Interpace Diagnostics Group, Inc.(IDXG) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Unaudited Interim Condensed Consolidated Financial Statements Unaudited Q1 2025 financial statements detail revenue and net income growth, stockholders' deficit, and notes on PancraGEN, restructuring, and debt Condensed Consolidated Balance Sheets As of March 31, 2025, total assets slightly decreased, total liabilities decreased, and the stockholders' deficit improved Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $11,654 | $11,773 | | Total assets | $14,494 | $14,792 | | Total current liabilities | $8,678 | $10,615 | | Total liabilities | $15,076 | $17,009 | | Total stockholders' deficit | $(582) | $(2,217) | Condensed Consolidated Statements of Operations For Q1 2025, net revenue grew 13%, operating income increased, and net income more than doubled Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue, net | $11,515 | $10,178 | | Gross profit | $7,370 | $6,311 | | Operating income from continuing operations | $1,829 | $1,114 | | Net income | $1,647 | $708 | | Net income per basic share | $0.37 | $0.16 | Condensed Consolidated Statements of Cash Flows Q1 2025 saw significant improvement in operating cash flow, with cash used in financing activities, leading to an overall cash decrease Q1 2025 vs Q1 2024 Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,235 | $(58) | | Net cash used in investing activities | $0 | $(28) | | Net cash used in financing activities | $(1,500) | $(600) | | Net decrease in cash and cash equivalents | $(265) | $(686) | | Cash and cash equivalents – ending | $1,196 | $2,812 | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail liquidity, a corporate restructuring plan, amendments to the term loan, preferred stock conversion, and subsequent events - The company provides molecular diagnostics and pathology services focused on early cancer detection[21] - A Local Coverage Determination (LCD) by Medicare contractor Novitas resulted in the loss of Medicare coverage for the PancraGEN test, effective April 24, 2025, with the company stopping specimen acceptance after May 2, 2025[25][27] - In response to losing PancraGEN coverage, the board approved a Restructuring Plan to reduce operating costs, expecting to incur severance costs of $0.5 to $0.6 million in Q2 2025, in addition to $0.2 million recorded in Q1 2025[26][28][92] - Despite the loss of PancraGEN, management anticipates that current cash, cash equivalents, and forecasted cash receipts will be sufficient to meet cash requirements for the next twelve months[32] - The company's term loan with BroadOak was amended multiple times, with the maturity date extended to December 31, 2025, and an outstanding balance of $2.9 million as of March 31, 2025[75][76] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2025 financial results, PancraGEN reimbursement cessation impact, a corporate restructuring plan, and sufficient liquidity Results of Operations Q1 2025 revenue increased 13% due to higher test volumes, with gross profit margin improving and operating income growing Q1 2025 vs Q1 2024 Results of Operations (in thousands) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue, net | $11,515 | $10,178 | | Gross profit | $7,370 | $6,311 | | Gross Margin | 64.0% | 62.0% | | Operating income | $1,829 | $1,114 | | Net income | $1,647 | $708 | - The increase in revenue was driven by increased test volumes compared to the prior year[112] Liquidity and Capital Resources The company generated cash from operations, amended its primary term loan, and anticipates sufficient liquidity for the next twelve months - As of May 2, 2025, the company had approximately $1.6 million of cash and cash equivalents[130] - The company's term loan with BroadOak was amended in January 2025, extending the maturity date to December 31, 2025[127][128] - Management anticipates that current cash and forecasted cash receipts will be sufficient to meet its cash requirements through the next twelve months, even with the loss of PancraGEN reimbursement[138] Non-GAAP Financial Measures Adjusted EBITDA, a non-GAAP measure, significantly increased in Q1 2025, with reconciliation from GAAP income Reconciliation of Adjusted EBITDA (in thousands) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Income from continuing operations (GAAP Basis) | $1,754 | $812 | | Adjusted EBITDA | $2,096 | $1,245 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Interpace Biosciences is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide the information requested by this item[141] Controls and Procedures Disclosure controls were ineffective due to a material weakness in royalty expense accrual, with a remediation plan adopted - A material weakness was identified in the company's internal control over financial reporting related to accruing royalty expense and understanding complex agreements[143] - Due to this material weakness, the principal executive officer and principal financial officer concluded that disclosure controls and procedures were not effective as of March 31, 2025[143] - A remediation plan has been adopted, which includes holding quarterly meetings between the accounting department and lab management to discuss new agreements[144] PART II - OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the period - There are no legal proceedings to report[147] Risk Factors The company refers investors to risk factors in its Annual Report on Form 10-K, with no material changes reported - The report refers to the risk factors disclosed in the company's Annual Report on Form 10-K filed on March 31, 2025[148] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds to report[149] Exhibits This section lists exhibits filed with the Form 10-Q, including the BroadOak loan amendment and officer certifications - Key exhibits filed include the Fourth Amendment to the Loan and Security Agreement with BroadOak Fund V, L.P., and officer certifications pursuant to the Sarbanes-Oxley Act of 2002[153]