PRPO 10-K & 10-Q changes, risk factors and insider trading
Precipio, Inc. · Nasdaq · Laboratory Analytical Instruments · CIK 1043961 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our ability to expand our business may depend on access to additional capital.”
New heading “We may become subject to costly litigation, which could adversely affect our business, financial condition and results of operations.”
New heading “We need to ensure strong product performance and reliability to maintain and grow our business.”
New heading “The use of artificial intelligence in diagnostic or laboratory applications may subject us to additional regulatory and liability risks.”
Removed heading “We may require significant additional financing to sustain our operations and without it we will not be able to continue operations.”
Removed heading “We may need to raise substantial additional capital to commercialize our diagnostic technology, and our failure to obtain funding when needed may force us to delay, reduce or eliminate our product development programs or collaboration efforts or force us to restrict or cease operations.”
Removed heading “We have incurred losses since our inception and may incur losses in the foreseeable future. We cannot be certain that we will achieve or sustain profitability.”
Removed heading “We have been, and may continue to be, subject to costly litigation.”
Removed heading “The U.S. Congress, the Trump administration, or any new administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business.”
Removed heading “The sale or issuance of our common stock to, or through, AGP may cause significant dilution and the sale of the shares of common stock acquired by AGP, or the perception that such sales may occur, could cause the price of our common stock to fall.”
Removed heading “We have issued a substantial number of warrants and equity awards from our equity plans which are exercisable into shares of our common stock which could result in substantial dilution to the ownership interests of our existing stockholders.”
Largest changes
Security incidents, including physical or electronic break-ins, computer viruses, attacks by hackers and similar cybersecurity incidents, and data breaches, can create system disruptions or shutdowns or the unauthorized disclosure of, access to, or misuse of confidential information. If personal information or protected health information is improperly accessed, tampered with, misused or disclosed as a result of a cybersecurity incident or data breach, we may incur significant costs to notify impacted stakeholders (including affected individuals, investors and regulators) and mitigate potential harm to affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information. In addition, a cybersecurity incident, data breach of or other adverse event affecting our information systems could damage our reputation, subject us to liability claims or regulatory penalties for compromised personal information and could have a material adverse effect on our business, financial condition and results of operations. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our privacy and data security obligations. Further, although we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential liabilities related to any experienced cybersecurity incident or data breach. Cybersecurity incidents could result in operational disruption, regulatory investigations, required notifications and remediation, litigation, fines, reputational harm, or financial costs that could materially adversely affect our business, financial condition, results of operations, or prospects.see in full comparison
“The continuing worldwide macroeconomic and geopolitical uncertainty, as well as existing tariffs and trade wars, may adversely affect our business and prospects, both domestically and internationally. Continued concerns about the systemic impact of potential recession and geopolitical issues, including wars and terrorism, have contributed to increased market volatility and uncertainty for economic growth in the world. …”see in full comparison
“The use of artificial intelligence in diagnostic or laboratory applications may subject us to additional regulatory and liability risks.”see in full comparison
“Additionally, severe or prolonged economic downturn or additional global financial crises could result in a variety of risks to our business, including weakened demand for any product candidates we develop or our ability to raise additional capital when needed on acceptable terms, if at all. For example, on October 1, 2025, the U.S. federal government entered a shutdown suspending services deemed non-essential as a result of the failure by Congress to enact regular appropriations for the 2026 fiscal year. …”see in full comparison
“We may become subject to costly litigation, which could adversely affect our business, financial condition and results of operations.”see in full comparison
“We may need to raise substantial additional capital to commercialize our diagnostic technology, and our failure to obtain funding when needed may force us to delay, reduce or eliminate our product development programs or collaboration efforts or force us to restrict or cease operations.”see in full comparison
Full comparison: every changed paragraph (61)
Our independent registered public accounting firm has issued an opinion on our consolidated financial statements included in this Annual Report on Form 10-K that states that the consolidated financial statements were prepared assuming we will continue as a going concern. Our consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business. We have incurred substantial operating losses and have typically used cash in our operating activities for the past few years. For the year ended December 31, 2024,2025, the Company had aan netoperating loss of $4.3$1.2 million and net cash provided by operating activities of $0.4$0.7 million. As of December 31, 2024,2025, the Company had an accumulated deficit of $102.4$102.8 million and a working capital deficit of $0.8$2.3 million. Our consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. We also cannot be certain that additional financing, if needed, will be available on acceptable terms, or at all, and our failure to raise capital when needed could limit our ability to continue our operations. There remains substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date the consolidated financial statements were issued.
Our ability to expand our business may depend on access to additional capital.
We may require significant additional financing to sustain our operations and without it we will not be able to continue operations.
At December 31, 2024, we had a working capital deficit of $0.8 million. For the year ended December 31, 2024, we had an operating cash flow of $0.4 million and a net loss of $4.3 million. We do not currently have sufficient financial resources to fund our operations or those of our subsidiaries. Therefore, we may need additional funds to continue these operations.
Our primary sources of funds to meet our liquidity and capital requirements include cash on hand, funds generated from operations and funding pursuant to a sales agreement with A.G.P./Alliance Global Partners (“AGP”).
To facilitate ongoing operations and product development, on April 14, 2023, we entered into a sales agreement with AGP, pursuant to which we may offer and sell our common stock, par value $0.01 per share (the “Common Stock”) (the “Shares”), having aggregate sales proceeds of up to $5.8 million, to or through AGP, as sales agent (the “AGP 2023 Sales Agreement”), from time to time, in an “at the market offering” (as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended) of the Shares (the “2023 ATM Offering”). We are limited in the number of shares we can sell in the 2023 ATM Offering due to the offering limitations currently applicable to us under General Instruction I.B.6. of Form S-3 and our public float as of the applicable date of such sales, as well as the number of authorized and unissued shares available for issuance, in accordance with the terms of the AGP 2023 Sales Agreement.
The extent we rely on AGP as a source of funding will depend on a number of factors including, the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources. If obtaining sufficient funding from AGP were to prove unavailable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working capital needs. Even if we sell all $5.8 million under the AGP 2023 Sales Agreement, we may still need additional capital to fully implement our business, operating and development plans. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects. From April 14, 2023 through the date the consolidated financial statements were issued, we received approximately $0.1 million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 11,847 shares of common stock. We have approximately $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement. On April 8, 2024, we filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sales of up to $1,061,478 of shares of our common stock. We have approximately $1.0 million of remaining availability pursuant to this prospectus supplement.
As of December 31, 2025, we had cash of $2.6 million and working capital of $2.3 million. Although we have recently generated positive operating cash flow, our future liquidity will depend on our ability to sustain or improve operating performance and manage working capital. We may have to raise significant additional capital or obtain additional credit in the future to fund our operationsoperations, fund growth initiatives, respond to changes in thereimbursement future.or regulatory requirements, pursue strategic opportunities, or address unforeseen events. The failure to raise significant capital, or obtain credit when needed, on acceptable terms, could have a material adverse effect on our business, prospects, financial condition and results of operations, and we may not be able to continue our business as currently contemplated or may be required to seek protection under United States federal bankruptcy law.
Our future capital requirements will depend on numerous factors, including revenue growth, reimbursement trends, regulatory developments, investment in commercialization activities, working capital needs, and potential strategic initiatives. While we have historically relied on equity and debt financings to fund operations, we may seek additional financing in the future. There can be no assurance that such financing will be available on favorable terms, or at all.
If we are unable to maintain positive operating performance or obtain additional capital when needed, we may be required to delay or scale back certain growth initiatives, product development efforts or strategic plans.
We have incurred losses since inception and, although recent results reflect improvement, we may incur losses in future periods. Our ability to achieve and sustain profitability depends on a number of factors, many of which are beyond our control, including market acceptance of our products, competitive dynamics, reimbursement levels, regulatory requirements and operating efficiency. There can be no assurance that we will achieve or sustain profitability in future periods.
We may need to raise substantial additional capital to commercialize our diagnostic technology, and our failure to obtain funding when needed may force us to delay, reduce or eliminate our product development programs or collaboration efforts or force us to restrict or cease operations.
As of December 31, 2024, we had cash of $1.4 million and we had a working capital deficit of $0.8 million. Due to our recurring losses from operations and that we may continue to incur losses in the future, we may be required to raise additional capital to complete the development and commercialization of our current product candidates and to pay off our obligations. To date, to fund our operations and develop and commercialize our products, we have relied primarily on equity and debt financings. In future periods, when we seek additional capital, we may seek to sell additional equity and/or debt securities or to obtain a credit facility, which we may not be able to do on favorable terms, or at all. Our ability to obtain additional financing will be subject to a number of factors, including market conditions, our operating performance and investor sentiment. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development and/or commercialization of one or more of our product candidates, restrict or cease our operations or obtain funds by entering into agreements on unattractive terms.
We have incurred losses since our inception and may incur losses in the foreseeable future. We cannot be certain that we will achieve or sustain profitability.
We have incurred losses since our inception and may incur losses in the future. At December 31, 2024, we had a working capital deficit of $0.8 million. For the year ended December 31, 2024, we had operating cash flow of $0.4 million and a net loss of $4.3 million. For the year ended December 31, 2024, we have experienced negative cash flow from development of our diagnostic technology, as well as from the costs associated with establishing a laboratory and building a sales force to market our products and services. We may incur substantial net losses through at least the first half of 2025 as we further develop and commercialize our diagnostic technology. We also expect that our selling, general and administrative expenses will continue to increase due to the additional costs associated with market development activities and expanding our staff to sell and support our products. Our ability to achieve or, if achieved, sustain profitability is based on numerous factors, many of which are beyond our control, including the market acceptance of our products, competitive product development and our market penetration and margins. We may never be able to generate sufficient revenue to achieve or, if achieved, sustain profitability.
For both the years ended December 31, 20242025 and 2023,2024, one customer individually represented 10%26% orand more17% of our total revenue.revenue, respectively. We expect to maintain ongoing relationships with our customers, however, the loss of, or significant decrease in demand from, any of our top customers could have a material adverse effect on our business, results of operations and financial condition.
At December 31, 2025, we had three customers who each individually represented more than 10% of our total accounts receivable. Collectively they accounted for approximately 56% of our total accounts receivable. At December 31, 2024, one customer accounted for approximately 29% of our total accounts receivable and at December 31, 2023, one customer accounted for approximately 13% of our total accounts receivable. The business risks associated with this concentration, including increased credit risks for these and other customers and the possibility of related credit loss write-offs, could negatively affect our margins and profits. Additionally, the loss of any of our top customers, whether through competition or consolidation, or a disruption in sales to such a customer, could result in a decrease of the Company’s future sales, earnings and cash flows. Generally, we do not require collateral or other securities to support our accounts receivable and while we are directly affected by the financial condition of our customers, management does not believe significant credit risks exist at December 31, 2024.2025.
We may become subject to costly litigation, which could adversely affect our business, financial condition and results of operations.
We have been, and may continue to be, subject to costly litigation.
We have been, and may continue to be, subject to legal proceedings. Due to the nature of our business and our history of insufficient capital resources to pay our obligations on a timely basis, we may be subject to a variety of regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of our business. The results of these legal proceedings cannot be predicted with certainty due to the uncertainty inherent in litigation, including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges and juries and the possibility that decisions may be reversed on appeal. Such litigation has been, and in the future, could be, costly, time-consuming and distracting to management, result in a diversion of resources and could materially adversely affect our business, financial condition and operating results.
On May 12, 2022, we received CE-IVD marking for our HemeScreen® reagents in the EU in accordance with the requirements of the EU In Vitro Diagnostic Directive ("IVDD") (Directive 98/79/EC). The EU In Vitro Diagnostic Regulation ("IVDR") (Regulation (EU) 2017/746) came into effect on May 26, 2022 and replaced the IVDD.
Because our CE marking was obtained under the IVDD by self-declaration without notified body involvement, and because our HemeScreen® products require notified body involvement in the conformity assessment procedure under the IVDR, we qualify for the transitional provisions under Article 110(3) of the IVDR, as introduced for self-declared devices by Regulation (EU) 2022/112 and further amended by Regulation (EU) 2024/1860. These provisions allow devices for which a declaration of conformity was drawn up prior to May 26, 2022 under the IVDD and which require notified body involvement in the conformity assessment procedure under the IVDR to continue to be placed on the EU and Northern Ireland markets until December 31, 2028, assuming a Class C risk classification under the IVDR, provided that certain conditions are met on a continuing basis. These conditions include: continued compliance with the IVDD; no significant changes to the design or intended purpose of the device; maintenance of a quality management system in accordance with Article 10(8) of the IVDR, which was required to be in place by May 26, 2025; and compliance with IVDR requirements for post-market surveillance, vigilance, and registration of economic operators and devices.
To maintain eligibility for this transitional period beyond May 26, 2026, we must submit a formal application for conformity assessment to an IVDR-designated notified body by that date, and must conclude a written agreement with a notified body by September 26, 2026. Failure to meet either of these deadlines would result in the transitional protection lapsing on the relevant date, regardless of whether the transition period would otherwise have continued until December 31, 2028. These are firm regulatory deadlines and we are actively working to meet them.
On May 12, 2022, we received CE-IVD marking for ourOur HemeScreen® reagentsproducts will in theany EUevent inrequire accordancefull with the requirements of the EU IVDD (Directive 98/79/EC). The new EU IVDR (Regulation 2017/746), came into effect on May 26, 2022 and replaced the IVDD. The transitional provisionsrecertification under the IVDR allow for devices with valid CE marking under the IVDD that were placed on the EU market prior to May 26, 2022 to continue to be placed on the market in the EU until deadlines ranging from December 2027 to December 2029, depending on risk classification, provided the manufacturer complies with post-market surveillance, vigilance, and registration requirements under the IVDR. Our device will need to be re-certified under the IVDR in order to remain on the EU marketand Northern Ireland markets beyond the deadlinesapplicable fortransition transition,deadline. whichThis will includerequire evaluation by an EUEU-designated notified body to confirm whether our deviceproducts meetsmeet the general safety and performance requirements underof the IVDR. There is no guarantee that oura devicenotified body will bedetermine determinedour toproducts be compliantcomply with such requirements. ItThe shouldnumber alsoof benotified appreciatedbodies thatcurrently designated under the IVDR remains limited, and there is currently is a severesignificant shortage of capacity of the EU notified bodiesbody capacity to assess allthe volume of devices that will require notified bodyrequiring certification under the IVDR. ThereWe cancannot be no assuranceassure that our ability to market HemeScreen® reagents in the EU inand theNorthern futureIreland will not be interrupted and this could, in turn,the havefuture. aAny negativesuch interruption could negatively impact on our business and operating results.
The regulatory framework for medical devices in the UK is likely to evolve now that the UK is no longer part of the EU. Changes to the UK regulations may require additional review of our devices and there is a risk our devices may not be compliant with any revised UK regulations.
Our products are subject to evolving regulatory requirements in Great Britain, Northern Ireland and the EU. In Great Britain, medical devices are subject to MHRA registration requirements, and manufacturers established outside the United Kingdom must appoint a UK Responsible Person to satisfy certain regulatory obligations. In addition, the UK government is continuing to implement changes to its medical devices regime, including revised post market surveillance requirements and potential future changes to pre market authorization requirements and reliance mechanisms.
In Northern Ireland, EU medical device rules continue to apply under the Windsor Framework. In addition, our ability to continue placing certain products on the EU and Northern Ireland markets during the IVDR transition period depends on satisfaction of specific legal and procedural conditions. For devices qualifying under the IVDR transitional provisions, including, as applicable, devices for which a declaration of conformity was drawn up prior to May 26, 2022 under the IVDD and that require Notified Body involvement under the IVDR, continued market access is contingent on ongoing compliance with applicable post market surveillance, vigilance, and registration requirements, timely submission of a formal application to an IVDR designated notified body by May 26, 2026, and execution of a written agreement with such notified body by September 26, 2026. If these conditions are not met, the applicable transitional protection would cease.
Compliance with these evolving requirements may require significant additional operational, quality, clinical, technical, and regulatory resources. Any delay in obtaining, maintaining, or renewing required registrations, certifications, notified body arrangements, or other regulatory authorizations, any adverse change in applicable reliance mechanisms or transitional provisions, or any failure to comply with applicable post market obligations could delay or prevent our ability to market our products in Great Britain, Northern Ireland or the EU, disrupt commercialization, increase costs, and materially adversely affect our business, financial condition, and results of operations
Now that the UK has left the EU, the new UK Conformity Assessed (“UKCA”) mark will replace the EU CE mark in Great Britain (“GB”). The EU legal framework remains applicable in Northern Ireland (indeed any products placed on the market in Northern Ireland must be compliant with EU law). EU CE marks will continue to be recognized in GB for in-vitro diagnostic devices that are compliant with the EU IVDD or EU IVDR until June 30, 2030 (except for general in-vitro diagnostic devices where the conformity assessment under the EU IVDD and EU IVDR does not involve a notified body). In addition, all devices must now be registered with the MHRA in order to be placed on the GB market. These new requirements under the UK medical devices legislation and any other changes that are brought into force could result in delays in our ability to obtain a UKCA mark and to continue to market our product in the UK. The UK’s departure from the EU has also impacted customs regulations as well as timing and ease of shipments into the EU from UK.
The continuing worldwide macroeconomic and geopolitical uncertainty, as well as existing tariffs and trade wars, may adversely affect our business and prospects, both domestically and internationally. Continued concerns about the systemic impact of potential recession and geopolitical issues, including wars and terrorism, have contributed to increased market volatility and uncertainty for economic growth in the world. Our business and results of operations may be adversely impacted by changes in macroeconomic conditions, including inflation, bank failures, rising interest rates, and availability of capital markets. Economic uncertainty, an increase in unemployment rates, as well as an increase in health insurance premiums, co-payments and deductibles may result in cost-conscious consumers making fewer trips to their physicians and specialists, which in turn would adversely affect demand for our products and procedures. Furthermore, governments and other third-party payors around the world facing tightening budgets could move to further reduce the reimbursement rates or the scope of coverage offered, which could adversely affect sales of our products.
We operate globallymainly andin the United States but may sell our products in other countries throughout the world. Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S. federal administration, are difficult to predict and may have a material adverse effect on us. Similarly, changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For example, during the prior Trump administration, increased tariffs were implemented on goods imported into the U.S., particularly from China, Canada, and Mexico. On February 1, 2025, the U.S. imposed a 25% tariff on imports from Canada and Mexico, which were subsequently suspended for a period of one month, and a 10% additional tariff on imports from China. Historically, tariffs have led to increased trade and political tensions, between not only the U.S. and China, but also between the U.S. and other countries in the international community. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations.
The current U.S. administration has threatened to continue to broadly impose tariffs, which could lead to corresponding punitive actions by the countries with which the U.S. trades. Historically, tariffs have led to increased trade and political tensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations. We will continue to monitor global capital markets and assessing the potential impact of these factors on our business.
Additionally, severe or prolonged economic downturn or additional global financial crises could result in a variety of risks to our business, including weakened demand for any product candidates we develop or our ability to raise additional capital when needed on acceptable terms, if at all. For example, on October 1, 2025, the U.S. federal government entered a shutdown suspending services deemed non-essential as a result of the failure by Congress to enact regular appropriations for the 2026 fiscal year. If the shutdown continues for a prolonged period of time, it could result in increased uncertainty and volatility in the global economy and financial markets which could have a material adverse effect on our business. Weak economic conditions or significant uncertainty regarding the stability of financial markets related to stock market volatility, inflation, recession, changes in tariffs or other trade restrictions, trade agreements, trade wars or governmental fiscal, monetary and tax policies, among others, could adversely impact our business, financial condition and operating results.
The U.S. Congress, the Trump administration, or any new administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business.
In 2017, the U.S. Congress and the Trump administration made substantial changes to U.S. policies, which included comprehensive corporate and individual tax reform referred to as the Taxes Cuts and Jobs Act. Under current law, a number of such changes to U.S. tax law are set to expire after December 31, 2025. In addition, the Trump administration called for significant changes to U.S. trade, healthcare, immigration and government regulatory policy. Changes to U.S. policy occurred under the Biden administration and have continued at a rapid pace under the Trump Administration in 2025, making further changes likely. Any such changes to U.S. policy implemented by the U.S. Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation (including in respect of extending the changes from the Taxes Cuts and Jobs Act, which are set to expire and any other potentially forthcoming tax reform), the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business. Until we know what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.
We need to ensure strong product performance and reliability to maintain and grow our business.
We need to maintain and continuously improve the performance and reliability of our diagnostic tests to achieve our profitability objectives. Poor product performance and reliability could lead to customer dissatisfaction, adversely affect our reputation and revenues, and increase our service and distribution costs and working capital requirements. Our diagnostic tests may contain errors or defects, and while we have made efforts to test them extensively, we cannot assure that our current diagnostic tests, or those developed in the future, will not have performance problems. Performance issues with our diagnostic tests will increase our costs in the near-term and accordingly adversely affect our business, financial condition and results of operations.
Like other companies in our industry, we, and our third party vendors, have experienced threats and cybersecurity incidents relating to our information technology systems and infrastructure. We maintain our information technology systems with safeguards designed to protect against cyberattacks including passive intrusion protection, firewalls and virus detection software. However, these safeguards do not ensure that a significant cyberattack could not occur. Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not prevent the systems’ improper functioning or damage or the improper access or disclosure of personally identifiable information such as in the event of cyberattacks.
Security incidents, including physical or electronic break-ins, computer viruses, attacks by hackers and similar cybersecurity incidents, and data breaches, can create system disruptions or shutdowns or the unauthorized disclosure of, access to, or misuse of confidential information. If personal information or protected health information is improperly accessed, tampered with, misused or disclosed as a result of a cybersecurity incident or data breach, we may incur significant costs to notify impacted stakeholders (including affected individuals, investors and regulators) and mitigate potential harm to affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information. In addition, a cybersecurity incident, data breach of or other adverse event affecting our information systems could damage our reputation, subject us to liability claims or regulatory penalties for compromised personal information and could have a material adverse effect on our business, financial condition and results of operations. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our privacy and data security obligations. Further, although we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential liabilities related to any experienced cybersecurity incident or data breach. Cybersecurity incidents could result in operational disruption, regulatory investigations, required notifications and remediation, litigation, fines, reputational harm, or financial costs that could materially adversely affect our business, financial condition, results of operations, or prospects.
We recently reported that we experienced a cybersecurity incident involving unauthorized access to an employee’s cloud-based storage account that may have resulted in access to certain personally identifiable information and protected health information of individuals, which we publicly disclosed in January 2026. In response, we initiated an investigation, engaged third-party cybersecurity specialists, secured the impacted account, notified law enforcement authorities, and are conducting a review of the potentially affected data. The event remains under investigation, and we continue to assess the scope and potential impacts of the incident, including any regulatory, legal, or financial implications. While we have taken mitigation steps, there can be no assurance that similar incidents will not occur in the future or that additional impacts from this or related incidents will not be identified.
U.S. federal, state and local and non-U.S. tax laws are subject to change through legislative, administrative and judicial actions. Changes to tax laws or regulations, or changes in interpretations of existing laws (which changes may have retroactive effect), could increase our tax liability, reduce available tax benefits, or otherwise adversely affect our financial condition and results of operations.
For example, the One Big Beautiful Bill Act (“OBBBA”), signed into law on July 4, 2025, made significant changes to U.S. federal tax law, including modifications to the treatment of research and development expenditures under Section 174 of the Internal Revenue Code. Under prior law, research and development expenses were required to be capitalized and amortized. The OBBBA permits certain taxpayers, beginning in taxable years after December 31, 2024, to elect to immediately deduct qualifying U.S.-based research and development expenditures, while also providing mechanisms to accelerate deductions of previously capitalized amounts. The application and interpretation of these provisions may affect our cash flow and effective tax rate.
In addition, changes in tax policy, including the potential expiration or modification of provisions enacted under prior tax reform legislation, the imposition of new income or non-income taxes (such as payroll, sales, use, value-added, digital or other taxes), or changes in international tax rules, could increase our compliance costs or overall tax burden. As we expand our business activities, including internationally, our exposure to tax law changes may increase. Any such changes could materially adversely affect our financial condition and results of operations.
The rules dealing with U.S. federal, state, and local and non-U.S. taxation are constantly under review by persons involved in the legislative process, the Internal Revenue Service, the U.S. Treasury Department and other taxing authorities. Changes to tax laws or tax rulings, or changes in interpretations of existing laws (which changes may have retroactive application), could adversely affect us or holders of our common stock. These changes could subject us to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital tax, net worth, property, and goods and services taxes), which in turn could materially affect our financial position and results of operations. Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our products. In recent years, many such changes have been made, and changes are likely to continue to occur in the future. Furthermore, as we expand the scale of our business activities, any changes in the U.S. and non-U.S. taxation of such activities may increase our effective tax rate and harm our business, financial condition, and results of operations.
On April 29, 2024, the U.S. Food and Drug Administration (“FDA”) published a final rule that, if implemented, would have amended FDA’s regulatory definition of in vitro diagnostics to include laboratory developed tests (“LDTs”) and phased out the agency’s longstanding enforcement discretion for most LDTs over a planned multi-stage implementation period. The rule would have subjected many LDTs to premarket review and device regulatory requirements.
Subsequently, in March 2025, a federal district court in American Clinical Laboratory Association v. FDA and Association for Molecular Pathology v. FDA vacated the April 29, 2024 final rule on the basis that FDA lacked statutory authority to regulate LDTs as medical devices under the Federal Food, Drug, and Cosmetic Act. In September 2025, FDA published a rule restoring the regulatory text governing LDTs to the pre-2024 status quo. As a result, the April 2024 final rule is no longer in effect, and there are currently no FDA-imposed device-style premarket requirements or staged compliance deadlines applicable solely because a laboratory develops and uses an LDT.
Most recently, on April 29, 2024, the FDA published a final rule on LDTs, in which FDA outlines its plans to end enforcement discretion for many LDTs in five stages over a four-year period.
The final rule potentially extends enforcement discretion for certain tests, such as LDTs approved by the New York State Department of Health and LDTs first marketed prior to May 6, 2024 which are not modified or are modified in certain limited ways, from certain FDA regulatory requirements, provided certain important limitations have been met. We are actively reviewing the final rule to evaluate its applicability to our operations, and the extent to which we may be required to modify our operations to comply with its requirements.
On May 29, 2024, the American Clinical Laboratory Association filed a lawsuit challenging the FDA’s authority to regulate LDTs as medical devices under the Federal Food, Drug, and Cosmetic Act. Subsequently, on August 19, 2024, the Association for Molecular Pathology filed a lawsuit similarly challenging FDA’s final rule on LDTs. The outcome of these lawsuits are uncertain at this time.
The use of artificial intelligence in diagnostic or laboratory applications may subject us to additional regulatory and liability risks.
The integration of artificial intelligence or machine learning technologies into diagnostic or laboratory workflows may subject us to additional regulatory oversight, including potential review by the U.S. Food and Drug Administration or other regulatory authorities. Regulatory standards applicable to AI-enabled medical technologies continue to evolve and may require additional validation, documentation, or monitoring. AI-based tools may be subject to increased scrutiny regarding accuracy, bias, and clinical reliability. If AI-enabled outputs are determined to be inaccurate or unreliable, we could face liability claims, regulatory enforcement, reputational harm, or limitations on our ability to market such tools.
Our commercial success depends in part on our avoiding infringement, misappropriation and other violations of the patents and proprietary rights of third parties. There is a substantial amount of litigation involving patents and other intellectual property rights in the diagnostic industries,industries. asIn well asaddition, administrative proceedings for challenging patents, including interferenceinterference, reexamination proceedings, inter partes review, and reexaminationpost proceedingsgrant review before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. Recently, under U.S. patent reform, new procedures including inter partes review and post grant review have been implemented. As stated above, this reform willjurisdictions bring uncertainty to the possibility of challenge to our patents in the future. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our product candidates. As the diagnostic industry expands and more patents are issued, the risk increases that our product candidates may give rise to claims of infringement of the patent rights of others.
Third parties may assert that we are employing their proprietary technology without authorization. Patents issued in the U.S. by law enjoy a presumption of validity that can be rebutted only with evidence that is “clear and convincing,” a heightened standard of proof. There may be third-party patents of which we are currently unaware with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our products or product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations,technologies or product candidates, including processes for manufacture or methods of use, including combination therapy or patient selection methods, the holders of any such patent may be able to block our ability to develop and commercialize the product candidate unless we obtained a license or until such patent expires or is finally determined to be held invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all. Even if we obtained such a license, it may only be non-exclusive, which would permit third parties to use the same intellectual property and compete with us. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, we may be unable to commercialize our product candidates or such efforts may be impaired or delayed, which could in turn significantly harm our business.
As is the case with other diagnostic companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the diagnostic industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. In addition, the U.S. has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. For example, in the case, Assoc. for Molecular Pathology v. Myriad Genetics, Inc., the U.S. Supreme Court held that certain claims to DNA molecules are not patentable. In addition, the case Amgen Inc. v. Sanofi affects the way antibody claims are examined and litigated. We cannot predict how future decisions by the courts, the Congress or the USPTO may impact the value of our patents.
In addition, a European Unified Patent Court (UPC) came into force in June 2023. The UPC is a common patent court that hears patent infringement and revocation proceedings effective for member states of the European Union.EU. This could enable third parties to seek revocation of a European patent in a single proceeding at the UPC rather than through multiple proceedings in each of the jurisdictions in which the European patent is validated. If our pending European patent application issues, and if we obtain other such patents and applications in the future, any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products. Moreover, the controlling laws and regulations of the UPC will develop over time, and may adversely affect our ability to enforce or defend the validity of any European patents we may obtain. We may decide to opt out from the UPC any future European patent applications that we may file and any patents we may obtain. If certain formalities and requirements are not met, however, such European patents and patent applications could be challenged for non-compliance and brought under the jurisdiction of the UPC. We cannot be certain that our pending European patent application and future European patents and patent applications will avoid falling under the jurisdiction of the UPC, if we decide to opt out of the UPC.
These and other market and industry factors may cause the market price and demand for our common stock to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their shares of our common stock and may otherwise negatively affect the liquidity of our common stock. In addition, the stock market in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. InCompanies thethat past,experience whensignificant volatility in the market price of atheir stocksecurities hasare beensometimes volatile,subject holders of that stock have institutedto securities class action litigationlitigation, against the company that issued the stock. If any of our stockholders brought a lawsuit against us,and we could incur substantial costs defendingin the lawsuit.future be subject to such claims. Such a lawsuitclaim could also divert the time and attention of our management.
The sale or issuance of our common stock to, or through, AGP may cause significant dilution and the sale of the shares of common stock acquired by AGP, or the perception that such sales may occur, could cause the price of our common stock to fall.
On April 14, 2023, we entered into a sales agreement with AGP, pursuant to which we may offer and sell our Common Stock, having aggregate sales proceeds of up to $5.8 million, to or through AGP, from time to time, in the 2023 ATM Offering. We are limited in the number of shares we can sell in the 2023 ATM Offering due to the offering limitations currently applicable to us under General Instruction I.B.6. of Form S-3 and our public float as of the applicable date of such sales, as well as the number of authorized and unissued shares available for issuance, in accordance with the terms of the AGP 2023 Sales Agreement. Sales to, or through, AGP by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
From April 14, 2023 through the date of issuance of this Report on From 10-K, we received $0.1 million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 11,847 shares of Common Stock. The Company has an additional $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement. On April 8, 2024, we filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sales of up to $1,061,478 of shares of our common stock. We have approximately $1.0 million of remaining availability pursuant to this prospectus supplement.
We have issued a substantial number of warrants and equity awards from our equity plans which are exercisable into shares of our common stock which could result in substantial dilution to the ownership interests of our existing stockholders.
Management's Discussion & Analysis (MD&A)
New heading “Employee Retention Credit (ERC)”
New heading “One Big Beautiful Bill Act of 2025”
Largest changes
“This unique integrated operating structure is the foundation of the Company’s approach to research, development, and product commercialization. Unlike companies that rely primarily on stand-alone research facilities or external clinical validation programs, the Company’s clinical laboratory operations enables its R&D team to evaluate, refine, and validate diagnostic products in the course of routine clinical testing activities, and at minimal incremental cost. …”see in full comparison
see in full comparisonNotwithstanding the aforementioned circumstances, thereThere remains substantial doubt about our ability to continue as a going concern for the next twelve months from the date the consolidated financial statements were available to be issued. There can be no assurance that we will be able to successfully achieve our initiatives summarized above in order to continue as a going concern. The accompanying financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments that might result should we be unable to continue as a going concern as a result of the outcome of this uncertainty. See “Risk Factors – There is substantial doubt about our ability to continue as a going concern”.
“In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which eliminates the previous stage-based model for capitalizing software costs and replaces it with a principles-based framework. This new guidance is designed to be more adaptable to modern, agile software development methods, clarifying when an entity should capitalize software costs based on a “probable-to-complete” threshold. …”see in full comparison
“Other (Expense) Income. We recorded net other income of $0.8 million for the year ended December 31, 2025 which included income of $0.1 million from the gain on settlement of liabilities, income of $0.8 million from the receipt of Employee Retention Credits (as defined below), and net interest expense of $0.1 million. During the year ended December 31, 2024, we recorded net other expense of $0.1 million which was related to net interest expense.”see in full comparison
Full comparison: every changed paragraph (44)
We are a healthcare biotechnology company focused on improving cancer diagnostics. The Company’s objective is to enhance diagnostic accuracy and accessibility while building a sustainable business model that supports ongoing innovation. The Company can achieve this through a combination of clinical laboratory services and proprietary diagnostic product development. By integrating diagnostic services with product development, the Company’s service business doubles as a self-funded research and development (R&D) unit, enabling the Company to achieve rapid and cost-efficient innovation, rather than being a major cost center of the Company.
This unique integrated operating structure is the foundation of the Company’s approach to research, development, and product commercialization. Unlike companies that rely primarily on stand-alone research facilities or external clinical validation programs, the Company’s clinical laboratory operations enables its R&D team to evaluate, refine, and validate diagnostic products in the course of routine clinical testing activities, and at minimal incremental cost. Through these activities, the Company generates clinical data, operational experience, and specimen access that support ongoing assay development and product improvement. While these activities are initially conducted to provide diagnostic services to patients and their healthcare providers, they also contribute to product development and validation processes.
Precipio has a single operating segment but operates two business divisions that are complementary to each other. The Company’s pathology services division provides specialized cancer diagnostic testing services to physicians, hospitals, and laboratories. This division generates revenue and supports the development of the Company’s expertise in oncology diagnostics. The pathology services division delivers specialized diagnostic testing focused primarily on hematologic cancers and operates a full laboratory that includes all the equipment, personnel, and work processes required to receive patient samples daily, and deliver clinical results to the physicians under the proper compliance umbrella, while also generating profitable revenue to the company. While reimbursement levels and testing volumes may vary, the Company views this division as an important foundation for both current operations and future product development.
The Company’s product division develops and commercializes proprietary diagnostic assay kits designed for use by clinical laboratories. These products allow the Company to expand its reach by enabling other laboratories to benefit from the diagnostic products developed by the Company, while building scalable diagnostic solutions. The Company believes this dual structure provides a unique model for R&D development of clinically applicable products, while delivering operational stability and supporting innovation and future growth. Furthermore, it provides the Company with substantial competitive advantages in terms of the economics of product development, and time to market. The products division focuses on developing proprietary diagnostic assays and kits intended for use by other clinical laboratories. These products are designed to improve testing accessibility and laboratory workflow efficiency while enabling broader market reach without requiring Precipio to perform all testing internally. Product revenues may offer greater scalability than traditional laboratory services, although adoption depends on regulatory, reimbursement, and market factors.
We are a healthcare biotechnology company focused on cancer diagnostics. Our business mission is to address the pervasive problem of cancer misdiagnoses by developing solutions in the form of diagnostic products and services.
Our products and services aim to deliver higher accuracy, improved laboratory workflow, and ultimately better patient outcomes, which reduce healthcare expenses. We develop innovative technologies in our laboratory where we design, test, validate, and use these products clinically. We believe these technologies improve diagnostic outcomes across various diseases within the hematologic field. We then commercialize these technologies as proprietary products that serve the global laboratory community in furtherance of our mission to eliminate or greatly reduce the prevalence of misdiagnoses. To deliver our strategy, we have structured our organization to develop diagnostic products, including our laboratory and research and development (“R&D”) facilities located in New Haven, Connecticut and Omaha, Nebraska, respectively, which house teams that collaborate on the development of new products and services. We operate Clinicalclinical Laboratorylaboratory Improvementimprovement Amendmentsamendment (“CLIA”) compliant laboratories in both New Haven, Connecticut and Omaha, Nebraska,Nebraska from whichwhere we provide essential blood cancer diagnostics to office-based oncologists in many states nationwide. To deliver on our strategy of mitigating misdiagnoses,misdiagnoses we rely heavily on our CLIA laboratories to support R&D beta-testing of the products we develop, in a clinical environment.
The development of laboratory products involves a qualified facility; highly skilled laboratory staff; and access to viable patient specimens to conduct development and testing. Our CLIA laboratory in New Haven, which is operated by our pathology services division, encapsulates these components, and also generates revenue for us which covers costs associated with operating this laboratory. This structure of utilizing our clinical lab to obtain samples and utilize the equipment and staffing to develop, test and validate our products, significantly reduces the development costs and timeline for our products. This also enables us to accelerate the time to market of new product development and launch.
Furthermore, as a clinical laboratory, we are always the first user of every product we develop, which allows us to optimize important laboratory functions such as workflow, inventory management, regulatory and billing issues. As a vendor, this enables us to serve as a reputable user of our own products, and we believe this provides us with significant credibility with existing and prospective customers. Furthermore, because we use our products as part of our day-to-day operations, we can deliver a high level of hands-on, expert support to customers, improving their experience with our products.
Our Products Division commercial team generates direct sales and works with our key distributors. Global healthcare distributors, such as ThermoFisher, McKesson, Medline and Cardinal Health, have partnered with us to form the backbone of our go-to-market strategy and enable us to access laboratories around the country that can benefit from using our diagnostic products.
The consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business. We have incurred substantial operating losses and hashave typically used cash in itsour operating activities for the past several years. For the year ended December 31, 2024,2025, we had aan netoperating loss of $4.3$1.2 million and net cash provided by operating activities of $0.4$0.7 million. As of December 31, 2024,2025, we had an accumulated deficit of $102.4$102.8 million and a working capital deficit of $0.8$2.3 million. Our ability to continue as a going concern over the next twelve months from the date the consolidated financial statements were issued is dependent upon a combination of achieving itsour business plan, including generating additional revenue and avoiding potential business disruption due to the macroeconomic environment and geopolitical instability, and raising additional financing, if needed, to meet itsour debt obligations and paying liabilities arising from normal business operations when they come due.
To meet our current and future obligations we have taken the following steps to capitalize the business and successfully achieve our business plan:
Notwithstanding the aforementioned circumstances, thereThere remains substantial doubt about our ability to continue as a going concern for the next twelve months from the date the consolidated financial statements were available to be issued. There can be no assurance that we will be able to successfully achieve our initiatives summarized above in order to continue as a going concern. The accompanying financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments that might result should we be unable to continue as a going concern as a result of the outcome of this uncertainty. See “Risk Factors – There is substantial doubt about our ability to continue as a going concern”.
Net sales for the year ended December 31, 20242025 were $18.5$24.0 million, an increase of $3.3$5.5 million, as compared to the same period in 2023.2024. During the year ended December 31, 2024,2025, patient diagnostic service revenue increased $3.7$5.4 million as compared to the same period in 2023.2024. This increase was due to a greater number of cases processed in the current year period. We processed 11,89415,470 cases during the year ended December 31, 20242025 as compared to 6,76511,894 cases during the same period in 2023,2024, or a 76%30% increase in cases. The benefit of the increase in cases billed during the full year ended December 31, 2024 as compared to the full year ended December 31, 2023 was partially offset by a lower average price per case during the current year as a result of a different product mix. Product revenue decreasedincreased by $0.4$0.1 million for the year ended December 31, 20242025 as compared to the same period in 2023.2024.
Cost of Sales. Cost of sales includes material and supply costscosts, including shipping, for the patient tests performed, costs related to products and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory. Cost of sales increased by $1.8$2.4 million for the year ended December 31, 20242025 as compared to the same period in 2023.2024. The majority of the increase related to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the increase in the number of cases processed, as discussed above.
Gross margin was 41%45% and 40%41% of total net sales, for the years ended December 31, 20242025 and 2023,2024, respectively, and the gross profit was approximately $7.6$10.7 million and $6.0$7.6 million during the years ended December 31, 20242025 and 2023,2024, respectively. The grossGross profit increased during the year ended December 31, 2024,2025, as compared to the prior year period, as a result of increases in case volume and revenue. We operate a fully staffed CLIA and CAP certified clinical pathology and molecular laboratory. As such, it is necessary to maintain appropriate staffing levels to provide industry standard laboratory processing and reporting to ordering physicians. An increase in case volume will enable our laboratory to yield economies of scale and to leverage fixed expenses.
Operating Expenses. Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock basedstock-based compensation costs and depreciation and amortization. Our operating expenses decreasedincreased by $1.9$0.1 million to $11.9 million for the year ended December 31, 2025 as compared to $11.8 million for the year ended December 31, 20242024. as compared to $13.6 million forFor the year ended December 31, 2023. The decrease included decreases from2025: (1) ageneral decreaseand administrative expenses remained flat which included an increase of $1.5$0.1 million in sales and marketing expenses due mainly to a decrease in personnel costs ofoffset $1.2 million as a result of a lower headcount and a decrease of $0.3 million in other costs, (2) a decrease of $0.4 million in research and development expenses mainly related toby a decrease of $0.1 million in operatinglegal supplies,and aprofessional decreasefees, of(2) sales and marketing expenses increased by $0.1 million due to an increase in professional fees, (3) research and development expenses increased by $0.3 million due to an increase in personnel costs and aoperating decrease of $0.2 million in other costs,supplies, and (34) a decrease of $0.1 million in stock-based compensation expenses. General and administrative expenses for the year ended December 31, 2024 increaseddecreased by $0.1$0.3 million as compared to the year ended December 31, 2023.million.
Other (Expense) Income. We recorded net other income of $0.8 million for the year ended December 31, 2025 which included income of $0.1 million from the gain on settlement of liabilities, income of $0.8 million from the receipt of Employee Retention Credits (as defined below), and net interest expense of $0.1 million. During the year ended December 31, 2024, we recorded net other expense of $0.1 million which was related to net interest expense.
Other (Expense) Income. We recorded net other expense of $0.1 million for the year ended December 31, 2024 which was related to net interest expense. For the year ended December 31, 2023, we recorded net other income of $1.8 million which was related to $1.7 million of income from the write-off of certain liabilities and $0.1 million of income related to a gain on the dissolution of joint venture. These were partially offset by less than $0.1 million of interest expense.
During the year ended December 31, 2025, we received net cash proceeds of approximately $1.3 million from the exercise of 444,444 warrants, which resulted in the issuance of 242,562 shares of common stock of the Company.
Also, during the year ended December 31, 2025, we received $0.8 million related to refundable Employee Retention Credits that it had applied for.
To date, we have incurred significant net losses and have funded our operations primarily through cash generated from operations, the issuance of convertible debt and the issuance of shares of our common stock.
During the year ended December 31, 2024 we received $0.3 million in proceeds from debt issuance and net proceeds of $0.1 million from sale of 11,822 shares of our common stock through at the market offerings. The Company has approximately $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement which includes approximately $1.0 million of remaining availability pursuant to the April 2024 Prospectus Supplement.
Net Change in Cash. Cash increased by $1.3 million during the year ended December 31, 2025 and decreased by $0.1 million and $1.9 million during the yearsyear ended December 31, 2024 and 2023, respectively.2024.
Cash Flows Provided by (Used in) Operating Activities. The cash flows provided by operating activities of $0.7 million during the year ended December 31, 2025 included an increase in accounts payable of $0.5 million, an increase in deferred revenues of $0.1 million, and non-cash adjustments of $3.2 million. These were partially offset by a net loss of $0.4 million, an increase in accounts receivables of $1.4 million, an increase in inventories of $0.2 million, a decrease in operating lease liabilities of $0.2 million and a decrease in accrued expenses of $0.9 million. The non-cash adjustments included $0.2 million for the change in provision for credit losses. We routinely provide a reserve for credit losses as a result of having limited in-network payer contracts. The other non-cash adjustments to net loss of approximately $3.0 million include, among other things, depreciation and amortization, and stock-based compensation. The cash flows provided by operating activities of approximately $0.4 million during the year ended December 31, 2024 included a decrease in accounts receivables of $0.4 million, a decrease in other assets of $0.3 million, an increase in accrued expenses of $1.0 million, an increase in deferred revenue of $0.1 million and non-cash adjustments of $3.4 million. These were partially offset by a net loss of $4.3 million, an increase in inventories of $0.3 million, and a decrease in operating lease liabilities of $0.2 million.
Cash Flows Provided by (Used in) Operating Activities. The cash flows provided by operating activities of $0.4 million during the year ended December 31, 2024 included a decrease in accounts receivables of $0.4 million, a decrease in other assets of $0.3 million, an increase in accrued expenses of $1.0 million, an increase in deferred revenue of $0.1 million and non-cash adjustments of $3.4 million. The non-cash adjustments included $0.1 million for the change in provision for credit losses. We routinely provide a reserve for credit losses accounts as a result of having limited in-network payer contracts. The other non-cash adjustments to net loss of approximately $3.3 million include, among other things, depreciation and amortization, the value of stock issued in payment of services, gain on write-off of liabilities and stock-based compensation. These were partially offset by a net loss of $4.3 million, an increase in inventories of $0.3 million, and a decrease in operating lease liabilities of $0.2 million. The cash flows used in operating activities of $3.6 million during the year ended December 31, 2023 included a net loss of $5.8 million, an increase in accounts receivables of $0.5 million, a decrease in accounts payable of $0.2 million and a decrease in operating lease liabilities of $0.2 million. These were partially offset by a decrease in inventories of $0.3 million, a decrease in other assets of $0.4 million, an increase in accrued expenses of $0.7 million and non-cash adjustments of $1.7 million.
Cash Flows Provided by (Used in) ProvidedFinancing Activities. Cash flows provided by Financingfinancing Activities.activities totaled $0.9 million for the year ended December 31, 2025, which included $1.3 million in proceeds from the exercise of warrants and $0.1 million in proceeds from the exercise of stock options. These were partially offset by $0.5 million in payments on our long-term debt and finance lease obligations. Cash flows used in financing activities totaled $0.3 million for the year ended December 31, 2024, which included $0.7 million in payments on our long-term debt and finance lease obligationsobligations. ofThese $0.6 millionwere partially offset by $0.2$0.3 million of proceeds from debt and $0.1 million of proceeds from the issuance of common stock. Cash flows provided by financing activities totaled $1.7 million for the year ended December 31, 2023, which included $2.2 million of proceeds from the issuance of common stock partially offset by payments on our long-term debt and finance lease obligations of $0.5 million.
For additional information on critical accounting estimates, see Note 2 to the consolidated Financial Statements, “Summary of Significant Accounting Policies and New Accounting Standards,Policies,” in Part II, Item 8, of this Annual Report on Form 10-K.
In December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”) which amends the Codification to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires additional disaggregation of the reconciliation between the statutory and effective tax rate for an entity and of income taxes paid, both of which are disclosures required by current GAAP. The amendments improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The amendments in ASU 2023-09 apply to all entities that are subject to Topic 740, Income Taxes. For public business entities, the amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company has adopted this standard with retrospective application in the 2025 annual financial statements and have included the additional disclosures in Note 9 - Income Taxes.
In June 2022, the Financial Accounting Standards Board (the “FASB”) issued ASU 2022-03, Fair Value Measurement (Topic 820) (“ASU 2022-03”). The amendments in ASU 2022-03 clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments in this Update also require additional disclosures for equity securities subject to contractual sale restrictions. The Company adopted this guidance on January 1, 2024. The adoption of this standard was not material to our consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06 “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share (“EPS”) guidance for both Subtopics. The Company adopted this guidance on January 1, 2024. The adoption of this standard was not material to our consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses. Under the new guidance an entity is required to disclose the title and position of the chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU also requires that an entity that has a single reportable segment provide all the disclosures required by this ASU and all existing segment disclosures in Topic 280. The ASU does not change how operating segments are identified or, when applicable, aggregated. The Company adopted this standard for fiscal year 2024 and such adoption did not have a material impact on our consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”) which amends the Codification to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires additional disaggregation of the reconciliation between the statutory and effective tax rate for an entity and of income taxes paid, both of which are disclosures required by current GAAP. The amendments improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The amendments in ASU 2023-09 apply to all entities that are subject to Topic 740, Income Taxes. For public business entities, the amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09 is effective for the Company beginning January 1, 2025. Adoption of ASU 2023-09 is expected to enhance the usefulness of income tax disclosures and is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, including those assets acquired in a business combination. The practical expedient permits all entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which eliminates the previous stage-based model for capitalizing software costs and replaces it with a principles-based framework. This new guidance is designed to be more adaptable to modern, agile software development methods, clarifying when an entity should capitalize software costs based on a “probable-to-complete” threshold. This ASU is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, and may be applied using a prospective, modified, or retrospective transition approach. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.
Change Healthcare (“CHC”), a subsidiary of UnitedHealth Group, sufferedexperienced a cybersecurity breach in February 2024 which resulted in the temporary shut-down of some of its systems. Precipio uses CHC to process its billings for pathology services. Thus, when CHC shut down its business operations our pathology billings were halted. Our ability to process billings, accept payer remittances, process medical and billing benefit notices, bill secondary insurers, as well as patients, and communicate with commercial payers was severely impacted. Starting shortly after the breach, we redirected a significant amount of our internal resources to internally handle the billing services that CHC was no longer delivering. This resulted in billing and cash reimbursement delays during the year ended December 31, 2024.
Along with the delays in billing and cash reimbursements, we incurred approximately $0.3 million of expenseexpenses during the year ended December 31, 2024, as we incurred lost collections and used alternative methods for claims processing. CHC established a Temporary Funding Assistance Program to help bridge the gap in short-term cash flow needs for its customers affected by the disruption of its services due to the cyberattack. On October 28, 2024, the Companywe received a notice from CHC stating that they had restored the connectivity of their systems. During the year ended December 31, 2024, we received approximately $1.1 million from CHC through this program. See Note 6 – “Accrued Expenses and Other Current Liabilities” for further discussion.
During the year ended December 31, 2025, we made approximately $0.9 million in repayments to CHC and wrote off another $0.1 million. See Note 6 – “Accrued Expenses and Other Current Liabilities” for further discussion.
Employee Retention Credit (ERC)
On March 27, 2020, the U.S. government enacted the CARES Act. Under the provisions of the CARES Act, and its subsequent extensions, we became eligible to apply for a refundable Employee Retention Credit (the “ERC”), subject to certain criteria, which could be used to offset payroll tax liabilities.
In November 2022, we submitted an ERC claim totaling approximately $1.5 million. During the year ended December 31, 2025, we received payments totaling approximately $0.8 million. We recorded this amount as other income in the condensed consolidated statements of operations.
We retain all rights to pursue and receive the remaining balance of approximately $0.7 million and are actively evaluating the likelihood and timing of any additional disbursements. We have not waived any claims to the unpaid portion of the ERC and are taking reasonable steps to secure the remaining balance. However, there can be no assurance as to the timing, amount, or certainty of receipt of additional funds, and we will continue to assess the collectability of the remaining claim in accordance with applicable accounting standards.
The $0.8 million ERC refund and the $0.1 million CHC write-off discussed above are non-recurring items and, as a result of these non-recurring items, we recorded approximately $0.9 million of other income in the consolidated statements of operations.
One Big Beautiful Bill Act of 2025
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant changes to federal tax law and other regulatory provisions that may impact us. We are currently assessing the impact of the OBBBA on our business, outlook, and financial statements.
What changed in the latest 10-Q
Risk Factors
New heading “Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer.”
Largest changes
“Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, misuse, attack, or damage. We rely on our information systems to provide security for processing, transmission and storage of confidential information and personal information about our patients, customers and personnel and rely on our third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies, data breaches or cybersecurity incidents. …”see in full comparison
“Security incidents, including physical or electronic break-ins, computer viruses, attacks by hackers and similar cybersecurity incidents, and data breaches, can create system disruptions or shutdowns or the unauthorized disclosure of, access to, or misuse of confidential information. …”see in full comparison
“On December 4, 2025, we reported that we experienced a cybersecurity incident involving unauthorized access to an employee’s cloud-based storage account that resulted in unauthorized access to certain personally identifiable information and protected health information of individuals. In response, we initiated an investigation, engaged third-party cybersecurity specialists, secured the impacted account, notified law enforcement authorities, and undertook a review of the affected files, which was preliminarily completed in March 2026. …”see in full comparison
“Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyberattacks could include wrongful conduct by hostile foreign governments, intentional or inadvertent wrongful conduct by insider employees or vendors, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful ransomware, malware, denial-of-service attacks, social engineering fraud (including phishing attacks) or other means to threaten data security, confidentiality, integrity and availability. …”see in full comparison
“Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer.”see in full comparison
“We maintain our information technology systems with safeguards designed to protect against cyberattacks including passive intrusion protection, firewalls and virus detection software. However, these safeguards do not ensure that a significant cyberattack could not occur. …”see in full comparison
Full comparison: every changed paragraph (7)
ThereExcept as set forth below, there have been no material changes from the risk factors disclosed in “Part I, Item 1A—Risk Factors” of our most recent Annual Report.
Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer.
Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, misuse, attack, or damage. We rely on our information systems to provide security for processing, transmission and storage of confidential information and personal information about our patients, customers and personnel and rely on our third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies, data breaches or cybersecurity incidents. We also rely on our employees and consultants to safeguard their security credentials and follow our policies and procedures regarding use and access of computers and other devices that may contain our sensitive information. If we or our third-party providers fail to maintain or protect our information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant disruptions to our information technology systems, we or our third-party providers could have difficulty preventing, detecting and controlling such cyberattacks and any such attacks could result in losses described above, as well as disputes with physicians, patients and our partners, regulatory sanctions or penalties, increases in operating expenses, expenses or lost revenues or other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition, prospects and cash flows. Any failure by such third-parties to prevent or mitigate cybersecurity incidents, data breaches or improper access to, misuse of, or disclosure of such information could have similarly adverse consequences for us. If we are unable to prevent or mitigate the impact of such cybersecurity incidents, data breaches or other adverse events, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business.
Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyberattacks could include wrongful conduct by hostile foreign governments, intentional or inadvertent wrongful conduct by insider employees or vendors, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful ransomware, malware, denial-of-service attacks, social engineering fraud (including phishing attacks) or other means to threaten data security, confidentiality, integrity and availability. A successful cyberattack could cause serious negative consequences for us, including, without limitation, the disruption of operations, the misappropriation of confidential business information, including financial information, trade secrets, financial loss and the disclosure of corporate strategic plans. The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements. Compliance with changes in privacy and information security laws and with rapidly evolving industry standards may result in our incurring significant expense due to increased investment in technology and the development of new operational processes.
We maintain our information technology systems with safeguards designed to protect against cyberattacks including passive intrusion protection, firewalls and virus detection software. However, these safeguards do not ensure that a significant cyberattack could not occur. Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not prevent the systems’ improper functioning or damage or the improper access or disclosure of personally identifiable information such as in the event of cyberattacks.
Security incidents, including physical or electronic break-ins, computer viruses, attacks by hackers and similar cybersecurity incidents, and data breaches, can create system disruptions or shutdowns or the unauthorized disclosure of, access to, or misuse of confidential information. If personal information or protected health information is improperly accessed, tampered with, misused or disclosed as a result of a cybersecurity incident or data breach, we may incur significant costs to notify impacted stakeholders (including affected individuals, investors and regulators) and mitigate potential harm to affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information. In addition, a cybersecurity incident, data breach of or other adverse event affecting our information systems could damage our reputation, subject us to liability claims or regulatory penalties for compromised personal information and could have a material adverse effect on our business, financial condition and results of operations. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our privacy and data security obligations. Further, although we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential liabilities related to any experienced cybersecurity incident or data breach. Cybersecurity incidents could result in operational disruption, regulatory investigations, required notifications and remediation, litigation, fines, reputational harm, or financial costs that could materially adversely affect our business, financial condition, results of operations, or prospects.
On December 4, 2025, we reported that we experienced a cybersecurity incident involving unauthorized access to an employee’s cloud-based storage account that resulted in unauthorized access to certain personally identifiable information and protected health information of individuals. In response, we initiated an investigation, engaged third-party cybersecurity specialists, secured the impacted account, notified law enforcement authorities, and undertook a review of the affected files, which was preliminarily completed in March 2026. We began providing notice to potentially affected individuals in April 2026. We continue to assess the potential impacts of the incident, including any regulatory, legal, or financial implications. In April and May 2026, two putative class action complaints were filed against us in the United States District Court for the District of Connecticut on behalf of individuals whose information was allegedly affected by the incident. Those actions have been consolidated. We intend to defend the actions vigorously, but we are unable to predict their outcome or estimate the amount or range of any potential loss. We may become subject to additional litigation, regulatory inquiries or enforcement actions arising from the incident, and the costs of defending these matters and any resulting liability could be significant and may exceed our available insurance coverage. While we have taken mitigation steps, there can be no assurance that similar incidents will not occur in the future or that additional impacts from this or related incidents will not be identified.
Management's Discussion & Analysis (MD&A)
New heading “Results of Operations for the Six Months Ended June 30, 2026 and 2025”
Largest changes
“Results of Operations for the Six Months Ended June 30, 2026 and 2025”see in full comparison
“Gross profit was approximately $5.9 million and $4.6 million during the six months ended June 30, 2026 and 2025, respectively. The gross profit increased $1.3 million during the six months ended June 30, 2026, as compared to the prior year period, as a result of increases in case volume and revenue. The gross margin was 43% for the six months ended June 30, 2026 and 2025. We operate a fully staffed CLIA and College of American Pathologists (“CAP”) certified clinical pathology and molecular laboratory. …”see in full comparison
“Cost of Sales. Cost of sales includes material and supply costs for the patient tests performed, costs related to products and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory. Cost of sales increased by $1.9 million for the six months ended June 30, 2026 as compared to the same period in 2025. The increase is primarily attributable to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the higher number of cases processed, as discussed above.”see in full comparison
Cash Flows Provided bysee in full comparisonor Used inOperating Activities. The cash flows provided by operating activities of$0.1$0.7 million during thethreesix months endedMarchJune31,30, 2026 included an increase inaccountsdeferredpayablerevenue of$0.2$0.1 million, a decrease in inventories and other assets of$0.1$0.2 million, and non-cash adjustments of$1.8$3.0 million. These were partially offset by a net loss of$1.4$1.7 million, an increase in accounts receivables of$0.3$0.5 million, a decrease in operating lease liabilities of$0.1$0.2 million,a decrease in deferred revenue of $0.1 millionand a decrease in accounts payable and accrued expenses of$0.1$0.2 million. The non-cash adjustments included $0.3 million for the change in provision for credit losses. We routinely provide a reserve for credit losses as a result of having limited in-network payer contracts. The other non-cash adjustments to net loss of approximately$1.5$2.7 million include, among other things, depreciation and amortization, and stock-based compensation. The cash flowsusedprovidedinby operating activities ofless than $0.1$0.3 million during thethreesix months endedMarchJune31,30, 2025 included a decrease in other assets of $0.1 million, an increase in accounts payable of $0.5 million, an increase in deferred revenues of $0.1 million, and non-cash adjustments of $1.6 million. These were partially offset by a net loss of$0.9$0.8 million, an increase in accounts receivables of$0.1$0.6 million, an increase in inventories of$0.1$0.3 million, a decrease in operating lease liabilities of $0.1 million and a decrease in accrued expenses of$0.1$0.2 million.These were partially offset by a decrease in other assets of $0.1 million, an increase in accounts payable of $0.2 million, an increase in deferred revenues of $0.1 million, and non-cash adjustments of $0.9 million..
“Net sales for the six months ended June 30, 2026 were approximately $13.7 million, an increase of $3.1 million as compared to the same period in 2025. During the six months ended June 30, 2026, patient diagnostic service revenue increased $2.9 million as compared to the same period in 2025. This increase was due to a greater number of cases processed in the current year period. We processed 9,564 cases during the six months ended June 30, 2026 as compared to 6,713 cases during the same period in 2025, or a 42% increase in cases. …”see in full comparison
“Operating Expenses. Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock-based compensation costs and depreciation and amortization. Our operating expenses increased by $1.6 million for the six months ended June 30, 2026 as compared to the same period in 2025. …”see in full comparison
Full comparison: every changed paragraph (24)
The following discussion should be read together with our condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q and with the audited financial statements, related notes and Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which we filed with the Securities and Exchange Commission on March 30, 2026. Results for the three and six months ended MarchJune 31,30, 2026 are not necessarily indicative of results that may be attained in the future.
The condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business and do not include any adjustments that might result should we be unable to continue as a going concern. We have incurred substantial operating losses for the past several years and while we have shown cash provided by our operating activities over the past year,18 months, this was largely aided by $0.8$1.2 million in payments received related to non-recurring Employee Retention Credits. See Note 12 Employee Retention Credit. For the threesix months ended MarchJune 31,30, 2026, we had an operating loss of $1.4$2.0 million and net cash provided by operating activities of $0.1$0.7 million. As of MarchJune 31,30, 2026, we had an accumulated deficit of $104.2$104.5 million and working capital of $2.1$2.8 million. Our ability to continue as a going concern over the next twelve months from the date the condensed consolidated financial statements were issued is dependent upon a combination of achieving our business plan, including generating additional revenue, and raising additional financing to meet our debt obligations and paying liabilities arising from normal business operations when they come due.
Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025
Net sales for the three months ended MarchJune 31,30, 2026 were approximately $6.7$7.0 million, an increase of $1.8$1.4 million as compared to the same period in 2025. During the three months ended MarchJune 31,30, 2026, patient diagnostic service revenue increased $1.8$1.1 million as compared to the same period in 2025. This increase was due to a greater number of cases processed in the current year period. We processed 4,9124,652 cases during the three months ended MarchJune 31,30, 2026 as compared to 3,0213,692 cases during the same period in 2025, or a 63%26% increase in cases. The benefit of the increase in cases billed during the three months ended March 31, 2026 as compared to the same period of 2025 was partially offset by a lower average price per case during the current year as a result of a different product mix. Product revenue for the three months ended MarchJune 31,30, 2026 remainedincreased flat$0.3 million as compared to the prior year firstsecond quarter.
Cost of Sales. Cost of sales includes material and supply costs for the patient tests performed, costs related to products and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory. Cost of sales increased by $1.2$0.7 million for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025. The increase is primarily attributable to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the higher number of cases processed, as discussed above.
Gross profit was approximately $2.7$3.1 million and $2.1$2.4 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively. The gross profit increased $0.6$0.7 million during the three months ended MarchJune 31,30, 2026, as compared to the prior year period, as a result of increases in case volume and revenue. The gross margin was 41%45% and 43% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease is mostly due to the lower average price per case in our patient diagnostic service revenues in the current quarter, as mentioned above. We operate a fully staffed CLIA and College of American Pathologists (“CAP”) certified clinical pathology and molecular laboratory. As such, it is necessary to maintain appropriate staffing levels to provide industry standard laboratory processing and reporting to ordering physicians. An increase in case volume or average price per case will enable our laboratory to yield economies of scale and to leverage fixed expenses.
Operating Expenses. Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock-based compensation costs and depreciation and amortization. Our operating expenses increased by $1.2$0.5 million for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025. For the three months ended MarchJune 31,30, 2026: (1) general and administrative expenses increased by $0.1 million primarily due to increased consultinglegal and professional fees, (2) sales and marketing expenses increased by $0.3$0.1 million due to increase personnel costscosts, andspecifically recruitingrelated coststo fornew hires in our product division sales force, which are tied to our increased revenues, (3) research and development expenses increasedremained byrelatively $0.2flat millionas duecompared to anthe increaseprior inyear personnel costs of $0.1 million and $0.1 million in increased operating supplies,period, and (4) stock-based compensation, which is a non-cash expense, increased by $0.6$0.3 million.
Other Expense. We recorded net other income of $0.4 million for the three months ended June 30, 2026, which included income of $0.4 million from the receipt of Employee Retention Credits partially offset by net interest expense of $9 thousand. We recorded net other income of $0.9 million for the three months ended June 30, 2025 which included income of $0.1 million from the gain on settlement of liabilities, income of $0.8 million from the receipt of Employee Retention Credits, and net interest expense of $23 thousand.
Results of Operations for the Six Months Ended June 30, 2026 and 2025
Net Sales. Net sales were as follows:
Net sales for the six months ended June 30, 2026 were approximately $13.7 million, an increase of $3.1 million as compared to the same period in 2025. During the six months ended June 30, 2026, patient diagnostic service revenue increased $2.9 million as compared to the same period in 2025. This increase was due to a greater number of cases processed in the current year period. We processed 9,564 cases during the six months ended June 30, 2026 as compared to 6,713 cases during the same period in 2025, or a 42% increase in cases. The benefit of the increase in cases billed during the six months ended June 30, 2026 as compared to the same period of 2025 was partially offset by a lower average price per case during the current year as a result of a different product mix. Product revenue for the six months ended June 30, 2026 increased by $0.3 million.
Cost of Sales. Cost of sales includes material and supply costs for the patient tests performed, costs related to products and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory. Cost of sales increased by $1.9 million for the six months ended June 30, 2026 as compared to the same period in 2025. The increase is primarily attributable to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the higher number of cases processed, as discussed above.
Gross Profit and Gross Margins. Gross profit and gross margins were as follows:
Gross profit was approximately $5.9 million and $4.6 million during the six months ended June 30, 2026 and 2025, respectively. The gross profit increased $1.3 million during the six months ended June 30, 2026, as compared to the prior year period, as a result of increases in case volume and revenue. The gross margin was 43% for the six months ended June 30, 2026 and 2025. We operate a fully staffed CLIA and College of American Pathologists (“CAP”) certified clinical pathology and molecular laboratory. As such, it is necessary to maintain appropriate staffing levels to provide industry standard laboratory processing and reporting to ordering physicians. An increase in case volume or average price per case will enable our laboratory to yield economies of scale and to leverage fixed expenses.
Operating Expenses. Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock-based compensation costs and depreciation and amortization. Our operating expenses increased by $1.6 million for the six months ended June 30, 2026 as compared to the same period in 2025. For the six months ended June 30, 2026: (1) general and administrative expenses increased by $0.2 million primarily due to increased legal and professional fees, (2) sales and marketing expenses increased by $0.4 million due to increased personnel and recruiting costs, specifically related to new hires in our product division sales force, (3) research and development expenses increased by $0.1 million due to increased personnel costs, and (4) stock-based compensation, which is a non-cash expense, increased by $0.9 million.
Other Expense. We recorded net other income of $0.4 million for the six months ended June 30, 2026, which included income of $0.4 million from the receipt of Employee Retention Credits partially offset by net interest expense of $24 thousand. We recorded net other income of $0.9 million for the six months ended June 30, 2025 which included income of $0.1 million from the gain on settlement of liabilities, income of $0.8 million from the receipt of Employee Retention Credits, and net interest expense of $48 thousand.
Other Expense. We recorded net other expense of $15 thousand and $25 thousand for the three months ended March 31, 2026 and 2025, respectively. These amounts were all related to net interest expense.
Analysis of Cash Flows – ThreeSix Months Ended MarchJune 31,30, 2026 and 2025
Cash Flows Provided by or Used in Operating Activities. The cash flows provided by operating activities of $0.1$0.7 million during the threesix months ended MarchJune 31,30, 2026 included an increase in accountsdeferred payablerevenue of $0.2$0.1 million, a decrease in inventories and other assets of $0.1$0.2 million, and non-cash adjustments of $1.8$3.0 million. These were partially offset by a net loss of $1.4$1.7 million, an increase in accounts receivables of $0.3$0.5 million, a decrease in operating lease liabilities of $0.1$0.2 million, a decrease in deferred revenue of $0.1 million and a decrease in accounts payable and accrued expenses of $0.1$0.2 million. The non-cash adjustments included $0.3 million for the change in provision for credit losses. We routinely provide a reserve for credit losses as a result of having limited in-network payer contracts. The other non-cash adjustments to net loss of approximately $1.5$2.7 million include, among other things, depreciation and amortization, and stock-based compensation. The cash flows usedprovided inby operating activities of less than $0.1$0.3 million during the threesix months ended MarchJune 31,30, 2025 included a decrease in other assets of $0.1 million, an increase in accounts payable of $0.5 million, an increase in deferred revenues of $0.1 million, and non-cash adjustments of $1.6 million. These were partially offset by a net loss of $0.9$0.8 million, an increase in accounts receivables of $0.1$0.6 million, an increase in inventories of $0.1$0.3 million, a decrease in operating lease liabilities of $0.1 million and a decrease in accrued expenses of $0.1$0.2 million. These were partially offset by a decrease in other assets of $0.1 million, an increase in accounts payable of $0.2 million, an increase in deferred revenues of $0.1 million, and non-cash adjustments of $0.9 million..
Cash Flows Used In Investing Activities. Cash flows used in investing activities were approximately $0.1 million and $0.1$0.2 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively,2025 resulting from purchases of property and equipment.
Cash Flows Used in Financing Activities. Cash flows used in financing activities totaled $0.1 million for the threesix months ended MarchJune 31,30, 2026, which included payments on our long-term debt and finance lease obligations. Cash flows used in financing activities totaled $0.2$0.4 million for the threesix months ended MarchJune 31,30, 2025, which included $0.2$0.4 million in payments on our long-term debt and finance lease obligations.
At each of MarchJune 31,30, 2026 and December 31, 2025, other than certain purchase commitments of approximately $2.8 million and $3.1 million, respectively, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. The purchase commitments are mostly for laboratory reagents used in our normal operating business.
No significant changes to contractual obligations and commitments occurred during the three months ended MarchJune 31,30, 2026, as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission on March 30, 2026.
Inflationary factors, such as increases in our cost of goods, labor, or other operating expenses, may adversely affect our operating results. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the three and six months ended MarchJune 31,30, 2026 and 2025. We cannot assure you, however, that we will be able to increase the prices of our products or reduce our operating expenses in an amount sufficient to offset the effects future inflationary pressures may have on our gross margin. Accordingly, we cannot assure you that our financial condition and results of operations will not be materially impacted by inflation in the future.
PRPO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (1 insider, 3 trade dates, 4,034 shares, about $100.3K). Net open-market shares: -4,034 (purchases minus sales); net value about -$100.3K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-15 | Valauri Christina Rizopoulos |
Grant/award | 108 | $25.24 | $2.7K |
| 2026-07-15 | Cossman Jeffrey |
Grant/award | 416 | $25.24 | $10.5K |
| 2026-07-15 | Cohen David Seth |
Grant/award | 520 | $25.24 | $13.1K |
| 2026-05-21 | Sandberg Richard A |
Open-market sale | 900 | $25.02 | $22.5K |
| 2026-05-20 | Sandberg Richard A |
Open-market sale | 2,034 | $24.89 | $50.6K |
| 2026-05-20 | Sandberg Richard A |
Open-market sale | 500 | $25.00 | $12.5K |
| 2026-05-19 | Sandberg Richard A |
Open-market sale | 600 | $24.42 | $14.7K |
| 2026-04-15 | Valauri Christina Rizopoulos |
Grant/award | 93 | $29.49 | $2.7K |
| 2026-04-15 | Cossman Jeffrey |
Grant/award | 365 | $29.49 | $10.8K |
| 2026-04-15 | Cohen David Seth |
Grant/award | 445 | $29.49 | $13.1K |
Well-known investors holding PRPO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 16,199 | $401.1K | 0.0% | Reduced 16% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 14,714 | $364.3K | 0.0% | Reduced 3% |