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NASDAQ: NEO
Company Overview Presentation
August 2013
Time Matters. Results Count!
“Improving Patient Care
through exceptional cancer
genetic testing services!”
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.
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
44
Consistent Historical Growth
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
Annual Revenue ($, 000’s)
0
20,000
40,000
60,000
80,000
100,000
120,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
Tests Performed (000’s)
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%
66
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.
77
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”
88
Business Model Targets
Pathologists and Hospital Pathology Groups (71% of Q2 Revenue)
• 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 (24% of Q2 Revenue)
• Includes Oncologists, Dermatologist, Urologists
• Specialized high level of service and outstanding quality for clinicians
• Genetic Pathology Solutions™ (GPS) reporting – all relevant case data on one page
report
• Increasing Opportunity to service larger practices with Tech-only model
Other (5% of Revenue)
• Contract research/clinical trial support work for Pharma clients
• Reference laboratories
99
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
• Capitalize on new healthcare
paradigm
• Attract New Customers
– Promote key advantages of
“tech-only” model
– Partner with Clinician Offices
• Grow existing customer base
– Sales force productivity
– Increase share of wallet
– Promote product education
– Capitalize on competitor turmoil
• Sustainable revenue growth opportunity
• Significant degree of operating leverage in
the business model
New Products &
Solutions
Market Share Gains
• Continue to expand test menu
• Sublicensing of HDC products
– Cytogenetics/Flow/IHC systems
– Prostate/colon/pancreatic Cx Tests
– International opportunities
• Proprietary test development
• Disruptive technology for select solid
tumor cancers
• Seek new R&D partnerships
Superior Financial Model
NeoGenomics Formula for Success
1010
• 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
1111
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% 50-60%
Neo Revenue Split: ~80% ~20%
1212
Cancer Testing Market Characteristics
• Highest growth segment of lab Industry
- ~20% annual growth in genetics testing
- ~8% 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
1313
NV
OR
WA
MT
MN
NE
SD
ND
ID
WY
OK
KS
COUT
TX
NM
SC
FL
GAALMS
LA
AR
MO
IA
VA
NC
IN
KY
IL
MI
WI
PA
WV
VT
ME
RI
NH
AZ
OH
DE
MD
NY
CA
NJ
CT
MI
MA
Irvine, CA
18k sf
Nashville, TN
7k sf
Ft. Myers, FL
45k sf
States sending specimens since Jan 2012
Tampa, FL
5k sf
A Growing Commercial & Facility Footprint
1414
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
30 new Molecular Assays
Proprietary method for increasing
sensitivity of Sanger sequencing
7 NeoTYPE MolDx Panels
New Aperio Digital Image Analysis
SVM for ALK FISH (Patent App)
Barrett’s Esoph. FISH (Patent App)
NeoARRAY/SNP Cytogenetics
Internalized 99% of send-outs
2013 (In Progress)
25-35 new Molecular tests
Add’l NeoTYPE Panels
Next Generation
Sequencing (48 genes)
ROS1 FISH
NeoSITE Melanoma FISH
Plasma/Urine-based
Prostate Test (Patent App)
SVM-based Cytogenetics
Analysis System
SVM-based Automated
FISH Analysis System v2
Accelerating Pace of Innovation
1515
Solid Tumor Assays* Hematopoietic Assays*
New Assays Launched in 2012/2013
Molecular Assays:
1. IDH1 & IDH2 Mutation Analysis
2. c-KIT Mutation Analysis
3. PIK3CA Mutation Analysis
4. NRAS Mutation Analysis
5. TP53 Mutation Analysis
6. NeoARRAY SNP/Cytogenetic Profile
7. KRAS Mutation Analysis
8. BRAF Mutation Analysis
9. EGFR Mutation Analysis
10. Microsatellite Instability Analysis
11. NeoTYPE Breast Profile
12. NeoTYPE Colorectal Profile
13. NeoTYPE Gastric Profile
14. NeoTYPE Lung Profile
15. NeoTYPE Solid Tumor (Other) Profile
16. TPMT Genotyping
17. UGT1A1 Genotyping
18. Kit/PDGFRa Mutation Analysis
19. HRAS Mutation Analysis
20. PTEN Mutation Analysis
21. HOXB13 Genotyping
FISH/ISH Assays:
1. ISH – Kappa ISH
2. ISH – Lambda ISH
3. NeoSITE Barrett’s Esophagus FISH
4. ROS1 FISH
5. NeoSITE Melanoma FISH
6. 1p/19q Deletion FISH Test
Molecular Assays:
1. BCR-ABL1 Translocation, t(9;22)
2. ABL1 Kinase Domain Mutation Anal
3. IgVH Mutation Analysis
4. FLT3 Mutation Analysis
5. NPM1 Mutation Analysis
6. JAK2 V617F Mutation Analysis
7. JAK2 Exon 12-14 Mutation Anal
8. BCL2 Translocation, t(14;18)
9. BCL1 Translocation, t(11;14)
10. MPL Mutation Analysis
11. MPN Reflex Panel
12. DNMT3A Mutation Analysis
13. RUNX1-RUNX1T1 (AML1-ETO)
Translocation, t(8;21)
14. SF3B1 Mutation Analysis
15. B-Cell Gene Rearrangement
16. T-Cell Gene Rearrangement
17. CBFB/MYH11 Translocation, inv(16)
18. PML-RARA Translocation, t(15;17)
19. CEBPA Mutation Analysis
20. WT1 Mutation Analysis
21. NeoTYPE CLL Prognostic Profile
22. NeoTYPE AML Prognostic Profile
23. ETV6-RUNX1 (TEL-AML1)
Translocation, t(12;21)
24. CARD11 Mutation Analysis
25. CD79B Mutation Analysis
26. MYD88 Mutation Analysis
27. RUNX1 Mutation Analysis
31. NOTCH1 Mutation Analysis
32. EZH2 Mutation Analysis
33. Chimerism/DNA Fingerprinting
Analysis
34. TET2 Mutation Analysis
35. CBL Mutation Analysis
36. ASXL1 Mutation Analysis
37. PTPN11 Mutation Analysis
38. CSF3R Mutation Analysis
39. PTPN11 Mutation Analysis
40. STAT3 Mutation Analysis
41. ETV6 Mutation Analysis
42. NeoTYPE Lymphoma Profile
43. NeoTYPE MDS/CMML Profile
44. NeoTYPE Spliceosome Profile
FISH/ISH Assays:
1. NHL FISH Panel (Revised)
2. MYC/IgH t(8;14)
3. CLL FISH Panel (Revised)
4. MDS FISH Panel (Revised)
5. MPN FISH Panel (Revised)
6. AML FISH Panel (Revised)
7. Eosinophilia FISH Panel
8. IGH/MAFB FISH
9. PTEN FISH
BOLD = Multi-assay tests customizable
to meet client needs (assays may also be
ordered individually).
* Certain assays may be useful in both solid
tumor and hematopoietic cancers. Each
assay listed in area of primary use.
1616
• Additional Sales Representatives
• Lab Collaboration Initiatives (LCI’s) with large Oncology groups
- Recent addition of 3 Oncology Business Development Mgrs
• New Aperio Image Analysis Platform (just starting full scale roll-out)
• Further penetration of Solid Tumor Market (IHC, etc.)
• Continued outsize growth in molecular assays and panels
• Accelerating growth in 10 color flow cytometry
• Significant traction in clinical trials support work
• Next generation sequencing
• NeoSCORE Prostate Cancer Test
• Other proprietary tests
• M&A Opportunities
Key Growth Drivers Over the Next 3 Years
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 expiration of the Medicare Technical Component (TC) Grandfather Clause took effect on 7/1/12 and resulted in an ~11% YoY Reduction in Avg Rev/Test.
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% 45.9%
-21.8%
41.6%
-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
Q213
Gross Margin % Cum Change in Avg Rev/Test(2) Cum Change in Productivity(1)
1818
Operating Cost per Test & Adj. EBITDA Margin
Cost Management & Operating Leverage Have
Resulted In a 33% Reduction in Total Costs Per Test
$723
$642 $642
$671
$649
$618
$576 $565
$555 $531
$512 $526 $482 $478
$478
-12%
-1%
-2%
-5%
0%
-1%
5% 6%
8%
12%
12%
6% 10%
11%
12%
-15%
-10%
-5%
0%
5%
10%
15%
$0
$100
$200
$300
$400
$500
$600
$700
$800
Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213
Cogs Cost/Test G&A Net of R&D Cost/Test S&M Cost/Test
R&D Cost/Test Total Cost/Test Adj EBITDA Margin %
1919
Quarterly Financial Information
($, 000's) Q2 12 Q3 12 * Q4 12 * Q1 13 * Q2 13 *
Total Revenue 15,611$ 14,202$ 14,893$ 15,657$ 15,603$
% Growth (YoY) 49.2% 25.5% 15.5% 3.3% -0.1%
Total Gross Margin 7,367 5,892 6,434 7,246 7,157
Gross Margin % 47.2% 41.5% 43.2% 46.3% 45.9%
Sales & Marketing Exp 1,934 1,839 1,692 1,931 1,971
General & Administrative Exp 4,066 3,930 4,097 4,175 4,064
Research & Development Exp 528 808 448 835 616
Total SG&A (Incl R&D) Expenses 6,528 6,576 6,237 6,942 6,651
SG&A as a % of Rev 41.8% 46.3% 41.9% 44.3% 42.6%
Net Income/(Loss) 551$ (975)$ (113)$ 3$ 273$
Diluted EPS $0.01 ($0.02) ($0.00) $0.00 $0.01
Adjusted EBITDA 1,943$ 842$ 1,439$ 1,794$ 1,825$
Summary Operating Data
% Growth in Tests Performed (YoY) 57.1% 41.7% 35.3% 19.1% 12.7%
Avg. Revenue/Test 541$ 502$ 488$ 488$ 480$
Avg. COGS/Test 286$ 293$ 277$ 262$ 260$
* Quarterly financials impacted by a reduction in revenue of $1.3 MM/Qtr as a result of the expiration of the TC Grandfather Clause.
2020
Key Financial Information
Recent Share Price (8/1/13): $ 2.84
Common Shares Outstanding: 48.8 M
Current Market Cap: $138.2 M
Diluted Shares (MRQ, Pro Forma): 53.7 M
Fully Diluted Shares: 55.8 M
Non-affiliate Float Shares: 41.1 M
52 Week Low/High: $1.91/$4.20
Avg. Daily Trading Volume (3 Mos): 301,256
2121
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
• Q3 2013 guidance: $15.8 - $16.4 million of revenue
with $0.00 – $0.01 per share of net income
• Fiscal 2013 guidance: $63 - $66 million of revenue with
$0.01 - $0.04 per share of net income

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NGNM Company Overview Presentation Aug 2013

  • 1. 1 NASDAQ: NEO Company Overview Presentation August 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
  • 4. 44 Consistent Historical Growth $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 Annual Revenue ($, 000’s) 0 20,000 40,000 60,000 80,000 100,000 120,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 Tests Performed (000’s)
  • 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 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.
  • 7. 77 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”
  • 8. 88 Business Model Targets Pathologists and Hospital Pathology Groups (71% of Q2 Revenue) • 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 (24% of Q2 Revenue) • Includes Oncologists, Dermatologist, Urologists • Specialized high level of service and outstanding quality for clinicians • Genetic Pathology Solutions™ (GPS) reporting – all relevant case data on one page report • Increasing Opportunity to service larger practices with Tech-only model Other (5% of Revenue) • Contract research/clinical trial support work for Pharma clients • Reference laboratories
  • 9. 99 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 • Capitalize on new healthcare paradigm • Attract New Customers – Promote key advantages of “tech-only” model – Partner with Clinician Offices • Grow existing customer base – Sales force productivity – Increase share of wallet – Promote product education – Capitalize on competitor turmoil • Sustainable revenue growth opportunity • Significant degree of operating leverage in the business model New Products & Solutions Market Share Gains • Continue to expand test menu • Sublicensing of HDC products – Cytogenetics/Flow/IHC systems – Prostate/colon/pancreatic Cx Tests – International opportunities • Proprietary test development • Disruptive technology for select solid tumor cancers • Seek new R&D partnerships Superior Financial Model NeoGenomics Formula for Success
  • 10. 1010 • 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
  • 11. 1111 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% 50-60% Neo Revenue Split: ~80% ~20%
  • 12. 1212 Cancer Testing Market Characteristics • Highest growth segment of lab Industry - ~20% annual growth in genetics testing - ~8% 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
  • 13. 1313 NV OR WA MT MN NE SD ND ID WY OK KS COUT TX NM SC FL GAALMS LA AR MO IA VA NC IN KY IL MI WI PA WV VT ME RI NH AZ OH DE MD NY CA NJ CT MI MA Irvine, CA 18k sf Nashville, TN 7k sf Ft. Myers, FL 45k sf States sending specimens since Jan 2012 Tampa, FL 5k sf A Growing Commercial & Facility Footprint
  • 14. 1414 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 30 new Molecular Assays Proprietary method for increasing sensitivity of Sanger sequencing 7 NeoTYPE MolDx Panels New Aperio Digital Image Analysis SVM for ALK FISH (Patent App) Barrett’s Esoph. FISH (Patent App) NeoARRAY/SNP Cytogenetics Internalized 99% of send-outs 2013 (In Progress) 25-35 new Molecular tests Add’l NeoTYPE Panels Next Generation Sequencing (48 genes) ROS1 FISH NeoSITE Melanoma FISH Plasma/Urine-based Prostate Test (Patent App) SVM-based Cytogenetics Analysis System SVM-based Automated FISH Analysis System v2 Accelerating Pace of Innovation
  • 15. 1515 Solid Tumor Assays* Hematopoietic Assays* New Assays Launched in 2012/2013 Molecular Assays: 1. IDH1 & IDH2 Mutation Analysis 2. c-KIT Mutation Analysis 3. PIK3CA Mutation Analysis 4. NRAS Mutation Analysis 5. TP53 Mutation Analysis 6. NeoARRAY SNP/Cytogenetic Profile 7. KRAS Mutation Analysis 8. BRAF Mutation Analysis 9. EGFR Mutation Analysis 10. Microsatellite Instability Analysis 11. NeoTYPE Breast Profile 12. NeoTYPE Colorectal Profile 13. NeoTYPE Gastric Profile 14. NeoTYPE Lung Profile 15. NeoTYPE Solid Tumor (Other) Profile 16. TPMT Genotyping 17. UGT1A1 Genotyping 18. Kit/PDGFRa Mutation Analysis 19. HRAS Mutation Analysis 20. PTEN Mutation Analysis 21. HOXB13 Genotyping FISH/ISH Assays: 1. ISH – Kappa ISH 2. ISH – Lambda ISH 3. NeoSITE Barrett’s Esophagus FISH 4. ROS1 FISH 5. NeoSITE Melanoma FISH 6. 1p/19q Deletion FISH Test Molecular Assays: 1. BCR-ABL1 Translocation, t(9;22) 2. ABL1 Kinase Domain Mutation Anal 3. IgVH Mutation Analysis 4. FLT3 Mutation Analysis 5. NPM1 Mutation Analysis 6. JAK2 V617F Mutation Analysis 7. JAK2 Exon 12-14 Mutation Anal 8. BCL2 Translocation, t(14;18) 9. BCL1 Translocation, t(11;14) 10. MPL Mutation Analysis 11. MPN Reflex Panel 12. DNMT3A Mutation Analysis 13. RUNX1-RUNX1T1 (AML1-ETO) Translocation, t(8;21) 14. SF3B1 Mutation Analysis 15. B-Cell Gene Rearrangement 16. T-Cell Gene Rearrangement 17. CBFB/MYH11 Translocation, inv(16) 18. PML-RARA Translocation, t(15;17) 19. CEBPA Mutation Analysis 20. WT1 Mutation Analysis 21. NeoTYPE CLL Prognostic Profile 22. NeoTYPE AML Prognostic Profile 23. ETV6-RUNX1 (TEL-AML1) Translocation, t(12;21) 24. CARD11 Mutation Analysis 25. CD79B Mutation Analysis 26. MYD88 Mutation Analysis 27. RUNX1 Mutation Analysis 31. NOTCH1 Mutation Analysis 32. EZH2 Mutation Analysis 33. Chimerism/DNA Fingerprinting Analysis 34. TET2 Mutation Analysis 35. CBL Mutation Analysis 36. ASXL1 Mutation Analysis 37. PTPN11 Mutation Analysis 38. CSF3R Mutation Analysis 39. PTPN11 Mutation Analysis 40. STAT3 Mutation Analysis 41. ETV6 Mutation Analysis 42. NeoTYPE Lymphoma Profile 43. NeoTYPE MDS/CMML Profile 44. NeoTYPE Spliceosome Profile FISH/ISH Assays: 1. NHL FISH Panel (Revised) 2. MYC/IgH t(8;14) 3. CLL FISH Panel (Revised) 4. MDS FISH Panel (Revised) 5. MPN FISH Panel (Revised) 6. AML FISH Panel (Revised) 7. Eosinophilia FISH Panel 8. IGH/MAFB FISH 9. PTEN FISH BOLD = Multi-assay tests customizable to meet client needs (assays may also be ordered individually). * Certain assays may be useful in both solid tumor and hematopoietic cancers. Each assay listed in area of primary use.
  • 16. 1616 • Additional Sales Representatives • Lab Collaboration Initiatives (LCI’s) with large Oncology groups - Recent addition of 3 Oncology Business Development Mgrs • New Aperio Image Analysis Platform (just starting full scale roll-out) • Further penetration of Solid Tumor Market (IHC, etc.) • Continued outsize growth in molecular assays and panels • Accelerating growth in 10 color flow cytometry • Significant traction in clinical trials support work • Next generation sequencing • NeoSCORE Prostate Cancer Test • Other proprietary tests • M&A Opportunities Key Growth Drivers Over the Next 3 Years
  • 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 expiration of the Medicare Technical Component (TC) Grandfather Clause took effect on 7/1/12 and resulted in an ~11% YoY Reduction in Avg Rev/Test. 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% 45.9% -21.8% 41.6% -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 Q213 Gross Margin % Cum Change in Avg Rev/Test(2) Cum Change in Productivity(1)
  • 18. 1818 Operating Cost per Test & Adj. EBITDA Margin Cost Management & Operating Leverage Have Resulted In a 33% Reduction in Total Costs Per Test $723 $642 $642 $671 $649 $618 $576 $565 $555 $531 $512 $526 $482 $478 $478 -12% -1% -2% -5% 0% -1% 5% 6% 8% 12% 12% 6% 10% 11% 12% -15% -10% -5% 0% 5% 10% 15% $0 $100 $200 $300 $400 $500 $600 $700 $800 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Cogs Cost/Test G&A Net of R&D Cost/Test S&M Cost/Test R&D Cost/Test Total Cost/Test Adj EBITDA Margin %
  • 19. 1919 Quarterly Financial Information ($, 000's) Q2 12 Q3 12 * Q4 12 * Q1 13 * Q2 13 * Total Revenue 15,611$ 14,202$ 14,893$ 15,657$ 15,603$ % Growth (YoY) 49.2% 25.5% 15.5% 3.3% -0.1% Total Gross Margin 7,367 5,892 6,434 7,246 7,157 Gross Margin % 47.2% 41.5% 43.2% 46.3% 45.9% Sales & Marketing Exp 1,934 1,839 1,692 1,931 1,971 General & Administrative Exp 4,066 3,930 4,097 4,175 4,064 Research & Development Exp 528 808 448 835 616 Total SG&A (Incl R&D) Expenses 6,528 6,576 6,237 6,942 6,651 SG&A as a % of Rev 41.8% 46.3% 41.9% 44.3% 42.6% Net Income/(Loss) 551$ (975)$ (113)$ 3$ 273$ Diluted EPS $0.01 ($0.02) ($0.00) $0.00 $0.01 Adjusted EBITDA 1,943$ 842$ 1,439$ 1,794$ 1,825$ Summary Operating Data % Growth in Tests Performed (YoY) 57.1% 41.7% 35.3% 19.1% 12.7% Avg. Revenue/Test 541$ 502$ 488$ 488$ 480$ Avg. COGS/Test 286$ 293$ 277$ 262$ 260$ * Quarterly financials impacted by a reduction in revenue of $1.3 MM/Qtr as a result of the expiration of the TC Grandfather Clause.
  • 20. 2020 Key Financial Information Recent Share Price (8/1/13): $ 2.84 Common Shares Outstanding: 48.8 M Current Market Cap: $138.2 M Diluted Shares (MRQ, Pro Forma): 53.7 M Fully Diluted Shares: 55.8 M Non-affiliate Float Shares: 41.1 M 52 Week Low/High: $1.91/$4.20 Avg. Daily Trading Volume (3 Mos): 301,256
  • 21. 2121 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 • Q3 2013 guidance: $15.8 - $16.4 million of revenue with $0.00 – $0.01 per share of net income • Fiscal 2013 guidance: $63 - $66 million of revenue with $0.01 - $0.04 per share of net income