iSpecimen Inc. Q1 FY2024 earnings call

• Streamlined operations, reducing quarterly cash burn; compensation costs down 41% and technology costs down 66% compared to Q1 2023.
• Next-Day Quotes Program: 40% of quotes qualified in Q1 2024 (up from 25% in Q3 2023), 50% of purchase orders originated from Next-Day Quotes; prospective collections conversion improved to 91% with 190% increase in purchase order dollar value from Q4 2023.
• Supplier network refresh: Reduced supplier count from 243 to 140 by terminating lower-value contracts; working with remaining suppliers to expand capabilities and add specialized inventory files.
• Embedded coordinator program: 3 sites with embedded coordinators, goal to add more as part of supplier network refresh.
• Cancer sequencing initiative: Inventory of mutation-characterized FFPE cancer tissues, with $1.5 million pipeline of new business from 27 confirmed orders across 65 projects.

For the quarter ended March 31, 2024, revenue was approximately $2.3 million compared to approximately $3 million for the same period in 2023. The decrease in revenue was primarily due to a 39% drop in specimen count, from 8,629 specimens in Q1 2023 to 5,241 in Q1 2024, but the average selling price per specimen increased by 28% ($342 to $437). Cost of revenue decreased by 13% to approximately $1 million. Technology expenses increased by 9%, sales and marketing expenses decreased by 31%, and general and administrative expenses increased by 16%. Cash used in Q1 2024 was $2.5 million, with $1.2 million from one-time events.

• Set stage for revenue growth in second half of 2024 and beyond by strategically reducing expenditures and focusing on key market opportunities.
• Burn rate improved significantly; without one-time charges, Q1 2024 burn rate would be ~$400,000 per month.
• Plan to continue expanding Next-Day Quotes Program and adding embedded coordinators to drive growth.

• Forward-looking statements subject to uncertainties beyond the company's control, as outlined in the 10-K.
• Dependence on successful execution of supplier network refresh and Next-Day Quotes Program for revenue growth.
• Impact of external factors (e.g., market conditions) on biospecimen demand and procurement.

Q: Maybe first up, a remarkable increase in the conversion rate on your Next-Day Quotes. I'm just curious, is that sustainable? How should we think about, especially as you add several more kind of people embedded with those customers, how will that kind of drive or accelerate growth as the year progresses?

A: Leslie Hoyt stated Next-Day Quotes is sustainable. On banks/remnant, working with suppliers to get inventory data files; on prospective, partnering with sites and adding 3 sites in last 2 months. Tracy Curley added embedded coordinators will help in prospective area.

Q: Similarly, with the reduction in suppliers, how does that change access to samples? Or are your remaining 140 sites? Are they able to increase their supply or some of the things that maybe the prior suppliers weren't capable of providing data on or whatnot.

A: Leslie Hoyt said they have access to more supply with less suppliers. They focus on remaining suppliers, finding they have more capabilities, and halfway through recontracting already have greater supply with fewer suppliers. Terminated suppliers weren't providing quality supply or efficient collaboration.

Q: Bird flu has been hitting the headlines quite a bit here recently. And I'm just curious if that creates an opportunity for you? If so, have you already started to work with some of your supplier network to ramp up their capabilities sort of obtaining samples and the necessary data? Are you already seeing demand on the purchasing side of those types of samples.

A: Tracy Curley and Leslie Hoyt responded they have not yet seen demand from bird flu but will follow up after the call.