NeoGenomics, Inc.

Good morning, and welcome to the Neogenomics Second Quarter 2025 Financial Results Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I will now turn the call over to Kendra Webster, Vice President of Investor Relations.

Thank you, Tom, and good morning, everyone. Welcome to the Neogenomics Second Quarter 2025 Financial Results Call. With me today to discuss the results are Tony Zuck, Chief Executive Officer, and Jeff Sherman, Chief Financial Officer. Additional members of the management team will be available for the Q&A portion of our call. This call is being simultaneously webcast, and we will be referring to the slide presentation that has been posted to the Investors tab on our website at ir.neogenomics.com. During this call, we will make forward-looking statements regarding our future performance, business strategy, and financial guidance. We caution you that the actual events or results could differ materially from those expressed or implied by the forward-looking statements. These forward-looking statements made during the call speak only as of the original date of this call, and we undertake no obligation to update or revise any of these statements. Please refer to the information disclosed under the heading Risk Factors in our most recent Forms 10-K, 10-Q, and 8-K that we filed with the SEC to identify important risks and other factors that may cause our actual results to differ from the forward-looking statements. These documents can be found in the Investors section of our website or on the SEC's website. During this call, 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 measures in a table available in the press release we issued this morning and available in the investor section of our website. I will now turn the call over to Tony.

Thanks, Kendra. Good morning, everyone, and I thank you for joining us today. I'm pleased to lead this call, having now completed my first quarter as CEO. Since becoming CEO in April, I've engaged with the business, including sales, operations, and R&D, and reexamined our strategic initiatives and financial targets from a more in-depth perspective than I could as a director. I've also met existing and potential partners at various industry conferences, and had conversations with many of our shareholders to better understand their perspectives. These conversations reinforced the significant opportunities to drive value for our customers, patients, and shareholders. Cancer testing continues to be a large and attractive market. Most of our business today is in diagnostic testing, though recently we have accelerated our offerings in therapy selection with the launch of several NGS products. In addition, Our radar 1.1 technology and R&D work and next generation MRD enable us to participate in a market that's under-penetrated and rapidly growing. I acknowledge that our delivery this quarter was below expectations. While I remain extremely optimistic about the future of NeoGenomics, our team and I are doubling down on our efforts to focus the business on execution excellence as we build upon our disciplined financial and operational foundation. But before we talk about our plans moving forward, Let's spend time on the quarter. We had a solid second quarter in the core clinical business, posting significant volume in share gains in key segments. However, our non-clinical revenue was below expectations. Revenue for Q2 was $181 million, slightly below our second quarter guidance range, though still representing double-digit growth of 10% year over year. Our clinical business continues to expand with organic growth of 13%. Strength in our clinical business was offset by continued weakness in our non-clinical revenue, driven by lower revenue from pharma and biotech customers. In the second quarter, we saw a sequential improvement in AUP, a record quarter for test volumes, and NGS growth at 23%, slightly below our 25% target, but well ahead of the low to mid-teens NGS market growth rate. We can continue to capture market share in clinical revenue, But we made a conscious decision to leverage the learnings from our Pantracer Liquid Biopsy, EAP, to establish an even stronger product profile for launch. This meant we delayed our launch, which resulted in lower revenue and a lower than targeted NGS growth rate. I'm excited to confirm that Pantracer Liquid Biopsy will launch commercially tomorrow and believe that our approach to bringing this product to market will positively impact patients treated in the community and our NGS growth rate later this year. We're projecting lower-than-planned revenue from pharma customers for the remainder of the year, as well as a negative impact to revenue associated with lower-than-planned volumes for Pantracer Liquid Biopsy and NGS Mix. As a result, we've updated our 2025 Financial Guide, which Jeff will provide more insight on in a moment. I am confident that NIO can continue to achieve double-digit annual growth, fill product gaps through organic and inorganic activities, and capture additional market share. The leadership team and I have drilled down to align our cost structure with revenues, reestablish our consistent execution, and rebuild credibility with our shareholders. Investments we are making in operating efficiencies this year, including the LIMS project and digital pathology, position us well to achieve more operating leverage in the back half of this year. I think it's important to spend some time discussing our Q2 results and how we intend to accelerate growth and drive value. The pharma macro environment conditions contributed to the revenue shortfall in the quarter versus our expectations. Specifically, market uncertainty surrounding NIH funding, drug pricing, patient enrollment in clinical trials, and potential tariffs are leading directly to investment volatility and creating significant headwinds for both our pharmaceutical and biotech clients. This is resulting in budget restrictions, reprioritization, and consolidation of assets, and postponed or canceled projects specific to our pharma services line that are more pronounced than we've experienced over the last two years. As we've shared in past quarters, Radar 1.0 was a growth driver for pharma revenue and also provided a call point to sell other testing modalities. As a result of the negotiated settlement, these Radar 1.0 contracts are no longer producing pharma revenue in 2025. We are adding additional testing capabilities in our portfolio to make our menu more attractive to our pharma and biotech customers, such as Pelletra, our AI-powered spatial proteomics platform, which launched in June. While we have updated our pharma go-to market strategy and made key changes in leadership, it is taking longer than anticipated to yield results. So how do we plan to respond to these challenges? Our strategic drivers are focused on three areas, the customer experience, the community channel, and new products. Optimizing and winning the customer experience continues to be our competitive strength. We've earned a market leadership position in Heem through our heavy investments in community hospitals, and we continue to invest in the community oncology setting. To win the customer experience, we focus on investments in our Salesforce effectiveness and efficiency, bidirectional interfaces and ordering portals, as well as automation and digital pathology in the lab. Last quarter, we announced our plans for Epic Integrations, which we believe will begin to impact our revenue in late 2025. We're also continuing our multi-year process of integrating our multiple limbs into one single limbs, which will allow us to sunset eight legacy systems. We believe this will give us operational efficiency, enable us to further improve our turnaround times, and further enhance our data assets to fuel more robust growth in our oncology data solutions business. In terms of enhancing our community channel strength, we leverage our business development capabilities to establish effective, compelling partnerships, like the one with Adaptive, around delivering industry-leading heme MRD tests to our customers, which we have started to bring to market through a controlled pilot earlier this month. Our pipeline of future opportunities continues to grow as we capitalize on the recognized strength and the unique brand recognition of our channel in the community space, coupled with our sales effectiveness. A key growth driver for clinical and pharma is focusing our R&D and business development efforts on new, next-generation, precision-guided products. We believe MRD and therapy selection MGS provide the biggest market opportunities and represent the largest associated unmet need. The $30 billion MRD market specifically represents significant unmet clinical needs, particularly in low-shedding cancers. MRD has the potential to transform cancer care by enabling earlier detection of recurrence, more precise treatment decisions, and better outcomes for patients. This also makes MRD highly relevant to biopharma partners to advance targeted therapies. We intend to make further progress here and evolve our product portfolio to be more comprehensive across the cancer care continuum. Simultaneously, We will continue building on our deep relationships with the community hospital pathologists and growing relationships with community oncologists, providing us with an even wider competitive moat and reinforcing our responsibility to inform treatment decisions with actionable insights. As I mentioned at the outset of this call, I've met with many of our shareholders to better understand their perspectives. They challenged us to rethink our confidence levels and to be transparent in our guidance. incorporating the risks and uncertainties inherent in our industry and our business. We take this feedback seriously, and I want our shareholders to know they have been heard. Revising our 2025 guidance reflects the headwinds I've discussed, while at the same time acknowledging the efforts we've implemented to best position the company for the future. I'm confident we can achieve these forecasts, and if we execute on our action plan, I'm just as confident that there is additional upside we can capture as well. We intend to prove that one quarter at a time. As a member of the board of directors, I approve the update to the long range plan we communicated earlier this year. As CEO, one of my primary objectives has been to oversee the execution of the strategy behind the plan and proactively identify opportunities to improve upon it. Here's how I think about our long range plan. It's just that, long range. While the plan covers the company's execution of certain key metrics during the next five years, this does not guarantee that the plan is going to correlate exactly to our guidance for the coming year, and there will be variability from year to year. My confidence in the long-range plan is based on three key assumptions. First, we believe that the core business, which now includes Pathline, will continue to grow at a 10% plus rate, even with the headwinds affecting our farmer revenue. Second, Our business development activities will add incremental revenue that materializes gradually with significant growth in the out years, but the timing will be lumpy depending on deal terms and structures. Finally, as we increase our investments in R&D and launch Pantrazer liquid biopsy and future products like NextGen MRD, we expect to generate incremental revenue through consistent improvement in NGS mix and growth. Beyond that, to the extent the pharma headwinds subside, there is upside. As we progress into the back half of 2025, we will continue to monitor the impact of the recently passed federal budget bill, changes in the pharma landscape, and the success of our liquid biopsy launch. Consistent with our historical practice, we will release our 2026 guidance when we report our 2025 full-year earnings in February of 2026. Going forward, like many in our industry, we will not be providing external updates on our progress against the long-range plan. and will instead focus on our near-term guidance targets. Based on my experience these last four months, I'm more optimistic than ever about NEO's future. And with that, I'll hand it over to Jeff to further discuss our results from the quarter.