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Genoptix Reports Strong Financial Results for First Quarter 2008

CARLSBAD, Calif., May 8 /PRNewswire-FirstCall/ -- Genoptix, Inc. (Nasdaq: GXDX), a specialized laboratory service provider, today reported revenues of $22.3 million for the first quarter ended March 31, 2008, as compared to revenues of $10.7 million for the comparable period in 2007. The first quarter 2008 results include a $651 thousand benefit from changes in accounting estimates relating to 2007.

"We started the year with another quarter of strong operational results, increasing sales by 20% over the fourth quarter of 2007 and 109% from a year ago," said Tina Nova Bennett, Ph.D., President and CEO of Genoptix. "A growing customer base and improving case volumes continue to drive revenues as customer adoption of our services grows in regions across the country."

The Company also reported GAAP net income of $5.0 million for the first quarter ended March 31, 2008, compared to net income of $1.3 million for the first quarter ended March 31, 2007. Diluted earnings per share, or EPS, for the first quarter of 2008 was $0.29 based on 17.5 million weighted average common shares outstanding, including $0.05 of negative impact from increased costs associated with non-cash stock-based compensation expense, which includes the launch of our employee stock purchase program at the start of 2008.

The Company completed its initial public offering, or IPO, on November 2, 2007. On a pro forma basis, assuming conversion of all outstanding preferred stock, diluted EPS for the three months ended March 31, 2007 would have been $0.10 (see "Pro Forma Net Income Per Share" table below).

Gross profit for the first quarter of 2008 improved to $13.1 million, or 59% of revenues, from $6.0 million, or 56% of revenues, for the first quarter of 2007, a 118% improvement year-over-year resulting primarily from continued increases in sales and operational leverage gained from additional case volumes.

Operating expenses for the first quarter of 2008 increased to $9.0 million from $4.6 million in the first quarter of 2007. These expenses consisted primarily of additional investment in organizational growth efforts and ultimately contributed to operating income of $4.2 million in the first quarter of 2008, or 19% of revenues, as compared to $1.4 million, or 13% of revenues, during the same period in 2007.

As of March 31, 2008, the Company's cash and cash equivalents and investment securities available-for-sale totaled $84.7 million. For the first quarter of 2008, cash generated from operations was $581 thousand, while purchases of capital equipment for the same period totaled $1.3 million. The quarter closed with bad debt expense of 2.8% of total revenues and average days sales outstanding, or DSO, of 64 days, an increase over prior periods due to the timing of receipt of certain payments, which were collected at the beginning of April, 2008.

"We executed well on our major initiatives, hiring new sales representatives to drive increases in the number of active customers we service and adding hematopathologists to Cartesian's medical staff to effectively manage the resulting increase in case volumes," said Sam Riccitelli, Genoptix EVP and COO. "Our solid operational execution and resulting cash flows will continue to support our reinvestment in future growth as the year progresses."

Performance Outlook

Based on first quarter results, Genoptix is adjusting its performance outlook for the full-year 2008, and now expects revenues of between $90 and $95 million with net income near the high end of the previously provided range of between $15 and $17 million (assuming an average annual tax rate of 5%). This includes the impact of an estimated $6 million in non-cash stock-based compensation, an increase resulting primarily from expenses associated with the initiation of the Company's most recent equity incentive programs.

GAAP earnings per diluted share are now expected to be at the high end of the previously provided range of $0.85 to $0.95 for the full year 2008.

Based on continued infrastructure expansion and implementation of its strategic plan, the Company is projecting capital expenditures of approximately $6 million for the full-year 2008.

Conference Call Information

A conference call will take place on Thursday, May 8, 2008, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), hosted by President and CEO Tina Nova Bennett, Ph.D., and other members of senior management. To access the live conference call via phone, dial 866-277-1181 in the U.S. or Canada and 617-597-5358 for international callers. Please specify to the operator that you would like to join the "Genoptix First Quarter 2008 Earnings Conference Call." The participant code for the call is 26333972. If you are unable to listen to the live webcast, a replay of the call will be available through Thursday, May 15, 2008. Interested parties can access the rebroadcast by dialing 1-888-286-8010 or 1-617-801-6888 internationally and entering the reservation number 99500372.

The conference call will also be webcast live under the investor relations section of the Genoptix website at 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. If you are unable to listen to the live webcast, a replay of the call will be available through Monday, June 9, 2008, on the Genoptix website at

About Genoptix, Inc.

Genoptix is a specialized laboratory service provider focused on delivering personalized and comprehensive diagnostic services to community-based hematologists and oncologists. Genoptix is headquartered in Carlsbad, California.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with generally accepted accounting principles (GAAP), this release contains non-GAAP financial measures. The diluted EPS information for the three months ended March 31, 2007 assumes the conversion of all outstanding preferred stock at the beginning of the period. The Company believes that the non-GAAP financial measures included in this release provide meaningful supplemental information to both management and investors that is indicative of the Company's core operating results. The Company believes these non-GAAP financial measures facilitate comparison of operating results across reporting periods, and uses these non-GAAP financial measures when evaluating its financial results, as well as for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP that are also included in this release.

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 success of the Company's business model, improving case volumes, increasing revenues, customer adoption and growth, the Company's ability to continue to invest in future growth and expand its business and consistently provide specialized, personalized and comprehensive diagnostic services, the Company's growth prospects, DSOs, and the Company's financial guidance for 2008. 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, 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 for the full-year period ended December 31, 2007 that was filed with the United States Securities and Exchange Commission on February 12, 2008 and in subsequent filings with the SEC. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. Genoptix 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.
                       (in thousands, except par value)

                                                       March 31,  December 31,
                                                         2008         2007
    Current assets:
      Cash and cash equivalents                         $31,933      $50,624
      Investment securities available-for-sale           52,729       34,836
      Accounts receivable, net of allowance for
       doubtful accounts                                 15,213        9,013
      Other current assets                                1,276        1,409
    Total current assets                                101,151       95,882
    Property and equipment, net                           3,096        1,950
    Other long-term assets                                   78            -
    Total assets                                       $104,325      $97,832

    Liabilities and Stockholders' Equity
    Current liabilities:
      Accounts payable and accrued expenses              $5,691       $4,312
      Accrued compensation                                2,312        2,496
      Deferred revenues                                      68           95
    Total current liabilities                             8,071        6,903
    Deferred rent, net of current portion                   332          324
    Commitments and contingencies
    Stockholders' equity:
      Preferred stock                                         -            -
      Common stock                                           16           16
    Additional paid-in capital                          132,853      132,532
    Accumulated other comprehensive income                   42           53
    Accumulated deficit                                 (36,989)     (41,996)
    Total stockholders' equity                           95,922       90,605
    Total liabilities and stockholders' equity         $104,325      $97,832

                                GENOPTIX, INC.
                    (in thousands, except per share data)

                                                         Three Months Ended
                                                              March 31,
                                                          2008         2007

    Revenues                                            $22,298      $10,651
    Cost of revenues                                      9,175        4,637
    Gross profit                                         13,123        6,014
    Operating expenses:
      Sales and marketing expenses                        4,261        2,321
      General and administrative expenses                 4,388        2,134
      Research and development expenses                     317          178
    Total operating expenses                              8,966        4,633
    Income from operations                                4,157        1,381
    Interest income                                         931           48
    Interest expense                                          -          (82)
    Other income                                             28           29
    Income before income taxes                            5,116        1,376
    Provision for income taxes                             (109)         (51)
    Net income                                           $5,007       $1,325

    Net income per share: (1)(2)
      Basic                                               $0.31          $ -
      Diluted                                             $0.29          $ -

    Shares used to compute net income per share: (1)(2)
      Basic                                              16,156          154
      Diluted                                            17,493          154

    (1) As a result of the conversion of the Company's preferred stock into
        11,032 shares of common stock upon completion of the Company's initial
        public offering in November 2007, there is a lack of comparability in
        the basic and diluted net income per share amounts for the periods
        presented above.
    (2) For the three months ended March 31, 2007, the Company's net income of
        $1,325 was allocated to preferred stockholders for purposes of
        calculating net income per share pursuant to the terms of the
        preferred stock, resulting in $0 of net income allocable to common

                                GENOPTIX, INC.
                      PRO FORMA NET INCOME PER SHARE (1)

                                                   Three Months Ended
                                                        March 31,
                                                                Pro forma
                                                   2008            2007
                                         (in thousands, except per share data)
      Net income allocable to common
       stockholders                                $5,007        $1,325
      Weighted average shares of common stock
       outstanding                                 16,185           197
      Weighted average unvested shares of common
       stock subject to repurchase                    (29)          (43)
      Adjustments to reflect the weighted average
       effect of the assumed  conversion of
       convertible preferred stock (1)                  -        11,032

      Pro forma weighted average shares of
       common stock outstanding - basic            16,156        11,186
      Dilutive effect of common equivalent shares   1,337         1,532

      Pro forma weighted average shares of
       common stock outstanding - diluted          17,493        12,718

    Pro forma net income per share (1):
      Basic                                         $0.31         $0.12
      Diluted                                       $0.29         $0.10

    (1) As a result of the conversion of the Company's preferred stock into
        11,032 shares of common stock upon completion of the Company's initial
        public offering in November 2007, there is a lack of comparability in
        the basic and diluted net income per share amounts for the periods
        presented above.

SOURCE Genoptix, Inc.

CONTACT: Marcy Graham, Sr. Director, Investor Relations of Genoptix, Inc., +1-760-930-7150,; or Joleen Schultz, Principal of Mentus, +1-858-455-5500, ext. 215,, for Genoptix, Inc.

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