FORT MYERS — Doug VanOort, chairman and CEO of NeoGenomics, had one word to describe the company’s second quarter results — “unacceptable.”
The Fort Myers-based company, which specializes in genetic testing for cancer, lost money and revenue grew less than expected.
“An important core value for NeoGenomics is accountability. Among other things, accountability means to us that we take responsibility for our results,” VanOort said during a conference call with analysts on Thursday.
He said the publicly-traded company strives to keep its promises and to do what it says it will do, but that didn’t happen in the last quarter.
“We missed our quarterly guidance and we’re obviously disappointed about that,” VanOort said.
Revenue for the quarter ending June 30 was $8.5 million, up 14 percent from $7.5 million in the same quarter a year ago.
The company lost $978,000 last quarter, or 3 cents a share. A year ago, it reported $8,000 in profits.
Originally, the company estimated quarterly revenues at $8.8 million to $9.92 million and expected to report a net loss of no more than 2 cents share. Based on Reuters estimates, analysts were looking for earnings of 1 cent a share on revenue of $9 million.
“While we are certainly disappointed with our revenue growth in the second quarter, we are very pleased and proud of our company’s quality and services, organizational health and most importantly our people,” VanOort said.
Operationally, he said, the company is in its strongest position ever and the future looks bright.
He said four factors are hurting the company’s growth: The sales team is not where it should be, the revenue per test has been on the decline, the company is still feeling the impact from a decision by one of its largest clients to internalize bladder cancer testing and orders for its new melanoma test are coming in slower than expected.
In the second quarter, test volume increased by 28 percent over a year ago. But the average revenue per test was down 11 percent from last year, due to changes in the types of tests ordered and reductions in insurance reimbursements.
The company is taking steps to address its challenges, including making changes in its leadership. It has recruited an “outstanding” sales and marketing executive, VanOort said, but his name isn’t being revealed yet. Until he’s hired, the sales team will report directly to VanOort.
The company has negotiated new contracts with Blue Cross/Blue Shield and Aetna that should help stabilize the average price of its tests and give it new opportunities for growth. It’s now an in-network provider for the two companies, which should increase sales, VanOort said.
More managed care companies are encouraging physicians not to use laboratories that are out of network because costs can be much higher. That has hurt NeoGenomics, VanOort said.
Market acceptance of the new melanoma test hasn’t been as quick as expected, said Bob Gasparini, the company’s president and chief scientific officer. He described it as “powerful,” saying it has already helped diagnose melanoma in kids as young as 14. For others, it has brought tears of joy that they don’t have cancer, but just a funny looking mole.
New marketing pieces are being introduced for the melanoma test and a scientific paper will soon be published, adding more credibility to it, Gasparini said. Although the sales force is not as productive as it should be, Steven Jones, the company’s chief financial officer, said the business model is “anything but broken” at NeoGenomics.
The company is working on another new cancer test, which it hopes to introduce soon.
“We remain truly excited about our company’s future,” VanOort said.
NeoGenomics has labs in Nasvhille, Tenn., Irvine, Calif., and Fort Myers. Its clients include pathologists, oncologists, urologists and hospitals.
Connect with Laura Layden at www.naplesnews.com/staff/laura_layden.