Q3-2025 Financial Results:
Revenues. Q3-2025 revenues reached $6.8M, a 30% increase YoY from $5.2M in Q3-2024, and a QoQ increase of 20% from $5.7M in Q2-2025. Pathology Services Division's services revenue increased 20% from the prior quarter; revenues from Product Division customers increased 16% from the prior quarter.
Adjusted EBITDA. Q3-2025 Adjusted EBITDA of $469K was up $369K YoY and up more than $500K from Q2-2025, swinging from negative to positive Adjusted EBITDA.
Cash flow. Cash generated by operations (before Change Healthcare transactions which are included in operations) changed from a cash burn of ($148K) in Q2-2025, to $285K of cash generated in Q3-2025, a $433K swing in cash generated quarter-over-quarter.
"This is a proud moment for our Company. The combination of repeated quarter-over-quarter revenue growth, alongside operational efficiencies and financial discipline, have helped us achieve both meaningful positive EBITDA and a business that generates cash", said Ilan Danieli, Precipio's CEO. "Quarters like this create all kinds of growth opportunities for our Company, ones that management intends to seize."
Pathology Services Division Summary:
Pathology Services Division revenue increased by approximately $1.0M, or 20% from $5.0M in Q2-2025 to $6.0M in Q3-2025. This growth was largely due to initiating service at several accounts in our growing prospective customer pipeline. Furthermore, our pipeline for further customer additions remains strong, with several prospects in various trial phases of our services.
We are confident that our superior quality and customer-centric level of service, compared to some of the mega-labs in the industry, will be a key factor in growing this business. On the cost side, our team was able to handle the increased volume while maintaining the same COGS, and without any significant fixed cost increase, supporting a continuous margin increase.
Products Division Summary:
Product Division revenues increased 16% quarter-over-quarter from $0.62M in Q2-2025 to $0.72M in Q3-2025. The majority of revenue increases stemmed from existing customers ordering more current panels and was supplemented by their orders for new panels and new applications in their lab.
The process of acquiring customers through our distributors has been a lengthy process with multiple steps. Over the past quarter we have seen increased activity resulting in engagement with new prospects and meetings that have laid the groundwork for several additional new customers (both Company and distributor initiated) to go live in the next two quarters.
Gross margins, operating expenses:
Pathology Services Division gross margins have increased quarter-over-quarter from 43% to 46%. Our past investments in building capacity to handle increased volume have enabled us to grow revenues and margins simultaneously.
Product's Division gross margins were 30% in Q3-2025, down from 44% in the previous quarter Q2-2025. This decline of 14% is driven by the "prepare for growth" investments, similar to those we made in the Pathology Division as discussed above. Such changes are the principal cause of the short-term impact to margin, and not any adverse changes in our unit revenue or cost.
Overall, the Company's gross margin increased from 43% last quarter to 44% in Q3-2025. We anticipate continued gross margin increase towards the 50% mark, as the pathology business continues to exploit its economies of scale, and the products division builds more revenue that can be leveraged to higher margins.
EBITDA and Adjusted EBITDA Reconciliation and Explanation
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a non-GAAP financial measure that is widely used to evaluate operational performance. Management believes Adjusted EBITDA provides investors with a useful perspective on the company's ongoing financial health by eliminating (a) unusual non-operating income and expense and (b) non-cash charges for employee stock option costs and amortization of intangible assets.
Below is a reconciliation of Net Income, EBITDA, and Adjusted EBITDA for the third quarter of 2025 and 2024:
($ in millions, Unaudited)
Q3-2025
Q3-2024
