What NeoGenomics (NEO) Said on Its Q3 Earnings Call

Key Points

• Strong Q3 performance: NeoGenomics reported $209 million in revenue, up 11% year over year, while NGS revenue jumped 29%. Higher-value testing helped lift adjusted gross margin to 49% and adjusted EBITDA 53% to $18.7 million.
• 2026 guidance raised: The company increased full-year revenue guidance to $807 million–$809 million and adjusted EBITDA guidance to approximately $60 million, with NGS revenue expected to approach $250 million.
• Growth initiatives and leadership transition: NeoGenomics is expanding RaDaR ST reimbursement, investing in the NovaSeq X platform, and expects MRD growth to accelerate from 2027 onward. COO Warren Stone will become CEO on Jan. 4, 2027, with current CEO Tony Zook moving to executive chair.

NeoGenomics NASDAQ: NEO reported third-quarter revenue growth of 11% year over year, led by continued expansion in next-generation sequencing, or NGS, testing, while raising its full-year revenue and adjusted EBITDA guidance.

Total third-quarter revenue reached $209 million, above the company’s expectation for roughly 10% growth. Clinical revenue, which represented approximately 93% of total revenue, increased 13% to $195 million. The company said clinical growth reflected a 2% increase in test volumes and an 11% rise in average unit price, or AUP.

NGS revenue increased 29% from a year earlier, supported by 17% volume growth and more than 25% growth in large-panel NGS test volumes. Chief Executive Officer Tony Zook said the company’s shift toward higher-value testing is central to its strategy, noting that NGS currently represents about one-third of clinical revenue but only 10% of clinical volumes.

Margins Expand as Higher-Value Testing Gains Share

Adjusted gross margin was 49% in the third quarter, expanding by more than 300 basis points year over year. Adjusted gross profit rose 19% to $102 million, driven by higher AUP, a greater mix of NGS testing and laboratory efficiencies under the company’s Lab of the Future initiative.

Adjusted EBITDA increased 53% year over year to $18.7 million, or approximately $19 million. Chief Financial Officer Abhishek Jain said the result reflected operating performance as well as disciplined investment in sales, research and development, and laboratory infrastructure.

Sales and marketing expense rose 27% from the prior-year period as NeoGenomics continued building its commercial organization. Research and development spending increased 13%, while general and administrative expense declined 4% as the company shifted spending toward growth areas.

The company ended the quarter with $139 million in cash and cash equivalents, down $6 million from the previous quarter. Jain said cash flow reflected about $10 million in payments for a previously disclosed Department of Justice settlement, temporary effects associated with a revenue cycle management platform implementation, and infrastructure investments.

NeoGenomics spent more than $5 million during the quarter on sequencers and data servers associated with its planned transition to the NovaSeq X platform. The company expects to transition its hematology NGS portfolio, its largest NGS revenue component, to NovaSeq X in the first half of 2027. Jain said the financial benefits of that conversion are expected to begin appearing in the second half of 2027 and become more significant in 2028.

Guidance Raised for 2026

Based on its third-quarter performance, NeoGenomics raised its full-year revenue guidance to $807 million to $809 million, from its previous range of $802 million to $806 million. The midpoint implies annual revenue growth of about 11%.

• Clinical revenue is expected to grow in the low teens for the full year.
• NGS revenue is expected to rise more than 25%, approaching approximately $250 million in 2026.
• Non-clinical revenue is expected to decline by low double digits year over year.
• Adjusted gross margin is expected to improve by well over 150 basis points for the full year.
• Adjusted EBITDA guidance was raised to approximately $60 million, from a prior range of $56 million to $58 million.

The company expects fourth-quarter revenue growth of approximately 11% and fourth-quarter adjusted gross margin of about 48%.

NeoGenomics’ non-clinical business produced $15 million in quarterly revenue, down about 10% year over year. Zook said the company is reviewing lower-margin, commoditized contracts in its legacy pharma testing operation while remaining focused on higher-value pharma services and its Oncology Data Solutions business, which sells real-world evidence to pharmaceutical customers.

RaDaR ST Reimbursement and Portfolio Strategy

The company highlighted progress in its minimal residual disease, or MRD, testing franchise. In August, its RaDaR ST assay received MolDX coverage for immunotherapy treatment-response monitoring, marking its third Medicare-covered indication. NeoGenomics expects two more MolDX reimbursement decisions, with one potentially arriving by year-end and another by mid-2027.

President and Chief Operating Officer Warren Stone said more than 30% of RaDaR ST orders are accompanied by other NeoGenomics tests. About two-thirds of RaDaR ST orders are within covered indications, and roughly 20% are within covered indications for Medicare patients, according to Stone.

A regional commercial health plan also informed the company that it will cover RaDaR ST for all MolDX-reimbursed indications beginning Dec. 15. Stone said the company expects MRD revenue to take time to build, but believes expanding reimbursement and recent order trends could support increasing momentum in 2027 and more meaningful revenue contributions in 2028 and beyond.

NeoGenomics also updated its NEO Comprehensive Heme Panel during the quarter to include UBA1 and detect variants at allele fractions as low as 3%. Its next-generation whole-genome MRD assay remains on track for data generation next year and could launch clinically in 2029, Zook said.

Leadership Transition Set for January

Zook said the call would be his final earnings call as CEO. Effective Jan. 4, 2027, Stone will become CEO and join the company’s board, while Zook will become executive chair.

Zook said the transition followed succession planning and comes “from a position of strength.” Stone said he had been deeply involved in company decisions involving strategy and leadership during his nearly four years at NeoGenomics and described himself as one of the architects of the current strategy.

Stone said NeoGenomics’ priorities will remain durable NGS growth, broader RaDaR ST adoption, commercial expansion, operational efficiency and continued investment in product development. The company plans to hold an investor day in the first half of 2027.

About NeoGenomics (NASDAQ:NEO)

NeoGenomics, Inc NASDAQ: NEO is a cancer-focused diagnostics company that provides laboratory testing and related services to oncologists, hospitals, academic institutions, and biopharmaceutical companies. Its diagnostic offerings support the detection, classification, and monitoring of cancer and help inform treatment decisions.

The company's services include pathology, immunohistochemistry, flow cytometry, cytogenetics, molecular testing, and other specialized oncology assays. NeoGenomics also provides clinical trial and pharmaceutical services, including biomarker testing, central laboratory support, and companion diagnostic development for drug developers.

Founded in 1999, NeoGenomics has expanded through internal growth and acquisitions and operates a network of clinical laboratories serving customers primarily in the United States, with additional international capabilities.

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