iSpecimen Inc. Q3 FY2022 earnings call

• Recent C-suite changes: Christopher Ianelli and Jill Mullan are no longer with the company; Tracy Curley is Interim CEO and CFO.
• Efforts to ensure continuity: Increased cross-functional team communications, reviewed technology roadmap, held meetings with employees.
• Initiatives: Reducing supplier concentration, launching Marketplace Onsite program, reorganizing sales approach, retaining a revenue consultant to evaluate structure and processes, enhancing the marketplace platform with new Dashboard, and ongoing software projects for electronic medical records, marketplace search capabilities, and back-end updates.

For the three months ended September 30, 2022, revenue from non-COVID-19 related specimens was approximately $2.3 million, accounting for 88% of total revenue, while COVID-19 related revenue was approximately $322,000 (12% of total revenue). For the nine months ended September 30, 2022, non-COVID-19 related revenue was approximately $6.5 million (87% of total revenue) and COVID-19 related revenue was approximately $971,000 (13% of total revenue). In the third quarter of 2022, revenue was $2.6 million compared to $2.7 million in the third quarter of 2021. The nine-month period ended September 30, 2022, had revenue of approximately $7.4 million compared to $8.6 million in the same period of 2021.

• Expect to complete electronic medical records integration and marketplace search overhaul in the first half of 2023.
• Back-end updates and data-as-a-service pilot expected to be completed in the second half of 2023, which could validate additional revenue streams.
• Commitment to invest in technology, as seen in increased cash spend on technology for the three and nine months ended September 30, 2022.

• Macroeconomic uncertainty: Lingering COVID-19 pandemic, uncertain global economies, high interest rates, potential recession.
• Impact of Russia-Ukraine war: Shut down supply side in those regions, affecting order fulfillment, with Ukraine supply sites operating at limited capacity.

Q: Good morning, Tracy. Thanks for providing the update and all the detail. Maybe the first one for me. There's been a lot of questions and comments the past quarter or two regarding the health of the biotech and pharma markets. You touched on it briefly. But I'm just curious, what are you seeing and hearing from your customers both on the supply and the procurement side as far as the health of that market? I know it's primarily the small biotech and pharma customers. But are you seeing some of that impact? Or what could you tell us there?

A: So on the customer side, we are seeing that we are still getting projects, but they're smaller in value, possibly more specimens, but the values are smaller. But in our opinion, they're preserving cash. They're continuing to do research, but they're trying to preserve cash at the moment.

Q: And then I think one of the things that you mentioned earlier is that your plan -- one of the enhancements that you're going to be making is to the search capabilities. And I'm just curious, as you work through something like that from a functionality standpoint, what steps -- or what do you put in place to ensure that you don't have any disruption to the ongoing business?

A: Well, we're doing that in parallel. And we're doing a lot of testing, if you will, off into an environment that doesn't impact. So we don't go live until we're sure that the product is ready to go live. So there's no disruption.

Q: And maybe one last one and I'll hop back in the queue. I think you laid out a few different enhancements that you're going to be working on: a couple for the first half, one for the second half of the year. Of those 3, what do you view as being the biggest potential driver to accelerating growth and profitability? Thank you.

A: For me, it's the revenue stream associated with the data. This is something that we talked about pre-IPO that the proceeds that we raked in the IPO were going to be used to develop our technology further. And one of the things we discussed was our ability to tap into our data so we can monetize that. So to me, that's a really exciting thing, that, by the middle of next year, we're going to be doing our pilot on data as a revenue stream. So I'm pretty excited about that, Matt