Shares of Precipio, Inc. (PRPO Quick QuotePRPO - Free Report) have lost 14.4% since the company reported its earnings for the quarter ended March 31, 2026. This compares with the S&P 500 Index’s 0.3% loss over the same period. Over the past month, the stock has lost 9.1% against the S&P 500’s 5.3% gain.

Precipio’s Earnings Snapshot

Precipio reported first-quarter 2026 net sales of $6.7 million, up 36.2% from $4.9 million in the year-ago quarter, driven primarily by growth in pathology services. Service revenue, net of allowance for credit losses, increased 42% year over year to $6.1 million from $4.3 million, while product revenue was essentially flat at $0.7 million. PRPO processed 4,912 diagnostic cases during the quarter, up 63% from 3,021 cases a year earlier, though a lower average price per case partially offset the benefit of higher volume.

Net loss widened to $1.4 million, or 81 cents per share, from $0.9 million, or 59 cents per share, in the prior-year period. Gross profit rose 27.3% to $2.7 million from $2.1 million, although gross margin narrowed to 41% from 43% a year ago.

PRPO’s Commercial Expansion and Pipeline Growth

Management highlighted continued investment in PRPO’s commercial infrastructure as a key focus area during the quarter. According to CEO Ilan Danieli, the newly hired commercial team established relationships with approximately 20 distributor representatives, identified 10 new qualified customer opportunities and added about $3 million in annualized revenue potential to the sales pipeline during the quarter. Combined with existing opportunities, Precipio’s commercial pipeline now represents around $10 million in annualized revenue potential.

PRPO said the onboarding process for molecular diagnostic customers can create timing variability in quarterly results because customer validation, IT integration and physician training schedules are often outside its direct control. Management nevertheless indicated that once customers become operational, revenue tends to become more stable and predictable.

Precipio’s Margin Pressure and Earnings Drivers

Adjusted EBITDA loss was $0.2 million in the first quarter against a gain of $0.9 million in fourth-quarter 2025. Management attributed the sequential decline to several largely temporary factors, including lower pathology gross profit tied to CMS reimbursement cuts, delayed product shipments, increased spending on commercial expansion and the absence of a one-time accounting benefit recorded in fourth-quarter 2025.

Precipio said a new 2026 CMS fee schedule reduced reimbursement rates by 8% for one of its most frequently used tests, flow cytometry, leading to an approximately $0.5 million revenue write-down and a $125,000 hit to gross profit during the quarter.

Additionally, hiring and ramping the commercial team increased quarterly costs by approximately $250,000, while a delayed shipment from one of Precipio’s largest product customers reduced product gross profit by about $280,000 because revenue recognition shifted into the second quarter.

Operating expenses climbed 38.5% to $4.2 million from $2.9 million a year earlier, reflecting higher consulting fees, recruiting costs, research and development expenses and stock-based compensation. Stock-based compensation alone increased by $0.6 million year over year.

PRPO’s Cash Flow and Liquidity

Cash flow from operations was $64,000 during the quarter, against cash used in operating activities of $44,000 in the year-ago period. Total cash burn was approximately $47,000. Management said first-quarter cash flow reflected normal seasonal patterns, including annual bonus payments, beginning-of-year expenses and slower collections tied to patient insurance deductible resets.

Precipio ended the quarter with $2.6 million in cash and working capital of $2.1 million. However, the company reiterated that substantial doubt remains regarding its ability to continue as a going concern over the next 12 months, citing accumulated deficits and dependence on future revenue growth and potential financing activities.

Precipio’s Management Outlook

Management expects continued expansion of the commercial pipeline and greater conversion of opportunities into revenue during the second half of 2026. PRPO also anticipates margin improvement as recent commercial investments begin contributing more significantly to revenue growth and as production volumes increase.

Danieli stated that Precipio’s pathology services business currently operates at an annualized revenue run rate of about $24 million, while existing laboratory infrastructure could support between $45 million and $50 million in annual revenue before requiring significant capital expenditures.

PRPO’s Other Developments

During the quarter, Precipio completed repayment of funding received under Change Healthcare’s Temporary Funding Assistance Program, which had been established following the 2024 cyberattack affecting billing systems. The company made its final repayment during the first quarter of 2026.

PRPO also continues pursuing approximately $0.7 million in remaining Employee Retention Credit (ERC) claims after receiving about $0.8 million in ERC payments during 2025.

Precipio did not announce any acquisitions, divestitures or restructuring initiatives during the quarter.