Q3 2021 Precipio Inc Earnings Call
Welcome to the precipitous shareholder third quarter 2021 shareholder update conference call.
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Now, let me hand over the call.
Thank you and Danielle a precipitous CEO.
Thank you Brad good afternoon, everyone and thank you for joining our Q3 2021 shareholder.
My goal on this call is to give you an insight into how we finish the recent quarter.
Our financial statements were filed last week.
And to give you some insights into how we see the future.
Let me start by saying, we had a rough quarter.
Several challenges, we dealt with them and have overcome them with.
These challenges thanks to our team their passion dedication and commitment to our cost to the business I believe we're coming out of this quarter stronger and with more determination to succeed.
Let me begin by providing an insight to each of our business segments, and then share with you some of the exciting outlook for our company going forward.
Let's start with our clinical pathology services.
This quarter was the first quarter, where we didn't experience the growth we saw in prior quarters.
For the nine months ended September 32021 year over year. All these revenues of $6 4 million increased $2 3 million or 55% from 2020.
That's a great accomplishment in Q3, our case volume and revenues were relatively flat.
Not great.
Is there any conflict situation, there's rarely one thing because it could be identified as the sole driver of a problem.
Like many companies around the globe, we too had to deal with supply chain issues.
I know a lot of Victoria services.
And in addition, internal lab operational issues, which ultimately translated into service issues to our customers.
The challenges involved in us, losing several customers Fortunately none of them large enough that our revenue decline, but nonetheless, it resulted in us not achieving the growth we've demonstrated previously in.
Nobody likes losing a customer certainly not us.
Our team stepped up and.
And we worked hard to resolve the issues.
Our mission in mind, which is first and foremost providing the most accurate diagnosis to ensure proper patient care.
Long side her goal of providing our customers with the service they have become accustomed to from us with that in mind, we worked hard to address those issues.
Today Midway through Q3, Q4, I'm pleased to report that the operational issues have been resolved. In addition, we have revamped our sales process and these steps together are starting to produce the stages.
I was proud to watch our team stepped up and break the problems at all both parts.
I believe the company's management teams are measured not when everything is going smoothly, but rather when challenges arise.
And the way in which these challenges are addressed.
Our team performed outstandingly disapproved, just once again, what we already knew but theres nothing that we can.
On the product side of the business. This quarter was a successful quarter for heat treated products.
As previously announced in August we signed an agreement with <unk>.
Large oncology practice onboard.
This guy was introduced to us by our strategic partner.
Who did a great job in bringing this customer to the table and helping to close the deal.
To date <unk>.
It was the largest customer we on boarded and our teammates for the Onboarding will be smooth successful.
We conducted onsite training for the lab team I've worked with them to ensure a smooth and successful launch.
I'm pleased to announce that as of last week.
Life with history.
Now like the nice process, when Onboarding, new product it could be bumps along the way.
Like to share with you a small example of our team's dedication to our customer success.
Our shipments of reagents.
Hundreds of thousands of dollars and they've shipped on dry eye. So that they can remain frozen until the agency by the customer side and our safety customers. Please.
Given several mishaps with Fedex on the pathology services buys we weren't going to take the risk of our very first shipments to our largest customer.
Driving the reagents by call it isn't enough to give it a business.
So one of our managers breakthrough volunteered to fly down was the Boston reagents, and his luggage and personally deliver them to the customer.
Now there's been that sound like a big deal, but this is not typical in our industry and our laboratory is well experienced in receiving reagents from other vendors that are either fired arris temperature.
Not with specific.
This invitation our team members rose to the occasion and got the job done.
This is a major customer with significant expected revenue and gross margin impacts.
Once running at full steam Aon on its own is expected to reduce our cash burn by approximately 25%.
Hey is also very very visible customer and we're actively working to onboard numerous other sizable customers and to grow this part of our business with continued impact on revenue and profitability.
No we haven't discussed RV sell for a while until today. The reality is there hasn't been a court.
Our pathology services were limited access full outlets.
All with history, we were still able to present, the costumes and onboard customers with IV self onboarding process really requires hands on in person worked together at the client side.
The ongoing disarray as laboratories due to Covid this really wasn't possible.
Having said that we've not given up in fact I'm pleased to say that we are making progress with several of them.
And I hope to have some good news early next.
We still believe that IV. So it is a groundbreaking technology and.
And we see the impact to patient care in our laboratory every day.
With persistence I anticipate that we will win customers and then ultimately other laboratories worldwide will benefit from this technology.
From an organizational perspective, where the process of reorganizing our company.
Next year, we will have two divisions. The first is our clinical diagnostic services Division, which includes our pathology sales team and our lab operations.
This division has two purposes, the first and foremost is to deliver on our mission battled a problem.
Yes.
From our proprietary processes and technology to our expert academic pathologist, we continued to demonstrate an unparalleled level of quality and accuracy that impact patient care.
This is the core of who we are as a company and this will always remain at the heart of our business.
Yeah.
The second purpose of this division is to provide a breeding ground for new technology.
Both Haynesville and RV, so were born out of that simplification operational and clinical deficiencies in the.
Laboratory operate and our desire to improve these efficiencies and provide better patient care.
Therefore, our laboratory in terms of the Oprah.
One is to provide clinical results for our customers and the second is to support our R&D team continues to identify examine developed developed technologies for laboratories.
The second division is our diagnostics products.
This division will include our R&D team and the products commercial arm that we'll be bringing these technologies such as games screening like yourself and others to market.
We believe that this division is going to be the primary growth engine profitability contributor for the company going forward.
Due to several factors.
First off this is the <unk> business. It does not require the customer to repeatedly makes decision to use a product.
Once the lab is onboard and validated our product it's difficult to unseat us, especially.
Actually what our technology is superior to competing products in the market.
From the company's perspective, this means a recurring revenue stream with relatively minimal sales and technical support effort required.
Second this is a higher margin business do the economics of the project.
And lastly, this is a highly scalable business.
Spending less than $50000. We've recently set up a full production facilities and scale up it is 25 times the volume of product. We currently produce.
All these factors have a direct impact on our company revenues as well as gross margin and profitability.
It is our intention to continue to invest more in R&D and build a pipeline of products.
With a methodical and disciplined process to evaluate new technologies against market me I can already visualized doubling our product portfolio next year.
And bringing to market, new exciting and clinically impactful technologies.
But economic and operational benefits for customers, but also support our core mission of eradicating misdiagnosis and providing the diagnostic tools to ensure the highest level of accuracy for patients.
I wanted to take a few moments to discuss our IR strategy.
I know many of you have been disappointed in the decline of the share price over the last quarter and the lack of news it's all about it.
Hopefully you can see that neither of these near the actual activity going on in the company.
We've made tremendous progress.
As insiders, we have the benefit of seeing how our company is a bad thing, making huge strides towards success, but sometimes you just need to hunker down and keep their having a game in focus and that can result in less communication to the outside world as we just focus on our work and let the results speak for itself.
In the past we've seen press releases makes the stock the stock lease up only with to return to its previous position relatively quickly.
Volatility is not good for the company noisy shareholders and there's a third.
But it's not good for institutional investors.
As our company grows our goal is to transition from a microcap company to a more mature company. They can attract and earned a supportive long term its two largest institutional investors.
That in addition of course to the ongoing performance, which ensures stability and continuous long term growth of the shelf life and reduce volatility for the share price.
Of course, our shareholders.
Yes.
I would argue that the previous in the share price is not a reflection of the company value and our accomplishments hopefully with the results that we've shared today you can see that even more.
Let me give you a few anecdotal financial points to support that.
For the nine months ended September 2000, 2030 years 2021.
Our audited revenues of $6 4 million have increased by 55% or $2 2 million for the same period last year.
The company also reported a gross profit of $1 1 billion and reported gross margins of 27% both a 68% improvement the same period in 2020.
There are other financial measures, they're just as imports allowance for doubtful accounts has dropped from around 25% to below 10%.
As well as the significant improvements in DSO days sales outstanding from above 100 days to below 30 days.
All of those have significant cash impact to the company and demonstrate substantial and continuous improvements in the right direction for us.
These are some of the financial metrics that institutional investors look at it demonstrate that accompanies on its way to becoming a high performing.
In summary, we had a challenging quarter, which we overcame.
We are stronger our team is more resilient and our business will benefit from the learning experience as we overcome these challenges I am proud to be a part of this team and support them as they translate this dedication and commitment to the ongoing equivalent for the business. Our goal is fairly be these changes into financial performance and shareholder value for you our shareholders.
Yeah.
We have a unique business model that combines the values of the clinical lab with technological capabilities developed real world solutions to true clinical challenges.
I have no doubt that continued to support our diagnostic services division, while allocating resources to our.
I'll be honest division and building a strong team to execute on these technologies and those in the pipeline.
Resolved real enterprise value for our company and for you our shareholders.
We have some amazing caused us we're working on that I'm eagerly awaiting the moment when I can share those with you and enable you to share in the prior to being part of the procedure.
With that I want to wish our shareholders and their families happy holiday season.
Wish you that while you remain our shareholders Union loved ones will never require our services.
For those who rely on us to provide the quality and accuracy and to deliver on our mission no that where I'm always committed to that goal.
Thank you all for your support and have a great evening.
Yes.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.