NeoGenomics stock jumped Wednesday after the company issued a strong 2025 outlook. That partially reversed a shocking sell-off after Chief Executive Chris Smith announced his retirement on Monday.
The company, which offers cancer diagnostics and pharma services, expects sales to grow 11% to 13% this year, to $735 million to $745 million. That easily beat forecasts for $728 million, Needham analyst Ami Fadia said in a report.
Further, NeoGenomics expects $55 million to $58 million in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA. Analysts expected a lower $54.5 million. EBITDA would grow about 43% to 51% vs. NeoGenomics' 2024 guidance.
"We believe these should ease fears that underlying momentum is fading and that Smith is leaving under strained circumstances related to financials," William Blair analyst Andrew Brackmann said in a report to clients.
NeoGenomics stock advanced more than 6.8%, closing at 14.71. Shares briefly rose above their 200-day moving average. That partly reversed a 14.5% decline on Monday after Smith announced his retirement.
Long-Term View Boosts NeoGenomics Stock
The sales guidance for 2025 includes 25% growth from next-generation sequencing testing — a means of reading a patient's DNA — and no contribution from Radar. Radar is NeoGenomics' platform for screening a patient for recurring cancer.
Longer term, NeoGenomics expects 12% to 13% annual sales growth, gross margin expansion of 100 to 150 basis points per year, adjusted EBITDA improvement of 250 to 300 basis points each year, and positive cash flow from operations in 2025. The company also expects to serve more than 1 million patients each year by 2028.
Needham's Fadia kept her buy rating on NeoGenomics stock.
"While NEO shares experienced a sharp sell-off following the retirement announcement of CEO Chris Smith, we believe that the 2025 guidance and NEO's updated long-term targets provided today demonstrate that the company remains in a very strong position," she said.
Also this week, NeoGenomics and Adaptive Biotechnologies announced a new multiyear deal to cross-promote Adaptive's test for recurring blood cancers with NeoGenomics' hematopathology services. NeoGenomics stock rose 9.1% on the announcement, while Adaptive shares fell 6%.
"As market leaders in heme testing, and with NeoGenomics seeking to expand its MRD (minimum residual disease) platform, this partnership makes a lot of sense to us," said Brackmann, the William Blair analyst.
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