NEO:NASDAQ Class Action Lawsuit (NEO) was filed on December 6, 2022 on behalf of the shareholders.
On November 4, 2021, during the Company’s 3Q21 Earnings Call, Defendant McKenzie revealed that: “We are voluntarily 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.”
She added that, “based on preliminary findings of this internal investigation, we voluntarily notified the Office of the Inspector General of the U.S. Department of Health and Human Services of our investigation in November 2021.
Though our review of this matter is ongoing, we have accrued a reserve of $10.5 million for potential damage and liabilities associated with the federal healthcare program revenue received spanning multiple years in connection with the agreements at issue that were identified during the course of this internal investigation.”
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.”
On March 28, 2022, NeoGenomics filed a Current Report on Form 8-K with the SEC (the “March 28, 2022 8-K”), disclosing 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.”
Also in the March 28, 2022 8-K, NeoGenomics disclosed that: “The Company 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Additionally, the Company has withdrawn its 2022 annual financial guidance issued February 23, 2022.”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.
Before the start of trading on April 27, 2022, NeoGenomics filed a Current Report on Form 8-K with the SEC disclosing the Company’s first-quarter 2022 financial results (the “April 27, 2022 8-K”).
In the April 27, 2022 8-K, NeoGenomics revealed that revenue for the quarter was $117 million and EBITDA loss was $19 million. In the April 27, 2022 8-K, the Company further revealed that: “Consolidated gross profit for the first quarter of 2022” had “decreased 8.0% compared to the first quarter of 2021” in part due to “higher payroll and payrollrelated costs.”
NeoGenomics also revealed that: “Operating expenses increased by $34 million, or 59%, compared to the first quarter of 2021” driven, in part, by “higher payroll and payrollrelated costs to support the Company’s strategic growth initiatives.”
Also on the call, Bonello stated, “we’ve seen a notable decrease in lab efficiency over the course of the past year. This decrease is 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. We are already taking action to reduce this complexity.
These actions include eliminating low-margin services, streamlining our NGS processes to drive reductions in labor, supplies and bioinformatics costs, while simultaneously improving turnaround time and implementing AI to increase lab tech productivity.”
Summarizing, Bonello further stated: “We view 2022 as a rebuilding year, where our primary focus is to improve our current product offering, drive operational efficiency, . . . and lay a foundation to support sustainable, profitable growth in 2023 and beyond.”
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.