iSpecimen Inc. Q3 FY2023 earnings call

• The company has been rightsizing the business, with a 20% reduction in workforce on September 6, resulting in monthly head count expenses expected to decrease by ~29% and other monthly operational costs expected to decrease by ~52% for the remainder of the year.
• Completed implementation of the next-day quote program in Q3 2023, which led to a 122% increase in quote to purchase order conversion.
• Expanded global provider network, adding 13 new suppliers in Q3 and further expanding to support women's health research, while winding down relationships with certain suppliers in Q4 to strengthen specimen capabilities.
• Launched sequencing procurement program and embedded coordinator program. The sequencing procurement program has an exclusive inventory of cancer sequence specimens and is positioned to serve a high-growth market. The embedded coordinator project, initially planned to have 12 coordinators, was adjusted to a pilot program with 4 large supplier sites, expected to drive additional revenue.

For the third quarter of 2023, iSpecimen reported $2.8 million in revenue compared to $2.6 million in the third quarter of 2022 and $1.6 million in the second quarter of 2023. The 3-month period compared to the same period last year increased by $195,000 or 8%, and compared to the second quarter of 2023 increased by $1.2 million or 75%. The increase in revenue was primarily due to an 11% increase in specimen count from 4,840 specimens in the 3 months ended September 30, 2022 to 5,367 specimens in the 3 months ended September 30, 2023, partially offset by a 3% decrease in average selling price per specimen. For the 9-month period ended September 30, 2023, revenue was $7.35 million compared to $7.44 million in the same period last year. The slight decrease was due to an 11% decrease in average selling price per specimen offset by an 11% increase in specimen count from 16,768 specimens in the 9 months ended September 30, 2022 to 18,678 specimens in the 9 months ended September 30, 2023.

• Expect to be cash flow neutral by the end of the year, with efforts focused on meeting revenue goals and continuing cost reduction.
• In 2024, focus on revenue growth, including delivering on new services, and continuing to build out the technology platform as part of the investment in the transformational online biospecimen marketplace.

Forward-looking statements are subject to numerous conditions beyond the company's control, as set forth in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2022, filed with the SEC. Actual results may differ materially from forward-looking statements.

Q: What has been the feedback from customers regarding the sequencing service?

A: There has been an overwhelming positive response, with an ~75% to 100% response rate from customers, and interest from sequencing companies. The program was tailored to a market deficit identified through research.

Q: How should we think about ASPs and margin profile on the sequencing?

A: Margins on the sequencing program are better than the core business. The program is a collaborative effort with suppliers and sequencing partners, and margins are expected to improve over time.