go-to-market approach with successful launch of radar MRD assay in four indications, breast, lung, head and neck, and colorectal. The radar assay has been available over the last year for use in clinical research studies and pharmaceutical collaboration. Now it's fully available to U.S. clinicians to detect small amounts of cancer fragments with up to 10 times greater sensitivity than other tests available on the market, which allows clinicians to identify cancer recurrence earlier. In the first quarter, we also expanded our NGS portfolio with three new tests, including neocomprehensive for solid tumors. We have completed our mold DX submission for radar in breast cancer and are on track for submitting two additional indications by year end. In addition, we have completed the build out of our pharma and informatics sales force teams, which positions us well for continued growth. And our third priority, driving value creation, is well underway. We have prioritized an increase in productivity and efficiency, and we're beginning to see results here as well. Even with a significant increase in testing volumes, we have continued to improve turnaround times by 17% in the first quarter. thereby delivering results to patients and clinicians even sooner. Additionally, we have generated significant operating leverage as a large percentage of revenue favorability fell through to the bottom line. Overall, it was a fantastic quarter. Now I'd like to turn the call over to Jeff to review our substantial results in more detail. Thanks, Chris. Good afternoon, everyone.