8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 23, 2017

CANCER GENETICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-35817	04-3462475
(State or Other	(Commission	(IRS Employer
Jurisdiction of	File Number)	Identification No.)
Incorporation)

201 Route 17 North 2nd Floor, Rutherford, New Jersey 07070

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code (201) 528-9200

____________________________________________________________

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Credit Facilities

On March 22, 2017, we restructured our debt with Silicon Valley Bank (“SVB”), by repaying the outstanding term loan, which was scheduled to mature in May 2017, and entered into a new two year asset-based revolving line of credit agreement.   The new SVB credit facility provides for an asset-based line of credit (“the ABL”) in an amount not to exceed the lesser of (a) $6.0 million or (b) 80% of eligible accounts receivable plus the lesser of 50% of the net collectable value of third party accounts receivable or three (3) times the average monthly collection amount of third party accounts receivable over the previous quarter.  The ABL requires monthly interest payments at the Wall Street Journal prime rate plus 1.5% (5.5% at March 22, 2017), an annual commitment fee of 0.25% and matures on March 22, 2019.  We paid to SVB a $30,000 commitment fee at closing and will pay a fee of 0.25% per year on the average unused portion of the ABL.

We concurrently entered into a new three year $6.0 million term loan agreement (the “Term Loan”) with Partners for Growth IV, L.P. (“PFG”).  The Term Loan is an interest only loan with the full principal and any outstanding interest due at maturity on March 22, 2020.  Interest is payable monthly at a rate of 11.5% per annum, with the possibility of reducing to 11.0% in 2018 based on achieving certain financial milestones set forth by PFG. We may prepay the Term Loan in whole or part at any time without penalty.  We paid PFG, a commitment fee of $120,000 at closing.

Both loan agreements require us to comply with certain financial covenants, including minimum adjusted EBITDA and minimum revenue covenants, and restrict us from, among other things, paying cash dividends, incurring debt and entering into certain transactions without the prior consent of the lenders. Repayment of amounts borrowed under the new loan agreements may be accelerated if an event of default occurs, which includes, among other things, a violation of such financial covenants and negative covenants.

Our obligations to SVB under the ABL facility are secured by a first priority security interest on substantially all of our assets, and our obligations under the Term Loan to PFG are secured by a second priority security interest subordinated to the SVB lien.

In connection with such term loan, we issued seven year warrants to the lenders to purchase an aggregate of 443,262 shares of our common stock at an exercise price of $2.82 per share. The number of shares may be reduced by 20% subject to us achieving certain financial milestones set forth by PFG.  The issuance of the warrants and the underlying warrant shares will be exempt from registration under Section 4(a)(2) of the Securities Act or 1933.

Item 2.02. Results of Operations and Financial Condition.

On March 23, 2017, Cancer Genetics, Inc. (the “Registrant”) issued a press release regarding financial results for the fiscal year ended December 31, 2016 and posted a slide presentation to its website, which it may refer to during its conference call to discuss the results. A copy of the press release and slide presentation are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, hereto and are incorporated by reference herein.

Forward-Looking Statements

This report, including Exhibit 99.1 and Exhibit 99.2 furnished herewith, contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate” and similar words, and the opposites of such words, although some forward-looking statements are expressed differently. Forward-looking statements involve known and unknown risks and uncertainties that exist in the Registrant’s operations and business environment, which may be beyond the Registrant’s control, and which may cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. For example, forward-looking statements include, without limitation: statements regarding prospects for additional customers; market forecasts; projections of earnings, revenues, synergies, accretion or other financial information; and plans, strategies and objectives of management for future operations. The risks and uncertainties referred to above include, but are not limited to, risks detailed from time to time in the Registrant’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2015, Quarterly Report on Form 10-Q for the period ended September 30, 2016 and other reports filed with the SEC. These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrant. Forward-looking statements represent the judgment of management of the Registrant regarding future events. Although the Registrant believes that the expectations reflected in such forward-looking statements are reasonable at the time that they are made, the Registrant can

give no assurance that such expectations will prove to be correct. Unless otherwise required by applicable law, the Registrant assumes no obligation to update any forward-looking statements, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.

Item 7.01 Regulation FD.

The slide presentation referred to in Item 2.02 above is attached hereto as Exhibit 99.2 and incorporated herein by reference.

The information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K (including Exhibit 99.1 and Exhibit 99.2) attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d)    Exhibits

As described above, the following exhibits are furnished as part of this report:

Exhibit 99.1 – Press release, dated March 23, 2017.

Exhibit 99.2 – Slide presentation Q4 2016 earnings call.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CANCER GENETICS, INC.

By: /s/ John A. Roberts        

Name: John A. Roberts

Title: Chief Operating Officer and Executive

Vice President, Finance

Date:    March 23, 2017

EX-99.1

March 23, 2017

Cancer Genetics, Inc. Announces Record Revenue for Fourth Quarter and Full-Year 2016 and Provides 2017 Business Update

• Full-year 2016 revenues up 50% year-over-year to $27 million from $18 million

• Fourth quarter revenues up 32% year-over-year on strong organic growth to $7.2 million

• Fourth quarter gross profit margins expand over three-fold to 41% compared to 13% for the same quarter of 2015

• Full-year 2016 gross profit margins were 37% up from 22% for the full-year of 2015

• Fourth quarter 2016 net loss reduced by 51% as compared to fourth quarter 2015 and improves pathway to profitability

• CGI is working with 9 of the top 10 global pharmaceutical and biotech companies

• CGI is powering over 125 active clinical trials and studies with 36 focused in immuno-oncology

• Company closed $12 million in debt financing on Wednesday, March 22, 2017

• Conference call begins at 9:00 a.m. Eastern DST, Thursday March 23, 2017

RUTHERFORD, NJ & LOS ANGELES, CA, March 23, 2016 (GLOBE NEWSWIRE) -- Cancer Genetics, Inc. (Nasdaq: CGIX) a leader in enabling precision medicine for oncology through molecular markers and diagnostics, announced today financial and operating results for the fourth quarter and full-yearended December 31, 2016 and will provide an update on the business and strategic objectives for 2017.

“During 2016 we grew our topline revenue over 50%, reduced our operating expenses significantly, and continued to launch innovative new tests and capabilities that are industry leading. Our business continues to scale, and shows tremendous demand going into 2017,” said Panna Sharma, CEO and President of Cancer Genetics, Inc. “CGI is now working with 9 of the top 10 pharma and biotech companies and has made significant gains in our clinical market share due to our expansion into solid tumors, hereditary cancers and immuno-oncology.”

The company reported total revenue of $27 million for 2016, compared to $18 million in 2015, an annual increase of 50%. Total revenue in the fourth quarter of 2016 was $7.2 million, compared to $5.5 million in Q4 2015, an increase of 32%, driven by organic growth across all market categories: biopharma, clinical and discovery.

Revenue from biopharma partners and customers increased by 32% to $15.3 million in 2016 as compared to $11.6 million during 2015. For the fourth quarter of 2016

Cancer Genetics, Inc. – March 23, 2017

Q4 2016 & Full Year 2016 Earnings Press Release - Nasdaq (CGIX)

biopharma revenues increased 34% to $4 million up from $3 million during the same period of 2015. Additionally, the company increased the number of clinical studies and trials it is supporting by 50% over the year to 125 by the end of the fourth quarter 2016.

Clinical services revenue growth was 88% for the full year of 2016 over 2015, from $5.7 million to $10.7 million. For the fourth quarter of 2016 clinical service revenue increased 25% over the same period in 2015, from $2.4 million to $3 million. The growth was driven by an increase in clinical test volumes from 12,429 in 2015 to 28,658 in 2016, an increase of 131%.

Discovery services, mostly performed in India, provides genomic and bioinformatics support for global discovery and pre-clinical initiatives.Discovery services contributed an additional $1.1 million in revenue for the full year of 2016, a 31% increase over 2015. During the fourth quarter of 2016 Discovery services increased by 102% over the same period of 2015, from $157 thousand to $317 thousand, driven by significant demandfor discovery solutions by research institutions where next-generation sequencing is combined with novel bioinformatics analysis.

“All categories of our business showed improvement throughout 2016 as we fully integrated our acquisitions, generated greater operating leverage across CGI, and increased market share,” said Panna Sharma. “As we integrated our US sites, we achieved record margins during Q4 which we expect will continue rising as we grow revenue and capabilities. We have also started a major initiative to make our information and molecular data more valuable to both our biopharma customers and healthcare systems. We expect that this big-data and artificial intelligence initiative will further expand our margins while increasing our value to the oncology ecosystem.”

FINANCIAL HIGHLIGHTS FOR THE QUARTER AND YEAR INCLUDE:

• Full-year 2016 revenue of $27 million, a 50% increase over 2015, with $15.3 million from Biopharma services, $10.7 from Clinical services and $1.1 million from Discovery services

• Fourth quarter 2016 revenue of $7.2 million, a 32% increase over the same period of 2015, with $4 million from Biopharma services, $3 million from Clinical services and $0.3 million from Discovery services

• Full year 2016 gross profit margins of 37%, an increase from 22% during 2015

• Fourth quarter 2016 gross profit margins of 41%, an increase from 13% during the same period of 2015 driven by successful integration of the Response acquisition and greater operating efficiencies across all US sites

• Operating expenses during the fourth quarter of 2016 improved to $6.5 million from $7.9 million during the fourth quarter of 2015

• Net loss improved to $2.8 million during the fourth quarter, or a diluted EPS of ($0.15), as compared to a net loss of $5.7 million during the fourth quarter of 2015, or a diluted EPS of ($0.48)

Cancer Genetics, Inc. – March 23, 2017

Q4 2016 & Full Year 2016 Earnings Press Release - Nasdaq (CGIX)

• Cash and cash equivalents at December 31, 2016 were $9.8 million as compared to $19.5 million at December 31, 2015

• Today the company also announced the completion of a $12 million debt financing

• The company also raised an additional $1 million in non-dilutive capital through the New Jersey Technology Business Tax Certificate Program in February of 2017

“CGI is committed to continuing to innovate in precision oncology while being focused on increasing market share, and optimizing margins,” said Panna Sharma. “Our ability to continue executing on our innovation roadmap during 2017 will continue to improve our market position, and yield a more durable and more valuable company for our investors and partners.”

2016 and RECENT BUSINESS HIGHLIGHTS 

• Launched a NGS-based Hereditary Breast & Ovarian Cancer panel, FOCUS::HERSite™, which was selected by a global pharmaceutical company to power a 1,000+ patient clinical study

• Launched FOCUS::Renal™, a NGS-based panel, for enabling precision and personalized diagnosis and therapy selection for renal cancers

• Launched FOCUS::Lymphoma™, the most comprehensive and clinically actionable NGS-based panel in precision hematological diagnosis

• Announced five agreements and contracts with biotech and pharma customers to develop liquid biopsy tests for a broad range of solid tumors addressing $20 billion market by 2020

• Received New York State approval for FOCUS::Myeloid™, a targeted NGS panel for improved diagnosis, risk stratification, and therapy selection of patients with myeloid cancers

• Received New York State approval for FOCUS::CLL™, a highly-targeted NGS panel for Chronic Lymphocytic Leukemia

• Announced a distribution agreement with Sayre Therapeutics for CGI’s proprietary Tissue of Origin™ test which aids in identifying challenging tumors, including metastatic, poorly differentiated, and undifferentiated cancers. TOO™ is the ONLY FDA-cleared test of its type and is a Medicare-reimbursed test.

• Continued expanding our covered lives in the U.S. with leading insurance providers through agreements and contracts with 29 payers

• Selected by H3 Biomedicine Inc., a division of Eisai Group, to provide biomarker discovery and testing for a global drug development program in Hematologic Cancers

• Announced a strategic agreement with Lantern Pharma Inc. to jointly leverage genomics, biomarkers & artificial intelligence to rescue and repurpose drugs for cancer

Cancer Genetics, Inc. – March 23, 2017

Q4 2016 & Full Year 2016 Earnings Press Release - Nasdaq (CGIX)

• Listed by Merck as a “National Reference Laboratory” for KEYTRUDA® (pembrolizumab) companion diagnostic testing

• Increased the number of clinical trials and studies CGI is supporting to over 125, including 36 in immuno-oncology

• Streamlined finance and business support operations under leadership of healthcare technology industry veteran Jay Roberts as COO and Executive Vice President of Finance

“During 2017 we expect our business to continue high double-digit, durable growth while continuing to innovate in the development and delivery of precision diagnostics and testing for oncology. We believe that we have a clear path towards achieving profitability, and accelerating our market share through partnerships and collaborations in areas that are becoming increasingly critical to the next generation of breakthroughs in patient care,” continued Mr. Sharma. “Technologies and trends such as artificial intelligence, big-data, and combining genomic and immune-marker testing to improve patient outcomes and accelerate the discovery of new therapeutics are all areas that CGI will be integrating into our business model and into our global business infrastructure. Our growing reach into the oncology ecosystem coupled with the strengthening of our operating fundamentals makes CGI a leader in developing and delivering oncology diagnostics from bench to bedside.”

CONFERENCE CALL & WEBCAST
Thursday, March 23, 9:00 AM Eastern Time
Domestic:	888-203-7337
International:	719-325-2216
Conference ID:	8291952
Webcast:	http://public.viavid.com/index.php?id=123354
Replays – Available through April 6, 2017
Domestic:	844-512-2921
International:	412-317-6671
Conference ID:	8291952

ABOUT CANCER GENETICS

Cancer Genetics, Inc. is an emerging leader in enabling precision medicine for oncology through the use of molecular markers and information. CGI is developing a global footprint with locations in the US, India and China. We have established strong clinical research collaborations with major cancer

Cancer Genetics, Inc. – March 23, 2017

Q4 2016 & Full Year 2016 Earnings Press Release - Nasdaq (CGIX)

centers such as Memorial Sloan Kettering, The Cleveland Clinic, Mayo Clinic, Keck School of Medicine at USC and the National Cancer Institute.

The Company offers a comprehensive range of laboratory services that provide critical genomic and biomarker information. Its state-of-the-art reference labs are CLIA-certified and CAP-accredited in the US and have licensure from several states including New York State.

For more information, please visit or follow us:

Internet: www.cancergenetics.com
Twitter: @Cancer_Genetics
Facebook: www.facebook.com/CancerGenetics

Forward Looking Statements:

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results, future growth in revenues, margins, research, technology, clinical development and potential opportunities for Cancer Genetics, Inc. tests and services, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements.

Any statements that are not historical fact (including, but not limited to, statements that contain words such as "will," "believes," "plans," "anticipates," "expects," "estimates") should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization of potential products, risks of cancellation of customer contracts or discontinuance of trials, risks that anticipated benefits from acquisitions will not be realized, uncertainty in the results of clinical trials or regulatory approvals, need and ability to obtain future capital, maintenance of intellectual property rights and other risks discussed in the Cancer Genetics, Inc. Form 10-K for the year ended December 31, 2015, its Quarterly Report on Form 10-Q for the period ended September 30, 2016, along with other filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. Cancer Genetics, Inc. disclaims any obligation to update these forward-looking statements.

CONTACT:

Richard (Dick) Moyer

Cameron Associates, Inc.

535 Fifth Ave., New York, NY 10017

(212) 554-5466

richard@cameronassoc.com

Cancer Genetics, Inc. – March 23, 2017

Q4 2016 & Full Year 2016 Earnings Press Release - Nasdaq (CGIX)

CANCER GENETICS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

	12/31/2016		12/31/2015
Assets
Current Assets
Cash and Cash Equivalents	$	9,502	$	19,459
Accounts Receivable, Net	11,748		6,621
Other Current Assets	2,174		2,118
Total Current Assets	23,424		28,198
Fixed Assets, Net	4,738		6,069
Restricted Cash	300		300
Goodwill and Intangible Assets, Net	13,532		13,756
Other Assets	440		561
Total Assets	$	42,434	$	48,884
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities	$	11,046	$	9,865
Long Term Liabilities	5,764		6,002
Total Liabilities	16,810		15,867
Stockholders' Equity	25,624		33,017
Total Liabilities and Stockholders' Equity	$	42,434	$	48,884

Cancer Genetics, Inc. – March 23, 2017

Q4 2016 & Full Year 2016 Earnings Press Release - Nasdaq (CGIX)

CANCER GENETICS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per share amounts)

	Quarter Ending			Quarter Ending			Year Ending			Year Ending
	12/31/2016			12/31/2015			12/31/2016			12/31/2015
Revenue	$	7,230		$	5,484		$	27,049		$	18,040
Cost of Revenue	4,272			4,756			17,104			14,098
Gross Profit	2,958			728			9,945			3,942
Operating Expenses
General & Administrative	4,357			5,031			16,034			14,567
Research & Development	1,161			1,148			5,967			5,483
Sales & Marketing	937			1,726			4,668			5,269
Total Operating Expenses	6,455			7,905			26,669			25,319
Other Income (Expense)	721			279			921			9
Income Tax (Benefit)	—			(1,184		)	—			(1,184		)
Net (Loss)	$	(2,776	)	$	(5,714	)	$	(15,803	)	$	(20,184	)
Basic weighted average shares outstanding	18,839			12,048			15,861			10,298
Diluted weighted average shares outstanding	18,839			12,048			15,861			10,299
Basic Net (Loss) per share	$	(0.15	)	$	(0.47	)	$	(1.00	)	$	(1.96	)
Diluted Net (Loss) per share	$	(0.15	)	$	(0.48	)	$	(1.00	)	$	(1.96	)

Cancer Genetics, Inc. – March 23, 2017

Q4 2016 & Full Year 2016 Earnings Press Release - Nasdaq (CGIX)

EX-99.2

CGI Headquarters 201 Route 17 North Rutherford, NJ 07070 Phone: +1 201-528-9200 RUTHERFORD, NJ Research Triangle Park 133 Southcenter Court Morrisville, NC 27569 Phone: +1 919-465-0100 RALEIGH, NC LOS ANGELES, CA 1640 Marengo Street Fourth Floor Los Angeles, CA 90033 Phone: +1 323-224-3900 #3-1-135/1A CNR Complex Mallapur Main Road, R.R. Dst. Hyderabad – 500 076, Telangana Toll-free: +91 040-2717-8178 HYDERABAD, INDIA 781 Cai Lun Road, Room 803 Shanghai 201203 P.R. China Toll-free: +86 21-5049-5700 SHANGHAI, CHINA