bioAffinity Technologies Announces Targeted Actions to Cut $4 Million in Costs and Drive CyPath® Lung Sales Growth

Rhea-AI Summary

bioAffinity Technologies (NASDAQ: BIAF) has announced strategic cost-cutting measures expected to save approximately $4 million annually at its subsidiary Precision Pathology Laboratory Services (PPLS). The company is implementing:

• 38% workforce reduction in non-CyPath® Lung personnel at PPLS
• Operational efficiency improvements
• Discontinuation of low-margin pathology services

The restructuring aims to accelerate commercial growth of CyPath® Lung, their noninvasive early-stage lung cancer detection test. While these actions will decrease revenue, they are expected to improve PPLS's profitability by focusing on CyPath® Lung and high-value service lines. The company plans to launch a focused government marketing program next quarter, targeting Veterans Administration and Department of Defense medical centers, following CyPath® Lung's availability through the Federal Supply Schedule.

Positive

• Expected $4M annual cost savings
• CyPath® Lung showing year-over-year sales growth
• Access to government contracts through Federal Supply Schedule
• Focus shift to higher-margin services

Negative

• 38% workforce reduction at PPLS subsidiary
• Expected decrease in revenue
• Discontinuation of certain pathology services

Insights

Financial Analyst

bioAffinity's strategic restructuring represents a significant pivot toward operational efficiency with a dual focus on cost reduction and commercial growth for their lead product. The $4 million in annual cost savings—achieved through a 38% workforce reduction at their PPLS subsidiary and operational streamlining—signals management's commitment to improving the company's financial position.

While the company acknowledges expected revenue decreases from discontinuing low-margin pathology services, this calculated trade-off aims to improve overall profitability by concentrating resources on high-margin offerings, particularly their CyPath® Lung diagnostic. This strategic refocusing suggests management has identified specific growth opportunities that warrant resource reallocation.

The announcement of CyPath® Lung's availability through the Federal Supply Schedule is particularly noteworthy, as government contracts can provide stable, recurring revenue streams. Their planned marketing initiative targeting Veterans Administration and Department of Defense medical centers could significantly expand their addressable market.

The company's ability to simultaneously reduce costs while maintaining their R&D roadmap (including plans for FDA pivotal trials and development of additional diagnostics for COPD and asthma) indicates this isn't merely defensive cost-cutting but rather strategic repositioning. However, investors should monitor whether the claimed year-over-year sales growth for CyPath® Lung accelerates following these changes, as this will be the true measure of whether this restructuring achieves its intended outcomes.

• Proactive steps reinforce bioAffinity Technologies’ laser focus on accelerating CyPath® Lung sales growth in strategic national markets
• Decreases labor and overhead costs, including 38% workforce reduction in non-CyPath® Lung personnel at Company’s subsidiary laboratory

SAN ANTONIO--(BUSINESS WIRE)-- bioAffinity Technologies, Inc. (Nasdaq: BIAF; BIAFW), a biotechnology company focused on the need for noninvasive tests for the detection of early-stage lung cancer and other lung diseases, today announced targeted strategic actions to improve financial performance and accelerate the commercial growth of CyPath® Lung, the Company’s noninvasive test for early-stage lung cancer. The Company expects these measures to deliver approximately $4 million in annual cost savings at its subsidiary Precision Pathology Laboratory Services (PPLS), while increasing resources to expand CyPath® Lung sales in high-potential national markets.

“Following our acquisition of PPLS, we embarked on a deliberate and strategic review as part of our commitment to optimizing operations and accelerating CyPath® Lung sales. We believe our changes at PPLS support and enhance bioAffinity’s commercial strategy to fast-track market expansion and sales of CyPath® Lung while continuing to provide PPLS clients with exceptional anatomical pathology services as it has done for more than 25 years,” bioAffinity President and CEO Maria Zannes said. “We will continue to rely on the combined innovation and expertise of both bioAffinity and PPLS employees to achieve our planned 2025 milestones, including starting enrollment for the FDA pivotal trial for CyPath® Lung and development of additional noninvasive diagnostics, including tests for COPD and asthma.”

Specifically, bioAffinity Technologies expects to achieve the majority of the $4 million in cost savings on an annual run rate through:

• Labor cost reductions, including an approximately 38% workforce reduction at PPLS;
• Operational efficiency enhancements, such as reduced direct costs for purchased services and supplies; and,
• A focus on high-margin services by discontinuing certain pathology services with suboptimal profit margins.

With year-over-year sales growth, CyPath® Lung remains the focal point of bioAffinity’s commercial strategy. “Although these actions are expected to result in a decrease in revenue, they are also expected to improve profitability at our PPLS subsidiary by focusing on CyPath® Lung and other high-value service lines,” bioAffinity Chief Financial Officer Michael Edwards said.

“Our strategic adjustments today enhance our readiness to serve the market for noninvasive lung cancer detection in both civilian and military healthcare systems, and we continue to see increasing sales as more and more physicians incorporate CyPath® Lung into their protocol for patients at high risk for lung cancer,” Maria Zannes, President and Chief Executive Officer, said. “With CyPath® Lung now available for purchase through the Federal Supply Schedule, we intend to launch a focused government marketing program next quarter to introduce the test to Veterans Administration and Department of Defense medical centers.”

About CyPath® Lung

CyPath^® Lung uses proprietary advanced flow cytometry and artificial intelligence (AI) to identify cell populations in patient sputum that indicate malignancy. Automated data analysis helps determine if cancer is present or if the patient is cancer-free. CyPath® Lung incorporates a fluorescent porphyrin that is preferentially taken up by cancer and cancer-related cells. Clinical study results demonstrated that CyPath® Lung had 92% sensitivity, 87% specificity and 88% accuracy in detecting lung cancer in patients at high risk for the disease who had small lung nodules less than 20 millimeters. Diagnosing and treating early-stage lung cancer can improve outcomes and increase patient survival. For more information, visit www.cypathlung.com.

About bioAffinity Technologies, Inc.

bioAffinity Technologies, Inc. addresses the need for noninvasive diagnosis of early-stage cancer and other diseases of the lung and broad-spectrum cancer treatments. The Company’s first product, CyPath® Lung, is a noninvasive test that has shown high sensitivity, specificity and accuracy for the detection of early-stage lung cancer. CyPath® Lung is marketed as a Laboratory Developed Test (LDT) by Precision Pathology Laboratory Services, a subsidiary of bioAffinity Technologies. For more information, visit www.bioaffinitytech.com.

Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements" within the meaning of the federal securities laws. Words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "predict," "forecast," "project," "plan," "intend" or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. These forward-looking statements are based upon current estimates and assumptions and include statements regarding the measures to deliver approximately $4 million in cost savings at Precision Pathology Laboratory Services (PPLS), while increasing resources to expand CyPath® Lung sales in high-potential national markets; changes at PPLS supporting and enhancing bioAffinity’s commercial strategy to fast-track market expansion and sales of CyPath® Lung while continuing to provide PPLS clients with exceptional anatomical pathology services as it has done for more than 25 years; continuing to rely on the combined innovation and expertise of both bioAffinity and PPLS employees to achieve planned 2025 milestones, including starting enrollment for the FDA pivotal trial for CyPath® Lung and development of additional noninvasive diagnostics, including tests for COPD and asthma; achieving the $4 million in cost savings on an annual run rate through labor cost reductions, operational efficiency enhancements and focus on high margin services; the actions resulting in a decrease in revenue and improvement in profitability; the continued increase in sales; and launching a focused government marketing program next quarter to introduce the test to Veterans Administration and Department of Defense medical centers. These forward-looking statements are subject to various risks and uncertainties, many of which are difficult to predict, that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, among others, the targeted actions having the desired results, including a $4 million cost savings and improvement in profitability, the ability to increase market expansion; the ability to start enrollment for the FDA pivotal trial for CyPath® Lung and development of additional noninvasive diagnostics in 2025; and the other factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and its subsequent filings with the SEC, including subsequent periodic reports on Forms 10-Q and 8-K. Such forward-looking statements are based on facts and conditions as they exist at the time such statements are made and predictions as to future facts and conditions. While the Company believes these forward-looking statements are reasonable, readers of this press release are cautioned not to place undue reliance on any forward-looking statements. The information in this release is provided only as of the date of this release, and the Company does not undertake any obligation to update any forward-looking statement relating to matters discussed in this press release, except as may be required by applicable securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250306388376/en/

bioAffinity Technologies

Julie Anne Overton

Director of Communications

jao@bioaffinitytech.com



Investor Relations

Dave Gentry

RedChip Companies Inc.

1-800-RED-CHIP (733-2447) or 407-491-4498

BIAF@redchip.com

Source: bioAffinity Technologies, Inc.

FAQ

How much cost reduction is bioAffinity Technologies (BIAF) targeting through its strategic actions?

bioAffinity Technologies aims to cut approximately $4 million in annual costs through workforce reduction and operational efficiency improvements at its PPLS subsidiary.

What percentage of workforce reduction is planned at BIAF's PPLS subsidiary?

The company is implementing a 38% workforce reduction specifically in non-CyPath® Lung personnel at its PPLS subsidiary.

When will BIAF launch its government marketing program for CyPath® Lung?

bioAffinity Technologies plans to launch its focused government marketing program in the next quarter, targeting VA and DoD medical centers.

What are bioAffinity Technologies' (BIAF) planned milestones for 2025?

BIAF's 2025 milestones include starting enrollment for the FDA pivotal trial for CyPath® Lung and developing additional diagnostics for COPD and asthma.