Precipio, Inc. (PRPO): A Genetic Testing Breakthrough with Liftoff Potential

Precipio, Inc. (PRPO) just delivered a Q1 2025 earnings report that should ignite investor curiosity. With revenue soaring 43% year-over-year to $4.9 million and a 92% reduction in its adjusted EBITDA loss, the company has positioned itself at a critical inflection point. For investors seeking exposure to the $28 billion genetic testing market—projected to grow at 11% annually through 2030—this is a moment to consider whether Precipio’s operational renaissance and strategic momentum can translate into outsized returns.

The Surge in Genetic Testing Demand: A Tailwind for Precipio

The company’s dual-engine growth model—its Products Division (diagnostic panels) and Pathology Services Division—is perfectly aligned with two megatrends: the shift toward personalized medicine and the Medicare billing expansion enabled by its recent MolDx approval.

• Products Division: Launched two new diagnostic panels in Q1, with two existing customers validating four additional panels. This pipeline momentum is critical as labs increasingly adopt Next-Generation Sequencing (NGS) tools for cancer diagnostics. The FDA’s reversal on LDT regulations has also removed a key barrier, opening doors to 12,000+ U.S. labs that previously hesitated to work with LDT providers.
• Pathology Services: Revenue jumped 54% YoY, fueled by 11 new physician partners and Medicare billing access for NGS tests. With 55 million Medicare beneficiaries, this approval alone could add $20+ million in annual revenue if fully penetrated—a testament to the company’s addressable market.

Margin Expansion: From Survival Mode to Profitability

Precipio’s financial transformation is equally compelling. Gross margins have exploded:
- Products Division: 51% in Q1 vs. 37% in 2024, driven by higher panel sales and operational efficiencies.
- Pathology Services: 42% vs. 24% in 2024, reflecting better cost discipline and volume leverage.

The company’s operating expenses now consume just 61% of revenue versus 87% in 2024, a staggering improvement. Management forecasts positive operating cash flow by Q2/Q3 2025, buoyed by a $400,000 CARES Act refund and seasonal revenue normalization.

Valuation: A Bargain in a High-Growth Sector

With a market cap of $10.84 million (as of May 2025) and trailing twelve-month revenue of ~$16.4 million (annualized Q1), Precipio trades at a Price/Sales ratio of just 0.66x. Compare this to industry peers like Exact Sciences (EXAS) at 1.8x or Invitae (NVTA) at 1.3x—Precipio is deeply undervalued relative to its growth trajectory.

Even more compelling:
- EV/EBITDA: While Q1 still showed a loss, the adjusted EBITDA narrowed to -$108,000 from -$1.4 million in 2024. With Q2’s $400,000 non-recurring gain and accelerating revenue, a positive EV/EBITDA is achievable by mid-2025.
- Share Count: 1.47 million shares outstanding means even modest revenue growth could trigger exponential EPS expansion.

Risks on the Radar

• Execution Risk: The sequential Q1 revenue decline (9.5% vs. Q4) highlights reliance on seasonal factors and distributor onboarding.
• Regulatory Volatility: While the FDA LDT reversal is a win, future regulatory shifts could disrupt momentum.
• Market Penetration: Convincing labs to adopt new panels takes time—though MolDx Medicare access reduces friction here.

Why This Is a Buy Now

Precipio isn’t just another diagnostics play. It’s a high-margin disruptor in a $300 billion global healthcare market where genetic testing is becoming standard-of-care. With:
1. A validated product pipeline (Bloodhound™ MPN panels, CALR mutation subtyping),
2. Medicare billing access unlocking a $20+ million opportunity, and
3. A $0.66 P/S valuation in a sector averaging 1.5x+,

this stock is primed for a re-rating. The path to $50 million revenue by 2026 is achievable if the company maintains its current growth cadence.

The Bottom Line

Precipio’s Q1 results aren’t just a snapshot—they’re a roadmap to profitability in one of healthcare’s fastest-growing niches. With a valuation that ignores its margin trajectory and secular tailwinds, this is a rare buy at $7.00/share. For investors willing to look past short-term noise, Precipio could be the next 10-bagger in precision medicine.

Action Item: Consider initiating a position in PRPO with a 12-18 month horizon, targeting $20+ per share by end-2026.