Oncology (cancer) diagnostics company NeoGenomics (NASDAQ: NEO) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 11.9% year on year to $187.8 million. The company expects the full year’s revenue to be around $723 million, close to analysts’ estimates. Its non-GAAP profit of $0.03 per share was in line with analysts’ consensus estimates.

Is now the time to buy NEO? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

NeoGenomics’ third quarter results were met with a negative market reaction, as shares declined following the announcement. Management attributed the quarter’s performance to robust growth in clinical test volumes and continued expansion in next-generation sequencing (NGS) revenues, which outpaced general industry trends. CEO Anthony Zook highlighted the successful integration of the Pathline acquisition and cited the company’s ability to deliver faster turnaround times and a broader test menu as factors boosting customer adoption, stating, “We again saw a sequential improvement in AUP, a record quarter for test volumes and NGS revenue growth of 24%.”

Looking ahead, NeoGenomics’ outlook is anchored by the anticipated commercial launch of its RaDaR ST minimal residual disease (MRD) assay and ongoing expansion of its PanTracer liquid biopsy product. Management believes that the recently secured regulatory approvals and enhancements to the sales force will support further market penetration in 2026 and beyond. CFO Jeffrey Sherman cautioned, however, that pharma revenue headwinds and the timing of reimbursement for new assays introduce uncertainty, noting, “We expect a slow revenue build in 2026 and most of that revenue becoming evident in the back half.”

Key Insights from Management’s Remarks

Management linked third quarter momentum to strong clinical execution and successful product launches, while acknowledging near-term challenges in nonclinical revenue and margin pressures.

• Clinical test volume growth: NeoGenomics experienced record clinical test volumes, driven by expanded relationships with community oncologists and hospitals, and effective execution of its “protect, expand, acquire” commercial strategy.
• NGS outperformance: Next-generation sequencing (NGS) revenues grew 24% year-over-year, exceeding market growth rates, with the five NGS products launched in 2023 now contributing a significant share of clinical revenue.
• Pathline integration progress: The Pathline acquisition expanded NeoGenomics’ presence in the Northeast and allowed for faster turnaround times on state-approved tests, with integration milestones—such as assay validation—completed during the quarter.
• Launch of PanTracer LBx liquid biopsy: The commercial launch of the PanTracer LBx liquid biopsy test, after a delayed rollout to incorporate physician feedback, is expected to bolster the company’s therapy selection offering and overall NGS growth.
• MRD and pharma segment dynamics: While clinical revenues performed well, nonclinical revenue from pharma and biotech customers remained a challenge, and management acknowledged that pharma business recovery is likely a 2027 event, with near-term MRD revenue primarily from biopharma customers beginning in 2026.

Drivers of Future Performance

Management expects growth in 2026 to be led by continued expansion in NGS, the commercial launch of MRD assays, and operational efficiencies, though ongoing pharma segment softness and reimbursement uncertainties remain headwinds.

• New product launches and adoption: The full clinical launch of RaDaR ST for MRD and the recent launch of PanTracer LBx are expected to drive revenue growth, particularly as community oncologists adopt these assays for cancer recurrence monitoring and therapy selection.
• Sales force expansion and operational streamlining: The expanded commercial team, along with operational consolidation initiatives like unified laboratory information management systems (LIMS), are anticipated to improve sales productivity and reduce costs, with benefits expected to become more visible in late 2026 and beyond.
• Pharma segment headwinds: Management noted the pharma business will likely remain soft through 2026 due to long sales cycles and broader industry spending patterns, with a return to growth anticipated in 2027. Achieving reimbursement milestones for new assays also introduces risk to near-term revenue projections.

Catalysts in Upcoming Quarters

Over the coming quarters, our analysts will closely monitor (1) the pace of adoption and reimbursement for both RaDaR ST and PanTracer LBx, (2) progress on operational streamlining through LIMS integration and lab automation, and (3) signs of stabilization or renewed growth in the pharma and nonclinical segments. The company’s execution in expanding its Northeast presence through Pathline and commercializing new assays will also be important markers.

NeoGenomics currently trades at $9.98, down from $10.15 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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