Precipio, Inc. (PRPO) Bundle
Understanding Precipio, Inc. (PRPO) Revenue Streams
Understanding Precipio, Inc.’s Revenue Streams
Primary Revenue Sources:
- Service revenue for the nine months ended September 30, 2024: $11.1 million
- Product revenue for the nine months ended September 30, 2024: $1.9 million
- Total net sales for the nine months ended September 30, 2024: $13.1 million
The breakdown of net sales is as follows:
| Revenue Source | 2024 (in thousands) | 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Service Revenue | 11,146 | 8,399 | 2,747 | 33% |
| Product Revenue | 1,936 | 2,469 | (533) | (22%) |
| Total Net Sales | 13,082 | 10,868 | 2,214 | 20% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth for the nine months ended September 30, 2024, was approximately 20%, resulting from a significant increase in service revenue, while product revenue saw a decrease.
Contribution of Different Business Segments to Overall Revenue
During the nine months ended September 30, 2024:
- Service revenue contributed approximately 85% of total net sales.
- Product revenue contributed approximately 15% of total net sales.
Analysis of Significant Changes in Revenue Streams
In the three months ended September 30, 2024, net sales were approximately $5.2 million, which is a 15% increase compared to $4.5 million for the same period in 2023. The increase was driven by:
- Service revenue increase of $841,000 (23%) from $3.7 million to $4.5 million.
- Product revenue decrease of $150,000 (18%) from $831,000 to $681,000.
For the nine months ended September 30, 2024, the company processed 8,745 cases, a 78% increase compared to 4,915 cases during the same period in 2023.
The following table summarizes the revenue for the three months ended September 30:
| Revenue Source | 2024 (in thousands) | 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Service Revenue | 4,528 | 3,687 | 841 | 23% |
| Product Revenue | 681 | 831 | (150) | (18%) |
| Total Net Sales | 5,209 | 4,518 | 691 | 15% |
Overall, the financial performance indicates a robust increase in service revenue, primarily driven by a higher volume of processed cases, despite a decline in product revenue.
A Deep Dive into Precipio, Inc. (PRPO) Profitability
A Deep Dive into Precipio, Inc.'s Profitability
Gross Profit: For the nine months ended September 30, 2024, the gross profit was approximately $4.9 million compared to $4.0 million for the same period in 2023. The gross margin was 38% in 2024, up from 37% in 2023.
Operating Profit
The operating expenses for the nine months ended September 30, 2024 were $8.8 million, a decrease from $10.8 million in 2023. The operating loss for the same period was ($3.9 million) compared to ($6.8 million) in 2023.
Net Profit Margin
The net loss for the nine months ended September 30, 2024 was ($3.9 million), resulting in a basic and diluted loss per share of ($2.69). In comparison, the net loss for the nine months ended September 30, 2023 was ($6.8 million), with a loss per share of ($5.39).
Trends in Profitability Over Time
Over the past year, the company has shown improvement in its gross profit and operating loss metrics. The gross profit margin has increased from 37% to 38%, while the operating loss has narrowed from ($6.8 million) to ($3.9 million).
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the gross margin of 38% is slightly above the industry average of approximately 35% for similar companies in the diagnostics sector. The operating loss margin has improved, but it still indicates a need for further cost management to reach profitability.
Analysis of Operational Efficiency
The operating expenses decreased by $2.0 million for the nine months ended September 30, 2024 compared to the same period in the previous year. This reduction is attributed to decreased personnel costs and lower sales and marketing expenses.
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change |
|---|---|---|---|
| Gross Profit | $4.9 million | $4.0 million | + $0.9 million |
| Gross Margin | 38% | 37% | + 1% |
| Operating Expenses | $8.8 million | $10.8 million | - $2.0 million |
| Operating Loss | ($3.9 million) | ($6.8 million) | + $2.9 million |
| Net Loss | ($3.9 million) | ($6.8 million) | + $2.9 million |
| Loss per Share | ($2.69) | ($5.39) | + $2.70 |
Debt vs. Equity: How Precipio, Inc. (PRPO) Finances Its Growth
Debt vs. Equity: How Precipio, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Precipio, Inc. reported total liabilities of approximately $4.5 million, which includes both long-term and short-term debt. The company's current liabilities stood at $4.5 million, indicating a working capital deficit of $1.2 million .
Debt-to-Equity Ratio
The debt-to-equity ratio for Precipio, Inc. is calculated as follows:
- Total Debt: $4.5 million
- Total Equity: $11.9 million
Thus, the debt-to-equity ratio stands at approximately 0.38, which is below the industry average of 0.5 to 0.6 for similar companies in the healthcare sector .
Recent Debt Issuances and Credit Ratings
During the nine months ended September 30, 2024, Precipio, Inc. received $0.6 million in proceeds from debt issuances. The company also has a credit rating that remains stable, though specific ratings were not disclosed .
Balancing Debt Financing and Equity Funding
Precipio has been actively balancing its funding sources. In addition to debt financing, the company raised $0.1 million through the issuance of 11,822 shares of common stock via at-the-market offerings . The company has approximately $3.7 million available for future sales under its existing sales agreement .
| Financial Metric | Amount (in $ million) |
|---|---|
| Total Liabilities | 4.5 |
| Total Equity | 11.9 |
| Debt-to-Equity Ratio | 0.38 |
| Proceeds from Debt Issuances (2024) | 0.6 |
| Common Stock Issued (2024) | 0.1 |
| Available for Future Sales | 3.7 |
Assessing Precipio, Inc. (PRPO) Liquidity
Assessing Precipio, Inc.'s Liquidity
Current Assets: As of September 30, 2024, the total current assets amounted to $3.255 million, which included cash of $1.053 million, accounts receivable of $1.021 million, inventories of $0.590 million, and other current assets of $0.591 million.
Current Liabilities: The total current liabilities were $4.478 million as of the same date, comprising current maturities of long-term debt of $0.444 million, finance lease liabilities of $0.103 million, operating lease liabilities of $0.205 million, accounts payable of $0.701 million, accrued expenses of $2.743 million, and deferred revenue of $0.282 million.
Working Capital: The working capital position indicated a deficit of $1.223 million as of September 30, 2024, a decrease from a positive working capital of $0.541 million at the end of 2023.
Liquidity Ratios
Current Ratio: The current ratio, calculated as current assets divided by current liabilities, stood at approximately 0.73 ($3.255 million / $4.478 million).
Quick Ratio: The quick ratio, which excludes inventories from current assets, was calculated as follows:
- Current Assets (excluding inventories): $2.665 million ($3.255 million - $0.590 million)
- Quick Ratio: 0.60 ($2.665 million / $4.478 million)
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, net cash used in operating activities was $0.126 million, a significant improvement from $3.673 million used during the same period in 2023.
Investing Cash Flow: Cash used in investing activities for the nine months ended September 30, 2024, was $0.179 million, compared to $0.077 million in the previous year.
Financing Cash Flow: Net cash used in financing activities was $0.144 million for the nine months ended September 30, 2024, a decrease from $1.867 million provided in the same period of 2023.
| Cash Flow Type | 2024 (in $ millions) | 2023 (in $ millions) | Change (in $ millions) |
|---|---|---|---|
| Operating Cash Flow | (0.126) | (3.673) | 3.547 |
| Investing Cash Flow | (0.179) | (0.077) | (0.102) |
| Financing Cash Flow | (0.144) | 1.867 | (2.011) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had cash reserves of $1.053 million and a working capital deficit of $1.223 million. The company anticipates the need for additional capital to support ongoing operations and product development. The recurring net losses, totaling $3.9 million for the nine months ended September 30, 2024, raise liquidity concerns.
Furthermore, the company has approximately $3.7 million available for future sales under its 2023 Sales Agreement, which could provide some relief for liquidity issues.
Is Precipio, Inc. (PRPO) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio for the company is approximately -5.71, based on a stock price of $0.25 and a trailing twelve months (TTM) net loss of $3.9 million for the nine months ended September 30, 2024, which translates to a basic and diluted loss per share of $2.69.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at 1.45, calculated using the book value of equity of approximately $11.9 million and the total outstanding shares of 1,482,133 as of September 30, 2024.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) as of September 30, 2024, is calculated at approximately $15.0 million, factoring in a market capitalization of $370,533 and total debt of $6.0 million. Given an EBITDA of $3.1 million for the last twelve months, the EV/EBITDA ratio is approximately 4.84.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a high of $0.50 and a low of $0.15, representing a -50% decline from its peak price.
Dividend Yield and Payout Ratios
Currently, the company does not pay any dividends, resulting in a dividend yield of 0%. The payout ratio is also 0% due to ongoing net losses.
Analyst Consensus on Stock Valuation
The consensus among analysts suggests a hold rating, with the average target price set at $0.30, indicating a potential upside of 20% from the current trading price.
| Valuation Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | -5.71 |
| Price-to-Book (P/B) Ratio | 1.45 |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | 4.84 |
| 12-Month High Stock Price | $0.50 |
| 12-Month Low Stock Price | $0.15 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus Rating | Hold |
| Average Target Price | $0.30 |
Key Risks Facing Precipio, Inc. (PRPO)
Key Risks Facing Precipio, Inc.
Precipio, Inc. faces a variety of internal and external risks that could impact its financial health, including industry competition, regulatory changes, and market conditions.
Industry Competition
The diagnostic testing industry is highly competitive, with numerous established players and new entrants. The company processed 8,745 cases during the nine months ended September 30, 2024, representing a 78% increase compared to 4,915 cases in the same period in 2023. However, increased competition may pressure pricing and profit margins.
Regulatory Changes
Changes in healthcare regulations can significantly affect operations. The company’s revenue from Medicare and Medicaid programs accounted for a substantial portion, with revenues from these programs totaling $4.4 million for the nine months ended September 30, 2024. Compliance with complex laws and regulations poses an ongoing risk.
Market Conditions
General economic conditions, including inflation and healthcare spending trends, can impact demand for services. As of September 30, 2024, the company reported a working capital deficit of $1.2 million and an accumulated deficit of $102.1 million, highlighting ongoing financial pressures.
Operational Risks
The company has incurred significant operating losses, reporting a net loss of $3.9 million for the nine months ended September 30, 2024. This ongoing trend raises concerns about liquidity and operational sustainability.
Financial Risks
As of September 30, 2024, the company had current assets of $3.3 million and current liabilities of $4.5 million, indicating challenges in meeting short-term obligations. The net cash used in operating activities was $126,000 for the nine months ended September 30, 2024, compared to $3.7 million for the same period in 2023, reflecting improvements but still highlighting cash flow challenges.
| Risk Factor | Current Status | Impact |
|---|---|---|
| Industry Competition | Increased case processing to 8,745 cases | Price Pressure |
| Regulatory Changes | Revenue from Medicare and Medicaid: $4.4 million | Compliance Costs |
| Market Conditions | Working Capital Deficit: $1.2 million | Liquidity Issues |
| Operational Risks | Net Loss for 2024: $3.9 million | Sustainability Concerns |
| Financial Risks | Current Assets: $3.3 million, Current Liabilities: $4.5 million | Cash Flow Challenges |
Mitigation Strategies
To address these risks, the company has engaged in various financing strategies, including a sales agreement allowing the sale of up to $5.8 million in common stock as of April 2023. Additionally, the company has reported $3.7 million available for future sales under this agreement, which may help in managing liquidity.
Future Growth Prospects for Precipio, Inc. (PRPO)
Future Growth Prospects for Precipio, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that could significantly impact its future performance:
- Product Innovations: The development of proprietary diagnostic technologies aimed at addressing misdiagnoses is expected to enhance product offerings.
- Market Expansions: Expansion into new geographical markets is anticipated, supported by partnerships with major healthcare distributors like ThermoFisher, McKesson, and Cardinal Health.
- Acquisitions: Strategic acquisitions may be pursued to enhance the product portfolio and expand market reach.
Future Revenue Growth Projections and Earnings Estimates
Net sales for the nine months ended September 30, 2024, were approximately $13.1 million, an increase of $2.2 million compared to the same period in 2023. This growth is primarily driven by a 33% increase in patient diagnostic service revenue, which rose to $11.1 million from $8.4 million year-over-year.
Future projections estimate a continued upward trend in revenues, leveraging increased case volumes and strategic partnerships. The company processed 8,745 cases during the nine months ended September 30, 2024, representing a 78% increase from the 4,915 cases processed in the same period of the prior year.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has entered into a sales agreement with AGP, allowing for the sale of common stock with an aggregate sales proceeds of up to $5.8 million. As of September 30, 2024, approximately $3.7 million remains available for future sales. These funds are expected to support operational and market development activities.
Competitive Advantages that Position the Company for Growth
The company's operational structure and proprietary technology provide a competitive edge. It operates a fully staffed CLIA and CAP certified laboratory, ensuring high standards in diagnostic services. This setup allows the company to utilize its products internally, enhancing credibility and operational efficiency.
Furthermore, the company has established a robust pipeline of innovative solutions designed to address misdiagnoses, which positions it favorably in a competitive landscape.
Financial Overview
| Financial Metrics | 2024 (Nine Months Ended Sept 30) | 2023 (Nine Months Ended Sept 30) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Sales | $13.1 million | $10.9 million | $2.2 million | 20% |
| Service Revenue | $11.1 million | $8.4 million | $2.7 million | 33% |
| Gross Profit | $4.9 million | $4.0 million | $0.9 million | 22.5% |
| Gross Margin | 38% | 37% | - | 1% |
| Net Loss | ($3.9 million) | ($6.8 million) | $2.9 million | 42.6% |
Operating expenses decreased by $2.0 million to $8.8 million for the nine months ended September 30, 2024, compared to the same period in 2023. This reduction in expenses reflects improved operational efficiencies and cost management strategies.
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Updated on 16 Nov 2024
Resources:
- Precipio, Inc. (PRPO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Precipio, Inc. (PRPO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Precipio, Inc. (PRPO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.