NGNM: Q2 2010 Updated Analyst Coverage
Expect Two Managed Care Organization Contracts, Second Abbott Test And A Host Of Organizational Changes
By Year-end
Click here to download the report.
• Revenue in 2Q:10 increased 14% year-over-year from
$7.5 to $8.5 million. We expect 5 year revenue CAGR of
35% (from 42%).
• An appointment of a new Vice President of Sales and
Marketing is expected to drive test numbers. Test
volumes are expected to increase 38% from 7,555 in
3Q:09 to 10,198 in 3Q:10.
• The gross margin is expected to expand by 100 basis
points sequentially, reflecting the ease of pricing
pressures and aid of new contracts signed with major
managed care organizations. Service agreement
expansion with Blue Cross, which comprises 40% of
insurance payers.
• We expect continued moderation in average revenue per
test, which is expected to decline 12% in 3Q:10 on a
year over year basis.
• We expect uptake in Melanoma FISH Test revenue driven
by focused marketing and sales initiatives.
• NGNM expects to launch the next Abbott test by
year-end.
Summary
2Q:10 NGNM results were softer than our expectations and missed our
revenue projection by 3%. Four factors were primarily responsible for the
miss:
• Pricing pressures from managed care organizations
• Overestimated productivity from a recently bolstered sales force
• Slower than expected Melanoma FISH test adaption and lack of results
from marketing partners
• A higher than anticipated impact of internalization of bladder cancer
testing by NGNM’s largest client.
Management has undertaken several organizational
changes in response to the situation. We expect these
changes will reflect positively during 2H:10.
Please download to read the full report.
|
