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BIOCEPT INC (BIOCQ)·Q3 2022 Earnings Summary

Executive Summary

  • Q3 2022 revenue fell sharply as COVID-19 testing waned; net revenues were $5.59M and diluted EPS was -$0.33, with gross margin negative due to costs exceeding revenue .
  • CNSide traction continued: orders rose 8% sequentially and 176% YoY, and 28 of 64 NCI-designated cancer centers had ordered; management sizes the CNSide TAM at ~$1.2B U.S./$2.0B global .
  • Guidance narrative reiterated focus on CNSide clinical utility and reimbursement; COVID-19 testing revenue expected to end after December 2022 (first disclosed in Q2) .
  • Near-term stock catalysts: CNSide clinical evidence (FORESEE trial site expansions) and broader center adoption; headwinds include payor liabilities and rapid COVID revenue decay .

What Went Well and What Went Wrong

What Went Well

  • CNSide momentum: “CNSide orders increased 8% sequentially and 176% versus 3Q 2021” and multiple scientific posters featured at SNO, supporting clinical adoption narrative .
  • Channel expansion: “28 of the elite 64 National Cancer Institute-designated cancer centers having ordered CNSide,” validating institutional interest .
  • Cost control in SG&A and Sales: G&A fell to $3.0M (from $3.5M YoY); Sales & Marketing fell to $1.0M (from $1.9M YoY), reflecting reduced commissions and lower headcount .

What Went Wrong

  • Revenue compression: Net revenues dropped to $5.59M from $17.47M YoY as COVID testing volumes fell (COVID revenue $4.7M vs. $16.5M a year ago) .
  • Negative gross margin: Cost of revenues ($5.78M) exceeded revenue in Q3, yielding gross margin of -3.4% and EBIT margin near -100%, highlighting operating deleverage .
  • Payor/HRSA headwinds: A $5.7M liability was recorded in Q2 due to HRSA recoupment mechanism changes; payor liability stood at $6.105M on Q3 balance sheet, elevating near-term cash dynamics risk .

Financial Results

MetricQ3 2021Q1 2022Q2 2022Q3 2022
Net Revenues ($USD Millions)$17.47 $19.95 $10.61 $5.59
Cost of Revenues ($USD Millions)$11.27 $10.34 $8.02 $5.78
Gross Profit ($USD Millions)$6.21 $9.61 $2.59 -$0.19
Gross Margin %35.5% 48.1% 24.4% -3.4%
Operating Income (EBIT) ($USD Millions)-$0.55 -$2.71 -$5.10 -$5.58
EBIT Margin %-3.1% -13.6% -48.0% -99.8%
Net Income ($USD Millions)-$0.63 -$2.77 -$5.25 -$5.55
Net Income Margin %-3.6% -13.9% -49.5% -99.3%
Diluted EPS ($USD)-$0.04 -$0.16 -$0.31 -$0.33
Commercial Samples Accessioned (#)152,796 153,056 77,779 49,874
Average Value per Accession ($USD)$114 —$135 $111

Segment/Revenue Mix

Revenue ComponentQ1 2022Q2 2022Q3 2022
RT-PCR COVID-19 Test Revenue ($USD Millions)$18.60 $9.80 $4.70
Oncology Test Revenue ($USD Millions)$1.30 ——
Development Services Revenue ($USD Millions)$0.04 ——
Total Net Revenues ($USD Millions)$19.95 $10.61 $5.59

Balance Sheet Liquidity

MetricDec 31, 2021Mar 31, 2022Jun 30, 2022Sep 30, 2022
Cash & Cash Equivalents ($USD Millions)$28.86 $27.57 $22.93 $18.02
Payor/Other Liability ($USD Millions)——$5.65 (Other non-current liability) $6.11 (Payor liability)

KPIs and Commercial Traction

KPIQ1 2022Q2 2022Q3 2022
CNSide Orders – Sequential Growth %+70% vs. Q4 2021 +14% vs. Q1 2022 +8% vs. Q2 2022
CNSide Orders – YoY Growth %+219% +212% +176%
NCI Centers Ordering CNSide (#)——28 of 64 centers

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
COVID-19 Testing Revenue OutlookThrough Dec 2022Diminishing but cash-flow positive; no revenue anticipated beyond Dec 2022 No explicit update in Q3; expectation for no COVID revenue beyond Dec 2022 remained the stance Maintained
CNSide Clinical Utility Evidence (FORESEE)Near-termEnrollment opened; building evidence to support reimbursement First site open; expect at least one additional site cleared in coming months Raised (execution milestones)
CNSide Commercial ExpansionOngoingExpanded to metastatic melanoma; first biopharma revenue ($58k) using CNSide in trial Adoption continued; SNO posters; broader center engagement Maintained/Progressing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2022)Trend
CNSide commercial tractionQ1: +219% YoY/+70% seq; expanded customer base . Q2: +212% YoY/+14% seq; expanded to melanoma; first biopharma revenue .+176% YoY/+8% seq; 28/64 NCI centers ordering; TAM ~$1.2B U.S./$2B global .Positive adoption, moderating sequential growth as base rises.
COVID-19 testing trajectoryQ1: strong revenue contribution . Q2: diminishing; expected to end post-Dec 2022 .$4.7M in Q3; end after Dec 2022 reiterated stance .Structural decline; exit expected.
Clinical utility/reimbursement strategyQ1: preparing FORESEE; focus on CNSide evidence . Q2: enrollment opened; higher reimbursement targeted .More sites expected; SNO posters showcased data .Building data set for guidelines/reimbursement.
Payor/HRSA dynamicsQ2: $5.7M liability recorded due to HRSA mechanism .Payor liability on balance sheet $6.105M .Ongoing billing/reimbursement headwind.
Commercial coverage resources—“Relatively small commercial organization… not fully covering the geography of the U.S.” .Coverage constraints may cap near-term adoption pace.

Management Commentary

  • “Our third quarter financial results reflect solid increases in CNSide orders, up 8% sequentially and 176% year-over-year. We are executing well on our strategy to generate further evidence to secure higher reimbursement for CNSide and support its adoption into clinical care guidelines.” — Samuel D. Riccitelli, Interim President & CEO .
  • “Our customer base has also expanded with 28 of the elite 64 National Cancer Institute-designated cancer centers having ordered CNSide… We estimate the annual market opportunity of $1.2 billion in the U.S. and $2 billion globally.” — Sam Riccitelli, Q3 call .
  • “The first site in our FORESEE clinical trial is now open for patient enrollment and we expect at least one additional site to be cleared for enrollment in the coming months.” .

Q&A Highlights

  • Adoption breadth and depth: Analyst questions probed how Biocept engages remaining NCI centers; management emphasized KOL outreach, medical team collaboration, and “relatively small commercial organization… not fully covering the geography,” indicating prioritized regional focus .
  • Repeat orders: Management cited “relatively good performance” with increasing cases per client, underscoring stickiness post initial clinician experience .
  • Financial reporting status: CFO noted current with quarterly SEC filings and focused remarks on Q3 and nine months results, aligning reported figures across press release and 10-Q .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2022 was unavailable due to missing CIQ mapping for BIOCQ in SPGI’s company map; therefore, we cannot benchmark Q3 revenue or EPS against S&P Global consensus. If you can supply a CIQ identifier, we will retrieve and compare consensus immediately [GetEstimates error].

Key Takeaways for Investors

  • CNSide is the core growth asset; adoption continues across top cancer centers, with supportive scientific visibility (SNO posters) and expanding clinical evidence (FORESEE), underpinning a path to improved reimbursement and guideline inclusion .
  • Revenue mix is transitioning rapidly away from COVID testing; investors should model near-zero COVID revenue after December 2022 and focus on CNSide volume growth, pricing/reimbursement, and payor contracts .
  • Operating leverage deteriorated in Q3 as volumes fell; cost discipline in SG&A/Sales helped but gross margin turned negative—near-term profitability depends on CNSide scaling and reimbursement wins .
  • Billing/collections risk remains elevated given payor liability exposures; monitor resolution timelines and balance sheet cash trends (cash down to $18.0M at Q3) .
  • Biopharma collaborations (first CNSide trial revenue in Q2) illustrate an additional monetization route; expanding licensing/partner testing could diversify revenue beyond diagnostics services .
  • Tactical actions: watch for updates on additional FORESEE sites, payer agreements, and NCI center onboarding; these are likely catalysts for estimate revisions and sentiment .
  • Without S&P Global consensus, sell-side anchoring may be limited; expect shares to trade on execution signals (CNSide orders, center penetration, reimbursement milestones) rather than near-term quarterly beats/misses.

Sources

  • Q3 2022 8‑K 2.02 and Exhibit 99.1 press release and financials:
  • Q2 2022 8‑K 2.02 and Exhibit 99.1 press release and financials:
  • Q1 2022 8‑K 2.02 and Exhibit 99.1 press release and financials:
  • Q3 2022 earnings call transcript (InsiderMonkey):
  • BusinessWire press release (Q3 2022 results):
  • UCSF investigator-initiated study press release (Nov 16, 2022):