Oncology (cancer) diagnostics company NeoGenomics (NASDAQ: NEO) beat Wall Street’s revenue expectations in Q3 CY2025, 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.
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NeoGenomics (NEO) Q3 CY2025 Highlights:
- Revenue: $187.8 million vs analyst estimates of $183.8 million (11.9% year-on-year growth, 2.1% beat)
- Adjusted EPS: $0.03 vs analyst estimates of $0.02 (in line)
- Adjusted EBITDA: $12.23 million vs analyst estimates of $10.94 million (6.5% margin, 11.8% beat)
- The company reconfirmed its revenue guidance for the full year of $723 million at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $0.10 at the midpoint
- EBITDA guidance for the full year is $42.5 million at the midpoint, in line with analyst expectations
- Operating Margin: -14.4%, down from -12.6% in the same quarter last year
- Free Cash Flow was -$10.25 million compared to -$1.55 million in the same quarter last year
- Market Capitalization: $1.31 billion
“During the third quarter, we again delivered strong clinical test volumes and revenue while advancing our long-term growth initiatives in therapy selection and MRD – two of the largest and fastest growing areas of cancer testing with significant unmet needs,” stated Tony Zook, CEO of NeoGenomics.
Company Overview
Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ: NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, NeoGenomics grew its sales at a decent 10.8% compounded annual growth rate. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. NeoGenomics’s annualized revenue growth of 11.1% over the last two years aligns with its five-year trend, suggesting its demand was stable. 
This quarter, NeoGenomics reported year-on-year revenue growth of 11.9%, and its $187.8 million of revenue exceeded Wall Street’s estimates by 2.1%.
Looking ahead, sell-side analysts expect revenue to grow 9.6% over the next 12 months, similar to its two-year rate. Still, this projection is admirable and indicates the market sees success for its products and services.
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Operating Margin
NeoGenomics’s high expenses have contributed to an average operating margin of negative 19.7% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.
Analyzing the trend in its profitability, NeoGenomics’s operating margin decreased by 2.3 percentage points over the last five years, but it rose by 3.1 percentage points on a two-year basis. Still, shareholders will want to see NeoGenomics become more profitable in the future.
In Q3, NeoGenomics generated a negative 14.4% operating margin.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
NeoGenomics’s flat EPS over the last five years was below its 10.8% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
We can take a deeper look into NeoGenomics’s earnings to better understand the drivers of its performance. As we mentioned earlier, NeoGenomics’s operating margin declined by 2.3 percentage points over the last five years. Its share count also grew by 16.3%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. 
In Q3, NeoGenomics reported adjusted EPS of $0.03, down from $0.05 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects NeoGenomics’s full-year EPS of $0.10 to grow 77.4%.
Key Takeaways from NeoGenomics’s Q3 Results
It was encouraging to see NeoGenomics meet analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 6.8% to $10.84 immediately following the results.
NeoGenomics may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
