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…

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…

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…

[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.