precipio's 2025 Earnings Call: Gross Margin Projections and Commercial Team Plans at Odds

Date of Call: Apr 2, 2026

Financials Results

• Revenue: $24M, representing a 30% increase year-over-year compared to 2024
• Gross Margin: 45% in 2025, improved year over year from 41% in 2024

Guidance:

• Focus on growing the Products Division in 2026 with a new dedicated sales team.
• Expect continued growth in the Pathology Services business, generating cash for reinvestment into Products.
• Launch a new service combining rapid molecular testing (next day results) for AML, differentiating the platform.
• Aim to move revenue mix from current ~90/10 (Pathology/Products) towards a more balanced split over 3-5 years.

Business Commentary:

Financial Inflection and Growth:

• Precipio delivered $24 million in revenue for 2025, representing a 30% increase year-over-year compared to 2024.
• The growth was driven by the transition from a cash-using company to a self-sustaining business with positive cash flow, achieved through operational leverage and revenue growth primarily in the Pathology Services division.

Operational Leverage and Margin Improvement:

• Overall gross margin improved year-over-year from 41% in 2024 to 45% in 2025.
• This improvement was primarily driven by higher case volumes in the Pathology Services division, a more favorable case mix towards higher-margin tests, and continued operational efficiency.

Product Division Challenges and Strategic Response:

• Product revenues did not grow as expected in 2025 due to customer operational fluctuations and an insufficient commercial team.
• The company plans to address these challenges by strengthening the Products commercial team with new hires and implementing additional business continuity measures.

Increased Investor Engagement:

• In 2025, Precipio engaged with more than 50 unique interactions with investors, family offices, institutional funds, and analysts.
• This increased engagement is part of the company's strategy to communicate its progress and build long-term value for shareholders.

Future Growth Opportunities:

• The company sees significant opportunities to expand its share in the Products Division within an estimated $500 million addressable market annually in the U.S.
• The focus for 2026 is on growth execution, commercial momentum, and increased market share, leveraging both the Pathology Services and Products Division.

Sentiment Analysis:

Overall Tone: Positive

• CEO states '2025 was a year of financial and strategic inflection' and that the company achieved its goal to transition to a self-sustaining business with positive cash flow. He also expresses confidence in the new commercial team, citing 'encouraging progress' and a 'strong and durable business foundation' with 'significant opportunities ahead.'

Q&A:

• Question from Unknown Analyst: What were the main reasons for the lack of growth in the Products Division in 2025?
  Response: Two main causes: customer operational fluctuations (downtime, maternity leave) and an insufficient commercial team (only one senior and one junior sales person).

• Question from Unknown Analyst: How did you address customer operational fluctuations to ensure revenue continuity?
  Response: Implemented a backup testing facility onboarding for new customers, so if they experience interruptions, samples are sent to Precipio's lab, ensuring continuous service and revenue.

• Question from Unknown Analyst: Why did Products Division gross margins leap to 90% in Q4 2025 from 30% in Q3?
  Response: Due to concentrated, strategic production runs to cover anticipated Q1 2026 demand (holiday downtime and equipment maintenance) and dual use of inventory for customer sales and internal lab consumption.

Contradiction Point 1

Gross Margin Trajectory

Contradiction on the company's gross margin target for the near future.

Implied from summary (No direct Q&A) - Implied from summary (No direct Q&A)

2025Q4: Overall gross margin improved from 41% in 2024 to 45% in 2025... The Products Division's gross margin was temporarily impacted... but saw a leap to 90% in Q4 due to concentrated production. - Ilan Danieli(CEO)

What factors influenced the gross margin performance in 2025 and the fluctuation in the Products Division's margins? - Implied from summary (No direct Q&A)

20251118-2025 Q3: Confident that total company gross margin will exceed 50% by mid-2026. - Ilan Danieli(CEO)

Contradiction Point 2

Products Division Revenue Growth Expectations

Contradiction on the growth outlook and strategic focus for the Products Division.

Implied from summary (No direct Q&A) - Implied from summary (No direct Q&A)

2025Q4: Products Division revenue growth was impacted by customer operational fluctuations and an insufficient commercial team... The company has hired a Chief Commercial Officer and two experienced Business Development Officers in January 2026, moving from a defensive to an offensive growth strategy. - Ilan Danieli(CEO)

What factors caused the Products Division's revenues to fall short of expectations in 2025, and what plans are in place for improvement? - Implied from summary (No direct Q&A)

20251118-2025 Q3: No anticipated need for further overhead in the next 12-24 months, with growth fueled by existing infrastructure. - Ilan Danieli(CEO)

Contradiction Point 3

Growth Outlook and Revenue Trajectory

Contradiction on expected revenue growth and financial stability.

Implied from summary (Investor) - Implied from summary (Investor)

2025Q4: The company is now shifting its focus from stabilization to growth and long-term value creation. - Ilan Danieli(CEO)

What were the key financial results and growth strategies for 2025? - Shareholder/Investor

2025Q2: While strong performance is noted, the CEO did not provide specific revenue growth guidance for Q3, focusing instead on the continuation of the positive trend. - Ilan Danieli(CEO)

Contradiction Point 4

Commercial Team Structure and Capacity

Contradiction on the size and readiness of the commercial team for growth.

Implied from summary (Investor) - Implied from summary (Investor)

2025Q4: To address issues, the company has hired a Chief Commercial Officer and two experienced Business Development Officers in January 2026, moving from a defensive to an offensive growth strategy. - Ilan Danieli(CEO)

Why did the Products Division's 2025 revenues not meet expectations, and what is the improvement plan? - Shareholder/Investor

2025Q2: The company's ability to scale was discussed in the context of building a distributor pipeline, with the initial challenge being the lack of early customer wins to prove product value. - Ilan Danieli(CEO)

Contradiction Point 5

Financial Performance & Growth Strategy

Contradiction on the company's cash flow status and growth focus.

[Not specified] - [Not specified]

2025Q4: The company achieved its goal of transitioning from a cash-using company to a self-sustaining business with positive cash flow. The company is now shifting its focus from stabilization to growth and long-term value creation. - Ilan Danieli(CEO)

What were the company's 2025 financial results and growth strategies? - [Operator]

2025Q1: The company expects to return to positive cash flow in Q2 or Q3 and sees a positive outlook for Product revenue growth. - Ilan Danieli(CEO)