Q1 2025 NeoGenomics Inc Earnings Call
Greetings and welcome to the Neogenomics first quarter 2025 conference call.
At this time all participants are in a listen only mode and a question and answer session will follow the formal presentation.
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Please note this conference is being recorded.
Speaker Change: I will now turn the conference over to your host Kendra Sweeney VP of Investor Relations Ma'am you may begin.
Kendra Sweeney: Thank you Ali good morning, everyone and welcome to the Neogenomics first quarter 2025 financial results call with me today to discuss the results are Tony Zook, Chief Executive Officer, Jeff Sherman, Chief Financial Officer, Warren Stone, President Chief President and Chief operating Officer.
Andrew Kovacs: And Andrew Kovacs, Chief Innovation Officer.
Andrew Kovacs: Members of the management team are available for Q&A, including <unk> head of strategy and transformation Alyea Levo General counsel and head of business development and Dr. Nate Montgomery VP of clinical services.
Andrew Kovacs: This call is being simultaneously webcast and we will be referring to slide presentation.
Andrew Kovacs: Posted to the investors tab on our website at IR Dot Neogenomics dotcom.
Andrew Kovacs: During this call we will make forward looking statements regarding our future performance, we caution you that actual events or results could differ materially.
Andrew Kovacs: Forward looking statements made during this call speak only as of the original date on this call and we undertake no obligation to update or revise any of these statements.
Andrew Kovacs: Please refer to our most recent forms 10-K, 10-Q and 8-K, we filed with the SEC to identify important risks and other factors that may cause our actual results to differ from the forward looking statements.
During this call we refer to certain non-GAAP financial measures.
Andrew Kovacs: Adjustments to GAAP results.
Andrew Kovacs: The non-GAAP financial measures presented should not be considered an alternative to the financial measures required by GAAP and are unlikely to be comparable to non-GAAP financial measures provided by other companies.
Andrew Kovacs: Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measures and a table available in the press release, we issued this morning I will now turn the call over to Tony Best Chief Executive Officer of Neogenomics. Thanks, Kendra. Good morning, everyone and thank you for joining us today.
Andrew Kovacs: On today's call, we will discuss the highlights of our first quarter financial results and provide an update on our key business growth drivers.
Before we discuss our financials I want to thank our teammates for their unyielding commitment to our mission and their hard work throughout the quarter.
Andrew Kovacs: Profound mission driven culture is what attracted me to neo and it's what drives me and our 2400 teammates every day.
Andrew Kovacs: Since officially becoming CEO on April one I've met with shareholders our teammates in the labs and our sales force in the field to gain a deeper understanding of our business.
Andrew Kovacs: Many shareholders I've met over the last few weeks of best under my tenure, what stays the same and what changes.
Andrew Kovacs: First and foremost nios unique patient centric culture is what motivated me to join the board a few years ago and I believe it will continue to propel this company forward.
Andrew Kovacs: The things that have been working our commitment to cancer patients served in the community setting and financial discipline across the company stayed the same.
Andrew Kovacs: As we enter the next phase of growth, we will dedicate more resources to innovation through research and development business development and commercialization of new products to provide patients with more options for their care, while expanding our market reach.
Andrew Kovacs: I believe it has a tremendous opportunity to further capitalize on our position as a leader in oncology solutions by offering a broad test menu that serves cancer patients and providers, where they are with a focus on the community setting.
Andrew Kovacs: Most industry estimates, 80% of all cancer patients choose to be treated in the community setting.
Andrew Kovacs: Where they can recover in the comfort of their homes surrounded by their loved ones and trusted doctors.
Andrew Kovacs: Our deep relationships with community hospitals, and oncologists provide us with competitive advantage and our responsibility to deliver accurate results quicker to inform treatment decisions.
Speaker Change: We've taken steps to set our organization up for greater success, including the alignment of our commercial and operations teams under the leadership of worn stone who's been elevated to the role of President and COO.
Speaker Change: In addition in March we announced the acquisition of path line of New York State approved lab based in New Jersey.
Speaker Change: Which allows us to expand our capabilities and accelerate growth by establishing a local presence in the northeast.
Speaker Change: We expect to grow incremental topline revenue with contribution from the acquired business this year while.
Speaker Change: While operational consolidation efforts and synergies are expected to yield cost savings and help generate positive adjusted EBITDA from this acquisition starting next year.
Speaker Change: I look forward to working with this team over the coming years to execute on our long term strategy and solidifying our position as the market leader in community oncology.
With that let's get into the Q1 highlights on the next slide.
Speaker Change: We had a solid start to the year with revenues of $168 million and adjusted EBITDA of $7 1 million.
Speaker Change: Clinical testing volumes increased 8% versus prior year with a 3% increase in revenue per test or.
Speaker Change: Our progress continues with adjusted EBIT performance with over 100% improvement for the quarter, making Q1, our seventh consecutive quarter of positive adjusted EBITDA.
Speaker Change: With continued strength of our clinical business and the acquisition pipeline, we are raising our full year 2025 revenue guidance, while reaffirming our adjusted EBITDA guidance now.
Speaker Change: Now, let me hand, it over to warn stone, President and Chief operating officer to give an update on the business and some insights into its growth. Thanks.
Speaker Change: Thanks, Tony Let's turn to slide five I am pleased to share that the clinical volumes grew 8% in the first quarter with <unk> revenue growth of 18%. Since Q1 of 2023, we have launched five mgs products that account for 22% of our total clinical revenue in Q1, which.
Speaker Change: Demonstrates our ability to penetrate the market with new and relevant products and the value of our sales channel.
Speaker Change: Based on the most recent market data the NGL market is growing 10% to 15% annually and we believe we can continue to grow meaningfully above this rate.
Speaker Change: The Q1 <unk> growth rate is impacted by the annualized nation of new products, one less calendar day than 2024 and difficult comps with over 50% <unk> revenue growth in Q1, 2024, we expect to get back with our upcoming product launches as well as the maturation of our expanded sales force will be.
Speaker Change: Able to further accelerate growth and achieve the 25% annual growth in Ags that we outlined in our long range plan.
Speaker Change: To fuel the accelerated growth we have completed the expansion of our commercial resources to drive market penetration into community oncology and to support the launch of key project products targeted to this segments with approximately 140 salespeople on our team we are approaching a one to one ratio between the hospital pathology in.
Speaker Change: Community Oncology Cove point.
Speaker Change: These new teammates are joining at a very exciting time for <unk> as we prepare to launch pantry for liquid biopsy later this quarter and kickoff our commercial collaboration with adaptive to deliver advanced minimal residual disease testing for our <unk> customers starting in the third quarter. This partnership will enhance our ability to drive Inc.
Commensal custom campus cases.
Speaker Change: In addition to new tests. The recently closed acquisition of pack line will help accelerate growth in clinical settings. Historically, we have been underpenetrated in the northeast market because of the lack of physical presence in the area hampered our ability to deliver expected physician experience.
Speaker Change: Now, we will be able to offer an improved experience across the cancer care continuum and anticipate that.
Speaker Change: Comprehensive menu of oncology test solutions will drive incremental business with greater reach from an expanded commercial organization and a physician presence in the highly relevant region.
Speaker Change: We will continue to penetrate both new and existing customers with a sharpened focus on Ngls testing.
Speaker Change: As you penetrate deeper into new accounts and maintain a priority of delivering exceptional customer experience. We have signed an agreement with epic to interface with clients, which will allow us to scale a bidirectional interface at an accelerated rate.
Speaker Change: Through the epic partnership, we will have better taste ordering and discrete genomic data into existing workflows and debate delivered cash reports directly into the EMR, reducing turnaround time and enabling improved patient care.
Speaker Change: These integrations also supported our collection efforts since being able to pull medical necessity or prior authorizations, our epic create less pay a friction.
Speaker Change: We are beginning to see the benefits of the investments we've made in <unk> last year with the 300, plus new interfaces and we expect to start activating epic integrations to customers in the second half of the year with revenue benefits being recognized shortly thereafter.
Speaker Change: We experienced a significant increase in revenues and improved customer stickiness with clients integrations.
Speaker Change: In the non critical setting we're experiencing macro factors that have impacted our business beyond what we had anticipated specifically the pharma and biotech spend has not rebounded sufficiently to facilitate growth in that business.
Speaker Change: Tariff announcements and other trade headwinds as well as potential cut in NIH funding and grants are anticipated to result in reduced R&D spend across non clinical customer base.
Speaker Change: While the non clinical portfolio portion of our business accounts for around 10% of our total revenue in the quarter and is dilutive to our growth today. We continue to believe in the strategic value of this business and are confident it will return to growth.
Now, let me handover to Andrew Kovacs, Chief Innovation officer to talk about upcoming products and clinical data that will provide a commercial organization with tools to expand their reach.
Andrew Kovacs: Thanks Ward consistent with our prior quarter statements or innovation strategy is focused on three key areas product development clinical evidence generation and research beginning.
Andrew Kovacs: Beginning with product development, the bulk of our existing test menu has historically been directed towards the diagnostics market.
Andrew Kovacs: But more and more we are building out our test menu to cover therapy selection as well.
Andrew Kovacs: Alignment with this strategy early last week, we announced the successful completion of our Pan tracer liquid biopsy analytical validation.
Andrew Kovacs: <unk> is a blood based test that analyzes certainly circulating tumor DNA.
Andrew Kovacs: Identified key genomic alterations in patients with advanced stage solid tumors. It is designed to support treatment decisions when tumor tissue tissue was unavailable or insufficient a common challenge in oncology care.
Andrew Kovacs: And the validation study pantries are L. Bx demonstrated strong concordance with comparable products across multiple biomarker classes, including MSI in TMP, which can aid in the selection of various immuno therapeutic treatments. We have submitted this study along with our analog political validation data for approval by molded optics.
Andrew Kovacs: We will present, a poster with a portion of the details of the associated validation vaccines later this morning at ACR.
Andrew Kovacs: Furthermore, in preparation for a full clinical launch planned later this quarter. We are currently allowing select physicians use the assay on a limited basis ahead of commercial availability.
Andrew Kovacs: Valuation assessment program or EAP is intended to optimize the full launch by testing and identifying opportunities to streamline logistics reporting and customer support.
Andrew Kovacs: Physician interest in the participating program has been strong and we were very pleased to see the program oversubscribed in just five days of announcing the EAP.
Andrew Kovacs: This level of interest only furthers, our belief that our clinical customers, particularly those in the community oncology space are eager to consolidate their testing needs with a single comprehensive testing service provider.
Andrew Kovacs: In addition to pantries are L. Dx, we will also launch an upgrade to our on market Neo comprehensive Ngls, now, which will now be called pantries or tissue.
Andrew Kovacs: The upgrade will include the option of the addition of HRD, which.
Andrew Kovacs: Provides predictive and prognostic value in ovarian cancer therapy selection and the <unk>.
Andrew Kovacs: Potential to be useful in other tissue types as data and guidelines continue to evolve.
Andrew Kovacs: This pan for Acer product suite to assisting with pantries are L bx, and tracer tissue and penetration and tracer tissue HRD provides an easily accessible set of tests that can be used independently or in a complementary manner for comprehensive genomic profiling in the community oncology setting.
Andrew Kovacs: Now turning our attention to the <unk> space, we continue to support radar one point under the legally approved carve outs for patients in clinical trials already using this technology.
Andrew Kovacs: We have also remained dedicated to the development of radar version, one one which is now successfully completed analytical validation is available for downstream operational readiness activities when warranted.
Andrew Kovacs: In addition to advancing our radar technology, we remain dedicated to our Nextgen MRV research program focused on generating IP that is entirely separate and distinct more radar portfolio.
Andrew Kovacs: Our research team includes one of the original pioneers of Cte DNA technologies, and we are leveraging his leadership lithium scientific expertise to identify novel approaches for the ultra sensitive detection of load shedding cancers. Under this program. We expect 2025 to serve as a year for IP development in 2026 for building products.
Andrew Kovacs: In trials with a projected nextgen emergency product launch in the 2027 timeframe.
Andrew Kovacs: And lastly, just this morning, we announced a collaboration with ultimate genomics to expand future clinical test offerings in oncology using the using your 100 sequencing platform as a pioneer in high quality low cost whole genome sequencing ultimate represents an ideal partner for <unk> to collaborate with to continue delivering the best in class.
Andrew Kovacs: Oncology testing solutions to our customers and the community setting.
Andrew Kovacs: Today's announcement represents a first step in a series of strategic moves that <unk> intends to make to leverage our internal R&D resources, more effectively allowing us to translate innovations rapidly and efficiently towards the benefit of patients.
Andrew Kovacs: <unk> care and now to Jeff for our first quarter financial results.
Jeff Sherman: Thanks, Andrew we saw continued earnings momentum in Q1 with another quarter of positive adjusted EBITDA growing 102% over the prior year to positive $7 million. The combination of clinical test volume growth and improvements in revenue per test due to tech Smith test mix and our steam initiatives.
Jeff Sherman: To drive revenue growth adjusted gross margins improved by 146 basis points to 47% with adjusted gross profit is up 11% to $79 million.
Jeff Sherman: Total revenue for the quarter was $168 million, an increase of 8% over prior year and in line with the previous range, we provided of 8% to 10% growth for Q1 'twenty five.
Jeff Sherman: Total test volume was the highest in the company's history and was also up sequentially by one 4% over Q4 the year over year increase in revenues reflects increasing test volumes and higher revenue per test due to increased ordering of higher value Ngls test and strategic reimbursement initiatives.
Jeff Sherman: Clinical revenue continued with double digit growth and increased by $15 million or 11, 3% in the quarter against a very strong comp of 17, 1% growth in Q1 of 2024.
Jeff Sherman: This strong clinical growth was partially offset by non clinical revenue declining by $3 4 million or 15, 8%.
Jeff Sherman: The first quarter of 2024 was our most difficult comp for this year with 13, 9% total revenue growth and an extra day due to leap year, which impacted the overall revenue growth rate.
Jeff Sherman: As our expanded Salesforce penetrates deeper into the community oncology setting we are seeing increased adoption of Ngls testing, which is driving higher volume growth. The strong demand for <unk> testing and the insights. It provides continues to fuel revenue growth and earnings.
Jeff Sherman: We continue to believe ongoing state biomarker legislation being passed we will also provide a long term tailwind to improve pricing and cash collections, but this is a process that will take time to develop.
Jeff Sherman: The path line acquisition is expected to.
Jeff Sherman: Adjusted gross margins and adjusted EBITDA for the remainder of 2025, as we work to optimize the operations and service offerings. However.
Jeff Sherman: However, we expect topline will accelerate volumes revenue and earnings growth in 2026 and beyond as we build on their strong platform with the expanded neo test menu, including our full Ngls desktop offerings.
Speaker Change: As Warner noted for the non clinical business macro factors around tariffs and uncertainty regarding the NIH budget and subsequent brands have caused our customers to delay spending which impacted our revenue on top of this most pharma trials utilizing radar one plano have now wrapped up and our inability to sell <unk>.
Speaker Change: Our one point of our contracts due to the negotiated settlement further impacts revenue as 2025 progresses. There is heightened uncertainty around pharma and biotech spending, but we are continuing our efforts to position <unk> to grow pharma revenue through the introduction of new products are more streamlined go to market approach and <unk>.
Speaker Change: Hans sales enablement efforts, we now expect our pharma revenue to decline this year, but will be offset with incremental clinical revenue growth in 2025.
Speaker Change: Looking at our first quarter financial overview on slide nine adjusted gross profit increased by 11% over prior year as a result of revenue growth and operating leverage generating higher adjusted gross profit and margins.
Speaker Change: Regarding operating expenses sales and marketing expense was $23 million, an increase of 12%, reflecting our continued investment in the expansion of our commercial sales organization and support staff.
Speaker Change: R&D expense increased 34% to $10 million in the quarter and our 2025 guidance also incorporates ramping investments in R&D targeted to drive future products and long term IP value.
Speaker Change: Finally, G&A expense increased to $68 million driven by higher technology costs to drive customer engagement increased compensation cost and expenses associated with the <unk> acquisition and CEO transition.
Speaker Change: We ended the first quarter with cash and marketable securities of $358 million a decrease.
Speaker Change: A decrease of 7% versus prior year.
Speaker Change: As is typical cash outflows were the highest in Q1 due to annual bonus payments with cash flow from operations of negative $25 million, an improvement of 2% over Q1 of 2024.
Speaker Change: We still intend to pay off our May 2025 convertible notes with a principal balance of $201 million using existing cash and marketable securities and expect to have sufficient liquidity to invest in the sales force expansion product development and future potential business development opportunities, including licensing partnerships and strategic.
Speaker Change: Tuck in acquisitions.
Speaker Change: Let's move on to our full year 2025 guidance for the full year. We are revising the guide to reflect the incremental revenue and costs associated with our acquisition of top line. We now anticipate revenue of 747% to $759 million, representing 13% to 15% growth while adjusted EBITDA.
Speaker Change: A 55% to $58 million remains unchanged, we expect pipeline to contribute $12 million to $14 million in revenue in 2025 and have a negative adjusted EBITDA impact of $2 million in the second quarter with an additional with additional potential impact of negative $1 million for the remainder of the year.
Speaker Change: We have begun the integration activities for pipeline aligning operations and consolidating resources and expect to begin realizing synergies in the second half of the year. We expect revenue in the second quarter to be in the range of 183 to 187 million with adjusted EBITDA of $9 million to $11 million with the near term earnings drag.
Speaker Change: Pipeline.
Finally, the majority of our supplies are sourced from U S. Based manufacturers at this time. So we believe the potential cost impact of any new tariffs would be manageable and offset with other savings initiatives.
Speaker Change: We will continue to take a balanced approach to investments with increasing adjusted EBITDA, enabling further investments to drive operating efficiencies in the business and targeted investments in R&D to drive future product innovation for our well established commercial channel.
Speaker Change: We view 2025 is a full year story as our sales force matures and new products are introduced complemented by financial discipline that fuels earnings and with that I'll hand, it back to Tony to wrap up.
Tony: Thanks, Jeff it's been an eventful few weeks in my seat and more time I spend with our teammates more excited I am about the work we're doing the sustained performance that delivered these results in benefits patients and their families.
Kendra Sweeney: We have ambitious plans and an exciting opportunity ahead of us and look forward to reporting our continued progress next quarter. So now let me hand, the call over to Kendra for questions.
Speaker Change: Thanks, Tony that concludes our prepared remarks. This morning, Let's go ahead and open the line for questions Holly.
Speaker Change: Thank you Mark.
Speaker Change: At this time, we will be conducting our question and answer session.
Speaker Change: We'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to remove your question from the queue.
Speaker Change: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Our first question is coming from Andrew <unk> with William Blair. Your line is live.
Speaker Change: Hi, guys. Good morning, Thanks for taking the questions So Tony.
Speaker Change: Tony maybe just start where you sort of left off there.
Speaker Change: Can you, maybe just sort of talk to us about the last 30 days at the helm is there anything that maybe make you more optimistic about the business, where its outlook and I guess, Conversely to that any areas of the business that you think maybe need a little bit more attention than.
Speaker Change: You thought coming in here.
Speaker Change: Thanks, Andrew.
Speaker Change: I would say that I haven't seen anything of surprised to be honest I have.
Speaker Change: <unk> seen many many things that have concerned confirmed my my observations coming in.
Speaker Change: I really enjoyed the management team Ive had the opportunity to engage with the next level of leadership across the organization.
Speaker Change: Let's see.
Speaker Change: An abundance of talent there from.
Speaker Change: From a business perspective.
Speaker Change: As we stated very strong solid performance for the year for the quarter with volume that was its highest <unk>.
Speaker Change: <unk> growth above market and so all of that was confirmatory for me coming in.
Speaker Change: Very good interactions with the R&D team to get more focused and where we want to go so that's been a very positive.
Speaker Change: <unk>.
Speaker Change: And as we said there were some fairly strong headwinds on the pharma side, but that was not unexpected and we kind of anticipated that even seen the early days of the non flush at the end of the quarter. So.
Speaker Change: All in all it's been a very positive experience with <unk> benefited in large part from the two or three months running.
Speaker Change: So I had the opportunity to really get out and about and get a good appreciation for the organization. So thanks for that.
Speaker Change: Perfect and then maybe just on Ngls here I think more on you caught out five new products drive 22% of the clinical revenue can you, maybe just unpack that a little bit for us is that sort of broad based across the five test stores that maybe one or two that drive that and related there as we sort of think about these new product launches later this year in particular penetration lbs.
Speaker Change: Is this the type of growth trajectory that we should anticipate over the next couple of years for that product or is it going to be something different. Thank you.
Speaker Change: Yes, good morning, Andrew Thanks for the question.
Speaker Change: The byproduct that we extend to that there is a couple that have a larger contribution and others, but theyre all contributing very meaningfully to that.
Speaker Change: 22% of revenue and again the majority of those are going into the community, which is part of our strategy and our success here is obviously the combination of the products that we've launched but also the investments we've made from a field sales perspective that we've been talking about.
Speaker Change: And we've been very strategic in the investment of resources in parallel with product launches and we've just done exactly the same thing ahead of penetrates the liquid which as we said we will look to launch commercially later this quarter. So the investment into the up to 140 salespeople aligns with that launch so we remain very optimistic intend.
Speaker Change: <unk> ability to continue to penetrate into can be oncology as demonstrated by those five products that I referenced.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question is coming from Dan Brennan with TD Cowen Your line is live.
Great. Thank you maybe the first question would just be on the pharma business.
Speaker Change: <unk> talked a lot about some of the headwinds that are happening right now maybe could you just walk through that.
Speaker Change: The full year guide I think you said decline so maybe just elaborate on kind of what's expected in Q2 and for the rest of the year on the pharma and kind of what your visibility is on reaching those goals.
Speaker Change: Yeah, Dan This is Jeff.
Speaker Change: If you looked at our non clinical business, which includes pharma last year, we were down $7 million roughly for the year.
Speaker Change: I think thats, probably a range as we think about this year in a similar range of we're expecting for pharma as we look at this year farmers. The majority of the non clinical and Ah represents roughly about three quarters of the non clinical revenue. We do expect our our informatics business, which is oncology data service is now to grow.
Speaker Change: For the year.
Speaker Change: While we do expect that our clinical revenue growth.
Speaker Change: It will help offset that and so as you think about our guide for the year. We added we added $12 million to $14 million for path line. So the midpoint of that is $13 million with us for three quarters. So if you annualize that that's roughly about $17 million plus.
Speaker Change: So very much in line with the.
Initial revenue range of $20 million. So as we think about the things that are going to drive growth in the back half of the year it will be the <unk>.
Speaker Change: In GFS growth it will be liquid biopsy, helping to drive growth and it won't be the maturing of the sales force and a significant sales force expansion that we brought in in Q4 and Q1 of this year. So I think that's what gives us confidence, we'll see revenue growth accelerated in the back half of the year.
Speaker Change: Okay got that and then maybe just on the guide itself.
Speaker Change: You just mentioned <unk> Speaker, Yes, you just mentioned path line 17 million that is below the $29 two doses that conservatism just kind of what's going on with path line and as we think about the.
Speaker Change: The Q2 guide just how much of a path line isn't that Q2 guide versus the underlying core neo and <unk>.
Speaker Change: I know you cited some headwinds this quarter with leap year, and a tough comp or any things we should be thinking about for Q2 in terms of any any any factors that might influence Q2 got clinical numbers. Thank you.
Speaker Change: Q2, Q1, and Q2 were our strongest revenue growth quarters last years, we grew almost 14% in Q1 and about 12% in Q2. So Q2, so a little bit of a tougher comp and the comps get easier in the.
Speaker Change: The back half of the year.
Speaker Change: Look I think it's a new acquisition. So we've got it integrated customers, we're looking at the product offerings as well.
Speaker Change: We certainly think Rob.
Speaker Change: Drawing platform to grow in that business and not just their core business by the Ngls growth going into 2026. So I think we just think it will take time to ramp up the business as a new acquisition.
Speaker Change: To learn the customers.
Speaker Change: Hopefully, we will see good growth there going into 2026 as well.
Speaker Change: And I think in terms of if you look at that $13 million its roughly $4 million.
Speaker Change: Plus a quarter. So that's how I would expect $3 million to $4 million for topline in the second quarter.
Speaker Change: Okay ill get back in the queue. Thank you.
Speaker Change: Thank you. Our next question is coming from payoffs Savant with Morgan Stanley. Your line is live.
Speaker Change: Hey, guys good morning, and thank.
Speaker Change: For the time.
Speaker Change: Maybe just one on the balance sheet entrepreneur download convert it looks like you have about $150 million in cash. So there is another I think $340 million convert and Jan 28, just walk us through how you're thinking about sort of flexibility to invest in the business in this multiple <unk>.
Speaker Change: <unk> launches plus Mardi development coming up.
Speaker Change: And also you've got inorganic tuck ins that you've talked about in the past potentially so.
Speaker Change: So just walk us through the capital deployment and internal investment flexibility here in the context of the converts and where youll be on after the paydown.
Speaker Change: Sure. Thanks, Thanks for the question so I would say this.
Speaker Change: This year Q1 is our highest cash burn quarter as is fairly typical and we will build cash throughout the remaining of the year.
Speaker Change: So we will expect to enter 2026, and a position of strength and we actually expect to produce positive free cash flow in 2026, our cash balance will start growing.
Speaker Change: In 2026, and as our earnings continues to grow we will have a variety of options available for the 2028 converts including paying a portion of them or all of it off or refinancing with both straight debt or convertible notes. So I think as our financial performance continues to improve we'll have significant off.
Speaker Change: Actions.
Speaker Change: With the 2028 converts I mean, it's a very low cost basically.
Speaker Change: Fixed that right now it's kind of 25 basis point coupon. So it's actually very good long term financing for us and as we think about our investments going forward, we think that cash liquidity will be sufficient to do the things, we need to do including licensing partnerships and strategic tuck in acquisitions and as that cash flow starts to grow.
Speaker Change: It will provide us more flexibility to continue to invest in the business, but our guide already contemplated R&D continuing to grow.
Speaker Change: Again, a big chunk of our R&D investment this year.
Speaker Change: As for radar 1.1, and next Gen <unk> and we really don't have anything in our long range guide for that so early funding future potential upside in revenue out of our existing cash flow.
Speaker Change: Got it that's Super helpful. And then maybe a couple on the pipeline for either Tony or Warren here.
Speaker Change: On the on the pantries are liquid biopsy launch.
Speaker Change: Can you just share like how many of your customers do you see eventually ordering both neo comprehensive and pantries are concurrently or should we just think of these as you know.
Speaker Change: The comprehensive offering <unk> tissue was not available then you've got a reflex to the.
Speaker Change: The <unk> assay and then second on the <unk> sort of timeline that you laid out.
Speaker Change: Is there anything you can do the pull forward that sort of nexgen assay timeline and are you at this point and done with clear validation of radar one one thank you.
Speaker Change: So if you.
Andrew Kovacs: I wouldn't mind handling the first part and then Andrew will throw to you for the update.
Speaker Change: Sounds good thanks.
Speaker Change: And the <unk>.
Andrew Kovacs: As we mentioned Andrew mentioned in his script, we actually rebranding our near comprehensive to penetrate the tissue.
Andrew Kovacs: And obviously, the liquid biopsy product Relaunches pantry, illiquid and we've actually done that because we wanted to simplify the ordering process from a community oncology business makes it particularly with regards to those that fall within therapy selection.
Speaker Change: Ed that simplifies the ordering.
Speaker Change: We anticipate a big portion of the testing to be for lung testing and from a guideline perspective concurrent testing is now something that has been included in the guidelines.
Speaker Change: Though the Cove point is identical for the two products, we would expect a fair amount of concurrent testing on the lung side of things and in other cases more likely a case of where.
Speaker Change: Physician preference because we're hearing more and more that physicians like the flexibility of the cost to turn on time and it eliminates the need for block retrieval. So sometimes they go with a liquid first strategy others still go with what's perceived as the gulfs data, which is the solid first when tissue is available so it's going to be positioned.
Speaker Change: Restaurants.
Speaker Change: Other indications outside of lung.
Speaker Change: Andrew would you months ended up.
Speaker Change: Thank you.
Speaker Change: Absolutely. So in terms of next Gen. <unk> I think if the question is is there any opportunity to accelerate the timeline.
Speaker Change: I think what we've actually laid out is a reasonable but aggressive schedule in the sense that we really are starting from developing brand new IP. This year.
Speaker Change: Moving into developing those kind of foundational elements into a true product in 2026, which was also going to have to include some clinical work.
Speaker Change: Get to a launch schedule by 2027, so I do think foundational Lee like that is that is probably a realistic timeline I would say there is the always the opportunity for acceleration through partnerships, which screams THAAD and myself continue to explore along the way, but I think as a starting point this represents really a very.
Speaker Change: Right.
Speaker Change: I'll say aggressive but achievable timeframe.
Speaker Change: When it comes to our radar one one I think you asked the question about analytical validation, yes analytical validation has been completed for that product at this time.
And we're really just kind of queuing up for being operationally ready at this point in time.
Speaker Change: Got it Super helpful guys. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question is coming from Mike Matson with Needham <unk> Company. Your line is live.
Mike Matson: Yes, good morning.
Speaker Change: I guess, Tony I, just wanted to ask about your comments on M&A.
Mike Matson: You have already taught in year one.
Mike Matson: Since you've joined the company or I guess become CEO our pipeline. So should we expect a pickup in M&A activity over the next couple of years.
Mike Matson: Yes, thanks for the question Mike.
Mike Matson: I've shared my thoughts that I believe that Neil is a tremendous strength in the community oncology segment.
Mike Matson: And the community hospital, setting and we're only strengthening that with our field force investments I do believe that that is the leverage level asset.
Mike Matson: You'll see examples of that with the adaptive partnership and now with the path line acquisition.
Mike Matson: We will continue to work with cream and Ali in the rest of the team and identify opportunities that we think could help generate incremental value for the organization and our shareholders.
Mike Matson: We see them more as tuck in in licensing opportunities nothing transformational in scope.
Mike Matson: We believe we have the firepower to do that so we will continue to look at these types of opportunities and.
Mike Matson: Make determinations based on the value that we think they can bring and we want them to be accretive in a relatively short period of time and so we wanted to do this in a very responsible manner, but it is a strength and I hope that we can more fully leverage it and become a partner of choice.
Mike Matson: Okay got it and then just as far as the the annual guidance I mean, you're effectively maintaining the organic guidance, but you do have sort of an increased headwind from the non clinical side.
Mike Matson: Understand that you expect upside on the clinical business to offset that but I mean should.
Mike Matson: Should we be modeling things maybe at the lower end of the range now just given that kind of incremental headwind in that the non clinical business.
Mike Matson: Yes look I think we've provided a range.
Mike Matson: That we think makes sense and is achievable.
Mike Matson: I think I would say our forecasting accuracy has improved and so.
Mike Matson: The variance between actual performance in.
Mike Matson: Guidance, our consensus in the past has shrunk and so I would expect it's a reasonable range.
Mike Matson: And we are providing.
Mike Matson: While we have seen in the past over the last couple of quarters as guidance revenue guidance is still been above the top end of our guidance and so I certainly wouldn't point people towards that I would point you to our.
Mike Matson: Our guidance range is a reasonable basis, where we think our performance is going to land.
Mike Matson: And we expect to be in that range.
Mike Matson: Okay got it thank you.
Keith: Thank Keith.
Speaker Change: Our next question is coming from Mac Sykes with Goldman Sachs. Your line is nice.
Mac Sykes: Hi, good morning, Thanks for taking my questions maybe just.
Mac Sykes: Just one on the average revenue per test noted the sequential step down in Q1 you've.
Mac Sykes: You've made a lot of progress over the past year on that but just from a modeling perspective like how should we think about average revenue per test as we move through the year have we hit sort of a ceiling in the near term in terms of what you can do or is there still room to improve that any puts and takes for the sequential step down this quarter.
Mac Sykes: Yes, I would say Matt.
Mac Sykes: Matt look at the mix of test first and so adding path line top line has quite a bit of a lower AEP and so the blended rate, it's going to negatively impact our blended AEP I would say when you look at it from an actual modality basis, we continue to make progress. So we continue to see our overall.
Mac Sykes: Hi.
Mac Sykes: Go up by modality, and Thats, driven it's driven by selling more Ngls, it's driven by our Sam initiatives driven by pricing initiatives.
Mac Sykes: But the mix of the mix of the modalities will have an impact.
Mac Sykes: Our overall A&P. So so you can see situations, where our overall volume is growing.
Mac Sykes: A&P may be growing less or flat.
Because of the mix of test and so <unk> will help that over time, but I wouldn't expect to see the rate of growth that we saw in prior years, and particularly when we're adding some lower volume.
Mac Sykes: Tests for pathway now again with top line, we expect that the jumping off point and now as we get into the back half of this year and in 2026 that we will see more ngls.
Mac Sykes: Growth pull through through path line, but that's going to certainly impact the AEP over the next couple of quarters negatively.
Speaker Change: Got it. Thanks, that's very helpful. And then one for you Warren just with the commercial and operations under your leadership could you maybe call out some of the potential synergies.
Speaker Change: You could sort of apply to that both being under your leadership, whether it's sort of ease of ordering for.
Speaker Change: For providers that will help your commercial team or other kind of examples of how you can drive some synergies now that those are both under your leadership.
Speaker Change: Yes. Thank you great question I would say I mean, there's a number and the two that are probably pull out to the first one is what I would just simply cordis catches that whole workflow, which snapshot of course within my accountability and just identifying areas of leverage opportunity in.
Speaker Change: Improve that workflow, whether it's around the customer experience side of things, taking friction out of that process, whether it's around thinking about our site network and how do we optimize where we do our testing to maximize gross margin and ultimately the cash collection side of things already starting to see a number of them.
Speaker Change: Real opportunities, there, which is going to benefit both the customer and ultimately the P&L as well I think a second area for me, which is starting to surface pretty readily is just around portfolio.
Speaker Change: How we can optimize vitalize and even some cases prune our portfolio to ensure that we are focused on the most relevant products that are needed in terms of diagnosis therapy selection and MLP subsidiary.
Speaker Change: High level, but really starting to see a lot of opportunity here to create value.
Speaker Change: And Matt I would only add one.
Speaker Change: I have already seen it with the path line integration. It's just a great example, when you have all of the operations leaders and the sales leaders in the same room as youre laying out the plan for that integration. It just seems to go much faster and much more seamless and so I've already seen some of the early benefits as well.
Speaker Change: Great. Thank you very much.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question is coming from David Westenburg with Piper Sandler Your line is life.
Speaker Change: Hi, Thank you for taking the question. So first of all just wanted to talk about or ask about the sales force maturity and on average how long does it take for your sales force to reach.
Speaker Change: Full kind of productivity and where are we outright now with the with the sales adds.
Speaker Change: Yes.
Speaker Change: Great question, I think you David I think.
Speaker Change: We've completed the ads.
Speaker Change: Right now.
Speaker Change: In terms of the investment that we had indicated that we would make at the back end of last year and the beginning of this year that Chris This is principally complete.
Speaker Change: In terms of time to productivity it really does depend on where the person came from how much knowledge that they have on oncology diagnostics, how many relationships that they have within the target customers et cetera. So that does create a little bit of variability, but we are typically seeing this sort of six to nine months is instead of a timeframe there.
Speaker Change: We are seeing from the time somebody starts to when they start showing value and if you've been in the oncology setting in a similar territory, you're probably getting there in six months, if oncology as Youtube territories, new to it may take a little a little longer.
Speaker Change: Got it so if we're just thinking about contributions here from Salesforce as an isolated variable I mean, we should probably look at this is like kind of a Q4 and maybe even into 26 is kind of the acceleration plan.
Speaker Change: Yes, some of the resources, we added last year, we started the expansion in 'twenty late 2024, and the balance this year. So we certainly are anticipating.
Speaker Change: Leverage in the second half of the year aligned with the Aldi the liquid biopsy launch that is planned for late this quarter.
Speaker Change: Got it great and then just a really quick question for Jeff Here can you talk about is was there any impact of wildfires in southern California, I think you've made the acquisition of Genoptix Clarient I'm guessing you have a very high percentage of revenue in southern California, and if that is indeed, the case could you see any benefits in the later half.
Speaker Change: The year because.
Speaker Change: Cancer testing doesn't just go away it just gets pushed back.
Speaker Change: Yes, so our lab is in Orange County, which really wasn't impacted by the fires at all.
Speaker Change: I would say no no material impact from the fires in the quarter.
Speaker Change: Okay.
Thank you.
Speaker Change: Our next question is coming from Mason Cherico with Stephens. Your line is live.
Speaker Change: Hey, guys. Thanks for the questions, maybe going back to a prior question here on DSP and asking it.
Speaker Change: A different way I realized path line is going to be dilutive to ASP.
Speaker Change: Near term, but have your expectations around the runway for core <unk> ASP changed at all compared to Navy.
Speaker Change: A quarter ago, I think last quarter. When you guys gave guidance you talked about clinical revenue growth this year being driven by a similar mix of volume and ASP growth as it was last year.
Speaker Change: Yes, I would say.
Speaker Change: On balance I would say, it's probably a little more heavily weighted to volume growth then Ben.
Speaker Change: Growth this year.
Speaker Change: In 2010.
Speaker Change: 25, again, I think we expect to continue to see progress either modality level, but.
Speaker Change: As we're adding business, sometimes we're adding business and lower lower volume modalities are lower value modalities as well. So it's really just the mix of business and how that drives AEP, but on a on a discrete modality basis, we're still seeing progress. It's just more mix driven so but I would expect more of the revenue growth to come from the volume side and a little bit.
Speaker Change: Less from the AEP side in 'twenty five.
Speaker Change: Got it Okay and then could you also just talk about how quickly you would expect to begin driving adoption of the broader portfolio with top line customers. It seems like and correct me if I'm wrong here, but thats more of a 2026 the opportunity.
Speaker Change: Just could you give us a sense of how much of that benefit is baked in this year why it shouldn't be playing out more materially in the back half of it is not really baked in any details there.
Speaker Change: Okay.
Speaker Change: <unk> do you want to talk to that.
Speaker Change: Yes, I mean, I can add real quick.
Speaker Change: So we still have to do a lot of validation of our existing new tests in the path line lab, so thats going to take probably a good part of the next quarter couple of quarters.
Speaker Change: So minimal benefit this year because of that and then we'll see we'll start seeing the spike probably around the Q4, but more probably Q1 of next year timeframe.
Speaker Change: Got it thank you.
Speaker Change: Okay.
Speaker Change: Keith or.
Speaker Change: Our next question is coming from Mike Riskin with Banc of America.
Speaker Change: Erica your line is live.
Speaker Change: Hey, this is Eric on for Mike. Thanks for taking the question I know you already talked about <unk>, a little bit and timeline.
Speaker Change: But I wanted to get a sense of how youre thinking about the evolution in the competitive landscape of <unk> and just the mature the maturation at that point. Thanks.
Speaker Change: Yes.
Andrew Kovacs: I'll kick it off and then turn it over to Andrew.
Speaker Change: So thanks for the call Erin.
Speaker Change: I guess at.
Speaker Change: At the highest level.
Speaker Change: We still see the MLP market has had very very attractive.
Speaker Change: Penetration rates are still relatively low, especially in the community environment and so we still think there is ample opportunity for us to leverage our offerings.
Speaker Change: And look with the entirety of our portfolio and our significant presence in that sector.
Speaker Change: So we are after.
Speaker Change: Optimistic about what our opportunities lie with that and with Andrew perhaps maybe a little bit more color.
Speaker Change: Yes, no happy to Ed and Tony Thanks for the question.
Speaker Change: I think I'll start maybe by jumping off of what Tony said this is still a fairly underpenetrated market and I think we're just in the early innings of of how we think about sensitivity I would say, we're starting to see more and more companies start to focus on ultra sensitive applications I still think thats pretty much in the early innings.
Speaker Change: And I think Theres a lot of time left in these next three years did not only prove out the analytical nature of this this ultra sensitive.
Speaker Change: The approach, but youre going to have to youre going to have to prove it out in the clinical setting as well.
Speaker Change: And so the idea here is that we do have some of the pioneers of Cte DNA technology in house as part of our prior acquisitions.
Speaker Change: And I think they really do set us up for having kind of that intellectual advantage over the next several years to ensure we're kind of moving to where the market is going in regards to sensitivity and potentially other evolving.
Speaker Change: Needs of the market. So I think that's probably how I see kind of that landscape evolve over the next several years.
Speaker Change: Great. Thank you.
Andrew Cooper: Thank you. Our next question is coming from Andrew Cooper with Raymond James Your line is live.
Speaker Change: Hi, everybody thanks for the questions.
Speaker Change: Let me just first just stick on Mardi you talked about queuing up for operational readiness for one one maybe just remind us some of the hurdles there and how you think about that launch as the October trial in years, and kind of what what thresholds or stage gates, you need to get through.
Speaker Change: Before we see that out commercially.
Andrew: Andrew do you want to just speak a little bit about some of the work that's still ongoing.
Speaker Change: Yeah, No I think that'd be great I think we're solidly to.
Speaker Change: Three major elements.
Speaker Change: We're driving it through at this point in time, one is the bridging studies. So again remembering that we have claims on our radar one point.
Speaker Change: Products, where we believe there is good equivalency between one and $1 one in terms of performance and so we intend to go to <unk> to demonstrate bridging.
Speaker Change: So that those reimbursements those indications for use can be transferred over to the $1. One product. So I think thats one.
One area of focus the second area of focus when we talk about operational readiness is really kind of exercising that operational muscle ensuring all the validation on the production side are ready to go systems already commercial is ready to go and so that's really the second part and then those are the two elements are focused at this point.
Okay helpful. And then just maybe one on the P&L a little bit at least versus our numbers R&D was a little higher sales and marketing a little bit lower for the quarter. So just maybe some context to think about the jumping off point there I know Warren you mentioned in the sales force ramp is largely in place at least now should we think.
Speaker Change: About build from the <unk> levels and maybe what magnitude.
Speaker Change: And kind of same question on R&D would be great and then ill jump back in the queue.
Speaker Change: Yes, I would say.
Speaker Change: I would expect sales continued to grow throughout the year.
Speaker Change: Both of those revenue increases Youll see youll see.
Speaker Change: Some commission expense grow with revenue.
Speaker Change: As well as as.
Speaker Change: As well as just the incremental adds that were added in Q1, playing out so I would expect a little more growth.
Speaker Change: On the sales side as the year progresses.
Speaker Change: I would say it was probably a little bit higher in Q1 due to some validation work we're doing on the liquid product.
Speaker Change: And I would expect that would probably come down a little bit as the year progresses from a total dollar perspective.
Speaker Change: Great I appreciate the questions.
Speaker Change: Thanks Keith.
Speaker Change: Our next question is coming from Mike Massaro with BTG. Your line is nice.
Mike Massaro: Hey, guys. Thank you for taking the questions.
Mike Massaro: So I wanted to ask about the partnership with adaptive.
Mike Massaro: I think many people recognize the value of <unk> <unk>.
Mike Massaro: Perhaps the one of the fastest growing tests in the heme space.
Mike Massaro: But I would love to get some clarity around how.
Mike Massaro: This partnership will be additive to you and so.
Speaker Change: I appreciate that you are planning to launch in Q3 I believe that this is tied into your accomplice and chart menu, but I'm trying to get a sense for how it will be incremental to neogenomics should we expect any revenue contribution in.
Speaker Change: 2025, or 2026, and just strategically can you remind us how this sort of has been beneficial to Neil.
Ryan: Yes, Mike it's Ryan Thanks for the question.
Speaker Change: <unk>.
Speaker Change: <unk> aspect, there so first and foremost.
<unk> really plays in the academic medical center that sort of where the primary focus is whilst from a near prospect to be much more focused in the community both can be hospital as well as can be oncology.
Speaker Change: This is a joint collaboration with adaptive.
Speaker Change: Adaptive will be promoting our campus in those academic medical centers, something we don't do today. So we anticipate that that awareness and promotion will drive incremental campus cases coming from academic medical centers.
Speaker Change: Also if we think about the community setting both the oncology and community hospital setting.
Speaker Change: The effect that we are now able to offer internal seek as part of our campus menu. We believe it's going to make that suite of offerings that much more attractive, which will drive incremental demand for compass encompasses highly relevant for us because it's the highest AEP test that we have so the more volume.
Speaker Change: We can grow that could take you to test the better for us So that's really where the value comes.
Speaker Change: Yes.
Speaker Change: Overall testing perspective, the <unk> is still going to be tested by adaptive the campus is still going to be tested by.
Speaker Change: <unk> performed should I say by Neogenomics and billing will still be done by those.
Speaker Change: The two entities per se, but the incremental value really comes from the incremental volume that the partnership will generate.
Speaker Change: And we certainly anticipate that to start coming to fruition in the second half of the year and more could you just maybe take a moment.
Speaker Change: <unk> as a patient and physician level with one landlord as opposed.
Speaker Change: The key aspect here.
Speaker Change: In terms of the value from a physician's Nash patient perspective is very often the sample type is is a bone marrow, which is a very painful.
Speaker Change: Extraction and in today's World. If you are looking to get diagnosed and then having to have external seek MLR DRAM is to ship sample extractions, and therefore subjecting the patients two to two two painful experiences by combining the campus which supports diagnosis.
Speaker Change: And the MLR D kernel seek at the same time, it's a single sample that gets drawn once and therefore it has a massive benefit from a physician perspective in terms of their ability to treat but also a massive patient benefit as well.
Speaker Change: And maybe Mark just to add a reminder on.
Speaker Change: The second point that Gordon mentioned this is an exclusive relationship for the term of the agreement and so Neil would be the only company in a position to provide that combination of diagnostic testing and MRV recurrence monitoring testing offer the same trs and that reinforces that strategic value as we mentioned in the past.
Speaker Change: Yeah, Thanks, Mark Okay.
Speaker Change: Fantastic just a quick clarification question. So you submitted.
Speaker Change: Tracer liquid to mold extra reimbursement coverage is that something that you think can come in maybe at the end of this year and just give us a sense if youre expecting a draft for our final to come in I'm. Just wondering if you think you can go straight to final.
Andrew Cooper: Andrew would you pick that up for us. Please.
Speaker Change: Yes.
Speaker Change: I think when.
Speaker Change: Thinking about.
Speaker Change: <unk> you have to integrate a turn turn or two with <unk> in terms of ensuring that they feel confident in the package has been provided and I think that's just good standard practice.
Speaker Change: I think theyre turns usually take rate somewhere in the nature. So we'll say 60 to 90 days and you have time to respond so think about to turn model.
Speaker Change: I think end of year is probably a reasonable a reasonable place to to.
Speaker Change: Kind of triangulate against at this point in time.
Speaker Change: Great. Thanks, guys.
Speaker Change: Thank you. Our next question is coming from Tycho Peterson with Jefferies. Your line is life.
Speaker Change: Yeah, Hi, good morning. This is Jack on for Tycho. Thanks for taking my question.
Speaker Change: You called out macro headwinds and the non clinical side, but I guess thinking about macro uncertainty, particularly tariffs and funding headwinds among providers do you expect that to impact oncology volumes or asps in any capacity and if so I guess what actions have you taken to offset changing customer behavior among providers and.
Speaker Change: Puts and takes there would be great. Thanks.
Speaker Change: Yes, I don't think were expecting any impact on the clinical volume side, I mean, I think when youre dealing with cancer patient that they're going to need to have care and so our expectation is we're not expecting any any major impact from that I think the only other thing you can say macro is.
Speaker Change: If a recession causes impact to the number of insured employees.
Speaker Change: But we haven't seen anything yet and so we'll just continue to monitor that.
Speaker Change: Okay, Great and then once the <unk> final rule being vacated.
Speaker Change: Incremental upside to your margin expansion target of 250 to 300 bps.
Speaker Change: We had baked in.
Speaker Change: Into the guide expectations for increasing resources there over time, it wasn't really material for the first couple of years.
Speaker Change: In terms of some reporting requirements et cetera, and we are looking at new products.
Speaker Change: <unk>, new products and design control framework.
Speaker Change: So I wouldn't expect any material change to our guide based upon that.
Speaker Change: Thank you. Our final question today is coming from Puneet <unk> with Leerink partners. Your line is live.
Speaker Change: Yeah, Hi, guys. Thanks for the question here so.
Speaker Change: First one.
Speaker Change: Correct me, if I'm wrong, but the way you're pointing out.
Speaker Change: The NTS growth it does appear to be.
Speaker Change: Lower versus before I am just trying to understand is that just largely comp or is there what is the longer term and GFS growth expectation.
Speaker Change: And more importantly, the au pay.
Speaker Change: The core AAP is that lower.
Speaker Change: Beyond just the path line dilution, what I'm trying to get to is how should we think about the overall growth for clinical volumes and revenue for neogenomics going forward.
And longer term, because I think thats really the key question here.
Speaker Change: Yes.
Speaker Change: Core to your business.
Speaker Change: Yes, so the comp puneet in Q1 of last year, we did have the <unk> solid tumor.
Speaker Change: Really ramping and it was introduced at the end of Q1 in 2023 and was really starting to ramp and so we saw over 50% Ngls growth.
Speaker Change: In Q1 of last year.
Speaker Change: <unk> 47.
Speaker Change: <unk> percent growth in Q2. So some of this is just a difficult comp we still expect we're going to grow 20 or over 25% and Ngls for the year. So the back half of the year, the comps will get easier and the overall growth continues.
Speaker Change: And I think in terms of our overall clinical growth.
Speaker Change: <unk> seen very strong volume growth.
Speaker Change: Youre seeing some some volume growth at lower A&P modalities as I talked about and so.
Speaker Change: Going to be a blend of both we're certainly focused on in GFS growth, but as we enter new contracts, sometimes you will see lower lower A&P tests come in as well. So I think it is just how those are those new business wins kind of play out over the year will impact.
Speaker Change: I don't know if Warner if you want to add anything no I think Geoff you've covered it too much more to add there.
Speaker Change: Okay and then just go ahead sorry.
Speaker Change: Just a quick follow up on cost if I may.
Speaker Change: What are other initiatives that you have in place.
Speaker Change: In order to lower the cost just given the.
Speaker Change: <unk> growth is.
Speaker Change: Is it softer near term second half or does recover and lower core A&P growth.
Speaker Change: Yes, I would say from an overall operating leverage prospective we continue to get operating leverage just with volume growth, we saw a relatively large fixed cost.
Speaker Change: Infrastructure, so, adding incremental volume will generate operating efficiencies there.
Speaker Change: Got several initiatives underway to continue to drive operating efficiencies. Our lens project is continuing that won't be a long term driver of operating efficiencies. When we can have lab in pharma staff working off of one platform and really being able to co mingle staff more efficiently I would say secondly, just from an.
Speaker Change: Asian kind of lean six Sigma perspective, we still have a lot of work on underway in our labs and how to optimize our process flow that includes lab automation and includes how we use technology differently and that remains we would say a significant opportunity as we've looked at our success so far in terms of <unk>.
Speaker Change: Proving turnaround time, even with increasing volume and spend more kind of manual brute force over the last two years, we're really now getting into the phase of really evaluating where we have operating efficiency and automation opportunities and we will be capitalizing on those I would say for the next couple of years I think.
Speaker Change: I'll add to that just briefly is relevant and I think as I said earlier sort of site footprint is probably another area that is going to create some leverage secondly, we havent move fully to the novus seek ex yet that's going to create further enhancements in terms of cost per test on the NGL side.
Speaker Change: A thing and then Andrew already mentioned in his commentary about the ultimate partnership that's going to provide further opportunity. We expect further opportunities down the road as well.
Speaker Change: I think there is numerous opportunities drive cost savings.
Speaker Change: So we got everyone and I want to thank all of you for taking the time to join US This morning.
Speaker Change: I'll close the way I began I am truly excited to be a member of the Neogenomics team I think we have an exciting road ahead with many many opportunities and we will look forward to sharing the results of those.
Speaker Change: We get together in the future thanks, everybody.
Speaker Change: Thank you ladies and gentlemen, this does conclude today's conference you may disconnect. Your lines at this time and we thank you for your participation.