Interpace Diagnostics Group, Inc.(IDXG) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Unaudited Interim Condensed Consolidated Financial Statements Interim financials for June 30, 2025, reflect decreased assets, a Q2 net loss due to lost Medicare coverage, and reduced cash despite positive operating cash flow Condensed Consolidated Balance Sheets As of June 30, 2025, total assets and liabilities decreased, while the total stockholders' deficit slightly improved Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $502 | $1,461 | | Total current assets | $9,504 | $11,773 | | Total assets | $12,335 | $14,792 | | Total current liabilities | $7,149 | $10,615 | | Total liabilities | $13,548 | $17,009 | | Total stockholders' deficit | $(1,213) | $(2,217) | Condensed Consolidated Statements of Operations Q2 2025 revenue decreased 23% year-over-year, resulting in a net loss, with six-month revenue also declining Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $9,232 | $12,042 | $20,747 | $22,219 | | Gross profit | $5,276 | $7,806 | $12,646 | $14,117 | | Operating (loss) income | $(468) | $2,632 | $1,362 | $3,746 | | Net (loss) income | $(640) | $2,437 | $1,007 | $3,145 | | Net (loss) income per basic share | $(0.14) | $0.56 | $0.23 | $0.72 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, operating cash flow increased, but financing outflows led to a net cash decrease Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,755 | $1,346 | | Net cash used in investing activities | $(201) | $(225) | | Net cash used in financing activities | $(2,513) | $(2,600) | | Net decrease in cash and cash equivalents | $(959) | $(1,479) | | Cash and cash equivalents – ending | $502 | $2,019 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail liquidity challenges from lost Medicare coverage for PancraGEN, a restructuring plan, and the BroadOak term loan status - The company was negatively impacted by Local Coverage Determination (LCD) L39365, which resulted in the loss of Medicare coverage for its PancraGEN molecular test as of April 24, 2025[22] - A restructuring and cost-savings plan was implemented, resulting in workforce reductions and severance costs of $0.7 million for the six months ended June 30, 2025[23][25][87] - Despite the loss of PancraGEN revenue, management anticipates that current cash and forecasted receipts will be sufficient to meet cash requirements for the next twelve months[29] - The outstanding balance of the Term Loan with BroadOak was $1.9 million as of June 30, 2025, with the maturity date extended to December 31, 2025[73][72] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the impact of lost Medicare coverage for PancraGEN, leading to revenue decline and operating loss, and liquidity strategies - The primary challenge discussed is the reliance on Medicare reimbursement and the negative impact from the Center for Medicare and Medicaid Services' decision to cease coverage for the PancraGEN test, effective April 24, 2025[94][97] - As a result of the PancraGEN non-coverage, the company implemented a restructuring plan, incurring approximately $0.7 million in related costs for the first six months of 2025[100] - The company's liquidity strategy involves using available cash, improving margins, collecting receivables, containing costs, and exploring other financing or strategic alternatives[139][140] Reconciliation of Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | (Loss) income from continuing operations (GAAP) | $(533) | $2,511 | $1,221 | $3,323 | | Adjusted EBITDA (Non-GAAP) | $365 | $2,752 | $2,472 | $3,997 | Results of Operations Q2 2025 net revenue decreased 23% due to lost PancraGEN reimbursement, leading to an operating loss, with six-month revenue also down - Q2 2025 net revenue decreased by $2.8 million (23%) year-over-year, primarily driven by the loss of reimbursement for PancraGEN[108] - Q2 2025 operating expenses included $0.5 million in severance and related costs and a $0.2 million asset impairment charge for lab supplies associated with PancraGEN[111][113] - For the six months ended June 30, 2025, net revenue decreased by $1.5 million (7%) year-over-year, also due to the loss of PancraGEN revenue[119] Liquidity and Capital Resources The company ended with $0.5 million cash, with operating cash flow of $1.8 million, anticipating sufficient liquidity for the next twelve months - As of June 30, 2025, the company had $0.5 million in cash and cash equivalents, down from $1.5 million at year-end 2024[136] - The Term Loan with BroadOak has been amended multiple times, extending the maturity date to December 31, 2025. The outstanding balance was $1.9 million at June 30, 2025[135] - Management believes that even with the loss of PancraGEN reimbursement, current cash and forecasted receipts are sufficient for the next twelve months[144] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide information for this item as it qualifies as a smaller reporting company[148] Item 4. Controls and Procedures A material weakness in internal control over financial reporting was identified, rendering disclosure controls ineffective, with a remediation plan adopted - A material weakness was identified in internal control over financial reporting related to accruing royalty expense and understanding complex royalty agreements[150] - Due to the material weakness, the company's disclosure controls and procedures were concluded to be not effective as of June 30, 2025[150] - A remediation plan has been adopted, involving quarterly meetings between the accounting department and lab management to mitigate the weakness[151] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company reported no pending legal proceedings at this time - There are no pending legal proceedings involving the Company at this time[153][48] Item 1A. Risk Factors The report refers to previously disclosed risk factors in the Annual Report on Form 10-K, with no material changes noted - The company directs investors to the risk factors disclosed in its Annual Report on Form 10-K filed on March 31, 2025, as amended[154] Other Items (2, 3, 4, 5) The company reported no information for Items 2, 3, 4, or 5, including no unregistered equity sales or defaults - No information was reported for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), or Item 5 (Other Information)[155][156][157][158] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002[160]