iSpecimen Reports Third Quarter 2024 Results

Rhea-AI Summary

iSpecimen reported Q3 2024 financial results with revenue of $2.66M, down from $2.78M in Q3 2023. The company implemented strategic changes including a 1-for-20 reverse stock split to maintain Nasdaq listing and secured a $1M loan facility. Through their Supplier Refresh program, they reduced suppliers from 232 to 75 key partners. Cost-cutting initiatives, including headquarters relocation and headcount reduction, are expected to yield $750,000 in annual savings, with additional Q4 measures projected to save $2.35M annually. Q3 net loss improved to $1.44M compared to $2.11M in Q3 2023.

Positive

• Net loss improved from $2.11M in Q3 2023 to $1.44M in Q3 2024
• Nine-month revenue increased 6% to $7.82M from $7.35M YoY
• Specimen count increased 58% to 8,461 in Q3 2024
• Cost reduction initiatives expected to save $3.1M annually
• Successfully secured $1M loan facility and completed $5M public offering

Negative

• Q3 revenue declined to $2.66M from $2.78M YoY
• Average selling price per specimen decreased 39% in Q3 2024
• Cost of revenue increased by $162,000 in Q3 2024
• Cash position decreased to $1.75M from $5M at end of 2023
• Required 1-for-20 reverse stock split to maintain Nasdaq listing

Insights

Financial Analyst

Analysis of iSpecimen's Q3 2024 results reveals concerning trends despite management's cost-cutting initiatives. Revenue declined to $2.66M from $2.78M year-over-year, with a significant 39% drop in average selling price per specimen. While specimen volume increased by 58%, the lower pricing suggests competitive pressures or a shift to lower-value specimens.

The company's cash position has deteriorated to $1.75M from $5M at year-end 2023, though this was partially addressed by a subsequent $5M public offering. Cost-cutting measures totaling $3.1M in annual savings are promising but may not be sufficient given the current burn rate. The supplier reduction strategy from 157 to 75 key suppliers could improve efficiency but also increases concentration risk.

Market Research Analyst

The biospecimen marketplace strategy shows mixed results. While specimen volume growth is strong at 58%, the sharp decline in average selling prices indicates potential market positioning issues. The "Supplier Refresh" program, reducing providers from 157 to 75, suggests a strategic pivot toward quality over quantity, but also raises questions about market coverage and competitive positioning.

The Next Day Quotes program and operational streamlining are positive steps, but the need for additional financing and continued cost-cutting points to underlying business model challenges. The recent $5M offering and cost reductions may provide temporary relief, but sustainable growth requires addressing the core pricing and margin challenges.

LEXINGTON, Mass., Nov. 07, 2024 (GLOBE NEWSWIRE) -- iSpecimen Inc. (Nasdaq: ISPC) (“iSpecimen” or the “Company”), an online global marketplace that connects scientists requiring biospecimens for medical research with a network of healthcare specimen providers, today reported its financial and operating results for the three and nine month periods ended September 30, 2024.

"The third quarter was a period of continued strategic transformation for iSpecimen, primarily driven by several key initiatives," said Tracy Curley, CEO of iSpecimen. "First, we completed a 1-for-20 reverse stock split which helped the Company maintain its Nasdaq listing. Additionally, we secured a $1,000,000 loan facility with favorable terms, an agreement which included access to an additional $1,000,000 revolving credit line tied to a future $5,000,000 financing, which we successfully completed on October 31, 2024.”

"I am particularly pleased with the progress and success of our Supplier Refresh program, which is aimed at streamlining our network and focusing on our most productive relationships. In doing so, we have strategically reduced our supplier base this year by 157 suppliers to 75 key suppliers, with an additional 13 new prospects currently in our pipeline. This focused approach has significantly improved the quality and efficiency of our supplier network, while reducing administrative overhead. Combined with our Next Day Quotes program, these initiatives continue to accelerate our sales velocity and enhance conversion rates. These operational improvements, combined with our cost optimization efforts in the third quarter, which included relocating our headquarters and reducing our headcount, are expected to yield over $750,000 in annual savings. As we move closer to a cash flow neutral position we have continued our cost cutting efforts into the fourth quarter. Through November 2024, we have executed additional activities that are expected to yield an additional estimated $2,350,000 in annual savings. In aggregate, these actions provide a solid foundation from which to strengthen our position in the biospecimen industry and drive shareholder value.”

Third Quarter and Nine Month 2024 Highlights

• iSpecimen secured a $1,000,000 loan, which included an additional $1,000,000 revolving credit line tied to a future $5,000,000 public offering;
• During the first nine months of 2024, iSpecimen terminated 157 suppliers, ending the third quarter with 107 suppliers, 75 of which are considered key suppliers;
• iSpecimen appointed three new outside directors; Richard Paolone, Avtar Dhaliwal and board chair Katie Field;
  

Subsequent Events

• On October 1, 2024, iSpecimen received a notification from Nasdaq stating that the Company had regained compliance with Listing Rule 5559(a)(2) based on the Company maintaining a closing bid price of our common stock was $1.00 per share or greater for 11 consecutive business days.
• On October 31, 2024, iSpecimen announced the closing of a $5,000,000 public offering of the Company’s common stock and pre-funded warrants.
• During the 4^th quarter, through November 2024, the Company has continued its cost-cutting efforts that are expected to result in an additional estimated $2,350,000 in annual savings for the Company.
  

Financial Results for the Three and Nine Months Ended September 30, 2024

For the three months ended September 30, 2023, iSpecimen had revenue of approximately $2,660,000, compared with approximately $2,780,000 for the three months ended September 30, 2023. This result was primarily due to a 39% decrease in average selling price per specimen for the third quarter of 2024, compared with approximately $518 for the same period in 2023. The decrease in the average selling price per specimen was offset by a 58% increase in specimen count to 8,461 specimens for the three months ended September 30, 2024, compared with 5,367 specimens for the same period last year.

For the nine months ended September 30, 2024, revenue increased by approximately $463,000, or 6%, to $7,820,000, from approximately $7,350,000 for the same period in 2023. This was result was primarily due to a 942, or 5%, increase in specimen count, to 19,620 specimens, compared with 18,678 specimens for same period in 2023. The average selling price per specimen also increased by approximately $4, or 1%, to $398 for the nine months ended September 30, 2024, compared with approximately $394 for the same period last year.

For the three months ended September 30, 2024, cost of revenue increased by approximately $162,000 to $1,550,000, compared with approximately $1,390,000 for the same period in 2023. This result was attributable to an approximately 58% increase in the number of specimens accessioned for the three months ended September 30, 2024, compared with the same period in the prior year, offset by an approximately $76, or 29%, decrease in the average cost per specimen for the recent nine month period.

For the nine month period ended September 30, 2024, cost of revenue increased by approximately $586,000 to $3,980,000, compared with approximately $3,390,000 for the same period in 2023. This result was attributable to a $21, or 12%, increase in the average cost per specimen and a 5% increase in the number of specimens accessioned, compared with the same period in the prior year.

For the three month period ended September 30, 2024, general and administrative expenses decreased by approximately $209,000, or 19%, to approximately $893,000, compared with approximately $1,100,000 for same period in 2023. The decrease was attributable to decreases in compensation costs of approximately $172,000, general operating expenses of approximately $71,000, professional fees of approximately $20,000, utilities and facilities expenses of approximately $16,000, and depreciation and amortization of approximately $7,000, partially offset by increases in taxes and insurance of approximately $57,000 and bad debt expense of approximately $20,000.

For the nine months ended September 30, 2024, general and administrative expenses decreased approximately $470,000, or 10%, to approximately $4,050,000 compared with approximately $4,520,000 for the nine months ended September 30, 2023. The period over period decrease was attributable to decreases in compensation costs of approximately $470,000, general operating expenses of approximately $175,000, depreciation and amortization of approximately $51,000, bad debt expense of approximately $37,000, utilities and facilities expenses of approximately $26,000, which were partially offset by increases in taxes and insurance of approximately $148,000 and professional fees of approximately $141,000.

For the third quarter ended September 30, 2024, net loss was approximately $1,440,000, or $(2.10) per share, for the third quarter of 2024, compared with a net loss of approximately $2,110,000, or $(4.66) per share, for the third quarter of 2023. For the nine months ended September 30, 2024, net loss was approximately $6,450,000, or $(11.30) per share, compared with a net loss of approximately $8,030,000, or $(17.78) per share, for the first nine months of 2023.

As of September 30, 2024, cash and cash equivalents, as well as available for sale securities, were approximately $1,750,000, compared with approximately $5,000,000 as of December 31, 2023.

About iSpecimen
iSpecimen (Nasdaq: ISPC) offers an online marketplace for human biospecimens, connecting scientists in commercial and non-profit organizations with healthcare providers that have access to patients and specimens needed for medical discovery. Proprietary, cloud-based technology enables scientists to intuitively search for specimens and patients across a federated partner network of hospitals, labs, biobanks, blood centers and other healthcare organizations. For more information, please visit www.ispecimen.com.

Forward Looking Statements
This press release may contain 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. Such forward-looking statements are characterized by future or conditional verbs such as "may," "will," "expect," "intend," "anticipate," “believe," "estimate," "continue" or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information.

Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to the risk factors contained in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. Forward-looking statements speak only as of the date they are made. New risks and uncertainties arise over time, and it is not possible for the Company to predict those events or how they may affect the Company. If a change to the events and circumstances reflected in the Company's forward-looking statements occurs, the Company's business, financial condition and operating results may vary materially from those expressed in the Company's forward-looking statements.

Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

For further information, please contact:

Investor Contact
KCSA Strategic Communications
Phil Carlson
iSpecimen@kcsa.com

iSpecimen Inc.
Condensed Balance Sheets

		September 30, 2024				December 31, 2023
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents		$	1,751,854			$	2,343,666
Available-for-sale securities			—				2,661,932
Accounts receivable – unbilled			1,654,019				2,212,538
Accounts receivable, net of allowance for doubtful accounts of $639,116 and $520,897 at September 30, 2024 and December 31, 2023, respectively			974,383				728,388
Prepaid expenses and other current assets			277,579				292,079
Total current assets			4,657,835				8,238,603
Property and equipment, net			102,803				127,787
Internally developed software, net			5,357,188				6,323,034
Other intangible assets, net			764,589				908,255
Operating lease right-of-use asset			342,107				193,857
Security deposits			39,701				27,601
Total assets		$	11,264,223			$	15,819,137
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	4,055,332			$	3,925,438
Accrued expenses			1,022,373				1,540,607
Senior note payable, net of debt discount			864,425				—
Operating lease current obligation			42,513				167,114
Deferred revenue			283,571				415,771
Total current liabilities			6,268,214				6,048,930
Operating lease long-term obligation			281,437				29,130
Total liabilities			6,549,651				6,078,060
Commitments and contingencies (See Note 9)
Stockholders’ equity
Common stock, $0.0001 par value, 200,000,000 shares authorized, 831,373 issued and 829,823 outstanding at September 30, 2024 and 455,719 issued and 454,169 outstanding at December 31, 2023			83				45
Additional paid-in capital			70,530,467				69,105,176
Treasury stock, 1,550 shares, at cost			(172	)			(172	)
Accumulated other comprehensive income			—				840
Accumulated deficit			(65,815,806	)			(59,364,812	)
Total stockholders’ equity			4,714,572				9,741,077
Total liabilities and stockholders’ equity		$	11,264,223			$	15,819,137

iSpecimen Inc.
Condensed Statements of Operations and Comprehensive Loss
(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Revenue		$	2,661,936			$	2,777,751			$	7,815,608			$	7,353,090
Operating expenses:
Cost of revenue			1,554,159				1,392,534				3,978,557				3,393,079
Technology			754,730				921,580				2,578,624				2,599,086
Sales and marketing			631,625				897,433				2,380,515				2,972,757
Supply development			84,972				186,176				420,322				801,038
Fulfillment			449,142				471,735				1,293,185				1,363,427
General and administrative			892,712				1,102,373				4,051,994				4,522,028
Total operating expenses			4,367,340				4,971,831				14,703,197				15,651,415
Loss from operations			(1,705,404	)			(2,194,080	)			(6,887,589	)			(8,298,325	)
Other income, net
Interest expense			(7,364	)			(4,465	)			(16,303	)			(11,535	)
Interest income			1,235				67,362				40,896				292,506
Other income (expense), net			271,680				20,082				412,002				(9,173	)
Total other income, net			265,551				82,979				436,595				271,798
Net loss		$	(1,439,853	)		$	(2,111,101	)		$	(6,450,994	)		$	(8,026,527	)
Other comprehensive income (loss):
Net loss		$	(1,439,853	)		$	(2,111,101	)		$	(6,450,994	)		$	(8,026,527	)
Unrealized gain (loss) on available-for-sale securities			—				(47	)			(840	)			641
Total other comprehensive income (loss)			—				(47	)			(840	)			641
Comprehensive loss		$	(1,439,853	)		$	(2,111,148	)		$	(6,451,834	)		$	(8,025,886	)
Net loss per share - basic and diluted		$	(2.10	)		$	(4.66	)		$	(11.30	)		$	(17.78	)
Weighted average shares of common stock outstanding - basic and diluted			687,141				453,267				570,693				451,487

FAQ

What was iSpecimen's (ISPC) revenue in Q3 2024?

iSpecimen reported revenue of $2.66 million in Q3 2024, compared to $2.78 million in Q3 2023.

How much cost savings does ISPC expect from their 2024 initiatives?

iSpecimen expects annual savings of $750,000 from Q3 initiatives and an additional $2.35 million from Q4 2024 cost-cutting measures, totaling approximately $3.1 million in annual savings.

What was ISPC's net loss per share in Q3 2024?

iSpecimen reported a net loss of $2.10 per share in Q3 2024, compared to $4.66 per share in Q3 2023.

How many suppliers does ISPC have after their Supplier Refresh program in 2024?

After the Supplier Refresh program, iSpecimen reduced their supplier base to 75 key suppliers, down from 232 suppliers.