Biotech Values

[apljack]

NEO CC Highlights: "Revenue per test increased 12% over the second quarter of 2018, marking the fourth straight quarter in which revenue per test has increased year-over-year. We also achieved very strong growth in our Pharma Services Division, with revenue up 55% year-over-year to a record $12.7 million. We signed $20 million of new contracts during the quarter, and our backlog was up 18% year-over-year to $106 million. We drove growth across all testing platforms and are seeing an increase in Phase II and Phase III trials being placed with us."
"Adding to our global footprint, we recently opened our new lab in Singapore and are working on plans for a laboratory in China in 2020."
"Pharma Services revenue increased 55% to almost $13 million, which is the new high watermark for the division and was ahead of our internal projections."
"Combined gross profit increased by $18 million to $49 million, up 60% from the prior year. This increase represents a 54% contribution on the $34 million of revenue growth."
"Notably, our Pharma Services gross margin was outstanding, reaching 50% for the first time ever."
"As we have discussed on previous calls, our capabilities with regard to companion diagnostics are unique and powerful. We have wide scale and scope across pharma and clinical markets, a broad reach to oncologists and pathologists and access to a massive quantity of oncology-specific test result data."
" I believe right now, we have something like 30 projects with pharma companies in our Pharma pipeline for companion diagnostic test. "
"Our organic growth as a company was in the range of 20% for the quarter. So there's really very strong momentum, and we're trying to be prudent with our guidance."
"Right now, we're more focused on our M&A opportunities in the Pharma business. We have got an integration going on in our clinical business. So we've got -- our cup is full on that one. But there are some very interesting things that we're looking at in the pharma side and we'll continue to pursue those. If we can find the right opportunity with the right cultural fit and the right economics, we would be all in."

I looked carefully at what might be considered downside news in the CC and there was precious little to report. I would, however, note that management reported that the Physician Fees are projected to drop 1-3% (which they report is not significant) and that they will be spending $50-60 million on a new "home office/lab" in FL. They recently raised $150 million by issuing shares and have a new credit facility of $250 million. They reported that the cash raised by the stock offering was NOT going to be used for construction, and, as can be gleaned from one of the above quotes, it appears that they are shopping for a Pharma co. purchase.

https://finance.yahoo.com/news/edited-transcript-neo-earnings-conference-211546246.html