iSpecimen Inc. Q2 FY2023 earnings call

• Second quarter operational initiatives: Completed business structure realignment, saw improved quote to purchase order ratio and reversed downward receivable payment trend. - Revenue-enhancing projects: Sequencing pilot launched with ~300 samples, expecting revenue from initial batch end of Q3 2023; embedded coordinators project progressing, with sites in various stages of deployment; remnant project advancing with technology build-out to flag sample requests; next-day quotes initiative underway, expected to be operational by end of third quarter. - Technology advancements: Updating search functionality, user interface, increasing automation, enhancing matchmaking, working on electronic medical record integration, upgrading back-end architecture for growth, and evolving matchmaking algorithm using historical data.

In the second quarter of 2023, iSpecimen reported approximately $1.6 million in revenue compared to approximately $2.3 million in the same period of 2022. The decrease in revenue was due to a 33% decrease in specimen count from 7,004 specimens in Q2 2022 to 4,682 specimens in Q2 2023, offset by a 4% increase in average selling price per specimen. For the six-month period ended June 30, 2023, revenue was approximately $4.6 million compared to $4.9 million in the same period of 2022. This was attributable to a 16% decrease in average selling price per specimen, offset by a 12% increase in specimen count. Cost of revenue decreased by 15% in Q2 2023 compared to Q2 2022, and by 8% for the six-month period ended June 2023 compared to the same period in 2022. Technology spend increased in both the three-month and six-month periods ended June 2023 compared to the prior year periods.

• Expect to offer next-day quotes by end of third quarter, which is expected to positively impact quarterly results. - Begin seeing meaningful revenue contribution from revenue-enhancing projects in the second half of the year. - Aim to be cash flow neutral by end of 2023 and cash flow positive in 2024. - Continue with planned technology investments to advance the iSpecimen Marketplace.

• Economic environment uncertainty and industry-wide downturn negatively impacting business. - Risk of lower-than-expected conversion of quotes to purchase orders. - Potential delay in customer receivable payments. - Uncertainty regarding the effectiveness of technology investments and revenue-enhancing projects.

Q: What impact are you seeing from your customers relating to the decline in funding for small pharma and biotech companies and are you experiencing any impact?

A: Yes, seeing an impact. Implemented changes like reevaluating competitiveness, new customer acquisition campaigns focused on certain life science companies, and adjusting marketing pushes and follow-up cadences. Conversion rates have gone up relatively about 50%.

Q: What were the pivots to new initiatives mentioned and will you be able to replicate the success going forward into any other areas?

A: Pivots included looking at competitive pricing, new customer acquisition, conversion drivers from quote to PO, and remnant and bank focus. Actions like becoming more competitive on quotes, new lead campaigns, accelerating next-day quote effort, and focusing sales and marketing on remnant and bank areas. The next-day quoting piece is a big thing and the actions taken provided immediate results with trends seen in data analytics, and it's expected to be replicated in other areas as the initiatives are effective.