NeoGenomics Says One Dropped Customer Skewed Volume And Price Growth, Lifts 2026 Revenue Outlook
The cancer-testing company's 11% average unit price gain and slower volume trace to one unprofitable account, its CFO said.
NeoGenomics, which runs cancer-focused diagnostic labs, said on its third-quarter earnings call on Wednesday that the exit of one unprofitable, high-volume customer, not a discontinued product, explains why average unit price growth of 11% ran ahead of guidance while volume growth ran behind.
One customer, not one product
Chief Financial Officer Abhishek Jain told a Leerink Partners analyst that the company had guided at the start of the year for high-single-digit price growth and low-single-digit volume growth. The gap came from leaving a "high volume, low value test" contract with a customer that ran high volumes in 2025.
President and Chief Operating Officer Warren Stone, answering a Jefferies analyst, said the company signed that customer about 15 to 18 months ago and dropped it "because it wasn't profitable." The tests remain in the portfolio, he said.
Jain said price growth should settle back to mid-single digits once the dynamic stabilizes. He expects fourth-quarter volume growth of about 3%, after roughly 2% in the third quarter, with the comparison easing through the first half of 2027.
Quarter and raised outlook
Total revenue rose 11% to $209 million, and adjusted EBITDA was $18.7 million. Next-generation sequencing revenue grew 29%, on 17% volume growth, and adjusted gross margin reached 49%, up more than 300 basis points (three percentage points) from a year earlier.
Jain raised 2026 revenue guidance to $807 million to $809 million, from $802 million to $806 million. Adjusted EBITDA guidance rose to about $60 million, from $56 million to $58 million. Cash ended the quarter at $139 million, down $6 million from the prior quarter, after a roughly $10 million Justice Department settlement payment.
NeoGenomics provides cancer testing and consulting services to community pathology and oncology practices, hospital labs and drug companies.
MRD numbers deferred to February
A Piper Sandler analyst asked for fourth-quarter contributions from MRD (tests for cancer cells left after treatment) and liquid biopsy. Jain said the company is not breaking them out by quarter: "Sorry to disappoint you on that one." More color will come on the fourth-quarter call, he said, and both lines are tracking to guidance given earlier in the year.
A TD Cowen analyst asked what the larger immunotherapy-monitoring opportunity could mean for MRD in 2027. CEO Tony Zook said "we'll definitely go with the 27 in 27." He said Radar and liquid biopsy together are in line with, or slightly ahead of, the mid-single-digit-million target for this year. Stone said growing momentum in 2027 should support more meaningful revenue in 2028 and beyond.
Zook put the company's exposure to preliminary 2027 Medicare rates at low to mid-single-digit millions, which would flow through to gross margin and EBITDA. He called it "not a big headwind."
Zook said the company will update on fourth-quarter results and the 2027 outlook in February, on a call led by Stone, who becomes CEO on January 4, 2027.
Sources
- NeoGenomics Q3 2026 Earnings Call Transcript — benzinga.com
- NeoGenomics Non-GAAP EPS of $0.07 beats by $0.01, revenue of $209.25M beats by $1.92M (NASDAQ:NEO) | Seeking Alpha — seekingalpha.com
- NeoGenomics: Q3 Earnings Snapshot | 9news.com — Associated Press
