Precipio, Inc.

Previous wording

This Quarterly Report on Form 10-Q or the information incorporated herein by reference, including this Management’s Discussion and Analysis, contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. These statements are based on management’s current views, assumptions or beliefs of future events and financial performance and are subject to uncertainty and changes in circumstances. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements. These factors include, among other things: our expected revenue, income (loss), receivables, operating expenses, the effects of a cyberattack on us or our operations, supplier pricing, availability and prices of raw materials, insurance reimbursements, product pricing, foreign currency exchange rates, sources of funding operations and acquisitions, our ability to raise funds, sufficiency of available liquidity, future interest and inflation costs, future economic circumstances, business strategy, industry conditions and key trends, our ability to execute our operating plans, the success of our cost savings initiatives, competitive environment and related market conditions, our ability to comply with the listing requirements of the Nasdaq Capital Market, expected financial and other benefits from our organizational restructuring activities, geopolitical uncertainties includingthe ongoing Russia and Ukraine conflict and the Israel-Hamas war, actions of governments and regulatory factors affecting our business, projections of future earnings, revenues, synergies, accretion or other financial items, any statements of the plans, strategies and objectives of management for future operations, retaining key employees and other risks as described in our reports filed with the SEC. In some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” or the negative of such terms and other similar expressions.

Current wording

This Quarterly Report on Form 10-Q or the information incorporated herein by reference, including this Management’s Discussion and Analysis, contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. These statements are based on management’s current views, assumptions or beliefs of future events and financial performance and are subject to uncertainty and changes in circumstances. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements. These factors include, among other things: our expected revenue, income (loss), receivables, operating expenses, the effects of a cyberattack on us or our operations, the nature, cost and outcome of any pending or potential litigation and other legal proceedings, supplier pricing, availability and prices of raw materials, insurance reimbursements, product pricing, foreign currency exchange rates, sources of funding operations and acquisitions, our ability to raise funds, sufficiency of available liquidity, future interest and inflation costs, future economic circumstances, business strategy, industry conditions and key trends, our ability to execute our operating plans, the success of our cost savings initiatives, competitive environment and related market conditions, our ability to comply with the listing requirements of the Nasdaq Capital Market, expected financial and other benefits from our organizational restructuring activities, geopolitical uncertainties includingthe ongoing Russia and Ukraine conflict and the Israel-Hamas war, actions of governments and regulatory factors affecting our business, projections of future earnings, revenues, synergies, accretion or other financial items, any statements of the plans, strategies and objectives of management for future operations, retaining key employees and other risks as described in our reports filed with the SEC. In some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” or the negative of such terms and other similar expressions.

Previous wording

The following discussion should be read together with our condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q and with the audited financial statements, related notes and Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which we filed with the Securities and Exchange Commission on March 30, 2026. Results for the three and six months ended June 30, 2026 are not necessarily indicative of results that may be attained in the future.

Current wording

The following discussion should be read together with our condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q and with the audited financial statements, related notes, and Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which we filed with the Securities and Exchange Commission on March 30, 2026. Results for the three and nine months ended September 30, 2026 are not necessarily indicative of results that may be attained in the future.

Previous wording

We are a healthcare biotechnology company focused on improving cancer diagnostics. Ourobjective is to enhance diagnostic accuracy and accessibility while building a sustainable business model that supports ongoing innovation. We seek to achieve these objectives through a combination of clinical laboratory services and proprietary diagnostic product development. By integrating diagnostic services with product development, our service business

Current wording

We are a healthcare biotechnology company focused on improving cancer diagnostics. Ourobjective is to enhance diagnostic accuracy and accessibility while building a sustainable business model that supports ongoing innovation. We seek to achieve these objectives through a combination of clinical laboratory services and proprietary diagnostic product development. By integrating diagnostic services with product development, our service business doubles as a self-funded research and development (“R&D”) unit, enabling us to achieve rapid and cost-efficient innovation, rather than being a major cost center of the Company.

Previous wording

This unique integrated operating structure is the foundation of our approach to research, development, and product commercialization. Unlike companies that rely primarily on stand-alone research facilities or external clinical validation programs, our clinical laboratory operations enables its R&D team to evaluate, refine, and validate diagnostic products in the course of routine clinical testing activities, and at minimal incremental cost. Through these activities, we generate clinical data, operational experience, and specimen access that support ongoing assay development and product improvement. While these activities are initially conducted to provide diagnostic services to patients and their healthcare providers, they also contribute to product development and validation processes.

Current wording

the course of routine clinical testing activities, and at minimal incremental cost. Through these activities, we generate clinical data, operational experience, and specimen access that support ongoing assay development and product improvement. While these activities are initially conducted to provide diagnostic services to patients and their healthcare providers, they also contribute to product development and validation processes.

Previous wording

The condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business and do not include any adjustments that might result should we be unable to continue as a going concern. We have incurred substantial operating losses for the past several years and while we have shown cash provided by our operating activities over the past 18 months, this was largely aided by $1.2 million in payments received related to non-recurring Employee Retention Credits. See Note 12 Employee Retention Credit. For the six months ended June 30, 2026, we had an operating loss of $2.0 million and net cash provided by operating activities of $0.7 million. As of June 30, 2026, we had an accumulated deficit of $104.5 million and working capital of $2.8 million. Our ability to continue as a going concern over the next twelve months from the date the condensed consolidated financial statements were issued is dependent upon a combination of achieving our business plan, including

Current wording

The condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business and do not include any adjustments that might result should we be unable to continue as a going concern. We have incurred substantial operating losses for the past several years and while we have shown cash provided by our operating activities over the past 18 months, this was largely aided by $1.2 million in payments received related to non-recurring Employee Retention Credits. See Note 12 Employee Retention Credit. For the nine months ended September 30, 2026, we had an operating loss of $2.0 million and net cash provided by operating activities of $1.3 million. As of September 30, 2026, we had an accumulated deficit of $104.5 million and working capital of $3.1 million. Our ability to continue as a going concern over the next twelve months from the date the condensed consolidated financial statements were issued is dependent upon a combination of achieving our business plan, including generating additional revenue, and raising additional financing to meet our debt obligations and paying liabilities arising from normal business operations when they come due.

Previous wording

Net sales for the three months ended June 30, 2026 were approximately $7.0 million, an increase of $1.4 million as compared to the same period in 2025. During the three months ended June 30, 2026, patient diagnostic service revenue increased $1.1 million as compared to the same period in 2025. This increase was due to a greater number of cases processed in the current year period. We processed 4,652 cases during the three months ended June 30, 2026 as compared to 3,692 cases during the same period in 2025, or a 26% increase in cases. Product revenue for the three months ended June 30, 2026 increased $0.3 million as compared to the prior year second quarter.

Current wording

Net sales for the three months ended September 30, 2026 were approximately $7.3 million, an increase of $0.6 million as compared to the same period in 2025. During the three months ended September 30, 2026, patient diagnostic service revenue, net, increased by $0.3 million as compared to the same period in 2025. We processed 4,582 cases during the three months ended September 30, 2026 as compared to 4,258 cases during the same period in 2025, or an 8% increase in cases. The increase in number of cases processed was partially offset by a lower average price per case during the 2026 period due to a different mix of case types. Product revenue for the three months ended September 30, 2026 increased $0.3 million as compared to the prior year third quarter, primarily reflecting revenue generated from new product related projects and activity unrelated to historic product sales.

Previous wording

Cost of Sales. Cost of sales includes material and supply costs for the patient tests performed, costs related to products and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory. Cost of sales increased by $1.9 millionfor the six months ended June 30, 2026 as compared to the same period in 2025. The increase is primarily attributable to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the higher number of cases processed, as discussed above.

Current wording

Cost of Sales. Cost of sales includes material and supply costs for the patient tests performed, costs related to products, and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory. Cost of sales increased by $0.2 millionfor the three months ended September 30, 2026 as compared to the same period in 2025. The increase is primarily attributable to increases in reagents, operating supplies, and shipping costs all due to the higher number of cases processed, as discussed above, partially offset by reduced costs related to product revenues.

Previous wording

Gross profit was approximately $5.9 million and $4.6 million during the six months ended June 30, 2026 and 2025, respectively. The gross profit increased $1.3 million during the six months ended June 30, 2026, as compared to the prior year period, as a result of increases in case volume and revenue. The gross margin was 43% for the six months ended June 30, 2026 and 2025. We operate a fully staffed CLIA and College of American Pathologists (“CAP”) certified clinical pathology and molecular laboratory. As such, it is necessary to maintain appropriate staffing levels to provide industry standard laboratory processing and reporting to ordering physicians. An increase in case volume or average price per case will enable our laboratory to yield economies of scale and to leverage fixed expenses.

Current wording

Gross profit was approximately $3.4 million and $3.0 million during the three months ended September 30, 2026 and 2025, respectively. The gross profit increased $0.4 million during the three months ended September 30, 2026 as compared to the prior year period, as a result of increases in case volume and revenue. The gross margin was 46% and 44% for the three months ended September 30, 2026 and 2025, respectively. We operate a fully staffed CLIA and College of American Pathologists (“CAP”) certified clinical pathology and molecular laboratory. As such, it is necessary to maintain appropriate staffing levels to provide industry standard laboratory processing and reporting to ordering physicians. An increase in case volume or average price per case will enable our laboratory to yield economies of scale and to leverage fixed expenses.

Previous wording

Operating Expenses. Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock-based compensation costs and depreciation and amortization. Our operating expenses increased by $0.5 million for the three months ended June 30, 2026 as compared to the same period in 2025. For the three months ended June 30, 2026: (1) general and administrative expenses increased by $0.1 million primarily due to increased legal and professional fees, (2) sales and marketing expenses increased by $0.1 million due to increase personnel costs, specifically related to new hires in our product division sales force, (3) research and development expenses remained relatively flat as compared to the prior year period, and (4) stock-based compensation, which is a non-cash expense, increased by $0.3 million.

Current wording

$0.3 million for the three months ended September 30, 2026 as compared to the same period in 2025. For the three months ended September 30, 2026: (1) general and administrative expenses increased by $0.3 million primarily due to increased personnel costs and legal and professional fees, (2) sales and marketing expenses remained flat with the same period in 2025 and included an increase of $0.2 million in personnel costs related to new hires in our product division sales force, offset by a decrease of $0.2 million in personnel costs related to service revenues, (3) research and development expenses increased by $0.1 million as compared to the prior year period, and (4) stock-based compensation, which is a non-cash expense, decreased by approximately $0.1 million.

Previous wording

Results of Operations for the Six Months Ended June 30, 2026 and 2025

Current wording

Results of Operations for the Nine Months Ended September 30, 2026 and 2025

Previous wording

Net sales for the six months ended June 30, 2026 were approximately $13.7 million, an increase of $3.1 million as compared to the same period in 2025. During the six months ended June 30, 2026, patient diagnostic service revenue increased $2.9 million as compared to the same period in 2025. This increase was due to a greater number of cases processed in the current year period. We processed 9,564 cases during the six months ended June 30, 2026 as compared to 6,713 cases during the same period in 2025, or a 42% increase in cases. The benefit of the increase in cases billed during the six months ended June 30, 2026 as compared to the same period of 2025 was partially offset by a lower average price per case during the current year as a result of a different product mix. Product revenue for the six months ended June 30, 2026 increased by $0.3 million.

Current wording

Net sales for the nine months ended September 30, 2026 were approximately $21.1 million, an increase of $3.7 million as compared to the same period in 2025. During the nine months ended September 30, 2026, patient diagnostic service revenue, net, increased $3.1 million as compared to the same period in 2025. This increase was due to a greater number of cases processed in the current year period. We processed 14,146 cases during the nine months ended September 30, 2026 as compared to 10,971 cases during the same period in 2025, or a 29% increase in cases. The benefit of the increase in cases billed during the nine months ended September 30, 2026 as compared to the same period of 2025 was partially offset by a lower average price per case during the current year as a result of a different mix of case types. Product revenue for the nine months ended September 30, 2026 increased by $0.6 million.

Previous wording

Cost of Sales. Cost of sales includes material and supply costs for the patient tests performed, costs related to products and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory. Cost of sales increased by $0.7 millionfor the three months ended June 30, 2026 as compared to the same period in 2025. The increase is primarily attributable to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the higher number of cases processed, as discussed above.

Current wording

Cost of Sales. Cost of sales includes material and supply costs for the patient tests performed, costs related to products, and other direct costs (primarily personnel costs, pathologist interpretation costs, and rent) associated with the operations of our laboratory. Cost of sales increased by $2.0 millionfor the nine months ended September 30, 2026 as compared to the same period in 2025. The increase is primarily attributable to increases in reagents, operating supplies, personnel costs, and pathologist interpretation costs all due to the higher number of cases processed, as discussed above.

Previous wording

Gross profit was approximately $3.1 million and $2.4 million during the three months ended June 30, 2026 and 2025, respectively. The gross profit increased $0.7 million during the three months ended June 30, 2026, as compared to the prior year period, as a result of increases in case volume and revenue. The gross margin was 45% and 43% for the three months ended June 30, 2026 and 2025, respectively. We operate a fully staffed CLIA and College of American Pathologists (“CAP”) certified clinical pathology and molecular laboratory. As such, it is necessary to maintain appropriate

Current wording

Gross profit was approximately $9.2 million and $7.6 million during the nine months ended September 30, 2026 and 2025, respectively. The gross profit increased $1.7 million during the nine months ended September 30, 2026 as compared to the prior year period, as a result of increases in case volume and revenue. The gross margin was 44% for the nine months ended September 30, 2026 and 2025. We operate a fully staffed CLIA and College of American Pathologists (“CAP”) certified clinical pathology and molecular laboratory. As such, it is necessary to maintain appropriate staffing

Previous wording

staffing levels to provide industry standard laboratory processing and reporting to ordering physicians. An increase in case volume or average price per case will enable our laboratory to yield economies of scale and to leverage fixed expenses.

Current wording

levels to provide industry standard laboratory processing and reporting to ordering physicians. An increase in case volume or average price per case will enable our laboratory to yield economies of scale and to leverage fixed expenses.

Previous wording

Operating Expenses. Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock-based compensation costs and depreciation and amortization. Our operating expenses increased by $1.6 million for the six months ended June 30, 2026 as compared to the same period in 2025. For the six months ended June 30, 2026: (1) general and administrative expenses increased by $0.2 million primarily due to increased legal and professional fees, (2) sales and marketing expenses increased by $0.4 million due to increased personnel and recruiting costs, specifically related to new hires in our product division sales force, (3) research and development expenses increased by $0.1 million due to increased personnel costs, and (4) stock-based compensation, which is a non-cash expense, increased by $0.9 million.

Current wording

Operating Expenses. Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock-based compensation costs, and depreciation and amortization. Our operating expenses increased by $1.9 million for the nine months ended September 30, 2026 as compared to the same period in 2025. For the nine months ended September 30, 2026: (1) general and administrative expenses increased by $0.5 million primarily due to increased personnel costs and legal and professional fees, (2) sales and marketing expenses increased by $0.4 million due to increased personnel and recruiting costs, specifically related to new hires in our product division sales force, (3) research and development expenses increased by $0.3 million due to increased personnel costs, and (4) stock-based compensation, which is a non-cash expense, increased by $0.7 million.

Previous wording

Other Expense. We recorded net other income of $0.4 million for the three months ended June 30, 2026, which included income of $0.4 million from the receipt of Employee Retention Credits partially offset by net interest expense of $9 thousand. We recorded net other income of $0.9 million for the three months ended June 30, 2025 which included income of $0.1 million from the gain on settlement of liabilities, income of $0.8 million from the receipt of Employee Retention Credits, and net interest expense of $23 thousand.

Current wording

Other Expense. We recorded net other income of $0.4 million for the nine months ended September 30, 2026, which included income of $0.4 million from the receipt of Employee Retention Credits partially offset by net interest expense of $34 thousand. We recorded net other income of $0.9 million for the nine months ended September 30, 2025 which included income of $0.1 million from the gain on settlement of liabilities, income of $0.8 million from the receipt of Employee Retention Credits, and net interest expense of $57 thousand.

Previous wording

Analysis of Cash Flows – Six Months Ended June 30, 2026 and 2025

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Analysis of Cash Flows – Nine Months Ended September 30, 2026 and 2025

Previous wording

Cash Flows Provided by Operating Activities. The cash flows provided by operating activities of $0.7 million during the six months ended June 30, 2026 included an increase in deferred revenue of $0.1 million, a decrease in inventories and other assets of $0.2 million, and non-cash adjustments of $3.0 million. These were partially offset by a net loss of $1.7 million, an increase in accounts receivables of $0.5 million, a decrease in operating lease liabilities of $0.2 million, and a decrease in accounts payable and accrued expenses of $0.2 million. The non-cash adjustments included $0.3 million for the change in provision for credit losses. We routinely provide a reserve for credit losses as a result of having limited in-network payer contracts. The other non-cash adjustments to net loss of approximately $2.7 million include, among other things, depreciation and amortization, and stock-based compensation. The cash flows provided by operating

Current wording

Cash Flows Provided by Operating Activities. The cash flows provided by operating activities of $1.3 million during the nine months ended September 30, 2026 included an increase in accounts payable of $0.1 million, an increase in accrued expenses of $0.1 million, and non-cash adjustments of $3.7 million. These were partially offset by a net loss of $1.7 million, an increase in accounts receivables and other assets of $0.4 million, a decrease in operating lease liabilities of $0.3 million, and a decrease in deferred revenue of $0.2 million. The non-cash adjustments included $0.3 million for the change in provision for credit losses. We routinely provide a reserve for credit losses as a result of having limited in-network payer contracts. The other non-cash adjustments to net loss of approximately $3.4 million include, among other things, depreciation and amortization, and stock-based compensation. The cash flows provided by operating activities of $0.3 million during the nine months ended September 30, 2025 included an increase in accounts payable of $0.5 million, an increase in deferred revenues of $0.1 million, and non-cash adjustments of $2.4 million. These were partially offset by a net loss of $0.9 million, a decrease in other assets of $0.1 million, an increase in accounts receivables of $1.2 million, an increase in inventories of $0.1 million, a decrease in operating lease liabilities of $0.2 million, and a decrease in accrued expenses of $0.2 million.

Previous wording

Cash Flows Used In Investing Activities. Cash flows used in investing activities were approximately $0.2 million for the six months ended June 30, 2026 and 2025 resulting from purchases of property and equipment.

Current wording

Cash Flows Used In Investing Activities. Cash flows used in investing activities were approximately $0.2 million and $0.3 million, respectively, for the nine months ended September 30, 2026 and 2025 resulting from purchases of property and equipment.

Previous wording

Cash Flows Used in Financing Activities. Cash flows used in financing activities totaled $0.1 million for the six months ended June 30, 2026, which included payments on our long-term debt and finance lease obligations. Cash flows used in financing activities totaled $0.4 million for the six months ended June 30, 2025, which included $0.4 million in payments on our long-term debt and finance lease obligations.

Current wording

Cash Flows (Used in) Provided By Financing Activities. Cash flows used in financing activities totaled $0.2 million for the nine months ended September 30, 2026, which included payments on our long-term debt and finance lease obligations. Cash flows provided by financing activities totaled $0.8 million for the nine months ended September 30, 2025, which included $1.3 million in proceeds from the exercise of warrants partially offset by $0.5 million in payments on our long-term debt and finance lease obligations.

Previous wording

At each of June 30, 2026 and December 31, 2025, other than certain purchase commitments of approximately $2.8 million and $3.1 million, respectively, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. The purchase commitments are mostly for laboratory reagents used in our normal operating business.

Current wording

At each of September 30, 2026 and December 31, 2025, other than certain purchase commitments of approximately $2.4 million and $3.1 million, respectively, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. The purchase commitments are mostly for laboratory reagents used in our normal operating business.

Previous wording

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual financial results based on judgments or estimates may vary under different assumptions or circumstances. Our critical accounting estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission on March 30, 2026.

Current wording

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual financial results based on judgments or estimates may vary under different assumptions or circumstances. Our critical accounting estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission on March 30, 2026.

Previous wording

Inflationary factors, such as increases in our cost of goods, labor, or other operating expenses, may adversely affect our operating results. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the three and six months ended June 30, 2026 and 2025. We cannot assure you, however, that we will be able to

Current wording

Inflationary factors, such as increases in our cost of goods, labor, or other operating expenses, may adversely affect our operating results. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the three and nine months ended September 30, 2026 and 2025. We cannot assure you, however, that we will be able to increase the prices of our products or reduce our operating expenses in an amount sufficient to offset the effects future inflationary pressures may have on our gross margin. Accordingly, we cannot assure you that our financial condition and results of operations will not be materially impacted by inflation in the future.