22Forward-looking StatementsThis presentation contains statements which constitute forward-lookingstatements within the meaning of Section 27A of the Securities Act, asamended; Section 21E of the Securities Exchange Act of 1934; and thePrivate 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 tospecifically identify forward-looking statements. All statements that are notstatements of historical fact are forward-looking statements.Investors and prospective investors are cautioned that any suchforward-looking statements are not guarantees of future performance andinvolve risks and uncertainties, and that actual results may differ materiallyfrom those projected in the forward-looking statements as a result ofvarious factors. The risks that might cause such differences are identifiedin our filings with the Securities and Exchange Commission. We undertakeno obligation to publicly update or revise the forward looking statementsmade in this presentation to reflect events or circumstances after the dateof this presentation or to reflect the occurrence of unanticipated events.
33Investment Highlights• Fast growing pure-play, cancer genetics lab• Servicing: Oncologists, Pathologists and Hospitals• “Tech-Only” model creates strategic client partnerships• Rapidly growing industry undergoing consolidation• Strong Management Team with large cap lab experience• Industry leading revenue & test volume growth driven bynew test innovation and increasing sales force productivity• Increasing productivity and operating leverage leading toaccelerating cash flow and net income
44Consistent Historical Growth$0$10,000$20,000$30,000$40,000$50,000$60,000200420052006200720082009201020112012Annual Revenue ($, 000’s)020,00040,00060,00080,000100,000120,000200420052006200720082009201020112012Tests Performed (000’s)
55Accelerating Cash Flow & Earnings($, 000s) 2010 2011 2012Total Revenue 34,371$ 43,484$ 59,867$% Growth 16.6% 26.5% 37.7%Total Gross Margin 15,783 19,428 26,836Gross Margin % 45.9% 44.7% 44.8%Sales & Marketing Exp as a % of Rev 21.8% 16.0% 12.5%Gen & Admin Exp as a % of Rev 31.2% 28.4% 26.5%R&D Exp as a % of Rev 1.5% 1.2% 3.8%SG&A Expenses 18,746 19,837 25,624Total SG&A as a % of Rev 54.5% 45.6% 42.8%Adjusted EBITDA (566)$ 2,134$ 5,997$% Growth NA 181.0%Net Income/(Loss) (3,303)$ (1,177)$ 65$Diluted EPS ($0.09) ($0.03) $0.00Summary Operating MetricsAvg. Revenue/Test 600$ 570$ 522$% Change -7.1% -4.9% -8.4%
66• Molecular diagnostics transforming lab servicesindustry and fueling rapid growth– Molecular diagnostics enable physicians to betterdiagnose diseases and predict therapeutic efficacy• Clinical Benefits: Effective treatment at an early stageincreases patient survival rates• Healthcare Savings: a) forego spending on ineffectivetherapies and b) effective intervention at an early stagegenerally lowers overall treatment cost– Need for companion diagnostics being driven by risingdrug costs and an increase in targeted therapeutics• Xalkori® - Cost of ~$90,000 annually to treat non-small celllung cancer. 50 – 61% effective for the ~3% of thepopulation with certain genetic characteristics• Diagnostic testing can significantly lowerhealthcare costs and improve clinical outcomes– Diagnostics represents only 2-3% of total healthcarespend but influence approximately 70% - 80% ofphysician decisions• Cancer prevalence expected to increase as U.S.population ages– 77% of all cancers diagnosed are in people age 55 orolder, the fastest growing segment of the US16%17% 16%18%22%25% 25% 26%11%13% 12% 13%16%19% 20% 20%0%5%10%15%20%25%30%1980 1990 2000 2010 2020 2030 2040 2050PercentOfPopulationAge 60 and older Age 65 and olderCurrentU.S. Population DemographicsBoomer Impact on Cancer MarketIndustry Dynamics
88Cancer Testing Market Characteristics• Highest growth segment of lab Industry- ~20% annual growth in genetics testing- 8-10% annual growth in related AP testing• Approx. 360 Genetic Labs in the U.S.- 2/3 affiliated with academic institutions- Approximately 20% perform 80% of testing- Only 15-20 labs with national reach• High pace of consolidation - Recent examples include:Target Acquiror TV/LTM RevCaris Diagnostics Miraca 3.5xGenoptix Novartis 1.7xClarient GE Healthcare Svcs 5.8xGenzyme Genetics LabCorp 2.5x
99Business Model TargetsPathologists and Hospital Path Groups• Innovative technical component (TC) only services – Flow, FISH, IHC• Enables community pathologists to compete with large labs• Rapid turnaround-time and web-based reporting• Extensive training programsOncologists and Clinician Groups• Specialized high level of service and outstanding quality for clinicians• Genetic Pathology Solutions™ (GPS) reporting – all relevant casedata on one page report
1010NeoGenomics’ Cancer Testing ServicesKey Testing ModalitiesCytogenetics: chromosome analysis- “Neighborhood view of 46 houses from 1000 feet”Flow Cytometry & IHC: cell surface markeranalysis- “Single house view from 500 feet”Fluorescence in-situ Hybridization (FISH):gene analysis - “Door and window view of one house”Molecular testing: DNA/RNA analysis-“View of serial number on door lock”
1111• Hired Dr. Maher Albitar as Chief Medical Officer (Jan 12)• Entered into exclusive worldwide license to Health Discovery Corp’s IPrelating to pattern recognition technology, biomarker discovery, and gene& protein-based tests for cancer LDTs (Jan 12)- Targeted initial focus areas: prostate, pancreatic and colon cancer tests;automating cytogenetics and flow cytometry analysis• 10 Color flow cytometry (Q2 12)• Increased IHC menu to 140 antibodies and 21 diagnostic panels (2012)• 49 New Molecular Assays and NeoTYPE MolDx Panels (2012 - present)• SVM-based test for ALK lung cancer FISH (Sep 12)• NeoARRAY/SNP Cytogenetics Test (Nov 12)• New Aperio Digital Imaging Platform (Q4 12)• Barrett’s Esophagus FISH Test (Dec 12)Recent Innovation
1515Industry Dynamics& Demographics• Aging U.S. population andprevalence of cancer• Diagnostic testing reduceshealthcare costs and improvesclinical outcomes• Emergence of molecular diagnostics• Targeted therapeutics andcompanion diagnostics• Grow existing customer base– Salesforce productivity– Increase share of wallet– Promote product education• Attract New Customers– Promote key advantages of“tech-only” model to community-based hospitals– Partner with Clinician Offices• Sustainable revenue growth opportunity• Significant degree of operating leverage inthe business modelNew Products &TerritoriesMarket Share Gains• Continue to expand test menu• Sublicensing of HDC products– Cytogenetics/Flow systems– International opportunities• Proprietary test development• Mergers & AcquisitionsSuperior Financial ModelKey Growth Drivers
1616Management Team• Douglas VanOort, Chairman & CEOOperating Partner, Summer Street Capital Partners;Chief Operating Officer, Quest Diagnostics• Maher Albitar, M.D., Chief Medical Officer & Director of R&DMed. Dir. for Hematopathology & Oncology and Chief of R&D, Quest Nichols Institute;Director of Leukemia and Molecular Laboratory, MD Anderson Cancer Center• Robert Gasparini, Director & Chief Scientific OfficerDirector of Genetics, U.S. Labs; Worldwide Marketing Mgr., Ventana Medical Systems;Asst. Director, Prenatal Diagnostic Center (Harvard)• Steven Jones, Director, EVP – Finance, & Chief Compliance OfficerChairman, Aspen Capital Group; Managing Member, Medical Venture Partners;Vice President, Merrill Lynch Investment Banking• George Cardoza, Chief Financial OfficerCFO, Protocol Global Solutions; Controller, Central Region, Quest Diagnostics• Robert Horel, Vice President, Sales & MarketingRegional Mgr., US Labs; Product Specialist, Ventana Medical Systems; Pilot, U.S. Navy• Steven Ross, Chief Information OfficerVice President Technology, Chico’s FAS, Inc.
1717Productivity Increases Have Offset Changes inAverage Revenue/Test to Keep Margins Stable(1) Productivity calculated as the average number of lab tests completed per month per laboratory FTE.(2) The Medicare Technical Component Grandfather expiration took effect on 7/1/12, which resulted in a 7.3% sequential decrease in Avg. Unit Price.(2)47.3% 48.4%46.1%44.7% 44.6% 43.9% 44.5% 44.8% 45.2%47.1% 47.2%41.5%43.2% 46.3%-20.5%43.4%-50%-40%-30%-20%-10%0%10%20%30%40%50%0%10%20%30%40%50%60%70%80%90%100%Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Q113Gross Margin % Cum Change in Avg Rev/Test Cum Change in Productivity(1)
2020NeoGenomics Summary• Emerging leader in the fastest growing segment of thelab testing industry• Robust competitive advantages and product portfolio• Strong Management Team with directly relevant industryexperience• Accelerating profitability propelled by revenue growthand increased operating leverage• Q2 2013 guidance: $15.8 - $16.4 million of revenuewith $0.00 – $0.01 per share of net income• Fiscal 2013 guidance: $68 - $73 million of revenue with$0.03 - $0.05 per share of net income