As an essential business with an essential service, Fort Myers-based NeoGenomics reports that it continues to operate "without interruption or delay."
That's reflected in its first-quarter results.
Unlike many businesses in Southwest Florida that have been forced to close or curb operations due to the coronavirus pandemic that has swept across the globe, the clinical laboratory is still seeing strong revenue growth.
Revenue grew 11% to $106 million in the quarter, when compared to a year ago.
The company — specializing in genetic testing for cancer — saw revenue increases in both its clinical and pharmaceutical divisions.
That doesn't mean, however, that the coronavirus hasn't impacted the business.
Previous reporting: Fort Myers-based NeoGenomics grows again with $37 million acquisition
While all of the company's main laboratories have remained open throughout the crisis and it has been able to continue offering all of its testing services with "excellent quality and turn-around time," clinical test volume has been lighter than expected and some clinical trials have been delayed due to the spread of COVID-19, said Douglas VanOort, chairman and CEO of NeoGenomics, in an earnings conference call Tuesday.
The company estimates the pandemic reduced its first quarter revenue by about $4 million, with the virus resulting in at least a 4% decline in clinical testing volume.
Revenue in the pharmaceutical services division rose more than 39% over the year to $13 million, despite the disruptions caused by COVID-19.
On top of that, the pharmaceutical team signed new contracts worth $28 million in the quarter and the value of the backlog of signed contracts increased 47% over the year to $148 million.
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Losses widen
Due to several factors, however, including the negative impacts from the coronavirus, the company's losses for the quarter widened to $7 million, or 7 cents a share. That compared to a loss of $2.4 million, or 3 cents a share, a year ago.
Excluding one-time items, the company reported a loss of 2 cents a share in the first quarter, compared to earnings of 7 cents a share a year ago.
The quarterly results missed Wall Street's expectations on earnings. On average, analysts anticipated earnings of 2 cents a share on revenue of $104.58 million after adjustments.
Shares fell as a result, closing at $27.97, down by $2.31, or more than 7.6%.
NeoGenomics handles cancer testing for pathologists, clinicians, oncologists and hospitals throughout the country. It has labs in multiple states, including Tennessee, Texas and Florida, as well as abroad. One of its labs is at its headquarters in Fort Myers.
The company's newer pharmaceutical division offers biopharmaceutical and clinical trial services, which drug companies and others are increasingly seeking out for the development of new cancer treatments and therapies.
While NeoGenomics may not be immune to the economic impacts of the coronavirus, it's resilient and still well-positioned for long-term growth, VanOort said.
"We had positive momentum going into this crisis, with both revenue and volume tracking at or above expectations prior to the onset of the virus," he said. "We strongly believe that we will come out of this crisis with positive momentum as well."
When its safer for cancer patients to seek treatment and oncologists and hospitals to resume more normal schedules, VanOort said he fully expects test volumes and growth rates to "gradually return to normal levels."
Springing into action
In the conference call, VanOort detailed how the company has responded to the pandemic, saying "our guiding principle has been first to secure the safety and well-being of our employees" for the benefit of employees and patients, who as a result of those actions can still have access to critical oncology testing.
"Our response was also influenced by our desire to emerge from this crisis in a relatively superior competitive position," VanOort said. "As a result, rather than implementing layoffs or furloughs, we focused on short-term actions to invest in our workforce, strengthen our culture and focus on the initiatives and strategies designed to strengthen our long-term competitiveness."
The company is providing more training and development opportunities to its workers, as well as giving small cash bonuses to its employees working on the front lines in its laboratories.
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Early on, the company took actions to put spacing and distance between its people, restricted visitors to its labs and employee travel, and implemented an emergency paid-time-off policy for employees personally affected by the virus.
"We realize that some may question our decision to retain employees during this temporary volume slowdown," VanOoort said. "And we are also well aware it will have a short-term impact on earnings. However, we believe this is an investment worth making."
Retaining and training its employees in these difficult times, he said, will help NeoGenomics keep its "strong company culture for years to come."
Like many other businesses around the country, NeoGenomics has sent many of its employees home to work.
"We have had well over two-thirds of our employees working productively from home," he said.
The company has also managed its supply chain carefully to ensure it will continue to have the inventory it needs to offer testing uninterrupted.
"In certain cases, we added months of supply to our inventory levels," VanOort said.
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Keeping an eye on costs
The company will continue to closely monitor and contain its costs, but its new $50 million state-of-the-art world headquarters, west of I-75 near Alico Road," is still moving full-steam ahead, he said.
"While we are continuing construction of our new Fort Myers laboratory and headquarters facility, we are substantially scaling back or postponing plans for changes and upgrades to all other facilities. We are not hiring unless it's strategically important. We are continuing to invest in automation, as that will allow us to continue our long-term improvement in cost per test," VanOort said.
In the first quarter, average revenue per clinical test increased slightly by 1% to $371.
Although NeoGenomics is and will continue to be focused on cancer testing and trials, it's now offering testing for COVID-19 through its laboratories.
Within a week, VanOort said the company will be able to perform 5,000 PCR tests per day. PCR (polymerase chain reaction) tests, which involve putting a swab up the nose far back into the throat, and blood-based antibody tests are the most common ways to test for the virus.
"If there is demand, we can quickly ramp that up significantly higher," he said.
The company has also invested in instruments and other equipment that will allow it to offer the antibody tests soon.
"At this point it is too early to estimate the financial impact from the COVID-19 test offering," VanOort said. "We do know that testing is critical to help people safely get back to work. A number of organizations reached out to us for help and we're doing this because we feel it's the right thing to do."
Looking ahead, he said, the company intends to be "prudently aggressive."
"We will continue to make growth investments, particularly in next generation sequencing, pharma services, informatics and companion diagnostics," VanOort said.
Next generation sequencing remains an "area of particular focus," with expectations of delivering several new products in this area in 2020.
"Liquid biopsy is one area of particular interest for us," VanOort said. "Although the market is still relatively small, we expect it to grow quickly."
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