NeoGenomics (NEO) Q3 2025: NGS Revenue Jumps 24% as Community Oncology Penetration Deepens
NeoGenomics delivered robust clinical growth in Q3, with next-generation sequencing (NGS) revenue surging and operational initiatives gaining traction. Strategic moves, including the Pathline acquisition and a sharpened focus on the community oncology market, are driving above-market test volume and average unit price (AUP) expansion. Management signals sustained outperformance in NGS and MRD (minimal residual disease) as new product launches and operational streamlining set up accelerating growth into 2026.
Summary
- NGS Outpaces Market: NeoGenomics’ NGS revenue grew 24% YoY, signaling share gains in therapy selection.
- Community Oncology Penetration: Clinical volume growth is fueled by deeper relationships in underpenetrated regional markets.
- 2026 Growth Levers in Place: New launches and operational efficiencies are poised to drive margin and revenue expansion next year.
Performance Analysis
NeoGenomics’ Q3 results underscore a pivot toward higher-value clinical testing, with total revenue reaching $188 million, up 12% YoY. Clinical revenue, now the core engine, climbed 18% while non-clinical revenue (mainly pharma and biotech) declined, reflecting sector-wide headwinds. The clinical segment now comprises over 90% of total revenue, and its growth is led by test volume gains (up 15%) and a 3% lift in AUP, a key metric reflecting both product mix and pricing power.
NGS now accounts for 33% of clinical revenue, with five products launched in 2023 contributing nearly a quarter of that figure. The company’s “protect, expand, acquire” strategy, focused on customer retention and new account wins, is translating into record test volumes and sequential AUP gains. Non-NGS modalities also outperformed, supporting the narrative that NeoGenomics is not solely reliant on a single technology for growth.
- Volume-Driven Growth: Test volume increases, especially in the community oncology setting, are the primary driver of clinical revenue gains.
- Product Mix Shift: Higher-value NGS and recent pricing actions are lifting AUP, enhancing gross profit leverage.
- Operational Execution: Turnaround times and customer service improvements are supporting both retention and expansion.
With adjusted gross profit up 7% and cash from operations positive, NeoGenomics is demonstrating both top-line momentum and improving operational discipline, even as it invests in commercial expansion and R&D for future growth drivers.
Executive Commentary
"We believe the addition of Pathline allows us to offer significantly faster turnaround times, a larger and relevant New York State-approved test menu, and an enhanced physician experience in the Northeast region, where we have historically been underpenetrated."
Tony Zook, President & CEO
"NGS revenues grew by 24% over a prior year and a quarter and accounted for 33% of total clinical revenue. Average revenue for clinical tests increased sequentially from Q2 by $15, or 3%, and was up by 3% from prior year."
Jeff Sherman, Chief Financial Officer
Strategic Positioning
1. Community Oncology Focus
NeoGenomics is aggressively targeting the community oncology market, which accounts for 80% of U.S. cancer care but has lagged in adopting advanced diagnostics. The Pathline acquisition is a key enabler, expanding the company’s Northeast footprint and accelerating time-to-result for local providers. This regional push is unlocking new account wins and driving repeat ordering behavior among newly onboarded oncologists.
2. Portfolio Expansion and Differentiation
The company’s broad menu—over 500 oncology-focused tests—positions it as a one-stop partner for institutions seeking operational simplicity. The Pantracer family (tissue and liquid biopsy) and MRD offerings are central to this strategy, with new launches like Pantracer LBX and RadarST expected to drive incremental growth and reinforce NeoGenomics’ competitive moat in both therapy selection and cancer monitoring.
3. Operational Efficiency and Digital Transformation
NeoGenomics is consolidating multiple laboratory information management systems (LIMS) and integrating with Epic’s Aura solution, aiming to streamline workflows, reduce redundancy, and enhance the customer experience. AI-enabled LIMS will help identify process bottlenecks, while expanded automation and digital pathology initiatives are expected to yield multi-year margin improvements as test volumes scale.
4. Pharma and Biotech Headwinds
Non-clinical revenue remains challenged, with management signaling that a rebound in the pharma segment will be gradual, likely not materializing until 2027. Near-term focus is on leveraging new products like RadarST to re-engage pharma partners, but the long sales cycle and sector-wide budget constraints limit visibility.
5. R&D and Indication Expansion
Ongoing investment in MRD innovation and indication expansion underpins a multi-year growth agenda. NeoGenomics is pursuing additional regulatory submissions and preparing for broader commercial launches, with the expectation that new indications for RadarST and next-gen MRD will contribute meaningfully in the second half of 2026 and beyond.
Key Considerations
This quarter highlights NeoGenomics’ strategic execution in clinical expansion, operational leverage, and portfolio differentiation, while also surfacing the limits of its influence over pharma revenue cycles.
Key Considerations:
- NGS Momentum: Sustained above-market NGS growth is a direct result of commercial execution and new product launches, supporting AUP expansion and share gains.
- Pathline Integration: Northeast expansion is unlocking underpenetrated markets, but full synergy capture and cost leverage will take time to materialize.
- Operational Simplification: LIMS and digital initiatives are expected to drive productivity and margin gains, especially as test volumes increase.
- Pharma Segment Lag: Non-clinical recovery is outside near-term control, with management targeting 2027 for a return to growth.
- MRD Launch Cadence: RadarST and next-gen MRD launches are staged for a gradual revenue build, with reimbursement and indication expansion as key catalysts.
Risks
Pharma and biotech revenue remains structurally soft, with limited visibility into timing of recovery. MRD and NGS reimbursement is not guaranteed, and delays could impact the pace of revenue realization. Operational complexity from recent M&A and multi-site integration could dilute near-term margin gains if execution falters. Competitive intensity in both community and academic oncology testing remains high, with larger players and new entrants vying for share.
Forward Outlook
For Q4 2025, NeoGenomics guided to:
- Clinical revenue strength continuing, with non-clinical still soft
- Operational improvements from commercial and lab initiatives
For full-year 2025, management reiterated guidance:
- Consolidated revenue of $720 to $726 million (9-10% YoY growth)
- Adjusted EBITDA of $41 to $44 million (3-10% YoY growth)
- Net loss of $108 to $116 million (up 37-47% YoY)
Management highlighted continued NGS and MRD outperformance, a robust clinical pipeline for 2026, and operational efficiencies from LIMS and automation as key drivers for the coming year.
- Pantracer LBX and RadarST launches to drive incremental growth
- Pathline synergy and Northeast expansion to accelerate in 2026
Takeaways
NeoGenomics is executing a clear pivot toward higher-value clinical testing, with NGS and MRD as the primary growth engines. Operational discipline and digital transformation are setting the stage for margin expansion, while the company’s broad portfolio and customer-centric approach are reinforcing its position as the partner of choice in community oncology.
- NGS and MRD Outperformance: Sustained above-market growth and share gains are positioning NeoGenomics as a leader in precision oncology testing.
- Execution on Integration and Efficiency: Pathline and LIMS projects are critical to unlocking scale and margin leverage in 2026 and beyond.
- Watch Pharma Recovery and Reimbursement: Investors should monitor the pace of pharma segment rebound and the timing of MRD reimbursement for upside or downside surprises.
Conclusion
NeoGenomics’ Q3 2025 results demonstrate a successful strategy of clinical expansion, operational execution, and portfolio innovation, even as pharma headwinds persist. The company is well positioned to capitalize on NGS and MRD growth, with operational and commercial levers primed for acceleration in 2026.
Industry Read-Through
The outperformance of NGS and MRD at NeoGenomics signals accelerating adoption of advanced diagnostics in community oncology, a trend likely to benefit other focused players with broad portfolios and strong commercial capabilities. The slow recovery in pharma and biotech spend is a cautionary signal for peers reliant on non-clinical revenue streams, while the emphasis on operational simplification and digital transformation is increasingly table stakes for margin expansion in the diagnostics sector. Regional expansion via targeted M&A and integration of digital workflows will remain key differentiators as competition intensifies and reimbursement dynamics evolve.