Q3 2024 Precipio Inc Earnings Call
Okay.
Speaker Change: Good day and welcome to the precipitous third quarter 'twenty 'twenty four shareholder update conference call.
Operator: Welcome to the Precipio third quarter 2024 shareholder update conference. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey fall by zero.
Operator: Please note that the conference is being Statements made during this call contain forward-looking statements about our... statements are based upon our current expectations, forecasts, and assumptions, and are subject to significant risks and uncertainties. Statements may be identified by words such as may, will, should. Expect, Intend, Plan, Anticipate, Believe, Estimate, Predict, Potential, Forecast. or the negative of these terms or other words or terms of similar meaning.
Speaker Change: Please note that the conference is being recorded.
Speaker Change: Statements made during this call contain forward looking statements about our business you should not place undue reliance on forward looking statements. As these statements are based upon our current expectations forecast and assumptions and are subject to significant risks and uncertainties.
Speaker Change: These statements may be identified by words, such as May will should could expect intend plan anticipate believe estimate predict potential forecast continue or the negative of these terms or other words or terms of similar meaning.
Operator: 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 in our annual report on Form 10-K for the year ended December 30th. which is on file with the Securities and Exchange Commissions as well as other risks detailed in our subsequent filing. These reports are available at www.sec.gov.
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 30th 2022.
Speaker Change: Which is on file with the securities and exchange commissions as well as other risks detailed in our subsequent filings with the Securities and Exchange Commission. These reports are available at Www Dot S. A C dot gov.
Operator: Statements and information, including forward-looking statements, speak only to the date they are provided unless an earlier date is indicated, and 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 by law.
Speaker Change: Statements and information, including forward looking statements speak only to the date. They are provided unless an early earlier date has indicated and we do not undertake any obligation to publicly update any statements or information.
Speaker Change: Including forward looking statements, whether as a result of new information future events or otherwise except as required by law.
Ilan Danieli: Now, let me hand the call over to Ilan Danieli, Precipio's CEO. Please go ahead.
Speaker Change: Now, let me hand, the call over to Ilan Danielli precipitous CEO. Please go ahead Sir.
Ilan Danieli: Thank you, and good afternoon. Thank you all for joining our 2024-23 shareholder update call. Thanks to all those who submitted questions. As always, we'll do our best to address them during this call.
Ilan Danielli: Thank you and good afternoon, and thank you all for joining our 2024 Q3 shoulder I think Paul.
Speaker Change: Thanks to all those who submitted questions as always the blockbuster address them during this call.
Ilan Danieli: Before we jump into the numbers, I'd like to take a moment to remind everyone of the business we're in and the impact we have. We recently crossed the 10,000 case mark for the year compared to close to 8,000 in 2023. For us, those aren't just numbers that translate into revenue and share price. These are real people, parents and grandparents, siblings and children, who have to deal with the awful battle against... I'm really proud of the impact we have on those patients and their families' lives as we execute on our mission to battle misdiagnosis. I can assure you that many of those 10,000 people are better off because they were diagnosed by our.
Before we jump into the numbers I'd like to take a moment to remind everyone of the business. We're in and in fact, we have.
Speaker Change: We recently crossed the 10000 case Mark.
Speaker Change: Compared to close to 8000 in 2023.
Speaker Change: For us those are just numbers it translates into revenue and share price are these are real people parents and grandparents siblings and children, who have to deal with the awful battle against cancer I'm really proud of the impact we have on those patients and their families lives and we are as we execute on our mission to battle mismatch.
Speaker Change: I can assure you that many of those 10000 people are better off because they were diagnosed by our company.
Ilan Danieli: Now let's jump into business. At the end of last year, we declared our goal of reaching breakeven in 2024. Beyond bringing the business to this important successful operational milestone of a company that starts making money, the objective reflects our commitment to avoid raising the looted structured capital and to bring the company to a new era where we are able to deliver appreciation and shareholder value. I'm pleased to report that our two careers demonstrate that we are well on track to achieve our goals.
Speaker Change: Now, let's jump into this.
Speaker Change: At the end of last year, we declared our goal of reaching breakeven in 2024.
Speaker Change: I'm, bringing the business to this important successful operational milestones the company has started making money.
Speaker Change: We objected reflects our commitments to avoid raising dilutive structured capital and to bring the company into a new era, we are able to deliver appreciation and shareholder value.
Speaker Change: I'm pleased to report that our kids meal demonstrate.
Speaker Change: Demonstrate that we are well on track to achieve our goal this year.
Ilan Danieli: Let's review each of the division's performances in a bit more detail. started with the pathology. For the second consecutive quarter, our pathology revenues exceeded the division breakeven point, and that $4.5 million per quarter represents a robust 18% increase from the previous quarter of 2020. We're going to continue to grow this division organically with our existing sales team, and our goal is to reach approximately 20 million run rates for this division and remain above. This creates a division that does two key things for us. First, the division will generate positive cash flow. Second, it provides a self-sustained, cost-free R&D platform that enables us to support our product customers and build our next generation of products, which is the future growth engine of Precipio.
Speaker Change: Let's review each of the divisional performances in a bit more detail.
Speaker Change: Starting with the pathology division.
Speaker Change: For the second consecutive quarter, our pathology revenues exceeded the division breakeven point and at four 5 million per quarter represents a robust 18% increase over the previous quarter, a future where.
Speaker Change: We're going to continue to growing wellness division organically with our existing sales team and our goal is to reach approximately $20 million run rate for this division and remain above.
Speaker Change: This creates a division, but the two key things.
Speaker Change: First the division will generate positive cash flow.
Speaker Change: Second it provides itself sustain costly RV platform that enables us to support our customers and build our next generation of products, which is the future growth engine.
Ilan Danieli: Our current sales team of five members enabled us to deliver this revenue. We may be hiring one more salesperson to provide additional revenue stability, so we remain well above that break-even. I'm really proud of the team, both our commercial team and our lab operations, for their contributions to reaching this point. I know of no other lab that can reach breakeven at these revenue levels. Indeed, if you look at some of the other competitors in the lab services market, even at revenues tenfold ours, they're still struggling to generate cash. This is a testament to our efficiency of operations, the quality of our service, and our business structure that enables us to achieve this financial milestone.
Speaker Change: Our current sales team of five members enabled us to deliver this revenue we may be higher one more sales force provides additional revenue stability. So we remained well above that breakeven point.
Speaker Change: I'm really proud of the team both our commercial team and our lab operations.
Speaker Change: Contributions to reaching this point I know no other lab they can reach breakeven revenue levels. Indeed, if you look at some of the other competitors in the lab services markets, even revenues tenfold ours, they're still struggling to generate cash.
Speaker Change: Testaments to our efficiency of operations the quality of our service and our business structure that enables us to achieve this financial mouse.
Ilan Danieli: I am also confident that with the current team, the division will remain in this position, ensuring that the pathology services will continue to serve as a positive operational and financial contributor to our broader strategy.
Speaker Change: I'm also confident that the current team the division will remain disposition. During all of these services will continue to deliver positive operational and financial contributor to our broader strategy.
Ilan Danieli: Moving along to the Products Division. Although the division has not yet hit breakeven, we are making steady progress and moving closer. Q2 revenues increased by 13% over Q2, reaching 680,000. As we discussed, we're building a robust customer pipeline, among which we have three key customers who are in various onboarding stages. We anticipate that in this current quarter, as well as in the next quarter, we're going to see the full weight of those three customers as they onboard our products, and that's going to have a significant impact on the division's performance. Going forward, this division is going to become the main engine of growth for our business.
Speaker Change: Moving along to the products Division.
Speaker Change: Although this division has not yet has not yet hit breakeven, we are making steady progress and moving closer to three revenues increased by 13% over Q2, reaching 680000 as.
Speaker Change: As we discussed we are building a robust customer pipeline, among which we have three key customers for various on boarding stages, we anticipate that in this current quarter as well as in the next quarter, we're going to see the full weight of those three customers as they onboard our products and that's going to have a significant impact on the division's performance.
Speaker Change: Going forward. This division is going to become the main engine of growth for our business and and as Juan Let me recap and remind you of the three reasons for that.
Ilan Danieli: And as one, let me recap and remind you of the three reasons for that. Number one, occurring every The products generate consistent, reliable income streams, unlike the variability of the pathology. Number two, customer retention. Product customers are committed to their technology, which means there is less likelihood of customer turnover, which in turn contributes to stable and predictable revenue generation. And the last point is margins. The margins for our products are significantly higher than those generated by the Pathology Services Division. Developing products require R&D investment, which in our case, thanks to our Pathology Division, is relatively minimal.
Speaker Change: Number one recurring revenue.
Speaker Change: The products generates consistent reliable income streams. Unlike the variability of the pathology division.
Speaker Change: Number two customer retention.
Speaker Change: Customers are committed to basically boggy, which means there is less likelihood of customer turnover and once you turn contributes to stable and predictable revenue generated.
Speaker Change: And the last point is margins the margins of our products are significantly higher than those generated by the pathology services.
Speaker Change: The balancing products require R&D investments, which in our case with all of them.
It's relatively minimal.
Ilan Danieli: Selling them requires less overhead, simpler operational complexity, and a small sales force and less management attention. This results in a far higher contribution to the bottom line from the products that they produce. The product commercial team consists of three members, and for the foreseeable future, we intend to keep this small team as is. The strategy is to leverage our distribution channel and ultimately reach their full potential. To this date, the majority of our revenues is from direct sales, but going forward, we expect to see a gradual shift, increasing the share of revenue that is generated via our distribution.
Speaker Change: It requires less overhead simple operational complexity and a small sales force unless management attention with adults are higher contribution to the bottom line from the bottom.
Speaker Change: The promise of commercial team.
Speaker Change: Members.
Speaker Change: They have a future we intend to keep it the small team.
Speaker Change: The strategy is to leverage our distribution channel.
Speaker Change: <unk> reached their full potential cause it states the majority of our revenues from direct sales.
Speaker Change: We expect to see a gradual shift we've seen the share of revenue is generated by our distributors.
Ilan Danieli: Although our distributors receive 20% of the margin, we in turn gain access to hundreds of sales reps that are not on our payroll and have access to essentially every customer in the world. With that access, supported by the brand and reach of these distributors, we're able to get in front of many more customers than we would have likely achieved having gone the direct sales route.
Speaker Change: Although our distributions, 20% with margin reinsurance gain access to hundreds of sales reps and all of our payroll and have access to essentially every customer.
Speaker Change: Well with that axis afforded by the brand and beach with distributors were able to get in front of many more customers than we would have likely achieved hadn't gone direct the direct sales.
Ilan Danieli: Moving to our task of the day. In terms of our cash position, as you saw in our filings, our changing cash balance from the end of Q2 to the end of Q3 was $226,000 in cash. This is compared to approximately 1 million of cash burned during the same period in 2023, a reduction of 75% in our cash flow. I don't think there is a better metric to show you the impact of our company growth and improved performance than our cash position as we are rapidly approaching breaking. With our current quarterly performance and our cash balance, at this point, management sees no need for capital raises.
Speaker Change: Moving to our cash position.
Speaker Change: In terms of our cash position cash position as.
Speaker Change: As you saw in our filings our change in cash balance from the end of Q2 to the end of Q3 was 226000 in cash for.
Speaker Change: This is compared to approximately $1 million of cash burn during the same period in 2023, a reduction of 75% in Kashmir.
Speaker Change: I don't think there is a better metric to show you the impact of our company growth and improved performance in our cash position as we are rapidly approaching breakeven.
Speaker Change: With our current quarterly performance and our cash balance at this point and what it sees no need for capital raises.
Ilan Danieli: with This is a very exciting time for us. Our team is working tirelessly to achieve the goal of financial independence and it's exciting to see it within reach. Turning the corner from survival mode to build mode is going to be a very refreshing change for us and we're ready to embrace this new chapter building on the strong foundations we've established.
Speaker Change: With our current market cap, we remain committed to building cash reserves through organic growth and customer shell avoiding shareholder dilution.
Speaker Change: This is a very exciting time for us our team is working tirelessly to achieve the goal of financial independence, and it's exciting to see it within reach turning the corner from survival mode to build those is going to be a very refreshing change for us and where we.
Speaker Change: Ready to embrace this new chapter building on the strong foundation, we've established.
Ilan Danieli: Some of the questions we received revolved around how to translate the company's business performance into future shareholder value. In our analysis, up until now, two main things have held us back, and I'd like to address those. Number one is the risk of continued capital raises and the second is the lack of education of our company's vision and market opportunity within the investor community. I think we've reached a turning point in addressing the first concern. With our business performance, progress toward break-even, and cash reserves, we are now in a position where capital raises to cover cash burn, as we've done in the past, are no longer necessary.
Speaker Change: Some of the questions, we can see evolves around how to translate the company's business performance into future shareholder value.
Speaker Change: Our analysis are still now two main things that held us back.
The addressable.
Speaker Change: One is the risk of any capital raises and the second is the lack of education, our company vision market opportunity within the Investor community.
Speaker Change: I think we can reach a turning point in investing first in China.
Speaker Change: With our business performance progress toward breakeven and cash reserves. We are now in a position where capital raise just a couple of Kathryn as we've done in the past are no longer necessary.
Ilan Danieli: This marks a significant step forward, and we can confidently say that this challenge is behind us.
Speaker Change: Marcia.
Marcia: That's the part we can confidently say that this child is born.
Ilan Danieli: After the lack of education about our company, this is going to change next year. Once the company has achieved several consecutive strong performance quarters, we will then be able to point back to both solid past performance as well as provide investors with insights into what they can expect. This will be done through management guidance on certain parameters such as revenues and EBITDA performance going forward. Our plan also includes participating in investor conferences, building analyst coverage, and other investor-related activities that will help provide more visibility to the company. That, alongside solid and consistent growth and performance, meeting and exceeding our guidance, should hopefully provide a substantial boost to our visibility, increasing trading volume, and ultimately impact our share price, adjusting the market cap to revenue multiples higher than the current split.
Speaker Change: I suppose the lack of education about our company. This is going to change next year.
Once the company has achieved several consecutive strong performance quarters. We will then be able to point back to both solid past performance as long as provides investors with insights into what they can expect this will be done through management guidance on certain parameters, such as revenues and EBITDA performance going forward.
Speaker Change: Our plan also includes participating in investor conferences building analyst coverage and other investor related activities that will help provide more visibility to the company.
Speaker Change: Alongside quality.
Speaker Change: Performance me.
Speaker Change: Meeting and exceeding our guidance should help supervise the stuff still substantial boost poor visibility increase in trading volume and ultimately impact our share price adjusting the market cap the revenue multiple higher.
Speaker Change: But.
Ilan Danieli: In summary, it's really exciting to see the company's orgy smile. We have been through a lot, and as Winston Churchill said, if you're going through hell, keep going. And we did. I think we're going to end the year strong and go into next year even stronger.
Speaker Change: In summary, it's really exciting to see the company towards these milestones.
We have been through a lot of initiatives that you said, you're going through Hell keep going and we did I think we could end the year song and those next year even stronger.
Ilan Danieli: With the holidays approaching, I want to wish everyone a joyous holiday season with family and friends and a Happy New Year to everyone. I'd like to thank you all for your support, and I look forward to connecting with you in our next call in 2025. Happy holidays and have a nice evening. Thank you.
Speaker Change: With the holidays approaching I want to wish everyone, a joyous holiday season with family and friends and.
Speaker Change: And a happy new year.
Speaker Change: I'd like to thank you all for your support and I look forward to connecting with you in our next fall 'twenty. Please.
Speaker Change: All of these and have a nice day. Thank you.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: You may now disconnect.
Speaker Change: Okay.
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Speaker Change: Okay.
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