iSpecimen Inc. (ISPC) Q2 2024 Earnings Name Transcript

iSpecimen Inc. (NASDAQ:ISPC) Q2 2024 Earnings Convention Name August 6, 2024 8:30 AM ET

Firm Members

Phil Carlson – IR, KCSA Strategic Communications
Tracy Curley – CEO and CFO
Leslie Hoyt – VP, Operations

Convention Name Members

Matt Hewitt – Craig-Hallum Capital Group

Operator

Good morning everybody and welcome to the iSpecimen Second Quarter 2024 Earnings Convention Name. Right now, contributors are in a listen-only mode. A matter-and-answer session will observe managements’ comment. This convention name is being recorded. A replay of right now’s name will likely be accessible on the Investor Relations’ part of iSpecimen’s web site and can stay posted for the subsequent 30 days.

I’ll now hand the decision over to Phil Carlson, Investor Relations, for the introduction and the studying of the Protected Harbor assertion. Please go forward.

Phil Carlson

Thanks, operator. Good morning everybody and welcome to iSpecimen’s second quarter 2024 convention name. With us on right now’s name is Tracy Curley, Chief Government Officer and Chief Monetary Officer; and Leslie Hoyt, Senior Vice President of Operations.

Earlier than we start, I wish to remind you that right now’s name accommodates sure forward-looking statements from our administration made throughout the which means of Part 27A of the Securities Act of 1933, as amended and Part 21E of the Securities and Trade Act of 1934, as amended regarding future occasions.

Phrases akin to could, ought to, tasks, expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such phrases and related expressions are supposed to establish forward-looking statements. These statements are topic to quite a few circumstances, lots of that are past the management of the corporate, together with these set forth within the threat components part of the corporate’s Type 10-Okay for the 12 months ended December 31, 2023, filed with the SEC. Copies of this doc can be found on the SEC’s web site at www.sec.gov.

Precise outcomes could differ materially from these expressed or implied by such forward-looking statements. The corporate undertakes no obligation to replace these statements for revisions or adjustments after the date of this name, besides as required by legislation.

Now, it’s my pleasure to introduce Tracy Curley, Chief Government Officer and Chief Monetary Officer. Tracy, please go forward.

Tracy Curley

Thanks, Phil. Good morning and thanks all for becoming a member of right now’s name. I am happy to report that the second quarter of 2024 outcomes exceeded our inside targets with lots of the initiatives we carried out over the previous couple of quarters beginning to produce tangible outcomes, together with the Subsequent Day Quote program that was rolled out within the third quarter of 2023.

With me right now is our Senior Vice President of Operations, Leslie Hoyt, who will present extra particulars in regards to the operational packages we’ve got carried out and the affect they’ve had on iSpecimen. Lastly, I am going to overview our monetary outcomes for the three and 6 months ended June thirtieth, 2024 after which open the decision for questions.

As we famous throughout our first quarter 2024 earnings convention name, we proceed to take a measured and disciplined strategy to our enterprise to make sure our long-term monetary success by strategically decreasing our capital, human assets and operational expenditures, and aligning to deal with key market alternatives. We’re setting the stage for income progress for the remainder of 2024 and past.

For the second quarter of 2024, we generated revenues of roughly $2.9 million as in comparison with roughly $1.6 million for a similar interval within the prior 12 months, representing a rise of 76%.

As I discussed earlier, these outcomes exceeded our inside projections as we proceed to enhance operationally whereas concurrently offering our clients a streamlined specimen procurement resolution.

We additionally proceed to strategically scale back our spending in numerous operational areas as we deal with our core capabilities. These efforts allowed us to proceed to scale back our money burn from roughly $7.1 million within the first half of 2023 to $2.9 million for the primary half of 2024, leading to a lowered burn price for the primary half of 2024 of 59% in comparison with the identical interval within the prior 12 months.

Our ends in the primary half of 2024 clearly display our operational initiatives are taking maintain, and we count on to see continued success as we transfer into the second half of 2024.

In our ongoing effort to strengthen our management staff and optimize our gross sales construction, we welcomed Brielan Smiechowski, our new Senior Vice President of Gross sales and Enterprise Growth, to iSpecimen in the course of the quarter.

Brielan brings over 15 years of expertise in life sciences and well being care. She will likely be main iSpecimen’s enterprise improvement and gross sales efforts going ahead, serving to scientists and their organizations procure the biospecimens essential to advance their analysis and applied sciences.

As I discussed earlier, Leslie Hoyt, our Senior Vice President of Operations, had performed an integral position in creating a number of of our operational initiatives just like the Subsequent Day Quote program. She has additionally led the hassle to make sure that we perceive extra deeply the competencies of our provider community and have interaction with these suppliers that provide the strongest capabilities.

This effort has already helped us drastically enhance the standard of our provider community. And the Subsequent Day Quote program has contributed to elevated velocity by our gross sales funnel and the sturdy outcomes we’ve got generated.

I might now like to show our name over to Leslie to overview our operational enhancements and what we consider the affect has been for iSpecimen. Leslie, please go forward.

Leslie Hoyt

Thanks, Tracy. Second quarter outcomes present that the actions we’ve got taken to streamline our operations, coupled with the packages we carried out on the finish of 2023, are beginning to achieve traction.

As Tracy talked about, these packages contributed to the corporate exceeding its inside income targets. We stay squarely targeted on the standard of our provider community and the specimens that we offer to the analysis group.

With the Subsequent Day Quote program, we additionally stay targeted on an expedited quoting course of with a purpose to improve conversions at each level by the gross sales funnel. I consider that we’re higher positioned to fulfill the demand of our biospecimen clients than we’ve got ever been.

As our Subsequent Day Quote program grows, so do the outcomes. The proportion of whole alternatives we’re qualifying as Subsequent Day Quotes throughout all segments, for remnant and biobank specimens in addition to potential collections, continues to stay excessive. Our Subsequent Day Quote program has allowed us to streamline the method for our clients and our suppliers.

For our clients, because of this iSpecimen will usually reply to inquiries throughout the identical or subsequent day, outlining the associated fee, timeline, and strategy to supply the wanted specimens. We’re proud to say that 99% of our clients are capable of take part within the Subsequent Day Quote program. For our suppliers, it implies that we are able to search inside knowledge on provider capabilities and pricing, decreasing time-consuming cellphone calls to suppliers and redundancy.

For Q2 2024, 44% of quotes offered to clients have been a part of the Subsequent Day Quote program, a gradual enchancment from 38% of quotes in This autumn of 2023 and 43% in Q1 of this 12 months.

Within the first half of 2024, an unimaginable 58% of Subsequent Day Quotes have been transformed to buy orders, straight contributing to our means to exceed our inside income targets for Q2 2024.

Over the approaching quarters, we’ll proceed to increase the Subsequent Day Quote program. With info gathered from our suppliers and the power to look that knowledge, we’re planning to supply Subsequent Day estimates to clients even when we’re not capable of provide a quote.

This course of ought to expedite and improve conversations between gross sales and potential clients and result in extra quotes with increased conversion charges. Over the subsequent few quarters, we’ll present extra info on the enlargement of the Subsequent Day Quote program and the instruments which are being constructed to help it.

I might now like to show the decision over to Tracy to overview our monetary outcomes. Tracy, please go forward.

Tracy Curley

Thanks, Leslie. For the three months ended June thirtieth, 2024, income was roughly $2.9 million in comparison with roughly $1.6 million for the three months ended June thirtieth, 2023.

The rise in income for the second quarter of 2024 was primarily as a consequence of a rise of 1,236 specimens or 26% in specimen depend from 4,682 specimens within the three months ended June thirtieth, 2023, to five,918 specimens within the three months ended June thirtieth, 2024. The common promoting value per specimen additionally elevated by $137 or 39% from $347 within the three months ended June thirtieth to $484 within the three months ended June thirtieth, 2024.

For the six months ended June thirtieth, 2024, income was roughly $5.2 million in comparison with roughly $4.6 million for the six months ended June thirtieth, 2023. This improve was primarily as a consequence of a rise in common promoting value per specimen of $119 or 34% from $343 within the six months ended June 30, 2023, to $462 within the six months ended June 30, 2024th.

The rise in common promoting value per specimen was offset by a lower of two,152 specimens or 16% in specimen depend from 13,311 specimens within the six months ended June thirtieth, 2023, to 11,159 specimens within the six months ended June thirtieth, 2024.

Value of income elevated by roughly $570,000 or 67% to roughly $1.4 million for the three months ended June thirtieth, 2024 in comparison with roughly $854,000 for the three months ended June thirtieth, 2023.

The rise in price of income was attributed to a 26% improve within the variety of specimens accessioned for the present interval and a 32% improve within the common price per specimen in comparison with the identical interval within the prior 12 months.

Value of income elevated by roughly $423,000 or 21% to roughly $2.4 million for the primary six months ended June thirtieth, 2024, in comparison with roughly $2 million for the six months ended June thirtieth, 2023.

The rise in price of income was attributable to a forty five% improve within the common price per specimen impacted by the specimen combine, offset by a 16% lower within the variety of specimens accessioned in comparison with the identical interval within the prior 12 months.

For the second quarter of 2024, we decreased our money spend for know-how to roughly $541,000 from roughly $1.5 million for a similar interval within the prior 12 months.

For the six-month interval ended June 30, 2024, we decreased our money spend for know-how to roughly $1.2 million from roughly $3.5 million for a similar interval within the prior 12 months.

The lower in spend for the three and six-month interval ending June thirtieth, 2024, in comparison with the identical prior 12 months’s interval is because of reductions in workforce stemming from our determination to take a position at a considerably decrease degree in 2024 when in comparison with 2023 and prior years, whereas we deal with rising our revenues by key market alternatives and assessing our capital elevate prospects.

For the three-month interval ended June thirtieth, 2024, money spend was comprised of roughly $172,000 of capitalized internally developed software program and roughly $369,000 of bills that we have been in any other case not capable of capitalize and subsequently, categorized as know-how expense.

The rest of the know-how expense for the three-month interval ended June thirtieth, 2024, was comprised of roughly $543,000 of non-cash amortization associated to internally developed software program.

Whole know-how expense for the three-month interval ended June thirtieth, 2024, was roughly $912,000 in comparison with roughly $843,000 for a similar interval within the prior 12 months.

For the six-month interval ended June thirtieth, 2024, money spend was comprised of roughly $448,000 of capitalized internally developed software program and roughly $748,000 in know-how expense that we have been in any other case not capable of capitalize and subsequently, categorized as know-how expense.

The rest of the know-how expense for the six-month interval ended June thirtieth, 2024 was comprised of roughly $1.1 million of non-cash amortization associated to internally developed software program.

Whole know-how expense for the six-month interval ended June thirtieth, 2024, was roughly $1.8 million in comparison with $1.7 million for a similar interval within the prior 12 months.

The gross sales and advertising and marketing bills elevated by roughly $105,000 or 11% from roughly $978,000 for the three months ended June thirtieth, 2023 to roughly $1.1 million for the three months ended June thirtieth, 2024.

The rise was primarily attributable to will increase in compensation bills of roughly $123,000 and promoting and promotion bills of roughly $100,000, partially offset by decreases in exterior advertising and marketing bills of roughly $96,000 and normal working bills associated to gross sales and advertising and marketing of roughly $22,000.

Gross sales and advertising and marketing bills decreased by roughly $276,000 or 14% from roughly $2 million for the six months ended June thirtieth, 2023 to roughly $1.7 million for the six months ended June thirtieth, 2024.

The period-over-period lower was primarily attributable to decreases in exterior advertising and marketing bills of roughly $191,000, compensation bills of roughly $179,000, and normal working bills associated to gross sales and advertising and marketing of roughly $42,000, partially offset by will increase in promoting and promotion expense of roughly $136,000.

Basic and administrative bills decreased by roughly $703,000 or 40% from roughly $1.8 million for the three months ended June thirtieth, 2023, to roughly $1.1 million for the three months ended June thirtieth, 2024.

The period-over-period lower was attributable to decreases in compensation price of roughly $183,000; taxes and insurance coverage of roughly $176,000; skilled charges of roughly $165,000; dangerous debt expense of roughly $102,000; normal and working bills of roughly $51,000; depreciation and amortization of roughly $21,000; and utilities and facility bills of roughly $5,000.

Basic and administrative bills decreased by roughly $311,000 or 9% from the roughly $3.5 million for the six months ended June thirtieth, 2023, to roughly $3.2 million for the six months ended June thirtieth, 2024.

The period-over-period lower was attributable to decreases in compensation prices of roughly $348,000; normal working bills of roughly $105,000; dangerous debt expense of roughly $57,000; depreciation and amortization of roughly $44,000; utilities and services expense of roughly $9,000, which have been partially offset by will increase in skilled charges of roughly 161,000; and taxes and insurance coverage of roughly $91,000.

As of June thirtieth, 2024, iSpecimen had $2.1 million of money and available-for-sale securities, which represented a lower of roughly $2.9 million from roughly $5 million as of December thirty first, 2023 and a lower of roughly $405,000 from roughly $2.6 million as of March thirty first, 2024.

As we talked about in our final earnings name on March fifth, we entered into an ATM to situation and promote shares of widespread inventory with an combination providing value of as much as $1.5 million by our shelf registration assertion.

In the course of the six months ended June thirtieth, 2024, we offered 3,980,075 shares of widespread inventory for gross proceeds of roughly $1.5 million underneath the ATM settlement.

We incurred providing prices of roughly $255,000, leading to internet proceeds of roughly $1.2 million. Proceeds have been used primarily for the administration of our accounts payable.

The longer term success of the corporate depends on its means to efficiently receive extra working capital and/or to finally receive worthwhile operations. We’re actively engaged on each. Now we have initiated aggressive efforts to lower our operational expenditures by slicing prices and rightsizing the corporate by reductions within the workforce.

All year long ended December thirty first, 2023, and into the primary half of 2024, we’ve got executed reductions in workforce, whereas streamlining operations and rationalizing assets to deal with key market alternatives.

The reductions in workforce since January 1st, 2023, by the top of June thirtieth, 2024, has resulted in an estimated discount in compensation price of roughly 45% and know-how price of roughly 66% by the top of June thirtieth, 2024, when in comparison with January 1st, 2023.

As well as, the corporate plans so as to add extra clients and suppliers to extend revenues in addition to to proceed to scale back and handle expenditures to enhance its monetary place and guarantee continued funding of operations. We’re actively searching for to fund operations as we attain a cash-positive place by public fairness or debt financing in addition to different sources.

This concludes our ready remarks. Now, I might prefer to open the decision for questions. Operator, please go forward.

Query-and-Reply Session

Operator

Thanks a lot presenters and girls and gents, we’ll now start the question-and-answer session. [Operator Instructions]

And our first query comes from the road of Matt Hewitt of Craig-Hallum Capital Group. Your line is now open.

Matt Hewitt

Good morning and congratulations on the sturdy quarter.

Tracy Curley

Thanks Matt.

Matt Hewitt

Possibly first up, might you describe or discuss slightly bit in regards to the macro atmosphere, what you are listening to from clients and suppliers, however extra so on the shopper facet of the equation, how are they feeling about their funding? Has there been any shifts in prioritization of tasks, something alongside these strains?

Tracy Curley

It is nonetheless slightly robust atmosphere for our researchers proper now. So, they’re being very cautious on what they’re keen to spend money on for analysis, however they’re nonetheless on the market pursuing tasks. Leslie, you are slightly bit nearer to this than I’m operationally, any insights that you just’d prefer to share with Matt?

Leslie Hoyt

I might add two fast issues, Matt. I might say that the tasks proceed, however the calls for are excessive. We’re seeing an increasing number of specificity within the necessities. And quantity two is timeliness issues. After they get funding they usually’re able to go, they’re able to go, which is why we’re actually engaged on the timing of our response in each attending to a quote again to the shopper after which additionally the timeliness of beginning our tasks as soon as we’ve got a purchase order order.

Matt Hewitt

Obtained it. Effectively, that is an important segue into my subsequent query on the Subsequent Day Quotes, 58% transformed to buy orders within the quarter, that is unbelievable. Do you’ve an inside goal? Or is there some kind of a aim that you’ve got sort of set the place you’d prefer to see, is it 75%? Or how ought to we be fascinated by that metric?

Tracy Curley

So, we do — however as you already know, we do not actually give steering, Matt. I might love for it to be 100%, to be sincere. However — so we’re not giving steering on that, however we do have an inside aim that we’re monitoring in the direction of for that, and it’s a lot increased than the 58%.

Matt Hewitt

Obtained it, okay. After which shifting gears slightly bit. The deal with the rise within the high quality of your suppliers, are these suppliers capable of fulfill most, if not all, of the requests you had beforehand been getting from a broader spectrum of suppliers? Like have you ever discovered the 200, the 300 that you just suppose can fulfill 99% of any request that you’d come throughout hit the transom?

Tracy Curley

So, I will reply that slightly bit, however then I will flip it over to Leslie as a result of she’s actually, actually a lot nearer to this. So, we realized final 12 months that we’ve got quite a lot of suppliers that we actually had not been partaking with in a significant vogue, they usually hadn’t been partaking with us both.

So, we launched into what we name Provider Refresh, which we have talked about in prior quarters and we terminated quite a lot of contracts with suppliers the primary half of this 12 months. We at the moment are all the way down to 105 suppliers from the place we have been at 240 in 2023.

And the explanation for it is because as we did our Provider Refresh and have interaction with the suppliers to grasp high quality, pricing, amount, capabilities, we really discovered that over time, our suppliers’ capabilities had shifted and we had not been conscious of that.

And so we’ve got found that we even have suppliers inside our community that might present us — perhaps they have been solely doing remnant or financial institution specimens, however they’d expanded their capabilities in order that now they may present us extra perspective, which was an actual eye-opener for us, an actual nice eye-opener, if you’ll, for us to search out that out. And so these are the suppliers that we need to and have been partaking with extra.

I am going to flip it over to Leslie to kind of full that.

Leslie Hoyt

Sure, I 100% agree, Tracy. With the restricted or much less suppliers that we’ve got now, we even have extra capabilities and principally as a result of we’re conscious of the capabilities, having taken the time to survey and have conversations with suppliers to really perceive what they do and what they’re able to doing.

I might say we’re a bigger share of their enterprise now, which makes them extra attentive to us and therefore to our clients. So, it is actually been an fascinating endeavor attending to know these suppliers, which we proceed to do an increasing number of and to see how we are able to have a smaller community with extra aligned suppliers that we all know extra about. So, provide has not been a problem to-date.

Matt Hewitt

Obtained it. After which perhaps a few metrics and I apologize if I missed this, however do you’ve the variety of distinctive clients in the course of the quarter and the variety of registered analysis and provider customers in the course of the quarter?

Tracy Curley

I believe I will should get again to you on that. I haven’t got that at my fingertips.

Matt Hewitt

No drawback. All proper. Congratulations once more on the quarter.

Tracy Curley

Thanks, Matt. Recognize it.

Operator

Thanks a lot. [Operator Instructions]

And I present no additional questions within the queue. Right now, I might like to show the decision over to Ms. Tracy Curley, CEO for closing remarks.

Tracy Curley

Thanks. I wish to thank everybody once more for becoming a member of us on right now’s name and to your continued help. We consider the operational developments that we have made this quarter and admittedly, for the final a number of quarters, will play a major position in our future progress.

We’re altering the panorama of our enterprise by extra quickly and successfully connecting biospecimen suppliers with researchers and we consider that, that’s key for our success.

Our Subsequent Day Quote program has confirmed profitable and we stay up for updating you with our continued rollout of this program in addition to different initiatives that we’re presently engaged on.

And with that, thanks and have an important day.

Operator

This concludes right now’s convention name. Thanks for taking part and chances are you’ll now disconnect. Have a superb day.