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Building One Growth-Driven Company l 1Building One Growth-Driven Company l 1
Company Overview Presentation
July 2016
Building One Growth-Driven Company l 2
Forward-looking Statements
This presentation contains statements which constitute forward-looking statements within
the meaning of Section 27A of the Securities Act, as amended; Section 21E of the Securities
Exchange Act of 1934; and the Private Securities Litigation Reform Act of 1995. The words
“may”, “would”, “could”, “will”, “expect”, “estimate”, “anticipate”, “believe”, “intend”, “plan”,
“goal”, and similar expressions and variations thereof are intended to specifically identify
forward-looking statements. All statements that are not statements of historical fact are
forward-looking statements.
Investors and prospective investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in the forward-looking statements
as a result of various factors. The risks that might cause such differences are identified in
our filings with the Securities and Exchange Commission. We undertake no obligation to
publicly update or revise the forward looking statements made in this presentation to reflect
events or circumstances after the date of this presentation or to reflect the occurrence of
unanticipated events.
Building One Growth-Driven Company l 3
Investment Highlights
Fast growing cancer genetics
lab servicing Oncologists,
Pathologists and Hospitals
Strategic client
partnerships created by
“Tech-Only” model
Dynamic, rapidly-
growing and consolidating
industry
Industry-leading revenue
& test volume growth
Most Comprehensive Cancer
Testing Menu in Industry
Strong Management Team
with large cap lab
experience
Acquisition of Clarient Should more than Double Revenue
and more than Triple Adj. EBITDA in 2016
Building One Growth-Driven Company l 4
Experienced Management Team
• Douglas VanOort, Chairman & CEO
Chief Operating Officer, Quest Diagnostics
Executive Vice President, Corning Life Sciences, Inc.
• Maher Albitar, M.D., Chief Medical Officer & Director of R&D
Med. Dir. for Hematopathology & Oncology and Chief of R&D, Quest Nichols Institute;
Director of Leukemia and Molecular Laboratory, MD Anderson Cancer Center
• Robert Shovlin, Chief Growth Officer
Chief Development Officer, Bostwick Laboratories; President & Chief Executive Officer, Aureon Biosciences
• Steven Jones, Director, EVP – Finance, & Chief Compliance Officer
Chairman, Aspen Capital Group; Vice President, Merrill Lynch Investment Banking
• George Cardoza, Chief Financial Officer
CFO, Protocol Global Solutions; Controller, Central Region, Quest Diagnostics
• Steven Brodie – Chief Scientific Officer
Senior Director - Quest Diagnostics
• Steven Ross, Chief Information Officer
Vice President Technology, Chico’s FAS, Inc.
• Mark Machulcz, Vice President, Operations
Director of Operations - Clarient Diagnostic Services
Building One Growth-Driven Company l 5
1,1524,082
12,838
20,998
32,539
45,675
57,332
76,288
114,606
137,317
177,279
221,033
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
$558
$1,885
$6,476
$11,505
$20,015
$29,469
$34,371
$43,484
$59,866
$66,467
$82,194
$91,048
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
NEO’s Proven Track Record of Consistent Growth
Base NEO* Annual Revenue Base NEO* Tests Performed
($, 000s)
* Base NEO represents organic revenue and test volume growth from legacy business and excludes the impacts from the PathLogic and Clarient acquisitions.
Building One Growth-Driven Company l 6
Stable Pricing Expected in 2016 After 6 Years of AUP Declines!
* For comparison purposes, Base NEO excludes the impacts from the PathLogic and Clarient acquisitions.
(1) Productivity calculated as the average number of lab tests completed per month per laboratory FTE.
Historically, Steady Margins Despite Lower Avg Unit Prices – Base NEO*
Building One Growth-Driven Company l 7
Customer Targets
Pathologists & Hospital Pathology Groups (about 81% of 2015 Revenue*)
• Enable community Pathologists to practice using sophisticated tools and tests
• Innovative technical component (TC or “tech-only”) services – Flow, FISH, IHC
• Outstanding Web-based Lab System & extensive training programs
Oncologists & Clinician Groups (about 15% of 2015 Revenue*)
• Includes Hematologists, Oncologists, Dermatologists, Urologists
• Disease Panels and comprehensive molecular menus
• Increasing Opportunity to service larger practices with Tech-only model
Clinical Trials & Other (about 4% of 2015 Revenue*)
• Contract research/clinical trial support work for Pharma clients
* Percentages are for Base NEO only and exclude the impacts from the PathLogic and Clarient acquisitions.
Building One Growth-Driven Company l 8
Rapidly Growing Market Opportunity
The exploding cost of cancer care offers extraordinary opportunities for those labs that can
deliver innovative and value-based solutions to the healthcare system.
Source: National Institutes of Health (NIH)
Building One Growth-Driven Company l 9
NEO Addressable Cancer Testing Market
NeoGenomics currently addresses a $5 billion clinical testing market opportunity!
Mkt Size
Estimate 2008 - 2014
Test Description Key CPT Codes(1)
2014 % CAGR
Clinical Market Size Before Hospital Market Gross Up Adjustments(a)
: ($, MMs)
Cytogenetics 88237, 88264, 88291 100 0.3%
IHC, Pathology & Digital Pathology 88342, 88360, 88361 1,305 4.0%
FISH 88367, 88368, 88120, 88121 840 6.0%
Flow Cytometry 88184, 88185, 88189 642 1.7%
Molecular
Molecular (2) Numerous 1,662 27.9%
Est. Market Size Before Hospital Market Adjustments 4,548 9.2%
Estimated Additional Market for Hospital Direct Billing Tests (b)
Cyto & Molecular CLFS Tests Billed Directly to Hospitals(3)
181
Tech Component PFS Tests Billed to Hospitals after TC Grandfather Expiration(4)
418
Total Hospital Direct Bill Gross-Up Adjustments 599
NEO'S TOTAL ADDRESSABLE MARKET FOR CLINICAL TESTS $5,147 11.1%
Sources:
(a)
(b) Management estimates.
(1)
(2)
(3)
(4)
U.S. Anatomic Pathology Market Forecast & Trends 2016, Laboratory Ecnomics, derived from CodeMap, LLC and CMS (Medicare allowed c
Only those CPT codes related to the clinical Cancer Genetic Testing Services provided by NEO were used in this analysis.
Historical Molecular market not available by CPT Code. Laboratory Economics' estimate of the Pharmacogenomic Testing (PGx) market used as a proxy.
Clinical Lab Fee Schedule (CLFS) tests for Medicare beneficiaries must be billed directly to hospitals. Thus, this portion of market is not captured above.
Physician Fee Schedule (PFS) TC tests for Medicare beneficiaries must be billed directly to hospitals after July 2012. Thus, this portion of market not captured above.
Building One Growth-Driven Company l 10
Accelerating Pace of Innovation
• 70 new/revised tests, incl:
NeoLABTM Liquid Biopsies
• MDS/CMML Profile
• AML Profile
• FLT3 Mutation Analysis
• NPM1 Mutation Analysis
• PML-RARA Translocation
• RUNX1-RNX1T1Transloc
• INV16 Translocation
• c-kit Mutation Analysis
• IDH1 Mutation Analysis
• IDH2 Mutation Analysis
• NRAS Mutation Analysis
• KRAS Mutation Analysis
• BTK Inhibitor Resistance
• Solid Tumor Monitoring
Germline MolDx Testing
• BRCA1 & BRCA2
• Lynch Syndrome (colon)
• 73 Gene Comprehensive
Predisposition Panel
Other
• ALK, ROS1, RET Fusion
• Sarcoma gene Fusion
• NeoSITE Cervical FISH
• Expanded IHC Menu
• Smart Flow Cytometry
• 10-color Flow Cytometry
• Implemented Adv MolDx
platform in lieu of Kits
• 28 new Molecular Assays
• Proprietary method for
increasing sensitivity of
Sanger sequencing
• 7 NeoTYPE MolDx Panels
• SVM for FISH (Patent App)
• Barrett’s Esoph. FISH (Patent
App)
• NeoARRAY/SNP Cytogenetics
• Internalized send-outs
• 40 new Molecular tests
• Add’l NeoTYPE Panels
• Next Generation Sequencing
(48 genes)
• ROS1 FISH
• NeoSITE Melanoma FISH
• Plasma/Urine-based
Prostate Test (Patent App)
• SVM-based Cytogenetics
Analysis System
• SVM-based Automated FISH
Analysis System v2
• Began development of
NeoLAB (Liquid Alternative
to Biopsy) Prostate Cx test
2015
2012
2013
• 60 new/revised MolDx tests
• 24 new NeoTYPE Next
Generation Sequencing
Profiles
• 26 new IHC/ISH tests
• Additional NeoLAB Prostate
clinical studies
• AML Extended FISH Panel
• AML Favorable-Risk FISH
Panel
• MDS Extended FISH Panel
• Plasma Cell Myeloma Risk
Stratification FISH Panel
• RET FISH
• MET FISH
• ALL Adult & Pediatric FISH
Panels
• HER2 Breast Equivocal FISH
Panel
• BRAF Translocation FISH
• Chromosome 1 POC Ploidy
• Launched robotic FISH-Cyto
processing platform
2014
Building One Growth-Driven Company l 11
Accelerating Same Store Sales*
* Base NEO represents organic revenue and test volume growth from legacy business and excludes the impacts from the PathLogic and Clarient acquisitions.
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Year-Over-Year Total % of Test Volume Growth
Same Store Year-over-year Growth w/o FCS FCS Year-over-Year Growth Other Year-over-Year Growth
Building One Growth-Driven Company l 12
Pathology Group Preferences for Cancer Testing
16% -
NeoGenomics
11% - Clarient
17% - LabCorp
14% - Quest
9% - Mayo
Clinic
6% - ARUP
1% - CSI Labs
23% -
All Others*
Source: Laboratory Economics Anatomic Pathology Market Trends Survey, July 2015 (n=280 surveyed pathology groups/labs)
* All Others include Johns Hopkins, MPLN, OHSU, PathGroup, ProPath, and local academic medical centers.
Combined NeoGenomics and Clarient are the preferred Cancer Reference Lab
according to a recent third party survey of independent pathologists.
Building One Growth-Driven Company l 13
Recent Quarterly Financial Information (P&L)
($, 000's)
Base NEO(1)
Q2 15
Base NEO(1)
Q2 16
Consolidated(2)
Q2 15
Consolidated(2)
Q2 16
Total Revenue $ 22,117 $ 29,482 $ 24,370 $ 63,129
% Growth (YoY) 9.3% 33.3% 17.9% 159.0%
Total Gross Profit 10,286 14,076 10,813 28,605
Gross Margin % 46.5% 49.8% 44.4% 45.3%
Total SG&A (Incl R&D) Exp 10,785 26,412
SG&A as a % of Rev 44.3% 41.8%
Adjusted Net Income/(Loss)* $ 540 $ 3,657
Adjusted Diluted EPS* $0.01 $0.04
Adjusted EBITDA* $ 2,407 $ 9,181
% Growth 15.6% 281%
Operating Data(3)
% Growth in Clinical Genetic Tests (YoY) 23.3% 31.6% 23.3% 158%
Avg. Revenue/Clinical Genetic Test $ 405 $ 410 $ 405 $ 385
% Change (YoY) -11.3% 1.3% -11.3% -4.8%
Avg. COGS/Clinical Genetic Test $ 217 $ 214 $ 217 $ 207
% Change (YoY) -8.0% -1.0% -8.0% -4.4%
* See Appendix for definitions of Adj. EBITDA, Adj. Net Income and Adj. Diluted EPS as well as a reconciliation of GAAP Net Income to Adjusted financial information.
(1) For comparison purposes, Base NEO represents the core clinical genetic testing operations of NeoGenomics excluding the impacts from the Path Logic and Clarient
Acquisitions. Since SG&A allocations were not made between the companies, Base NEO SG&A and Adj. EBITDA figures are not available. As a result of the ongoing
integration activities of NEO and Clarient, beginning in Q3 2016 it will no longer be possible to break out Base NEO revenue and gross profit figures separately .
(2) Consolidated Financials include the results from BioPharma, PathLogic, and Clarient (Q2 16 only).
(3) All Operating data refers to Clinical Genetic Testing and excludes the results from PathLogic and the BioPharma testing activities.
Building One Growth-Driven Company l 14
Confidential
New
NextGen
Digital Companion
Pathology Dx
Oncology
Technologies: FISH Clinical Trials
Flow
Cytogenetics
Traditional
Old Anatomic Path.
Low Market High
Growth
14
NEO’s Acquisition Strategy
NEO Focus – Upper right hand quadrant
Synergistic
Deals
High
HighLow Market Growth
Technologies
Clarient Attributes
 Technology leader
 High growth (clinical
trials)
 Revenue scale
 Nationwide presence
 Complementary
footprint
 Geographic proximity
 Ongoing GE affiliation
Building One Growth-Driven Company l 15
Key Benefits
• Synergy potential of $20mm - $30mm/year within 3-5 year
– Laboratory, Purchasing, Cross-selling, etc.
• East Coast/West Coast labs
– Combine Irvine and Aliso Viejo
• Low cost position in every testing discipline
– FISH, Flow, Cytogenetics, IHC, Digital Pathology, Molecular
• Leadership in hematological and solid tumor cancers
– One-stop-shop for clients with broad geographical coverage
• Potential to be a leading consolidator going forward
• GE as significant long-term Investor
– Collaboration in Bioinformatics in Precision Oncology
• Significant clinical trials business
– Combined business approximates $25mm revenue
Building One Growth-Driven Company l 16
Confidential
2016 - Combined Pro Forma Revenue Bridge(1)
(1) Preliminary Estimate - Subject to further refinements
We estimate combined revenue of approx. $242 – $252 mm in 2016…
• CMS Reimbursement estimates includes net positive price adjustments of $5-7 mm. We estimate $2 MM of
revenue synergies and approximately $6 MM of revenue distractions relating to sales pipeline reductions.
• Clarient revenue includes gross up for estimated Bad Debt, which was previously netted from Revenue.
$0
$50
$100
$150
$200
$250
$300
Neo Clarient* CMS Fees Synergies Distractions New Neo
$120mm
$125mm
$6 mm $2 mm
($6mm)
$247mm
Building One Growth-Driven Company l 17
Confidential 17
2016 Pro Forma Adjusted EBITDA Bridge (1)
• NEO expects to realize $20-30 MM of total synergies in the next 3 years with approximately 75% of such synergies being
cost synergies as a result of efficiencies gained through the combination with Clarient.
• 2016 Adjusted EBITDA assumes $6 MM of Cost Synergies and $1MM of contribution from revenue synergies (50%).
• 2016 Adjusted EBITDA estimates a $3mm reduction to Adjusted EBITDA as a result of revenue distractions (50% of
revenue distractions) expected during the integration.
(1) Preliminary Estimate – Subject to further refinements
We estimate combined Adj. EBITDA of approx. $35 – $40 mm in 2016…
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Neo Clarient CMS Fees Synergies Distraction New Neo
$18.5 mm
$9 mm
$6 mm
$7mm
($3mm)
$37.5 mm
Building One Growth-Driven Company l 18
Current 2016 Guidance*
• Revenue: $242 - $252 MM
• Adjusted EBITDA* 35 - 40 MM
• Adjusted Net Income* 8 – 13 MM
• Adjusted Diluted EPS* $0.08 - $0.13
* See Appendix for definitions of Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS as well as a reconciliation of GAAP
Net Income to Adj. EBITDA, Adj. Net Income and Adj. Diluted EPS.
2016 net income available to common stockholders calculated in accordance with GAAP will be impacted by certain non-cash charges,
including: (i) expenses related to variable stock-based compensation, (ii) approximately $7.3 million of expense related to the
amortization of customers lists and other intangibles from the Path Logic and Clarient acquisitions, (iii) approximately $7.4 million of
deemed preferred stock dividends, and (iv) approximately $14.9 million of related to the amortization of the beneficial conversion
feature related to the preferred stock issued in connection with the Clarient acquisition. These non-cash charges have been included in
GAAP net income (loss) available to common shareholders and GAAP net income (loss) per share; however, they have been removed
from Adjusted Net Income and Adjusted Diluted Net Income per Share. As a result, the Company expects 2016 diluted net loss per share
calculated in accordance with GAAP to be $0.35 - $0.40 per share lower than 2016 Adjusted Diluted Net Income per Share.
NeoGenomics believes that Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS provide a more consistent measurement of
operating performance and trends across reporting periods by excluding from income those cash and non-cash items of expense
(income) not directly related to ongoing operations. Adjusted figures also assists investors in performing analysis that is consistent with
financial models developed by research analysts. Investors should consider non-GAAP results together with GAAP results in analyzing
NeoGenomics financial performance.
Building One Growth-Driven Company l 19
NeoGenomics Vision and Goals
Leadership Goals:
• Be the leading oncology-focused testing and information company in the World.
• Innovate aggressively to advance precision medicine.
• Be the highest quality and lowest cost provider in each product area
Competencies:
• Outstanding Scientific, Medical and Informatics expertise.
• Partnerships for efficiency/effectiveness across health-care care continuum
• Disciplined process management and quality systems.
• Entrepreneurial, values-driven culture.
Financial Performance Goals:
• Consistent and sustainable double-digit revenue growth.
• Clinical Trials > 15% of revenue.
• Adjusted EBITDA margin of 20-25% when annual revenue >$300 MM.
Building One Growth-Driven Company l 20
Appendix
Building One Growth-Driven Company l 21
CMS Reimbursement is Expected to be Stabile in 2017
Implied CY 2017 PFS Rates Based on CMS Draft Rule on the Physicial Fee Schedule (CMS-1654-P issued 7/7/16)
CPT Proc
Code Procedure Description
National
Unadj Rate
2013
National
Unadj Rate
2014
National
Unadj Rate
2015
National
Unadj Rate
2016
2016 vs
2015 %
change
Prelim Rule -
Implied
National Unadj
Rate 2017 (1)
%
Change
2017
Prelim
Rule vs
2016
88184 FLOW 1ST MARKER 88.80$ 87.77$ 94.51$ 76.26$ -19.3% 61.53$ -19.3%
88185 FLOW EACH ADDL MARKER 54.10$ 53.73$ 57.49$ 46.55$ -19.0% 37.56$ -19.3%
88189 FLOW INTERP 16 OR MORE MARKERS 106.49$ 110.69$ 113.91$ 114.22$ 0.3% 92.30$ -19.2%
88374 FISH AUTOMATED PER PROBE (Multiplex Probe Stain) 255.77$ 205.54$ 345.87$ 68.3% 345.59$ -0.1%
88374-TC FISH AUTOMATED PER PROBE TECH (Multiplex Probe Stain) 193.08$ 160.26$ 299.68$ 87.0% 293.00$ -2.2%
88374-26 FISH AUTOMATED PER PROBE INTERP (Multiplex Probe Stain) 62.69$ 45.28$ 46.19$ 2.0% 46.15$ -0.1%
88121 FISH AUTOMATED - UROVYSION 557.98$ 508.30$ 556.97$ 558.55$ 0.3% 546.64$ -2.1%
88121-TC FISH AUTOMATED - UROVYSION 508.64$ 459.99$ 505.23$ 506.63$ 0.3% 494.77$ -2.3%
88121-26 FISH AUTOMATED - UROVYSION 49.33$ 48.31$ 51.74$ 51.92$ 0.3% 51.87$ -0.1%
Uses G0461 in 2014
88342 IMMUNOHISTOCHEMISTRY (1st Stain) 88.48$ 90.91$ 107.41$ 18.1% 107.68$ 0.3%
88342 - TC IMMUNOHISTOCHEMISTRY TECH (1st Stain) 57.67$ 54.26$ 70.18$ 29.3% 70.48$ 0.4%
88342 - PC IMMUNOHISTOCHEMISTRY INTERP (1st Stain) 30.81$ 36.65$ 37.24$ 1.6% 37.21$ -0.1%
Uses G0462 in 2014
88341 IMMUNOHISTOCHEMISTRY (Add'l Stain) 68.42$ 67.91$ 90.23$ 32.9% 90.15$ -0.1%
88341 - TC IMMUNOHISTOCHEMISTRY TECH (Add'l Stain) 55.88$ 45.99$ 62.30$ 35.5% 61.89$ -0.7%
88341 - PC IMMUNOHISTOCHEMISTRY INTERP (Add'l Stain) 12.54$ 21.92$ 27.93$ 27.4% 28.26$ 1.2%
Uses G0461 in 2014
88344 IMMUNOHISTOCHEMISTRY (each Multiplex Stain) 88.48$ 117.50$ 174.01$ 48.1% 173.15$ -0.5%
88344 - TC IMMUNOHISTOCHEMISTRY TECH (each Multiplex Stain) 57.67$ 77.26$ 133.19$ 72.4% 132.37$ -0.6%
88344 - PC IMMUNOHISTOCHEMISTRY INTERP (each Multiplex Stain) 30.81$ 40.25$ 40.82$ 1.4% 40.78$ -0.1%
88361 MORPHOLOGY, EACH ANTIBODY - AUTOMATED 156.51$ 157.98$ 170.32$ 149.66$ -12.1% 155.98$ 4.2%
88361-TC MORPHOLOGY TECH, EACH ANTIBODY - AUTOMATED 99.35$ 98.51$ 109.96$ 88.79$ -19.3% 94.80$ 6.8%
88361-26 MORPHOLOGY INTERP, EA ANTIBODY - AUTOMATED 57.16$ 59.47$ 60.37$ 60.87$ 0.8% 61.18$ 0.5%
(1) This Analysis is based on a Proposed Rule only, which is still subject to finalization by Medicare.
The Final Rule is generally not published until November and any part or all of these implied rates may change.
(2) Assumes no other Physician Fee Schedule (PFS) rule changes or limited coverage determinations are implemented for 2017.
Uses Estimated Conversion Factor of 36.1096 taken from Section VI(C)(1) of CMS-1654-P (page 786 of display copy of rule on CMS website).
Final Conversion Factor subject to change.
Building One Growth-Driven Company l 22
Confidential
 Core business focused on IHC, Flow, FISH,
Cytogenetics and Molecular tests
 National reach with focus on both independent
and hospital pathologists
 Consistently strong growth - early development
to late stage testing
 ~ 200 projects in process for >30 customers
Clarient Overview
22
 IHC/Digital Pathology: Large and Industry leading capabilities
 FISH/ISH: Similar Instrumentation and capabilities
 FLOW: Similar instrumentation and capabilities
 Molecular: Smaller menu
 Cytogenetics: Similiar capabilities
Facilities/Infrastructure Customer Mix
Product Lines (1)
 78,000 sq. ft. Lab located in Aliso Viejo, CA
 Available Capacity due to efficient workflow
and processes.
 Uses similar equipment and Instrumentation.
 Uses similar IT Labs Systems and database
structure
 24,000 sq. ft. facility located in Houston, TX
IHC
42%
FISH/ISH
19%
FLOW
14%
Molecular
15%
Cyto
5%
Other
5%
(1) Clinical operations only. Percentage of tests Performed.
CLINICAL
CUSTOMERS
BIOPHARMA
CUSTOMERS and
Other
Building One Growth-Driven Company l 23
Confidential
Clarient Test Volume and Average Unit Price
Revenue by Customer Type: Tests
2013 2014 2015 PF 2013 2014 2015
Clinical $111.9 $106.5 $93.8 Clinical Revenue $111.9 $106.5 $93.8
BioPharma 13.8 20.7 23.0 Tests 297.7 284.7 271.3
Total Revenue 125.7 127.2 116.8 AUP
(1)
$376 $374 $346
Bad Debt Acctng Adj(2)
6.6 6.7 8.2 Bad Debt Acctng Adj(2)
19.8 19.7 26.1
Proforma Rev to NEO $132.3 $133.9 $125.0 Proforma AUP to NEO $396 $394 $372
(1) Average Unit Price is based on revenue from clinical testing (excluding BioPharm tests).
(2) Historically, Clarient booked Bad Debt as a reduction to revenue, wheras NEO books it in GA.
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
2013 2014 2015 PF
BioPharma
Clinical
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
2013 2014 2015Est
Tests
Building One Growth-Driven Company l 24
2015 Pro Forma Financial Information
(Dollars in Millions)
Clarient NeoGenomics Comined
2015 2015 2015
Pro Forma Audited Pro Forma
Revenue 116.8$ 99.8$ 216.6$
Estimated Revenue using Neo Policie 125.0 (1)
99.8 224.8
EBITDA* 5.7 (2)
9.7 15.4
Pro Forma Adjusted EBITDA 9.2 (3)
9.7 18.9
(1) 2015 Revenue using NEO's Policies adds back 7% of net revenue for bad debt and moves this charge to G&A.
(2) 2015 EBITDA excludes a $47.6 MM impairment charge to reduce the value of intangibles.
(3) Pro Forma Adjusted EBITDA includes adjustments to reflect the business being acquired.
Building One Growth-Driven Company l 25
Confidential
Clarient Revenue and Payer Mix in 2014
Payor Mix - 2014 Clinical Only
2014 Payor Mix
Client 39.6%
Insurance 34.4%
Government 12.4%
HMO 5.3%
Patient/Other 8.3%
Total 100.0%
Client
Insurance
Government
HMO
Patient/Other
Building One Growth-Driven Company l 26
Clarient Transaction Consideration
• $80 MM Cash
– $15 MM – NEO cash from balance sheet
– $10 MM – New, 5-year $25mm revolver
– $55 MM – New, 5-year Term Loan
• 14.67 MM Shares of Series A Redeemable Preferred Stock
– Issued at $7.50 per share
– Redeemable by NEO at any time at the issue price plus accrued PIK dividends
– 4% annual PIK dividend begins 1/1/17 and increases after Year 4 by 1% per year to 10%
in year 10.
– Up to $10 MM discount for early redemption (declining discount over 4 years)
– GE Ability to convert to common after 3 years if common stock > $8.00 per share for 30
consecutive trading days.
– Valued at $73.2 MM for GAAP fair market value on closing date
• 15 MM Shares of Common Stock
– Valued at $102.5 MM for GAAP fair market value on closing date
Building One Growth-Driven Company l 27
Confidential
Reconciliation of GAAP Net Income to Adjusted EBITDA
“Adjusted EBITDA” is defined by NeoGenomics as net income from continuing operations before: (i) interest expense, (ii) tax expense,
(iii) depreciation and amortization expense, (iv) non-cash, stock-based compensation expense, and if applicable in a reporting period
(v) acquisition related transaction expenses and other significant non-recurring or non-operating (income) or expenses.
For the three months ended
June 30,
For the six months ended
June 30,
2016 2015 2016 2015
Net Income (Loss) (per GAAP) $ 413 $ (176) $ 568 $ (937)
Adjustments to Net Income (Loss):
Interest expense 1,448 189 3,040 384
Income tax expense 332 15 505 19
Amortization of intangibles 1,610 97 3,636 190
Depreciation 3,744 1,663 7,329 3,249
EBITDA 7,547 1,788 15,078 2,905
Further Adjustments to EBITDA:
Non-cash stock based compensation 1,634 619 2,337 1,020
Adjusted EBITDA (non-GAAP) $ 9,181 $ 2,407 $ 17,415 $ 3,925
Use of non-GAAP Financial Measures: NeoGenomics believes that using non-GAAP financial measures provides useful
supplemental information to investors and facilitates the analysis of the company’s core operating results and the comparison of
core operating results more consistently across reporting periods. Management also uses non-GAAP financial measures for financial
and operational decision making, planning and forecasting purposes and to manage the company’s business. These non-GAAP
financial measures enable investors to evaluate our operating results and future prospects in the same manner as management and
research analysts. The non-GAAP financial measures do not replace the presentation of GAAP financial results and should only be
used as a supplement to and not as a substitute for financial results presented in accordance with GAAP. There are limitations
inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP
presentation, and do not therefore present the full measure of NeoGenomics recorded costs against its net revenue. In addition,
non-GAAP financial measures as defined by NeoGenomics may differ from non-GAAP measures used by other companies.
Building One Growth-Driven Company l 28
Confidential
Reconciliation of GAAP Net Income to Adjusted Net
Income & GAAP Diluted EPS to Adjusted Diluted EPS
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2016 2015 2016 2015
Net income (loss) available to common stockholders (GAAP) $ (5,154) $ (176) $ (10,565) $ (937)
Adjustments to Net Loss:
Amortization of intangibles 1,610 97 3,636 190
Deemed dividends on preferred stock 1,840 — 3,680 —
Amortization of preferred stock beneficial conversion
feature 3,727 — 7,453 —
Non-cash stock based compensation expenses 1,634 619 2,337 1,020
Adjusted net income (non-GAAP) $ 3,657 $ 540 $ 6,541 $ 273
Net loss per common share (GAAP)
Basic EPS $ (0.07) $ (0.00) $ (0.14) $ (0.02)
Diluted EPS $ (0.07) $ (0.00) $ (0.14) $ (0.02)
Adjustments to Loss per Share:
Amortization of intangibles $ 0.02 $ 0.00 $ 0.05 $ 0.00
Non-cash stock based compensation expenses $ 0.03 $ 0.01 $ 0.03 $ 0.02
Deemed dividends on preferred stock $ 0.02 $ — $ 0.05 $ —
Amortization of preferred stock beneficial
conversion feature $ 0.05 $ — $ 0.10 $ —
Adjusted net income per common share (non-GAAP):
Adjusted Basic $ 0.04 $ 0.01 $ 0.07 $ 0.00
Adjusted Diluted $ 0.04 $ 0.01 $ 0.07 $ 0.00
Building One Growth-Driven Company l 29
Confidential
“Adjusted Net Income” is defined by NeoGenomics as net income available to common shareholders from continuing operations plus:
(i) non-cash amortization of customer lists and other intangible assets, (ii) non-cash, stock-based compensation expense, (iii) non-cash
deemed dividends on preferred stock, (iv) non-cash amortization of preferred stock beneficial conversion feature, and if applicable in a
reporting period (v) acquisition related transaction expenses and other significant non-recurring or non-operating (income) or
expenses.
“Adjusted EPS” is calculated using Adjusted Basic Shares and Adjusted Diluted Shares outstanding. Adjusted Basic Shares and Adjusted
Diluted Shares include the weighted average number of common shares that would be outstanding if the preferred stock were
converted into common stock on the original issue date based on the number of days such common shares would have been
outstanding in the reporting period. In addition, If GAAP Net Income is negative and Adjusted Net Income is positive, Adjusted Diluted
Shares will also include any options or warrants that would be outstanding as dilutive instruments using the treasury stock method.
Reconciliation of GAAP Net Income to Adjusted Figures
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
2016 2015 2016 2015
Weighted average shares used in computation of adjusted
earnings per share:
GAAP Basic Common Shares outstanding 77,448 60,425 76,758 60,352
Weighted Avg. Preferred Shares (as converted) 14,667 — 14,667 —
Adjusted Basic Shares outstanding 92,115 60,425 91,425 60,352
Diluted Common Shares (GAAP) 77,448 60,425 76,758 60,352
Options and warrants not included in GAAP Diluted
Shares (using treasury stock method) 2,297 2,826 1,951 2,609
Weighted Avg. Preferred Shares (as converted) 14,667 — 14,667 —
Adjusted Diluted Shares outstanding (non-GAAP) 94,412 63,251 93,376 62,961

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2016 07 26 neo company overview presentation

  • 1. Building One Growth-Driven Company l 1Building One Growth-Driven Company l 1 Company Overview Presentation July 2016
  • 2. Building One Growth-Driven Company l 2 Forward-looking Statements This presentation contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act, as amended; Section 21E of the Securities Exchange Act of 1934; and the Private Securities Litigation Reform Act of 1995. The words “may”, “would”, “could”, “will”, “expect”, “estimate”, “anticipate”, “believe”, “intend”, “plan”, “goal”, and similar expressions and variations thereof are intended to specifically identify forward-looking statements. All statements that are not statements of historical fact are forward-looking statements. Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The risks that might cause such differences are identified in our filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise the forward looking statements made in this presentation to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events.
  • 3. Building One Growth-Driven Company l 3 Investment Highlights Fast growing cancer genetics lab servicing Oncologists, Pathologists and Hospitals Strategic client partnerships created by “Tech-Only” model Dynamic, rapidly- growing and consolidating industry Industry-leading revenue & test volume growth Most Comprehensive Cancer Testing Menu in Industry Strong Management Team with large cap lab experience Acquisition of Clarient Should more than Double Revenue and more than Triple Adj. EBITDA in 2016
  • 4. Building One Growth-Driven Company l 4 Experienced Management Team • Douglas VanOort, Chairman & CEO Chief Operating Officer, Quest Diagnostics Executive Vice President, Corning Life Sciences, Inc. • Maher Albitar, M.D., Chief Medical Officer & Director of R&D Med. Dir. for Hematopathology & Oncology and Chief of R&D, Quest Nichols Institute; Director of Leukemia and Molecular Laboratory, MD Anderson Cancer Center • Robert Shovlin, Chief Growth Officer Chief Development Officer, Bostwick Laboratories; President & Chief Executive Officer, Aureon Biosciences • Steven Jones, Director, EVP – Finance, & Chief Compliance Officer Chairman, Aspen Capital Group; Vice President, Merrill Lynch Investment Banking • George Cardoza, Chief Financial Officer CFO, Protocol Global Solutions; Controller, Central Region, Quest Diagnostics • Steven Brodie – Chief Scientific Officer Senior Director - Quest Diagnostics • Steven Ross, Chief Information Officer Vice President Technology, Chico’s FAS, Inc. • Mark Machulcz, Vice President, Operations Director of Operations - Clarient Diagnostic Services
  • 5. Building One Growth-Driven Company l 5 1,1524,082 12,838 20,998 32,539 45,675 57,332 76,288 114,606 137,317 177,279 221,033 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $558 $1,885 $6,476 $11,505 $20,015 $29,469 $34,371 $43,484 $59,866 $66,467 $82,194 $91,048 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 NEO’s Proven Track Record of Consistent Growth Base NEO* Annual Revenue Base NEO* Tests Performed ($, 000s) * Base NEO represents organic revenue and test volume growth from legacy business and excludes the impacts from the PathLogic and Clarient acquisitions.
  • 6. Building One Growth-Driven Company l 6 Stable Pricing Expected in 2016 After 6 Years of AUP Declines! * For comparison purposes, Base NEO excludes the impacts from the PathLogic and Clarient acquisitions. (1) Productivity calculated as the average number of lab tests completed per month per laboratory FTE. Historically, Steady Margins Despite Lower Avg Unit Prices – Base NEO*
  • 7. Building One Growth-Driven Company l 7 Customer Targets Pathologists & Hospital Pathology Groups (about 81% of 2015 Revenue*) • Enable community Pathologists to practice using sophisticated tools and tests • Innovative technical component (TC or “tech-only”) services – Flow, FISH, IHC • Outstanding Web-based Lab System & extensive training programs Oncologists & Clinician Groups (about 15% of 2015 Revenue*) • Includes Hematologists, Oncologists, Dermatologists, Urologists • Disease Panels and comprehensive molecular menus • Increasing Opportunity to service larger practices with Tech-only model Clinical Trials & Other (about 4% of 2015 Revenue*) • Contract research/clinical trial support work for Pharma clients * Percentages are for Base NEO only and exclude the impacts from the PathLogic and Clarient acquisitions.
  • 8. Building One Growth-Driven Company l 8 Rapidly Growing Market Opportunity The exploding cost of cancer care offers extraordinary opportunities for those labs that can deliver innovative and value-based solutions to the healthcare system. Source: National Institutes of Health (NIH)
  • 9. Building One Growth-Driven Company l 9 NEO Addressable Cancer Testing Market NeoGenomics currently addresses a $5 billion clinical testing market opportunity! Mkt Size Estimate 2008 - 2014 Test Description Key CPT Codes(1) 2014 % CAGR Clinical Market Size Before Hospital Market Gross Up Adjustments(a) : ($, MMs) Cytogenetics 88237, 88264, 88291 100 0.3% IHC, Pathology & Digital Pathology 88342, 88360, 88361 1,305 4.0% FISH 88367, 88368, 88120, 88121 840 6.0% Flow Cytometry 88184, 88185, 88189 642 1.7% Molecular Molecular (2) Numerous 1,662 27.9% Est. Market Size Before Hospital Market Adjustments 4,548 9.2% Estimated Additional Market for Hospital Direct Billing Tests (b) Cyto & Molecular CLFS Tests Billed Directly to Hospitals(3) 181 Tech Component PFS Tests Billed to Hospitals after TC Grandfather Expiration(4) 418 Total Hospital Direct Bill Gross-Up Adjustments 599 NEO'S TOTAL ADDRESSABLE MARKET FOR CLINICAL TESTS $5,147 11.1% Sources: (a) (b) Management estimates. (1) (2) (3) (4) U.S. Anatomic Pathology Market Forecast & Trends 2016, Laboratory Ecnomics, derived from CodeMap, LLC and CMS (Medicare allowed c Only those CPT codes related to the clinical Cancer Genetic Testing Services provided by NEO were used in this analysis. Historical Molecular market not available by CPT Code. Laboratory Economics' estimate of the Pharmacogenomic Testing (PGx) market used as a proxy. Clinical Lab Fee Schedule (CLFS) tests for Medicare beneficiaries must be billed directly to hospitals. Thus, this portion of market is not captured above. Physician Fee Schedule (PFS) TC tests for Medicare beneficiaries must be billed directly to hospitals after July 2012. Thus, this portion of market not captured above.
  • 10. Building One Growth-Driven Company l 10 Accelerating Pace of Innovation • 70 new/revised tests, incl: NeoLABTM Liquid Biopsies • MDS/CMML Profile • AML Profile • FLT3 Mutation Analysis • NPM1 Mutation Analysis • PML-RARA Translocation • RUNX1-RNX1T1Transloc • INV16 Translocation • c-kit Mutation Analysis • IDH1 Mutation Analysis • IDH2 Mutation Analysis • NRAS Mutation Analysis • KRAS Mutation Analysis • BTK Inhibitor Resistance • Solid Tumor Monitoring Germline MolDx Testing • BRCA1 & BRCA2 • Lynch Syndrome (colon) • 73 Gene Comprehensive Predisposition Panel Other • ALK, ROS1, RET Fusion • Sarcoma gene Fusion • NeoSITE Cervical FISH • Expanded IHC Menu • Smart Flow Cytometry • 10-color Flow Cytometry • Implemented Adv MolDx platform in lieu of Kits • 28 new Molecular Assays • Proprietary method for increasing sensitivity of Sanger sequencing • 7 NeoTYPE MolDx Panels • SVM for FISH (Patent App) • Barrett’s Esoph. FISH (Patent App) • NeoARRAY/SNP Cytogenetics • Internalized send-outs • 40 new Molecular tests • Add’l NeoTYPE Panels • Next Generation Sequencing (48 genes) • ROS1 FISH • NeoSITE Melanoma FISH • Plasma/Urine-based Prostate Test (Patent App) • SVM-based Cytogenetics Analysis System • SVM-based Automated FISH Analysis System v2 • Began development of NeoLAB (Liquid Alternative to Biopsy) Prostate Cx test 2015 2012 2013 • 60 new/revised MolDx tests • 24 new NeoTYPE Next Generation Sequencing Profiles • 26 new IHC/ISH tests • Additional NeoLAB Prostate clinical studies • AML Extended FISH Panel • AML Favorable-Risk FISH Panel • MDS Extended FISH Panel • Plasma Cell Myeloma Risk Stratification FISH Panel • RET FISH • MET FISH • ALL Adult & Pediatric FISH Panels • HER2 Breast Equivocal FISH Panel • BRAF Translocation FISH • Chromosome 1 POC Ploidy • Launched robotic FISH-Cyto processing platform 2014
  • 11. Building One Growth-Driven Company l 11 Accelerating Same Store Sales* * Base NEO represents organic revenue and test volume growth from legacy business and excludes the impacts from the PathLogic and Clarient acquisitions. -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Year-Over-Year Total % of Test Volume Growth Same Store Year-over-year Growth w/o FCS FCS Year-over-Year Growth Other Year-over-Year Growth
  • 12. Building One Growth-Driven Company l 12 Pathology Group Preferences for Cancer Testing 16% - NeoGenomics 11% - Clarient 17% - LabCorp 14% - Quest 9% - Mayo Clinic 6% - ARUP 1% - CSI Labs 23% - All Others* Source: Laboratory Economics Anatomic Pathology Market Trends Survey, July 2015 (n=280 surveyed pathology groups/labs) * All Others include Johns Hopkins, MPLN, OHSU, PathGroup, ProPath, and local academic medical centers. Combined NeoGenomics and Clarient are the preferred Cancer Reference Lab according to a recent third party survey of independent pathologists.
  • 13. Building One Growth-Driven Company l 13 Recent Quarterly Financial Information (P&L) ($, 000's) Base NEO(1) Q2 15 Base NEO(1) Q2 16 Consolidated(2) Q2 15 Consolidated(2) Q2 16 Total Revenue $ 22,117 $ 29,482 $ 24,370 $ 63,129 % Growth (YoY) 9.3% 33.3% 17.9% 159.0% Total Gross Profit 10,286 14,076 10,813 28,605 Gross Margin % 46.5% 49.8% 44.4% 45.3% Total SG&A (Incl R&D) Exp 10,785 26,412 SG&A as a % of Rev 44.3% 41.8% Adjusted Net Income/(Loss)* $ 540 $ 3,657 Adjusted Diluted EPS* $0.01 $0.04 Adjusted EBITDA* $ 2,407 $ 9,181 % Growth 15.6% 281% Operating Data(3) % Growth in Clinical Genetic Tests (YoY) 23.3% 31.6% 23.3% 158% Avg. Revenue/Clinical Genetic Test $ 405 $ 410 $ 405 $ 385 % Change (YoY) -11.3% 1.3% -11.3% -4.8% Avg. COGS/Clinical Genetic Test $ 217 $ 214 $ 217 $ 207 % Change (YoY) -8.0% -1.0% -8.0% -4.4% * See Appendix for definitions of Adj. EBITDA, Adj. Net Income and Adj. Diluted EPS as well as a reconciliation of GAAP Net Income to Adjusted financial information. (1) For comparison purposes, Base NEO represents the core clinical genetic testing operations of NeoGenomics excluding the impacts from the Path Logic and Clarient Acquisitions. Since SG&A allocations were not made between the companies, Base NEO SG&A and Adj. EBITDA figures are not available. As a result of the ongoing integration activities of NEO and Clarient, beginning in Q3 2016 it will no longer be possible to break out Base NEO revenue and gross profit figures separately . (2) Consolidated Financials include the results from BioPharma, PathLogic, and Clarient (Q2 16 only). (3) All Operating data refers to Clinical Genetic Testing and excludes the results from PathLogic and the BioPharma testing activities.
  • 14. Building One Growth-Driven Company l 14 Confidential New NextGen Digital Companion Pathology Dx Oncology Technologies: FISH Clinical Trials Flow Cytogenetics Traditional Old Anatomic Path. Low Market High Growth 14 NEO’s Acquisition Strategy NEO Focus – Upper right hand quadrant Synergistic Deals High HighLow Market Growth Technologies Clarient Attributes  Technology leader  High growth (clinical trials)  Revenue scale  Nationwide presence  Complementary footprint  Geographic proximity  Ongoing GE affiliation
  • 15. Building One Growth-Driven Company l 15 Key Benefits • Synergy potential of $20mm - $30mm/year within 3-5 year – Laboratory, Purchasing, Cross-selling, etc. • East Coast/West Coast labs – Combine Irvine and Aliso Viejo • Low cost position in every testing discipline – FISH, Flow, Cytogenetics, IHC, Digital Pathology, Molecular • Leadership in hematological and solid tumor cancers – One-stop-shop for clients with broad geographical coverage • Potential to be a leading consolidator going forward • GE as significant long-term Investor – Collaboration in Bioinformatics in Precision Oncology • Significant clinical trials business – Combined business approximates $25mm revenue
  • 16. Building One Growth-Driven Company l 16 Confidential 2016 - Combined Pro Forma Revenue Bridge(1) (1) Preliminary Estimate - Subject to further refinements We estimate combined revenue of approx. $242 – $252 mm in 2016… • CMS Reimbursement estimates includes net positive price adjustments of $5-7 mm. We estimate $2 MM of revenue synergies and approximately $6 MM of revenue distractions relating to sales pipeline reductions. • Clarient revenue includes gross up for estimated Bad Debt, which was previously netted from Revenue. $0 $50 $100 $150 $200 $250 $300 Neo Clarient* CMS Fees Synergies Distractions New Neo $120mm $125mm $6 mm $2 mm ($6mm) $247mm
  • 17. Building One Growth-Driven Company l 17 Confidential 17 2016 Pro Forma Adjusted EBITDA Bridge (1) • NEO expects to realize $20-30 MM of total synergies in the next 3 years with approximately 75% of such synergies being cost synergies as a result of efficiencies gained through the combination with Clarient. • 2016 Adjusted EBITDA assumes $6 MM of Cost Synergies and $1MM of contribution from revenue synergies (50%). • 2016 Adjusted EBITDA estimates a $3mm reduction to Adjusted EBITDA as a result of revenue distractions (50% of revenue distractions) expected during the integration. (1) Preliminary Estimate – Subject to further refinements We estimate combined Adj. EBITDA of approx. $35 – $40 mm in 2016… $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 Neo Clarient CMS Fees Synergies Distraction New Neo $18.5 mm $9 mm $6 mm $7mm ($3mm) $37.5 mm
  • 18. Building One Growth-Driven Company l 18 Current 2016 Guidance* • Revenue: $242 - $252 MM • Adjusted EBITDA* 35 - 40 MM • Adjusted Net Income* 8 – 13 MM • Adjusted Diluted EPS* $0.08 - $0.13 * See Appendix for definitions of Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS as well as a reconciliation of GAAP Net Income to Adj. EBITDA, Adj. Net Income and Adj. Diluted EPS. 2016 net income available to common stockholders calculated in accordance with GAAP will be impacted by certain non-cash charges, including: (i) expenses related to variable stock-based compensation, (ii) approximately $7.3 million of expense related to the amortization of customers lists and other intangibles from the Path Logic and Clarient acquisitions, (iii) approximately $7.4 million of deemed preferred stock dividends, and (iv) approximately $14.9 million of related to the amortization of the beneficial conversion feature related to the preferred stock issued in connection with the Clarient acquisition. These non-cash charges have been included in GAAP net income (loss) available to common shareholders and GAAP net income (loss) per share; however, they have been removed from Adjusted Net Income and Adjusted Diluted Net Income per Share. As a result, the Company expects 2016 diluted net loss per share calculated in accordance with GAAP to be $0.35 - $0.40 per share lower than 2016 Adjusted Diluted Net Income per Share. NeoGenomics believes that Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS provide a more consistent measurement of operating performance and trends across reporting periods by excluding from income those cash and non-cash items of expense (income) not directly related to ongoing operations. Adjusted figures also assists investors in performing analysis that is consistent with financial models developed by research analysts. Investors should consider non-GAAP results together with GAAP results in analyzing NeoGenomics financial performance.
  • 19. Building One Growth-Driven Company l 19 NeoGenomics Vision and Goals Leadership Goals: • Be the leading oncology-focused testing and information company in the World. • Innovate aggressively to advance precision medicine. • Be the highest quality and lowest cost provider in each product area Competencies: • Outstanding Scientific, Medical and Informatics expertise. • Partnerships for efficiency/effectiveness across health-care care continuum • Disciplined process management and quality systems. • Entrepreneurial, values-driven culture. Financial Performance Goals: • Consistent and sustainable double-digit revenue growth. • Clinical Trials > 15% of revenue. • Adjusted EBITDA margin of 20-25% when annual revenue >$300 MM.
  • 20. Building One Growth-Driven Company l 20 Appendix
  • 21. Building One Growth-Driven Company l 21 CMS Reimbursement is Expected to be Stabile in 2017 Implied CY 2017 PFS Rates Based on CMS Draft Rule on the Physicial Fee Schedule (CMS-1654-P issued 7/7/16) CPT Proc Code Procedure Description National Unadj Rate 2013 National Unadj Rate 2014 National Unadj Rate 2015 National Unadj Rate 2016 2016 vs 2015 % change Prelim Rule - Implied National Unadj Rate 2017 (1) % Change 2017 Prelim Rule vs 2016 88184 FLOW 1ST MARKER 88.80$ 87.77$ 94.51$ 76.26$ -19.3% 61.53$ -19.3% 88185 FLOW EACH ADDL MARKER 54.10$ 53.73$ 57.49$ 46.55$ -19.0% 37.56$ -19.3% 88189 FLOW INTERP 16 OR MORE MARKERS 106.49$ 110.69$ 113.91$ 114.22$ 0.3% 92.30$ -19.2% 88374 FISH AUTOMATED PER PROBE (Multiplex Probe Stain) 255.77$ 205.54$ 345.87$ 68.3% 345.59$ -0.1% 88374-TC FISH AUTOMATED PER PROBE TECH (Multiplex Probe Stain) 193.08$ 160.26$ 299.68$ 87.0% 293.00$ -2.2% 88374-26 FISH AUTOMATED PER PROBE INTERP (Multiplex Probe Stain) 62.69$ 45.28$ 46.19$ 2.0% 46.15$ -0.1% 88121 FISH AUTOMATED - UROVYSION 557.98$ 508.30$ 556.97$ 558.55$ 0.3% 546.64$ -2.1% 88121-TC FISH AUTOMATED - UROVYSION 508.64$ 459.99$ 505.23$ 506.63$ 0.3% 494.77$ -2.3% 88121-26 FISH AUTOMATED - UROVYSION 49.33$ 48.31$ 51.74$ 51.92$ 0.3% 51.87$ -0.1% Uses G0461 in 2014 88342 IMMUNOHISTOCHEMISTRY (1st Stain) 88.48$ 90.91$ 107.41$ 18.1% 107.68$ 0.3% 88342 - TC IMMUNOHISTOCHEMISTRY TECH (1st Stain) 57.67$ 54.26$ 70.18$ 29.3% 70.48$ 0.4% 88342 - PC IMMUNOHISTOCHEMISTRY INTERP (1st Stain) 30.81$ 36.65$ 37.24$ 1.6% 37.21$ -0.1% Uses G0462 in 2014 88341 IMMUNOHISTOCHEMISTRY (Add'l Stain) 68.42$ 67.91$ 90.23$ 32.9% 90.15$ -0.1% 88341 - TC IMMUNOHISTOCHEMISTRY TECH (Add'l Stain) 55.88$ 45.99$ 62.30$ 35.5% 61.89$ -0.7% 88341 - PC IMMUNOHISTOCHEMISTRY INTERP (Add'l Stain) 12.54$ 21.92$ 27.93$ 27.4% 28.26$ 1.2% Uses G0461 in 2014 88344 IMMUNOHISTOCHEMISTRY (each Multiplex Stain) 88.48$ 117.50$ 174.01$ 48.1% 173.15$ -0.5% 88344 - TC IMMUNOHISTOCHEMISTRY TECH (each Multiplex Stain) 57.67$ 77.26$ 133.19$ 72.4% 132.37$ -0.6% 88344 - PC IMMUNOHISTOCHEMISTRY INTERP (each Multiplex Stain) 30.81$ 40.25$ 40.82$ 1.4% 40.78$ -0.1% 88361 MORPHOLOGY, EACH ANTIBODY - AUTOMATED 156.51$ 157.98$ 170.32$ 149.66$ -12.1% 155.98$ 4.2% 88361-TC MORPHOLOGY TECH, EACH ANTIBODY - AUTOMATED 99.35$ 98.51$ 109.96$ 88.79$ -19.3% 94.80$ 6.8% 88361-26 MORPHOLOGY INTERP, EA ANTIBODY - AUTOMATED 57.16$ 59.47$ 60.37$ 60.87$ 0.8% 61.18$ 0.5% (1) This Analysis is based on a Proposed Rule only, which is still subject to finalization by Medicare. The Final Rule is generally not published until November and any part or all of these implied rates may change. (2) Assumes no other Physician Fee Schedule (PFS) rule changes or limited coverage determinations are implemented for 2017. Uses Estimated Conversion Factor of 36.1096 taken from Section VI(C)(1) of CMS-1654-P (page 786 of display copy of rule on CMS website). Final Conversion Factor subject to change.
  • 22. Building One Growth-Driven Company l 22 Confidential  Core business focused on IHC, Flow, FISH, Cytogenetics and Molecular tests  National reach with focus on both independent and hospital pathologists  Consistently strong growth - early development to late stage testing  ~ 200 projects in process for >30 customers Clarient Overview 22  IHC/Digital Pathology: Large and Industry leading capabilities  FISH/ISH: Similar Instrumentation and capabilities  FLOW: Similar instrumentation and capabilities  Molecular: Smaller menu  Cytogenetics: Similiar capabilities Facilities/Infrastructure Customer Mix Product Lines (1)  78,000 sq. ft. Lab located in Aliso Viejo, CA  Available Capacity due to efficient workflow and processes.  Uses similar equipment and Instrumentation.  Uses similar IT Labs Systems and database structure  24,000 sq. ft. facility located in Houston, TX IHC 42% FISH/ISH 19% FLOW 14% Molecular 15% Cyto 5% Other 5% (1) Clinical operations only. Percentage of tests Performed. CLINICAL CUSTOMERS BIOPHARMA CUSTOMERS and Other
  • 23. Building One Growth-Driven Company l 23 Confidential Clarient Test Volume and Average Unit Price Revenue by Customer Type: Tests 2013 2014 2015 PF 2013 2014 2015 Clinical $111.9 $106.5 $93.8 Clinical Revenue $111.9 $106.5 $93.8 BioPharma 13.8 20.7 23.0 Tests 297.7 284.7 271.3 Total Revenue 125.7 127.2 116.8 AUP (1) $376 $374 $346 Bad Debt Acctng Adj(2) 6.6 6.7 8.2 Bad Debt Acctng Adj(2) 19.8 19.7 26.1 Proforma Rev to NEO $132.3 $133.9 $125.0 Proforma AUP to NEO $396 $394 $372 (1) Average Unit Price is based on revenue from clinical testing (excluding BioPharm tests). (2) Historically, Clarient booked Bad Debt as a reduction to revenue, wheras NEO books it in GA. $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 2013 2014 2015 PF BioPharma Clinical 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 2013 2014 2015Est Tests
  • 24. Building One Growth-Driven Company l 24 2015 Pro Forma Financial Information (Dollars in Millions) Clarient NeoGenomics Comined 2015 2015 2015 Pro Forma Audited Pro Forma Revenue 116.8$ 99.8$ 216.6$ Estimated Revenue using Neo Policie 125.0 (1) 99.8 224.8 EBITDA* 5.7 (2) 9.7 15.4 Pro Forma Adjusted EBITDA 9.2 (3) 9.7 18.9 (1) 2015 Revenue using NEO's Policies adds back 7% of net revenue for bad debt and moves this charge to G&A. (2) 2015 EBITDA excludes a $47.6 MM impairment charge to reduce the value of intangibles. (3) Pro Forma Adjusted EBITDA includes adjustments to reflect the business being acquired.
  • 25. Building One Growth-Driven Company l 25 Confidential Clarient Revenue and Payer Mix in 2014 Payor Mix - 2014 Clinical Only 2014 Payor Mix Client 39.6% Insurance 34.4% Government 12.4% HMO 5.3% Patient/Other 8.3% Total 100.0% Client Insurance Government HMO Patient/Other
  • 26. Building One Growth-Driven Company l 26 Clarient Transaction Consideration • $80 MM Cash – $15 MM – NEO cash from balance sheet – $10 MM – New, 5-year $25mm revolver – $55 MM – New, 5-year Term Loan • 14.67 MM Shares of Series A Redeemable Preferred Stock – Issued at $7.50 per share – Redeemable by NEO at any time at the issue price plus accrued PIK dividends – 4% annual PIK dividend begins 1/1/17 and increases after Year 4 by 1% per year to 10% in year 10. – Up to $10 MM discount for early redemption (declining discount over 4 years) – GE Ability to convert to common after 3 years if common stock > $8.00 per share for 30 consecutive trading days. – Valued at $73.2 MM for GAAP fair market value on closing date • 15 MM Shares of Common Stock – Valued at $102.5 MM for GAAP fair market value on closing date
  • 27. Building One Growth-Driven Company l 27 Confidential Reconciliation of GAAP Net Income to Adjusted EBITDA “Adjusted EBITDA” is defined by NeoGenomics as net income from continuing operations before: (i) interest expense, (ii) tax expense, (iii) depreciation and amortization expense, (iv) non-cash, stock-based compensation expense, and if applicable in a reporting period (v) acquisition related transaction expenses and other significant non-recurring or non-operating (income) or expenses. For the three months ended June 30, For the six months ended June 30, 2016 2015 2016 2015 Net Income (Loss) (per GAAP) $ 413 $ (176) $ 568 $ (937) Adjustments to Net Income (Loss): Interest expense 1,448 189 3,040 384 Income tax expense 332 15 505 19 Amortization of intangibles 1,610 97 3,636 190 Depreciation 3,744 1,663 7,329 3,249 EBITDA 7,547 1,788 15,078 2,905 Further Adjustments to EBITDA: Non-cash stock based compensation 1,634 619 2,337 1,020 Adjusted EBITDA (non-GAAP) $ 9,181 $ 2,407 $ 17,415 $ 3,925 Use of non-GAAP Financial Measures: NeoGenomics believes that using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the company’s core operating results and the comparison of core operating results more consistently across reporting periods. Management also uses non-GAAP financial measures for financial and operational decision making, planning and forecasting purposes and to manage the company’s business. These non-GAAP financial measures enable investors to evaluate our operating results and future prospects in the same manner as management and research analysts. The non-GAAP financial measures do not replace the presentation of GAAP financial results and should only be used as a supplement to and not as a substitute for financial results presented in accordance with GAAP. There are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation, and do not therefore present the full measure of NeoGenomics recorded costs against its net revenue. In addition, non-GAAP financial measures as defined by NeoGenomics may differ from non-GAAP measures used by other companies.
  • 28. Building One Growth-Driven Company l 28 Confidential Reconciliation of GAAP Net Income to Adjusted Net Income & GAAP Diluted EPS to Adjusted Diluted EPS For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Net income (loss) available to common stockholders (GAAP) $ (5,154) $ (176) $ (10,565) $ (937) Adjustments to Net Loss: Amortization of intangibles 1,610 97 3,636 190 Deemed dividends on preferred stock 1,840 — 3,680 — Amortization of preferred stock beneficial conversion feature 3,727 — 7,453 — Non-cash stock based compensation expenses 1,634 619 2,337 1,020 Adjusted net income (non-GAAP) $ 3,657 $ 540 $ 6,541 $ 273 Net loss per common share (GAAP) Basic EPS $ (0.07) $ (0.00) $ (0.14) $ (0.02) Diluted EPS $ (0.07) $ (0.00) $ (0.14) $ (0.02) Adjustments to Loss per Share: Amortization of intangibles $ 0.02 $ 0.00 $ 0.05 $ 0.00 Non-cash stock based compensation expenses $ 0.03 $ 0.01 $ 0.03 $ 0.02 Deemed dividends on preferred stock $ 0.02 $ — $ 0.05 $ — Amortization of preferred stock beneficial conversion feature $ 0.05 $ — $ 0.10 $ — Adjusted net income per common share (non-GAAP): Adjusted Basic $ 0.04 $ 0.01 $ 0.07 $ 0.00 Adjusted Diluted $ 0.04 $ 0.01 $ 0.07 $ 0.00
  • 29. Building One Growth-Driven Company l 29 Confidential “Adjusted Net Income” is defined by NeoGenomics as net income available to common shareholders from continuing operations plus: (i) non-cash amortization of customer lists and other intangible assets, (ii) non-cash, stock-based compensation expense, (iii) non-cash deemed dividends on preferred stock, (iv) non-cash amortization of preferred stock beneficial conversion feature, and if applicable in a reporting period (v) acquisition related transaction expenses and other significant non-recurring or non-operating (income) or expenses. “Adjusted EPS” is calculated using Adjusted Basic Shares and Adjusted Diluted Shares outstanding. Adjusted Basic Shares and Adjusted Diluted Shares include the weighted average number of common shares that would be outstanding if the preferred stock were converted into common stock on the original issue date based on the number of days such common shares would have been outstanding in the reporting period. In addition, If GAAP Net Income is negative and Adjusted Net Income is positive, Adjusted Diluted Shares will also include any options or warrants that would be outstanding as dilutive instruments using the treasury stock method. Reconciliation of GAAP Net Income to Adjusted Figures For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Weighted average shares used in computation of adjusted earnings per share: GAAP Basic Common Shares outstanding 77,448 60,425 76,758 60,352 Weighted Avg. Preferred Shares (as converted) 14,667 — 14,667 — Adjusted Basic Shares outstanding 92,115 60,425 91,425 60,352 Diluted Common Shares (GAAP) 77,448 60,425 76,758 60,352 Options and warrants not included in GAAP Diluted Shares (using treasury stock method) 2,297 2,826 1,951 2,609 Weighted Avg. Preferred Shares (as converted) 14,667 — 14,667 — Adjusted Diluted Shares outstanding (non-GAAP) 94,412 63,251 93,376 62,961