ISPC

Good morning, everyone, and welcome to the iSpecimen Second Quarter 2024 Earnings Conference Call. At this time, participants are in a listen-only mode. A question-and-answer session will follow management's remark. This conference call 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 for the next 30 days. I will now hand the call over to Phil Carlson in Investor Relations for the introduction and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to iSpecimen's Second Quarter 2024 conference call. With us on today's call is Tracy Curley, Chief Executive Officer and Chief Financial Officer, and Leslie Hoyt, Senior Vice President of Operations. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements.

These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2023, filed with the SEC. Copies of this document are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now, it is my pleasure to introduce Tracy Curley, Chief Executive Officer and Chief Financial Officer. Tracy, please go ahead.

Thank you, Phil. Good morning, and thank you all for joining today's call. I'm pleased to report that the second quarter of 2024 results exceeded our internal targets, with many of the initiatives we implemented over the last few quarters starting to produce tangible results, including the Next-Day Quote Program that was rolled out in the third quarter of 2023. With me today is our Senior Vice President of Operations, Leslie Hoyt, who will provide additional details about the operational programs we have implemented and the impact they have had on iSpecimen. Finally, I review our financial results for the three and six months ended June 30, 2024, and then open the call for questions. As we noted during our first quarter 2024 earnings conference call, we continue to take a measured and disciplined approach to our business to ensure our long-term financial success.

By strategically reducing our capital, human resources, and operational expenditures and aligning to focus on key market opportunities, we are setting the stage for revenue growth for the rest of 2024 and beyond. For the second quarter of 2024, we generated revenue of approximately $2.9 million, as compared to approximately $1.6 million for the same period in the prior year, representing an increase of 76%. As I mentioned earlier, these results exceeded our internal projections as we continue to improve operationally while simultaneously providing our customers with a streamlined specimen procurement solution. We also continue to strategically reduce our spending in various operational areas as we focus on our core capabilities.

These efforts allowed us to continue to reduce our cash burn from approximately $7.1 million in the first half of 2023 to $2.9 million for the first half of 2024, resulting in a reduced burn rate for the first half of 2024 of 59%, compared to the same period in the prior year. Our results in the first half of 2024 clearly demonstrate our operational initiatives are taking hold, and we expect to see continued success as we move into the second half of 2024. In our ongoing effort to strengthen our leadership team and optimize our sales structure, we welcomed Brielan Smiechowski, our new Senior Vice President of Sales and Business Development, to iSpecimen during the quarter. Brielan brings over 15 years of experience in life sciences and healthcare.

She will be leading iSpecimen's business development and sales efforts going forward, helping scientists and their organizations procure the biospecimens necessary to advance their research and technologies. As I mentioned earlier, Leslie Hoyt, our Senior Vice President of Operations, has played an integral role in developing several of our operational initiatives, like the Next-Day Quote Program. She has also led the effort to ensure that we understand more deeply the competencies of our supplier network and engage with those suppliers that offer the strongest capabilities. This effort has already helped us greatly improve the quality of our supplier network, and the Next-Day Quote Program has contributed to increased velocity through our sales funnel and the strong results we have generated. I would now like to turn our call over to Leslie to review our operational improvements and what we believe the impact has been for iSpecimen.

Leslie, please go ahead.

Thank you, Tracy. Second quarter results show that the actions we have taken to streamline our operations, coupled with the programs we implemented at the end of 2023, are starting to gain traction. As Tracy mentioned, these programs contributed to the company exceeding its internal revenue targets. We remain squarely focused on the quality of our supplier network and the specimens that we provide to the research community.... With the Next-Day Quote Program, we also remain focused on an expedited quoting process in order to increase conversions at every point through the sales funnel. I believe that we are better positioned to meet the demands of our biospecimen customers than we have ever been. As our Next-Day Quote Program grows, so do the results.

The percentage of total opportunities we are qualifying as next day quotes across all segments for remnant and biobank specimens, as well as prospective collections, continues to remain high.Our Next-Day Quote Program has allowed us to streamline the process for our customers and our suppliers. For our customers, this means that iSpecimen will often respond to inquiries within the same or next day, outlining the cost, timeline, and approach to provide the needed specimens. We are proud to say that 99% of our customers are able to participate in the Next-Day Quote Program. for our suppliers, it means that we can search internal data on supplier capabilities and pricing, reducing time-consuming phone calls to suppliers and redundancy.

For Q2 2024, 44% of quotes provided to customers were part of the Next-Day Quote Program, a steady improvement from 38% of quotes in Q4 of 2023 and 43% in Q1 of this year. In the first half of 2024, an incredible 58% of Next-Day Quote Program quotes were converted to purchase orders, directly contributing to our ability to exceed our internal revenue goals for Q2 2024. Over the coming quarters, we will continue to expand the Next-Day Quote Program. With information gathered from our suppliers and the ability to search that data, we are planning to provide next day estimates to customers even when we are not able to offer a quote. This process should expedite and enhance conversations between sales and potential customers and lead to more quotes with higher conversion rates.

Over the next few quarters, we will provide more information on the expansion of the Next-Day Quote Program and the tools that are being built to support it. I would now like to turn the call over to Tracy to review our financial results. Tracy, please go ahead.

Thank you, Leslie. For the three months ended June 30, 2024, revenue was approximately $2.9 million, compared to approximately $1.6 million for the three months ended June 30, 2023. The increase in revenue for the second quarter of 2024 was primarily due to an increase of 1,236 specimens, or 26%, in specimen count from 4,682 specimens in the three months ended June 30, 2023, to 5,918 specimens in the three months ended June 30, 2024. The average selling price per specimen also increased by $137, or 39%, from $347 in the three months ended June 30, to $484 in the three months ended June 30, 2024.

For the six months ended June 30, 2024, revenue was approximately $5.2 million, compared to approximately $4.6 million for the six months ended June 30, 2023. This increase was primarily due to an increase in average selling price per specimen of $119, or 34%, from $343 in the six months ended June 30, 2023, to $462 in the six months ended June 30, 2024. The increase in average selling price per specimen was offset by a decrease of 2,152 specimens, or 16%, in specimen count from 13,311 specimens in the six months ended June 30, 2023, to 11,159 specimens in the six months ended June 30, 2024.

Cost of revenue increased by approximately $570,000, or 67%, to approximately $1.4 million for the three months ended June 30, 2024, compared to approximately $864,000 for the three months ended June 30, 2023. The increase in cost of revenue was attributed to a 26% increase in the number of specimens accessioned for the current period and a 32% increase in the average cost per specimen compared to the same period in the prior year. Cost of revenue increased by approximately $423,000, or 21%, to approximately $2.4 million for the first six months ended June 30, 2024, compared to approximately $2 million for the six months ended June 30, 2023.

The increase in cost of revenue was attributable to a 45% increase in the average cost per specimen, impacted by the specimen mix, offset by a 16% decrease in the number of specimens accessioned compared to the same period in the prior year. For the second quarter of 2024, we decreased our cash spend for technology to approximately $541,000, from approximately $1.5 million for the same period in the prior year. For the six-month period ended June 30, 2024, we decreased our cash spend for technology to approximately $1.2 million from approximately $3.5 million for the same period in the prior year.

The decrease in spend for the 3- and 6-month periods ending June 30, 2024, compared to the same prior year's periods, is due to reductions in workforce stemming from our decision to invest at a significantly lower level in 2024 when compared to 2023 and prior years, while we focus on growing our revenues through key market opportunities and assessing our capital raise prospects. For the 3-month period ended June 30, 2024, cash spend was comprised of approximately $172,000 of capitalized internally developed software and approximately $369,000 of expenses that we were otherwise not able to capitalize and therefore classified as technology expense. The remainder of the technology expense for the 3-month period ended June 30, 2024, was comprised of approximately $543,000 of non-cash amortization related to internally developed software.

Total technology expense for the three-month period ended June 30, 2024, was approximately $912,000, compared to approximately $843,000 for the same period in the prior year. For the six-month period ended June 30, 2024, cash spend was comprised of approximately $448,000 of capitalized internally developed software and approximately $748,000 in technology expense that we were otherwise not able to capitalize and therefore classified as technology expense. The remainder of the technology expense for the six-month period ended June 30, 2024, was comprised of approximately $1.1 million of non-cash amortization related to internally developed software.

Total technology expense for the six-month period ended June 30, 2024, was approximately $1.8 million, compared to $1.7 million for the same period in the prior year. The sales and marketing expenses increased by approximately $105,000, or 11%, from approximately $978,000 for the three months ended June 30, 2023, to approximately $1.1 million for the three months ended June 30, 2024. The increase was primarily attributable to increases in compensation expenses of approximately $123,000 and advertising and promotion expenses of approximately $100,000, partially offset by decreases in external marketing expenses of approximately $96,000 and general operating expenses related to sales and marketing of approximately $22,000.

Sales and marketing expenses decreased by approximately $276,000, or 14%, from approximately $2 million for the six months ended June 30, 2023, to approximately $1.7 million for the six months ended June 30, 2024. The period-over-period decrease was primarily attributable to decreases in external marketing expenses of approximately $191,000, compensation expenses of approximately $179,000, and general operating expenses related to sales and marketing of approximately $42,000, partially offset by increases in advertising and promotion expense of approximately $136,000.

General and administrative expenses decreased by approximately $703,000, or 40%, from approximately $1.8 million for the three months ended June 30, 2023, to approximately $1.1 million for the three months ended June 30, 2024. The period-over-period decrease was attributable to decreases in compensation costs of approximately $183,000, taxes and insurance of approximately $176,000, professional fees of approximately $165,000, bad debt expense of approximately $102,000, general operating expenses of approximately $51,000, depreciation and amortization of approximately $21,000, and utilities and facility expenses of approximately $5,000.

General and administrative expenses decreased by approximately $311,000, or 9%, from the approximately $3.5 million for the six months ended June 30, 2023, to approximately $3.2 million for the six months ended June 30, 2024. The period-over-period decrease was attributable to decreases in compensation costs of approximately $348,000, general operating expenses of approximately $105,000, bad debt expense of approximately $57,000, depreciation and amortization of approximately $44,000, utilities and facilities expense of approximately $9,000, which were partially offset by increases in professional fees of approximately $161,000, and taxes and insurance of approximately $91,000.

As of June 30, 2024, iSpecimen had $2.1 million of cash and available for sale securities, which represented a decrease of approximately $2.9 million from approximately $5 million as of December 31, 2023, and a decrease of approximately $405,000 from approximately $2.6 million as of March 31, 2024. As we mentioned in our last earnings call on March 5, we entered into an ATM to issue and sell shares of common stock with an aggregate offering price of up to $1.5 million through our shelf registration statement. During the six months ended June 30, 2024, we sold 3,980,075 shares of common stock for gross proceeds of approximately $1.5 million under the ATM agreement....

We incurred offering costs of approximately $255,000, resulting in net proceeds of approximately $1.2 million. Proceeds were used primarily for the management of our accounts payable. The future success of the company is dependent on its ability to successfully obtain additional working capital and or to ultimately obtain profitable operations. We are actively working on both. We have initiated aggressive efforts to decrease our operational expenditures by cutting costs and rightsizing the company through reductions in the workforce. Throughout the year ended December 31, 2023, and into the first half of 2024, we have executed reductions in workforce while streamlining operations and rationalizing resources to focus on key market opportunities.

The reductions in workforce since January 1, 2023, through the end of June 30, 2024, has resulted in an estimated reduction in compensation costs of approximately 45% and technology costs of approximately 66% by the end of June 30, 2024, when compared to January 1, 2023. In addition, the company plans to add additional customers and suppliers to increase revenues, as well as to continue to reduce and manage expenditures to improve its financial position and ensure continued funding of operations. We are actively seeking to fund operations as we reach a cash positive position through public equity or debt financing as well as other sources. This concludes our prepared remarks. Now I'd like to open the call for questions. Operator, please go ahead.

Thank you so much, presenters. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised, and should you wish to decline from the polling process, please press the star followed by the number 2. If you're using a speakerphone, please lift the handset before pressing any keys. Our first question comes from the line of Matt Hewitt of Craig-Hallum Capital Group. Your line is now open.

Good morning, and congratulations on the strong quarter.

Thanks, Matt.

Maybe first up, could you describe or, or talk a little bit about the macro environment, what you're hearing from customers and suppliers, but more so the, on the customer side of the equation. You know, how are they feeling about their funding? You know, has there been any shifts in prioritization of projects? Anything along those lines?

It's still a real tough environment for researchers right now, so they're being very careful on what, you know, they're willing to invest in for research. But they're still out there pursuing projects. Leslie, you're a little bit closer to this than I am operationally. Any insights that you'd like to share with Matt?

I would add two quick things, Matt. I would say that the projects continue, but the demands are high. We're seeing more and more specificity in the requirements. And number two is timeliness matters. When they get funding and they're ready to go, they're ready to go, which is why we're really working on the timing of our response, in both getting to a quote back to the customer, and then also the timeliness of starting our projects, once we have a purchase order.

Got it. Well, that's a great segue, great segue into my next question on the next day quotes. 58% converted to purchase orders in the quarter. That's fantastic. Do you have an internal target, or is, is there some type of a goal that you've kind of set where you'd like to see? Is it 75%, or, you know, how should we be thinking about that metric?

So, we do, but as you know, we don't really give guidance, Matt. I would love for it to be 100%, to be honest, but, you know, so we're not giving guidance on that. But we do have an internal goal that we are tracking towards, for that, and it is much higher than the 58%.

Got it. Okay, and then shifting gears a little bit, the focus on the increase in the quality of your suppliers. Are those suppliers able to fulfill most, if not all, of the requests you had previously been getting from a broader spectrum of suppliers? Like, have you found the 200 to 300 that you think can fulfill 99% of any requests that would come, you know, across at the transom?

So I'm gonna answer that a little bit, but then I'm gonna turn it over to Leslie because she's really, really much closer to this. So we realized last year that we had a lot of suppliers that we really had not been engaging with in a meaningful fashion, and they hadn't been engaging with us either. So we embarked on what we call Supplier Refresh, which we've talked about in prior quarters, and we terminated a lot of contracts with suppliers the first half of this year. We are now down to 105 suppliers from where we were at 240 in 2023.

The reason for this is because as we did our supplier refresh and engaged with the suppliers to understand, you know, quality, pricing, quantity, capabilities, we actually found out that over time, our suppliers' capabilities had shifted, and we had not been aware of that. And so we have discovered that we actually have suppliers within our network that could provide us, maybe they were only doing remnant or bank specimens, but they had expanded their capabilities so that now they could provide us prospective, which was, you know, a real eye-opener for us, a real pleasant eye-opener, if you will, for us to find that out. And so those are the suppliers that we want to and have been engaging with more. I'll turn it over to Leslie to sort of complete that.

Yes, I 100% agree, Tracy. With the limited or less suppliers that we have now, we actually have more capabilities, and mostly because we're aware of the capabilities, having taken the time, to survey and have conversations with suppliers to truly understand what they do and what they're capable of doing. I would say, you know, we are a larger percentage of their business now, which makes them more responsive to us, and hence to our customers. So it's really been, it's really been an interesting endeavor, getting to know these suppliers, which we continue to do, more and more, and to see how we can have a smaller network, with more aligned suppliers that we know more about. So supply has not been an issue to date.

Got it. And then maybe a couple metrics, and I apologize if I missed this, but do you have the number of unique customers during the quarter and the number of registered research and supplier users during the quarter?

I think I'm gonna have to get back to you on that. I don't have that at my fingertips.

No problem. All right. Thank you very much, and congratulations again on the quarter.

Thank you, Matt. Appreciate it.

Thank you so much. And again, if you would like to ask a question, please press star one. And I show no further questions in the queue. At this time, I'd like to turn the call over to Miss Tracy Curley, CEO, for closing remarks.

Thank you. I would like to thank everyone again for joining us on today's call and for your continued support. We believe the operational advancements that we've made this quarter, and frankly, for the last several quarters, will play a significant role in our future growth. We are changing the landscape of our business by more rapidly and effectively connecting biospecimen suppliers with researchers, and we believe that that is key for our success. Our Next-Day Quote Program has proven successful, and we look forward to updating you with our continued rollout of this program, as well as other initiatives that we are currently working on. With that, thank you and have a great day.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Have a good day.

Good day, everyone, and welcome to iSpecimen's First Quarter 2024 Results Conference Call. [Operator Instructions] This conference call 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 for the next 30 days. I will now hand the call over to Phil Carlson, Investor Relations for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to iSpecimen's First Quarter 2024 Conference Call. With us on today's call is Tracy Curley, Chief Executive Officer and Chief Financial Officer; and Leslie Hoyt, our Senior Vice President of Operations. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended in Section 21E of the Securities Exchange Act of 1934 as amended, concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, which many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's 10-K for the year ended December 31, 2023, filed with the SEC. Copies of this document is available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements or revisions or changes after the date of this call, except as required by law. Now it's my pleasure to introduce Tracy Curley, Chief Executive Officer and Chief Financial Officer. Tracy, please go ahead.

Good morning, and thank you for joining our call. In the first quarter of 2024, we focused largely on leveraging our streamlined operational infrastructure to advance the specific initiatives we undertook in the second half of 2023. On today's call, I will provide an update on our success in advancing these initiatives to create a runway for continued growth and scale for our business. I will then turn the call over to our Senior Vice President of Operations, Leslie Hoyt, who will speak specifically about how these operational achievements are enhancing the way in which iSpecimen interacts with and provide value to our supplier partners and researcher customers, thereby continuing to transform the biospecimen procurement process. Finally, I will review our financial results for the first quarter and open the call for questions. As we noted during our fourth quarter 2023 earnings conference call, we have undertaken a measured and disciplined strategy to ensure our long-term financial success by strategically reducing our capital and operational expenditures and realigning our resources to focus on key market opportunities, we are setting the stage for revenue growth in the second half of 2024 and beyond. Strategically reducing our spending in various operational areas to focus on our core capabilities has resulted in a reduction in our quarterly cash burn. Compared to the first quarter of 2023, we reduced compensation costs by 41% and technology cost by 66%. In addition, of the $2.5 million cash used in the first quarter of 2024, $1.2 million was attributable to onetime events, which included consulting and legal expenses, franchise tax compliance and fees associated with our ATM offering. Without these onetime charges, our burn rate for the quarter would have been approximately $1.2 million or a little over $400,000 per month, which is significantly improved from where we were a year ago. Now that we have secured a strong foundation to scale our business, we are diligently focused on maximizing the potential of our online marketplace and uncovering additional value in our supplier network to strengthen our competitive position and drive increased top line growth opportunities. In the fourth quarter of 2023, we share the success of our Next-Day Quotes Program, which significantly reduces the amount of time from opportunity to quote and improve our quote to purchase order conversion ratio. Given the incredible impact this program has had on strengthening our sales flow and the benefit it is providing to our customers to successfully advance their scientific research. We are diligently working with many of our suppliers to participate in the Next-Day Quote Program and to advance this program throughout 2024. Leslie Hoyt, our Senior Vice President of Operations, has played an integral role in developing the Next-Day Quote Program, reshaping our entire supplier network to better engage with the suppliers that offer the strongest capability. This effort aligns with our goal of improving the quality of our supplier network as opposed to simply expanding it in size and in the process, creating the highest quality supplier network in the market. I would now like to turn the call over to Leslie to review the operational achievements we have made in the first quarter and how they are reshaping the biospecimen procurement process with the goal of delivering the most highly sought after biospecimen in real time and produce greater financial returns for iSpecimen. Leslie, please go ahead.

Thank you, Tracy. As Tracy mentioned, we are advancing a lean and efficient business model by continuing to streamline our operations cutting unnecessary costs and focusing on quality over quantity. To that end, I am pleased to report that we have made incredible progress in the first quarter, recontracting with our supplier network to deepen our relationships with biospecimen suppliers capable of adapting to today's increasing biospecimen demand. We are seeing strong initial results from both our Next-Day Quotes Program and supplier network refresh initiatives. Next-Day Quote. The percentage of total quotes and orders qualifying for the Next-Day Quotes Program, including remnant and biobank specimens as well as prospective collections continues to increase quarter-over-quarter. The Next-Day Quotes Program continues to grow for all quotes provided to customers in Q1 2024, 40% qualified as Next-Day Quotes, as compared to 34% in Q4 2023 and 25% in Q3 2023. In the first quarter of 2024 across all lines of business, 50% of all purchase orders originated with Next-Day Quotes. Our Next-Day Quotes Program is fueling significant growth in our prospective collections line of business. In the first quarter of 2024, 91% of prospective Next-Day Quote dollars converted to purchase orders as compared to 32% in the fourth quarter of 2023. Also, the Next-Day Quotes prospective purchase order dollar value increased by 190% in Q1 2024 from the fourth quarter of 2023. Overall, the Next-Day Quotes Program highest value is an improving conversion rate from quotes, purchase orders. The overall year-to-date conversion rate for all Next-Day Quotes opportunities was 52%, which means that greater than 50% of Next-Day Quotes returned into sale. These growth metrics clearly demonstrate the value of our Next-Day Quotes Program in driving stronger sales growth. Higher network refresh. As we are focused on the highest quality provider sites and growing our Next-Day Quotes Program, we strategically reduced as part of our supplier network refresh, the size of our supplier network, terminating over 100 contracts tied to the lower value suppliers, reducing the size of our supplier network from 243 suppliers in January of 2024 to the current 140 suppliers. The terminated supplier contracts represent sites that were not providing consistent and/or quality human specimen or collaborating with us in a manner that benefited both parties. As part of the supplier network refresh program, we have identified opportunities to expand our embedded coordinator program as we see evidence of supplier capability potential expansion with additional resources. We've been working diligently to renew existing contracts with the remaining suppliers, including an in-depth discovery of their capabilities, realignment on pricing and increasing the transfer and use of their inventory data. By doing so, we have identified new types of specimens and services to offer our customers and have successfully added those capabilities to the Next-Day Quote Program. With fewer suppliers to manage, we are working closely with our remaining suppliers to better understand the breadth of their capabilities so that we can optimize how we collaborate with them and more efficiently supply specimens to our end customers. The goal is to partner with the best suppliers with the highest quality product in the marketplace. Achieving these goals will greatly enhance our competitive position, allowing us to begin fulfilling biospecimen orders, in some cases, before our competitors can even provide a quote. As we move forward, a key component of the supplier network refresh initiative is increasing the number of specialized and monthly inventory files we receive from suppliers. Receiving data from suppliers allows us to market existing inventory and allow customers to choose specimens directly. This enhanced automation is intended to fuel sales and grow the Next-Day Quote Program. In short, we are well on our way to vastly improving our operations, offering greater capabilities to serve the medical community due to stronger collaborations with capable biospecimen suppliers. I will now turn the call back over to Tracy to discuss the technological advancements made to the iSpecimen marketplace.

Thank you, Leslie. Despite changes to our technology staffing model over the last year, we have kept a keen eye on organizational efficiencies and growth opportunities fueled by technological advancements. The success of the Next-Day Quotes Program has relied heavily on our sales team's ability to quickly and accurately determine the feasibility of a customer's request. This matchmaking is fueled by the capabilities and inventories provided by our global network of suppliers and powered by iSpecimen proprietary technology. Beyond our emphasis on proprietary technology, enhancing the acumen of our sales, marketing, operational and site development teams through deliberate business intelligence strategies has significantly amplified our capacity to preempt and respond to customer demand. This proactive approach has assisted in the markedly improved conversion of quotes to purchase orders discussed earlier, setting new benchmarks for performance. I would like to now turn the discussion to our revenue enhancement initiative. Our embedded coordinator program remains a key priority for our long-term growth and has been impacted by the rollout of our supplier network refresh program. We currently have embedded coordinators at 3 sites, each of which have very strategic growth plans tied to them. These sites have all moved over to the Next-Day Quotes Program, due to the support of our embedded coordinators. Our goal is to place embedded coordinators in additional sites as we work in partnership with suppliers on our supplier network refresh program. Our cancer sequencing initiative remains an important longer-term growth driver. Now that we have created inventory of mutation characterized formalin-fixed, paraffin-embedded FFPE cancer tumor tissues. There is significant value in having access to these biospecimens due to the fact that they are extremely difficult to find and hold significant potential to support cancer research. As we had mentioned in our call at year-end, we established a pipeline of new business opportunities in the fourth quarter of 2023. That pipeline now totals approximately $1.5 million from new and existing customers. Through our internal due diligence, we have 27 confirmed new orders across 65 ongoing projects. As we stated previously, several outstanding projects that had not resulted in a win were the direct result of not having found the exact markers being requested. Given the pricing and value proposition, this program continues to be well accepted by our customers, and we will provide further updates as we are still working to upgrade the targeted marketing plan for this program. I will now turn to our financial results. For the quarter ended March 31, 2024, revenue was approximately $2.3 million compared to approximately $3 million for the quarter ended March 31, 2023. The decrease in revenue for the first quarter of 2024 was primarily due to a decrease of 3,388 specimens or 39% in specimen count from 8,629 specimens in the 3 months ended March 31, 2023 to 5,241 specimens in the quarter ended March 31, 2024. The effect of the decrease in specimen count was partially offset by a change in the specimen mix, which caused the average selling price per specimen to increase by $95 per specimen or 28% from approximately $342 per specimen in the 3 months ended March 31, 2023 to $437 per specimen in the 3 months ended March 31, 2024. Cost of revenue decreased by approximately $147,000 or 13% from approximately $1.1 million for the 3 months ended March 31, 2023 to approximately $1 million for the 3 months ended March 31, 2024. Although there was a 39% decrease in the number of specimens accessioned during the quarter ended March 31, 2024. Over the same prior year period, the average cost per specimen increased by $58 per specimen or 44% from $133 per specimen for the quarter ended March 31, 2023, to $191 per specimen for the quarter ended March 31, 2024. Technology expenses increased by approximately $78,000 or 9% to approximately $900 and $12,000 for the quarter ended March 31, 2024, from approximately $834,000 for the same period in the prior year. The increase was related to increases in amortization of internally developed software of approximately $99,000, professional fees of approximately $11,000 and general operating expenses of approximately $1,000, which were partially offset by decreases in headcount and payroll and related expenses of approximately $33,000. Sales and marketing expenses decreased by approximately $296,000 or 31% to approximately $660,000 for the quarter ended March 31, 2024, from approximately $962,000 for the same period in the prior year. The decrease was primarily attributable to decreases in payroll and related expenses of approximately $217,000, external marketing expenses of approximately $95,000 and general operating expenses related to sales and marketing of approximately $20,000, which were partially offset by an increase in advertising and promotion expense of approximately $36,000. General and administrative expenses increased approximately $286,000 or 16% from approximately $1.8 million for the quarter ended March 31, 2023, to approximately $2.1 million for the quarter ended March 31, 2024. The increase was attributable to increases in professional fees of approximately $329,000, taxes and insurance of approximately $267,000 and bad debt expense of approximately $45,000, which were partially offset by decreases in compensation costs of approximately $250,000, general operating expenses of approximately $78,000, depreciation and amortization of approximately $23,000 and utility and facility expenses approximately $4,000. As of March 31, 2024, iSpecimen had approximately $2.1 million of cash and cash equivalents and approximately $466,000 of available-for-sale securities with maturities ranging from 1 to 6 months for a combined total of approximately $2.6 million compared to a cash balance of $5 million as of December 31, 2023. For the first quarter of 2024, $1.2 million of our $2.5 million of cash use was attributable to onetime charges, which included consulting and legal fees, franchise tax compliance and fees associated with our aftermarket offering. As I mentioned earlier, without these onetime charges, our burn rate for the quarter would have been approximately $1.2 million or a little over $400,000 per month, which is significantly improved from where we were a year ago. Also, as we mentioned in our last earnings call, on March 5, 2023, we entered into an aftermarket offering agreement. We may issue and sell shares of common stock from time to time with an aggregate offering price of up to $1.5 million through our shelf registration statement. We may also seek additional funding through public equity and other sources to fund further capital investments or for general corporate purposes. Reductions in our workforce in 2023 and continuing through the first quarter of 2024 resulted in an estimated reduction in monthly compensation costs of approximately 41% in the 3 months ended March 31, 2024, when compared to the same period in the prior year, which was possible after streamlining operations and rationalizing resources to focus on key market opportunities. While we have taken steps to reduce the current number of suppliers in our network, as just discussed, our long-term strategy is to add additional customers and suppliers to increase revenues through our revenue enhancement projects and our Next-Day Quotes Program, while continuing to reduce and manage expenditures to improve our financial position and ensure continued funding of operations. This concludes our prepared remarks. Now I'd like to open the call for questions. Operator, please go ahead.

[Operator Instructions] Your first question comes from Matt Hewitt from Craig Hallum Capital.

Maybe first up, a remarkable increase in the conversion rate on your Next-Day Quotes. I'm just curious, is that sustainable? How should we think about, especially as you add several more kind of people embedded with those customers, how will that kind of drive or accelerate growth as the year progresses?

Matt, thanks for that. I have a huge smile on my face because we are really excited about this. And we do believe it's sustainable. I'm going to turn it over to Leslie to talk a little bit more about that, Mela?

Matt, nice to meet you. I agree, Tracy Next-Day Quotes is absolutely sustainable and will is planned to be the way we operate on 2 fronts with our banks and remnant business as we continue to work through our supplier network refresh program, we are working with each and every supplier to understand where they are and their ability to provide inventory data files to us. And all of those conversations are moving them towards where they are and towards getting us more and better data. We're then able to have more data in our inventory. We can market more specimens. Customers can look at them directly. Those are all Next-Day Quotes and how we will grow our banks and remnant Next-Day Quote Program. On the prospective side, it's a little bit different. It's understanding and partnering with prospective sites, entire supplier contracts, if you will, where we understand their capabilities and trust and their ability to perform adequately. And we allow those whole sites and what they do into our program. We have added 3 sites in the last 2 months to that program, and we'll continue to do so. So yes, extremely sustainable in the business plan going forward.

And those embedded coordinators -- sorry, those embedded coordinators will be most helpful for us in a prospective area.

That's fantastic. Kind of similarly, with the reduction in suppliers, how does that change access to samples? Or are your remaining 140 sites? Are they able to increase their supply or some of the things that maybe the prior suppliers weren't capable of providing data on or whatnot.

That's a good question. You always have good questions, Matt. But the answer is we've been really energized and excited about these conversations we're having with suppliers, the existing remaining 100 plus because we are finding out that they have more capabilities than we were aware of. And so while we are contracting the size of our supplier network, we're able to expand the capabilities of those that are existing because of these more robust conversations we're having with them right now. And Leslie, maybe you can add a little bit more to that than I -- if it's good.

Yes. 100% agree, Tracy. We actually have access to more supply with less suppliers. And the reason why is we have time to be able to focus on those suppliers and understand the breadth of their capabilities. We -- I would say it's been in almost every case as we renew our relationship that those companies have grown in their ability to provide different services and different types of specimens, and we're now able to grow with them because we have the time to understand their pricing, understand their capabilities and for that to be known across the company for them to be used from sales and marketing through our feasibility process. We are probably halfway through this process of recontracting and already have a greater supply of specimens, if you will, with less suppliers. The last thing I'll say is the other reason that is true is that the supplier contracts that we terminated were suppliers that we weren't working much with that. They really weren't representing quality supply of specimens nor were they working with us in an efficient way where we were able to deliver these projects on time and under expectations. So not much lost on the terminated contracts and lots gained on the recontracting process.

That's great. And then maybe one last one, and I'll hop back in the queue. But bird flu has been hitting the headlines quite a bit here recently. And I'm just curious if that creates an opportunity for you? If so, have you already started to work with some of your supplier network to ramp up their capabilities sort of obtaining samples and the necessary data? Are you already seeing demand on the purchasing side of those types of samples. Any color on that front would be helpful.

So any opportunities like that are always unfortunately for -- or fortunately for us and unfortunate for the general population are an opportunity for us. We know that we had a lot of our cost for flu samples this year but Leslie, bird flu, do you know specifically?

I have not yet heard of demand from bird flu, but we'll certainly follow up on that right after this call. I agree, Tracy. We're getting the usual flu A and B and market demand wins with the different threat to us. But I -- we'll follow up on that. I have not seen any demand yet.

[Operator Instructions] I show no further questions in the queue at this time. I'd like to turn the call over to Ms. Tracy Curley, CEO, for closing remarks.

I'd like to thank everyone again for joining us on our call today and for your continued support. We believe the operational advancements made this quarter will play a significant role in our future growth. We are changing the landscape of our business and the biospecimen procurement industry at large, by more rapidly and effectively connecting biospecimen suppliers with researchers. Our Next-Day Quotes Program has proven successful, and we are really excited about the long-term capabilities of that. And we look forward to updating you with our continued rollout of this program. With that, thank you, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect. Have a good day.

Good day, everyone, and welcome to iSpecimen's Full-Year 2023 Results Conference Call. At this time, all participants are in a listen-only mode. This conference call 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 for the next 30 days. I will now hand the call over to Phil Carlson, Investor Relations for introductions and the reading of the safe harbor statement. If there are any questions for the management following the call, please e-mail [email protected]. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to iSpecimen's 2023 full-year results conference call. With us on today's call is Tracy Curley, Chief Executive Officer; and Eric Langlois, Chief Revenue Officer. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which are beyond the control of the Company, including those set forth in the Risk Factors section of the Company's Form 10-K for the year ended December 31, 2023, filed with the SEC. Copies of this document are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The Company undertakes no obligation to update these statements or revisions or changes after the date of this call, except as required by law. Now it's my pleasure to introduce Tracy Curley, Chief Executive Officer. Tracy, please go ahead.

Good morning, and thank you for joining our call. Throughout 2023, we worked diligently to streamline our operations, reduce costs and right-size our business. By driving operational efficiencies throughout the company, we are increasingly able to realize the true value of the iSpecimen Marketplace quarter-over-quarter and even month-to-month. On today's call, I will discuss how these ongoing improvements have strengthened iSpecimen's position operationally, at what we believe to be the forefront of the biospecimen procurement market. I will then turn the call over to our Chief Revenue Officer, Eric Langlois, who will address the advancements we made in 2023 and the revenue enhancement initiative for sequencing, which has launched a higher margin revenue stream for iSpecimen. Finally, I will review our financial results for the 2023 year-end. At the beginning of Q4 2023 and in preparation for 2024, we completed a top to bottom review of the entire business, and concluded that focusing on specific initiatives capable of contributing to our topline growth, would provide a clear path to future success. To accomplish our goals, we launched several important marketing initiatives and realigned our sales efforts, several of which helped the company generate $1.7 million in revenue in December, the strongest sales month in our history. Also encouraging for the fourth quarter, we have sanctioned over $3.1 million in specimens. Unfortunately, Q4 revenue was negatively impacted by one-time customer credits of approximately $545,000, which reduced our GAAP basis revenue. This was due to our adoption of a more robust returns process. As we continue to streamline our operations and focus on our core business, we believe we are well positioned to capitalize on these operational achievements, scale our proven biospecimen procurement platform and achieve improved levels of growth throughout the remainder of 2024. The key driver of our record December sales results and our most promising initiatives for continued topline growth has been our Next-Day Quote program, which we launched in September 2023. Through this initiative, we believe we have successfully unlocked the underlying potential of the iSpecimen Marketplace, which we expect to yield stronger financial results for the company going forward. In the fourth quarter, our first full quarter having Next-Day Quote, we significantly reduced the sales time line by improving the conversion of quotes to purchase orders, which in turn led to an increased sales momentum as well as a stronger backlog. As a result of the utilization of Next-Day Quote, during the fourth quarter, we achieved a 39% increase in conversions of quotes to purchase orders compared to the average from all prior quarters in 2023. The success of this program can also be seen when looking at our sales breakdown in the fourth quarter, where 32% of our total sales were attributable to the Next-Day Quote program, surpassing our internal projections. Based on the impact this program has had on our sales, strong customer and supplier feedback and the proven capabilities of our platform underlying technology, we believe Next-Day Quote will increasingly contribute to sales. Our goal is to steadily build this program, so that Next-Day Quote eventually accounts for a significant percentage of our total sales. We believe we can achieve these results with the rollout of our supplier contract refresh program, a new initiative to recontract with our suppliers to improve their engagement with us. In doing so, we are mining comprehensive information from our suppliers, including detailed capabilities, standard minimum pricing and a periodically scheduled refreshed list of their inventories. This program is enabling us to provide even more information than ever before to our customers on our platform, thereby greatly increasing the number of samples available via Next-Day Quote. In 2023, we identified and implemented at four key supplier sites, our embedded coordinator program, assigning dedicated iSpecimen professionals charged with supporting and expediting the fulfillment of customer orders and ultimately driving increased revenue. We had expected to rollout more sites in 2023, but paused the program due to preparations related to our supplier contract refresh program. Embedding a coordinator at site or certain business criteria are determined to be sustainable, both hand in hand with the objective of the supplier contract refresh program, and we are prepared to advance our embedded coordinator program in 2024, as we refresh contracts with suppliers. Finally, we have reevaluated the quality of our supplier network. To maintain our leadership position and to support the evolving needs of our research customers, we've shifted our attention from quantity to quality. It's not that quality wasn't historically being emphasized, it's simply recognizing that maintaining the highest quality supplier network possible is paramount to our long-term success, even if it means reducing the size of our overall network. Throughout 2023, in addition to finding new high-quality supplier agreements and expanding existing supplier relationships, we began identifying suppliers that no longer meet our business and technology criteria. Throughout 2024, we plan to terminate contracts with suppliers, where our criteria are not being met. At the same time, we continue to expand our network to offer high-demand specimens with cancer, hematology, cardiovascular, autoimmune, neurological, endocrine, metabolic and infectious disease categories, among others. I would like to now turn the call over to Eric Langlois, Chief Revenue Officer, to discuss the advancements that have strengthened the iSpecimen Marketplace and provide a status update on our revenue-enhancing initiative for sequencing as well as an update of the scales and marketing initiatives for 2024, all of which are expected to drive long-term growth for iSpecimen. Eric, please go ahead.

Thank you, Tracy. First, the technology recap. We've been strategically focused on leveraging the technology advancements we've made in the first half of 2023 to unlock the full potential of our core business, which we are now seeing in our operational and financial results. These technology efforts consisted of updating search functionality, improving the user interface, increasing automation and enhanced matchmaking. The matchmaking module allows us to automatically match supply sites to a project based on the specific criteria, paired with the site's capabilities. This module in particular, when combined with our Next-Day Quote initiative, has had immense impact on the speed of our sales funnel, allowing our sales team to move opportunities to quote more rapidly, leading to higher win rates. Our ability to consistently innovate and improve the iSpecimen Marketplace will make our platform one of the premier solutions for connecting researchers and providers. In addition, these advancements have allowed us to effectively rollout our revenue-enhancing programs. Finally, we have also enhanced our curator remnant program, which has allowed us to update our supplier list as well as the test and analyze codes we offer in order to locate a greater array of specimen. Importantly, we began seeing improved results from our remnant line of business in Q4 2023 and that is carried over in the Q1 2024. Next, cancer sequencing. One of the most impactful and visionary revenue enhancement initiatives is our cancer sequencing program. In addition to having the potential to elevate iSpecimen's leadership position in our industry, it also offers the opportunity to significantly change the future of cancer research. Through our cancer sequencing program, we can provide cancer researchers with on-demand access to sequence biospecimens that enable them to advance their research. There is a tremendous value in having extensive access to mutation characterized, formalin-fixed, paraffin-embedded cancer tumor tissues, as these characterized tumor tissues are extremely difficult to find and obtain. While this program has been well received by our customers, the sales cycle has taken longer than we originally anticipated. The commercial team is currently making the necessary marketing and sales adjustments to ensure the level of detail and follow-up required to secure and grow our sequencing business in a timely manner. These efforts are beginning to achieve traction, as evidenced by the increased momentum in customer conversations, as new budgets and research projects were initiated at the beginning of 2024. Launching a new product line cost effectively requires ongoing new business development outreach, which takes consistency, time and patience. Q4 2023 and Q1 2024, our prospecting efforts have secured a pipeline of approximately $1.5 million in new business opportunities, comprised of both existing and new customers. We've investigated 55 projects, which have resulted in 25 confirmed orders. Many of the projects that have not resulted in a win have been the direct result of being unable to find the particular marker is being requested. The overall pricing and value proposition of the program have been very well accepted by our customers. Now for sales and marketing initiatives for 2024. We continue to scale. We have launched a new sales strategy to maximize new business opportunities in 2024. We've moved to a team and line of business-oriented sales structure, with key account management being a primary focus. Five global zones have been created, each zone comprised of an account director and specialists in remnants and bank specimens. These own teams are associated with our line of business teams internally, which fosters better communication internally from marketing through fulfillment, while also giving accounts more focused on specialized retention. Sales team members are properly incentivized to focus on closing purchase orders and growing key accounts, rather than fulfillment, which is the domain of our operations teams. Most recently, we entered a pilot program with TriMetis Life Sciences, a provider of digital pathology, laboratory and AI workflow and automation solutions for hospitals, pathology, diagnostic and pharmaceutical companies. Initially focusing on a substantial subset of solid tumor types, utilizing TriMetis AI-powered automated digital pathology solutions, this partnership is expected to help standardize and enhance tissue sample evaluation, furthering our ability to support our research customers with the highest quality tissue samples available today. We are currently conducting a pilot test to screen a cohort of specimen. The next steps are technology and media integration, sales and marketing cross-training and finally, operational steps to ensure continuity. This relationship will allow iSpecimen's sales and marketing teams to highlight and focus on enhanced quality for our tissue customers. This also allows sales personnel to offer cost and time effective add-on services for tissue-related projects, which helps address important limitations. Tracy, I will now hand it over to you.

Thanks, Eric. Turning to our results. For the fiscal year ended December 31, 2023, revenue was approximately $9.93 million compared to approximately $10.4 million for the fiscal year ended December 31, 2022. The decrease in revenue for the 2023 fiscal year was primarily due to a decrease of 2,938 specimens or 11% in specimen count, from 27,503 specimens during the year ended December 31, 2022, to 24,565 specimens during the year ended December 31, 2023. The effect of the decrease in specimen count was partially offset by a change in the specimen mix, which resulted in the average selling price per specimen increasing by approximately $26 or 7%, from approximately $378 per specimen during the year ended December 31, 2022 to approximately $404 per specimen during the year ended December 31, 2023. To provide further color regarding the full-year results, during our Q1 2023 earnings call, we expressed our concern about what we perceived as a general economic uncertainty in our industry and an overall downturn in business. These concerns were realized, as our business was negatively impacted in Q2 2023. Despite the fact that we recognized record levels of opportunities in quote, we experienced lower-than-expected conversion of quotes to purchase orders in Q1 2023, which in turn left us with a much lower backlog of purchase orders at the beginning and early portion of Q2 2023 compared to prior quarters. As a result, we recorded approximately $1.63 million in revenue for Q2 2023. The average quarterly revenue recorded for the other three quarters of 2023 was approximately $2.77 million. Cost of revenue increased by approximately $63,000 or 1% from approximately $4.76 million for the year ended December 31, 2022, to approximately $4.82 million for the year ended December 31, 2023. Although there was an 11% decrease in our number of specimens of session during the year ended December 31, 2023, over the same prior year period, the average cost per specimen increased by 13% from approximately $173 per specimen for the year ended December 31, 2022, to approximately $196 per specimen for the year ended December 31, 2023. For the year ended December 31, 2023, we increased our cash spend for technology to approximately $5.39 million from approximately $4.45 million for the same period in the prior year. The increase in spend for the year ended December 31, 2023, compared to the same prior year's period is directly related to the record level of technology investment in 2023, which we believe has enabled the continued advancement of our online marketplace to be innovative in our industry. This spend was significantly greater at approximately $3.4 million for the first half of 2023. For the year ended December 31, 2023, this cash outlay was comprised of approximately $3.77 million of capitalized internally developed software and approximately $1.62 million of technology expenses that we were not able to capitalize and therefore classify this technology expense. The remainder of technology expense for the year ended December 31, 2023, was comprised of approximately $1.95 million of non-cash amortization related to internally developed software and approximately $142,000 related to stock compensation expense. Total technology expense for the year ended December 31, 2023, was approximately $3.57 million compared to approximately $2.66 million for the same period in the prior year. Sales and marketing expenses increased by approximately $511,000 or 15% from approximately $3.45 million for the year ended December 31, 2022, approximately $3.96 million for the year ended December 31, 2023. The increase was primarily attributable to increases in payroll and related expenses of approximately $345,000, external marketing expenses of approximately $201,000 and general and operating expenses related to sales and marketing of approximately $6,000, which was partially offset by a decrease in advertising and promotions expense of approximately $41,000. General and administrative expenses decreased by approximately $998,000 or 14% from approximately $6.93 million for the year ended December 31, 2022, approximately $594 million for the year ended December 31, 2023. As of December 31, 2023, iSpecimen had approximately $2.34 million of cash and approximately $2.66 million of available-for-sale securities, with maturities ranging from one to six months, for a combined total of approximately $5.01 million compared to a cash balance of approximately $15.31 million as of December 31, 2022. For 2023, the company had a cash burn of approximately $10.31 million, primarily comprised of approximately $5.58 million of operating expenses and of approximately $4.73 million for capitalized development of the iSpecimen Marketplace technology and our sequencing data. We have plans for significantly lower levels of operating expenses and capitalized investments in 2024. The deliberate investment this past year in our technology and sequencing initiatives, coupled with our inability to generate increased levels of revenue, have negatively impacted our cash and equivalents balances during the year. Throughout the year and primarily on September 6, 2023, the company executed a reduction in workforce, resulting in an estimated reduction in monthly compensation cost of approximately 29% and additional expenditure reductions estimated to be over 50% of monthly expenditures for the remainder of the year, after streamlining operations and rationalizing resources to focus on key market opportunities. As a result, the company experienced a significant decrease in expenditures during the second half of 2023 compared to the first half of 2023. The best way to articulate the impact of this is through understanding the quarterly cash burn for 2023. For Q1, Q2, Q3 and Q4, the quarterly cash burn was approximately $4.29 million, $2.81 million, $2.55 million and $657,000, respectively. As we focus on the 2024 strategy and budgeting process, we have been mindful of our cash position and continue to have a goal of being cash flow positive in 2024. On March 5, 2024, we entered into an aftermarket offering agreement, whereby we may issue and sell shares of our common stock from time to time on the open market with an aggregate offering price of up to $1.5 million through our shelf registration statement. We may seek additional funding through public equity or other sources to fund further capital investments or for general corporate purposes. I would like to thank everyone again for joining us on today's call and for your continued support. We have achieved great progress operationally in 2023, and we believe we are on track to advance our new revenue-generating sequencing opportunity in 2024, and with a stronger operational infrastructure in place. We look forward to updating you on our progress on our Q1 2024 results call during our quarterly conference call that is anticipated to take place in May 2024. With that, thank you, and have a great day.

Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, everyone, and welcome to iSpecimens Third Quarter 2020 Results Conference Call. At this time, participants are in listen-only mode. Question-and-answer session will follow management's remarks. This conference call is being recorded. A replay of today's call will be available on the Investor Relations section of iSpecimens website and will remain posted for the next 30 days. I will now hand the call over to Phil Carlson, Investor Relations for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to iSpecimen's third quarter 2023 results conference call. With us on today's call is Tracy Curley, Chief Executive Officer; Benjamin Bielak, Chief Information Officer; Eric Langlois, Chief Revenue Officer; and Carly Lejnieks, Vice President of Marketing. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21 of the Securities and Exchange Act of 1934 as amending concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2022, filed with the SEC. Copies of this document are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now it's my pleasure to introduce Tracy Curley, Chief Executive Officer. Tracy, please go ahead.

Good morning, and thank you for joining our call today. I'd like to take this opportunity to discuss how our recent initiatives to rightsize our business and enhance our operational structure and processes are paving the way for a new stage of future growth for iSpecimen. I will then turn the call over to Eric Langlois, our Chief Revenue Officer; Carly Lejnieks, our Vice President of Marketing; and Benjamin Bielak, our Chief Information Officer. Each will detail activities related to their operational responsibilities within iSpecimen. Finally, I will review our financial performance for the 3 and 9 months ended September 30, 2023, and open the call for questions. Since the first of this year, our team has advanced several new initiatives to allow us to operate more efficiently and effectively. I can say with a high degree of certainty that iSpecimen is not the same company today than we were at the beginning of this year. Every facet of how the company is operating and engaging internally and externally with our customers and supplier organizations has been reviewed and were needed improved upon. Throughout the year and culminating with a reduction in force the first week of September, we have been driving towards rightsizing the company. On September 6, we reduced our total workforce by approximately 20%. As a result of this initiative, including employee turnover during the year, the monthly expenses related to head count are expected to decrease by approximately 29% for the remainder of the year compared to the average monthly cost for the first 9 months of the year. We also made additional expenditure reductions after streamlining operations and rationalizing resources to focus on key market opportunities. All other monthly operational costs are expected to decrease by approximately 52% for the remainder of the year compared to the average monthly cost for the first 9 months of the year. We completed the implementation of our next-day quote program in the third quarter of 2023. This solution has transformed the way we interact with our customers and supplier networks and has significantly reduced the time between opportunity to quote and by extension, the time between issuing the quote and receiving the purchase order. After implementing its program, we recognized a conversion increase of 122% for the quotes to purchase orders for the third quarter of 2023 compared to the blended quarterly average of the prior 4 quarters, demonstrating the positive impact of this program. Moving to the supplier side of our business. We have dedicated significant resources to expanding our global provider network in a more purposeful and strategic manner. We are especially focused on quality over quantity as it pertains to our supplier network with the goal of building and expanding our supplier relationships with our most active and reliable revenue generators. At the beginning of the third quarter, we announced the addition of 13 new suppliers to our provider network, which collectively expanded iSpecimen's ability to fulfill requests in high-demand specimens within cancer and hematology, cardiovascular, autoimmune, neurological, endocrine, metabolic and infectious disease categories, among others. The expansion of our network also enables us to gain access to a new collection of biospecimens from diverse patient populations. We further expanded our provider network in the third quarter to help advance women's health research, increasing the availability of high-quality tissue and biofluid specimens for studies on cervical, uterine and breast cancer, reproductive health, cardiovascular disease and sexually transmitted infections. While our expansion efforts have increased the strength of our supplier network, we are working behind the scenes reviewing our existing supplier network. And in the fourth quarter this year, we will be winding down relationships with certain suppliers that no longer meet our needs or the needs of our researchers. While this will sharply decrease our supplier network, we expect these efforts to meaningfully strengthen our specimen capabilities and drive both near and long-term revenue opportunities for iSpecimen and for our supplier partners. In the third quarter of 2023, we rolled out two revenue-enhancing projects, a sequencing procurement program and our embedded coordinator program. Eric will speak to both of these projects in more detail. First, I would like to highlight the tremendous potential of our sequencing procurement program, which we launched at the end of August. The launch of this program is extremely timely as we are seeing increased demand from cancer researchers for DNA, RNA and biomarker sequence data from donor mutation characterized FSP blocks [ph] tumor tissue. Our specimen has created what we believe is the industry's largest exclusive inventory of cancer sequence specimens to enable critical access to mutation characterized tissue and adjacent sessions needed to help advance cancer research. There is currently a shortage of mutation characterized FFPE tissue available for researchers, and we believe iSpecimen is strongly positioned to play an integral role in serving the high-growth market, which is expected to reach $2.75 billion by 2031, according to transparency market research. I'd also like to touch briefly on the embedded coordinator project. As we mentioned on our call last quarter, this project is intent to provide on-site dedicated resources to our best and most potentially impactful sites, thus enabling them to fulfill requests at a significantly higher level. And in the process, we expect this to result in additional revenue. Our original plan was to have 12 embedded coordinators in place at supplier sites by the end of the second quarter. However, as this project got underway, we learned a great deal about the unique needs of our supplier organization. We made a conscious decision to slow the pace for embedding coordinators, creating a pilot program instead in order to take the time to ensure the success of this program. To date, four large supplier sites have been chosen. These supplier sites are working on fulfilling orders and other projects exclusively for iSpecimen. The program will be evaluated quarterly with plans to expand and we see expected revenue growth from these embedded coordinator sites. I will now like to turn the call over to Eric Langlois, Chief Revenue Officer, to provide an update on the key adjacent revenue opportunities introduced earlier this year. Eric?

Thank you, Tracy. Good morning, everyone. I'd first like to touch on the embedded coordinator project. As Stacy mentioned, this project is intended to provide resources to what we believe are our best and most potentially impactful sites and enable them to generate additional revenue. Most of these clinical sites lock the bandwidth to manage the day-to-day operations, much less fulfill iSpecimen customer orders, which have historically received reduced priority. As already mentioned, 4 large supply sites have been chosen to be part of our pilot program. Embedded coordinators will be employed by the supplier, but will receive training and support from iSpecimen. Strategic growth plans have been established for all participating sites. These resources have already proven useful to our next-day quote program as well as to increased fulfillment for our remnant, bank and prospective product lines. We look forward to continued improvements, increased efficiency and revenue growth from the initial and future planned embedded coordinator sites. For sequencing, we placed a significant emphasis on launching our sequencing procurement program this year, with much of the progress occurring in the most recent quarter. This program will not be possible without the breadth, depth and great support of partners from our supplier network. It's truly been a collaborative effort aimed at helping solve a major bottleneck in cancer research. Cancer based genomic biomarkers have become an integral part of therapeutic research for immuno-oncology drugs as well as in the area of precision medicine in the form of companion diagnostic tests. These characterized tissues also serve a major role for our general life science customers, making various assays, tests, techniques and capital equipment aimed at addressing the same market. As this is now public knowledge, I want to extend a special thanks to Azenta GENEWIZ, our current commercial sequencing partner who's processed and run all of our tumor samples to date. We now believe we've amassed the world's largest commercially available single-access collection of fully next-generation sequence cancer cases using Illumina's AmpliSeq comprehensive cancer panel version 3. We're approaching 1,500 exclusive cases in the program across various tumor types such as colon cancer, lung cancer, breast cancer, ovarian cancer, pancreatic cancer, head and neck cancer, prostate cancer, bladder cancer, renal cancer, brain cancer and melanoma. These samples have been analyzed for both DNA and RNA sequencing. We've embarked on a massive multipronged marketing and sales campaign that Carly Lejnieks will speak to shortly to generate demand for all of these characterized cases. iSpecimen is already processed and shipped several orders and has built out a pipeline of 20 to 30 projects. We're in the process of reaching out to tens of thousands of contacts in the world of cancer research and are quite bullish that the program will be a success. There's more to come as we get deeper into the program and the marketing effort throughout the fourth quarter. Now I'll turn the call over to Carly to provide a more detailed discussion of our multipronged marketing strategy. Carly?

Thank you, Eric, and good morning, everyone. The marketing launch of our sequence sample offerings is focused on a multichannel multipronged approach that includes targeted outreach to a growing volume of new and existing accounts in the cancer research and cancer genomic space. We have also implemented a cost-effective digital strategy that is working 24/7 to drive awareness, demand and inbound lead generation from an expanded global target audience. To accelerate the creation of new connections in this new market segment, we are also attending key conferences, beginning with the American Society of Human Genomics, which is underway as we speak. We are confident that integrating database marketing, co-prospecting, a digital inbound strategy and face-to-face conference activities will broaden our reach and increase impact in the shortest period of time. I would now like to turn the call over to Ben Bielak, who will speak regarding our iSpecimen marketplace platform and how greater efficiencies are supporting new opportunities to scale the platform. Ben?

Thank you, Karl, and good morning, everyone. Our product and technology efforts to improve the iSpecimen marketplace platform in 2023 include updating search functionality, improving the user interface, increasing automation and enhancing matchmaking. While we continue to move the product road map forward, we made the difficult decision earlier this quarter given the results in Q2 to moderate our development acceleration. This decision does not reflect any change in direction. If anything, these changes have enhanced our exploration of options like 5 versus build strategies. The team continues to work to support immediate business needs and realizing additional value from the investments over the last year. iSpecimen continues to focus on innovative ways to strengthen the iSpecimen platform for our network of researchers and providers. We are delivering on areas such as supporting our newly announced cancer sequencing procurement program, improving the integration with our provider partners, driving improved data quality and matchmaking, including leveraging external content providers and increasing operational efficiency. Further, we are continuing to update our back-end architecture to support growth and scale, enhance security and prepare for our data service pilot, which is slated to take place in 2024. The current phase of these back-end updates is expected to be completed by the end of 2023. We believe the successful completion of the data of the service pilot will allow us to validate one of many possible additional revenue streams for the company. I'll now turn the call back to Tracy to provide a more detailed discussion of our financial results for the third quarter of 2023 compared to the same period of 2022. Tracy?

Thanks, Ben. Turning to our results. For the third quarter of 2023, we reported $2.8 million in revenue compared to $2.6 million in the third quarter of 2022 and $1.6 million in the second quarter of 2023, respectively. The current 3-month period compared to the same period last year and the second quarter of 2023 increased by $195,000 or 8% and $1.2 million or 75%, respectively. The increase in revenue in the third quarter of 2023 compared to the same period last year was primarily attributable to an increase of 527 specimens or 11% in specimen account from 4,840 specimens and the 3 months ended September 30, 2022 to 5,367 specimens in the 3 months ended September 30, 2023. The effect of the increase in specimen count was partially offset by a change in the specimen mix, which caused the average selling price per segment to decrease by $16 per specimen or 3% from $534 per specimen in the 3 months ended September 30, 2022, to $518 per settlement in the 3 months ended September 30, 2023. During the 9-month period ended September 30, 2023, we reported revenue of $7.35 million compared to $7.44 million during the same period last year. The slight decrease in revenue for the 9-month period ended September 30, 2023, was primarily attributable to a decrease in average selling price per specimen of $50 or 11% from $444 per specimen in the 9 months ended September 30, 2022, to $394 per specimen in the 9 months ended September 30, 2023. The decrease in average selling price per specimen was offset by an increase of 1,910 specimens or 11% in specimen count from 16,768 specimens in the 9 months ended September 30, 2022, to 18,678 specimens in the 9 months ended September 30, 2023. Cost of revenue increased by $211,000 or 18% from $1.2 million for the 3 months ended September 30, 2022 to $1.4 million for the 3 months ended September 30, 2023 versus was attributable to a $15 per specimen or a 6% increase in the average cost per specimen and an 11% increase in the number of specimens a session for the current period compared to the same period in the prior year. Cost of revenue for the 9-month period ended September 30, 2020 [ph] was $3.39 million compared to $3.35 million for the same period in 2022. This increase was attributable to an 11% increase in the number of specimens of session during the 9 months ended September 30, 2023, over the same period in the prior year, which was offset by an $18 per specimen or a 9% decrease in the average cost per specimen impacted by the spectrum mix during the 9-month period ended September 30, 2023, over the same period in 2022. For the third quarter of 2023, we reduced our cash spend for technology to $1.19 million from $1.23 million for the same period in the prior year. The cash outlay was comprised of $770,000 of capitalized internally developed software and $427,000 of technology expenses that we were not able to capitalize and therefore, reclassify this technology expenses. The remainder of the technology expense for the third quarter of 2023 was comprised of $494,000 of noncash amortization related to internally developed software. Total technology expenses for the third quarter of 2023 were $922,000 compared to $753,000 for the same period in the prior year. For the 9-month period ended September 30, 2023, we increased our cash spend for technology to $4.7 million from $2.6 million for the same period in the prior year. This cash at let was comprised of $3.5 million of capitalized internally developed software and $1.2 million of technology expenses that we were not able to capitalize and therefore, reclassify this technology expenses. The remainder of the technology expense for the first 9 months of 2023 was comprised of $1.4 million of noncash amortization related to internally developed software. Total technology expenses for the first 9 months of 2023 were $2.6 million compared to $1.9 million in the same period in the prior year. The increase in expense for the 9-month period ended September 30, 2023, compared to the same prior year's period is directly related to our plan of increasing our investment in technology in the first half of 2023, which is manage the continued advancement of our transformational online biospecimen marketplace. Sales and marketing expenses were $898,000 for the third quarter of 2023 compared to $833,000 for the third quarter of 2022. The increase was attributable to increases in professional fees of $123,000 and payroll and related expenses of $112,000 due to hiring more sales personnel, which were partially offset by decreases in external marketing expenses of $169,000. For the 9-month period ended September 30, 2023, and sales and marketing expenses were $2.97 million compared to $2.53 million during the same period in the prior year. The period-over-period increase was primarily attributable to increases in payroll and related expenses of $535,000, external marketing expenses of $271,000 in general operating expenses related to sales and marketing of $17,000, which were partially offset by a decrease in advertising and promotion expense of $381,000. General and administrative expenses for the 3 months ended September 30, 2023, decreased by $1.13 million or 51% to $1.11 million compared to $2.24 million for the same period last year. For the 9-month period, general and administrative expenses decreased by $1.1 million or 20% and from $5.6 million for the 9 months ended September 30, 2022, to $4.5 million for the 9 months ended September 30, 2023. Through the 9 months of 2023, the company had a cash burn of $9.7 million, primarily comprised of $6.2 million for operating expenses and a $3.5 million of capitalization to further develop the iSpecimen marketplace technology with plans to invest at a lower level for the remainder of the year. As of September 30, 2023, iSpecimen had $2.7 million of cash and cash equivalents and $2.9 million of available-for-sale securities with maturities ranging from 1 to 6 months for compliant total of $5.6 million compared to a cash balance of $15.3 million as of December 31, 2022. This concludes our prepared remarks. Now I'd like to open the call for questions. Operator, please go ahead.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Matt Hewitt at Craig Hallum. Please go ahead. Your line is open.

Good morning and congratulations on the strong quarter. Thank you for taking the questions. Maybe first up, what has been the feedback from customers? I realize it's very early days on the sequencing service, but what has been the early feedback? And then what has you most excited about that program as you start to look into not only this quarter, Q4 but into fiscal '24??

Thanks, Matt, for the question. It's a good question. I'm actually going to defer to Eric who's on the front lines talking with our customers about this, so it's been pretty exciting. Eric, would you like to answer the question, please?

Sure. Yes. Thanks for the question, Matt. I'd say that [indiscernible] \the most excited is just that one of the major initiatives we've done over the last couple of weeks is look back over the last year to 18 months of requests that came in for mutation characterized material and kind of reach back out to those people to get awareness that we've done this and show them we actually matched up specific cases that we had case results that match the original request. And we've received an overwhelming response rate from those customers. I mean it's nearing about 75% to 100% response rate. Majority of those customers still have those needs. They haven't been able to actually fill those needs. So that was one of the most recent signals. But what we're seeing is that people are definitely not finding avenues to fulfill these projects. I think where we are in the calendar year, people have been at this for a while, so they're filling some specific niche buckets. But the response rates, the open rates, the interest in the program and then the consistent reach out to us by the sequencing companies and companies that are offering these kind of services, telling us that it's a great program to do that they'd like to be a part of. They might want to offer up sequencing services has all been really interesting. So to your point, it is early days. In the beginning, we were really hunting for preorders and trying to get things lined up from once we started the runs. But now that we have the runs and we have case data, everything has been overwhelmingly positive about what we're doing and the direction we're going, the cancers that we've selected, the profiles that we selected, all of that has been really positive. So right now, it's just all about the blocking and tackling of trying to match up to the actual open requests that people are looking for right now.

That's helpful.

This is a program which is an that we started January 1 after some significant research on where there was a deficit in the market to fill the need. And so you tailored this program to that deficit that our research indicated and our current marketing efforts are reaffirming that for us, really exciting to see that.

That's great. And maybe - and I realize maybe not specific, but how should we be thinking about the ASPs on the sequencing and maybe the margin profile on those? I would imagine that they're - especially once you start to scale up, but I would imagine those could be some of the best margins in your portfolio, but any color there would be helpful/

Yes. Go back at margins are better than our core business.

Yes. The structure of the program has been the most interesting part, and that's kind of part of the value proposition that we've really been communicating to our customer base that is truly a collaborative effort, right? I mean our suppliers are agreeing to us to access this material at little to no cost upfront. We're able to share with them on the back end. So it's really a collaboration in that sense. And then certainly, with the sequencing partners, we feel like we're getting certainly commercial quality because we're using a commercial partner, but we're getting a pretty good value there. So overall, when we sell and market these samples to the market, as Tracy said, the margins are some of the best that we have and they're only going to improve over time.

Excellent. And then last quarter, on the conference call, you mentioned that with some of the new initiatives that you've implemented this year, both on the cost reduction side as well as some of the new programs that you services that you've implemented, you expected to get to cash flow neutral by the end of this year. Is that still the plan? Is that still on track?

Yes, good question, Matt. I probably should have been more explicit in my comments earlier about that. But yes, we just finished October, we're looking - we're doing the accounting course for that and really, really pleased that we are exactly where we needed to be from position ourselves to do that through the end of October. So the answer is that I believe we are positioned well to get to cash flow neutral. There are obviously revenue goals that need to be met, and we don't give guidance, but we're working very hard to meet those revenue goals. But on the expense side, we cut the expenses down, and we're seeing those results coming through for October.

That's great. And then maybe one last one and then I'll hop back in the queue. This year, obviously, has required a lot of - I don't know if heavy lifting is the way to characterize it, but a lot of work, both on the streamlining of the organization and on the cost side as well as the new product launches and some of that's been more back half weighted with the next day quote service and now the sequencing. As we start to look to fiscal '24, how should we be thinking about your focus next year? Next year, more about driving growth and delivering on some of these new services? Or is there still some fine-tuning of the organization that's going to be required in addition to some new product launches? Thank you.

Yes. So I believe that an organization should always be growing and assessing their core competencies and efficiencies and effectiveness. So there's still going to be some tweaking to be had to find two things because we did just do a lot of stuff. And now we've got to sort of let - let the dust bet a little bit, and then we will begin and see, okay, where else do we need to improve. But definitely, next year is all about revenue growth, especially now that we've got operations where they need to be. And also some of the technology build-out that we lead in for investment purposes, the first half of this year, even though we're blowing that work now the second half, it's still going on, and so we're going to see some improvements on our marketplace platform in 2024 as well. So it it's really ease all the way around, I believe, for the company in all areas of operations and in our ability to generate value for our shareholders.

That's great. Well, congratulations on the progress so far. Thank you.

Thank you. [Operator Instructions] And we have a further question coming free. That's from the line of James Lieberman at River Securities [ph] Please go ahead. Your line is open.

Thank you very much. I'm really impressed by the incredible momentum that you've been building and by the investments and the focus that you brought there and to see such good results coming in so quickly. So I want to congratulate you on your efforts, and I'm extremely confident on the progress you've made. I just wanted to add that to your overall narrative. Thank you.

Thank you, James. Really appreciate that.

Thank you. [Operator Instructions] There seems to be no further questions coming through at this time. So I'll hand the floor back to our speakers for the closing comment.

I would like to thank everyone again for joining us on today's call and for your continued interest in iSpecimen and also my apologies for the weight that we all encounter including myself getting into the call this moment. So really sorry about that. As you can see, we are making strong progress executing our growth strategy, our operational efficiency strategy, which is really successfully maximizing the value for our iSpecimen marketplace. We believe that we will see continued growth from our new business opportunities, and we look forward to updating you with our progress. With that, thank you, and have a great day.

Thank you. This now concludes the conference. Thank you all very much for attending. You may now disconnect your line.

Good day, everyone, and welcome to iSpecimen's Second Quarter 2023 Results Conference Call. At this time participants are in a listen-only mode. A question-and-answer session will follow managements’ remarks. This conference call 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 for the next 30 days. I will now hand the call over to Phil Carlson of KCSA for introduction and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to iSpecimen's second quarter 2023 results conference call. With us on today's call is Tracy Curley, Chief Executive Officer and Chief Financial Officer; Benjamin Bielak, Chief Information Officer; Eric Langlois, Chief Revenue Officer; and Evan Cox, VP and Head of Product Management. Before we begin, I would like to remind you that today's call contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's amendment number one to the annual report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 30, 2023, and the risk factors set forth in Part 2 Item 1A of our quarterly report on Form 10-Q for the quarterly period ended June 30, 2023, being filed with the SEC shortly after this call. Copies of the company's filings are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now it is my pleasure to introduce Tracy Curley, Chief Executive Officer and Chief Financial Officer of iSpecimen. Tracy, please go ahead.

Thank you, Phil. Good morning, everyone, and thank you for joining our call. Today, I will begin with an overview of the second quarter, including a brief update on the impact of the current economic environment on our business and the progress of our operational initiatives. I will then turn the call over to Eric Langlois, our Chief Revenue Officer, who will provide additional details on the implementation ramp-up of our new revenue-enhancing projects and then to Evan Cox, Vice President and Head of Product Management, to discuss the technology advancements being made to enrich the overall functionality and efficiency of the iSpecimen Marketplace. I will wrap up our call with a discussion of our financial performance for the three and six months ended June 30, 2023, and open the call for questions. In the second quarter of this year, we continue to advance several key operational initiatives to unlock our full potential advancing projects and more effectively connect researchers with suppliers and to integrate new technologies. But we recently have had initial success in expanding our capabilities streamlining processes to increase supply utilization and expediting specimen fulfillment. Our second quarter results came in below expectations. On our Q1 earnings call, we expect concern about what we perceive as a general economic uncertainty in our industry and an overall downturn in business. These concerns were realized as our business was negatively impacted in Q2. Despite the fact that we recognized record levels of opportunities in quotes, we experienced lower-than-expected conversion of quotes to purchase orders in Q1, which in turn left us with a much lower backlog of purchase orders at the beginning and early portion of Q2 compared to prior quarters. We also noted in our Q1 earnings call that we were experiencing slower-than-normal receivable payments from our customers in Q1. The good news is that our early recognition of these operational challenges enabled us to expedite the launch of several new initiatives in Q2 that have resulted in an improved quote to purchase order ratio by the end of second quarter. I'm also pleased to report that our active collection efforts in Q2 were successful in reversing the downward receivable payment trend that we experienced in Q1. Thus far in Q3 and despite a continued industry-wide slowdown, our business has greatly improved as evidenced by stronger sales and backlog, both of which have returned to more historical levels. We believe that our results and revenue for the second quarter of 2023 represents a temporary downturn and that we have taken the required actions to address these issues, which we believe will allow us to achieve better results for the third quarter of 2023 and beyond. Operationally, we have completed our realignment from a department structure to align our business structure to improve our ability to execute. We are continuing to focus our efforts on more quickly converting quotes to purchase orders through our Q2 initiatives previously mentioned, for which we have seen positive results. As Eric will discuss further, we have begun making progress utilizing our revenue-enhancing projects for sequencing, embedded coordinators and remnant projects, which we believe will allow us to begin recognizing revenue from these efforts in the second half of this year. By the end of the third quarter, we expect to offer next-day quotes, which we believe will be innovative for our customers and suppliers will have a positive impact on our quarterly results. We appear to be back on target to achieve expected revenue results from our core business and we began seeing a meaningful contribution of revenues from our revenue-enhancing projects in the second half of the year, which we believe will contribute to iSpecimen becoming cash flow neutral by the end of 2023 and then cash flow positive in 2024. We continue to be invested in our technology and are very excited about our recent and upcoming launches, which Evan will discuss in more detail. We remain steadfast in our mission to support researchers by providing instant search and access to patients, biospecimens and data to our global network of health care providers. I am confident that our continuous improvement to consistently support our customer and supplier needs to one of the most comprehensive platforms in the biospecimen industry lead to a stronger iSpecimen Marketplace, and I believe will result in stronger top and bottom line growth overall. We have a lot going on at iSpecimen, and this is truly an exciting time for us. I look forward to updating you with our progress in the third quarter. Now let me turn the call over to Eric Langlois, Chief Revenue Officer, to discuss our near-term adjacent revenue opportunities. Over to you, Eric.

Thank you, Tracy. For the four revenue-enhancing projects that we have for the year, sequencing, it remains one of the most important revenue-enhancing projects as we're seeing increased demand by researchers for donor Formalin-Fixed Paraffin-Embedded FFPE blocks to provide direct access to highly sought donor tumor tissue samples. iSpecimen is collaborating with supply and sequencing partners to identify very specific donor FFPE tissue from high-value cancer patients that more likely than not possess specific mutations of increased interest to researchers and further sequence the tissue to derive data. The genetic signatures of cancer tissues provide important information necessary to develop new treatments and diagnostics. Access to large inventories of these high-quality, valuable screen blocks has typically been difficult to obtain are not always available with high quality and can be costly. However, with our extensive supplier network in a compelling partnering business model, we believe iSpecimen has made significant strides in overcoming these obstacles. We're investing in active repetitive sequencing to create a virtual inventory available for our research customers in these areas of high value. Providing profiles for highly sought donor tumor tissue samples to supply sites will be an ongoing activity as the company seeks to source the necessary tissue for this project. This new program offers a potential for a measurable on-demand virtual access and the new opportunity to customize future FFPE tissue requests, all of which we believe can drastically change the entire cancer research paradigm. The power of the iSpecimen network makes ambitious initiatives like this possible. And when paired with the search functionality of our proprietary iSpecimen Marketplace, will provide, we believe, a simpler solution. We have successfully launched our first sequencing pilot with approximately 300 samples and anticipate a modest level of revenue from the initial batch starting at the end of Q3 2023. This is the first of several runs we anticipate performing throughout the remainder of the year and beyond for this project. Embedded coordinators is another one of our revenue-enhancing projects. On-site specimen embedded coordinators also progressing very well. The intention of these projects provide resources to what we believe are our best and most potentially impactful sites and enable them to generate additional revenue even faster. As Tracy has highlighted on previous earnings calls, many project orders convert slower than expected or were closed out by a customer prior to being fully fulfilled or completed, which has negatively impacted our revenues. Simply put, many of these clinical sites lock the bandwidth to simultaneously manage the day-to-day operations and fulfill the request of iSpecimen's customers. More often than not, iSpecimen and his customers are deprioritized. iSpecimen spent the first half of this year evaluating the past, current and future potential capabilities for sites to generate revenue. Specific sites have been identified to receive dedicated iSpecimen employees or reimbursed when their existing employee dedicated hours to our iSpecimen projects. We expect this program to enhance iSpecimen's ability to accelerate revenue growth, both in terms of speed and completeness. Each site's resources are being matched specifically to the type of assistance they need, such that picking and shipping remnant samples, organizing and packaging inventory orders, assisting in the donor recruitment and execution of prospective collections or reviewing charts and cataloging samples into a format that allows iSpecimen to feature specimens on our iSpecimen Marketplace. We believe that this commitment to our sites will help all of our supply partners involved and enable iSpecimen to maximize their ability to fulfill orders and allow us to advance key initiatives that can increase sales such as our next-day quotes. We have numerous sites that are in various stages of contract negotiations and deployment with an embedded coordinator in place at one site and 11 more hirings in the work. We will continue to add more sites where the business opportunities are substantial. We expect increased revenue related to this program starting in the second half of this year. Remnants. We're also advancing our remnant revenue enhancement project, which is focused on improving internal operational processes and creating a line of business structure through significant integration with supplier sites. Remnants of the leftover biospecimens from a sample collected for clinical and diagnostic purposes. Our efforts to streamline our workflow for remnant requests appear to be already positioning iSpecimen for sales growth and margin expansion for this line of business. We're still adjusting to some of the workflows and approaches to find new ways to bring in even more revenue in the second half of the year, and we are pleased to have already begun seeing the results of these efforts. One exciting technology development is an improved build-out in our technology for flagging clinical remnant-type sample requests and orders to appear on supplier dashboards to further help expand our capabilities within our pre-existing supplier network. As we build out the technology to advance our remnant business, we expect to see even greater impact on our quarterly financial results. Next-day quotes. And finally, operations and sales have been working together to create new workflows for our lines of business in order to bypass the feasibility process wherever possible. The streamlined workflow will allow us to move straight to providing our customers with next-day quotes for opportunities. Our suppliers are extremely excited about our move in this direction, and we believe that providing next-day quotes could be a market differentiator for us. I would now like to turn the call over to Evan Cox, our VP and Head of Product Management, to discuss how new technology advancements being made to our iSpecimen Marketplace platform. Our technology development and investments are extremely timely now that we offer – are able to offer an even wider array of biospecimens that have historically been difficult to source. Evan, please go ahead.

Thank you, Eric. Our product and technology efforts to improve the iSpecimen Marketplace platform in 2023 include updating search functionality, improving the user interface, increasing automation and enhancing matchmaking. I'm pleased to report that we continue to make significant progress on these initiatives, which remain our highest priority technical investments in 2023. We are improving integrations with our provider partners, specifically with our first electronic medical record integration, where we're working to achieve the same level of confidence we have in locating specimens to locating patients and donors. This project has already been used to complete multiple customer requests, and we expect it to continue to accelerate the prospective collection process and reduce costs. Our technology team is currently performing a major upgrade to the iSpecimen Marketplace search and request capabilities. We are consistently reevaluating our iSpecimen Marketplace search functionality as this is our public face to researchers and the entry point for requests. These enhancements are keenly focused on upgrading to more modern user interface standards, new levels of automation, which will help us scale and major enhancements to our matchmaking algorithm to ensure the best possible matches between researchers and our vast supply network. We're happy to report that these changes have gone live or internal to the company's stakeholders, and we expect them to be available to external users before the end of the year. Further, we're updating our back-end architecture to support growth at scale, enhancing security and preparing for our Data as a Service pilot slated to take place in 2024. These back-end updates are expected to be completed in the second half of the year. The successful completion of our Data as a Service pilot, we believe, will allow us to validate one of many possible additional revenue streams for iSpecimen. Finally, we are using our deep insights provided by nearly 10 years of historical data and experience with customer requests, and supplier fulfillment to continue evolving our matchmaking algorithm, which is expected to result in better, faster matches and a streamlined procurement process for our researchers and reduce supplier efforts. As expected, we've already made significant progress on this initiative and are on track to complete it in the second half of the year. With that, I'll turn the call back to Tracy, who will provide more detailed discussion of our financial results for the second quarter of 2023 compared to the same period in 2022.

Thank you, Evan. In the second quarter of 2023, we reported approximately $1.6 million in revenue compared to approximately $2.3 million during the same period last year. The decrease in revenue was discussed earlier and was attributable to a decrease of 2,322 specimens or 33% in specimen count from 7,004 specimens in the three months ended June 30, 2022, to 4,682 specimens in the three months ended June 30, 2023. The decrease in specimen count was offset by a change in specimen mix that resulted in an increase in the average selling price per specimen approximately $13 or 4% compared to the same period in the prior year. During the six-month period ended June 30, 2023, we reported revenue of approximately $4.6 million compared to approximately $4.9 million during the same period last year. The decrease in revenue for the six-month period ended June 30, 2023, was attributable to a decrease in average selling price per specimen of $64 or 16% from approximately $407 in the six months ended June 30, 2022, to $343 in the six months ended June 30, 2023. The decrease in average selling price per specimen was offset by an increase of 1,383 specimens or 12% in specimen count from 11,928 specimens in the six months ended June 30, 2022, to 13,311 specimens in the six months ended June 30, 2023. Cost of revenue decreased by approximately $146,000 or 15% from approximately $1 million in the second quarter of 2022 to approximately $854,000 for the second quarter of 2023. A three-month period decrease was attributable to a 33% decrease in the number of specimens accessioned for the current period compared to the same period in the prior year, offset by a 28% increase in the average cost per specimen. Cost of revenue for the six-month period ended June 30, 2023, was approximately $2 million compared to approximately $2.2 million for the same period in 2022, a decrease of 8%. The six-month period decrease was attributable to a 17% decrease in the average cost per specimen impacted by the specimen mix, offset by a 12% increase in the number of specimens accessioned during the six months ended June 30, 2023, over the same period in the prior year. For the second quarter of 2023, we increased our cash spend for technology to approximately $1.5 million from approximately $807,000 for the same period in the prior year. For the six-month period ended June 30, 2023, we increased our cash spend for technology to approximately $3.4 million from approximately $1.4 million for the same period in the prior year. The increase in spend for the three and six-month period ended June 30, 2023, compared to the same prior year's period is directly related to the record level of technology investment planned for 2023, which we believe will enable the continued advancement of our online marketplace to be innovative in our industry. For the second quarter of 2023, this cash outlay was comprised of approximately $1.2 million of capitalized internally developed software and approximately $306,000 of technology expense that we were not able to capitalize and therefore, classified as technology expense. The remainder of the technology expense for the second quarter of 2023 was comprised of approximately $502,000 of non-cash amortization related to internally developed software and approximately $35,000 related to stock compensation expense. Total technology expense for the second quarter of 2023 was approximately $843,000 compared to approximately $636,000 for the same period in the prior year. For the six-month period ended June 30, 2023, the cash outlay was comprised of approximately $2.7 million of capitalized internally developed software and approximately $600,000 of technology expense that we were not able to capitalize and therefore, classified as technology expense. The remainder of the technology expense for the six-month period ended June 30, 2023, were comprised of approximately $935,000 of non-cash amortization related to internally developed software and approximately $73,000 related to stock compensation expense. The technology expense for the six-month period ended June 30, 2023, was approximately $1.7 million compared to $1.2 million the same period in the prior year. Sales and marketing expenses were approximately $978,000 for the second quarter of 2023, up 3% from approximately $951,000 in the second quarter of 2022. For the six-month period ended June 30, 2023, sales and marketing expenses were approximately $2 million, up 17.6% from the approximately $1.7 million during the same period in the prior year. General and administrative expenses for the three months ended June 30, 2023, increased by approximately $183,000 to approximately $1.8 million or 12% compared to approximately $1.6 million for the same period in the prior year. For the six-month period ended June 30, 2023, general and administrative expenses increased by approximately $100,000 to approximately $3.5 million or 3% compared to approximately $3.4 million during the same period in the prior year. For the quarter ended June 30, 2023, iSpecimen had approximately $2 million of cash and cash equivalents and approximately $6.2 million of available-for-sale securities with maturities ranging from one to six months. The combination of cash and cash equivalents and available-for-sale securities totaled approximately $8.2 million as of June 30, 2023, compared to our cash balance of approximately $15.3 million as of December 31, 2022. For the first half of 2023, the company had a cash burn of approximately $7.1 million. This is higher than our historical cash burn as it includes increased planned investments for technology in the first half of 2023 of $2.7 million and lower-than-expected revenue results for Q2. This concludes our prepared remarks. Now I would like to open the call for questions. Operator, please go ahead.

We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Matt Hewitt of Craig-Hallum. Please go ahead.

Good morning. This is Jack on for Matt. Thank you for the update and for taking my question. My first one is more of a broader one. What impact are you seeing from your customers relating to the decline in funding for small pharma and biotech companies? And then are you experiencing any impact from this decline?

Thanks, Jack. Glad you're on the call today. I'm going to – so the answer is yes, we are seeing an impact, and there are a lot of things that we're working on internally to overcome that. I'll turn it over to Eric Langlois, our Chief Revenue Officer, to talk about the sales and marketing changes that we made in Q2 to assist us in driving through this downturn that we're seeing. Eric?

Yes. Thank you, Tracy, and thank you for the question. I think as some of the earnings stated that we really recognize kind of the change in landscape at the end of Q1. So we're kind of bracing for some of that. We found that a lot of customers were putting in a lot of requests, but really slow rolling a lot of different things, both on the purchase order conversion front, but also on the payment of past projects front. So it seemed like everyone was just going into a very conservative-based position. So as Tracy stated, we implemented a number of different changes. We've really changed around our marketing pushes and what we're pushing and how we're pushing it and the content and who it's going out to. We also readdressed all of our margins for quotations that need to really create an impact just because we were able to obtain more POs toward the end of Q2 and into Q3 than we had in the prior couple of months. So that seemed to have almost an immediate impact. But we also moved to another system where we're doing a more structured cadence follow-up to our quotations, so that are ADRs who assist our salespeople. They're really doing a specific schedule a follow-up on very specific days, making sure that we get feedback. And we also are engaging customers just to get information and feedback and talk to some other people throughout the industry to make sure that they were seeing and experiencing the same things that we were so that we'd be prepared to address it in some additional ways. So like I said, thankfully, a lot of these things have already beared fruit. We've seen some results from it. Our conversion rates have gone up relatively about 50%. So I think that we're on the right track here. And I think as an industry, we're coming out of it a bit. But I think this is just me speaking here from the data I've seen. I think the funding things that you mentioned are really impacting kind of the middle of the life science market. And I think pharma is still always okay, but they're being more conservative. And I think the funding that we are seeing is going into relatively new companies with new technologies and new entrants into the market. So I think it's the middle part that, that kind of got squeezed. But I think, like I said, the things that we've done is really kind of right to the ship, and I think will help us through the rest of the year.

And I also think that this highlighted for us that we need to focus slightly differently on our customer base. As Eric mentioned, we're sort of in the middle market, early-stage life science companies and the funding is still coming through for companies that are going through, say, a Series A. There is that going on and big pharma still has money. And so part of – another strategy that we deployed in Q2 is new customer acquisition with new, new campaigns in those areas for us to tap into these life science companies that actually still do have cash and are still spending on R&D.

Okay. That's helpful. I appreciate the color. And then in your prepared remarks, you said that you're able to pivot to several new initiatives. What were those and will you be able to replicate the success going forward into any other areas?

Yes. So we actually looked at four different growth drivers and Eric has talked to a bit of them, the competitive pricing, new customer acquisition, our middle [indiscernible] conversion drivers and then remnant and bank focused. And some of the things we did for competitive pricing is we did look at, are we competitive and if we felt that we could be more competitive. We went back to those quotes and became more competitive sharpen their pencil. For new customer acquisition, I just talked a little bit about that about new lead campaigns really focused on Series A and big pharma, also joined some very mirrored product pushes for marketing efforts. And then for our conversion drivers, especially from quote PO, which is where it really, really impacted us or the next-day quote effort was already underway. We've accelerated that, and we've created if we will, internal term greenlight for site product pushes and quoting where we know based upon really understanding our supplier capabilities that those requests and opportunities could be fulfilled. And again, we'll be fully operational with our next-day quoting and it's underway so we were starting to see benefits from that. And then for remnant and bank focus because we can convert and fulfill faster in the remnant and bank area as opposed to perspective, which is our bespoke area. We're really focused on sales and marketing fully immersed in remnants and bank areas for us, product pushes. We make sure that we're on a cadence of 2x a week and again, just making sure that we understand our supplier capabilities and inventory so that we can expedite those opportunities to quote and [indiscernible] POs. Eric, is there anything else you want to add to that?

No, not really. Yes, I mean I think you've addressed all the drivers that we looked at and the actions that we're taking. And it's just comforting to know that they all provided some immediate results and we've seen the trends in the data analytics that show that. But yes, I'll just highlight what you said. The next-day quoting piece is the big thing. I think what we've really kind of dealt with now for a number of years is that a lot of these custom bespoke collections, they take a lot of operational lift to check out. The feasibility process can be very long. It can be 15 to as many as 60 days just to evaluate a project. And if all of your opportunities are concentrated in those custom collections, that can be very, very difficult. So going back with the next-day quote project initiative and really lining out sites going to them and saying, hey, we want to market specific types of collections, specific standards. We want to be able to have a locked-in go-to-market pricing arrangements so that when we can go out and highlight those types of projects, we can actually fill more of our funnel with those things that are preloaded and some of those collections will still take a long time to execute depending on the criteria and the specificity of what the customer is looking for. But at least we'll be able to get to the purchase order and contracting portion of it within a couple of days instead of a couple of weeks. And that allows us to reach a lot better revenue conversion velocity because we're starting the project a lot sooner. We're doing the training, the kit building in the donor recruitment phase of those projects a lot sooner. So I think having a number of sites take part in that initiative, understand what we're trying to do. Be very excited about the possibilities that they no longer – for at least certain things, they no longer ever have to engage in the feasibility process. The customers are the ones that will end up benefiting the most from that. I mean, clearly, we were on the site well, but we're really trying to do something to address a bit of a time crunch there for our customers.

Thanks for taking my questions.

Thank you.

[Operator Instructions] I show no further questions in the queue. So at this time, I'd like to turn the call over to Ms. Tracy Curley, CEO and CFO, for closing remarks.

Thank you. I'd like to thank everyone again for joining us on today's call and for your continued interest in iSpecimen. We look forward to having follow-up conversations with many of you and to see many of you at the upcoming events that we will be attending this quarter. So again, thank you very much. Have a great day.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Have a good day.