iSpecimen (ISPC) 14 May 222022 Q1 Earnings call transcript

Good day, everyone, and welcome to iSpecimen's First Quarter 2022 Conference Call. [Operator Instructions] This conference is being recorded. A replay of today's call will be available on the Investor Relations section of iSpecimen's website and will remain posted there for the next 30 days. I will now hand the call over to Allison Soss, Investor Relations for introductions and the reading of the safe harbor statement. Please go ahead.

operator. you, Thank and Conference everyone, iSpecimen's Quarter First Good welcome Results Call. XXXX morning, to on Christopher Officer; With Executive call today's us are President; Chief Officer. Curley, Mullan, Officer Ianelli, Tracy Chief Jill Financial and Operating and Chief iSpecimen's

Exchange amended, estimates as Words and may as control XX, including Risk XX-K which changes amended of the on results December XXXX of call, Actual to The to the subject to except events. ended of Before of you these Factors concerning plans, numerous call are of expressed are such the statements intended website with required document words the Act of obligation are from SEC's to may, of future management Securities from intends, available that this statements set the for the section identify revisions of conditions, beyond company's Form expects, undertakes believes, the materially such Securities such meaning These SEC. date the XXXX, forward-looking www.sec.gov. at forth of year as statements. forward-looking in Copies or similar remind made we implied are company or statements Act forward-looking law. by update after no those the or by would should, and projects, the within differ certain company, filed as the expressions and anticipates, of today's statements. of I hopes, our variations many begin, and Section like XXE contains Section XXXX XXA this those

pleasure please ahead. President my to Chris introduce Now and Chris, Ianelli, go of iSpecimen. it CEO is

with I'll operation Officer. Chief for our of financial With ended an update of and on of for and progress you our Financial joining by Allison, X Quarter Earnings begin I'm our following as Jill our performance provide overview Mullan, excited followed X today Thank Tracy company. operational a Tracy Operating Curley, Officer; you the Chief XXXX you, our quarters good by everyone. Call. are performance, months Conference completed by XXXX. during Thank me an on our to First morning, us providing review XX, public March a

will Ukraine challenges, to amount take highlights. Starting your which the the geopolitical we unrest. company, of the exciting from was by activity tremendous open and quarter that, the latter and another Following and the operational QX Russia resulting line marked few a questions. stemmed conflict our a of between military predominantly with for

we important to that release planning It's ago, several was has following in with half of last align done stress this discussed iSpecimen initial have we platform platform, calls, our first of growth long-term This the foundational iSpecimen on long-term of at announced marketplace the to that a the the supply to culmination of each the for our offering pleased our we that on being our June, series update chain the cover public you of strategy. focused was let our software expanding prior capabilities accelerating utilization starting that As to I'll management improvements and on been updates last second the began and new growth release and value. invigorating a intensely work I'm separately, with these of global a of our aimed marketplace. work weeks platform. marketplace incremental know yet year. delivering each plan revenue of

tools valuable automating sourced release latest unique process is market our discussed and have biospecimens tools. biospecimen component software supply inventories by our This includes inefficient a the by maintain and providers we our are grow model on platform marketplace a data These calls, business which of ingestion and tools share further ability add critical capture and of to and strategy to new chain, platform. prior and care As as to capabilities data to biobanks new federate health harmonization and defragmenting procured. our integration automated historically data improve such

includes directly our in search to have redesigned been biobanking release additional a operations Google-like desired network search manage interface them easy-to-use These for an well. bar provider enabling to extended this with iSpecimen's their as search Additionally, criteria. researchers samples search support via for intuitive better now for to capabilities suppliers,

clients' we customers of announce many will a platform that better forward have make confident identify to into I'm platform, clinical to serve on our sets and as are for biospecimen the ice opportunities. with We round patient moved center. client first partnership, our significant specimens a suppliers increased the easier utilized source data-sharing a to of have recognized marketplace in interest nationally cancer resulting will enhanced by which research and ultimately revenue Through transact, needs research to of begun and new the be encounters, critical for support that marketplace parallel world that large this deep also software pleased it major arrangement we specimen our may across for prospective ingesting In work data collections. this

scale a We are the business. highly collections of pursuing biospecimen growing accelerate prospective data-sharing as represent other proportion our that our this of ability part to our like plan specific actively deals and to conduct

approach, we on to this to With as and happy platform set unique the of addition with iSpecimen. definitive comes saw we call, side, iSpecimen's leader Cox to of as proposition Vice to from Management. the team we of health the continue to markets outstanding perfectly to another new and a and the personnel our experiences and that deep organization. the President announce advance Product him are opportunity our an Head value to relevant understanding align of Evan the bring care a brings with Evan On us

Valluri. are It's approach platform and Bielak plays role Madhu working our team, important with our iSpecimen side-by-side to and on as critical strategy. team the long-term technology CIO, in growing stress sourcing have to Evan our procurement of the to well as fortunate marketplace We engineering our Head the that Ben

on and traction design, qualify to throughout we development maximize aggressively software have engineering value the are We easier the these year. long-term to process in their the continue the and the the and of data and partners product to community, investing pleased the workflow made for Rest are provider getting investments forward this continue the monitor throughout our data care health support the collections. and with to company. to solutions with will updates to capital assured, demand to these progress research front We date even of plan that we we to make and return and highlighting capabilities you new providing of procurement to look needs the growing streamline support development additional tools prospective automation year, for allocations it

our include the helped hematopoietic suppliers by to the samples, to footprint, of access sequenced capabilities we've cryopreserved expand that us in geographic countries relationships with Estonia, securing and and others. our as United now and Turning fresh supplier products, COVID-XX specimens network Turkey, our providing made and supplier a progress expanded of new India Venezuela. new In both States, tissues cell successfully such biospecimen network. among we array oncology biofluids the broader QX, These

its to under procured supplier of XXX marketplace us base and that our our platform Acutis the the have assisting as services quarter, iSpecimen of health clinical sorry, research with to wide biospecimens unique in supplier now Acutis our Ending at assess on to growth surpass this I QX, Diagnostics, organizations network relationship to iSpecimen sequencing the of laboratory cancer. clients, had Combined, such the again organizations supplier customer offers of specific services organizations we similar measured As them variety efforts Diagnostics, unique mirrored in Diagnostics, care part The diagnostics we with by XXX added a I'm our agreement expansion, the from a provider with through specimens -- COVID-XX a allowed these mutations quarter, characterization our of provider. number genetic network. as better was during iSpecimen. of Acutis the by relationship have specimen. growth impact Throughout iSpecimen diseases

of an the companies. Measuring we Marketplace new government a increase during same fulfilled number biotechnology, X quarter to are both commercial XX% we pharmaceutical XXXX, total the of period also side of orders a customer consisted unique organizations agencies. These and number pleased period not-for-profit side an during platform year. some included customer users last this the year report iSpecimen of XXXX. same nearly biospecimen organizations, and It had year, compared XXX and and QX to of of diagnostic earlier, As first of the XXX primarily centers the supply increase from interacted with of XX% research the XX March that's successfully for of universities, that

in that to later customers of base technology. solid increasingly connected this an will form our confident in suppliers, to growth result year. continue investment by technology We're return a marketplace we together, platform Taken and all this our

new Additionally, These year. year. and investments in to sales we penetration personnel, have force, of past material our of impact a us expect the our essentially that over accounts the the have or ramp been to of revenue will doubled territories starting on coverage in recent of and give additional field size quarter bolster half also has second which improved complete the more mid-ramp sales the will growth throughout made rest the

lingering first quarter. during encountered us. for continues The the issues -- Next, pose the turning pandemic quarter challenges to we some to in the first

the to providers areas COVID our supply intermittent in health their regional care outbreaks relating On continued network face side, QX. some in constraints to during

care guarded we're outbreaks about in a disrupt our do While COVID we could low are additional and sites relatively of period chain. supply open, our mostly health COVID remain transmission that now provider

details activity is existed side, order flow, of post-COVID end from back and will Tracy her we improve believe more on preclinical meaning our customer ramp-up order in pre-pandemic. as transition revenue pandemic a subsides. heterogeneity to We specimen COVID-related the tail activity particularly the comments base of customers their research from research of the around requests, On customer our the now COVID-related to shortly. provide that that to dominating flow continues the level continue

shutdown experienced first both sudden and significantly, network and and military Ukraine quarter, Additionally ensuing a the conflict due the supply Russia during in the our of to unrest. we

suppliers operational affected in a the While biospecimen global network. which feasibility collections this orders, successfully of resiliency and reach scheduled testament we the flexibility $X of to majority is transitioning in and business purchase demonstrated to assessments regions, of the model other and by approximately majority million both our our open

the supply adverse for effect site have closures an on unexpected these However, revenue first quarter. did

improve take to conflict. of outside For orders of QX reported diminution this approximately QX sales to personnel, remainder the are execution quarter, will were we that remain we the strategy, to our compared XXXX. Tracy call will $X in investments confident approximately setback position gain Despite share especially revenue the for throughout open along the pass while and force, who suppliers This during market on capture primarily Russian Ukrainian continue to million XXXX. the delayed and revenue revenue our in and With the financial to extremely now our review region, with attributable over I'll the place the of results. expected was moved key of quarters. of And XXXX, that, technology we to million $X.X Curley, coming most to additional our fulfillment Tracy?

everyone. first same you, XXXX quarter Today, to financial Chris, be for XXXX. I'll morning, our the the in compared good Thank results reviewing and period of

same along decrease compared regions, continue heterogeneity first million of the revenue. order conflict, which down and those experience year. The our period with the the in our XXXX, prior revenue $X.X to heterogeneity Ukraine approximately revenue declines million in of of COVID-XX in as in when quarter attributable the we during year. returns, order specimens last mix sales COVID-XX we The to the was or reported the shut reduction primarily sites diversity of supply compared to to Russia in approximately $X For

decrease first specific For $XXX,XXX anticipate decrease revenue our We continue uncertainty of XXXX, Specimens that a to decline period to of $XXX,XXX or in in specimen X% quarter on the X,XXX prior million the decreased a X,XXX of a to in a impact XX% same to to same prior XX% X,XXX in revenue. Ukraine compared from XXXX, approximately same average by that of during in average COVID-XX. approximately $X.X quarter period specimen the specimen specimens for directly $X.X were accessioned XX% the XX% which conflict, specimens approximately current being XXXX will an for the quarter first in approximately $XX for to the of during note, year. a revenue On there positive and specimens the to the revenue accessioned or quarter approximately continued change in was as the the in decline COVID-XX was quarter first compared the mix due approximately to attributable selling an year. resulted or cost same approximately decrease $XXX,XXX the the decrease of XXXX million COVID-XX increase quarter Cost accessioned which of impacted well guidance price per in for the prior the of a approximately the per specimens the or period year. approximately $XXX,XXX prior to by Russia the the in in XX% of was COVID-XX of compared first compared as year, resulted

the period for our last cash first to the approximately approximately For expense of internally spend technology was first as technology, The for developed for classified $XXX,XXX of developed noncash software $XXX,XXX XXXX, quarter was invest increased for of XXXX comprised first in of $XXX,XXX technology internally the technology approximately of in commitment same for remainder compared technology for and expense. first capitalize quarter increase from of comprised of evidenced expense the our technology related first quarter -- are of Total XXXX of we the spend as of not cash to $XXX,XXX able by quarter that capitalized $XXX,XXX. and we amortization was the therefore, year. to software. XXXX was this expense -- to outlay The approximately quarter approximately $XXX,XXX of was capitalized our XXXX,

the quarter were in increases last XXXX, operating attributable marketing The efforts $XXX,XXX to during first approximately external the and compared expenses, and approximately same and was related year. For sales expenses marketing general $XXX,XXX period of increase expenses. to payroll

primarily stock were compensation, compared the For first of during the $X.X directors operating to to costs million approximately and related year. insurance officers, and in last administrative was expenses. an $XXX,XXX and maintenance The period quarter compensation, increase attributable XXXX, approximately general same and expenses increase to

$XX.X future, XX, March December long the of approximately $XX.X on we million our expected ahead as As prepared million XXXX, to quarterly for cash approximately remarks. rate burn foreseeable approximately $X.X million to This very cash have $X runway was concludes of balance million our of XXXX. Based of compared us. an XX, a

questions. Operator, I please call ahead. Now the would like go to open for

is question Group. line of [Operator Matt with Hewitt Capital Instructions] Our first the from Craig-Hallum

in I impacted Ukraine the of situation. regarding would quarter? over up, first and by cadence of think is the a year, there the will but orders wondering, mean the bit? reflected be of were recognized Maybe hitting it any any little you the Russia that roughly to million I'm said that $X way or kind of be bulk with particular in remainder I that help those us the

No.

orders allocated varied and when to So them those at collection look we rates had we sites, Ukrainian originally them sites. when to reallocated new we the from

X next that So out. the over evenly and we the will out collecting be it quarters, pretty of spread bulk turns it's

had Chris. of was doing to other the that move we though hard first to we for It's majority which sites immediately answering them, drop and not to And Jill as get the because those other scramble it's we into were to project these. as Matt, other could those they stuff move queues. part. did it's is to the orders, hard And this That project, successfully

come to quarter. the out be predict going those where it's in So bolus really next to of difficult orders the

the they're safeness it's say to So out spread to going over year.

of sense. your makes it highlighting abilities breadth and your That obviously, is the Okay. And platform.

little Maybe front. the that initiative. on regarding gears congratulations guess, a bit shifting I data So

out. changes, on first the of update obviously, that congratulations getting Some

the at do of data the the other to add next what next of greatest couple could and believe about platform look areas think you you updates, today As or value your you update the platform?

of So patients customers the those to whom the phenotype samples. time. to that deep clinical is into want be say to period because I from be or it's sets visibility of most what's our data continue as gain going valuable much And characteristics for a to able

would have to status, the to information historically intense may But information those to in That treatments, deep like family a in biobank. access foreseeable are the exists. from you pathology already reason being a a want time medical us, of number or increasingly X we want what lab, go want only important customer it's that increase for on gain to them in terms world the lab, those by medicine satisfied that responded sample only is we're to meaning of being in that And we've been past, the our of focus by been describe are an electronic they the customer for how for be for information that a is of is lab now -- into have from, are deeply that So cannot be patients on we've record, when a is the to history they not qualify this base biobank, and lab future, medicine patients because deeper data The these more a going for but phenotypes, sets collected. a patients or have the the way to of not the to reaching you are in that why samples meaning history. a done smoking treated, exist while, a a drinking, that we some the increase the them meaning those collections they deep by source we've trying with to getting select reasons. clinical diagnosis not or understanding environment get a One, samples to are seen sorts responded an how sample social of our becoming and that steady have that clinical pathology in than for sample lab the shipment requested need selection specific, prospective the already these be to but so asked picking increasingly seeing collections important second getting precision request exists. up, where now. sample They attributes precision for in really data, more

do to so where to can an is information informed have the patient can with care and they those have that health encounter are be approached, gathered with system We consent and we they likely where can about collection. that characteristics a be have

sets to collection data deep anything it's Jill add I arms So help run. know that, if has don't to we of currently both that really with to but...

that complete. I think No, was pretty

to, And X That's are in and last very with come or I'll the back actually as I versus this COVID this roughly guess, related maybe how collection And COVID of year during broader a helpful. X% Tracy, that is queue. I is think coming seeing before? more, it you that back increased of the higher the the and hop require much primarily a But year you're just data set greater ASP newer then how year-on-year, samples with the quarter much shift sample ASP. to that mentioned,

the that to let answer of she's our to going because mix Jill I'm closer specimens.

Yes.

clinical only So have slight those when and we collections the we overall price at go point in POs patient, them, we renin as from species, upon of use get of find a sample is based the can say, a custom I to were increase approach looked that something send a higher received like Chris typically, them sample. mix them, And were, that than, collections. what out, have the mentioned, research a prospective percentage saw the

samples, throughout certainly it typically COVID days of The those samples. price continues or we in the gotten were a year more our to clinical the part of samples, lower-value you of those effect as lot mix and is see increase. towards early COVID too will last COVID requests the remnant So so that had value higher shift COVID

history, Yes, mix, samples, you And continue samples ASPs. so a the I and mix projects. was overall, COVID depends expect look going to of ASPs overall percentage have I But on increase would quarter-by-quarter be that upon has you as the say, the it to other overall as would the shifts a our if up. really increased lumpy happened, gone it out as of because may our at see overall these basis

line Hutton. Davides the from Constantine is question EF of with next Our

you change valuations you I'm Chris, the in-house, are assets of does lately the understand capital, your cash bring assets have acquisition are for looking on highlighted cost are obviously, on can you help the much to us just the of that front? the mindset for extent rising And under would sheet and in you properties criteria maybe industry of And some balance target? does of just what how pressure. looking some change you terms the to wondering that

Yes.

along by macro that M&A. else certainly our environment be what being the but So towards king that ourselves is find with now, market, to in, we and it valuations and the Cash we now attitude certainly does everybody look right on look are does assigned change the continuing we at. are selective very

to the given announced criteria a market. feeling made we enter be a going environment the space pullback think I but our in competitors are what into, going happening in number a public be not what what's by to recessionary may or opportunistic, of have those up that from we be it are, very the I'll We are certainly but sting saying sum

the side give base gives some opportunistic us So opportunities deeper us in to assets customer for go serving. and can bolster we'll our be that competitors is very that platform, us for may to our those supply be of access that and better looking to also access in bring it and but

into we -- new be to example are to what to opportunity samples. they're related. one want of where patient now this we very addition would providing don't I primary to not Not can sample, there only specimen cell isolated tissue looking or looking or at tangential the a currently say sense from where only of be can material, look-alike in and types primary we types to but access do. opportunistic. In do from and And biological competitors an is that's adjacent patient, different meaning patient piece to what a we're sell be to offerings able access value tissue. get that because tissue the us in low-tech right separate add looking start to very something also We're getting to would that that we looking at network biofluid But being cell for access we right inventory to that at able then the demand to and opportunities we're create that whether a have in to such of large know many in to we access so that we being start very one tissue, types around market, types because the specialized some and hepatocytes different we are can cell of them. it's at

we progress. you ready qualify attention The of and M&A with offerings on to it make that their parameters disclosed So that we're to this force. and qualify that And opportunities, we the things not don't sensibly that. these that things that we we would around extend but to gives or as more for sales have I'm yet which will base, on clue can think coming be out as our can we or call, to customer partnership, platform do that these economic parameters financial I have little potential using things our targets we given opportunistic a be the some our

it Do in you event? more of feel a a we discussions along Or enough some you're is that transaction of year? these XXXX potentially like far this see

to do much because I what's to market, hold uncertainty to so this would want tell there's cash value you in going year constantly see of happen to on and that. and the Yes. we shutter the

So and next XXXX years. I would year much in unlikely -- likely say, this subsequent more and

the queue. Mr. At CEO call questions further remarks. in time, no closing President, Christopher Ianelli, this to and for show I'll I over turn the

I'd us Thank your call today's of of you many having interest right. operator. in again on you for follow-up events. everybody you, look and All like iSpecimen. to thank with conversations seeing for to forward upcoming many at We and continued joining

great that, you, everyone, a day. with have Bye. and thank So

for your today. the that conclude call disconnect for you We ask you conference and your That does thank lines. please participation