Q4 2022 Precipio Inc Earnings Call
Welcome to the Presidio Shareholder Twenty-twenty Fourth Quarter and Year End Shareholder Update Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note that the conference is being recorded. Statements made.
During this call, we will be making forward-looking statements about our business. You should not place undue reliance on these forward-looking statements, as they are based on our current expectations, forecasts, and assumptions, and are subject to significant risks and uncertainties.
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Risks and uncertainties that could cause our actual results to differ materially from those set forth in any forward-looking statements include, but are not limited to, the matters listed under Risk Factors in our Annual Report on Form 10-K for the year ended December 30, 2022, which is on file with the Securities and Exchange Commission, as well as.
Other risks detailed in our subsequent filings with the Securities and Exchange Commission. These reports are available at Www Dot F E C Dot Gov.
Statements and information, including forward-looking statements, speak only to the date provided, unless an earlier date is indicated. We do not undertake any obligation to publicly update any statements or information, including forward-looking statements, whether as a result of new information, future events, or otherwise, except as required.
Bylaw.
Now, please let me hand the call over to Ilan Daniela Presidio, CEO.
Thank you, Jay, and good afternoon. Thank you for joining our call for this year-end here.
First of all, please accept my apologies, for my voice is a little bit under the weather after the weekend. The salad covering my throat is lagging; I'm going to try to make this call shortly after Covid-19.
By now most of you have hopefully have the opportunity to glance at our 2022 annual filings.
We've shown some growth in our numbers is approximately 10% on the pathology side.
On the product side, it's obviously not what we were hoping for.
Early this year, our team spent quite a bit of time protecting yourselves, inflections, and questions to understand and analyze the results, and identify an action plan for what we need to do to achieve better results in 2023.
I think the recent press releases have already shown us there on the light truck.
We believe that 2023 is going to be a very different year from 2022, and I'd like to share with you some of the reasons for that.
Let me begin with the pathology business.
We closed 2022 pathology business still makes up the vast majority of our revenue while we build the product.
But the technology business is also the core of the heart and soul of the vision of our company, which is the battle the problem with this diagnosis.
However, we did meet our goals.
As a result, changes have been made within the commercial team, which we expect will result in a significant improvement in those numbers. In fact, initial evidence already indicates this; we recently finished March with a record number of cases in the company's history and exceeded $1 million in cash collections.
We believe we are on the right track going forward.
Keep in mind the Gulf to the Palms Division.
In the development of future products, therefore, instead of building a huge network with a large sales team and tremendous operation, we are focused on building a high-class boutique operation for our customers that is financially sustainable while generating the patient samples we need in order to continue to develop our existing products, such as IV cell at HIMSS.
Screen as well as future products.
The breakeven number for financial self-sustainability is around $14 million.
We ended 2022 with a run rate of about $9 million.
By the end of Q2, with the addition of some major customers, we expect to exceed a Monday at $11 million.
Well on our way to meet our goal financially.
Our cash flow break-even.
Okay.
We've restructured the team that's created huge incentive program distracting reward our high performance.
Now, let's move to the product.
Last year, we establish a product line with him screens and went out to market.
We realize that penetrating labs, particularly after COVID-19, is not a simple task.
Building, a direct sales force of expensive cumbersome takes time to see the fruits of that investment.
Fortunately, in the middle of 2022, we were approached by Thermo Fisher and subsequently signed a pivotal distribution agreement with them to market Keep Screen.
For those of you who don't know, Thermo Fisher is, in my view, the equivalent of Amazon for the laboratory world.
There's virtually no laboratory in the U.S. or, indeed, anywhere in the world that doesn't buy products from Thermo Fisher.
They have a massive sales force with both the depth of expertise and the breadth of reach necessary to successfully access the market that is their target.
The agreement with them to sign in Q3, we officially launched in Q4 last year.
Launch included a formal training session with their leadership team followed by an ongoing are going to work with their team to educate them on the benefits between customer targeting and market penetration.
<unk> seen that in January of this year, excuse me, was recognized by the Fiserv team. Won the award for the best new product for 2023.
As a result of our efforts, we have seen a significant increase in the pipeline of prospective customers who are now engaging with us for the purchase of Philip Gibbs Green.
The relationship with Thermo Fisher is in addition to another major healthcare distributor, whose total agreement with them remains unnamed.
It'll be a formidable partner for us, and leveraging their sales force to introduce our screen to their customer base.
The combined power of these two sales forces equals over 250 reps and support staff.
Access to virtually every potential customer.
Right.
The benefit of this is that Principium now has access to the sales force, while the cost structure is variable commission-based, and therefore covers the variable costs commensurate with that.
This makes it very attractive growth.
You've heard me say before that there probably isn't enough money in the world to enable us to build an entirely competent salesforce, and I'm grateful that we have the opportunity to work with world-class organizations.
I am even more grateful that we have a structure that is scalable and financially attractive for both parties.
Making it a win-win.
Moving to 2023, if I had to choose one word to describe the action for this year, that word would be conversion.
You have already begun to see this in recent press releases that started in December.
I'm showing you some of the deals that we've signed with midstream customers, and they are expecting to finance them.
Keep in mind that our customers still occur.
That would be kind of recurring revenue customers. It gives us two things first.
With an ongoing revenue stream continues to come in as we grow the business.
Second.
It provides us with a high level of predictability into operations manufacturing financial and cash needs going forward.
The range of business and then I'll field is a very attractive business.
And I'm sure you're well aware of other major players and their financial results.
The initial customer penetration has shown us that the same screen isn't an attractive product that solves a real clinical, operational, and economic problem for the laboratory. The initial adoption of this product seems very promising.
The fact that major distributors have embraced the stratum is yet another market indicator of the power of this technology.
What I'm trying to do it to paint a picture for you the shareholder of what each customer meetings to our revenues and go back to breakeven.
The nice thing about our business model is that as we scale up our heat treating revenues, there is virtually no incremental cost other than the cost of goods.
We need to hire no more sales reps; we're leveraging the sales reps or distributors.
Our support team is in place that are set to handle significant customer growth.
The good news, by the way, is that we've seen that for the most part, once our customers are alive, they require very little help from our students' complicity technology.
In addition, our manufacturing capabilities are currently well in excess of production.
$30 million of product annually, so.
For the foreseeable future, you'll probably need further investments on the manufacturing side to support the growth.
All of this translates into a very attractive model for the company, where a substantial percentage of the revenue impacts the bottom line.
Have a significant impact on our cash burn.
As of now, given our operating expenses for both divisions, our company projects $8 million of product revenue. Alongside that, $14 million inside the business will reach breakeven.
Our goal is to reach that number this year, and as you will see from our Q1 results as well as the ongoing press releases.
Well on our way to achieving that goal.
But all of this happens because of one word.
Version.
Management: the entire focus is on taking on this introduction pipeline of customers and converting them into your existing business.
Revenue into cash.
This is the time, where we begin to leverage our structure, where our expenses are mostly fixed our margins are attractive with strong distribution channel. So that each customer we onboard a significant impact to the bottom line.
So, this is what you can expect to see from us this year: consistent, ongoing, accelerated conversion.
This pipeline into account.
You said absorbing; that's another building block for revenue for the company.
Lastly, I'd like to discuss cash flow and Kashi.
As you know, we've been using the ATM facility, which is a periodic source for bringing in capital as needed.
And our analysis. This is the least dilutive auction and, given our situation, is by far the best vehicle to finance the company.
Any substantial capital raise would have to go through a process of filings announcements that could prove very harmful to the share price until the ATM provides a nice simple and inexpensive option that we will continue to use.
For the foreseeable future, we don't have any plans to conduct any substantial capital raise. We believe that once we are cash-flow positive and continue to grow in deposits, we will be a positive earnings company.
Then we'll be in entirely different situations, both from a share price and market cap perspective. At that point, the opportunities to grow the business will have changed dramatically.
For now we are all green down focusing on one action.
Conversion.
I apologize, I know my voice doesn't sound that way, but I'm really excited for 2023. Last year, we didn't have the commercial team we have today.
Didn't have the distribution partners that we have, we didn't have the marketing, training, and development element that we don't have. Enjoy these partnerships; they are successful, but our team and our product is well positioned in the marketplace.
With a strong wind at our back in Q1, I think you're going to be very happy with the upcoming results.
Our continued building of our customer base.
Lastly, I want to remind you that despite all the focus around the keep, our vision is not to be a single-product company.
The screen is indeed our golden goose, and that's what's going to get us to the promised land of castle breakeven. So for now, we're all hands on deck.
But once we get there.
Unleash our talented R&D team to continue developing and bringing to market other products that have similar value a similar market opportunity leveraging the engine that we've developed to bring these products to market in a low cost lowest scalable.
I look forward to connecting with you again after our Q1 results are out. By then, we expect to have more news items that will demonstrate our continued growth and progress towards our financial goals for the company in 2023.
Thank you and have a nice evening.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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Sure.