NeoGenomics, Inc. (NEO) Earnings Call Transcript & Summary

Welcome, everybody. My name is Matt Sykes, Senior Life Sciences Tools and Diagnostics Analyst at Goldman Sachs. And I have the pleasure of having the NeoGenomics' management team to present to us today. I just wanted to introduce them real quickly. Doug VanOort, the Executive Chairman; Katheryn McKenzie, the CFO; Doug Brown is the Chief Strategy and Corporate Development Officer; Clive Morris, the CEO of Inivata; and Charlie Eidson, Manager of IR, Strategy and Corporate Development. Everybody, thank you very much for joining. We're really happy to have you here. And maybe I'll start out and turn it over to you, Doug VanOort, maybe just kind of give us sort of a background on NeoGenomics and maybe some of the recent trends you're seeing and just a bit of -- to kind of set the stage for us a little bit.

Great. Thank you, Matt. And thanks, everyone, for joining us for this. I'll just start by saying that we're really excited about our company. We're excited about our culture, our people, our portfolio of businesses and also about the future, which gets more and more exciting, it seems like with every passing quarter. So first of all, let me just explain that NeoGenomics is an oncology company. That's all we do is oncology. We're a comprehensive pure-play one-stop shop oncology company for a variety of players in the oncology ecosystem. And to give you a sense for our size, we have about a little less than 1,800 people today around the world. We're really proud of our people because we have spent a lot of time investing in our people and our culture, and I think our people are really driven to this core mission that we have of essentially saving lives, and they know they do that every day. So I would say that NeoGenomics is -- apparently everyone says that they're a unique company, but I think we're a pretty unique company. And we have a very unique competitive position. I think there's not really a company that looks like us. And we've grown pretty quickly. I think, over the last number of years, I've been CEO up until about 2 months ago. Now I'm the Executive Chairman. But I was the CEO for about 12 years, and we grew from about $20 million in revenue to a run rate of a little less than $500 million now. And I think we're a clear leader -- we're a clear leader, really in 3 different -- well, in 2 of the 3 business units that we are playing in, the third one, just because we just got started. So we're a leader in the clinical testing market in the U.S. and what we do is we serve hospitals and oncologists in the community setting with a lot of very powerful tools. So we have the most comprehensive test menu that anyone has for oncology out there, and we have a lot of other competitive advantages. So we have really a very strong franchise with hospitals and oncologists in the community setting. And that business has been around for a while, and it's growing at double-digit rates. It's -- it generates cash, and maybe I'll talk more about that in a minute. The second business that we have, we started about 5 years ago, and it's our Pharma Services business, and this business is low. So we have labs in the U.S., we have labs in -- one in Geneva, Switzerland, one in Singapore, one in China now that we just opened because in this business, we serve the biopharma industry broadly. And what we do is we help them with their oncology research or oncology drug development. And this market is also growing like crazy, and we're, I think, growing very, very nicely. And it's hard to know what the growth rate is in that part of the market is, but I can tell you, even in quarter 1, our growth in Pharma Services, and we lump Informatics in with that, was 46% in quarter 1 versus the prior year. So you can get a sense for what's happening there. And then the third business unit we have, which we're not yet a leader because we just started about a year ago is, we call it Informatics. And what we're doing there is we're taking about 1 million -- data from about 1 million tests a year that we generate from our Clinical business, and we're using these data in ways that essentially helps this world of precision oncology, which is what we're in. So in precision oncology, pharma companies are having a hard time finding patients for trials that are -- have a very specific mutational characteristic or patients for their therapies that are approved. And so we see so many patients that were able to satisfy that very important demand, I think, better than anyone else. Now what's interesting about our portfolio of businesses is Clinical, Pharma and Informatics, all work synergistically with one another. And I mentioned how we fuel Informatics with the data. But Pharma business also is helping our Clinical business, and our Clinical business is helping our Pharma business. So it's very interesting. Now we're really excited, and we have Dr. Clive Morris here on our panel with us. Clive is joining us actually kind of a volunteer because we don't really have ownership of Inivata yet, but in about 2 weeks, we'll have the keys. And we made an investment in this fantastic company called Inivata about a year ago, minority investment, and we're -- we initially, we're excited about their circulating tumor DNA technology and the more we get to know the company, the more excited we got. And so Inivata will be our fourth business unit and we think that's going to really fuel growth in NeoGenomics even further for a number of other years. I would say also maybe a couple of other things in background. And that's, that the competitive strengths that we have are not easy to get. I mean we've got a lot of things that create sort of a moat and some really strong competitive advantages. One of the things that is quite unique and a competitive advantage is we are 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 the only thing we effectively don't do is hereditary cancer testing, and some of that stuff like Genomic Health does and Agendia, but other than that, we do just about everything. And so we have been a go-to one-stop shop reference lab for a lot of players in the ecosystem, and we keep our test menu very advanced. And it's a real advantage for us. Now the other thing I would say is, I mentioned that we've grown a lot over the last several years, but we've also been self-funding. And we are very proud that we've been a cash generator, adjusted EBITDA positive player in this system. And we've used that to create several businesses that have accelerated the growth of our core business. And we've invested a heck of a lot of time and money and energy in next-generation sequencing, generally, that's a fast growth part of our business. We've invested in our Pharma business. We've invested in Informatics. Now we're investing in Inivata. None of these businesses existed for NeoGenomics 5 years ago. And today, those businesses are about 1/3 of our revenue stream. So we're trying to maintain and actually build and accelerate the sort of growth momentum that we have in the business. I think you may ask, Matt, later about Inivata specifically, so I won't go into that anyways, Clive is much better at describing it than I am. But I'll just conclude some remarks opening by saying that we're a growth company. We're so excited about our businesses, and we're really excited about what the future holds for us.

Great. That was a great overview. I really appreciate that. Maybe I'll just start out with just quickly, I know Mark Mallon could join us, but just talk about the hiring of Mark, the transition plans, why was it time? And what in Mark's background kind of attracted you to him and him to NeoGenomics?

Yes. I was joking around, I said that there ought to be a term limit on CEOs. But certainly for us, I mean, I've been CEO for 12 years up until a couple of months ago, and that's long enough. I mean, I think it's been great. We've built, I think, a great company. We have a terrific team. But the world looks different now. And also, I thought it was time for me personally. But I think that what the company really needs now is fresh blood, a fresh set of eyes, and we have some new players. I mean, Doug Brown is fantastic. He joined our company a year and 3 or 4 months ago, Kathryn McKenzie here just joined as the CFO about the same time. Clive is just growing. So we're continuing to get new people in our company, which are driving momentum, but Mark is a leader -- has been a leader in the pharma industry for a lot of years. And I think when we're talking about moving from a kind of a multi -- almost a single dimensional kind of service model to adding a product orientation, like we are planning to do with this minimal residual disease potential blockbuster test that Inivata brings to us, Mark has been central casting for that because he's done that before he's in the therapeutic space. So he's got a lot of great attributes. Obviously, -- and our Board is very enthusiastic about bringing Mark on and he's only been here for, I think, 7 weeks and -- but we're really excited about that.

Great. And maybe kind of staying high level, we've talked a little bit about sort of the value of infrastructure in the platform within diagnostics. And I think NeoGenomics is a good example of that. Could you talk about the value that you see in your platform in terms of the investment and expertise that it takes to have a successful commercial organization? I think for you, particularly, the relationships that you've built in the community health centers and what kind of competitive advantage do you see that as for NeoGenomics in the oncology space?

Yes. Thanks for that question, Matt, because I think it is underappreciated how hard it is to build the kind of assets that we have within the NeoGenomics umbrella. I'll give you some examples. People sometimes don't appreciate that we have 250 managed care contracts. We have group purchasing organizations that allow us to have a hunting license in almost every hospital in America. We've got 4,000 -- or pretty close to 4,000 hospital accounts that are currently customers of ours. We've got a lab network, which is bicoastal. We're just building -- in fact, I just got out of the meeting where we're talking about the new corporate headquarters and lab building in Fort Myers. It's a 150,000-square-foot building. It's going to have enough capacity for us to grow for another number of years and really serve our clients in a much better way. So we've got a terrific network. We've got in our company, I think 120 MDs and PhDs. We've got 73 MDs and PhDs, just in our Clinical business. And all of these things, I mean, even billing, we have 160 people doing billing, which sounds ridiculous, but billing is kind of hard. And if you're a new company and you try to do this and what we're doing, you say, well, I can do the sequencing, but I have to do billing, too. I mean -- and it's darn complicated. So you put all this stuff together with a commercial team. And then in addition to all of that, we've got these synergistic businesses with Pharma and Informatics that are all kind of running together, stuff that's really hard to build. So I think that we do have some very strong competitive advantages because of the infrastructure that's taken us a long time to build. And we're pretty excited about it. It is easy now -- easier to get in the business with one testing technology. But it's harder to serve the market the way we do. And I think that's an advantage.

Yes. Yes. No, I think it's a really good point, something that we've thought a lot about is the sort of sector, I wouldn't say necessarily matures but evolves. Having that one test technology without the infrastructure, just gets more difficult as things get a little bit more competitive and crowded over time. Maybe if we go through a couple of the businesses and starting on Clinical, one area that's been growing really well for you, and you talked a little bit about it in your opening comments, is genetic testing. And given your broad perspective on the testing landscape, what's your view on genetic testing and the level of penetration you could see in your own business?

Well, a lot of the testing that we do, some people call it genetic. So for hematologic cancers, by the way, we're the #1 player. And a lot of people think cytogenetic testing and FISH testing is genetic testing. But I think what you're referring to, Matt, is the newer modality sort of molecular and genetic testing, which is really what we call next-generation sequencing. And next-generation sequencing has a lot of different kinds of -- it's not just one flavor. I mean you can do next-generation sequencing for solid tumors. You can do it for hematologic cancers. You can do it for targeted profiles, large profiles, DNA, RNA, it's all kinds of stuff, various aspects. You can also do now liquid biopsy next-generation sequencing. And effectively, we do it all. Now what's exciting about this is it makes precision oncology really work because of this technology, which is growing rapidly, it doesn't make economic or clinical sense anymore to use single gene molecular tests in trying to selective therapy for a patient because there are a lot of different therapies, and there are a lot of different biomarkers that have therapies associated with them. So it makes more sense rather than do that to use a panel. That's basically it. And so as a result, it's really growing like crazy. And I think that there's a lot of excitement about next-generation sequencing, in all it's various forms that I described. And we're certainly moving with the market. And I think we have very good assays, very good tests. And I think we're going to continue to grow very nicely with the market. And I think we'll take market share like we do with every other test modality.

Got it. Sounds very helpful. I think -- and maybe we'll start with you and then we'll go to Clive as we kind of dig into liquid biopsy a little bit. But obviously, it's a tremendous opportunity, rapid growth. It's also attracting a number of competitors in terms of the liquid biopsy space. I mean, where do you see the most opportunity for NeoGenomics to carve out a niche in the liquid biopsy space? Maybe you can start, Doug, and we can drill down with Clive.

Yes. I'll maybe start and sit Clive up. How's that?

Sounds good.

You guys -- I think the thing that -- actually, this is kind of a funny story because we got to know Inivata and Clive, and we are initially attracted to the InVisionFirst Liquid Biopsy in One test, which is a pretty darn good test. But as we really got to know Inivata, we got really excited about their minimal residual disease and recurrence monitoring test. And that's where there's a lot of excitement. It's a big market. It's a terrific test. And maybe with that, I'll turn it over to Clive.

Thanks, Doug, and thanks for the question, Matt. So no, I think there's a lot of opportunity. And I think there's a lot of excitement as well. And I think, particularly in the clinical testing market, liquid biopsy tests are still penetrating the market. We're still in the early days of adoption. So there's a lot of growth. I've been in the most advanced sectors. If you look at something like lung cancer stratification, majority of patients, they still don't get a liquid biopsy. So there's a lot to go even in the most penetrated part of liquid biopsy. And as Doug was saying, the InVisionFirst-Lung test was designed to be very rapid turnaround time, very high sensitivity and specificity targeted panel looking at the actionable alterations for lung cancer and that test is well validated, reimbursed and in spite of the initial collaboration with NeoGenomics, entering the U.S. market there. As Doug was mentioning, though, sort of we see the residual disease and recurrence space in early-stage cancer as being a huge opportunity. And actually, we've taken the same backbone technology that we have in InVisionFirst, and we've applied that -- and we basically create a personalized assay. So we find the patients following surgery. We have the tumor tissue from the time of surgery. We do a whole exome sequencing to identify the mutations present in that patient's cancer. And then we create a personalized assay with extremely high sensitivity for every variant that we track, and we also track up to 48 variants per patient. And when you combine those, with the novel analytics, the algorithms and error correction that we have, we achieve levels of sensitivity that are getting on for 2 orders of magnitude, 100x more sensitive than our InVisionFirst test, which we believe is the most sensitive of the stratification test. So we think an incredibly sensitive test there. And I should say, not at the expense of specificity. So actually, it's a very specific test as well. When we call something as positive, we have very high confidence that it is a genuine true positive. And the reason that's important is early-stage cancer is difficult to detect. The levels of ctDNA can be very low. And for residual disease, you make the problem even larger because you take those early-stage cancers and then you excise by surgery or some other means, all of the visibly available tumor tissue. And then you're trying to detect the evidence of microscopic disease that can't be seen by the naked eye or by imaging, PET scanning, et cetera. So you're really looking at very, very low tumor burdens, and that's where sensitivity is going to be so important and the sensitivity should translate into; a, detection of more patients following surgery who have residual disease and, therefore, will recur. And these are clearly candidates for further therapy, the sort of so-called adjuvant therapies following their surgeries. But also you can use the same test on a repeat test basis to look for recurrence monitoring and, again, a more sensitive test should allow you to detect the recurrence earlier and also with more certainty than a less sensitive test. So really that assay, we now have is up and running in our cap clear lab, and we're working through the clinical data sets. And so far, we've presented data in lung cancer, breast cancer and head and neck cancer and have a pretty broad portfolio of work that we've got ongoing across tumor types. And our aim is to bring that forward for residual disease and recurrence monitoring across tumor types.

Got it. And just talking on the MRD side and the RaDaR assay specifically, what types of catalysts and data points going forward? I know you just mentioned a few, but in terms of having to frame for investors of what to look for and data points to keep out for?

Yes. I think it's starting that clinical adoption, both in the biopharma space and then eventually into the clinical testing space. So increasing numbers of biopharma collaborations. There's a big, big excitement around biopharma for these types of tests. The early-stage drug development is actually very difficult because the majority of the patients that you recruit into those studies historically are cured of their cancer. And that means you have to recruit very large studies. You have to follow them out for many years to actually work out who is and isn't going to recur and any treatment effect from your therapeutic is heavily diluted out by those patients who don't have cancer and clearly, therefore, will not have any therapeutic benefits. So if we can use tests like RaDaR to identify patients who have residual disease, you can target those for development and the trials are much smaller because you're only treating and investigating people who have cancer. Clearly, if they don't get the efficacious drug, they will progress very rapidly, so you reach our endpoint much more rapidly. So there's a compelling advantage in terms of time to market for pharma. And the treatment effect is not diluted out. So you get the full benefit of it, so your value proposition is higher there to payers and others. So there's a lot of interest with pharma. So we can expect to see further announcements around pharma collaborations. And then we're working towards a submission for reimbursement in the U.S., in the first instance by the MolDx pathway and aiming for a submission there, sort of a reimbursement around sort of turn of the year and coverage early next year.

Got it. Got it. And maybe I think you're a great person to ask the value of the platform infrastructure. You have some great technology, great test. What do you see in your mind, the advantage that partnering with NeoGenomics or being a part of NeoGenomics gives to you, your company and your technology?

Yes. No, absolutely. So in many ways, what we have as our resources are actually very complementary. We're clearly a lot smaller, and we're only about 100 people in total. But we're largely focused around development of the technology, R&D, clinical trials, getting through reimbursements and biopharma partnering. We don't have the U.S. commercialization efforts that Doug talked through and some of the early questions were on. So there's clearly a natural fit there on how do we bring that. And that big list that Doug was describing there, billing and everything else, of course, we can leverage that to bring up through to the market. And we bring more of the sort of the more academic side of things and the key opinion leaders and other things that we can work with. So there's a natural fit there. On the biopharma side, clearly, a big portfolio of business already for NeoGenomics. I believe it -- all 25 of the top 25 pharma companies who are already working with NeoGenomics, there's clearly sort of a benefit there in terms of bringing RaDaR and InVisionFirst and indeed other tests that we have through into the biopharma market. And actually, people in the biopharma space actually love our technology and the performance that there sort of blows people away. The big questions we had as a smaller company was 1 in 3 to 5 years when a companion diagnostic is reading out and time for registrations, would the small companies still be there? And the second one is, how would we then commercialize and get that to the patients to be able to then get the therapeutic to patients. And of course, both of those challenges are addressed in the tie-up here with NeoGenomics.

Great. That's super helpful. And maybe, Doug Brown, you and I have talked a bit about this, but just one of the questions that I've got from investors since our initiation is -- at least in my mind, I think NeoGenomics represents a very derisked way to capture the growth opportunity in oncology diagnostics. You're essentially selling the picks and shovels to a very fast-growing market. With the Inivata acquisition, does it change that strategy at all? And maybe just talk about how that fits into the overall sort of picks and shovels, more agnostic platform strategy that you have?

Yes. No, it's a good question. It's a balance that we have. And I think we all agree that the enormity of the MRD market was something that changed how we think about our strategy. We really want to have a leading technology position in what could be arguably a $15 billion market. Now that doesn't change how we think about diagnosis, prognosis therapy selection. We have 750 assays. And we really sell solutions. We have a consultative approach with all of our oncologists and pathologists, and that's not going to change. So I wouldn't say that our strategy is changing, but because of the technology at Inivata, the platform, the market opportunity, that's really how we altered our thinking a little bit.

Got it. Really helpful. And maybe if I shift to Pharma Services, Douglas VanOort, I mean, use your last name just to avoid any confusion here. But is about 14% of your revenue growing like 20% a year. You've had some really great progress in this business. What are some of the key highlights and trends that investors should be aware of in this business? And how do you differentiate your Pharma Services business versus some of the competition you might be facing in that area?

So actually, Pharma Services business is growing more than 20%. And we just increased -- we said it was going to grow around 25%. It's growing even faster than that. I think I mentioned in my remarks, the first quarter grew more than 40%. So the market is growing, and the trends clearly in oncology are for precision therapeutics. That's where it's at and immuno-oncology. And that's where everything has been headed for the last several years in oncology. And so there's a great need by our customers to identify patients that have these conditions that they can target their therapies for in trials, and there's a great need for research even earlier on. And so our competitive advantages, I think, are actually pretty interesting because we -- for one thing, we have a comprehensive menu. So we do everything from the immunohistochemistry to FISH testing to sort of routine next-generation sequencing, to whole exome sequencing and now to liquid biopsy testing. So we cover the spectrum pretty much of what pharma companies want. We even do this very fairly sophisticated multiplexed immunohistochemistry testing pretty uniquely that allows pharma companies to do some very interesting research, primarily in immuno-oncology. So there's a -- the trends there are -- there's a lot of growth. A lot of new biotech companies out there, even large companies are doing a lot of work in this area. And we're somewhat unique because this is all we do. It's just oncology. Our service model is very tuned to the particular demands of the biopharma customer, where you have FDA compliance systems. We've got labs that do just biopharma work. And I think we are developing a reputation of being really good people to work with. And so those things sort of build on themselves, and I think you're seeing that now in the new signed contracts that we're adding every quarter and the backlog of signed contracts that we have, which are going to eventually most likely work their way into revenue. So it's a terrific business for us. We're very excited about it, and we're also global. So that's a distinguishing feature.

You talked about the synergies amongst the different businesses you have. Could you talk about Pharma Services and the synergies both maybe on the revenue side or cost or however it is, that you can identify and that you're talking about when you talk about the synergies, just to help, I think just investors understand how these all work together and how they can all benefit each other?

Yes. I'll give you a couple of examples. I mean one of the things that we're working on with pharma clients is companion diagnostic programs. So today, I think we have about 50 active companion diagnostic programs that we're working with a variety of pharmaceutical companies with and the way this could end up working is we'll develop the biomarker with our client, we'll set up the assay in our lab, we'll do the testing for their submission to provide them data for the submission to the regulatory authorities. And then once that's approved, we have the assay running in our lab. So we can immediately offer it commercially so that we can speed the kind of commercialization process for our clients. So that's good for our Clinical business. It's good for our Pharma business. And then there are new emerging ways that this is becoming important for us like in sponsored testing programs. So we've got a number of sponsored testing programs with pharmaceutical companies. We're actually doing the work for them in the companion diagnostic work, then they're saying, can you help us find patients because there are only certain patients that would benefit from this therapy. So we're using our Informatics Division to help them find patients. And then they're actually paying for the test, so that there's no cost to patients for the test, and that's obviously good for our Clinical business, too. So that's a very good example of how there's synergy between these businesses.

That's really helpful. Great example. Maybe that's a good transition to Informatics. It obviously presents a great growth opportunity for the company. Could you tell us just a little bit more about what you're doing there and any updates to look for? And maybe help us understand the size of where you see the market and the size of that actual market for NeoGenomics.

Okay. I'll maybe just explain for context that for years, we had all these data that we're generating from our Clinical business because it's -- we have a number one share. We're generating -- we're doing 1 million tests a year. And we scratched our heads and said it's not very fulfilling for us, frankly, to be selling these data to data aggregators. And that was the only thing we were selling the data for. And so we decided there's got to be a better way. And we did a lot of work with some folks to help us think about a strategy where we could add value to help clients in the oncology ecosystem, solve real-world problems. And so when I mentioned pharma, they have a real-world problem. They have to find patients for their clinical trials. They have a problem. They have to find patients for their therapies. They spend $1 billion developing a drug, and then they have to find the patients and their -- these are very specific patients that will benefit from that, that there are opportunities with providers, with the hospital systems that we have that have multiple oncology providers in their system, and they're saying, help us to make sure that we have common standards by which we're testing our patients because if they don't have common standards, then probably you're not going to get the best care. So these are all ways that we can use our informatics capabilities to help players in the ecosystem. And one of the dreams we have -- not sure where there's a revenue stream associated with this yet. But one of the dreams we have is to open up our informatics database for patients. That -- this is our mission, to help patients that have cancer. And so I think we can do that, too. But we think that the market for informatics, it's obviously huge. Depends on how you define it. But in our little way of thinking about it, we think that -- we have kind of an aspirational goal of creating $100 million of independent revenue stream business with our Informatics Division. And that doesn't even include the downstream benefits that we get in our Clinical business, like for sponsored testing programs, or in our Pharma business. So that's how we think about it. It's very exciting for us, and it's gotten off to a great start. We have a guy who's running it, Bill Bonello, who used to run strategy and he's been at it for about a year, and we've got now about 45 people in Informatics. We just bought a company, called Trapelo, that offers clinical decision support because it's pretty darn complicated if you're a physician now to figure out what test to order, it's complicated because there's such a proliferation of tests and therapies. And so this Trapelo tool is designed to assist our oncologists and pathologists in figuring out what should I order, so that I know that are providing the best care.

Got it. Yes. No, I think it's interesting. I think the whole informatics or bioinformatics, however you call it, the data opportunity within the life sciences space is still really early innings. One, because there's a sanctity of data issue that you need to be responsible for first. But then secondly, how do you monetize that? And how do you grow that business? Because everyone is sitting on a lot of data, and it can be particularly valuable, but how do you best use it, protect it and monetize it. And so getting an early start like you guys are, it will be an interesting area to watch for sure. Maybe we just -- as we're finishing up here, you obviously just did the Inivata deal, you did raise some capital as well. Just talk about some your capital allocation plans going forward. How are you thinking about the billed versus buy equation and kind of where is your mind now in terms of supporting the business through organic because you've done a lot lately versus always looking out for opportunities that are out there?

Doug, you want to take that one?

Yes, I'll take that one, sure. So it's been a busy year on the BD side, obviously. Inivata has been something we've been thinking about for the greater part of the year. And that was, frankly, a seminal moment for us, monitoring the channel, leadership and technology leadership. But I think we're still going to be busy on the BD side. And I always point investors to the Pharma business. If we could find something that would lend more scale there on a global basis, we'd be very excited. Because while Inivata took a lot of time and it's a threshold acquisition for us, that's a fourth division now. There's not a tremendous amount of integration. So we have the capabilities to look at other transactions. We certainly have the balance sheet. We've got, pro forma the transaction, north of $500 million on the balance sheet. So we'll continue to look at things, but I would emphasize Pharma and perhaps Informatics as well.

Got it. And then maybe lastly, just as we think about -- I mean, Doug, you mentioned at the outset about the self-funding capabilities, which I think is really important. As you think about sort of the margin progression that you guys are looking at and also wanting to support the growth of the business, how do you think about the potential margin progression for NeoGenomics going forward?

I think, Matt, it's different by business unit. And we have always had a tried to have a pretty disciplined approach to running our business. And the Clinical business, which is still 80-plus percent of our company today, is a business that fundamentally operates based on service, quality, continual improvement and hopefully then continual reduction in average unit cost as we just gain scale. And so in that business, we would expect, over time -- now we've had some disruption because of pandemic in acquisitions and so forth, but over time, we would expect margin expansion in that business. The same thing is now true about the Pharma Services business. Now we've invested heavily in infrastructure in that business. That business, as we fill up that infrastructure, is going to start to show margin improvement. On the other hand, we've got very exciting opportunities like with Inivata. And we are going to invest in the development of this RaDaR and other technologies and modalities of MRD testing so that we can optimize the value of that test to NeoGenomics and the shareholders. So we're thinking about it that way. I mean, we also want to stay positive cash flow, positive adjusted EBITDA even with a massive investment in Inivata. And I don't see any reason why we couldn't do that.

Great. Well, I think with that, we're out of time, but Doug, Doug, Clive, Kathyrn, Charlie, really appreciate your time, and thanks so much for joining. It was really helpful.

Matt, thank you for having us.

Thanks, Matt.

Take care.

Bye.