10-Q: Interpace Biosciences Q3 Revenue Drops 29% Amid PancraGEN Loss

Interpace Biosciences reports a significant revenue decline and net income drop in Q3 2025, primarily due to the loss of Medicare coverage for its PancraGEN test, despite improving liquidity and reducing debt.

Summary

• Net revenue for the three months ended September 30, 2025, decreased by 29% to $8.8 million, compared to $12.3 million for the same period in 2024.
• Net income for the three months ended September 30, 2025, was $0.9 million, a 46% decrease from $1.7 million in the prior year's quarter.
• For the nine months ended September 30, 2025, net revenue decreased by 15% to $29.5 million, down from $34.5 million in the comparable period of 2024.
• Net income for the nine months ended September 30, 2025, was $1.9 million, a 60% decrease from $4.8 million in the prior year.
• The primary driver for the revenue and income decline was the loss of Medicare reimbursement for the PancraGEN test, effective April 24, 2025.
• The company implemented a restructuring plan, incurring $0.7 million in severance and related costs for the nine months ended September 30, 2025.
• Cash and cash equivalents stood at $1.4 million as of September 30, 2025, and approximately $2.1 million as of November 7, 2025.
• The outstanding balance of the Term Loan with BroadOak was reduced to $1.0 million as of September 30, 2025, with its maturity extended to December 31, 2025.
• A material weakness in internal control over financial reporting was identified as of September 30, 2025, related to accruing royalty expense and understanding complex agreements.

Sentiment

Score: 3

Explanation: The company faces significant headwinds from the loss of its PancraGEN test reimbursement, leading to substantial revenue and profit declines. While debt has been reduced and liquidity is projected to last 12 months, the ongoing search for capital, delisting from major exchanges, and identified material weakness indicate a challenging operational and financial environment with considerable uncertainty.

Positives

• Net cash provided by operating activities increased to $3.7 million for the nine months ended September 30, 2025, from $3.5 million in the prior year.
• Total current liabilities significantly decreased to $5.9 million as of September 30, 2025, from $10.6 million as of December 31, 2024, improving the current ratio.
• The Term Loan outstanding balance was substantially reduced to $1.0 million as of September 30, 2025, from $4.4 million as of December 31, 2024, indicating effective debt management.
• Total stockholders' deficit improved, reducing from $(2.2) million as of December 31, 2024, to $(0.3) million as of September 30, 2025.
• Management anticipates current cash and forecasted cash receipts will be sufficient to meet anticipated cash requirements through the next twelve months from the filing date.

Negatives

• Net revenue decreased by 29% for the three months and 15% for the nine months ended September 30, 2025, primarily due to the loss of PancraGEN reimbursement.
• Net income decreased by 46% for the three months and 60% for the nine months ended September 30, 2025.
• Operating income from continuing operations decreased by 50% for the three months and 59% for the nine months ended September 30, 2025.
• Gross profit margin declined from 64.3% to 62.1% for the three months and from 63.8% to 61.3% for the nine months ended September 30, 2025.
• Diluted EPS significantly decreased from $0.38 to $0.03 for the three months and from $1.09 to $0.07 for the nine months ended September 30, 2025, partly due to increased dilutive shares from preferred stock.
• The company incurred $0.7 million in severance and related costs due to the restructuring plan.
• An asset impairment charge of approximately $0.2 million was recorded for lab supplies no longer useful after the loss of PancraGEN reimbursement.
• The company's common stock was removed from trading on OTCQX on August 18, 2025, and subsequently placed on OTCID, following its delisting from Nasdaq in February 2021.

Risks

• Reliance on Medicare reimbursement for clinical services and the ability to successfully restructure and maintain profitability after the loss of PancraGEN test coverage.
• The secured lender has the right to foreclose on substantially all assets if outstanding obligations are not timely repaid.
• Dependence on sales and reimbursements from clinical services for all revenue.
• Ability to finance the business on acceptable terms in the future, which may limit growth, product development, and commercialization.
• Dependence on third parties for the supply of materials used in clinical services tests.
• Potential adverse impact of current and future laws, licensing requirements, and governmental regulations, including the evolving U.S. regulatory environment for laboratory developed tests (LDTs), pricing, and patient access limitations.
• Reliance on sales and marketing activities for future business growth and the ability to expand these activities.
• The controlling interests of two private equity investors (Ampersand and 1315 Capital) who control 84.0% of outstanding common stock on an as-converted basis, which may substantially influence decisions.
• The delisting of common stock from Nasdaq has adversely affected and may continue to adversely affect common stock and business/financial condition.
• The removal of common stock from trading on OTCQX and subsequent placement on OTCID due to failure to meet market capitalization requirements.
• Ability to remediate the material weakness identified in internal control over financial reporting as of September 30, 2025.
• The determination to restate prior period consolidated financial statements and its impact on investor confidence and reputational issues.
• Impacts from current global, economic, sovereign, and political conditions and uncertainties, including new or proposed tariff or trade regulations.
• Ability to implement business strategy.
• Potential impact of existing and future contingent liabilities on financial condition.
• Risk of liability for personal injury or death to persons using products or services that the company promotes or commercializes.
• Risk of employment-related litigation and other litigation in the ordinary course of business.
• Risk of being held liable for errors and omissions of employees outside the scope of any indemnity or insurance policy, or if liability exceeds coverage.

Future Outlook

The company anticipates that current cash and cash equivalents and forecasted cash receipts will be sufficient to meet its anticipated cash requirements through the next twelve months from the filing date. It continues to explore various strategic alternatives, including dilutive and non-dilutive funding sources like equity and debt financings, strategic alliances, and business development, to provide additional liquidity. However, there is no assurance that such funding will be obtained on acceptable terms, especially given the adverse impact of its delisting from Nasdaq.

Management Comments

• Management's estimates are based on historical experience, facts and circumstances available at the time, and various other assumptions that are believed to be reasonable under the circumstances.
• The Company intends to meet its ongoing capital needs by using its available cash, as well as through targeted margin improvement; collection of accounts receivable; containment of costs; and the potential use of other financing options and other strategic alternatives.
• Even with the loss of reimbursement coverage of PancraGEN, as of the date of this filing, the Company anticipates that current cash and cash equivalents and forecasted cash receipts will be sufficient to meet its anticipated cash requirements through the next twelve months from the date of the filing of this report.
• The Company believes implementation of these processes and appropriate testing of their effectiveness will remediate the material weakness in the Company's internal control over financial reporting.

Industry Context

The diagnostic testing industry, particularly for oncology, is subject to significant regulatory changes, as evidenced by the Medicare Administrative Contractor Novitas's Local Coverage Determination (LCD) L39365. This LCD, governing Genetic Testing for Oncology, directly impacted Interpace Biosciences by eliminating Medicare coverage for its PancraGEN test. This highlights the critical dependence of specialized diagnostic companies on favorable reimbursement policies and the substantial financial risks associated with adverse regulatory decisions. The company's efforts to restructure and seek alternative funding reflect a common challenge for smaller players in adapting to evolving healthcare reimbursement landscapes and maintaining viability amidst regulatory shifts.

Comparison to Industry Standards

• NA The filing does not provide specific comparable company or project data to assess results against global benchmarks.

Corporate Governance

Related Party Transactions

• The Term Loan is with BroadOak Fund V, L.P., which is also a holder of Series C Preferred Stock.
• Series C Preferred Stock is held by Ampersand and 1315 Capital, who collectively control 84.0% of the company's outstanding common stock on an as-converted basis as of October 31, 2025.

Stakeholder Impact

• Shareholders: Significant decline in revenue and net income, delisting from Nasdaq and OTCQX to OTCID, and potential for further dilution if equity financing is pursued. The controlling interest of private equity investors (84.0% as-converted) limits the influence of other shareholders.
• Employees: Workforce reduction due to the restructuring plan following the loss of PancraGEN reimbursement, incurring $0.7 million in severance costs.
• Customers (Healthcare Providers/Patients): Loss of PancraGEN test offering after May 2, 2025, impacting patient diagnosis and management for pancreatic cancer risk.
• Creditors (BroadOak): Term Loan balance significantly reduced, but maturity extended to December 31, 2025, with interest-only payments until then, indicating ongoing financial obligations.

Next Steps

• Continue exploring various strategic alternatives and funding options (equity, debt, strategic alliances, business development) to provide additional liquidity.
• Implement the remediation plan to address the material weakness in internal control over financial reporting, including holding quarterly meetings between the accounting department and lab management.
• Make monthly interest-only payments on the Term Loan through December 1, 2025, with the remaining balance due on December 31, 2025.
• Evaluate the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Income Statement Disaggregation Disclosures) on financial statements.

Key Dates

Recommendation

The company faces severe operational and financial challenges, primarily driven by the loss of Medicare reimbursement for its key PancraGEN test, resulting in a 29% Q3 revenue drop and a 60% year-to-date net income decline. While debt has been reduced, the company's stock has been delisted from Nasdaq and OTCQX, now trading on OTCID, severely limiting liquidity and investor access. The identified material weakness in internal controls adds to governance concerns. Despite management's assertion of sufficient liquidity for the next 12 months, the ongoing need to explore dilutive and non-dilutive funding, coupled with the controlling interest of private equity investors, presents significant risks and limited upside potential for public shareholders. The fundamental business model has been severely impacted, and a clear path to sustainable growth and profitability is not evident.

Keywords

Molecular Diagnostics, Cancer Risk Evaluation, Genomic Tests, Pathology Services, PancraGEN, ThyGeNEXT, ThyraMIRv2, RespriDx, Medicare Reimbursement, Restructuring, SEC 10-Q, Biotechnology, Healthcare Diagnostics, Financial Results, Liquidity