Precipio’s Q4-2023 Cash Burn From Operations (unaudited) drops below $100K for the full quarter
- None.
- Q1-2024 may not demonstrate the same results due to seasonal declines in the pathology business during year-end holidays and insurance plan resets at the start of the calendar year.
Insights
Reducing Cash Burn From Operations (CBFO) by over 90% is a substantial achievement for Precipio, Inc., indicating a significant improvement in operational efficiency. The company's approach to reaching breakeven is a critical milestone for investors to consider. The ability to sustain such a low level of cash burn without increasing accounts payable (AP) suggests strong cash management and potentially improved leverage in negotiating terms with suppliers and partners.
However, the cautionary note regarding potential variability in Q1-2024 is crucial. Seasonal declines and insurance deductible resets could affect liquidity. Investors should be aware that while the Q4-2023 performance is promising, it may not be indicative of consistent future results. The lag in insurance payments could strain short-term cash flows and this operational hiccup must be factored into forecasts and valuations.
The context provided regarding the pathology business's seasonal nature offers insight into the company's revenue cycles. Understanding that patient volumes can fluctuate based on psychological and behavioral factors, such as postponing diagnoses during holidays, is essential for predicting future revenue streams. It is also indicative of the broader healthcare diagnostics market, where patient volumes and insurance cycles can significantly impact operational cash flow.
Moreover, the CEO's confidence in the business model and the emphasis on operating efficiencies reflect a strategic focus that could resonate with investors interested in long-term growth potential. The company's ability to increase market share in the specialty cancer diagnostics field hinges on maintaining these efficiencies and capitalizing on high variable margins.
The mention of high variable margins generated by product sales is noteworthy. In the specialty cancer diagnostics market, margins are often a function of the value and differentiation of the diagnostic services provided. Precipio's confidence in closing the remaining gap to achieve breakeven suggests that its services are not only in demand but also that they have managed to optimize the cost structure associated with delivering these services.
For stakeholders, the emphasis on quality service and business development is reassuring, as these are pillars of sustainable growth in the medical industry. The company's focus on converting business operations into cash is indicative of a strategy that prioritizes financial health alongside innovation and market expansion.
Results clearly demonstrate the business’s ability to reach breakeven in the near future
NEW HAVEN, Conn., Jan. 23, 2024 (GLOBE NEWSWIRE) -- Specialty cancer diagnostics company Precipio, Inc. (NASDAQ: PRPO) announces that continued revenue growth generated cash levels that bring the company closer to breakeven. Cash Burn From Operations (CBFO) declined by over
Precipio’s end of quarter cash balance changed from approximately
While management is pleased with this accomplishment which continues to move the company forward towards breakeven, it cautions that Q1-2024 may not demonstrate the same results, for several reasons.
First, the pathology business typically experiences a seasonal decline during the year-end holidays, which would impact revenue and cash receipts going into the start of Q1-2024. Basic human psychology has taught us that people tend to prefer to put off “bad news” (such as being diagnosed with cancer) until after the holidays. Subsequently, new patient visits to our customers decline, and with it drops the biopsy volume received in our laboratory.
Second, many insurance plans reset at the start of the calendar year. This means that patients must first meet their deductibles before insurance payments begin to kick in. While historically we have not seen an adverse impact in overall cash collection rates, we have experienced a lag of 30-60 days in the receipt of payments from some insurance carriers, which will impact cash receipts in Q1 of 2024.
Notwithstanding the above mentioned “seasonal” effects, the Q4-2023 CBFO results demonstrate the company’s ability to approach cash flow breakeven. With the high variable margins generated by product sales, management believes that achieving incremental growth to close the remaining gap is very much attainable.
“Seeing the results of our business impact cash flow in this way is extremely promising, and further validates our business model. I’m proud of my team for their continued hard work in business development and providing high quality service to our customers; but also in achieving increased operating efficiencies, which are resulting in the successful conversion of the business operations into cash,” said Ilan Danieli, Precipio’s CEO, “Results like these strengthen our confidence in our company’s ability to reach financial independence, and continue to grow and invest in our business to capture significant market share.”
About Precipio
Precipio is a healthcare biotechnology company focused on cancer diagnostics. Our mission is to address the pervasive problem of cancer misdiagnoses by developing solutions in the form of diagnostic products and services. Our products and services deliver higher accuracy, improved laboratory workflow, and ultimately deliver better patient outcomes which reduce healthcare expenses. Precipio develops innovative technologies in our clinical laboratory where we design, test, validate, and run these products intended to improve diagnostic outcomes. Precipio then commercializes its technologies as proprietary products that serve the global laboratory community and further scales Precipio’s reach to eradicate misdiagnosis. For more information, please visit www.precipiodx.com.
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Forward-Looking Statements
This press release contains “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. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding the targets set herein and related timing.
Except for historical information, statements about future volumes, sales, growth, costs, cost savings, margins, earnings, earnings per share, diluted earnings per share, cash flows, plans, objectives, expectations, growth or profitability are forward-looking statements based on management’s estimates, beliefs, assumptions and projections. Words such as “could,” “may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic and financial performance, are intended to identify such forward-looking statements. These forward-looking statements are only predictions based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and our other reports filed with the U.S. Securities and Exchange Commission. Any such forward-looking statements represent management’s estimates as of the date of this press release only. While we may elect to update such forward-looking statements at some point in the future, except as required by law, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
FAQ
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