Business context and reporting period
bioAffinity Technologies, Inc. filed this Form 10-K for the fiscal year ended December 31, 2023; it was signed April 1, 2024. The company develops noninvasive lung diagnostics and conducts early-stage cancer therapeutic research. Its lead test, CyPath® Lung, analyzes sputum using flow cytometry and automated analysis. In September 2023, its subsidiary acquired and began consolidating a CAP-accredited, CLIA-certified pathology laboratory, Precision Pathology Laboratory Services (PPLS).
Financial results and key metrics
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Net revenue | $2.532 million | $4,803 |
| Operating expenses | $10.506 million | $4.016 million |
| Operating loss | ($7.973 million) | ($4.011 million) |
| Net loss | ($7.937 million) | ($8.154 million) |
| Net loss per share, basic and diluted | ($0.91) | ($1.81) |
| Cash used in operating activities | $6.038 million | $4.071 million |
| Cash used in investing activities | $2.209 million | $0.220 million |
| Cash provided by/(used in) financing activities | ($0.345 million) | $14.344 million |
Revenue for 2023 primarily reflects PPLS operations consolidated from September 19: patient services of $2.200 million, histology services of $273,000, medical director fees of $19,000, and Department of Defense (DoD) study revenue of $19,000. Patient-service revenue includes direct billing for CyPath Lung; approximately $37,000 of 2023 revenue was attributed to CyPath Lung in the risk-factor discussion. The filing does not provide a clear gross margin figure.
At December 31, 2023, cash and cash equivalents were $2.822 million, working capital was approximately $1.7 million, total assets were $8.222 million, total liabilities were $3.366 million, and stockholders’ equity was $4.855 million. Lease liabilities totaled approximately $1.579 million, including $1.201 million under finance leases and $378,000 under operating leases. Loan payable was zero at year-end. The accumulated deficit was $44.6 million.
Material changes versus the prior comparable period
- Revenue rose from $4,803 to $2.532 million, largely because the acquired laboratory’s operations were included from September 2023; the periods are therefore not directly comparable.
- Total operating expenses increased 162% to $10.506 million. Major drivers included PPLS laboratory costs, acquisition and public-company expenses, higher compensation, stock-based compensation, and CyPath Lung marketing.
- Operating loss widened to $7.973 million from $4.011 million. Net loss narrowed modestly, from $8.154 million to $7.937 million, primarily because 2022 included substantial interest and convertible-note fair-value expenses.
- Cash declined from $11.414 million at the end of 2022 to $2.822 million at the end of 2023. Investing outflows increased mainly due to the PPLS acquisition; 2022 financing inflows had included IPO proceeds and warrant exercises.
Outlook, commentary, risks and unusual items
- Going concern and funding: Management and the auditor report substantial doubt about the company’s ability to continue as a going concern. Management said available cash was expected to fund operations only through September 2024 absent additional funding. The company reported raising $2.5 million gross in a March 2024 registered direct offering and concurrent warrant placement; the financial-statement note reports net proceeds of $2.05 million. Further capital may be needed, and additional equity financing could dilute shareholders.
- Acquisition: PPLS was acquired for $3.5 million—$2.5 million cash and $1.0 million in company shares. The acquisition added laboratory operations, goodwill, intangible assets, and lease obligations. The filing says the company does not expect immediate profit from PPLS and cannot reliably estimate when significant profit may begin.
- Commercial and regulatory plans: CMS reimbursement for CyPath Lung under PLA code 0406U took effect January 1, 2024. The company plans staged U.S. sales expansion, a pivotal trial of approximately 1,800 patients, and a voluntary FDA de novo submission; the filing identifies a planned de novo request in the second quarter of 2026. EU entry would require CE marking. A 2023 FDA proposal to phase out broad enforcement discretion for many laboratory-developed tests creates regulatory uncertainty.
- Early commercial indicator: The company reported a 375% increase in CyPath Lung tests ordered and processed for December 2023–February 2024 compared with the preceding three-month period. This is a company-reported post-year-end measure, not audited FY 2023 revenue.
- Test evidence and risks: A 150-patient validation study reported overall 82% sensitivity and 88% specificity; results for the small-nodule subset were 92% sensitivity and 87% specificity. The company cautions that the test has not received FDA marketing authorization and that market adoption, reimbursement, clinical-trial results, regulation of LDTs, competition, laboratory operations, and financing remain significant risks.
- Other disclosures: PPLS passed its CAP inspection in January 2024. The company reported no material pending legal proceedings and said management considered internal control over financial reporting effective as of year-end; the auditor was not required to attest to that assessment.
Important facts for investors to verify
- Current cash, cash burn, financing availability, and whether the company can fund operations beyond the stated September 2024 estimate.
- Actual CyPath Lung test volumes, collections, reimbursement rates, and the extent to which post-year-end growth is sustained.
- PPLS’s standalone operating performance, acquisition-related costs and liabilities, and progress toward profitability.
- FDA rulemaking affecting LDTs, the pivotal-trial schedule and enrollment, and the timing and feasibility of the planned de novo request.
- Potential dilution from outstanding warrants, options, and future capital raises; confirm the terms and completion of the March 2024 offering and required stockholder approvals.