NEOGENOMICS DEADLINE ALERT: Bragar Eagel & Squire, P.C. Reminds Investors that a Class Action Lawsuit Has Been Filed Against NeoGenomics, Inc. and Encourages Investors to Contact the Firm

NEW YORK–(BUSINESS WIRE)–#A–Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, reminds investors that a class action lawsuit has been filed against NeoGenomics, Inc. (“NeoGenomics” or the “Company”) (NASDAQ: NEO) in the United States District Court for the Southern District of New York on behalf of all persons and entities who purchased or otherwise acquired NeoGenomics securities between February 27, 2020 and April 26, 2022, both dates inclusive (the “Class Period”). Investors have until February 6, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.

Click here to participate in the action.

NeoGenomics provides cancer tests and testing services to doctors, clinics, hospitals, and pharmaceutical companies. Among the Company’s portfolio of tests are next generation sequencing (“NGS”) tests. NGS tests have become popular with pathologists in recent years because they can test multiple genes of a cancer simultaneously, making them more cost effective and efficient than older legacy tests that only look for a single specific genetic mutation.

Throughout the Class Period, NeoGenomics consistently misrepresented to investors that it had a “comprehensive menu” of cancer tests that positioned it as a “one-stop-shop” for pathologists that needed cancer testing. Moreover, the Company stated that it had “every kind of testing modality that you can use for cancer, including some of the fast-growing new ones, like next-generation sequencing,” and had “a competitive advantage” as a “go-to reference lab with a comprehensive menu for just about any kind of tests that you want to have done in cancer [] and we keep our test menu very advanced.”

NeoGenomics also consistently asserted during the Class Period that it could “leverage” the supposedly “fixed cost” structure of its business to improve profitability as revenue increased. NeoGenomics also repeatedly touted its “robust Compliance Program . . . overseen by our Board of Directors . . . to ensure compliance with the myriad of . . . laws, regulations and governmental guidance applicable to our business,” merely listing failure to comply among the many hypothetical risks that could impact the Company’s results.

These statements were materially false and misleading. In truth: (i) NeoGenomics was anything but a “one-stop-shop” for cancer testing because it did not offer the most technologically advanced NGS tests, which led to a significant decrease in revenue as current and prospective customers went elsewhere for their testing needs; (ii) the Company’s costs were not fixed because NeoGenomics needed to hire additional employees to process more complex customized testing demanded by customers utilizing the Company’s outdated portfolio of tests, leading to operational challenges, decreased lab efficiency, and increased testing turnaround times; and (iii) NeoGenomics violated federal healthcare laws and regulations related to fraud, waste, and abuse.

On November 4, 2021, NeoGenomics revealed that it was, “conducting an internal investigation with the assistance of outside counsel that focuses on the compliance of certain consulting and service agreements with federal healthcare laws and regulations” and had recently “notified the Office of the Inspector General of the U.S. Department of Health and Human Services of our investigation.” Additionally, the Company disclosed that it “accrued a reserve of $10.5 million for potential damage and liabilities associated with the federal healthcare program revenue received spanning multiple years.” On this news, the price of NeoGenomics common stock fell $8.18 per share, or 17.6%, from $46.53 per share on November 3, 2021 to $38.35 per share at the close of trading on November 4, 2021.

After the close of trading on November 4, 2021, NeoGenomics provided some limited additional details about the internal investigation, specifically that the “federal healthcare laws and regulations” at the center of the Company’s investigation “include those relating to fraud, waste and abuse.”

On March 28, 2022, NeoGenomics disclosed that “the Board of Directors and Mark Mallon, Chief Executive Officer, have agreed that Mr. Mallon will step down as CEO and member of the Board, effective immediately.” At the same time, the Company disclosed that it “currently expects revenue for Q1 2022 may be below the low end of its prior guidance of $118 – $120 million and EBITDA for Q1 2022 will be below the low end of its prior guidance of $(15) – $(12) million. The larger than anticipated EBITDA loss was primarily driven by higher than anticipated Clinical Services cost of goods sold. The Company intends to take immediate action to address performance and costs . . . Additionally, the Company has withdrawn its 2022 annual financial guidance issued February 23, 2022.” On this news, the price of NeoGenomics common stock fell $5.30 per share, or 29.8%, from $17.79 per share on March 28, 2022 to $12.49 per share at the close of trading on March 29, 2022.

Then, on April 27, 2022, NeoGenomics reported its first-quarter 2022 financial results including that revenue for the quarter was $117 million and EBITDA loss was $19 million, that “[c]onsolidated gross profit for the first quarter of 2022” had “decrease[d] 8.0% compared to the first quarter of 2021,” and that “[o]perating expenses increased by $34 million, or 59%, compared to the first quarter of 2021.” The Company explained that “higher payroll and payroll related costs to support the Company’s strategic growth initiatives” drove the decreased profit and increased operating expenses.

Also on April 27, 2022, NeoGenomics held a conference call to discuss its first quarter 2022 results (the “1Q22 Earnings Call”). During the 1Q22 Earnings Call, the Company attributed its poor performance in substantial part to the fact that, “our test mix is weighted to legacy modalities and disease-specific NGS offerings, while the market is moving towards larger, more comprehensive panels” and “we’ve seen a notable decrease in lab efficiency over the course of the past year . . . largely attributable to increased complexity of both our product offerings and our lab processes, due in part to efforts to respond to customer requests for customization.” NeoGenomics further disclosed that it was “seeing increased competition on the NGS front as panels move or as customers move to demanding larger, more comprehensive NGS-only panels, and our offering is more oriented towards smaller targeted panels” and that the Company was “seeing bigger and bigger panels coming from some of these emerging companies . . . where we have not kept up.”

On this news, the price of NeoGenomics common stock fell $0.41 per share, or 3.8%, from $10.85 per share on April 26, 2022 to $10.44 per share at the close of trading on April 27, 2022.

If you purchased or otherwise acquired NeoGenomics shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.

About Bragar Eagel & Squire, P.C.:

Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contacts
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Melissa Fortunato, Esq.
(212) 355-4648
investigations@bespc.comwww.bespc.com