Precipio’s Operational Efficiency Measures Continue To Reduce Cash Burn And Move The Company Towards Breakeven
August 03 2023 - 9:00AM
Specialty cancer diagnostics company Precipio, Inc. (NASDAQ: PRPO),
announces significant reductions in its cash-burn. For the six
months ended June 30, 2023, Precipio is projected to report cash
burn (excluding financing proceeds) of $3.1M, a reduction of $1.1M
from $4.2M for the same period in 2022, or 26% reduction YoY.
Q2-2023 cash burn has declined to $1.4M from $1.7M in Q1-2023, a
decrease of 20% QoQ.
In Q2 we identified
opportunities for operational efficiency throughout the Company
that will be realized throughout the remainder of 2023. We expect
further reductions in reported cash burn in both Q3 and Q4 in both
lab services and new products.The following are a few of the
operational efficiency and cost-cutting initiatives that will
contribute to the Company’s reduction in cash burn:
- Lab Services Economies of Scale. In our lab diagnostic services
business, we have reduced costs and added capacity with very low
incremental costs. As a result, we expect any sales increases to
require increased reagent costs but not labor or overhead. This can
create an estimated margin increase of approximately 8-10 points on
our current annual run-rate of $10.5M, and materially reduce our
cash burn.
- Bringing NGS testing in house. Until Q2 we have been sending
approximately $1.0M of NGS cases to outside labs. The launch of NGS
testing in-house will enable the Company to capture $1.0M in
additional net revenues, generating $300k in additional gross
profits and available cash.
- In-house billing. As mentioned in a prior press release, we
have terminated our outside billing contractor and found
experienced personnel to perform the same job in-house with higher
collection rates and lower costs.Prior to completing this move, the
Company’s costs to process, bill and collect exceeded 7.5% of
reported sales. Our goal is to reduce billing costs to under 4% of
net sales and realize at least an additional $100,000 per year
through better collection efforts. Together these initiatives are
expected to generate over $400,000 of cash savings on an annual
basis.
- Pathology interpretation restructuring. As a result of the
implementation of the new system, this initiative will lead to an
immediate reduction of approximately $180K in annualized cost
savings at the current case volume. As case volume increases, so
will the savings from the new system.
- Corporate expenses. Over the past couple of months, management
has reduced various corporate overhead expenses totaling $100K in
annual savings.
Alongside the revenue
growth, it is imperative that the company continuously conduct
internal reviews to identify cost-cutting opportunities. Led by a
task force of our finance and operational team, we have come up
with over a dozen initiatives that are being implemented by the
company. These initiatives have already, and will continue to show
significant impact to our cash burn and bring the company closer to
breakeven.
“I am delighted to see
the combination of revenue growth and operational efficiencies that
together, are driving us towards lower cash burn and ultimately
reaching breakeven,” said Ilan Danieli, CEO. “Company management is
laser focused on these two efforts, and with each member of the
team doing their share, we are heading in the right direction. I am
excited to continue to deliver positive results to our
shareholders.”
About Precipio
Precipio has built a platform designed to
eradicate the problem of misdiagnosis by harnessing the intellect,
expertise and technology developed within academic institutions and
delivering quality diagnostic information to physicians and their
patients worldwide, as well as proprietary products that serve
laboratories worldwide. Through its collaborations with world-class
academic institutions specializing in cancer research, diagnostics
and treatment, Precipio offers a new standard of diagnostic
accuracy enabling the highest level of patient care. For more
information, please visit www.precipiodx.com.
Please follow us on LinkedIn, Twitter
@PrecipioDx and on Facebook.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, including, among others, statements related to
the expected or potential impact of the novel coronavirus
(COVID-19) pandemic, and the related responses of the government,
consumers, and the company, on our business, financial condition
and results of operations, and any such forward-looking statements,
whether concerning the COVID-19 pandemic or otherwise, involve
risks, assumptions and uncertainties. Except for historical
information, statements about future volumes, sales, growth, costs,
cost savings, margins, earnings, earnings per share, diluted
earnings per share, cash flows, plans, objectives, expectations,
growth or profitability are forward-looking statements based on
management’s estimates, beliefs, assumptions and projections. Words
such as “could,” “may,” “expects,” “anticipates,” “will,”
“targets,” “goals,” “projects,” “intends,” “plans,” “believes,”
“seeks,” “estimates,” “predicts,” and variations on such words, and
similar expressions that reflect our current views with respect to
future events and operational, economic and financial performance,
are intended to identify such forward-looking statements. These
forward-looking statements are only predictions, subject to risks
and uncertainties, and actual results could differ materially from
those discussed. Important factors that could affect performance
and cause results to differ materially from management’s
expectations, or could affect the company’s ability to achieve its
strategic goals, includes factors that are described in the
sections entitled “Risk Factors” and “Management’s Discussion and
Analysis” in the company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2022, as updated from time to time
in the company’s Securities and Exchange Commission filings.
The company’s forward-looking statements in this
press release are based on management’s current views, beliefs,
assumptions and expectations regarding future events and speak only
as of the date of this release. The company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by the federal securities
laws.
Inquiries:
investors@precipiodx.com
+1-203-787-7888 Ext. 523
Precipio (NASDAQ:PRPO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Precipio (NASDAQ:PRPO)
Historical Stock Chart
From Jul 2023 to Jul 2024