Precipio's Q1 2025: Unpacking Contradictions on FDA Impact, Revenue Growth, and Margin Improvements

Impact of FDA ruling on product division, seasonal impact and revenue growth expectations, revenue growth expectations, earnings and cash flow improvement, product division's margin improvement are the key contradictions discussed in Precipio's latest 2025Q1 earnings call.



Strong Financial Performance Amid Seasonal Pressures:
- Precipio, Inc. reported revenue of $4.9 million for Q1 2025, up 43% year-over-year, despite a 9.5% decrease from Q4 2024.
- The sequential decline was due to expected seasonal pressures, with insurance plans resetting on January 1st, causing patients to postpone non-urgent testing.

Improved Pathology Services and Margins:
- Precipio's Pathology Services division saw a 46% increase in test volume and 53% growth in revenue year-over-year.
- Gross margins for the division improved from 24% to 42%, driven by increased case volume, scale efficiencies, and operational efficiency.

Regulatory Developments and Revenue Impact:
- Precipio received MolDx approval for its next-generation sequencing (NGS) testing, which allows for billing and cash collection for tests previously run at a loss.
- This approval is estimated to bring in approximately $250,000 per quarter in increased revenue and cash receipts, enhancing profitability.

Product Division Growth Pipeline:
- Precipio onboarded one new customer and launched two new diagnostic panels in Q1, with two customers beginning evaluations for four additional panels collectively.
- The company expects order volumes to increase in Q2 and beyond, driven by investment in sales channels and customer meetings.