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Genoptix Reports Strong Results for the Fourth Quarter and Full-Year 2009

Friday, February 26, 2010 Corporate News J E 4
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Company Reports 59% Annual Revenue Growth Year-Over-Year

CARLSBAD, Calif., Feb. 25 /PRNewswire-FirstCall/ -- Genoptix, Inc. (Nasdaq: GXDX), a specialized laboratory services provider, today reported revenues of $49.1 million and $184.4 million for the fourth quarter and full year of 2009, respectively.  Net income was $7.4 million, or $0.41 per diluted share, and $30.6 million, or $1.71 per diluted share, for the fourth quarter and full year 2009, respectively.

"We managed nearly 57,000 patient cases throughout the year, an increase of approximately 48% from the number of cases managed in 2008, a trend indicative of the demand for personalized service on the part of the community physicians we serve," said Tina S. Nova, Ph.D., President and CEO of Genoptix. "Our annual growth and continued performance reflect a year of exceptional execution."

Fourth Quarter 2009 Performance

Fourth quarter revenues of $49.1 million include a $2.0 million benefit from changes in accounting estimates resulting primarily from cash collections related to prior period revenue.  Fourth quarter revenues increased 45% over revenue of $34.0 million for the comparable period in 2008, which included a $2.2 million benefit from changes in accounting estimates.

Gross profit for the fourth quarter of 2009 was $30.5 million, or 62% of revenues, up from $20.7 million, or 61% of revenues, for the fourth quarter of 2008.  Operating income for the fourth quarter of 2009 was $13.9 million, or 28% of revenues, compared to operating income of $8.7 million, or 26% of revenues, for the same period in 2008.

Net income was $7.4 million for the fourth quarter of 2009, or $0.41 diluted earnings per share (EPS), based on 18.2 million weighted average common shares outstanding and a tax rate of 48%.  This compares to net income of $5.4 million for the fourth quarter of 2008, or EPS of $0.30, based on 17.8 million weighted average common shares outstanding and a tax rate of 43%.

As of December 31, 2009, the Company's total cash, cash equivalents and investment securities were $145.1 million.  Cash generated from operations was $4.1 million for the fourth quarter of 2009, while purchases of capital equipment for the same period totaled $2.2 million.

Full-Year 2009 Performance

Revenues for full-year 2009 totaled $184.4 million, including a $7.4 million benefit from changes in accounting estimates resulting primarily from cash collections related to revenue from prior years. Full-year 2009 revenues increased 59% over revenues of $116.2 million for the comparable period in 2008, which included a $3.3 million benefit from changes in accounting estimates.

Gross profit for the full-year 2009 was $115.2 million, or 62% of revenues, up from $70.2 million, or 60% of revenues, for the full-year 2008.  Operating income for the full-year 2009 was $53.8 million, or 29% of revenues, compared to operating income of $26.6 million, or 23% of revenues, for the same period in 2008.

Net income was $30.6 million for the full-year 2009, or EPS of $1.71, based on 18.0 million weighted average common shares outstanding and a tax rate of 45% for the year.  This compares to net income of $31.4 million for the full-year 2008, including a one-time net benefit of $14.9 million, resulting primarily from the recognition of deferred tax assets in 2008.  Full-year 2008 EPS was $1.78, which would have been reduced by $0.86 if taxed at the comparable rate of 45%.

For the full-year 2009, cash generated from operations was $37.7 million, while purchases of capital equipment for the same period totaled $5.5 million.  Full-year 2009 ended with bad debt expense at approximately 2% of revenue, as compared to 3% for the same period in 2008. The year ended with an average days sales outstanding of 56 days, flat compared to 2008.

"We ended the year with new customers, new employees, and new facilities, all factors in our success in 2009.  It is our goal to continue to expand our customer reach throughout 2010, in part with the introduction of new solid tumor testing and products like our NexCourse offering," said Sam Riccitelli, Genoptix EVP and COO.  "We are also making great progress on our hiring initiatives, ending the year with 80 sales representatives in the field.  We continue to grow operationally as well, with 35 hematopathologists currently on staff with Cartesian Medical Group and plans for continued hiring as the year progresses."

Performance Outlook

Recognizing the strength of operations, Genoptix expects revenues for the full-year 2010 to be between $235 and $240 million, up from initial guidance of $235 million, with full-year gross margins in the high-fiftieth percentile.

Operating margins for 2010 are expected to be in the low- to mid-twentieth percentile, with net income of approximately $33 million and diluted EPS between $1.80 to $1.85 on 18.3 million shares.  This assumes a tax rate of approximately 44% for the year.

Based on continued infrastructure expansion and implementation of its strategic plan, the Company projects capital expenditures of approximately $30 million for the full-year 2010, including approximately $22 million in new facilities expansion costs and $8 million in maintenance capital.

Conference Call Information

A conference call will take place today, February 25, 2010, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), hosted by President and CEO, Tina S. Nova, Ph.D., and other members of senior management. To access the live conference call via phone, dial 866-578-5784 in the U.S. or Canada and 617-213-8056 for international callers.  Please specify to the operator that you would like to join the "Genoptix Fourth Quarter and Full-Year 2009 Earnings Conference Call." The participant code for the call is 55554709.  If you are unable to listen to the live webcast, a replay of the call will be available through Thursday, March 4, 2010.  Interested parties can access the rebroadcast by dialing 1-888-286-8010 or 1-617-801-6888 internationally and entering the reservation number 41371647.

The conference call will also be webcast live on the "Investors" section of the Genoptix website at www.genoptix.com. Please connect to the Genoptix website several minutes prior to the start of the webcast to ensure adequate time for any software download that may be necessary.

About Genoptix, Inc.

Genoptix is a leading specialized laboratory service provider focused on delivering personalized and comprehensive diagnostic services to its physician customers, community-based hematologists and oncologists. On the forefront of personalized diagnostic services, Genoptix's highly trained group of hematopathologists utilize sophisticated technology to provide integrated testing and actionable diagnostic reports.  Its primary diagnostic services are designed to optimize the care of patients suffering from hematomalignancies, or cancers of the blood and bone marrow, including leukemia and lymphoma. Founded in 1999, Genoptix completed its initial public offering in November 2007 and is headquartered in Carlsbad, California.  For more information, please visit www.genoptix.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements in this press release regarding the Company's business that are not historical facts may be considered "forward-looking statements," including statements regarding the value of the Company's services, the Company's ability to provide high quality services and facilitate personalized medicine, the success of the Company's business model, improving case volumes, increasing revenues, customer adoption and growth, the Company's capacity to manage and support future growth and ability to successfully introduce new products and services and expand its business, hire additional personnel and consistently provide specialized, personalized and comprehensive diagnostic services, the Company's growth prospects and ability to capture additional market share in the U.S., estimated effective tax rates and the Company's financial guidance for 2010. Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties, which may cause the Company's results to differ materially and adversely from the statements contained herein. Some of the potential risks and uncertainties that could cause actual results to differ from the results predicted include, without limitation, commercial and governmental reimbursement decisions, compliance and regulatory risks, financial risks, the Company's ability to hire personnel and manage its growth and the competitive landscape within our industry.  These and other risks and uncertainties are detailed in the Company's Annual Report on Form 10-K and subsequent filings with the United States Securities and Exchange Commission.  Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.

[Financial tables follow]

    
    
                                   GENOPTIX, INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
    
                                  Three Months Ended      Twelve Months Ended
                                      December 31,             December 31,
                                      ------------             ------------
                                    2009        2008        2009        2008
                                    ----        ----        ----        ----
    Revenues                     $49,084     $33,960    $184,378    $116,170
    Cost of revenues              18,597      13,268      69,200      45,931
                                  ------      ------      ------      ------
    Gross profit                  30,487      20,692     115,178      70,239
    Operating expenses:                 
      Sales and marketing          8,758       5,536      31,296      20,065
      General and administrative   7,542       6,222      28,710      22,313
      Research and development       313         230       1,362       1,233
                                     ---         ---       -----       -----
    Total operating expenses      16,613      11,988      61,368      43,611
                                  ------      ------      ------      ------
    Income from operations        13,874       8,704      53,810      26,628
    Interest and other income        286         731       1,554       3,038
    Interest expense                   -           5           -           -
                                     ---         ---         ---         ---
    Income before income taxes    14,160       9,440      55,364      29,666
    Income tax expense (benefit)   6,804       4,090      24,730      (1,690)
                                   -----       -----      ------      ------
    Net income                    $7,356      $5,350     $30,634     $31,356
                                  ------      ------     -------     -------
    Net income per share:               
      Basic                        $0.43       $0.32       $1.80       $1.91
                                   -----       -----       -----       -----
      Diluted                      $0.41       $0.30       $1.71       $1.78
                                   -----       -----       -----       -----
    Shares used to compute net 
     income per share:                  
      Basic                       17,188      16,587      16,978      16,399 
                                  ------      ------      ------      ------
      Diluted                     18,158      17,767      17,954      17,653 
                                  ------      ------      ------      ------
    
    
                                 GENOPTIX, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
    
                                                       December 31,
                                                       ------------
                                                  2009              2008
                                                  ----              ----
    Assets                                             
    Current assets:                                     
      Cash and cash equivalents                 $27,945           $38,108
      Short-term investment securities          113,049            64,830
      Accounts receivable, net                   27,707            15,604
      Deferred tax asset                          5,406             4,707
      Other current assets                        3,320             2,179
                                                  -----             -----
    Total current assets                        177,427           125,428
    Property and equipment, net                  13,826            12,189
    Restricted cash                                 270               360
    Long-term investment security                 3,786             3,775
    Long-term deferred tax asset                  1,800             2,510
    Other long-term assets                          346               183
                                                    ---               ---
    Total assets                               $197,455          $144,445
                                               --------          --------
    Liabilities and Stockholders' Equity               
    Current liabilities:                               
      Accounts payable and accrued expenses      $8,322            $6,580
      Accrued compensation                        4,667             3,006
      Income tax payable                          1,557                 -
      Deferred revenues                           1,225               365
      Deferred rent                                 331               241
                                                    ---               ---
    Total current liabilities                    16,102            10,192
    Long-term deferred rent                       1,732             1,955
    Other long-term liabilities                     117                79
                                                        
    Stockholders' equity:                              
      Common stock                                   17                17
      Additional paid-in capital                160,064           143,616
      Treasury stock                                (25)                -
      Accumulated other comprehensive loss         (546)             (774)
      Accumulated earnings (deficit)             19,994           (10,640)
                                                 ------           -------
    Total stockholders' equity                  179,504           132,219
                                                -------           -------
    Total liabilities and 
     stockholders' equity                      $197,455          $144,445
                                               --------          --------
    
    
                                 GENOPTIX, INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
    
                                                 Years Ended December 31,
                                                 ------------------------
                                               2009        2008        2007
                                               ----        ----        ----
    Operating activities                            
    Net income                               $30,634     $31,356     $13,353
      Adjustments to reconcile net 
       income to net cash provided by 
       operating activities:                        
        Depreciation and amortization          3,569       1,388         580
        Provision for doubtful accounts        3,150       3,196       1,093
        Stock-based compensation expense       9,917       7,017         540
        Amortization of premium/discount 
         on investments securities             1,033        (417)         (4)
        Excess tax benefits from 
         stock-based compensation awards      (3,757)     (2,968)          -
        Deferred taxes                          (215)     (6,680)          -
        Loss on sale of property and 
         equipment                                 6           -           -
        Realized loss on sale of 
         investment securities                     -          66           -
        Non-cash interest expense                  -           -         166
      Changes in operating assets 
       and liabilities:                             
        Accounts receivable                  (15,253)     (9,787)     (5,340)
        Other current and long-term 
         assets                               (1,283)       (823)     (1,159)
        Accounts payable and accrued 
         expenses                              1,848       1,641       2,325
        Accrued compensation                   1,661         510       1,438
        Income taxes                           5,404       2,908           -
        Deferred revenues                        860         270          56
        Deferred rent                             96         478          57
                                                 ---         ---         ---
    Net cash provided by operating 
     activities                               37,670      28,155      13,105
                                              ------      ------      ------
    Investing activities
      Purchase of property and equipment      (5,474)     (9,567)     (1,243)
      Proceeds from sales of property 
       and equipment                               -          21           -
      Purchase of investment 
       securities                           (142,326)   (114,946)    (42,779)
      Proceeds from sales and 
       maturities of investment 
       securities                             93,517      79,803       8,000
      Purchase of intangibles                   (150)        (50)          -
      Change in restricted cash                   90           -           -
                                                 ---         ---         ---
    Net cash used in investing 
     activities                              (54,343)    (44,739)    (36,022)
                                             -------     -------     -------
    Financing activities                            
      Proceeds from issuance of common 
       stock, net                              2,779       1,864          56
      Excess tax benefits from 
       stock-based compensation awards         3,757       2,968           -
      Repurchase of common stock                 (26)          -           -
      Net (costs) proceeds (paid for) 
       from public offerings                       -        (764)     72,538
      Principal payments on notes 
       payable                                     -           -      (3,183)
      Proceeds from issuance of 
       notes payable                               -           -         284
      Principal payments on capital 
       lease obligations                           -           -         (19)
                                                 ---         ---         ---
    Net cash provided by financing 
     activities                                6,510       4,068      69,676
                                               -----       -----      ------
    Net (decrease) increase in cash 
     and cash equivalents                    (10,163)    (12,516)     46,759
    Cash and cash equivalents at 
     beginning of year                        38,108      50,624       3,865
                                              ------      ------       -----
    Cash and cash equivalents at 
     end of year                             $27,945     $38,108     $50,624
                                             -------     -------     -------
    Supplemental information:                       
      Income taxes paid, net                 $19,568      $2,128        $365
                                             -------      ------        ----
      Interest paid                               $-          $-        $187
                                                 ---         ---        ----
    Non-cash investing and financing 
     activities:                                    
      Unrealized gain (loss) on 
       investment securities, net               $454     $(1,365)        $53
                                                ----     -------         ---
      Capitalized tenant improvement 
       allowance                                  $-      $1,470          $-
                                                 ---      ------         ---
      Change in accrued purchases 
       of property and equipment                $(63)       $690          $-
                                                ----        ----         ---

SOURCE Genoptix, Inc.

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