What drove PRPO's earnings growth in 2023?

Precipio, Inc. (PRPO) experienced a net income growth rate of 0.52% in 2023, with a net income of -$5.85 million for the year. While the company has been working towards profitability, the earnings growth in 2023 was primarily driven by the following factors:

1. Revenue Growth: Precipio has seen significant revenue growth, particularly in its product division. For instance, Q3-2023 revenues doubled from Q3-2022, reaching $4.5 million. This increase was due to new customer acquisitions and the expansion of its product offerings, such as the launch of HemeScreen® technology.
2. Operational Efficiency Improvements: The company has implemented several operational efficiency initiatives that have reduced cash burn and improved profitability. These initiatives include economies of scale in lab services, bringing NGS testing in-house, and transitioning from an outside billing firm to in-house billing. Such improvements have enhanced the company's financial performance and moved it closer to breakeven.
3. Cost Reductions: Precipio has made substantial cost reductions through various operational efficiencies and cost-cutting measures. For example, the transition from an outside billing firm to in-house billing resulted in savings of approximately 4% of revenues, or $0.4 million/year. Similarly, restructuring pathologist fees and transitioning NGS testing in-house have contributed to the reduction in cash burn.
4. Financial Independence: The company's positive adjusted EBITDA and increase in cash flow, as reported in Q4 2024, indicate a step towards financial independence. This financial stability allows Precipio to focus on growth and value creation without relying on external capital infusions.

In summary, PRPO's earnings growth in 2023 was driven by revenue growth, particularly in the product division, operational efficiency improvements, cost reductions, and the company's progress towards financial independence. These factors collectively contributed to the company's net income growth, although it still reported a negative net income for the year.