Renalytix plc (RNLX)·Q1 2024 Earnings Summary

Executive Summary

• Revenue was $0.459M and diluted EPS were $(0.11) for Q1 FY2024 (quarter ended September 30, 2023); revenue declined 52.6% year over year and the company reported a net loss of $10.154M . Testing volume totaled 1,297 tests (56% billable), up from 1,232 in the prior quarter (57% billable), but down in billable mix versus 1,252 tests (82% billable) in the prior-year quarter .
• Cost-reduction actions are underway: payroll expense targeted down >35% and total SG&A down >30% year over year, with personnel realigned to focus on sales; management is in financing discussions aiming to extend operating runway through at least early calendar 2026 .
• Reimbursement momentum: KidneyIntelX.dkd pricing recommended at $950/test (matching pre-FDA pricing), a second Medicare contractor (First Coast Options) is paying, and NGS published the draft LCD with CLFS pricing at $950 effective January 1, 2024; management expects final LCD during fiscal 2024 .
• Near-term stock catalysts include progression of LCD to final coverage, expansion of commercial payer contracts (e.g., BCBS Texas, PCHP, PNOA), EPIC integration milestones (Atrium/Wake Forest), and execution of direct-to-physician rollout .

What Went Well and What Went Wrong

What Went Well

• New payer coverage and payment progression: additional commercial coverage (BCBS Texas, Parkland Community Health Plan, PNOA) and a second Medicare contractor now paying for billed tests; draft LCD published and CLFS price set at $950/test .
• Commercial execution: EPIC-integrated roll-out progressing at Atrium Health (integration expected complete in December 2023) and expansion into Illinois; direct-to-physician sales force targeted fully in-field by January 2024 .
• Management tone focused on runway and sales realignment: “Financing discussions in process with goal to provide operating runway through at least early calendar 2026, enabled by cost reductions and sales growth from adoptions by new hospital systems and independent physicians” .

What Went Wrong

• Top-line pressure and billable mix: revenue fell to $0.459M from $0.969M in the prior-year quarter; billable rate fell to 56% from 82% year-over-year due largely to Mount Sinai study-related tests (now non-billable post-transition) .
• Gross loss and widening operating deficit: gross loss of $(43)k in Q1 with operating loss of $(8.889)M; net loss was $(10.154)M .
• Liquidity drawdown and negative equity: cash declined sequentially from $24.682M (June 30, 2023) to $13.891M (September 30, 2023); shareholders’ equity turned negative ($(1.491)M) at quarter-end, underscoring the importance of cost controls and financing plans .

Financial Results

Note: Segment reporting is a single segment; no segment revenue breakdown disclosed .

Guidance Changes

No formal revenue/EPS guidance was provided in Q1 FY2024 materials .

Earnings Call Themes & Trends

Management Commentary

• “Financing discussions in process with goal to provide operating runway through at least early calendar 2026, enabled by cost reductions and sales growth from adoptions by new hospital systems and independent physicians” .
• “Cost cutting initiative projected to reduce payroll expense by over 35% and total SG&A by over 30% year-over-year… personnel have been realigned to focus on sales” .
• “KidneyIntelX EPIC-integrated commercial roll-out progressing at Atrium Health with expected integration completion in December 2023” .
• “Evidence from 12 months of care following KidneyIntelX prognostic testing… led to improvement in both diabetes (A1C reductions) and kidney health (eGFR slope improvement)” .
• “KidneyintelX.dkd recommended for pricing by CMS at $950 per test…” .

Q&A Highlights

• The Q1 FY2024 earnings call featured company leadership (CEO James McCullough, CFO James Sterling, President Tom McLain, CBO Howard Doran) and external analysts (BTIG, Stifel, Pinnacle Associates, Investec) .
• Management did not provide formal revenue/EPS guidance; emphasis remained on reimbursement progress (LCD path, CLFS pricing), cost discipline, sales force rollout, and EPIC integrations, consistent with the press release .

Estimates Context

• S&P Global consensus estimates for Q1 FY2024 could not be retrieved due to a CIQ mapping issue; therefore, an estimates-based beat/miss assessment is unavailable (S&P Global data not available via tool) [GetEstimates error].
• Investors should anchor revisions on forthcoming LCD finalization and payer coverage updates, which may influence top-line run-rate and billable mix .

Note: S&P Global consensus data unavailable via tool; estimates comparisons not presented.

Key Takeaways for Investors

• Reimbursement de-risking: With CLFS pricing at $950 and draft LCD published, a final LCD in FY2024 is a key catalyst to expand Medicare-covered lives and improve billable mix .
• Commercial scale-up: EPIC integration (Atrium) and direct-to-physician rollout should support sequential growth in billable volumes; watch near-term order intake and new hospital launches .
• Cost discipline: Execution on >35% payroll and >30% SG&A reductions is critical to conserving cash given the sequential decline in cash and negative equity; monitor quarterly cash burn trajectory .
• Near-term prints may remain choppy: Billable rate recovery from 56% hinges on coverage expansion and mix shift away from non-billable study tests; focus on payer contracting updates and MAC payment consistency .
• Liquidity optionality: Management is pursuing financing to extend runway through early 2026; progress on LCD and commercial traction could improve terms for non-dilutive or less-dilutive funding .
• Clinical utility supports adoption: Published RWE showing improved A1C and eGFR slope under KidneyIntelX-guided care strengthens the value proposition with providers and payers .
• Tactical trading: Stock may react to milestones like LCD finalization, large payer wins, or EPIC deployment completions; conversely, delays in reimbursement or slower billable growth could pressure sentiment .