Thank you, Ilan. Good afternoon and to our shareholders thank you for joining our call today. I am Carl Iberger, Precipio’s Chief Financial Officer. On today's call, I'll cover our 10-Q filing, operating performance and cash requirements.
First, as Ilan noted, we have completed and filed our 10-Q with the SEC today. Consistent with prior reporting, the company is filing a clean quarterly review and audit from Marcum LLP.
Moving on to operating performance and on the revenue front, in his remarks, Ilan discussed our Q3 revenue.
While Q3 revenue was lower from the prior quarter Q2 of 2019, our reported revenues on a year-to-date basis were $2.4 million for the nine months and more favorable to the nine months ending 2018 by 12%.
While reporting a 12% year-over-year increase and to Ilan's point, our expectations were higher. We projected a 15% increase and we were attracting to that forecast through August.
However, we fell short in the month of September.
Our testing revenue decreased as a result of a decrease in patient referrals from several key farmer accounts and certain other ordering accounts.
While disappointed with September, ordering patterns have rebounded in Q4.
Moving on to lab operating costs. At present, it is difficult to show improvement in gross profit because our testing volumes did not allow us to realize economies of scale. Both fixed and variable expenses are required at their current level to appropriately operate a functioning CLIA and CAP certified diagnostic lab.
Simply put, we are staffed at an appropriate level of effort to manage the lab and provide industry standard turnaround. But taken as a whole, lab operating costs have remained constant over the last 18 months.
As testing volumes grow, our margins will improve. That just stands today we do have excess capacity. Estimates are that we could absorb a volume increase approaching 20% before adding to our variable costs. Each incremental revenue dollar heals 55% to 60% margins.
Moving onto our operating expenses. The company's operating expenses consists of sales, marketing, R&D, public reporting expenses, legal, IT, general business operating expenses and management. By cost category, our operating expenses consist of salary, professional fees, facility costs, travel, depreciation and amortization. In the G&A section of operating expenses, we continually make strides with cost reductions and efficiencies through outsourcing and external systems. These initiatives yield both recurring and non-recurring reductions in our operating business. Key process changes have been in legal, public reporting, state and federal tax filings and business fees. Once we've locked on a reduction and demonstrate the savings, we in turn look to invest in sales, expanding our business development activities and R&D.
During Q2 and Q3, our investments have been expanding our sales team and upgrading our business development activities. Currently our sales force covers 17 States. Early results of our sales analytics show that we are seeing an increase in both new ordering accounts and a general across the Board increase and orders per account.
On the R&D front and I believe Ilan touched upon this. We've commercialized IV-cell and HemeScreen.
Well there have been some starts and stops in the clinical evaluation process and these have elongated our initial estimation regarding completion of clinical trials. Expectations remain for significant revenue contributions in 2020, operating losses.
For the three months ending September 30, 2019 the company reported a net loss of $2.4 million as compared to a net of $4.1 million for the equivalent period in 2018. Off the $1.7 million change, $1.6 million was the write offs associated with Goodwill. The remaining $0.1 million is the net impact of securing expense reductions in legal and public reporting and then turning around and investing in sales, business development and R&D.
So stepping back and viewing the company's operating expenses as a whole.
During 2019 we have successfully reduced spending in certain G&A areas and public reporting. We estimate that between 350 to 0.5 million in annual reductions have enabled the company to focus on its growth initiatives.
Moving forward we believe additional reductions or overall public reporting expenses will be evident in future quarters.
Turning to our cash and cash requirements, to grow the business, develop new products and expand sales. The company has relied on cash generated from its revenues and investor financing.
We are a consumer of cash today. Cash on hand as of September 30th was $1.7 million. This is an increase of 1.3 million from the year-end December 2018.
Going forward, management believes that current cash balances, continued growth in diagnostic testing revenue, generating additional cash, newly inked clinical research contracts and new product revenues in the form of IV-cell and HemeScreen combined with managing expenses will be sufficient to reach cash flow breakeven during 2020.
And now I'll turn the call back over to Ilan for some closing remarks.