Annual Meeting and Investor Day May 25, 2017 Meeting Agenda May - - PowerPoint PPT Presentation

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Annual Meeting and Investor Day May 25, 2017 Meeting Agenda May - - PowerPoint PPT Presentation

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Annual Meeting and Investor Day May 25, 2017 Meeting Agenda May 25th 8:00 8:30am Annual Shareholders Meeting Analyst/Investor Day Presentations 8:30 9:15am CEO Review 9:15 10:00am Pathologist Perspective 10:00 10:15am

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SLIDE 1

Annual Meeting and Investor Day

May 25, 2017

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SLIDE 2

Meeting Agenda – May 25th

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8:00 – 8:30am Annual Shareholders Meeting Analyst/Investor Day Presentations 8:30 – 9:15am CEO Review 9:15 – 10:00am Pathologist Perspective 10:00 – 10:15am Break 10:15 – 11:00am Pharma Services 11:00 – 12:00am R&D and New Test Development Noon - 1:00pm Lunch/Review of Governmental Affairs 12:10pm – 1:30pm- Lab Tours – leaving every 20 minutes

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SLIDE 3

Annual Shareholder Meeting

May 25, 2017

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SLIDE 4

Investor/Analyst Day Presentations

May 25, 2017

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SLIDE 5

Meeting Agenda – May 25th

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8:00 – 8:30am Annual Shareholders Meeting Analyst/Investor Day Presentations 8:30 – 9:15am CEO Review 9:15 – 10:00am Pathologist Perspective 10:00 – 10:15am Break 10:15 – 11:00am Pharma Services 11:00 – 12:00am R&D and New Test Development Noon - 1:00pm Lunch/Review of Governmental Affairs 12:10pm – 1:30pm- Lab Tours – leaving every 20 minutes

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SLIDE 6

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.

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SLIDE 7

CEO Summary

Douglas VanOort

Chairman & CEO

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SLIDE 8

NeoGenomics Vision

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By providing uncompromising quality, exceptional service and innovative solutions, we will be the World’s leading cancer testing and information company.

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SLIDE 9

NeoGenomics - Facts

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  • # 1 or 2 largest somatic cancer testing Lab in America
  • Approximately 650,000 tests will be performed in 2017
  • Approx. 160,000 SF of space, 1,000 employees, 50 Physicians and PhDs
  • Most advanced and comprehensive cancer testing menu in America
  • Outstanding franchise with Hospitals/Pathologists
  • Unique and Growing business with Pharma clients
  • Large market, fragmented industry, and very positive demographic trends
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SLIDE 10

Drive for Growth

Clinical Genetic Testing Annual Revenue Clinical Genetic 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.

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$558 $1,885 $6,476 $11,505 $20,015 $29,469 $34,371 $43,484 $59,866 $66,467 $82,194 $188,374 $214,708

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Pro Forma Clarient 2015 Genetic Test Revenue NEO Clinical Genetic Testing Revenue

1,152 4,082 12,838 20,998 32,539 45,675 57,332 76,288 114,606 137,317 177,279 490,450 563,132

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Pro Forma Clarient 2015 Clinical Genetic Tests NEO Clincial Genetic Tests Performed

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SLIDE 11

Confidential

Impact of Clarient Acquisition

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Key Benefits Outstanding Customer Mix Similar Product Lines (1)

  • Synergy potential of $20mm-$30mm within 3 years
  • East Coast/West Coast Labs w/similar instrumentation
  • Combine Irvine Lab into 78,000 sq. ft. Aliso Viejo Lab
  • Strategic leadership in Heme cancers and Solid tumors
  • Significant Pharma Services business.

IHC 42% FISH/ISH 19% FLOW 14% Molecular 15% Cyto 5% Other 5%

(1) Clinical operations only. Percentage of tests Performed.

SIMILAR CLINICAL CUSTOMERS (About 2,400) New BIOPHARMA CUSTOMERS (200 Projects with >30 Customers)

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The Deal – Closed on 12/30/15

  • Approx. $292 million purchase price --- $80mm cash, 15mm

shares of NEO, $110mm Pfd. Stock.

  • Clarient 2015 revenue $125mm and $9mm Adj EBITDA.
  • $55 mm of Pfd Stock Redeemed at 9.1% discount in Dec 16
  • Bank debt refinanced in Dec 16 at favorable rates (L+350)
  • GE currently holds 15mm NEO shares plus $45mm Pfd Stock.
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SLIDE 12

Post Acquisition – Focus on Client Retention

$20.7 $23.2 $25.0 $23.0 $24.4 $25.1 $26.6 $30.3 $32.4 $31.8 $35.9 $61.7 $0.7 $29.4 $30.7 $28.9 $24.6

$0 $10 $20 $30 $40 $50 $60 $70 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

Quarterly Revenue

(millions) Clarient Rev Neo Rev

Revenue up 29% over 6 quarters pre-acquisition Revenue flat during Integration

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SLIDE 13

Integration Complete

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After 15 months, as of March 31, 2017, Integration is 100% complete.

  • Sales force completely integrated after 2 months
  • All “back - office” systems and processes integrated after 6 months
  • LIS reprogrammed to incorporate Best Practices after 8 months
  • Corporate culture and incentive programs fully integrated within 9-12 months
  • All clients serviced from common LIS and Billing system after 12 months
  • Irvine Lab completely consolidated into Aliso Viejo Lab after 15 months

After 16 months, Client Retention is nearly 100%.

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SLIDE 14

New NeoGenomics

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Same historically successful attributes :

  • Growth orientation
  • Leadership in Innovation
  • Entrepreneurialism
  • Exceptional Quality/Service
  • Deep/comprehensive test menu
  • Low-cost testing processes
  • Strong culture
  • Scale from doubling our volume
  • Improved Profitability
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SLIDE 15

Pursuit of Growth - Again

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Growth Goals:

  • Mid-teens organic clinical volume growth
  • 20%+ organic Pharma revenue growth
  • 25-35% incremental Adjusted EBITDA on revenue growth

Driven by:

  • Market share gains
  • Demographics and medical advances
  • Innovation in test development
  • Increased efficiencies
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SLIDE 16

U.S. Cancer Testing Market

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  • Based on CMS Data, the Cancer

Market was $5.1B in 2014

  • Assuming modest growth, the Cancer

Market is about $6B in 2017

  • NeoGenomics 2017 Revenue estimate
  • f $260M --- about 5% of the market
  • Industry is highly fragmented – and is

expected to consolidate further over time

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SLIDE 17

Cancer Testing Industry

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Large Reference Labs LabCorp Quest Diagnostics BioReference/OPKO Myriad Genetics Eurofins Pure-Play Comprehensive Oncology Labs NeoGenomics Genoptix CSI PhenoPath Various Regional Players Specialty Labs Exact Sciences Foundation Medicine Genomic Health Natera Invitae Veracyte Fulgent Genetics Large Academic Centers, Hospitals, and Other ARUP Mayo MD Anderson Memorial Sloane Kettering Others Estimated $2.5 Billion in Oncology Testing Approximately $1.1 Billion in Oncology Testing Approximately $2 Billion in Oncology Testing About 20 M&A and Strategic Initiatives over past 12 months Approximately $500 million in Oncology Testing Combined Adjusted EBITDA loss for 2017 of $450 million NeoGenomics now largest and most profitable player

Recent Consolidators Avg growth 30%+ Significant Change Ocurring

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SLIDE 18

Market Demand

Source: National Institutes of Health (NIH)

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  • Aging Population – incidence

increases with age

  • Increased Prevalence – better

treatments lead to more survivors and monitoring

  • Scientific advances – driving

targeted therapeutics

  • Increased cost of drugs –

more careful triage

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SLIDE 19

Demographic Tailwinds

Shifting De mogr aphic s Inc ide nc e of Canc e r by Age

0.0 20.0 40.0 60.0 80.0 100.0 120.0 Ag e 60- 64 Ag e 65- 74 Ag e 75- 84 Ag e 85+ 1.0% 2.7% 5.1% 13.8% 24.4% 26.2% 18.8% 7.9% < 20 20- 34 35- 44 45- 54 55- 64 65- 74 74- 84 > 84

So urc e : Unite d Sta te s Ce nsus Bure a u So urc e : Na tio na l Ca nc e r I nstitute

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SLIDE 20

Scientific Advances

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Therapeutic Area Drug Examples Example Companion or Complimentary Tests

Immuno-Oncology Keytruda, Opdivo, and many in development PD-L1, MSI, MMR, Tumor Mutation Burden (TMB) NSCLC Anti-EGFR, ALK inhibitors, etc. EGFR, ALK, ROS1, BRAF V600E, MET, RET, NTRAK, etc. Ovarian and Prostate PARP Inhibitors BRCA, PTEN, ERG, MMR, Breast and Gastric Herceptin HER2/neu IHC & FISH tests, BRCA, and numerous molecular tests Melanoma Vemurafenib (Zelboraf) BRAF, C-KIT, numerous FISH tests

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SLIDE 21

Innovation in Test Development

70 ne w/ re vise d te sts:

Ne oL AB

T M L

iquid Biopsie s

  • MDS/ CMML

Pro file

  • AML

Pro file

  • F

L T 3 Muta tio n Ana lysis

  • NPM1 Muta tio n Ana lysis
  • PML
  • RARA T

ra nslo c a tio n

  • RUNX1-RNX1T

1T ra nslo c

  • I

NV16 T ra nslo c a tio n

  • c -kit Muta tio n Ana lysis
  • I

DH1 Muta tio n Ana lysis

  • I

DH2 Muta tio n Ana lysis

  • NRAS Muta tio n Ana lysis
  • K

RAS Muta tio n Ana lysis

  • BT

K I nhib ito r Re sista nc e

  • So lid T

umo r Mo nito ring

Ge rmline MolDx T e sting

  • BRCA1 & BRCA2
  • L

ync h Synd ro me (c o lo n)

  • 73 Ge ne Co mp re he nsive

Pre d isp o sitio n Pa ne l

Othe r

  • AL

K , ROS1, RE T F usio n

  • Sa rc o ma g e ne F

usio n

  • Ne o SI

T E Ce rvic a l F I SH

  • E

xp a nd e d I HC Me nu

  • Sma rt F

lo w Cyto me try

  • 10-c o lo r F

lo w Cyto me try

  • I

mp le me nte d Ad v Mo lDx p la tfo rm in lie u o f K its

  • 28 ne w Mo le c ula r Assa ys
  • Pro p rie ta ry me tho d fo r

inc re a sing se nsitivity o f Sa ng e r se q ue nc ing

  • 7 Ne o T

YPE Mo lDx Pa ne ls

  • SVM fo r F

I SH (Pa te nt Ap p )

  • Ba rre tt’ s E

so p h. F I SH (Pa te nt Ap p )

  • Ne o ARRAY/ SNP Cyto g e ne tic s
  • I

nte rna lize d se nd -o uts

40 ne w/ re vise d te sts:

  • Ad d ’ l Ne o T

YPE Pa ne ls

  • Ne xt Ge ne ra tio n

Se q ue nc ing (48 g e ne s)

  • ROS1 F

I SH

  • Ne o SI

T E Me la no ma F I SH

  • Pla sma / Urine -b a se d Pro sta te

T e st (Pa te nt Ap p )

  • SVM-b a se d Cyto g e ne tic s

Ana lysis Syste m

  • SVM-b a se d Auto ma te d F

I SH Ana lysis Syste m v2

  • Be g a n d e ve lo p me nt o f

Ne o L AB (L iq uid Alte rna tive to Bio p sy) Pro sta te Cx te st

60 ne w/ re vise d te sts:

  • 24 ne w Ne o T

YPE Ne xt Ge ne ra tio n Se q ue nc ing Pro file s

  • 26 ne w I

HC/ I SH te sts

  • Ad d itio na l Ne o L

AB Pro sta te c linic a l stud ie s

  • AML

E xte nd e d F I SH Pa ne l

  • AML

F a vo ra b le -Risk F I SH Pa ne l

  • MDS E

xte nd e d F I SH Pa ne l

  • Pla sma Ce ll Mye lo ma Risk

Stra tific a tio n F I SH Pa ne l

  • RE

T F I SH

  • ME

T F I SH

  • AL

L Ad ult & Pe d ia tric F I SH Pa ne ls

  • HE

R2 Bre a st E q uivo c a l F I SH Pa ne l

  • BRAF

T ra nslo c a tio n F I SH

  • Chro mo so me 1 POC Plo id y
  • L

a unc he d ro b o tic F I SH-Cyto p ro c e ssing p la tfo rm

50 ne w/ re vise d te sts:

  • Co mp re he nsive PD-L

1 T e sting (thre e F DA-c le a re d a nd o ne L DT )

  • 1,385 g e ne s RNA-Ba se d Pa n

Ca nc e r NGS F usio n, Muta tio n a nd E xp re ssio n Pro filing .

  • Sma rt F

lo w Cyto me try d a ta a na lysis p la tfo rm

  • Pe d ia tric He re d ita ry Susc e p tib ility
  • He re d ita ry DNA Pa ne l (p ro sta te )
  • I

nhe rite d Bo ne Ma rro w F a ilure

  • ME

T E xo n 14 De le tio n Ana lysis

  • NRAS E

xo n 4 Muta tio n Ana lysis

  • NGS AL

K , NT RK , RE T , ROS1 F usio n

Ne oL AB

T M L

iquid Biopsie s

  • Ne o L

AB Mye lo id Diso rd e rs Pro file

  • E

GF R T 790M

Ne oT YPE

T M Multi Modality Profile s
  • AI

T L / Pe rip he ra l T

  • Ce ll L

ymp ho ma

  • T

hyro id Pro file

  • Bra in T

umo r Pro file

  • Me la no ma Pro file
  • L

ip o sa rc o ma F usio n Pro file

  • He a d & Ne c k T

umo r Pro file

F ISH & IHC

  • F

I SH T e sting fo r E WSR1, SS18, DDI T 3, ST AT 6, BCL 2, & T CL 1

  • I

HC T e sting fo r CXCL 13, BAP1, I NI 1, MUC4

2012 2013 2014 2015 2016

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SLIDE 22

Opportunities by Customer Type

Pathologists & Hospitals (about 80% of Revenue)

  • Large Market with 5,600 Hospitals in U.S., and 18,000 active Pathologists
  • Enable Pathologists to practice using sophisticated tools/tests and “tech-only” services
  • Unique ability to be “One-stop shop” with comprehensive oncology test menu
  • Competitive pricing under contract, and agreements with hospitals & hospital GPOs

Oncologists, Hematologists & Clinicians (about 10% of Revenue)

  • Disease Panels, liquid biopsies, and comprehensive molecular menus
  • Increasing opportunity to service larger practices with Partnership-based tech-only model
  • Contracts with key Managed Care organizations

Pharma Services & Other (about 10% of Revenue)

  • Contract research/clinical trial support work for Pharma clients
  • Opening in Geneva, Switzerland to handle European and Global studies
  • MultiOmyx platform is a unique offering gaining acceptance by Pharma firms

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SLIDE 23

Cross Selling to Pathologists & Hospitals

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“Old Clarient Clients” Great reputation – Solid Tumors

– FISH – great solid tumor FISH

franchise, good capacity

– Flow Cytometry – excellent program,

expandable capacity

– Cytogenetics – good product and

service

– Digital Imaging and IHC –

  • utstanding and unique product,

steady volume

“Old NEO Clients” Great reputation - Heme Cancers

– FISH – outstanding hemeFISH

franchise, good capacity

– Flow Cytometry – Outstanding

program, expandable capacity

– Cytogenetics – outstanding product

and service

– Molecular – unique product, fast

growing volume

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SLIDE 24

Cost Synergies and Opportunities

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2015 Adjusted EBITDA NeoGenomics $ 9.7 MM Clarient Pro Forma $ 9.2 MM Pro Forma Combined $18.9 MM 2016 “New Neo” EBITDA $ 34.7 MM

Clearly, “synergies” showed up in 2016 --- and there are more to be realized in 2017- 18 2017 – 2018 Opportunities:

  • Laboratory facilities consolidated on 3/26/17 – teams now working as one
  • Ability to run combined batches in So. California rather than two batches
  • Ongoing supplier re-negotiations as contracts end – we have 2x volume
  • Irvine laboratory closed on 4/30 – saving over $50k per month
  • Cross selling now possible – accounts all one system
  • Pharma services just starting to access Neo’s leading Molecular menu

9 + 9 equals 34

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SLIDE 25

Reducing Cost per Test

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SLIDE 26

Improving Productivity

* To facilitate comparison, all data is for Clinical Genetic Testing and excludes the impact from the PathLogic acquisition and Pharma Services. (1) Productivity calculated as the average number of lab tests completed per month per laboratory FTE.

45.9% 44.7% 44.8% 47.7% 48.0% 46.1% 47.2%

  • 40.9%

65.6%

  • 50%
  • 40%
  • 30%
  • 20%
  • 10%

0% 10% 20% 30% 40% 50% 60% 70% 35% 40% 45% 50% 55% 2010 2011 2012 2013 2014 2015 2016 Gross Margin % From Clinical Genetic Testing Cum Change in Avg Rev/ Clinical Genetic Test Since 2009 Cum Change in Productivity Since 2009

Cum Change in Avg Rev/Test & Productivity

(1) 26

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SLIDE 27

Growing Pharma Services

$41.6mm Backlog as of 3/31/17 - Approx. 400 active projects from 100+ Clients

  • 50% of projects in pre-clinical space – possible lead to more lucrative Phase I, II, and III work
  • Major PD-L1 testing site for Keytruda (Merck) and Opdivo (BMS) – positioned in immuno-oncology
  • Medical and Scientific expertise, test menu, clinical distribution system,
  • International presence in 2017 with Geneva Switzerland Lab.

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SLIDE 28

Confidential 28

Acquisition Strategy

NEO Focus – Upper right hand quadrant Synergistic Deals

High High Low Market Growth Technologies

NextGen Seq Digital Companion Dx Pathology Oncology FISH Clinical Trials Flow Cytogenetics Traditional Anatomic Path. BioInformatics

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Requirements

  • Synergy
  • Scale
  • Added Capability
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SLIDE 29

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NEO Stock Price

May 2012 $1.67

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SLIDE 30

2020 Goals

By providing uncompromising quality, exceptional service & innovative solutions, we will be the world’s leading cancer testing and information company!

15%+

Clinical Volume CAGR

20%+

Pharma Services Revenue CAGR

20-25%

Adjusted EBITDA Margins

30

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SLIDE 31

Key Takeaways

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 Unique and leading pure-play Oncology Company  History of strong performance  Significant opportunities for growth  Realization of cost synergies expected to accelerate  Strategic opportunities highly likely over the next 36 mos  Well positioned for continued Industry Leadership

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SLIDE 32

Questions and Answers

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