NEW HAVEN, Conn., Aug. 03, 2023 (GLOBE NEWSWIRE) -- 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.
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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.
