Precipio says pathology revenue ‘heading back towards’ breakeven point

Precipio provides the following update to its shareholders on various business matters. The company said, “In September of 2023, Precipio’s pathology division exceeded its breakeven point of $15M annualized revenue run rate, resulting in a Q4 cash burn of less than $100K for the quarter. In the following quarter, as previously discussed, due to several operational issues, revenue declined below that point. We are pleased to report that the company has addressed the operational issues and as a result, pathology revenue is heading back towards its breakeven point. We anticipate that in the next quarter, Q3-2024, the pathology division will return to exceeding its breakeven point. On the products side, the company had several delays in product releases due to several technical and supply chain issues which often occur in this line of business. These hurdles have been addressed, and revenue growth is resuming. Recently, two major new customers received state regulatory approval for implementing our technology in their practice and we anticipate them going live early next quarter. These two customers are much larger than our average customer and we expect that they, along with several other customers in various onboarding stages, will provide a significant boost to product revenues and significantly advance us toward the necessary $6M annualized product revenue run rate goal that is part of our overall plan to reach profitability. As we previously mentioned, like many healthcare companies, Precipio too was impacted by the Change Healthcare hacking and subsequent freeze on cash inflow from the pathology services division. We appear to be at the tail-end of this situation, with Change Healthcare in the process of resuming normal operations. The company has taken measures to supplement its cash situation through short-term loans, both from Change Healthcare and independent sources, ensuring it has sufficient funds to continue operations. We expect a return to normal operations in Q3-2024, and to a quick return of any Change Healthcare loans. Furthermore, with the expected revenue growth discussed in the previous point, we anticipate a gradual reduction in cash burn, heading towards anticipated breakeven later in the year. The recent FDA ruling will ultimately transition Laboratory Developed Tests that are currently under the regulation of other federal and private agencies such as CLIA and COLA, to fall under the FDA’s jurisdiction as FDA-approved tests. This will require filings by test manufacturers and/or laboratories to register LDTs with the FDA. Requirements will be phased in over the next 4 years…This impacts both our pathology services division and our products division as follows: Pathology services division:The FDA rule has stipulated that any tests that a lab was operating before the ruling on May 2023 are “grandfathered” into approval and do not require any additional work. This applies to all our current tests. Should Precipio’s laboratory decide to add a test in the future, it will most likely add FDA-approved tests which will not place any burden on our laboratory. Therefore, the company does not expect any substantial budgetary impact to its pathology services division due to this ruling.”