What happened

Shares of NeoGenomics (NASDAQ:NEO) soared over 11% today after the company reported third-quarter 2019 operating results. The genetic testing leader delivered record quarterly revenue of $104.7 million and generated net income of $2.1 million during the period -- nearly as much as the company reported in the first nine months of 2018. 

Management also struck an optimistic tone about the company's near- and long-term future. NeoGenomics hired nearly 200 full-time employees and plowed money into research and development (R&D) activities to support growth. 

As of 12:22 p.m. EDT, the stock had settled to a 10% gain.

A woman checking her phone and pumping her fist in excitement as cash falls around her.

Image source: Getty Images.

So what

Investors will see wins everywhere they look when poring over the third-quarter 2019 operating results. NeoGenomics, which provides cancer-focused genetic testing services for clinics and pharmaceutical companies, grew clinical services revenue 56% to $92.6 million. The segment accelerated processing volume growth and achieved the fifth consecutive quarter of year-over-year increases in the amount of revenue generated per test.

And although the pharmaceutical services segment is much smaller, there are signs it's ready for a growth spurt. NeoGenomics grew its revenue 26% to $12.1 million during the quarter, but grew the backlog to a record $118 million. 

The solid quarter prompted management to raise full-year 2019 revenue guidance for the fourth straight quarter (counting the initial guidance provided when Q4 2018 earnings were reported). NeoGenomics now expects about $403 million in total revenue and $2 million in net income, up from the initial expectation for about $387 million in revenue and break-even net income.

Now what

NeoGenomics owns a more specialized niche than many other genetic testing companies, but that certainly isn't keeping it from growing. The business exited September with $179 million in cash and generated $20 million in cash flow from operations in the first nine months of 2019. Investors should keep an eye on the recent surge in head count and R&D expenses, as that could suppress operating income or overwhelm operating cash flow in the near term. Nonetheless, the business is well positioned to continue growing for the foreseeable future.

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