10q10k10q10k.net

What changed in NEOGENOMICS INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of NEOGENOMICS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+351 added−366 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-20)

Top changes in NEOGENOMICS INC's 2024 10-K

351 paragraphs added · 366 removed · 264 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

85 edited+25 added−33 removed106 unchanged
Biggest changeSimilar laws have been proposed or passed at the U.S. federal and state level, including the Virginia Consumer Data Protection Act, which took effect on January 1, 2023, the Colorado Consumer Protection Act, which took effect on July 1, 2023, the Connecticut Data Privacy Act, which took effect on July 1, 2023, and the Utah Consumer Privacy Act, which took effect on December 31, 2023.
Biggest changeSimilar laws continued to be proposed or passed at the U.S. federal and state level, including the Texas Data Privacy and Security Act, which took effect on July 1, 2024, the Oregon Consumer Privacy Act, which took effect on July 1, 2024, the Montana Consumer Data Privacy Act, which took effect on October 1, 2024, the Delaware Personal Data Privacy Act, which took effect on January 1, 2025, the Iowa Consumer Data Protection Act, which took effect on January 1, 2025, the Nebraska Data Privacy Act, which took effect on January 1, 2025, the New Hampshire Privacy Act, which took effect on January 1, 2025 and the New Jersey Data Privacy Act, which took effect on January 15, 2025.
The properties measured in these antibodies include the relative size, relative granularity or internal complexity, and relative fluorescence intensity. These fluorescent antibodies bind to specific cellular antigens and are used to identify abnormal and/or malignant cell populations. Flow cytometry is typically utilized in diagnosing a wide variety of hematopoietic and lymphoid neoplasms.
The properties measured include the relative size, relative granularity or internal complexity, and relative fluorescence intensity. These fluorescent antibodies bind to specific cellular antigens and are used to identify abnormal and/or malignant cell populations. Flow cytometry is typically utilized in diagnosing a wide variety of hematopoietic and lymphoid neoplasms.
Suppliers We order our laboratory and research supplies from large national laboratory supply companies. While we do not depend on a concentrated, limited number of suppliers, we do rely on certain suppliers for specific reagents or other equipment, including sequencers.
We order our laboratory and research supplies from large national laboratory supply companies. While we do not depend on a concentrated, limited number of suppliers, we do rely on certain suppliers for specific reagents or other equipment, including sequencers.
Dependence on Major Clients We market our services to pathologists, oncologists, other clinicians, hospitals, pharmaceutical companies, academic centers and other clinical laboratories throughout the United States and the United Kingdom. Our client base consists of a large number of geographically dispersed clients diversified across various customer types.
Dependence on Major Clients We market our services to pathologists, oncologists, other clinicians, hospitals, pharmaceutical companies, academic centers and other clinical laboratories throughout the United States and the United Kingdom. Our client base consists of a large number of geographically dispersed clients diversified across various client types.
World-Class Medical and Scientific Team Individuals comprising our medical and scientific team are specialists in the field of genetics, oncology and pathology. As of December 31, 2023, we employed or contracted with approximately 170 MDs and PhDs. We have many nationally and world-renowned pathologists on staff, which is a key differentiator from many smaller laboratories.
World-Class Medical and Scientific Team Individuals comprising our medical and scientific team are specialists in the field of genetics, oncology and pathology. As of December 31, 2024, we employed or contracted with approximately 170 MDs and PhDs. We have many nationally and world-renowned pathologists on staff, which is a key differentiator from smaller laboratories.
Although the Company’s business is conducted primarily in the United States, we do receive some samples for clinical testing from countries outside of the United States, have employee data from European Union and the United Kingdom and we collect data of individuals internationally as part of the Company’s Advanced Diagnostics business, which obligates us to comply with these laws.
Although the Company’s business is conducted primarily in the United States, we do receive some samples for clinical testing from countries outside of the United States, have employee data from European Union and the United Kingdom and we collect data of individuals internationally as part of the business, which obligates us to comply with these laws.
We also face increased competition from laboratories that are more specialized and focused on particular areas such as liquid biopsies or large tissue based molecular panels such as Guardant Health, Inc., Natera, Inc., Exact Sciences Corp, Caris Life Science, Tempus Labs, Inc. and Myriad Genetics, Inc.
We also face increased competition from laboratories that are more specialized and focused on particular areas such as liquid biopsies or large tissue based molecular panels such as Guardant Health, Inc., Natera, Inc., Exact Sciences Corp, Caris Life Science, Tempus AI, Inc. and Myriad Genetics, Inc.
For our Clinical Services segment, the genetic and molecular testing niche of the laboratory testing industry is highly competitive and, given the opportunities in this industry, we expect it to become even more competitive.
For our specialized clinical services, the genetic and molecular testing niche of the laboratory testing industry is highly competitive and, given the opportunities in this industry, we expect it to become even more competitive.
Our sales team for the Clinical Services segment is organized into nine regions in the United States – Northeast, Northwest, Mid-Atlantic, South, Southeast, North Central, West, Great Lakes, and South Central. Our sales team will be focused on value-based care solutions and end-to-end client experience as a growth driver.
Our clinical services sales team is organized into nine regions in the United States – Northeast, Northwest, Mid-Atlantic, South, Southeast, North Central, West, Great Lakes, and South Central. Our sales team is focused on value-based care solutions and end-to-end client experience as a growth driver.
For the years ended December 31, 2023, 2022 and 2021, no single client accounted for more than 10% of revenue.
For the years ended December 31, 2024, 2023 and 2022, no single client accounted for more than 10% of revenue.
As of December 31, 2023, the Company operated College of American Pathologists (“CAP”) accredited and Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified laboratories in Fort Myers, Florida; Aliso Viejo and San Diego, California; Research Triangle Park, North Carolina; and Houston, Texas; and a CAP accredited full-service, sample-processing laboratory in Cambridge, United Kingdom.
As of December 31, 2024, the Company operated College of American Pathologists (“CAP”) accredited and Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified laboratories in Fort Myers, Florida; Aliso Viejo and Carlsbad, California; Research Triangle Park, North Carolina; and Houston, Texas; and a CAP accredited full-service, sample-processing laboratory in Cambridge, United Kingdom.
We offer a comprehensive suite of technical and professional interpretation services to meet the needs of clients who are not credentialed and/or trained in interpreting various testing modalities and who require NeoGenomics' pathology specialists to interpret their testing results.
Comprehensive Oncology-Focused Test Menu We offer a comprehensive suite of technical and professional interpretation services to meet the needs of clients who are not credentialed and/or trained in interpreting various testing modalities and who require NeoGenomics' pathology specialists to interpret their testing results.
Additionally, private individuals may have a right of action against the Company for violations of a state’s privacy laws. We believe that we are in material compliance with current state laws regarding the confidentiality of health information, and we will continue to monitor and comply with new or changing state laws.
Additionally, private individuals may have a right of action against the Company for violations of a state’s privacy laws. We believe that we are in material compliance with current state laws regarding the confidentiality of health information, and we will continue to monitor and comply with new or changing state laws. 16 Table of Contents NEOGENOMICS, INC.
In addition, the volume of our testing tends to decline due to extreme adverse weather conditions, such as excessively hot or cold spells, heavy snow, hurricanes or tornadoes in certain regions, consequently reducing revenues and cash flows in any affected period.
In addition, the volume of our testing tends to decline due to extreme adverse weather conditions, such as excessively 9 Table of Contents NEOGENOMICS, INC. hot or cold spells, heavy snow, hurricanes or tornadoes in certain regions, consequently reducing revenues and cash flows in any affected period.
While we do not believe a short-term disruption from any one of these suppliers would have a material effect on our business, it could result in short-term impact on our turnaround time or gross margin depending on the nature or extent of the disruption.
While we do not believe a short-term disruption from any one of these suppliers would have a material effect on our business, it could result in short-term impact on our turnaround time or gross margin depending on the nature or extent of the disruption. 10 Table of Contents NEOGENOMICS, INC.
In addition, although we believe that we will be able to continue to obtain adequate insurance coverage, we cannot assure that we will be able to do so at an acceptable cost. Human Capital Management As of December 31, 2023, we had approximately 2,100 full-time equivalent employees and contracted pathologists.
In addition, although we believe that we will be able to continue to obtain adequate insurance coverage, we cannot assure that we will be able to do so at an acceptable cost. Human Capital Management As of December 31, 2024, we had approximately 2,200 full-time equivalent employees including contracted pathologists.
It is possible that changes to FDA’s regulatory approach, whether triggered by legislation or not, may result in increased regulatory burdens and costs for us to seek marketing authorization for and maintain ongoing compliance for our existing tests, any modifications thereto, or any future tests we may develop.
It is possible that changes to FDA’s regulatory approach, whether triggered by legislation, the change in presidential administration, or otherwise, may result in increased regulatory burdens and costs for us to seek marketing authorization for and maintain ongoing compliance for our existing tests, any modifications thereto, or any future tests we may develop.
Our employees are committed to providing accurate, reliable, and consistent services. Any concerns regarding the quality of testing or services provided by the Company are quickly communicated to our Company management. We also frequently revise and improve our tests, and we work with laboratory equipment vendors to help ensure that our laboratory has the highest possible quality.
Any concerns regarding the quality of testing or services provided by the Company are quickly communicated to our Company management. We also frequently revise and improve our tests, and we work with laboratory equipment vendors to help ensure that our laboratory has the highest possible quality.
Given our participation in Medicare and Medicaid, we are subject to Medicare and Medicaid regulations related to billing those programs as well as agency subregulatory guidance regarding the same, the federal Stark Law, federal and state anti-kickback statutes, and the federal FCA and state equivalents.
Given our participation in Medicare and Medicaid, we are subject to Medicare and Medicaid regulations related to billing those programs as well as agency subregulatory guidance regarding the same, the federal Stark Law, federal and state anti-kickback statutes, and the federal FCA and state equivalents. 15 Table of Contents NEOGENOMICS, INC.
We continuingly strive to promote a workplace in which people of diverse race, ethnicity, veteran status, marital status, socioeconomic level, national origin, religious belief, physical ability, sexual orientation, age, class, political ideology, gender identity and expression participate in, contribute to, and benefit equally.
We continuously strive to promote a workplace in which people of diverse race, 11 Table of Contents NEOGENOMICS, INC. ethnicity, veteran status, marital status, socioeconomic level, national origin, religious belief, physical ability, sexual orientation, age, class, political ideology, gender identity and expression participate in, contribute to, and benefit equally.
We cannot be certain as to which of our tests, if any, would require FDA approval or clearance under any of the proposed frameworks and, if required, that our tests could obtain such approval or clearance.
We cannot be certain as to which of our tests, if any, would require FDA approval or clearance under the current regulatory framework and, if required, that our tests could obtain such approval or clearance.
We are also subject to international laws and regulations, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act, relating to corrupt and illegal payments to, and contracting practices with regard to, government officials 14 Table of Contents NEOGENOMICS, INC. and others.
We are also subject to international laws and regulations, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act, relating to corrupt and illegal payments to, and contracting practices with regard to, government officials and others.
In our Advanced Diagnostics segment, we enter into both short-term and long-term contracts, ranging from one month to several years. While the volume of this testing is not as directly affected by seasonality as described above, the testing volume does vary based on the terms of the contract.
For our pharmaceutical development services, we enter into both short-term and long-term contracts, ranging from one month to several years. While the volume of this testing is not as directly affected by seasonality as described above, the testing volume does vary based on the terms of the contract.
Our competitors for our Clinical Services segment in the United States are numerous and include major national medical testing laboratories, hospital laboratories and in-house physician laboratories. Some of our competitors have greater financial resources and production capabilities than us.
Our diagnostic service competitors in the United States are numerous and include major national medical testing laboratories, hospital laboratories and in-house physician laboratories. Some of our competitors have greater financial resources and production capabilities than us.
Turnaround times allow for the performance of other adjunctive tests within an acceptable diagnosis window in order to augment or confirm results and more fully inform treatment options. Additionally, we believe that our rapid turnaround time on testing and our project milestones are a key factor in our Advanced Diagnostics segment.
Turnaround times allow for the performance of other adjunctive tests within an acceptable diagnosis window in order to augment or confirm results and more fully inform treatment options. Additionally, we believe that our rapid turnaround time on testing and our project milestones are key factors in our pharmaceutical development services.
The Office of Inspector General of the Department of Health and Human Services (“OIG”) has published compliance program guidance, including a General Compliance Program Guidance issued in November 2023 and applicable to all health care companies and stakeholders, a specific Compliance Program Guidance for Clinical Laboratories issued in August of 1998 (which the OIG plans to update in the coming years), fraud alerts, and advisory opinions.
The Office of Inspector General of the Department of Health and Human Services (“OIG”) has published compliance program guidance, including a General Compliance Program Guidance issued in November 2023 that is applicable to all health care companies and stakeholders, a specific Compliance Program Guidance for Clinical Laboratories issued in August of 1998 (which the OIG anticipates updating in 2025), fraud alerts, and advisory opinions.
Consequently, we are unable to ascertain with certainty 15 Table of Contents NEOGENOMICS, INC. that our arrangements and transactions will not be subject to scrutiny and, if scrutinized, will not result in sanctions or penalties.
Consequently, we are unable to ascertain with certainty that our arrangements and transactions will not be subject to scrutiny and, if scrutinized, will not result in sanctions or penalties.
ITEM 1. BUSINESS NeoGenomics, Inc., a Nevada corporation (referred to individually as the “Parent Company” or collectively with its subsidiaries as “NeoGenomics”, “we”, “us”, “our”, or the “Company” in this Annual Report on Form 10-K) is the registrant for SEC reporting purposes. Our common stock is listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “NEO”.
ITEM 1. BUSINESS NeoGenomics, Inc., a Nevada corporation (referred to individually as the “Company” or collectively with its subsidiaries as “NeoGenomics,” “we,” “us,” or “our,” in this Annual Report on Form 10-K) is the registrant for SEC reporting purposes. Our common stock is listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “NEO”.
Insurance We maintain professional liability and numerous other insurance policies. We believe that our present insurance is sufficient to cover currently estimated exposures, but we cannot assure that we will not incur liabilities in excess of the policy coverage limits.
We believe that our present insurance is sufficient to cover currently estimated exposures, but we cannot assure that we will not incur liabilities in excess of the policy coverage limits.
Our vision is to become the world’s leader in cancer testing, information, and decision support by providing uncompromising quality, exceptional service, and innovative solutions.
Our mission is to save lives by improving patient care. Our vision is to become the world’s leader in cancer testing, information, and decision support by providing uncompromising quality, exceptional service, and innovative solutions.
In certain circumstances, we act as a business associate under HIPAA and could be subject to such enforcement if we were to fail to comply with HIPAA as a business associate. 16 Table of Contents NEOGENOMICS, INC.
In certain circumstances, we act as a business associate under HIPAA and could be subject to such enforcement if we were to fail to comply with HIPAA as a business associate.
We also enter into invention disclosure and assignment agreements with our employees and consultants that obligate them to assign to us any inventions they have developed while working for us. 2024 Focus Areas: We are committed to sustainable growth while transforming cancer care for patients and providers.
We also enter into invention disclosure and assignment agreements with our employees and consultants that obligate them to assign to us any inventions they have developed while working for us. 2025 Focus Areas: We are committed to sustainable growth while transforming cancer care for patients and providers and enabling the delivering of precision oncology into the community care setting.
Our extensive experience in anatomic pathology continues to result in our winning clinical trials business as sponsors trust our medical team and want them to closely oversee their trials. We believe our service focus and our molecular and IHC platforms, as well as our exclusive MultiOmyx TM platform will continue to lead to rapid growth in this segment.
Our extensive experience in anatomic pathology continues to result in our winning clinical trials business as sponsors trust our medical team and want them to closely oversee their trials. We believe our service focus and our molecular and IHC platforms, as well as our exclusive MultiOmyx TM platform will position NeoGenomics well to be successful in this sector.
Compliance with licensure, accreditation, and quality standards are verified through periodic inspections by agents of relevant regulatory agencies and accrediting organizations, and we believe we are in material compliance with all licensure, accreditation, and quality requirements.
Compliance with licensure, accreditation, and quality standards are verified through periodic inspections by agents of relevant regulatory agencies and accrediting organizations, and we believe we are in material compliance with all licensure, accreditation, and quality requirements. Compliance and Ethics Program 12 Table of Contents NEOGENOMICS, INC.
Our Advanced Diagnostics segment has a dedicated team of business development specialists who are experienced in working with sponsors and helping them with the testing needs of their research and development projects as well as Phase I, II and III studies.
For our pharmaceutical development services, we have a dedicated team of business development specialists who are experienced in working with sponsors and helping them with the testing needs of their research and development projects as well as Phase I, II and III studies.
Under CLIA, the Centers for Medicare & Medicaid Services (“CMS”) establish various operational, personnel, facilities, administration, quality, and proficiency requirements for testing performed by a laboratory, intended to ensure testing services are accurate, valid, and timely.
All of our domestic laboratories are certified in accordance with the CLIA. Under CLIA, the Centers for Medicare & Medicaid Services (“CMS”) establish various operational, personnel, facilities, administration, quality, and proficiency requirements for testing performed by a laboratory, intended to ensure testing services are accurate, valid, and timely.
Many clinical reference laboratories have also entered the space in support of clinical trials and the related laboratory testing. These reference laboratories are often willing to compete with lower pricing for smaller, more limited studies. We believe our strong scientific and medical team is a key differentiator where NeoGenomics is used as an advisor to the sponsors on their trials.
These reference laboratories are often willing to compete with lower pricing for smaller, more limited studies. We believe our strong scientific and medical team is a key differentiator where NeoGenomics is used as an advisor to the sponsors on their trials.
Overview NeoGenomics provides a wide range of oncology diagnostic testing and consultative services which includes technical laboratory services and professional interpretation of laboratory test results by licensed physicians who specialize in pathology and oncology. We operate a network of cancer-focused testing laboratories in the United States and the United Kingdom. Our mission is to save lives by improving patient care.
Overview NeoGenomics provides a wide range of oncology diagnostic testing and consultative services which includes technical laboratory services and professional interpretation of laboratory test results by licensed physicians or molecular experts who specialize in pathology and oncology. We operate a network of cancer-focused testing laboratories in the United States and the United Kingdom.
Compliance and Ethics Program The health care industry is highly regulated and scrutinized with respect to fraud, abusive billing practices, and improper financial relationships between health care companies and their referral sources.
The health care industry is highly regulated and scrutinized, including with respect to fraud, waste, abuse, unauthorized billing practices, and improper financial relationships between health care companies and their referral sources.
This comprehensive molecular test menu allows our clients to obtain most of their molecular oncology testing needs satisfied by our laboratory. This is attractive to our clients as patient samples do not need to be split and then managed across several laboratories. The acquisition of Inivata in June of 2021 provided us with oncology liquid biopsy technology capabilities.
This comprehensive molecular test menu allows our clients to obtain most of their molecular oncology testing needs satisfied by our laboratory. This is attractive to our clients as patient samples do not need to be split and then managed across several laboratories.
By providing information to our clients in a timely manner, physicians can begin treating their patients as soon as possible. Timeliness of results by our Clinical Services segment is a driver of additional testing requests by referring physicians.
Turnaround Times We consistently focus on improving turnaround times for test results to our clients nationwide. By providing information to our clients in a timely manner, physicians can begin treating their patients as soon as possible. Timeliness of results from our clinical services is a driver of additional testing requests by referring physicians.
These factors have driven significant growth in the market for this type of testing. Additionally, there is an increased focus on developing tests for monitoring purposes, including MRD and recurrence detection in cancer survivors, which could also broaden the use of certain tests and influence the market for cancer testing.
These factors have driven significant growth in the market for this type of testing. Additionally, there is a growing emphasis on developing tests for monitoring purposes, including MRD and recurrence detection in cancer survivors, which could expand the use of specific tests and impact the cancer testing market.
In 2023, our Clinical Services segment accounted for 84% of consolidated revenue and our Advanced Diagnostics segment accounted for 16% of consolidated revenue. Please refer to Note 17. Segment Information, to our Consolidated Financial Statements included in this Annual Report for further financial information about these segments.
Financial Impact In 2024, the combined segment accounted for 100% of our consolidated revenue, with Clinical Services previously contributing 84% and Advanced Diagnostics contributing 16% in 2023. For further financial information, please refer to Note 16. Segment Information, in our Consolidated Financial Statements included in this Annual Report.
We believe several key factors are influencing the rapid growth in the market for cancer testing: (i) every year, more and more genes and genomic pathways are implicated in the development and/or clinical course of cancer; (ii) the incidence rates of cancer are rising, notably in younger populations, and more than one in three citizens is likely to develop some form of cancer in their lifetime; (iii) increasingly, new drugs are being targeted to certain cancer subtypes and pathways which require companion diagnostic testing; (iv) patient and payer awareness of the value of genetic and molecular testing; (v) decreases in the cost of performing genetic and molecular testing; (vi) increased coverage from third party payers and Medicare for such testing; and (vii) the health insurance coverage to uninsured Americans under the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act, each enacted in March 2010.
We believe that several key factors are influencing the rapid growth of the cancer testing market: (i) each year, an increasing number of genes and genomic pathways are implicated in the development and clinical course of cancer, and cancer incidence rates are rising, with one in two men and one in three women likely to develop some form of cancer in their lifetime; (ii) new drugs are increasingly being targeted to specific cancer subtypes and pathways, necessitating companion diagnostic testing; (iii) heightened awareness among patients and payers regarding the value of molecular testing; (iv) reductions in the cost of molecular testing; (v) expanded coverage from third-party payers and Medicare for such testing; and (vi) health insurance coverage for uninsured Americans under the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act, both enacted in March 2010.
Community-based pathology practices and hospital pathology labs may order certain testing services on a technical component only (“TC” or “tech-only”) basis, which allows them to participate in the diagnostic process by performing the professional component (“PC”) interpretation services without having to hire laboratory technologists or purchase the sophisticated equipment needed to perform the technical component of the tests.
Community-based pathology practices and hospital pathology labs may order certain testing services on a TC basis, allowing them to participate in the diagnostic process by performing the PC interpretation services without having to hire laboratory technologists or purchase sophisticated equipment needed for the TC testing.
Our Molecular and NGS Clinical Services segment test menus provide clients with the ability to order single gene molecular tests, targeted NeoTYPE panels that include the relevant actionable genes for a particular cancer type, as well as comprehensive NGS panels. Our Advanced Diagnostics segment offers a full range of sequencing testing including whole exome and whole genome sequencing.
Our Molecular and NGS test menus provide clients with the ability to order single gene molecular tests, targeted NeoTYPE and Neo Comprehensive panels that include the relevant actionable genes for a particular cancer type, as well as comprehensive NGS panels.
Human capital management, including the recruitment and retention of a talented, diverse and highly motivated workforce, is an essential component of our strategy for long-term value creation. We value our teammates and focus on driving employee engagement through internal programs, external outreach, and other internal collaborative initiatives.
World-Class Culture We promote a world-class culture through employee engagement, training and development, wellness, work-life balance, and communication initiatives. Human capital management, including the recruitment and retention of a talented, diverse and highly motivated workforce, is an essential component of our strategy for long-term value creation.
Personalized or precision medicine better allows clinicians to know if a patient will or will not respond to certain cancer medications such as Herceptin®, Keytruda®, PIQRAY®, and Opdivo®, among many others.
Personalized or precision medicine enables clinicians to determine if a patient will respond to specific 7 Table of Contents NEOGENOMICS, INC. cancer medications such as Herceptin®, Keytruda®, PIQRAY®, and Opdivo®, among others.
Ethnicity is also strongly represented: 44.6% of our workforce and 25.0% of our independent Board of Directors are ethnically diverse. We believe that a diverse and inclusive workforce, where all perspectives are recognized and respected, positively impacts our performance and strengthens our culture.
We believe that a diverse and inclusive workforce, where all perspectives are recognized and respected, positively impacts our performance and strengthens our culture.
Anatomic Pathology testing involves evaluation of tissue, as in surgical pathology, or cells as in cytopathology. The most widely performed Anatomic Pathology procedures include the preparation and interpretation of pap smears, skin biopsies, and tissue biopsies. 7 Table of Contents NEOGENOMICS, INC. Genetic and molecular testing typically involves analyzing chromosomes, genes, proteins, and/or DNA/RNA sequences for abnormalities.
Diagnostic testing involves evaluating tissue, such as in surgical pathology, or cells, such as in cytopathology. The most widely performed Anatomic Pathology procedures include pap smears, skin biopsies, and tissue biopsies allowing providers to understand the origin of the cancer. Therapy Selection involves analyzing genes, proteins, and/or DNA/RNA sequences for abnormalities.
Because of the broad definitions of applicability of these laws, international clients or vendors working for government-owned entities are often considered to be governmental officials. The Company has implemented a program to comply with these laws and educates employees and its relevant vendors regularly on the requirements for vendor onboarding and conducting appropriate business interactions globally.
The Company has implemented a program to comply with these laws and educates employees and its relevant vendors regularly on the requirements for vendor onboarding and conducting appropriate business interactions globally. 14 Table of Contents NEOGENOMICS, INC.
On September 29, 2023, the FDA published a proposed rule on LDTs in which the FDA proposes to end its historical policy of enforcement discretion for virtually all LDTs in five stages over a four-year period from the date FDA publishes a final rule.
On September 29, 2023, the FDA published a proposed rule on LDTs in which the FDA proposes to end its historical policy of enforcement discretion for virtually all LDTs in five stages over a four-year period from the date FDA publishes a final rule.On April 29, 2024, the FDA announced a final rule on the regulation of Laboratory Developed Tests (“LDTs”) which amends the FDA's regulations to make explicit that LDT's are devices under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”).
Competitive Strengths In addition to the competitive strengths discussed below, we believe that our superior testing technologies and instrumentation, laboratory information system, client education programs and domestic and international presence also differentiate NeoGenomics from its competitors. Turnaround Times We consistently focus on improving turnaround times for test results to our clients nationwide in the Clinical Services segment.
Enhance Our People and Culture • Enhance our Neo Culture; and • Expand scientific, medical and product capabilities. Competitive Strengths In addition to the competitive strengths discussed below, we believe that our superior testing technologies and instrumentation, laboratory information systems, client education programs and domestic and international presence also differentiate NeoGenomics from its competitors.
Clinical Services Segment Our Clinical Services revenue consists of the following four revenue streams: • Clinical cancer testing; • Interpretation and consultative services; • Molecular and NGS testing; and • Comprehensive technical and professional services offering.
The revenue streams include: • Clinical cancer testing; • Interpretation and consultative services; • Molecular and NGS testing; • Comprehensive technical and professional services offering; • Clinical trials and research; • Validation laboratory services; and • Oncology data solutions.
In the latter setting, the expert pathologists at NeoGenomics assist our client pathologists on their most difficult and complex cases.
In the latter setting, the expert pathologists at NeoGenomics assist our client pathologists on their most difficult and complex cases. Reportable Segments In 2024, we simplified our operational approach, bringing Clinical Services and Advanced Diagnostics under a single segment.
National Direct Sales Force 9 Table of Contents NEOGENOMICS, INC. Our direct sales force has been trained extensively in cancer genetic testing and consultative selling skills to service the needs of clients.
Additionally, we offer a full range of sequencing testing including whole exome and whole genome sequencing as part of our pharmaceutical development services. National Direct Sales Force Our direct sales force has been trained extensively in cancer genetic testing and consultative selling skills to service the needs of clients.
We also support our pathology clients with interpretation and consultative services using our own specialized team of pathologists for difficult or complex cases and we provide overflow interpretation services when requested by clients. In addition, we directly serve oncology, dermatology and other clinician practices that prefer to have a direct relationship with a laboratory for cancer-related genetic testing services.
We also support our pathology clients with interpretation and consultative services using our own specialized team of pathologists for difficult or complex cases, as well as provide overflow interpretation services when requested.
The Company has a Quality Management System, and we strive to conduct our business in a manner that meets applicable regulatory and accreditation requirements and industry standards. The quality of care provided to clients and their patients is of paramount importance to us. We maintain quality control processes, including standard operating procedures, controls, performance measurement and reporting mechanisms.
The quality of care provided to clients and their patients is of paramount importance to us. We maintain quality control processes, including standard operating procedures, controls, performance measurement and reporting mechanisms. Our employees are committed to providing accurate, reliable, and consistent services.
Genetic and molecular testing requires highly specialized equipment and credentialed individuals (typically MD or PhD level) to certify results and typically yields the highest reimbursement levels of the three market segments. NeoGenomics operates primarily in the Genetic and Molecular testing market and the Anatomic Pathology market.
Therapy selection (molecular) testing requires highly specialized equipment and credentialed individuals (typically MD or PhD level) to certify results. It usually yields the highest reimbursement levels of the three market segments. Minimal Residual Disease testing measures blood or bone marrow to evaluate the amount of cancer cells left after treatment.
As of December 31, 2023, women make up 59.9% of our global workforce, and of the 17.8% of our workforce that is in supervisory or higher positions, 50.8% are female. With regard to the Company’s top two management tiers, 44.4% of our executive team and our vice presidents are women and 33.3% of our independent Board of Directors are women.
With regard to the Company’s top two management tiers, 43.2% of our executive team and our vice presidents are women and 44.4% of our independent Board of Directors are women. Ethnicity is also strongly represented: 51.9% of our workforce and 33.3% of our independent Board of Directors are ethnically diverse.
Payer Mix The following table reflects our estimate of the breakdown of net clinical revenue by type of payer for the years ended December 31, 2023, 2022 and 2021: 2023 2022 2021 Client direct billing 67 % 67 % 63 % Commercial insurance 18 % 17 % 19 % Medicare and other government 15 % 16 % 18 % Total 100 % 100 % 100 % All of our Advanced Diagnostics revenue is billed directly to clients or the pharmaceutical sponsor.
Payer Mix The following table reflects our estimate of the breakdown of net revenue by type of payer for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 Client direct billing 72 % 72 % 73 % Commercial insurance 15 % 15 % 14 % Medicare and other government 13 % 13 % 13 % Self-pay — % — % — % Total 100 % 100 % 100 % Insurance We maintain professional liability and numerous other insurance policies.
We believe our relationship as a non-competitive partner to community-based pathology practices, hospital pathology labs, reference labs, and academic centers can empower them to expand their breadth of testing to provide a menu of services that could match or exceed the level of service found in any center of excellence around the world.
These services are designed to be a natural extension of, and complementary to, the services that clients perform within their own practices. We believe our relationship as a non-competitive partner to community-based pathology practices, hospital pathology labs, reference labs, and academic centers empowers them to expand their breadth of testing.
We are continuing to develop and broaden our informatics and data-related tools to leverage our unique market position and oncology expertise to help our stakeholders solve real-world problems such as identifying patients for clinical trials or providing clinical decision support tools for physicians and providers.
Our oncology data solutions, which involve the licensing of de-identified data to pharmaceutical and biotech customers in the form of either retrospective records or prospective deliveries of data, are designed to leverage our unique market position to solve real-world problems, such as identifying patients for clinical trials or providing clinical decision support tools for physicians and providers.
These are large national laboratories that possess greater name recognition, larger customer bases, and significantly greater financial resources and employ substantially more personnel than we do.
Competition Our competitors within the broader genomics profiling space include laboratory companies such as Quest Diagnostics, Laboratory Corporation of America and Bio-Reference Laboratories. These are large national laboratories that possess greater name recognition, larger client bases, and significantly greater financial resources and employ substantially more personnel than we do.
In addition, the laboratories in Fort Myers, Florida; Aliso Viejo and Carlsbad, California; Nashville, Tennessee; and Houston, Texas are licensed by the State of New York as the laboratories accept clinical specimens obtained in New York. All of our domestic laboratories are certified in accordance with the CLIA.
The State of New York is one state that requires licensure of nonresident laboratories that perform tests on specimens from patients who live in New York, and our laboratories in Fort Myers, Florida; Aliso Viejo and Carlsbad, California; Nashville, Tennessee; and Houston, Texas therefore are licensed by the State of New York.
NGS panels are one of our fastest growing testing areas, and clients can often receive a significant amount of biomarker information from very limited samples. These comprehensive panels can allow for faster treatment decisions for patients as compared to a series of single-gene molecular tests being ordered sequentially.
These tests are interpreted by our team of molecular experts and are often ordered in conjunction with other testing modalities. NGS panels, one of our fastest-growing testing areas, enable clients to receive significant biomarker information from limited samples.
In carrying out these commitments, we aim to provide transparency and choice to patients regarding the handling and use of their data through our Notice of Privacy Practices, and have invested in leading technologies to secure the data we maintain.
Our commitment to connecting patients with life-altering therapies and trials remains a core focus. We have invested in leading technologies to secure data and maintain transparency and choice for patients through our Notice of Privacy Practices.
In Phase 3 (effective three years post-finalization), laboratories would be required to comply with quality system requirements (good manufacturing practices). In Phase 4 (effective three and a half years post-finalization, but not before October 1, 2027), laboratories would be required to comply with premarket review requirements for high-risk tests ( i.e. , tests subject to premarket approval requirements).
In Stage 4 (beginning on November 6, 2027), laboratories would be required to comply with premarket review requirements for high-risk tests ( i.e. , tests subject to premarket approval requirements).
The loss or suspension of a CLIA certification could have a material adverse effect on the Company. Our laboratory in Cambridge, United Kingdom is accredited by CAP and actively participates in CAP’s proficiency testing programs for all tests offered by the Company.
Our laboratory in Cambridge, United Kingdom is accredited by CAP and actively participates in CAP’s proficiency testing programs for all tests offered by the Company. CAP’s proficiency testing programs require participating laboratories to test specimens that they receive from an approved testing entity and return the results.
In Phase 1 (effective one-year post finalization), laboratories would be required to comply with medical device (adverse event) reporting and correction and removal reporting requirements. In Phase 2, (effective two years post-finalization), laboratories would be required to comply with all other device requirements (including registration and listing, labeling and investigational use exemptions), except for quality system and premarket review requirements.
In Stage 2 (beginning on May 6, 2026), laboratories would be required to comply with all other device regulatory requirements not covered during other stages of the phaseout policy (including registration and listing and labeling and investigational use exemptions), except for quality system and premarket review requirements other than complaint files.
In addition to the direct benefits to patients, the “precision medicine” approach allows the healthcare system to save money by ensuring that expensive cancer drugs are only given to those who will be most likely to benefit from them.
Besides the direct benefits to patients, the precision medicine approach allows the healthcare system to save money by ensuring that expensive cancer drugs are given to those most likely to benefit from them. This type of testing enhances patient care and potentially saves lives by identifying optimized therapies much more rapidly than was possible in previous years.
Our Advanced Diagnostics business competes against many other Contract Research Organizations (“CROs”) and central reference laboratories. Many of these competitors are much larger and have a greater international presence than we do.
We compete against many other Contract Research Organizations (“CROs”) and central reference laboratories to provide pharmaceutical development services. Many of these competitors are much larger and offer services across the healthcare spectrum.
Our focus for 2024 is to sustain a purpose driven culture that maintains excellence in service and performance while growing through innovation. We expect the following initiatives to allow the Company to continue on its path to become one of the world’s leading cancer testing and information companies: 8 Table of Contents NEOGENOMICS, INC.
Our focus for 2025 is to sustain a purpose driven culture that maintains excellence in service and performance while growing through innovation.
In addition, this results in backlog that can be significant and highly dependent on pharmaceutical clinical trial enrollment. Competition Our competitors within the broader genomics profiling space include laboratory companies such as Quest Diagnostics, Laboratory Corporation of America and Bio-Reference Laboratories.
In addition, this results in backlog that can be significant and highly dependent on pharmaceutical clinical trial enrollment.
Over the past few years, we have expanded our Advanced Diagnostics business into Europe at the request of our clients and we 10 Table of Contents NEOGENOMICS, INC. believe that our expansive oncology testing menu and our high level of service will allow us to continue to gain market share in this segment.
We believe that our exclusive focus on oncology, enabled by our expansive oncology testing menu and our high level of service will allow us to continue to gain market share in this segment. Many clinical reference laboratories have also entered the space in support of clinical trials and the related laboratory testing.
Of the three, the fastest growing area is predictive testing, which is utilized by clinicians to predict which treatment options a patient will be most likely to benefit from in order to deliver “personalized” or “precision medicine” that is optimized to that patient’s particular circumstances.
Based on medical and scientific discoveries from the last decade, cancer testing is categorized into three types: diagnostic testing, prognostic testing, and predictive testing. Among these, predictive testing is the fastest-growing area, which clinicians use to anticipate which treatment options a patient is most likely to benefit from, delivering “personalized” or “precision medicine” tailored to that patient's needs.
This type of testing improves patient care and potentially saves lives by identifying optimized therapies much more rapidly than what was possible in previous years. The U.S. market for genetic and molecular testing is divided among numerous laboratories. Many of these laboratories are attached to academic institutions and primarily provide clinical services to their affiliated university hospitals and associated physicians.
The U.S. market for oncology testing is divided among numerous commercial and academically affiliated laboratories. The laboratories affiliated with academic institutions primarily provide clinical services to their affiliated university hospitals and associated physicians.
Our commitment to maintaining an excellent workplace includes investing in ongoing opportunities for employee development in a diverse and inclusive environment. In addition to gender and ethnic diversity and inclusion on our Board of Directors, diversity in gender and ethnicity is well-established within our workforce.
We value our teammates and focus on driving employee engagement through internal programs, external outreach, and other internal collaborative initiatives. Our commitment to maintaining an excellent workplace includes investing in ongoing opportunities for employee development in a diverse and inclusive environment.
Our clinical customers look to our staff and their expertise, and they often call our medical team on challenging cases. For our Advanced Diagnostics segment, many sponsors work with our medical team on their study design and on the interpretation of results from the 11 Table of Contents NEOGENOMICS, INC. studies.
Our clients look to our staff for their expertise, often calling on our medical team to work on challenging cases or collaborate on their study design and on the interpretation of results from the studies. Our medical team is a key differentiator as we have a depth of medical expertise that many other laboratories cannot offer to pharmaceutical companies.
Finally, in Phase 5 (effective four years post-finalization, but not before April 1, 2028), laboratories would be required to comply with premarket review requirements for moderate- and low-risk tests ( i.e. , tests subject to de novo or full 13 Table of Contents NEOGENOMICS, INC. 510(k) prenotification requirements).
Finally, in Stage 5 (beginning on May 6, 2028), laboratories would be required to comply with premarket review requirements for moderate- and low-risk tests ( i.e. , tests that require premarket submissions).

… 63 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

99 edited+36 added−33 removed253 unchanged
Biggest changeRisks Relating to Our Business • Our business is subject to rapid scientific change, which could have a material adverse effect on our business, results of operations, and financial condition. • We face the risk of capacity constraints, which could have a material adverse effect on our business, results of operations, and financial condition. • Increased competition, including price competition, could have a material adverse impact on our net revenues and profitability . • New product development and commercialization involve a lengthy and complex process and we may be unable to develop or commercialize new products on a timely basis, or at all. • Failure to develop, or acquire licenses for, new or improved testing technologies could materially and adversely affect our revenues. • The potential loss or delay of our material Advanced Diagnostics customer contracts or of multiple contracts could adversely affect our results. • We may become involved in litigation that may materially adversely affect us. • Intellectual property dispute over the RaDaR ® assay may necessitate redesign, licensing, discontinuation, or significant damages, potentially harming our overall financial condition, results of operations, or cash flows. • Our involvement with clinical trials and research services create a risk of liability. • Our investments in marketable securities are subject to certain risks which could affect our overall financial condition, results of operations, or cash flows. • Other manufacturers may discontinue or recall testing products used in our business. • We depend substantially upon third parties for payment of services, which reliance could have a material adverse effect on our cash flows and results of operations. • We may fail to protect our facilities, which could have a material adverse effect on our business, results of operations, and financial condition. • We depend on information technology systems and maintain protected personal data, and a cyber-attack or other breach affecting these information technology systems or protected data could have a material adverse effect on our results of operations. • Performance issues, service interruptions, or price increases by our shipping carriers could adversely affect our business, results of operations, and financial condition, and harm our reputation and ability to provide our specialized diagnostic services on a timely basis. • We use biological and hazardous materials that require considerable expertise and expense for handling, storage, or disposal and may result in claims against us.
Biggest changeNew product development and commercialization involve a lengthy and complex process and we may be unable to develop or commercialize new products on a timely basis, or at all. • Ethical, legal and social concerns related to the use of genetic information could reduce demand for our tests. • The potential loss or delay of our material client contracts or of multiple contracts could adversely affect our results. • We may become involved in litigation, and our insurance may not sufficiently cover all claims brought against us, which will increase our expenses and may adversely affect our business and results of operations. • We may be unable to obtain, maintain or enforce our intellectual property rights and may be subject to intellectual property litigation that could adversely impact our business. • Intellectual property dispute over the RaDaR® assay may necessitate redesign, licensing, discontinuation, or significant damages, potentially harming our overall financial condition, results of operations, or cash flows. • Our involvement with clinical trials and research services creates a risk of liability. • Our investments in marketable securities are subject to certain risks which could affect our overall financial condition, results of operations, or cash flows. • Other manufacturers may discontinue or recall testing products used in our business. • We depend substantially upon third parties for payment of services, which reliance could have a material adverse effect on our cash flows and results of operations. • We depend on information technology systems and maintain protected personal data, and a cyber-attack or other breach affecting these information technology systems or protected data could have a material adverse effect on our results of operations. • Performance issues, service interruptions, or price increases by our shipping carriers could adversely affect our business, results of operations, and financial condition, and harm our reputation and ability to provide our specialized clinical services on a timely basis. • We use biological and hazardous materials that require considerable expertise and expense for handling, storage, or disposal and may result in claims against us.
Our operations are dependent in part upon our ability to protect our laboratory operations, including our information technology systems, against physical damage from natural or man-made disasters, such as explosions, fire, floods, hurricanes, earthquakes, power loss, telecommunications failures, break-ins, public health issues, epidemics or pandemics, terrorist attacks, and similar events beyond our control.
Our operations are dependent in part upon our ability to protect our laboratory operations, including our information technology systems, against physical damage from natural or man-made disasters, such as explosions, fire, floods, earthquakes, power loss, telecommunications failures, break-ins, public health issues, epidemics or pandemics, terrorist attacks, and similar events beyond our control.
We are subject to the federal Stark Law, as well as similar state statutes and regulations, which prohibit billing Medicare for certain healthcare services, which are referred to as DHS, rendered as a result of referrals by physicians to DHS entities with which the physicians (or their immediate family members) have a financial relationship unless an exception is met.
We are subject to the federal Stark Law, as well as similar state statutes and regulations, which prohibit billing Medicare for certain designated healthcare services, which are referred to as DHS, rendered as a result of referrals by physicians to DHS entities with which the physicians (or their immediate family members) have a financial relationship unless an exception is met.
We do not presently have an emergency back-up generator in place at our Tampa, Florida, Nashville, Tennessee, Atlanta, Georgia, or Phoenix, Arizona laboratory locations, which would otherwise mitigate to some extent the effects of a prolonged power outage.
We do not presently have an emergency back-up generator in place at our Tampa, Florida, Nashville, Tennessee, Atlanta, Georgia, or Phoenix, Arizona dry laboratory locations, which would otherwise mitigate to some extent the effects of a prolonged power outage.
If our RaDaR ® assay is found to infringe any of Natera's patents, we could be required to redesign our technology or obtain a license from Natera to continue developing, manufacturing, marketing, selling and commercializing the RaDaR ® assay and related products.
If our RaDaR ® assay is ultimately found to infringe any of Natera's patents, we could be required to redesign our technology or obtain a license from Natera to continue developing, manufacturing, marketing, selling and commercializing the RaDaR ® assay and related products.
Potential difficulties we may encounter as part of the integration process, include the following: • the potential inability to successfully combine the acquired company’s business with our business in a manner that permits us to achieve the cost synergies expected to be achieved when expected, or at all, and other benefits anticipated to result from such transaction; 37 Table of Contents NEOGENOMICS, INC. • challenges optimizing the customer information and technology of the two companies, including the goal of consolidating to one laboratory information system and one billing system; • challenges effectuating any diversification strategy, including challenges achieving revenue growth from sales of each company’s products and services to the customers of the other company; • difficulties offering products and services across our expanded portfolio; • the need to revisit assumptions about reserves, revenues, capital expenditures, and operating costs, including expected synergies; • challenges faced by a potential diversion of the attention of our management as a result of the integration, which in turn could adversely affect our ability to maintain relationships with customers, employees and other constituencies or our ability to achieve the anticipated benefits of such transaction; • the potential loss of key employees, customers, managed care contracts, or strategic partners, or the ability to attract or retain key management and other key personnel, which could have an adverse effect on our ability to integrate and operate the acquired business; • complexities associated with managing the combined businesses, including difficulty addressing possible differences in corporate cultures and management philosophies and the challenge of integrating complex systems, technology, networks, and other assets of each of the companies in a seamless manner that minimizes any adverse impact on customers, suppliers, employees, and other constituencies; • costs and challenges related to the integration of the acquired company’s internal controls over financial reporting with ours; and • potential unknown liabilities and unforeseen increased expenses.
Potential difficulties we may encounter as part of the integration process, include the following: • the potential inability to successfully combine the acquired company’s business with our business in a manner that permits us to achieve the cost synergies expected to be achieved when expected, or at all, and other benefits anticipated to result from such transaction; • challenges optimizing the client information and technology of the two companies, including the goal of consolidating to one laboratory information system and one billing system; • challenges effectuating any diversification strategy, including challenges achieving revenue growth from sales of each company’s products and services to the clients of the other company; • difficulties offering products and services across our expanded portfolio; • the need to revisit assumptions about reserves, revenues, capital expenditures, and operating costs, including expected synergies; 38 Table of Contents NEOGENOMICS, INC. • challenges faced by a potential diversion of the attention of our management as a result of the integration, which in turn could adversely affect our ability to maintain relationships with clients, employees and other constituencies or our ability to achieve the anticipated benefits of such transaction; • the potential loss of key employees, clients, managed care contracts, or strategic partners, or the ability to attract or retain key management and other key personnel, which could have an adverse effect on our ability to integrate and operate the acquired business; • complexities associated with managing the combined businesses, including difficulty addressing possible differences in corporate cultures and management philosophies and the challenge of integrating complex systems, technology, networks, and other assets of each of the companies in a seamless manner that minimizes any adverse impact on clients, suppliers, employees, and other constituencies; • costs and challenges related to the integration of the acquired company’s internal controls over financial reporting with ours; and • potential unknown liabilities and unforeseen increased expenses.
As a result, it is possible that we may introduce a new product that uses technologies or methods of analysis that have been displaced by the time of launch, competes with one or more of our other products, addresses an opportunity that no longer exists or is smaller than anticipated, or produces data that provides less utility to our customers than anticipated or otherwise is not competitive at the time of launch.
As a result, it is possible that we may introduce a new product that uses technologies or methods of analysis that have been displaced by the time of launch, competes with one or more of our other products, addresses an opportunity that no longer exists or is smaller than anticipated, or produces data that provides less utility to our clients than anticipated or otherwise is not competitive at the time of launch.
In addition, third-party hacking attempts may cause our information technology systems and related products, protected data, or proprietary information to be compromised or stolen. A significant attack or other disruption could result in adverse consequences, including increased costs and expenses, manufacturing challenges or disruption, problems with product functionality, damage to customer relations, lost revenue, and legal or regulatory penalties.
In addition, third-party hacking attempts may cause our information technology systems and related products, protected data, or proprietary information to be compromised or stolen. A significant attack or other disruption could result in adverse consequences, including increased costs and expenses, manufacturing challenges or disruption, problems with product functionality, damage to client relations, lost revenue, and legal or regulatory penalties.
As of December 31, 2023, the Company has accrued a reserve of $11.2 million in other long-term liabilities on the Consolidated Balance Sheets for potential damages and liabilities associated with the federal healthcare program revenue received by the Company in connection with the agreements at issue that were identified during the course of this internal investigation.
As of December 31, 2024, the Company has accrued a reserve of $11.2 million in other long-term liabilities on the Consolidated Balance Sheets for potential damages and liabilities associated with the federal healthcare program revenue received by the Company in connection with the agreements at issue that were identified during the course of this internal investigation.
Restructuring presents potential risks of events occurring that could adversely affect us, including: actual or perceived disruption of service to customers; the failure to preserve supplier relationships and distribution, sales and other important relationships and to resolve conflicts that may arise; diversion of management attention from ongoing business activities; and the failure to maintain employee morale and retain key employees.
Restructuring presents potential risks of events occurring that could adversely affect us, including: actual or perceived disruption of service to clients; the failure to preserve supplier relationships and distribution, sales and other important relationships and to resolve conflicts that may arise; diversion of management attention from ongoing business activities; and the failure to maintain employee morale and retain key employees.
Our competitors may develop products and services that are superior to ours or that achieve greater market acceptance than our offerings. Many of our competitors have long established relationships with their customers and third-party payers. We cannot assure you that we will be able to compete successfully with these entities or other competitors in the future.
Our competitors may develop products and services that are superior to ours or that achieve greater market acceptance than our offerings. Many of our competitors have long established relationships with their clients and third-party payers. We cannot assure you that we will be able to compete successfully with these entities or other competitors in the future.
Similarly, there can be no assurance that third party information technology providers with whom we contract will not suffer a significant attack or disruption that impacts customers, such as supply chain attacks. Any significant breach, attack, disruption, or failure of our information technology systems could adversely affect our business, results of operations, and financial condition.
Similarly, there can be no assurance that third party information technology providers with whom we contract will not suffer a significant attack or disruption that impacts clients, such as supply chain attacks. Any significant breach, attack, disruption, or failure of our information technology systems could adversely affect our business, results of operations, and financial condition.
The successful qui tam relator who brought the case is entitled to a portion of the proceeds and his or her attorneys’ fees and costs. In addition, various states have enacted laws modeled after the federal False Claims Act, which prohibit submitting false claims for payment to the state, or, in some states, to commercial payers.
The successful qui tam relator who brought the case is entitled to a portion of the proceeds and his or her attorneys’ fees and costs. In addition, various states have enacted laws modeled after the federal FCA, which prohibit submitting false claims for payment to the state, or, in some states, to commercial payers.
The False Claims Act’s “whistleblower” or “qui tam” provisions are used with frequency to challenge the reimbursement practices of providers and suppliers. Those provisions allow a private individual to bring an action on behalf of the government alleging that the defendant has submitted false claims for payment to the government.
The FCA’s “whistleblower” or “qui tam” provisions are used with frequency to challenge the reimbursement practices of providers and suppliers. Those provisions allow a private individual to bring an action on behalf of the government alleging that the defendant has submitted false claims for payment to the government.
Risks Relating to Our Business If we are unable to keep pace with the rapid scientific and technological change characteristic to our industry, or to develop, or acquire licenses for, new or improved testing technologies, our competitive position, business, results of operations, and financial condition could be harmed.
If we are unable to keep pace with the rapid scientific and technological change characteristic to our industry, or to develop, or acquire licenses for, new or improved testing technologies, our competitive position, business, results of operations, and financial condition could be harmed.
Changes in laws, regulations, contracting arrangements with payers, or payer policies, including steps taken by payers to control utilization and reimbursement of healthcare services, may adversely affect coverage or reimbursement for our specialized diagnostic services, which may decrease our revenues and adversely affect our results of operations and financial condition.
Changes in laws, regulations, contracting arrangements with payers, or payer policies, including steps taken by payers to control utilization and reimbursement of healthcare services, may adversely affect coverage or reimbursement for our specialized clinical services, which may decrease our revenues and adversely affect our results of operations and financial condition.
If we are unsuccessful in keeping pace with scientific and technological changes, or enhancing our products to meet evolving industry standards or developing customer demands, our competitive position, business, results of operations, and financial condition may be materially and adversely affected.
If we are unsuccessful in keeping pace with scientific and technological changes, or enhancing our products to meet evolving industry standards or developing client demands, our competitive position, business, results of operations, and financial condition may be materially and adversely affected.
Performance issues, service interruptions, or price increases by our shipping carrier could adversely affect our business, results of operations, and financial condition, and harm our reputation and ability to provide our specialized diagnostic services on a timely basis. Expedited, reliable shipping is essential to our operations.
Performance issues, service interruptions, or price increases by our shipping carrier could adversely affect our business, results of operations, and financial condition, and harm our reputation and ability to provide our specialized clinical services on a timely basis. Expedited, reliable shipping is essential to our operations.
In addition, litigation could have a material adverse effect on our business if it impacts our existing and potential customer relationships, creates adverse public relations, diverts management resources from the operation of the business, or hampers our ability to otherwise conduct our business.
In addition, litigation could have a material adverse effect on our business if it impacts our existing and potential client relationships, creates adverse public relations, diverts management resources from the operation of the business, or hampers our ability to otherwise conduct our business.
However, any finding of infringement by us of Natera's asserted patents may have a material adverse effect on our business, as well as our financial condition and results of operations. Our involvement with clinical trials and research services create a risk of liability.
However, any finding of infringement by us of Natera's asserted patents may have a material adverse effect on our business, as well as our financial condition and results of operations. Our involvement with clinical trials and research services creates a risk of liability.
Management expects that our results of operations may fluctuate significantly in the future as a result of a variety of factors, including, but not limited to: (i) the continued rate of growth, usage, and acceptance of our products and services; (ii) demand for our products and services; (iii) the introduction and acceptance of new or enhanced products or services by us or by competitors; (iv) our ability to anticipate and effectively adapt to developing markets and to rapidly changing technologies; (v) our ability to attract, retain, and motivate qualified personnel; (vi) the initiation, renewal, or expiration of significant contracts with any major clients; (vii) pricing changes by us, our suppliers, or our competitors; (viii) seasonality; and (ix) general economic conditions and other factors.
Management expects that our results of operations may fluctuate significantly in the future as a result of a variety of factors, including, but not limited to: (i) the continued rate of growth, usage, and acceptance of our products and services; (ii) demand for our products and services; (iii) the introduction and acceptance of new or enhanced products or services by us or by competitors; (iv) our ability to anticipate and effectively adapt to developing markets and to rapidly changing technologies; (v) our ability to attract, retain, and motivate qualified personnel; (vi) the initiation, renewal, or expiration of significant 39 Table of Contents NEOGENOMICS, INC. contracts with any major clients; (vii) pricing changes by us, our suppliers, or our competitors; (viii) seasonality; and (ix) general economic conditions and other factors.
We frequently develop diagnostic tests for clients that cannot currently be provided using test kits approved or cleared by the FDA. Currently, all LDTs are conducted and offered in accordance with the requirements of CLIA and individual state licensing procedures, but the FDA has had a policy of enforcement discretion with regard to LDTs.
We frequently develop diagnostic tests for clients that cannot currently be provided using test kits approved or cleared by the FDA. Currently, all Laboratory Developed Tests (“LDTs”) are conducted and offered in accordance with the requirements of CLIA and individual state licensing procedures, but the FDA has had a policy of enforcement discretion with regard to LDTs.
If an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus substantial civil penalties for each separate false claim. Further, False Claims Act liability may lead to exclusion from participation in Medicare, Medicaid, and other federal healthcare programs.
If an entity is determined to have violated the federal FCA, it may be required to pay up to three times the actual damages sustained by the government, plus substantial civil penalties for each separate false claim. Further, FCA liability may lead to exclusion from participation in Medicare, Medicaid, and other federal healthcare programs.
The price of our common stock could fluctuate significantly for many reasons including the following: • change in our leadership or Board of Directors; • future announcements concerning us or our competitors; • regulatory developments and enforcement actions bearing on advertising, marketing, or sales; • reports and recommendations of analysts and whether or not we meet the milestones and metrics set forth in such reports; • gaining or losing large customers or managed care plans; • introduction of new products or services and related insurance coverage; • acquisition or loss of significant manufacturers, distributors or suppliers, or an inability to obtain sufficient quantities of materials needed to provide our services; • quarterly variations in operating results; • business acquisitions or divestitures; • changes in the regulation of LDTs; • changes in governmental or third-party reimbursement practices and rates; and • fluctuations in the economy, political events, or general market conditions.
The price of our common stock could fluctuate significantly for many reasons including the following: • change in our leadership or Board of Directors; 26 Table of Contents NEOGENOMICS, INC. • future announcements concerning us or our competitors; • regulatory developments and enforcement actions bearing on advertising, marketing, or sales; • reports and recommendations of analysts and whether or not we meet the milestones and metrics set forth in such reports; • gaining or losing large clients or managed care plans; • introduction of new products or services and related insurance coverage; • acquisition or loss of significant manufacturers, distributors or suppliers, or an inability to obtain sufficient quantities of materials needed to provide our services; • quarterly variations in operating results; • business acquisitions or divestitures; • changes in the regulation of LDTs; • changes in governmental or third-party reimbursement practices and rates; and • fluctuations in the economy, political events, or general market conditions.
Failure to comply with federal, state and international laws related to privacy and security could result in fines, penalties, and damage to the Company’s reputation with customers and could have a material adverse effect upon the Company’s business.
Failure to comply with federal, state and international laws related to privacy and security could result in fines, penalties, and damage to the Company’s reputation with clients and could have a material adverse effect upon the Company’s business.
Additionally, our ability to retain existing clients for our specialized diagnostic services and attract new clients is dependent upon retaining existing sales representatives and hiring and training new sales representatives, which are expensive and time-consuming processes.
Additionally, our ability to retain existing clients for our specialized clinical services and attract new clients is dependent upon retaining existing sales representatives and hiring and training new sales representatives, which are expensive and time-consuming processes.
We may not have sufficient cash flow from our business to pay our obligations under the Convertible Notes, which could adversely affect our financial condition and operating results. 18 Table of Contents NEOGENOMICS, INC. • We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes in cash or to repurchase the Convertible Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes. • The capped call transactions may affect the value of the 2028 Convertible Notes and our common stock. • Conversion of the Convertible Notes may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock.
We may not have sufficient cash flow from our business to pay our obligations under the Convertible Notes, which could adversely affect our financial condition and operating results. • We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes in cash or to repurchase the Convertible Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes. • The capped call transactions may affect the value of the 2028 Convertible Notes and our common stock. • Conversion of the Convertible Notes may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock.
The regulations establish a complex regulatory framework governing the use and disclosure of PHI, including, for example, the circumstances under which uses and disclosures of PHI are permitted or required without a specific authorization by the patient; a patient’s right to access, amend, and receive an accounting of certain disclosures of PHI; the content of notices of privacy practices describing how PHI is used and disclosed and individuals’ rights with respect to their PHI; and implementation of administrative, technical, and physical safeguards to protect privacy and security of PHI.
The regulations establish a complex regulatory framework governing the use and disclosure of PHI, including, for example, the following: (i) the circumstances under which uses and disclosures of PHI are permitted or required without a specific authorization by the patient; (ii) a patient’s right to access, amend, and receive an accounting of certain disclosures of PHI; (iii) the content of notices of privacy practices describing how PHI is used and disclosed and individuals’ rights with respect to their PHI; and (iv) implementation of administrative, technical, and physical safeguards to protect privacy and security of PHI.
These are large national laboratories that possess greater name recognition, larger customer bases, and significantly greater financial resources and employ substantially more personnel than we do.
These are large national laboratories that possess greater name recognition, larger client bases, and significantly greater financial resources and employ substantially more personnel than we do.
Before we can commercialize any new products, we will need to expend significant funds in order to: • conduct substantial research and development, including validation studies and clinical studies; • further develop and scale our laboratory processes to accommodate different products, including the expansion of our medical staff and PhDs; and • further develop and scale our infrastructure to be able to analyze increasingly large amounts of data; and • seek and obtain regulatory clearance or approvals of our new products, as required by applicable regulations.
Before we can commercialize any new products, we will need to expend significant funds in order to: • conduct substantial research and development, including validation studies and clinical studies; • further develop and scale our laboratory processes to accommodate different products, including the expansion of our medical staff and PhDs; • further develop and scale our infrastructure to be able to analyze increasingly large amounts of data; and 21 Table of Contents NEOGENOMICS, INC. • seek and obtain regulatory clearance or approvals of our new products, as required by applicable regulations.
However, implementing our business strategy may require more employees, capital equipment, supplies, or other expenditure items than management has predicted, particularly as we continue to assess any further needs resulting from the growth of our Advanced Diagnostics segment.
However, implementing our business strategy may require more employees, capital equipment, supplies, or other expenditure items than management has predicted, particularly as we continue to assess any further needs resulting from the growth of our business.
Submitting a claim with reckless disregard or deliberate ignorance of its truth or falsity could also result in liability under the False Claims Act. Following enactment of the ACA, knowing retention of overpayments is also considered a false claim and could lead to liability under the False Claims Act.
Submitting a claim with reckless disregard or deliberate ignorance of its truth or falsity could also result in liability under the FCA. Following enactment of the ACA, knowing retention of overpayments is also considered a false claim and could lead to liability under the FCA.
In addition, adverse speculation about our existing or potential relationships with our Advanced Diagnostics clients may be a catalyst for adverse speculation about us, our products and our technology, which can adversely affect our reputation and business. Delays, terminations or reductions in the scope of our contracts impact our ability to convert our backlog into revenue for the Company.
In addition, adverse speculation about our existing or potential relationships with our pharmaceutical development clients may be a catalyst for adverse speculation about us, our products and our technology, which can adversely affect our reputation and business. Delays, terminations or reductions in the scope of our contracts impact our ability to convert our backlog into revenue for the Company.
Finding a new provider of transport services would be time-consuming and costly and result in delays in our ability to provide our specialized diagnostic services.
Finding a new provider of transport services would be time-consuming and costly and result in delays in our ability to provide our specialized clinical services.
Violation of these laws can result in criminal or civil penalties, exclusion from participation in the Medicare, Medicaid, and other federal healthcare programs, repayment of reimbursement received related to services tied to any impermissible referrals, or civil monetary penalties, which may be significant, as well as potential False Claims Act liability.
Violation of these laws can result in criminal or civil penalties, exclusion from participation in the Medicare, Medicaid, and other federal healthcare programs, repayment of reimbursement received related to services tied to any impermissible referrals, or civil monetary penalties, which may be significant, as well as potential FCA liability.
Our Advanced Diagnostics clients may delay, terminate or reduce the scope of our contracts for a variety of reasons beyond our control, including but not limited to actions by regulatory authorities, negative clinical results, lack of patient enrollment, lack of available financing or shifts in internal priorities.
Our pharmaceutical development clients may delay, terminate or reduce the scope of our contracts for a variety of reasons beyond our control, including but not limited to actions by regulatory authorities, negative clinical results, lack of patient enrollment, lack of available financing or shifts in internal priorities.
Even if we were ultimately to prevail, litigation with Natera could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business. We cannot reasonably estimate the final outcome, including any potential liability or any range of potential future charges associated with these litigations.
Even if we were ultimately to prevail, litigation with Natera could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business. 23 Table of Contents NEOGENOMICS, INC. We cannot reasonably estimate the final outcome, including any potential liability or any range of potential future charges associated with these litigations.
There are a number of potential bases for liability under the federal False Claims Act. For example, liability arises when an entity knowingly submits, or causes another to submit, a claim for reimbursement to the federal government for a service which was not provided or which did not qualify for reimbursement.
There are a number of potential bases for liability under the federal FCA. For example, liability arises when an entity knowingly submits, or causes another to submit, a claim for reimbursement to the federal government for a service which was not provided or which did not qualify for reimbursement.
We cannot be certain that a physician or physician’s professional organization will not seek to terminate an 34 Table of Contents NEOGENOMICS, INC. agreement with us on any basis, nor can we be certain that governmental authorities in those states will not seek termination of these arrangements on the basis of state laws prohibiting the corporate practice of medicine.
We cannot be certain that a physician or physician’s professional organization will not seek to terminate an agreement with us on any basis, nor can we be certain that governmental authorities in those states will not seek termination of these arrangements on the basis of state laws prohibiting the corporate practice of medicine.
In particular, if we fail to comply with federal and state documentation, coding, and billing rules, we could be subject to liability under the federal False Claims Act, including civil penalties, loss of licenses, and exclusion from the Medicare and Medicaid programs.
In particular, if we fail to comply with federal and state documentation, coding, and billing rules, we could be subject to liability under the federal FCA, including civil penalties, loss of licenses, and exclusion from the Medicare and Medicaid programs.
Additionally, HIPAA allows state Attorneys General to bring an action against a covered entity, such as us, for a violation of HIPAA. We insure some of our risk with respect to HIPAA security breaches, but operational costs and penalties associated with HIPAA breaches easily could exceed our insured limits.
Additionally, HIPAA allows state Attorneys General to bring an action against a covered entity, such as us, for a violation of HIPAA. We insure some of our risk with respect to HIPAA security breaches, but operational costs and penalties associated with HIPAA breaches easily could exceed our insured limits. 36 Table of Contents NEOGENOMICS, INC.
Similarly, the cost of compensating additional management, employees, and consultants or other operating costs may be more than we estimate, which could result in ongoing and sustained losses. 38 Table of Contents NEOGENOMICS, INC. We may face fluctuations in our results of operations and we are subject to seasonality in our business which could negatively affect our business operations.
Similarly, the cost of compensating additional management, employees, and consultants or other operating costs may be more than we estimate, which could result in ongoing and sustained losses. We may face fluctuations in our results of operations and we are subject to seasonality in our business which could negatively affect our business operations.
Risks Relating to Government Regulation and Reimbursement • If the FDA were to begin to enforce regulation of Laboratory Developed Tests it could require us to conduct additional clinical trials, result in increased costs or delays, or we could fail to obtain necessary regulatory approvals, all of which could harm our business. • Healthcare reform efforts may impact our business and the pricing we receive for our services. • Changes in laws, regulations, contracting arrangements with payers, or payer policies, including steps taken by payers to control utilization and reimbursement of healthcare services, may adversely affect coverage or reimbursement for our specialized diagnostic services, which may decrease our revenues and adversely affect our results of operations and financial condition. • Failure to comply with laws and regulations regarding laboratory licensing and operations, including CLIA environmental, health, and safety laws and regulations such as the federal Occupational Safety and Health Administration Act and the Needlestick Safety and Prevention Act, could result in fines and penalties and loss of licensure, and have a material adverse effect upon our business. • Our net revenue will be diminished if payers do not adequately cover or reimburse our services. • Our operations are subject to strict laws prohibiting fraudulent billing and other abuse, and our failure to comply with such laws could result in substantial penalties, including exclusion from participation in Medicare, Medicaid, and other governmental payer programs. • The failure to comply with fraud and abuse laws, including physician self-referral laws and anti-kickback laws, may subject us to liability, penalties, or limitation of operations. • Failure to comply with federal, state and international laws related to privacy and security could result in fines, penalties, and damage to the Company’s reputation with customers and could have a material adverse effect upon the Company’s business.
Risks Relating to Government Regulation and Reimbursement • If the FDA were to begin to enforce regulation of Laboratory Developed Tests it could require us to conduct additional clinical trials, result in increased costs or delays, or we could fail to obtain necessary regulatory approvals, all of which could harm our business. • Healthcare reform efforts may impact our business and the pricing we receive for our services. • Changes in laws, regulations, contracting arrangements with payers, or payer policies, including steps taken by payers to control utilization and reimbursement of healthcare services, may adversely affect coverage or reimbursement for our specialized clinical services, which may decrease our revenues and adversely affect our results of operations and financial condition. • Failure to comply with laws and regulations regarding laboratory licensing and operations, including CLIA environmental, health, and safety laws and regulations such as the federal Occupational Safety and Health Administration Act and the Needlestick Safety and Prevention Act, could result in fines and penalties and loss of licensure, and have a material adverse effect upon our business. • Our net revenue will be diminished if payers do not adequately cover or reimburse our services. • Our operations are subject to strict laws prohibiting fraudulent billing and other abuse, and our failure to comply with such laws could result in substantial penalties, including exclusion from participation in Medicare, Medicaid, and other governmental payer programs. • The failure to comply with fraud and abuse laws, including physician self-referral laws and anti-kickback laws, may subject us to liability, penalties, or limitation of operations. • If our agreements or arrangements with certain of our licensed physicians and/or professional associations owned by physicians are deemed invalid under state corporate practice of medicine and similar laws or federal law, or are terminated as a result of changes in state law, it could have a material impact on our results of operations and financial condition. • Failure to comply with federal, state and international laws related to privacy and security could result in fines, penalties, and damage to the Company’s reputation with clients and could have a material adverse effect upon the Company’s business.
We have had certain tests discontinued by manufacturers and have had to develop alternative solutions for our clients. We depend substantially upon third parties for payment of services, which reliance could have a material adverse effect on our cash flows and results of operations. 23 Table of Contents NEOGENOMICS, INC.
We have had certain tests discontinued by manufacturers and have had to develop alternative solutions for our clients. We depend substantially upon third parties for payment of services, which reliance could have a material adverse effect on our cash flows and results of operations.
Because a portion of our revenues is from third-party payers with whom we are not currently contracted, it is likely that we will be required to make positive or negative adjustments to accounting estimates with respect to contractual allowances in the future, which may adversely affect our results of operations, our credibility with financial analysts and investors, and our stock price.
Because a portion of our revenues is from third-party payers with whom we are not currently contracted, it is possible that we will be required to make positive or negative adjustments to accounting estimates with respect to contractual allowances in the future, which may adversely affect our results of operations, our credibility with financial analysts and investors, and our stock price. 29 Table of Contents NEOGENOMICS, INC.
In addition, the Needlestick Safety and Prevention Act requires, among other things, that we include in our safety programs the evaluation and use of engineering controls such as safety needles, if found to be effective at reducing the risk of needlestick injuries in the workplace.
In addition, the Needlestick Safety and Prevention Act requires, among other things, that we include in our safety programs the evaluation and use of 31 Table of Contents NEOGENOMICS, INC. engineering controls such as safety needles, if found to be effective at reducing the risk of needlestick injuries in the workplace.
The Stark Law prohibits an entity that receives a prohibited DHS referral from seeking payment from Medicare for any DHS services performed as a result of such a referral, 33 Table of Contents NEOGENOMICS, INC. unless an arrangement is carefully structured to satisfy every requirement of a regulatory exception.
The Stark Law prohibits an entity that receives a prohibited DHS referral from seeking payment from Medicare for any DHS services performed as a result of such a referral, unless an arrangement is carefully structured to satisfy every requirement of a regulatory exception.
General Risk Factors We are dependent on key personnel and need to hire additional qualified personnel in order for our business to succeed. Our performance is substantially dependent on the performance of our senior management and key scientific and technical personnel. In particular, our success depends substantially on the continued efforts of our senior management team.
Risks Relating to Our Business We are dependent on key personnel and need to hire additional qualified personnel in order for our business to succeed. Our performance is substantially dependent on the performance of our senior management and key scientific and technical personnel. In particular, our success depends substantially on the continued efforts of our senior management team.
We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes in cash or to repurchase the Convertible Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes. 26 Table of Contents NEOGENOMICS, INC.
We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes in cash or to repurchase the Convertible Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes.
The commencement of clinical trials may be delayed due to insufficient patient enrollment, which is a function of many factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites, and the eligibility criteria for the clinical trial.
The commencement of clinical trials may be 28 Table of Contents NEOGENOMICS, INC. delayed due to insufficient patient enrollment, which is a function of many factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites, and the eligibility criteria for the clinical trial.
Privacy Shield Framework, under which personal data could be transferred from the EEA to U.S. entities that had self-certified under the Privacy Shield scheme. This framework has been replaced by the E.U.-U.S. Data Privacy Framework for which the European Commission adopted an adequacy decision in July 2023.
Privacy Shield Framework, under which 37 Table of Contents NEOGENOMICS, INC. personal data could be transferred from the EEA to U.S. entities that had self-certified under the Privacy Shield scheme. This framework has been replaced by the E.U.-U.S. Data Privacy Framework for which the European Commission adopted an adequacy decision in July 2023.
Existing federal laws governing Medicare and Medicaid, as well as other state and federal laws, also regulate certain aspects of the relationship between healthcare providers, including clinical laboratories, and their referral sources, including 32 Table of Contents NEOGENOMICS, INC. physicians, hospitals and other laboratories.
Existing federal laws governing Medicare and Medicaid, as well as other state and federal laws, also regulate certain aspects of the relationship between healthcare providers, including clinical laboratories, and their referral sources, including physicians, hospitals and other laboratories.
The loss 36 Table of Contents NEOGENOMICS, INC. of the services of any of our executive officers, our medical staff, our laboratory directors or other key employees could have a material adverse effect on our business, results of operations, and our financial condition.
The loss of the services of any of our executive officers, our medical staff, our laboratory directors or other key employees could have a material adverse effect on our business, results of operations, and our financial condition.
Third-party payers, including governmental payers such as Medicare and private payers, are scrutinizing new medical products and services and may not cover or may limit coverage and the level of reimbursement for 31 Table of Contents NEOGENOMICS, INC. our services.
Third-party payers, including governmental payers such as Medicare and private payers, are scrutinizing new medical products and services and may not cover or may limit coverage and the level of reimbursement for our services.
In developing a test, we must make numerous assumptions, often many years before a test is ready 21 Table of Contents NEOGENOMICS, INC. for use, regarding the commercial viability of a test, including with respect to our customers’ interest in a test, payers’ willingness to pay for a test, our costs to perform a test, and availability and attractiveness of competing offerings.
In developing a test, we must make numerous assumptions, often many years before a test is ready for use, regarding the commercial viability of a test, including with respect to our clients’ interest in a test, payers’ willingness to pay for a test, our costs to perform a test, and availability and attractiveness of competing offerings.
Any unforeseen increase in the volume of clients could strain the capacity of our personnel and systems, leading to unacceptable turnaround times or customer service failures. In addition, as the number of our clients and specimens increases, our products, services, and infrastructure may not be able to scale accordingly.
Any unforeseen increase in the volume of clients could strain the capacity of our personnel and systems, leading 20 Table of Contents NEOGENOMICS, INC. to unacceptable turnaround times or client service failures. In addition, as the number of our clients and specimens increases, our products, services, and infrastructure may not be able to scale accordingly.
The Stark Law is a strict liability statute, and thus any technical violation requires repayment of all “tainted” referrals, regardless of the intent, unless an exception applies.
The Stark Law 34 Table of Contents NEOGENOMICS, INC. is a strict liability statute, and thus any technical violation requires repayment of all “tainted” referrals, regardless of the intent, unless an exception applies.
Many of these factors would be beyond our control. We may not be able to enter into 28 Table of Contents NEOGENOMICS, INC. replacement arrangements without undue delays or considerable expenditures.
Many of these factors would be beyond our control. We may not be able to enter into replacement arrangements without undue delays or considerable expenditures.
Tests which are reimbursed by Medicare and other government payers (for example, State Medicaid programs) accounted for approximately 15%, 16% and 18% of our revenues for the years ended December 31, 2023, 2022 and 2021, respectively.
Tests which are reimbursed by Medicare and other government payers (for example, State Medicaid programs) accounted for approximately 13%, 13% and 13% of our revenues for the years ended December 31, 2024, 2023 and 2022, respectively.
See Part I, Item 1, “Business” in this Annual Report on Form 10-K for additional information about our competitors and competitive position. 20 Table of Contents NEOGENOMICS, INC. Also, in each of these markets, consolidation in our actual or potential customer base results in increased competition for important market segments and fewer available customers.
See Part I, Item 1, “Business” in this Annual Report on Form 10-K for additional information about our competitors and competitive position. Also, in each of these markets, consolidation in our actual or potential client base results in increased competition for important market segments and fewer available clients.
Risks Related to Our Common Stock and Indebtedness • The price of our common stock may fluctuate significantly. • Servicing our Convertible Notes require a significant amount of cash.
Risks Related to Our Common Stock and Indebtedness • The price of our common stock may fluctuate significantly. 18 Table of Contents NEOGENOMICS, INC. • Servicing our Convertible Notes require a significant amount of cash.
These CMS changes to reimbursement for NGS testing could directly affect our revenue for this test type. In recent years, Medicare has encouraged beneficiaries to participate in managed care programs, known as “Medicare Advantage” programs, and has encouraged beneficiaries from the traditional fee-for-service Medicare program to switch to 30 Table of Contents NEOGENOMICS, INC. Medicare Advantage programs.
These CMS changes to reimbursement for NGS testing could directly affect our revenue for these test types. In recent years, Medicare has encouraged beneficiaries to participate in managed care programs, known as “Medicare Advantage” programs, and has encouraged beneficiaries from the traditional fee-for-service Medicare program to switch to Medicare Advantage programs.
We may also be subject to liability for errors in the test results we provide to pathologists and oncologists or for a misunderstanding of, or inappropriate reliance upon, the information we provide.
We may also be subject to liability for 22 Table of Contents NEOGENOMICS, INC. errors in the test results we provide to pathologists and oncologists related to a misunderstanding of, or inappropriate reliance upon, the information we provide.
The market for genetic and molecular testing services is characterized by rapid scientific developments, evolving industry standards and customer demands, and frequent new product introductions and enhancements. For example, new tests 19 Table of Contents NEOGENOMICS, INC. developed by our competitors may prove superior and replace our existing tests.
The market for genetic and molecular testing services is characterized by rapid scientific developments, evolving industry standards and client demands, and frequent new product introductions and enhancements. For example, new tests developed by our competitors may prove superior and replace our existing tests.
The 2024 presidential election may also significantly alter the current regulatory framework and the health care industry, including any further challenges, extensions or expansions of certain ACA provisions. These changes could have an adverse and material impact on our operations.
The current and future policies and actions of the Trump administration may also significantly alter the current regulatory framework and the health care industry, including through any further challenges, extensions, changes or expansions of certain ACA provisions. These changes could have an adverse and material impact on our operations.
General Risk Factors • We are dependent on key personnel and need to hire additional qualified personnel in order for our business to succeed. • We may not be able to implement our business strategy, which could impair our ability to continue operations. • We may be unable to realize estimated benefits from our cost reduction and restructuring efforts and our profitability may be hurt or our business might otherwise be adversely affected. • If we are unable to successfully integrate future acquisitions with our legacy business, the anticipated benefits of such transaction may not be realized. • If goodwill and intangible assets that we recorded in connection with our acquisitions become impaired, we may have to take significant charges against earnings. • We may incur greater costs than anticipated, which could result in sustained losses. • We may face fluctuations in our results of operations and we are subject to seasonality in our business which could negatively affect our business operations. • The steps we have taken to protect our proprietary rights may not be adequate, which could result in infringement or misappropriation by third parties.
General Risk Factors • We may not be able to implement our business strategy, which could impair our ability to continue operations. • We may be unable to realize estimated benefits from our cost reduction and restructuring efforts and our profitability may be hurt or our business might otherwise be adversely affected. • If we are unable to successfully integrate future acquisitions with our legacy business, the anticipated benefits of such transaction may not be realized. • If goodwill and intangible assets that we recorded in connection with our acquisitions become impaired, we may have to take significant charges against earnings. • We may incur greater costs than anticipated, which could result in sustained losses. • We may face fluctuations in our results of operations and we are subject to seasonality in our business which could negatively affect our business operations. • The steps we have taken to protect our proprietary rights may not be adequate, which could result in infringement or misappropriation by third parties. • We may be subject to claims that we or our employees have wrongfully used or disclosed alleged trade secrets. 19 Table of Contents NEOGENOMICS, INC.
We also could be required to restructure or terminate our contractual and other arrangements with physicians, which could result in a loss of revenue and have a material adverse effect on our business.
We also could be required to restructure or terminate our contractual and other arrangements with physicians, which could result in a loss of revenue and have a material adverse effect on our business. In addition to the federal AKS, in October 2018, the U.S.
The Further Continuing Appropriations and Other Extensions Act of 2024 was passed in 2023 and further delayed the implementation of the 15.0 percent rate reduction cap to 2025 and extended the 15.0 percent rate reduction cap through 2027. When rate reductions begin to take effect again in 2024, this will further reduce Medicare program payments for CLFS tests.
Subsequent legislation, including most recently the Continuing Appropriations and Extensions Act, 2025 that was passed in 2024, delayed the implementation of the 15.0 percent rate reduction cap to 2026 and extended the 15.0 percent rate reduction cap through 2028. When rate reductions begin to take effect again in 2024, this will further reduce Medicare program payments for CLFS tests.
We may continue to make, use, and sell the RaDaR ® assay solely for continued use of the RaDaR ® assay: (i) for those patients already using it before the entry of this injunction, (ii) in support of research and development with other persons or 22 Table of Contents NEOGENOMICS, INC. entities on projects or studies that began before the entry of this injunction, or (iii) for use in or in support of clinical trials in process or already approved by an agency of the United States.
Under the preliminary injunction during the pendency of the case we may make, use, and sell the RaDaR® 1.0 assay solely for continued use of the RaDaR® assay: (i) for those patients already using it before the entry of this injunction, (ii) in support of research and development with other persons or entities on projects or studies that began before the entry of this injunction, or (iii) for use in or in support of clinical trials in process or already approved by an agency of the United States.
Some of these laws, including the federal AKS and the federal Stark Law contain extremely broad proscriptions.
Some of these laws, including the federal AKS and the federal Stark Law contain 33 Table of Contents NEOGENOMICS, INC. extremely broad proscriptions.
Our operations are subject to strict laws prohibiting fraudulent billing and other abuse, and our failure to comply with such laws could result in substantial penalties, including exclusion from participation in Medicare, Medicaid, and other governmental payer programs. Of particular importance to our operations is ensuring compliance with federal and state laws prohibiting fraudulent billing and the retention of overpayments.
Our operations are subject to strict laws prohibiting fraudulent billing and other abuse, and our failure to comply with such laws could result in substantial penalties, including exclusion from participation in Medicare, Medicaid, and other governmental payer programs.
Cyber-attacks, security breaches, computer viruses, malware and other incidents could cause misappropriation, loss or other unauthorized disclosure of such information. Increasingly complex methods have been used in cyber-attacks, including ransomware, phishing, structured query language injections, social engineering schemes, and distributed denial-of-service attacks. A cyber-attack can also be in the form of unauthorized access or a blocking of authorized access.
Increasingly complex methods have been used in cyber-attacks, including ransomware, phishing, structured query language injections, social engineering schemes, and distributed denial-of-service attacks. A cyber-attack can also be in the form of unauthorized access or a blocking of authorized access.
In connection with the issuance of the 2028 Convertible Notes, we have entered into capped call transactions with the option counterparties.
The capped call transactions may affect the value of the 2028 Convertible Notes and our common stock. In connection with the issuance of the 2028 Convertible Notes, we have entered into capped call transactions with the option counterparties.
This is particularly a risk if the representative goes to work for a competitor, as the healthcare professionals that are our clients may choose to use a competitor’s services based on their relationship with our former sales representative. We may not be able to implement our business strategy, which could impair our ability to continue operations.
This is particularly a risk if the representative goes to work for a competitor, as the healthcare professionals that are our clients may choose to use a competitor’s services based on their relationship with our former sales representative.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Convertible Notes or make cash payments upon conversions thereof. The capped call transactions may affect the value of the 2028 Convertible Notes and our common stock.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Convertible Notes or make cash payments upon conversions thereof. 27 Table of Contents NEOGENOMICS, INC.
Federal, state, and local laws and regulations also govern the use, generation, manufacture, 25 Table of Contents NEOGENOMICS, INC. storage, handling, and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair business efforts.
Federal, state, and local laws and regulations also govern the use, generation, manufacture, storage, handling, and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair business efforts. If we do not comply with applicable regulations, we may be subject to fines and penalties.
A number of other states have enacted laws related to the privacy and security of consumer health information and personal data which will become effective within the next two years, including Delaware, Florida, Indiana, Iowa, Montana, Nevada, Oregon, Tennessee, Texas, and Washington, and more states have proposed legislation under consideration.
A number of other states have passed laws related to the privacy and security of consumer health information and personal data which will become effective within the next two years, including Tennessee, Minnesota, Maryland, Indiana, Kentucky and Rhode Island, and more states have proposed legislation under consideration.
The steps taken by us to protect our proprietary rights may not be adequate or third parties may infringe or misappropriate our copyrights, trademarks, trade secrets, and similar proprietary rights. In addition, other parties may assert infringement claims against us. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The steps taken by us to protect our proprietary rights may not be adequate or third parties may infringe or misappropriate our copyrights, trademarks, trade secrets, and similar proprietary rights. In addition, other parties may assert infringement claims against us. We may be subject to claims that we or our employees have wrongfully used or disclosed alleged trade secrets.
Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, results of operations and financial condition.
Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, results of operations and financial condition. We may be unable to obtain, maintain or enforce our intellectual property rights and may be subject to intellectual property litigation that could adversely impact our business.
Our net revenue will be diminished if payers do not adequately cover or reimburse our services. There has been, and will continue to be, significant efforts by both federal and state agencies to reduce costs in government healthcare programs and otherwise implement government control of healthcare costs.
There has been, and will continue to be, significant efforts by both federal and state agencies to reduce costs in government healthcare programs and otherwise implement government control of healthcare costs.

… 88 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+8 added−1 removed0 unchanged
Biggest changeThe President of Enterprise Operations provides periodic reports to the Audit Committee and the full Board of Directors (the “Board”), as well as our Chief Executive Officer and other members of our senior management as appropriate.
Biggest changeThe CISO provides periodic updates on our cybersecurity risk profile to management's Technology Risk Management Committee and the Audit Committee of our board of directors. The CISO provides periodic updates to the Audit Committee, the full Board of Directors (the “Board”), our Chief Executive Officer, and other members of senior management, as appropriate.
These reports include updates on the Company’s cyber risks and threats, the status of key initiatives to strengthen the information security profile of our systems, cybersecurity incident response readiness, assessments of the information security program, and the emerging threat landscape.
These updates typically address: • Evolving cyber risks and threats; • Progress on strategic initiatives to safeguard our information systems; • Cyber incident response preparedness and capabilities; • Findings from assessments of our information security program; and • Insights into the emerging threat landscape.
ITEM 1C. CYBERSECURITY Our information security program is managed by the President of Enterprise Operations, whose team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes.
Our information security program is overseen by the Chief Information Security Officer (“CISO”), who is responsible for establishing and executing our enterprise-wide cybersecurity strategy, policies, standards, architecture, and associated processes.
Removed
Our program is regularly evaluated by internal and external experts with the results of those reviews reported to senior management and the Board. We also actively engage with key vendors, industry participants, and intelligence and law enforcement communities as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures.
Added
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity and information security risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
Added
We regularly assess risks from cybersecurity threats; monitor our information systems for potential vulnerabilities; and test those systems pursuant to our cybersecurity policies, processes, and practices, which are integrated into our overall risk management program. To ensure the continued effectiveness of our information security controls, we regularly engage both internal and external experts to evaluate our program.
Added
The results of these evaluations are reviewed by senior management and reported to the Board. In addition, we proactively collaborate with key vendors, industry peers, and relevant government and law enforcement entities to remain informed about new threats and best practices.
Added
This integrated approach enables us to continuously refine our cybersecurity posture, helping protect the confidentiality, integrity, and availability of our systems and data, as well as evaluate and mitigate the risk of threats from third parties.
Added
To date, the Company is not aware of any cybersecurity threats, including any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
Added
However, as discussed under the heading “ We depend on information technology systems and maintain protected personal data, and a cyber-attack or other breach affecting these information technology systems or protected data could have a material adverse effect on our results of operations ” in Part I, Item 1A, “Risk Factors,” the Company remains subject to evolving cybersecurity risks that could have adverse impacts. 40 Table of Contents NEOGENOMICS, INC.
Added
Cybersecurity Governance and Oversight Consistent with our overall risk management governance structure, management is responsible for the day-to-day management of cybersecurity risk while our Board and its Audit Committee play an active, ongoing oversight role.
Added
The CISO has over 20 years of experience in technology and information security, including extensive leadership experience in the biotechnology and laboratory sectors, and possesses the requisite education, skills, experience, and industry certifications expected of an individual assigned to these duties.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed1 unchanged
Biggest changeThe following table summarizes our facilities by location and approximate square footage: Location Square Footage Durham, North Carolina 187,700 Fort Myers, Florida 150,000 Aliso Viejo, California 112,700 Carlsbad, California 28,600 Houston, Texas 28,100 San Diego, California 25,400 Cambridge, United Kingdom 12,500 Nashville, Tennessee 7,800 Tampa, Florida 5,600 Phoenix, Arizona 4,700 Atlanta, Georgia 3,800 Fresno, California 2,600 Chicago, Illinois 2,200 Our Nashville, Tennessee; Tampa, Florida; Atlanta, Georgia; and Phoenix, Arizona locations support our Clinical Services segment exclusively.
Biggest changeThe following table summarizes our facilities by location and approximate square footage: Location Square Footage Fort Myers, Florida 150,000 Aliso Viejo, California 112,700 Houston, Texas 32,800 Durham, North Carolina 32,100 Carlsbad, California 28,600 Cambridge, United Kingdom 12,500 Nashville, Tennessee 7,800 Tampa, Florida 5,600 Phoenix, Arizona 4,700 Atlanta, Georgia 3,800 Fresno, California 2,600 Chicago, Illinois 2,200
ITEM 2. PROPERTIES We operate an international network of laboratories. Our leases expire at various dates through 2041. We believe that these locations are sufficient to meet our needs at existing volume levels and, if needed, additional space will be available at a reasonable cost. 39 Table of Contents NEOGENOMICS, INC.
ITEM 2. PROPERTIES We operate a network of laboratories. Our leases expire at various dates through 2041. We believe that these locations are sufficient to meet our needs at existing volume levels and, if needed, additional space will be available at a reasonable cost.
Removed
All other locations serve both segments of the business. For further financial information about our segments, please refer to Note 17. Segment Information, in the notes to our Consolidated Financial Statements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time the Company is engaged in legal proceedings, including proceedings that arise in the ordinary course of business. For further information on legal proceedings, please refer to Note 15. Commitments and Contingencies, in the notes to our Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time the Company is engaged in legal proceedings, including proceedings that arise in the ordinary course of business. For further information on legal proceedings, please refer to Note 15. Commitments and Contingencies, in the notes to our Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 41 Table of Contents NEOGENOMICS, INC.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed3 unchanged
Biggest changeIssuer Purchases of Equity Securities The following table sets forth information concerning our purchases of common stock for the periods indicated: Period of Repurchase Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 425 $ 12.31 — — November 1, 2023 - November 30, 2023 2,365 $ 14.03 — — December 1, 2023 - December 31, 2023 14,819 $ 18.01 — — Total 17,609 — — (1) The Company’s 2023 Equity Incentive Plan, adopted on May 25, 2023, allows participants to surrender vesting shares having a fair market value equal to the required withholding tax related to the vesting of restricted stock.
Biggest changeIssuer Purchases of Equity Securities The following table sets forth information concerning our purchases of common stock for the periods indicated: Period of Repurchase Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2024 - October 31, 2024 542 $ 14.71 — — November 1, 2024 - November 30, 2024 2,267 $ 13.60 — — December 1, 2024 - December 31, 2024 19,211 $ 17.70 — — Total 22,020 — — (1) The Company’s 2023 Equity Incentive Plan, adopted on May 25, 2023, allows participants to surrender vesting shares having a fair market value equal to the required withholding tax related to the vesting of restricted stock.
The results assume that $100 (with reinvestment of all dividends) was invested in our common stock, the index, and in the peer group and its relative performance tracked through December 31, 2023. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.
The results assume that $100 (with reinvestment of all dividends) was invested in our common stock, the index, and in the peer group and its relative performance tracked through December 31, 2024. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.
The peer group is made up of Invitae Corporation, Exact Sciences Corporation, Laboratory Corporation of America Holdings, Natera, Inc., and Quest Diagnostics, Inc. Several of our closest competitors are part of large pharmaceutical or other multi-national firms, or are privately held and, as such, we are unable to obtain financial information for them.
The peer group is made up of Exact Sciences Corporation, Laboratory Corporation of America Holdings, Myriad Genetics, Inc., Natera, Inc., and Quest Diagnostics, Inc. Several of our closest competitors are part of large pharmaceutical or other multi-national firms, or are privately held and, as such, we are unable to obtain financial information for them.
The performance graph set forth above shall not be deemed incorporated by reference into any filing by us under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act except to the extent that we specifically incorporate such information by reference therein.
The performance graph set forth above shall not be deemed incorporated by reference into any filing by us under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act except to the extent that we specifically incorporate such information by reference therein. ITEM 6. [RESERVED]
Comparison of Cumulative Five Year Total Return We have presented below the cumulative total return to our stockholders of $100 during the period from December 31, 2018, through December 31, 2023, in comparison to the cumulative return on the S&P 500 Index, the Nasdaq Biotechnology Index (^NBI) and a customized peer group of five publicly traded companies during that same period.
Comparison of Cumulative Five Year Total Return We have presented below the cumulative total return to our stockholders of $100 during the period from December 31, 2019, through December 31, 2024, in comparison to the cumulative return on the S&P 500 Index, the Nasdaq Biotechnology Index (^NBI) and a customized peer group of five publicly traded companies during that same period.
The average prices listed in the above table are averages of the fair market prices at which we valued shares withheld for purposes of calculating the number of shares to be withheld.
The average prices listed in the above table are averages of the fair market prices at which we valued shares withheld for purposes of calculating the number of shares to be withheld. 42 Table of Contents NEOGENOMICS, INC.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on The Nasdaq Stock Market LLC under the symbol “NEO.” Holders of Common Stock As of February 13, 2024, there were 645 stockholders of record of our common stock.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on The Nasdaq Stock Market LLC under the symbol “NEO.” Holders of Common Stock As of February 11, 2025, there were 615 stockholders of record of our common stock.
Recent Sales of Unregistered Securities None for the year ended December 31, 2023 that have not been previously included in a Current Report on Form 8-K. 40 Table of Contents NEOGENOMICS, INC.
Recent Sales of Unregistered Securities None for the year ended December 31, 2024 that have not been previously included in a Current Report on Form 8-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

64 edited+18 added−34 removed38 unchanged
Biggest changeThe following is a reconciliation of GAAP net loss to Non-GAAP EBITDA and Adjusted EBITDA for the years ended December 31, 2023 and 2022 (dollars in thousands): 2023 2022 NET LOSS (GAAP) $ (87,968) $ (144,250) Adjustments to net loss: Interest income (16,902) (6,075) Interest expense 6,907 7,581 Income tax benefit (9,129) (15,092) Depreciation 37,450 35,372 Amortization of intangibles 35,133 34,058 EBITDA (non-GAAP) (34,509) (88,406) Further Adjustments to EBITDA: Acquisition and integration related expenses — 2,479 CEO transition costs 500 4,518 Non-cash stock-based compensation 24,633 24,672 Restructuring charges 11,088 4,516 Other significant expenses (income), net (3) 1,774 4,211 ADJUSTED EBITDA (non-GAAP) $ 3,486 $ (48,010) _________________ (3) For the year ended December 31, 2023, other significant (income) expenses, net, includes fees related to a regulatory matter and other non-recurring items.
Biggest changeThe following is a reconciliation of GAAP net loss to Non-GAAP EBITDA and Adjusted EBITDA for the years ended December 31, 2024 and 2023 (dollars in thousands): 2024 2023 NET LOSS (GAAP) $ (78,726) $ (87,968) Adjustments to net loss: Interest income (18,427) (16,902) Interest expense 6,617 6,907 Income tax benefit (1,949) (9,129) Depreciation 39,101 37,450 Amortization of intangibles 33,446 35,133 EBITDA (non-GAAP) (19,938) (34,509) Further Adjustments to EBITDA: Non-cash stock-based compensation 33,413 24,633 Restructuring charges 6,658 11,088 IP litigation costs (1) 13,753 1,111 Other significant expenses (income), net (2) 5,722 1,163 ADJUSTED EBITDA (non-GAAP) $ 39,608 $ 3,486 51 Table of Contents NEOGENOMICS, INC. _________________ (1) For the year ended December 31, 2024, IP litigation costs include legal fees and a settlement payment.
Our Company NeoGenomics, Inc., a Nevada corporation (the “Parent,” “Company,” or “NeoGenomics”), and its subsidiaries provide a wide range of oncology diagnostic testing and consultative services which includes technical laboratory services and professional interpretation of laboratory test results by licensed physicians who specialize in pathology and oncology.
Our Company NeoGenomics, Inc., a Nevada corporation (the “Company,” or “NeoGenomics”), and its subsidiaries provide a wide range of oncology diagnostic testing and consultative services which includes technical laboratory services and professional interpretation of laboratory test results by licensed physicians who specialize in pathology and oncology.
Revenue is recorded for all payers based on the amount expected to be collected, which considers implicit price concessions. Accounts receivable are reported for all Clinical Services payers based on the amount expected to be collected, which also considers implicit price concessions.
Revenue is recorded for all payers based on the amount expected to be collected, which considers implicit price concessions. Accounts receivable related to clinical services are reported for all payers based on the amount expected to be collected, which also considers implicit price concessions.
Effects of Inflation During the years ended December 31, 2023, 2022 and 2021, inflation did not have a material effect on our business. Widely reported inflation has occurred, however, and may be ongoing for the foreseeable future. Depending on the severity and persistence of these inflationary pressures, we could experience, in the future, a negative impact on our financial results.
Effects of Inflation During the years ended December 31, 2024, 2023 and 2022, inflation did not have a material effect on our business. Widely reported inflation has occurred, however, and may be ongoing for the foreseeable future. Depending on the severity and persistence of these inflationary pressures, we could experience, in the future, a negative impact on our financial results.
We closely monitor changes in legislation and take specific actions to identify and estimate the impact of changes in legislation whenever possible as regulatory changes can affect reimbursement for clinical laboratory services. We do not anticipate significant changes to our clinical revenue in 2024 resulting from known changes in legislation or rulemaking.
We closely monitor changes in legislation and take specific actions to identify and estimate the impact of changes in legislation whenever possible as regulatory changes can affect reimbursement for clinical laboratory services. We do not anticipate significant changes to our revenue in 2025 resulting from known changes in legislation or rulemaking.
Interest income includes interest earned on funds held in our cash equivalent and marketable securities accounts. The increase in interest income in 2023 was due to the higher interest rate environment experienced when compared to the same period in 2022. For further details regarding our investments in marketable securities, please refer to Note 3.
Interest income includes interest earned on funds held in our cash equivalent and marketable securities accounts. The increase in interest income in 2024 was due to the higher interest rate environment experienced when compared to the same period in 2023. For further details regarding our investments in marketable securities, please refer to Note 3.
Cost of Revenue and Gross Profit Cost of revenue includes compensation and benefit costs for performing tests, maintenance and/or depreciation of laboratory equipment, rent for laboratory facilities, laboratory reagents, probes and supplies, delivery and courier costs relating to the transportation of specimens to be tested, and amortization for acquired intangible assets.
Cost of Revenue and Gross Profit Cost of revenue includes compensation and benefit costs for performing tests, maintenance and/or depreciation of laboratory equipment, rent for laboratory facilities, laboratory reagents, probes and supplies, delivery and courier costs relating to the transportation of specimens to be tested, amortization for acquired intangible assets, and stock-based compensation.
We expect to continue to grow our Advanced Diagnostics business through (i) expansion of our test offerings (including leading edge NGS tools such as WES, WGS, and others), and (ii) our unique capabilities for developing and commercializing companion diagnostic tests.
We expect to continue to grow our business through (i) expansion of our test offerings (including leading edge NGS tools such as WES, WGS, and others), and (ii) our unique capabilities for developing and commercializing companion diagnostic tests.
Interest expense for the years ended December 31, 2023 and 2022 primarily reflects the effective interest rate on the 2028 Convertible Notes and the 2025 Convertible Notes which is 0.70% and 1.96%, respectively. Interest on the 2028 Convertible Notes and 2025 Convertible Notes began accruing upon issuance and is payable semi-annually.
Interest expense for the years ended December 31, 2024 and 2023 primarily reflects the effective interest rate on the 2028 Convertible Notes and the 2025 Convertible Notes which is 0.70% and 1.96%, respectively. Interest on the 2028 Convertible Notes and 2025 Convertible Notes began accruing upon issuance and is payable semi-annually.
While we anticipate an increasingly uncertain macroeconomic environment in fiscal year 2024, we will continue to mitigate through targeted pricing and various sourcing strategies. We remain optimistic about our growth opportunities in our key markets in fiscal year 2024.
While we anticipate an increasingly uncertain macroeconomic environment in fiscal year 2025, we will continue to mitigate through targeted pricing and various sourcing strategies. We remain optimistic about our growth opportunities in our key markets in fiscal year 2025.
On October 1, 2023, we performed a qualitative assessment to determine whether it was more likely than not that the fair values of our reporting units were less than their carrying values.
On October 1, 2024, we performed a qualitative assessment to determine whether it was more likely than not that the fair values of our reporting units were less than their carrying values.
We are continuing to develop and broaden our informatics and data-related tools to leverage our strategic market position and oncology expertise to help our stakeholders solve real-world problems such as identifying patients for clinical trials or providing clinical decision support tools for physicians and providers. We are committed to connecting patients with life-altering therapies and trials.
We are continuing to develop and broaden our oncology data solutions to leverage our strategic market position and oncology expertise to help our stakeholders solve real-world problems such as identifying patients for clinical trials or providing clinical decision support tools for physicians and providers. We are committed to connecting patients with life-altering therapies and trials.
This decrease is primarily due to decreases in compensation and benefits costs and professional fees and an increase in research and development tax credits from the UK government. We anticipate research and development expenditures will increase in the future as we continue to invest in development activities for innovation projects and bringing new tests to market.
This increase is primarily due to increases in professional fees, a decrease in research and development tax credits from the UK government and an increase in compensation and benefits costs. We anticipate research and development expenditures will increase in the future as we continue to invest in development activities for innovation projects and bringing new tests to market.
For discussion and analysis pertaining to 2022 overview and highlights as compared to 2021, please refer to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on February 24, 2023.
For discussion and analysis pertaining to 2023 overview and highlights as compared to 2022, please refer to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on February 20, 2024.
Research and Development Expenses Research and development expenses relate to costs of developing new proprietary and non-proprietary genetic tests, including compensation and benefit costs, maintenance of laboratory equipment, laboratory supplies (reagents), and outside consultants and experts assisting our research and development team.
Research and Development Expenses Research and development expenses relate to costs of developing new proprietary and non-proprietary genetic tests, including compensation and benefit costs, maintenance of laboratory equipment, laboratory supplies (reagents), and outside consultants and experts assisting our research and development team, as well as stock-based compensation.
Definitions of Non-GAAP Measures Non-GAAP Adjusted EBITDA “Adjusted EBITDA” is defined by NeoGenomics as net (loss) income from continuing operations before: (i) interest income and expense, (ii) tax (benefit) or expense, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation expense, and, if applicable in a reporting period, (v) acquisition and integration related expenses, (vi) CEO transition costs, (vii) restructuring costs, and (viii) other significant or non-operating expenses, net.
Definitions of Non-GAAP Measures Non-GAAP Adjusted EBITDA “Adjusted EBITDA” is defined by NeoGenomics as net (loss) income from continuing operations before: (i) interest income, (ii) interest expense, (iii) tax (benefit) or expense, (iv) depreciation and amortization expense, (v) stock-based compensation expense, and, if applicable in a reporting period, (vi) restructuring charges, (vii) intellectual property (“IP”) litigation costs, and (viii) other significant or non-operating (income) or expenses, net.
These tests are interpreted by NeoGenomics’ team of molecular experts and are often ordered in conjunction with other testing modalities. NGS panels are one of our fastest growing testing areas and clients can often receive a significant amount of biomarker information from very limited samples.
These tests are interpreted by our team of molecular experts and are often ordered in conjunction with other testing modalities. NGS panels, one of our fastest-growing testing areas, enable clients to receive significant biomarker information from limited samples.
We believe our relationship as 43 Table of Contents NEOGENOMICS, INC. a non-competitive partner to community-based pathology practices, hospital pathology labs, reference labs, and academic centers can empower them to expand their breadth of testing to provide a menu of services that could match or exceed the level of service found in any center of excellence around the world.
We believe our relationship as a non-competitive partner to community-based pathology practices, hospital pathology labs, reference labs, and academic centers empowers them to expand their breadth of testing. We believe this enables them to provide a menu of services that could match or exceed the level of service found in any center of excellence around the world.
This $64.0 million decrease was primarily driven by our operating results (net loss adjusted for depreciation, amortization of intangibles, and other non-cash charges) which resulted in $57.8 million of lower cash used by operating activities year-over-year, as well as a $6.2 million decrease in cash used resulting from net changes in operating assets and liabilities.
This $9.0 million increase was primarily driven by our operating results (net loss adjusted for depreciation, amortization of intangibles, and other non-cash charges) which resulted in $16.1 million of lower cash used by operating activities year-over-year, as well as a $7.1 million decrease in cash used resulting from net changes in operating assets and liabilities.
Sales and Marketing Expenses Sales and marketing expenses are primarily attributable to employee-related costs including sales management, sales representatives, sales and marketing consultants, and marketing and customer service personnel.
Sales and Marketing Expenses Sales and marketing expenses are primarily attributable to employee-related costs including sales management, sales representatives, sales and marketing consultants, marketing and client service personnel, and stock-based compensation.
Cash Flows from Operating Activities Cash used in operating activities during the year ended December 31, 2023, was $2.0 million compared to $66.0 million in the same period in 2022.
Cash Flows from Operating Activities Cash provided by in operating activities during the year ended December 31, 2024, was $7.0 million compared to cash used of $2.0 million in the same period in 2023.
Capital Expenditures We forecast capital expenditures in order to execute on our business plan and maintain growth; however, the actual amount and timing of such capital expenditures will ultimately be determined by the volume of business.
Related Party Transactions, to our Consolidated Financial Statements for a description of our related party transactions. Capital Expenditures We forecast capital expenditures in order to execute on our business plan and maintain growth; however, the actual amount and timing of such capital expenditures will ultimately be determined by the volume of business.
For further details regarding the convertible notes please refer to Note 7. Debt in the accompanying notes to the Consolidated Financial Statements.
For further details regarding the convertible notes please refer to Note 7. Debt in the accompanying notes to the Consolidated Financial Statements. 50 Table of Contents NEOGENOMICS, INC.
The following table reflects our estimate of the breakdown of net clinical revenue by type of payer for the years ended December 31, 2023, 2022 and 2021: 2023 2022 2021 Client direct billing 67 % 67 % 63 % Commercial insurance 18 % 17 % 19 % Medicare and other government 15 % 16 % 18 % Total 100 % 100 % 100 % Results of Operations for the year ended December 31, 2023 as compared with the year ended December 31, 2022 Revenue The Company has historically reported its activities in two reportable segments; (1) the Clinical Services segment and (2) the Pharma Services segment.
The following table reflects our estimate of the breakdown of net revenue by type of payer for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 Client direct billing 72 % 72 % 73 % Commercial insurance 15 % 15 % 14 % Medicare and other government 13 % 13 % 13 % Self-pay — % — % — % Total 100 % 100 % 100 % Results of Operations for the year ended December 31, 2024 as compared with the year ended December 31, 2023 Revenue The Company has historically reported its activities in two reportable segments, (1) Clinical Services and (2) Advanced Diagnostics.
Fair Value Measurements in the accompanying notes to the Consolidated Financial Statements. Interest Expense Interest expense for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands): 2023 2022 $ Change % Change Interest expense $ 6,907 $ 7,581 $ (674) (8.9) % Interest expense decreased $0.7 million in 2023 compared to 2022.
Fair Value Measurements in the accompanying notes to the Consolidated Financial Statements. Interest Expense Interest expense for the years ended December 31, 2024 and 2023 is as follows (dollars in thousands): 2024 2023 $ Change % Change Interest expense $ 6,617 $ 6,907 $ (290) (4.2) % Interest expense decreased $0.3 million in 2024 compared to 2023.
We also support our pathology clients with interpretation and consultative services using our own specialized team of pathologists for difficult or complex cases and we provide overflow interpretation services when requested by clients. We are a leading provider of molecular and NGS testing.
We also support our pathology clients with interpretation and consultative services using our own specialized team of pathologists for difficult or complex cases, as well as provide overflow interpretation services when requested.
The decrease in cash used by operating activities for the year ended December 31, 2023 compared to the same period in 2022 was primarily driven by an improvement in gross profit of $56.7 million.
The increase in cash provided by operating activities for the year ended December 31, 2024 compared to the same period in 2023 was primarily driven by an improvement in gross profit of $45.5 million.
We currently anticipate that our capital expenditures for the year ended December 31, 2024, will be in the range of $35 million to $40 million. During the 51 Table of Contents NEOGENOMICS, INC. year ended December 31, 2023, we purchased, with cash, approximately $28.7 million of capital equipment, software, and leasehold improvements.
We currently anticipate that our capital expenditures for the year ended December 31, 2025, will be in the range of $30 million to $35 million. During the year ended December 31, 2024, we purchased, with cash, approximately $41.1 million of capital equipment, software, and leasehold improvements.
Consolidated research and development expense for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands): 2023 2022 $ Change % Change Research and development $ 27,309 $ 30,326 $ (3,017) (9.9) % Research and development as a percentage of revenue 4.6 % 5.9 % Research and development expenses decreased $3.0 million in 2023 compared to 2022.
Consolidated research and development expense for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands): 2024 2023 $ Change % Change Research and development $ 31,159 $ 27,309 $ 3,850 14.1 % Research and development as a percentage of revenue 4.7 % 4.6 % Research and development expenses increased $3.9 million in 2024 compared to 2023.
Community-based pathology practices and hospital pathology labs may order certain testing services on a technical component only (“TC” or “tech-only”) basis, which allows them to participate in the diagnostic process by performing the professional component (“PC”) interpretation services without having to hire laboratory technologists or purchase the sophisticated equipment needed to perform the technical component of the tests.
Community-based pathology practices and hospital pathology labs may order certain testing services on a TC basis, allowing them to participate in the diagnostic process by performing the PC interpretation services without having to hire laboratory technologists or purchase sophisticated equipment needed for the TC tests.
The following table presents a summary of our consolidated cash flows for operating, investing, and financing activities for the years ended December 31, 2023 and 2022, as well as the period ending cash and cash equivalents and working capital (in thousands): 50 Table of Contents NEOGENOMICS, INC. 2023 2022 Net cash (used in) provided by: Operating activities $ (1,953) $ (65,993) Investing activities 76,707 517 Financing activities 4,554 11,829 Net change in cash and cash equivalents 79,308 (53,647) Cash, cash equivalents and restricted cash, beginning of year 263,180 316,827 Cash and cash equivalents, end of year $ 342,488 $ 263,180 Working Capital, (4) end of period $ 500,508 $ 515,359 _________________ (4) Defined as current assets less current liabilities.
The following table presents a summary of our consolidated cash flows for operating, investing, and financing activities for the years ended December 31, 2024 and 2023, as well as the period ending cash and cash equivalents and working capital (in thousands): 2024 2023 Net cash (used in) provided by: Operating activities $ 7,023 $ (1,953) Investing activities 12,855 76,707 Financing activities 4,646 4,554 Net change in cash and cash equivalents 24,524 79,308 Cash, cash equivalents and restricted cash, beginning of year 342,488 263,180 Cash and cash equivalents, end of year $ 367,012 $ 342,488 Working Capital, (1) end of period $ 294,778 $ 500,508 _________________ (1) Defined as current assets less current liabilities.
Operating needs include, but are not limited to, the planned costs to operate our business (including amounts required to fund working capital and capital expenditures, continued research, and development efforts) and potential strategic acquisitions and investments. Related Party Transactions Please refer to Note 16. Related Party Transactions, to our Consolidated Financial Statements for a description of our related party transactions.
Operating needs include, but are not limited to, the planned costs to operate our business, including amounts required to fund working capital including the convertible senior notes due 2025, capital expenditures, continued research and development efforts, and potential strategic acquisitions and investments. 52 Table of Contents NEOGENOMICS, INC. Related Party Transactions Please refer to Note 15.
These comprehensive panels can allow for faster treatment decisions for patients as compared to a series of single-gene molecular tests being ordered sequentially. We have a broad Molecular testing menu and our targeted NeoTYPE panels include genes relevant to a particular cancer type, as well as other complementary tests such as IHC and FISH.
These comprehensive panels can allow for faster treatment decisions for patients as compared to a series of single-gene molecular tests being ordered sequentially. Our broad molecular testing menu includes NeoTYPE and Neo Comprehensive panels which target genes relevant to a particular cancer type. Additionally, we have molecular-only and comprehensive NGS-targeted panels which combine DNA and RNA into a single workflow.
Consolidated cost of revenue increased for the year ended December 31, 2023 when compared to the same period in 2022 primarily due to higher compensation and benefit costs and an increase in supplies expense partially offset by a decrease in professional fees and shipping costs. Gross profit margin for 2023 was 41.3% compared to 36.9% in 2022.
Consolidated cost of revenue increased $23.4 million for the year ended December 31, 2024 when compared to the same period in 2023 primarily due to $15.5 million in higher compensation and benefit costs, an increase in supplies expense of $6.9 million, and an increase in professional fees of $0.9 million, partially offset by a decrease in technology and equipment fees of $0.6 million.
In addition, we directly serve oncology, dermatology and other clinician practices that prefer to have a direct relationship with a laboratory for cancer-related genetic testing services. We typically serve these types of clients with a comprehensive service offering where we perform both the technical and professional components of the tests ordered.
For oncology, dermatology, and other clinician practices that prefer a direct relationship with a laboratory for cancer-related genetic testing services, we typically offer a comprehensive service where we perform both the TC and PC components of tests.
The increase primarily reflects increases in compensation and benefit costs due to increased headcount, an increase in sales commissions, and an increase in travel expenses partially offset by a decrease in professional fees. We expect higher commissions expense in the coming quarters as our sales representatives generate new business in our business segments.
Sales and marketing expenses increased $13.8 million in 2024 compared to 2023. The increase primarily reflects increases in compensation and benefit costs due to increased headcount, an increase in sales commissions, and an increase in travel. We expect higher commissions expense in the coming quarters as we expand our sales representative force and our sales representatives generate new business.
The Company operates a network of cancer-focused testing laboratories in the United States and the United Kingdom. 2023 Overview and Highlights • We increased consolidated revenue by 16.1% compared to 2022, including increases in Clinical Services revenue of 18.4% and in Advanced Diagnostics Services revenue of 5.5%; • Net cash used in operations improved $64.0 million compared to 2022; • We increased Adjusted EBITDA $51.5 million to positive $3.5 million compared to in 2022; and • We improved gross margin by 448 basis points while also improving turnaround time.
The Company operates a network of cancer-focused testing laboratories in the United States and the United Kingdom. 43 Table of Contents NEOGENOMICS, INC. 2024 Overview and Highlights • We increased revenue by 11.6% compared to 2023; • Net cash used in operations improved $9.0 million compared to 2023; • We increased Adjusted EBITDA $36.1 million to positive $39.6 million compared to 2023; and • We improved gross margin by 259 basis points while also improving turnaround time.
Consolidated general and administrative expenses for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands): 47 Table of Contents NEOGENOMICS, INC. 2023 2022 $ Change % Change General and administrative $ 243,101 $ 243,356 $ (255) (0.1) % General and administrative as a percentage of revenue 41.1 % 47.7 % General and administrative expenses decreased $0.3 million in 2023 compared to 2022.
Consolidated general and administrative expenses for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands): 2024 2023 $ Change % Change General and administrative $ 259,737 $ 243,101 $ 16,636 6.8 % General and administrative as a percentage of revenue 39.3 % 41.1 % General and administrative expenses increased $16.6 million in 2024 compared to 2023.
Enhance Our People and Culture • Enhance teammate development and engagement; and • Grow a customer-oriented and growth mindset. These critical success factors have been communicated throughout our Company. We have structured departmental goals around these factors and have created employee incentive plans in which every employee will have a meaningful incentive for our success.
Enhance Our People and Culture • Enhance our Neo Culture; and • Expand scientific, medical and product capabilities. 44 Table of Contents NEOGENOMICS, INC. These critical success factors have been communicated throughout our Company. We have structured departmental goals around these factors and have created employee incentive plans in which every employee will have a meaningful incentive for our success.
Interest Income Interest income for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands): 2023 2022 $ Change % Change Interest income $ (16,902) $ (6,075) $ (10,827) 178.2 % Interest income increased $10.8 million in 2023 compared to 2022.
Interest Income Interest income for the years ended December 31, 2024 and 2023 is as follows (dollars in thousands): 2024 2023 $ Change % Change Interest income $ (18,427) $ (16,902) $ (1,525) 9.0 % Interest income increased $1.5 million in 2024 compared to 2023.
Consolidated sales and marketing expenses for the years ended December 31, 2023 and 2022, are as follows (dollars in thousands): 2023 2022 $ Change % Change Sales and marketing $ 70,842 $ 67,321 $ 3,521 5.2 % Sales and marketing as a percentage of revenue 12.0 % 13.2 % Sales and marketing expenses increased $3.5 million in 2023 compared to 2022.
Consolidated sales and marketing expenses for the years ended December 31, 2024 and 2023, are as follows (dollars in thousands): 2024 2023 $ Change % Change Sales and marketing $ 84,652 $ 70,842 $ 13,810 19.5 % Sales and marketing as a percentage of revenue 12.8 % 12.0 % 49 Table of Contents NEOGENOMICS, INC.
Liquidity Outlook As of December 31, 2023, we had $342.5 million in cash and cash equivalents in addition to $72.7 million of marketable securities available to support current operational liquidity needs. We anticipate that the cash on hand, marketable securities, and cash collections are sufficient to fund our near-term capital and operating needs for at least the next 12 months.
We anticipate that the cash on hand, marketable securities, and cash collections are sufficient to fund our near-term capital and operating needs for at least the next 12 months.
Cash Flows from Financing Activities During the year ended December 31, 2023, cash provided by financing activities was $4.6 million compared to $11.8 million for the same period in 2022.
These decreases were partially offset by a $12.3 million increase in purchases of property and equipment year-over-year. Cash Flows from Financing Activities During the year ended December 31, 2024, cash provided by financing activities was $4.6 million compared to $4.6 million for the same period in 2023.
Restructuring charges Consolidated restructuring charges for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands): 2023 2022 $ Change % Change Restructuring charges $ 11,088 $ 4,516 $ 6,572 145.5 % Restructuring charges as a percentage of revenue 2.0 % 1.0 % 48 Table of Contents NEOGENOMICS, INC.
Restructuring charges Consolidated restructuring charges for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands): 2024 2023 $ Change % Change Restructuring charges $ 6,658 $ 11,088 $ (4,430) (40.0) % Restructuring charges as a percentage of revenue 1.0 % 2.0 % Restructuring charges relate to a restructuring program to improve execution and drive efficiency across the organization.
These decreases in general and administrative expenses for the year ended December 31, 2023 were partially offset by an increase in travel expenses of $1.7 million, an increase in depreciation and amortization expense of $1.2 million, an increase in compensation and benefit costs of $1.0 million, an increase in equipment expenses of $0.9 million, and an increase in professional fees of $0.7 million.
These increases in general and administrative expenses for the year ended December 31, 2024 were partially offset by a decrease in amortization of $1.7 million, and a decrease in credit card fees of $1.0 million.
This 4.4% increase is primarily related to increases in revenue partially offset by higher compensation and benefits costs and supplies expense. General and Administrative Expenses General and administrative expenses consist of compensation and benefit costs for our executive, billing, finance, human resources, information technology, and other administrative personnel, as well as stock-based compensation.
General and Administrative Expenses General and administrative expenses consist of compensation and benefit costs for our executive, billing, finance, human resources, information technology, and other administrative personnel, as well as stock-based compensation. We also allocate professional services, facilities expense, IT infrastructure costs, depreciation, amortization, and other administrative-related costs to general and administrative expenses.
Revenue Recognition and Accounts Receivable Clinical Services Revenue is recognized when, or as, performance obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to a customer. For Clinical Services, our specialized diagnostic services are performed based on an online test order or a written test requisition form.
Revenue Recognition and Accounts Receivable Our specialized clinical services are performed based on an online test order or a written test requisition form. The performance obligation is satisfied and revenues are recognized once the clinical services have been performed and the results have been delivered to the ordering physician.
Liquidity and Capital Resources To date, we have financed our operations primarily through cash generated from operations, public and private sales of debt and equity securities, and bank debt borrowings.
For the year ended December 31, 2023, other significant (income) expenses, net, fees related to a regulatory matter, CEO transition costs and other non-recurring items. Liquidity and Capital Resources To date, we have financed our operations primarily through cash generated from operations, public and private sales of debt and equity securities, and bank debt borrowings.
Cash Flows from Investing Activities During the year ended December 31, 2023, cash provided by investing activities was $76.7 million, compared to $0.5 million of cash used in investing activities for the same period in 2022.
Cash Flows from Investing Activities During the year ended December 31, 2024, cash provided by investing activities was $12.9 million, compared to $76.7 million for the same period in 2023. This change was due to a $6.8 million decrease in purchases of marketable securities and a $58.3 million decrease in the sales and maturities of marketable securities year-over-year.
We are continuing to develop and broaden our informatics and data-related tools to leverage our unique market position and oncology expertise to help our stakeholders solve real-world problems such as identifying patients for clinical trials or providing clinical decision support tools for physicians and providers.
Our oncology data solutions, which involve the licensing of de-identified data to pharmaceutical and biotech customers in the form of either retrospective records or prospective deliveries of data, are designed to leverage our unique market position to solve real-world problems, such as identifying patients for clinical trials or providing clinical decision support tools for physicians and providers.
Restructuring charges relate to a restructuring program to improve execution and drive efficiency across the organization. Restructuring charges consist of severance and other employee costs, costs for optimizing the Company’s geographic presence, and consulting and other costs. Restructuring charges increased $6.6 million in 2023 compared to 2022.
Restructuring charges consist of severance and other employee costs, costs for optimizing the Company’s geographic presence, and consulting and other costs. Restructuring charges decreased $4.4 million in 2024 compared to 2023. Restructuring charges in 2024 consist of $1.5 million in severance and other employee costs, $4.1 million in Facility Footprint Optimization costs, and $1.0 million of consulting and other costs.
This is attractive to our clients as patient samples do not need to be split and then managed across several laboratories. The acquisition of Inivata provided us with oncology liquid biopsy technology capabilities.
This comprehensive molecular test menu allows our clients to obtain most of their molecular oncology testing needs satisfied by our laboratory. This is attractive to our clients as patient samples do not need to be split and then managed across several laboratories.
Net Loss The following table provides the net loss for the years ended December 31, 2023 and 2022, along with the computation of basic and diluted net loss per share (in thousands, except per share amounts): 2023 2022 Net loss $ (87,968) $ (144,250) Basic weighted average shares outstanding 125,502 124,217 Diluted weighted average shares outstanding 125,502 124,217 Basic net loss per share $ (0.70) $ (1.16) Diluted net loss per share $ (0.70) $ (1.16) 49 Table of Contents NEOGENOMICS, INC.
Net Loss The following table provides the net loss for the years ended December 31, 2024 and 2023, along with the computation of basic and diluted net loss per share (in thousands, except per share amounts): 2024 2023 Net loss $ (78,726) $ (87,968) Basic weighted average shares outstanding 126,658 125,502 Diluted weighted average shares outstanding 126,658 125,502 Basic net loss per share $ (0.62) $ (0.70) Diluted net loss per share $ (0.62) $ (0.70) Non-GAAP Measures Use of Non-GAAP Financial Measures In order to provide greater transparency regarding our operating performance, the financial results and financial guidance include the use of certain non-GAAP financial measures that involve adjustments to GAAP results.
InVisionFirst ® -Lung is a highly sensitive, targeted plasma-based assay for patients with non-small cell lung cancer, and RaDaR ® is a liquid biopsy assay designed to detect residual disease and recurrence in plasma samples from patients with solid tumor malignancies. We expect our molecular laboratory and NGS capabilities to be a key growth driver in the coming years.
The acquisition of Inivata in June 2021 enhanced our capabilities with oncology liquid biopsy technology including RaDaR® which is designed to detect residual disease and recurrence in plasma samples from patients with solid tumor malignancies. These molecular laboratory and NGS capabilities are expected to drive growth in the coming years.
The consolidated cost of revenue and gross profit metrics for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands): 2023 2022 % Change Cost of revenue: Clinical Services (1) $ 287,059 $ 261,742 9.7 % Advanced Diagnostics (2) 59,980 60,090 (0.2) % Total cost of revenue $ 347,039 $ 321,832 7.8 % Cost of revenue as a percentage of revenue 58.7 % 63.1 % Gross Profit: Clinical Services $ 208,577 $ 157,012 32.8 % Advanced Diagnostics 36,027 30,884 16.7 % Total gross profit $ 244,604 $ 187,896 30.2 % Gross profit margin 41.3 % 36.9 % _________________ (1) Clinical Services cost of revenue for the twelve months ended December 31, 2023 and December 31, 2022 include $17.3 million and $17.1 million, respectively, of amortization of acquired intangible assets.
The consolidated cost of revenue and gross profit metrics for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands): 2024 2023 % Change Cost of revenue: Cost of revenue (1) $ 370,466 $ 347,039 6.8 % Cost of revenue as a percentage of revenue 56.1 % 58.7 % Gross Profit: Gross profit $ 290,100 $ 244,604 18.6 % Gross profit margin 43.9 % 41.3 % _________________ (1) Cost of revenue for the twelve months ended December 31, 2024 includes $19.6 million of amortization of acquired intangible assets and $1.4 million of stock-based compensation.
Clinical Services revenue increased $76.9 million, or 18.4%, to $495.6 million in 2023 as compared to $418.8 million in 2022. Increases in Clinical Services revenue reflects an increase in test volume, a more favorable test mix, and an increase in average unit price due to strategic reimbursement initiatives.
Increases in revenue reflect an increase in test volume, a more favorable test mix, and an increase in average unit price due to strategic reimbursement initiatives partially offset by lower RaDaR® revenue.
The cash provided by financing activities during the year ended December 31, 2023 consisted of $4.6 million for the issuance of common stock net of issuance costs offset by $0.1 million used for the repayment of equipment financing obligations.
The cash provided by financing activities during the year ended December 31, 2024 consisted of $4.6 million for the issuance of common stock net of issuance costs. Liquidity Outlook As of December 31, 2024, we had $367.0 million in cash and cash equivalents in addition to $19.8 million of marketable securities available to support current operational liquidity needs.
For the year ended December 31, 2022, other significant (income) expenses, net, includes fees related to a regulatory matter, moving costs, a gain on the sale of a building and other non-recurring items.
For the year ended December 31, 2023, IP litigation costs include legal fees. (2) For the year ended December 31, 2024, other significant (income) expenses, net, includes CEO transition costs, site closure costs, severance costs, and fees related to non-recurring legal matters.
Clinical Services and Advanced Diagnostics net revenue for the years ended December 31, 2023 and 2022, are as follows (dollars in thousands): 46 Table of Contents NEOGENOMICS, INC. 2023 2022 % Change Net revenue: Clinical Services $ 495,636 $ 418,754 18.4 % Advanced Diagnostics 96,007 90,974 5.5 % Total net revenue $ 591,643 $ 509,728 16.1 % Consolidated revenue in 2023 increased $81.9 million, or 16.1%, as compared to 2022.
In 2024, we simplified our operational approach, bringing Clinical Services and Advanced Diagnostics under a single segment. The consolidated revenue for the years ended December 31, 2024 and 2023, are as follows (dollars in thousands): 2024 2023 % Change Net revenue $ 660,566 $ 591,643 11.6 % Revenue in 2024 increased $68.9 million, or 11.6%, as compared to 2023.
We continue to develop our company-wide focus, which includes the following four critical success factors for 2024: 42 Table of Contents NEOGENOMICS, INC. Profitably Grow Core Business • Grow volume and NGS mix; • Drive market penetration; • Win on oncology; and • Improve revenue cycle management.
We continue to develop our company-wide focus, which includes the following four critical success factors for 2025: Profitably Grow Our Core Business • Accelerate volume growth; both through the traditional clinical and NGS modalities; • Accelerate growth with oncologists in the community; and • Execute pharmaceutical client strategy and deliver profitable revenue growth.
(2) Advanced Diagnostics cost of revenue for both the twelve months ended December 31, 2023 and December 31, 2022 include $2.4 million of amortization of acquired intangible assets.
Cost of revenue for the twelve months ended December 31, 2023 includes $19.6 million of amortization of acquired intangible assets. There were no stock-based compensation amounts recorded for the year ended December 31, 2023. 48 Table of Contents NEOGENOMICS, INC.
In carrying out these commitments, we aim to provide transparency and choice to patients regarding the handling and use of their data through our Notice of Privacy Practices, and have invested in leading technologies to ensure the data we maintain is secure at all times.
Our commitment to connecting patients with life-altering therapies and trials remains a core focus. We have invested in leading technologies to secure data and maintain transparency and choice for patients through our Notice of Privacy Practices. 46 Table of Contents NEOGENOMICS, INC.
This decrease was partially due to a decrease in recruiting expenses of $3.4 million, a decrease in loss on disposals of assets of $1.2 million, a decrease in credit card fees of $0.7 million, and a decrease in non-recurring facilities costs of $0.5 million.
This increase was partially due to an increase in legal and other professional fees of $8.3 million, an increase in compensation and benefit costs of $7.2 million, and an increase in depreciation of $1.6 million.
In certain instances, larger clinician practices have begun to internalize pathology interpretation services, and our tech-only service offering allows these larger clinician practices to also participate in the diagnostic process by performing the PC interpretation services on TC testing performed by us. In these instances we will typically provide all of the more complex, molecular testing services.
Larger clinician practices internalizing pathology interpretation services can benefit from our tech-only service offering, allowing them to participate in this diagnostic process while we handle the more complex molecular testing services. We are a leading provider of Heme oncology diagnostic testing, which includes molecular and NGS testing, and one of the key providers of solid tumor NGS testing solutions.
Removed
Accelerate Advanced Diagnostics • Execute Neo Comprehensive 2.0 launch; • Execute liquid biopsy CGP launch; and • Improve gross margin. Drive Value Creation • Increase productivity and efficiency; • Improve gross margin; • Implement LIMS Phase 1; and • Prioritize quality system enhancements.
Added
Accelerate Innovation • Deliver 3-year product roadmaps; • Execute successful timely-planned product launch(es); and • Drive productization and sales excellence for Data Solutions. Drive Value Creation • Improve operational efficiency and gross margin; • Transform Neo’s digital ecosystem; and • Achieve positive cash flow from operations.
Removed
At this time, we cannot predict what the current administration's impact will be on the oversight and regulation of LDTs or if there will be any changes to current rules and regulations.
Added
On April 29, 2024, the FDA announced a final rule on the regulation of Laboratory Developed Tests (“LDTs”) which amends the FDA's regulations to make explicit that LDT's are devices under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”).
Removed
Reportable Segments We report our activities in two reportable segments—the Clinical Services Segment and the Advanced Diagnostics Segment. We have presented the financial information reviewed by the Chief Operating Decision Maker including revenues, cost of revenue, and gross margin for each of our reportable segments.
Added
The FDA issued a policy to phase out, over the course of four years, its general enforcement discretion approach to LDTs and also issued targeted enforcement discretion policies for certain categories of LDTs.
Removed
Assets are not presented at the segment level as that information is not used by the CODM. Clinical Services The clinical cancer testing services we offer to community-based pathologists and oncologists are designed to be a natural extension of, and complementary to, the services that they perform within their own practices.
Added
The FDA is allowing currently marketed tests offered as LDTs (that were first marketed before May 6, 2024) to stay on the market without requiring pre-market review and approval by the FDA. Similarly, the FDA will not require pre-market review and approval by the FDA for tests approved by the New York State Department of Health Clinical Laboratory Evaluation Program.
Removed
In addition, we offer molecular-only NGS targeted and comprehensive panels which combine DNA and RNA into a single work stream in order to report a full spectrum of genomic alterations, including mutations, fusions, copy number variations, and gene expression. This comprehensive menu means that our clients can get most of their oncology testing needs satisfied by our laboratory.
Added
Reportable Segments In 2024, we simplified our operational approach, bringing Clinical Services and Advanced Diagnostics under a single segment. This decision was driven by an analysis of our reporting structure, the information available to our Chief Operating Decision Maker (“CODM”), and the strategic decisions being made to manage the business.
Removed
Advanced Diagnostics Our Advanced Diagnostics revenue consists of three revenue streams: • Clinical trials and research; • Validation laboratory services; and • Informatics. Our Advanced Diagnostics segment supports pharmaceutical firms in their drug development programs by supporting various clinical trials and research.
Added
This decision aims to streamline our operations and enhance our service offerings to our diverse client base, which includes community-based pathology and oncology practices, hospital pathology labs, reference labs, academic centers, and pharmaceutical companies. Revenue Streams Our single operating segment now encompasses a comprehensive range of services previously categorized under Clinical Services and Advanced Diagnostics.
Removed
This portion of our business often involves working with the pharmaceutical firms (“sponsors”) on study design as well as performing the required testing. Our medical team often advises the sponsor and works closely with them as specimens are received from the enrolled sites.
Added
The revenue streams include: • Clinical cancer testing; • Interpretation and consultative services; • Molecular and NGS testing; • Comprehensive technical and professional services offering; • Clinical trials and research; • Validation laboratory services; and • Oncology data solutions.
Removed
We also work on developing tests that will be used as part of a companion diagnostic to determine patients’ response to a particular drug. As studies unfold, our clinical trials team reports the data and often provides key analysis and insights back to the sponsors.
Added
Service Offerings Our clinical cancer testing services are designed to complement the work of community-based pathologists and oncologists, allowing them to expand their testing capabilities without significant investment in new technology or personnel.

… 36 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed8 unchanged
Biggest changeTo minimize our exposure due to adverse shifts in interest rates, we invest in short-term securities with short maturities. If a 1% change in interest rates were to have occurred on December 31, 2023, this change would not have had a material effect on the fair value of our investment portfolio as of that date.
Biggest changeTo minimize our exposure due to adverse shifts in interest rates, we invest in short-term securities with short maturities. If a 1% change in interest rates were to have occurred on December 31, 2024, this change would not have had a material effect on the fair value of our investment portfolio as of that date.
Our international revenues and expenses denominated in foreign currencies (primarily British Pounds), expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. We do not hedge foreign currency exchange risks and do not currently believe that these risks are significant. 52 Table of Contents NEOGENOMICS, INC.
Our international revenues and expenses denominated in foreign currencies (primarily British Pounds), expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. We do not hedge foreign currency exchange risks and do not currently believe that these risks are significant. 53 Table of Contents NEOGENOMICS, INC.

Other NEO 10-K year-over-year comparisons