Name: Precipio, Inc. Q1 2025 Earnings Call
Start: 2025-05-15T21:01:00.000Z

Executive Summary

Revenue was $4.90M, up 43% year-over-year and down 9.5% sequentially, with seasonality and onboarding delays cited as drivers of the QoQ decline .
Gross margin expansion continued: overall gross margin reached 43% (vs. 27% YoY), with Products at 51% (vs. 37%) and Pathology at 42% (vs. 24%) .
Management highlighted catalysts: MolDx approval enabling Medicare billing for NGS (estimated ~$0.25M per quarter uplift), reversal of the FDA LDT ruling unlocking paused product evaluations, and expectation of returning to positive operating cash flow in Q2 or Q3 .
Non-recurring ERC funds of >$0.4M were received in Q2; Change Healthcare cyber incident-related advances are being repaid over 2025 with a $130K write-off negotiated, easing liquidity near term .

What Went Well and What Went Wrong

Strong YoY growth and margin expansion: $4.9M revenue (+43% YoY) and overall gross margin of 43% vs. 27% YoY; Products gross margin rose to 51% and Pathology to 42% .
Regulatory and reimbursement wins: MolDx approval enables Medicare billing for NGS; management estimates ~$0.25M quarterly uplift from current case volume .
Product pipeline momentum post LDT reversal: distributors are generating more meetings; 1 new customer onboarded, 2 new panels launched, and validations underway for 4 panels; CEO: “We remain confident… momentum building in our Product business pipeline” .

Sequential revenue decline (-9.5% QoQ) attributed to seasonality (insurance deductibles reset) and temporary onboarding delays on Products .
Adjusted EBITDA remained negative at ($0.108M), though improved sharply from ($1.409M) YoY .
Customer onboarding timelines remain elongated due to regulatory updates, lab workflow issues, and staffing gaps at customer sites, delaying revenue recognition despite demand .

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$5.209*	$5.450*	$4.929
Diluted EPS ($USD)	-$0.423*	-$0.245*	-$0.588*
Gross Profit Margin %	43.7%*	48.6%*	43.0%
Adjusted EBITDA ($USD Millions)	N/A	$0.400	-$0.108
Cash from Operations ($USD Millions)	$0.041*	$0.565*	-$0.044

Values marked * retrieved from S&P Global.

Segment margin breakdown (YoY):

KPIs:

KPI	Q1 2024	Q1 2025
Pathology Revenue YoY Growth %	N/A	54%
Pathology Test Volume YoY Growth %	N/A	46%
New Ordering Physicians	N/A	11
MolDx (NGS) Approval Status	Not approved	Approved; billing enabled
Products: New Panels Launched	N/A	2
Products: New Customers Onboarded	N/A	1

Operating expense efficiency:

OpEx as % of net revenue improved from 87% to 61% YoY, driven by flat ~$3M quarterly OpEx and 43% YoY revenue growth .

Metric	Period	Previous Guidance	Current Guidance	Change
Operating Cash Flow	Q2–Q3 2025	None	Expect return to positive in Q2 or Q3	New
Pathology Gross Margin	FY 2025	None	Expected to stabilize in mid-40% range	New
Products Gross Margin	FY 2025	None	Expected to continue to grow with scale	New
Combined Gross Margin	FY 2025	None	Expected to continue climbing as mix shifts to Products	New
NGS Medicare Reimbursement Impact	Q2+ 2025	None	~$0.25M per quarter uplift from current volume	New
Products Revenue Ramp	FY 2025	On track to double run-rate by end 2025	Pipeline accelerating post LDT reversal; validations in flight	Maintained
Non-Recurring ERC	Q2 2025	$0	>$0.4M received; pursuing ~$1.0M remaining	New
Change Healthcare Settlement	2025	None	$130K write-off; ~<$0.8M to be repaid over 2025	New

Topic	Q3 2024 (Prev Mentions)	Q4 2024 (Prev Mentions)	Q1 2025 (Current)	Trend
Seasonality & Collections	Emphasis on approaching breakeven; lower burn	Positive adjusted EBITDA and cash flow achieved	Seasonal Q1 dip (deductibles reset) drove -9.5% QoQ; rebound expected Q2	Neutral to improving
Regulatory/Reimbursement	—	Addressed conversion and regulatory challenges (LOD)	MolDx approval; Medicare billing begins; FDA LDT reversal unlocks demand	Positive
Products Onboarding & Distribution	Pipeline development; distributors to scale growth	Distributor strategy refined; hiring to accelerate Products	1 new customer; 2 panels launched; 4 validations; distributors generating meetings	Positive but paced
Margins	Pathology above breakeven; product margins structurally higher	Margin focus and distribution leverage	Pathology 42%, Products 51%, Overall 43%	Positive
Cash & Capital Needs	Reducing burn; avoid raises	Positive cash in Q4; path to profitability	Expect positive op CF Q2/Q3; ERC >$0.4M; Change Healthcare write-off	Positive
R&D via Pathology	Pathology as self-financed R&D platform	Continued emphasis	>12,000 samples in 2024 supporting rapid product R&D	Positive

“We remain confident in the Company’s trajectory, supported by strong year-over-year revenue growth, improved gross margins, disciplined cost control and increasing operational efficiency… We anticipate continued revenue growth and a return to positive operating cash flow by Q2 or Q3.” – CEO Ilan Danieli .
“In Q1… we received MolDx approval for our next-generation sequencing… Based on our internal estimates, this could equal approximately $0.25 million per quarter in increased revenue and cash from our current case volume.” .
“In March… the FDA ruling [on LDTs] was overturned… prospective customers reached back out saying they are now ready to proceed.” .
“Operating expenses as a percent of revenue dropped from 87% to 61%… achieved by keeping OpEx ~ $3M per quarter while growing revenue by 43% YoY.” .

The Q1 shareholder update call was delivered as prepared remarks; a formal analyst Q&A segment was not recorded in the transcripts provided. Management proactively addressed: seasonal Q1 dynamics, MolDx approval impact, LDT reversal implications, customer onboarding timelines, and non-recurring cash items (ERC, Change Healthcare) .

S&P Global consensus was unavailable for PRPO’s Q1 2025 EPS and revenue; no beat/miss assessment versus Street can be made based on SPGI data retrieved. Values retrieved from S&P Global.

Near-term cash flow inflection: management expects positive operating cash flow in Q2 or Q3; monitor Q2 collections and pathology volumes as the key driver .
Reimbursement tailwind: MolDx approval enables Medicare billing for NGS and is estimated at ~$0.25M per quarter uplift from current volume; track claims conversion and incremental cash receipts .
Regulatory relief catalyzing pipeline: LDT reversal removes a key adoption barrier; watch the pace of validations converting to recurring orders, especially the multi-panel major lab onboarding cited .
Margin trajectory: mix-shift to Products and scale efficiencies should lift combined gross margin beyond 43% through 2025 if product revenues ramp as planned .
Liquidity supported by non-recurring items: ERC >$0.4M received and $130K Change Healthcare write-off ease 2025 repayments; treat ERC as one-time and adjust models accordingly .
Execution risk: elongated customer onboarding timelines (regulatory updates, lab workflow, staffing) can push revenue out; discount pipeline timing and look for evidence of quicker conversions via new support programs .
Strategic focus: Pathology remains cash engine and R&D platform (>12,000 samples in 2024), while Products aim to become the growth and margin driver through distributor leverage .