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DATE
Tuesday, Nov. 10, 2026
CALL PARTICIPANTS
- Chief Executive Officer - Ilan Danieli
- Chief Operating Officer - Ahmed Sabet
TAKEAWAYS
- Total Revenue -- $7.3 million, representing an 8% year-over-year increase and growth from $7.0 million in the prior quarter.
- Product Revenue -- $1.0 million, marking a 40% increase year over year and the first instance of this segment exceeding $1 million in a single quarter.
- Pathology Revenue -- $6.3 million, growing 5% year over year from $6.0 million in the third quarter of 2025.
- Adjusted EBITDA -- $400,000, remaining consistent with the second quarter of 2026 results.
- Operating Cash Flow -- $600,000, compared with approximately $700,000 generated in the second quarter of 2026.
- Cash Balance -- $3.5 million at quarter end, an increase from the $2.3 million reported in the third quarter of 2025.
- Product Run Rate Objective -- $10 million by the end of 2027, compared with the current annualized run rate of approximately $4 million.
- Pathology Run Rate Objective -- $30 million by the exit of 2027, driven by customer retention and coordinated sales efforts.
- Exit Run Rate Target -- $40 million combined annualized revenue by the end of 2027, reflecting management's goal for scaled operations.
- Infrastructure Capacity -- $100 million in annual revenue, which management stated the current facility and equipment can support without significant additional capital investment.
- Commercial Team Size -- four sales representatives currently, with plans to double the headcount to at least eight during 2027.
- Customer Implementation Time Line -- three months to 18 months, representing the range required to move from initial meeting to live clinical use.
- Product Gross Margins -- 40% to 50% currently, including distributor impacts.
- Scaling Margin Targets -- 70% to 75%, which management expects to achieve as revenue scales and overhead is leveraged.
- Product Pipeline Scale -- 50% conversion of the current pipeline would allow the company to reach its 2027 revenue run rate targets.
- Annualized Product Revenue Run Rate -- $4 million currently, based on the $1.0 million performance in the third quarter.
- Distribution Partnership Coverage -- four major distributors, including Thermo Fisher, Medline, McKesson, and Cardinal Health, provide access to over 200 sales representatives each.
- Year-Over-Year Revenue Growth -- 8% total growth, reflecting a shift toward financial independence and operational efficiency.
- Pathology Segment Growth -- 5% increase year over year, continuing to generate the majority of operating cash flow.
- Quarter-Over-Quarter Revenue Growth -- $300,000 total increase, driven by a $100,000 rise in product sales and a $200,000 rise in pathology services.
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RISKS
- Danieli stated, "it's so hard when you start with a customer to actually foresee when the first order will come in," noting that variable onboarding timelines ranging from three to 18 months create challenges for near-term revenue forecasting.
SUMMARY
Precipio, Inc. (NASDAQ:PRPO) reported third-quarter results characterized by a transition from achieving financial independence in 2025 toward a strategy of accelerated revenue growth for 2027. Management reported that the company achieved a quarterly cash balance exceeding $3.5 million while maintaining positive adjusted EBITDA and operating cash flow. The company stated its intent to leverage established distribution agreements with four major industry partners to scale its product division, targeting a combined annualized revenue run rate of $40 million by the end of 2027. This growth plan includes doubling the sales force and hiring a senior marketing executive to enhance clinical credibility and market awareness. Management noted that current facility infrastructure is already equipped to handle up to $100 million in annual revenue without further major capital expenditures.
- The company plans to double its product sales force in 2027 to meet demand from distribution partners and accelerate pipeline conversion.
- Management clarified that the 2027 targets represent exit run rate goals rather than a forecast of total revenue recognized during that fiscal year.
- COO Sabet indicated that the clinical laboratory serves both as a consistent revenue source and as a platform for developing and validating new diagnostic technologies.
- CEO Danieli stated, "It's time to pour gas on the fire, utilizing the incoming cash flow as resources towards accelerating the distributor and sales approach we spent this year developing."
- The company intends to increase its presence at medical conferences and build a network of key opinion leaders to drive evidence-based adoption of its diagnostic panels.
- Management reported that product margins are expected to reach 70% to 75% as segment revenue scales toward the $10 million run rate target.
INDUSTRY GLOSSARY
- HemeScreen: A collection of genetic diagnostic panels designed for the detection of hematological malignancies.
- ICE-COLD PCR: A patented technology that improves the sensitivity of molecular tests by preferentially amplifying mutant DNA sequences.
- IV-Cell: A specialized cell culture media used to grow multiple hematopoietic cell lineages simultaneously for diagnostic testing.
- Hematopathology: A branch of pathology that studies diseases of the blood, bone marrow, and lymph nodes.
- Run Rate: A financial prediction of future performance based on the assumption that current results will continue for a full year.
Full Conference Call Transcript
Operator: Welcome to Precipio Q3 2026 Shareholder Update Conference Call. [Operator Instructions] Please note that the conference is being recorded. Statements made during this call contain forward-looking statements about our business. You should not place undue reliance on forward-looking statements as these statements are based upon our current expectations, forecasts and assumptions and are subject to significant risks and uncertainties. These statements may be identified by words such as may, will, should, could, expect, intend, plan, anticipate, believe, estimate, predict, potential, forecast, continue or the negative of these terms or other words or terms of similar meaning.
Risks and uncertainties that could cause our actual results to differ materially from those set forth in any forward-looking statements include, but are not limited to, the matters listed under Risk Factors in our annual report on Form 10-K for the year ended December 31, 2025, which is on file with the Securities and Exchange Commission as well as other risks detailed in our subsequent filings with the Securities and Exchange Commission. These reports are available at www.sec.gov.
Statements and information, including forward-looking statements, speak only to the date they are provided, unless an earlier date is indicated, and we do not undertake any obligation to publicly update any statements or information, including forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Now let me hand the call over to Ilan Danieli, Precipio's CEO. Please go ahead.
Ilan Danieli: Good afternoon, everyone, and thank you for joining us. Before we jump into a review of the results for Q3 2026 and share several thoughts for 2027, I thought that as we come to the end of another successful year, it might be helpful to add another member of the management team to these calls. I'd like to introduce my Co-Founder and Precipio's Chief Operating Officer, Zaki Sabet. Along with Dr. Ayman Mohamed, the 3 of us started Precipio in 2011, and we've been inseparable since. Prior to founding Precipio, Zaki spent his career in the diagnostics industry. While at college, Zaki worked as an accessioner during the night shift in a lab in New Jersey.
And over the years, he moved up through the ranks of lab tech then supervisor to eventually manage the entire laboratory. Bringing his in-depth expertise, Zaki was responsible for building what is today, to the best of our knowledge, at our size, one of the few profitable hematopathology laboratories in the country. At Precipio, Zaki oversees all company operations, including both our clinical laboratory as well as operations for the products division, including manufacturing and supply chain. Today, Zaki will be joining me in sharing some remarks, and then we'll also be available to answer questions during the Q&A section.
As this is our last scheduled shareholder call of 2026, I'd like to put these results in the context of the progress we've made over the past couple of years and explain how that progress sets the stage for 2027. In 2025, our focus was on getting the company to a cash flow positive position. We've gone through several dilutive financings and decided that it was time for the company to stand on its own 2 feet and become financially independent. So we set our eyes on reaching cash flow positive through a combination of revenue growth alongside significant operational efficiency improvements. And at the end of 2025, we were there.
Our company was cash flow positive, no longer dependent on outside capital in order to survive. And for the first time, we were able to respond to the calls from the various investment banks and hedge funds looking to provide capital to Precipio with a polite but clear, no thank you. I can tell you, as the person responsible for raising money to keep the lights on for 15 years, that was a wonderful moment. The second goal in 2025 was to determine if the products we created and that were used in our own lab would be real value to other laboratories.
We carefully explored this market by identifying target customers in several segments, which would serve as an indicator of market interest. This meant reaching a better understanding of which products in which configuration suited each segment. It meant continuously refining our sales presentation and value proposition to give the customer what they wanted and also to determine which level of support was required by each customer.
While many investors have observed that our revenue in 2025 remained relatively flat, our learning experience was a critical step at that time and serves as an important foundation for us to determine the course for our sales team to efficiently target the market, for our R&D team to build the right products and for our support team to be well equipped to onboard our customers. At the end of 2025, we had accomplished 2 key tasks: first, financial independence; and second, a market understanding of our customers and our value proposition.
In 2026, with a better understanding of our customer base, our product mix and how we can best serve our customer, we set out to validate our go-to-market strategy, reaching customers via distribution. One of the things we learned in 2025 and before was that in the laboratory space, getting in front of the customer and meeting the right decision-makers is really difficult. And post-COVID, if you didn't have a personal relationship, it was near impossible. We also learned that once we were in front of the decision-maker, we were quite successful in making the sale. So how do we get that door open for us? The distributors hold an important role in this field.
Working with the top 4 distributors in the industry, Thermo Fisher, Medline, McKesson and Cardinal Health, we have learned the power of the 200-plus sales reps each of the distributors employ. These are armies of well-trained, experienced and well-connected reps that have a long-established relationship with their customer, often spanning 10 to 15 years. There is no amount of money that would enable us to replicate even a fraction of that sales force power. And so we decided that distribution was the way to go. We also learned that each distributor is different, with different organizational structures, divisional responsibilities between different reps and organizational culture differences that dictate how best to interact with each distributor.
In 2026, we set out to figure the recipe for success with each distributor. During this process, we also learned what were the internal skill sets we needed to develop within our commercial team to best apply each recipe with each distributor. As we stand now at the end of 2026, we feel we figured out most of what we set out to discover in terms of the recipe with each distributor. That has led to some new hires in our commercial team and to a clear internal articulation of our go-to-market strategy via distribution. You've seen the gradual growth of the product division over the first 3 quarters of this year.
While it's always nice to see the business grow, this is by no means satisfactory to us nor it is a reflection of our planned growth trajectory going forward, quite the contrary. Precipio will -- 2027 will mark an important next phase in Precipio's evolution as we shift our focus from developing and validating our commercial strategy to accelerated growth. With the right products, a clear understanding of our target customers and established distribution strategy and the commercial infrastructure we're putting in place, we believe we now have the foundation to pursue a significantly higher rate of growth in our products business.
For the first time, we'd like to share with shareholders some specific financial objectives against which we intend to measure our progress. For our product division, we are targeting an annual revenue run rate exceeding $10 million by the end of 2027 compared with approximately $4 million annualized run rate based on our third quarter results of 2026. Our pathology business will also remain an important part of our growth strategy. Beyond its role in supporting product development and clinical validation, it also continues to generate the majority of our operating cash flow. We intend to continue growing this business, targeting an annualized revenue run rate of approximately $30 million by the end of 2027.
Together, these objectives represent a combined annualized revenue run rate exceeding $40 million by the end of 2027. To be clear, these are targets for the annualized revenue run rate we aim to achieve as we exit 2027 rather than a forecast of total revenue recognized during the year. We believe achieving these objectives would represent a significant milestone for Precipio, demonstrating the scalability of our products business while strengthening the financial foundation that enables us to fund continuing growth, product innovation and expansion into new diagnostic markets.
We recognize that these are ambitious objectives and delivering against them will require disciplined execution, but we believe the progress made over the past 2 years positions us well for this next phase of growth. Now let's turn to a review of Q3. Total revenue increased from approximately $7 million in Q2 to $7.3 million in Q3. Pathology revenue was approximately $6.3 million and product revenue exceeded, for the first time, $1 million a quarter, an exciting milestone. Adjusted EBITDA was approximately $400,000, consistent with Q2. Our operating cash flow was approximately $600,000 compared with approximately $700,000 in the second quarter.
Total cash increased by approximately $0.5 million during Q3, bringing our quarter end cash balance above $3.5 million compared with approximately $2.3 million a year earlier. These results give us a stronger financial foundation. With the confidence of a consistently cash-flowing business, it's now time to shift the balance. While maintaining positive cash flow, we plan to shift our focus to significant accelerated revenue growth. So let's discuss how we plan to scale up for growth on the product side. 2026 is all about understanding the recipe for growth.
As we discussed, we view distribution as the key source of scalability for our products business, and we wanted to understand how to best make that channel work before committing resources to a broader commercial expansion. We deliberately approached this with a relatively small commercial team and a measured level of spending. We wanted to refine the distributor model and our overall sales strategy before building a larger sales and marketing effort around them. The sequence was intentional: establish the approach, learn from execution and then invest in scaling it. We now believe we have a much clearer understanding of that recipe and how to support it.
Our ability to connect effectively with the distributor reps, arm them with information to get us a meeting and proceed to build a pipeline, all give us confidence we're ready for the next stage. It's now time to shift our emphasis from developing the model and understanding the recipe to implementing and expanding its reach. In 2027, growth will be our central commercial priority. We intend to significantly expand the commercial team and set aggressive goals for them while increasing marketing and technical support behind our products. It's time to pour gas on the fire, utilizing the incoming cash flow as resources towards accelerating the distributor and sales approach we spent this year developing.
An important part of that plan is bringing in a senior marketing executive to lead initiatives that were not previously pursued at this level. We want a more active presence in the market and a more systemic way to build awareness, credibility and access to prospective customers. That includes a stronger presence at relevant conferences, where we can engage laboratories, clinicians and our distribution partners. It also includes building a network of key opinion leaders who can provide clinical insights and help inform the evidence needed to support adoption. We plan to build clinical credibility through additional publications and case studies that explain the application and value of our technologies.
Our products need to be supported with evidence useful to the physicians and laboratories making testing decisions. Marketing will also work closely with sales on prospecting and customer access. The goal is to identify the right accounts, reach the people involved in testing decisions and give our sales team stronger materials and more opportunities to substantive customer discussions. That should extend to our distributors as well as to our direct commercial efforts. These initiatives are intended to work together. Conferences create opportunities for engagements, clinical relationships and evidence, strengthen our credibility and coordinated marketing and sales follow-up help move that interest towards evaluation and adoption.
Since quarter end, we have made changes to the commercial leadership and are bringing our products and pathology sales efforts under a more coordinated structure. Our recent product training week brought commercial, clinical and operational teams together to deepen product knowledge and strengthen customer conversations. These steps all support the broader growth effort we are preparing for next year. We will measure progress through customers completing implementation, beginning clinical use and placing repeat orders, ultimately resulting in revenue growth. Aggressive goals need to translate into results, and we intend to maintain that discipline and focus as we expand our commercial activity.
As we move from developing our commercial strategy to executing against a much more ambitious growth plan, operational leadership and accountability across the entire organization will become increasingly important. Zaki has been instrumental in building the infrastructure that brought us to this point. So now I've asked him to join this call and share his perspective on how we plan to scale the business from here. Zaki, all yours.
Ahmed Sabet: Thank you, Ilan, and good afternoon, everyone. As Ilan has outlined, we've spent the last several years building the foundation for Precipio's next stage of growth. My focus has been on developing an organization that not only can deliver high-quality diagnostic services and products, but to do so efficiently, profitably and at a significantly greater scale than where we operate today. I believe one of Precipio's greatest strengths is the operational infrastructure we've already built, and the opportunity we now have to leverage that infrastructure as the business grows. Within our pathology division, we've demonstrated our ability to grow revenue while improving efficiency and profitability.
We've invested in our people, systems, processes and laboratory capabilities, creating an operating model that we believe can support substantial additional volume without requiring a corresponding increase in our cost base. On the product side, we applied that same philosophy. We've built manufacturing capabilities, quality systems and technical support infrastructure designed not just for our current level of sales, but for the much larger business we intend to build. And importantly, these 2 divisions are deeply connected. Our clinical laboratory is not simply a source of revenue and cash flow.
It is also where we develop, validate and continuously improve our technologies, giving us a unique understanding of how our products perform in real-world clinical environments, and what our customers need to implement them successfully. To put the scale of the opportunity into perspective, we estimate that our existing operational infrastructure has the capacity to support approximately $100 million in annual revenue, roughly equally divided between pathology services and product manufacturing without requiring significant additional capital investment in our core facilities and equipment. That is a substantial amount of capacity relative to where our business stands today, and it creates an important opportunity for us to scale revenue, improve margins and drive greater profitability as we grow.
Back to you, Ilan.
Ilan Danieli: Thank you, Zaki. In summary, the progression is clear. In 2025, we focused on reaching positive cash flow and financial independence. In 2026, as we generated cash, we studied and refined the commercial approach we believed can scale our products business. In 2027, we intend to put significant resources directly towards implementing that commercial approach and focus entirely on growth. We enter the next year with a strong financial foundation and a clear commercial direction. Our task is now to turn that preparation into faster growth. I'd like to thank our dedicated team of employees for their work and to our shareholders for your continued support. 2027 is going to be another pivotal year for us.
Zaki and I will now take your questions. Thank you.
Operator: [Operator Instructions] And your first question comes from the line of Sean Westropp with Deep Sail Capital.
Sean Westropp: Can you guys hear me okay?
Ilan Danieli: Yes, hear you great.
Sean Westropp: All right. Great. Good quarter. I wanted to ask a little bit about the product sales and the scalability. You talked a lot about it in your comments here. When -- can you update us real quick on the current sales force, like what the size is and kind of like what -- how many folks you have in there? And then what -- you talked about reinvesting some of the cash flow into that organization. What, kind of, do you see that size in the next year or so?
Ilan Danieli: Yes. Thank you. Great question. Currently, our sales force is 4, and we are planning on doubling that next year. As I said in the remarks, now that we have the recipe, we know how to work with distributors and how to efficiently get from lead to customer to convert, this is the time to really scale it up. So we're going to expand that significantly. We expect by the beginning of the year to hire probably 2 more folks at least, and then continue throughout the year to really build this up.
Part of it is also to meet the demand from our distributors as we strengthen our connections with them, we'll get more motivated, more and more prospects, more and more meetings that we need to handle.
Sean Westropp: Got it. Great. And then on that sales cycle and sales side, do you have any idea now that you've kind of got 4 in place around ramp-up time of these new folks? When do they start kind of ramping up to actually able to deliver some product sales?
Ilan Danieli: Yes. That's -- unfortunately, that's still an unknown variable which should be broad range. Just case in point, we have a customer going live this quarter in Q4 that we probably were working on for 1.5 years almost. On the other side, we had a customer that we met for the first time in late September. And in fact, this week, they're going through training and they're going to start the validation, they'll probably go live before the end of the year. So I think the 2 bookends of customer onboarding time line is probably somewhere between 3 months and 18 months.
We have come up with a way to shorten that, and we're implementing that, but some customers trust the process [indiscernible] unfortunately. Now I think the way to fix that in terms of scaling up revenue is just to have a large N numbers. So every quarter, we've got another $0.25 million, $0.5 million of new revenue coming in, and that just -- it's just shots on goal at the end of the day.
Sean Westropp: Right, right. Great. And yes, on the gross margin side, the product gross margin, no changes there. I don't think you guys have always had pretty healthy gross margins on that. Is there anything on the distributor impacts that would affect the gross margin or anything like that?
Ilan Danieli: No, no, not at all. That's baked into calculation. So we're currently hovering around the kind of high 40s, 50% gross margin. As we scale up, when we double our revenue, I think -- I'm trying to do the math in my head, but I think the margins jump to probably the mid-60s and we'll continue that way. So this will, at a higher scale, it would be a good 70%, 75% gross margin.
Operator: And your next question comes from the line of Jack Holden with Kestrel.
Jack Holden: Congrats on the great quarter here and the profit growth. In Q2, you talked about the 25-plus new qualified customers. I was wondering if you could give any color on if any of those have converted and what kind of that current count is?
Ilan Danieli: In Q2, I'm trying to think probably -- I think we have in this quarter, maybe 2 or 3 of them go live and a whole bunch slotted during the first half of 2027. That's approximately the time line. There'll be some -- the drag later is than that. But we are seeing some good conversions and good progress on all of them as they go through the onboarding [indiscernible]
Jack Holden: Great. And then the $1 million product revenue, I noticed in the footnote something about some project revenue in there. Is that kind of a good baseline for us to work off of with kind of sequential quarterly growth as we exit into $10 million plus [indiscernible] 2027?
Ilan Danieli: Yes, absolutely. I think the nice part of this is building blocks. Once the customer is on board, they've got x volume of patient samples and it's pretty consistent that comes in on a quarterly basis. So we expect -- it's proven to be true that for the most part, they're going to have at least that in sequential quarters. What contributes to growth from the specific customers is when they add additional panels. And usually, a customer will start with 1 or 2 panels. And within 6 to 12 months, they'll have 3 to 4 panels. So we'll see kind of organic growth within those customers as well in the revenue growth.
But yes, I think our numbers have shown we had, I think, only once where the revenue has dropped, and that was because of the shift of an order from one quarter to the other.
Operator: And the next question comes from the line of [ Ben Zara ] with [ Tenet Capital ].
Unknown Analyst: As you look at expanding capabilities on the product side, are there any new tests or disease areas you're kind of working on? And is that baked into the $10 million number for next year?
Ahmed Sabet: [ Ben ], thanks for your question. So currently, the pipeline that we are mentioning only accounts for the products that are existingly available on the market. So our intent is to continue with the products that we have available. We've pretty much focused on the heme or blood-related cancer space for the time being until we get the growth that we're looking to see and then decide to expand into other disease areas outside of heme and blood.
Operator: And the next question comes from the line of [ Vincent Chavarro ].
Unknown Analyst: Congratulations on the good quarter. I want to apologize in advance because I don't have the skill set that helps [indiscernible] be impactful. So I'm struggling with the level of sales expense expected relative to the growth. I would imagine that the current sales staff with the established distributor relationships should be able to achieve a good portion of the growth that you've outlined for us. And I just don't understand the level of additional investment on the sales side to achieve the targets you're talking about. Could you elaborate -- what strikes me is that potentially there's some price declines factored in and/or demand issues, but correct me if I'm wrong.
Ilan Danieli: [ Vincent ], thank you for your question. So no, there are no price declines or drops in demand. We have pretty strict pricing strategy that we hold across the board with all our distributors. So we kind of stick to that, and that's locked in contractually. So there's no real price decline nor is there any decrease in demand. I think as we mentioned in the conference call, we've taken a very conservative approach in terms of our sales force. I think if you compare this to any other company, having a sales force of 3 or 4 is tiny. And we did that by design.
We could have easily raised $10 million in capital and hired 25 sales reps. And there's companies that do that. I think we took a more conservative approach of taking this year to really study the market and study the interaction with distributors so that we can really make sure that when we hire a person, we have a sort of game book for them to step into, and how they interact with the distributors and how they interact with the customers so that they can be most effective. At the end of the day, every sales rep has an ROI on their back, if you will. And we want to make sure that we hit that.
And we've also had experience [ in the past ] where that hasn't happened. So yes, I understand. Your point is well taken, and we certainly are not happy with the sales growth. But I think as a company trying to balance shareholder value through dilution of additional capital versus growth, we made the decision to take this year to really study that. And next year, now that we have the cash reserves and we don't have to raise $10 million and dilute shareholders, we can do this properly. Does that answer your question?
Unknown Analyst: Not exactly. So -- partially. I don't think I was -- so my question is not why aren't you investing a lot more, I'm wondering why are you investing that much because I would have expected the current sales force with their experience under the belt and the distributors' relationships a little further seasoned than it was a year ago, that we could expect a certain amount of growth without any additional salespeople, approaching what you've outlined for Q4 of next year in terms of run rate. So I'm surprised to have that run rate that you mentioned and a plan to double the sales force. It just doesn't compute for me.
Ilan Danieli: Well, I see your point. I think you have to take into account the time line of results. As I've mentioned and as we've seen, it takes between -- on average, between 9 and 12 months from the initial conversation with the customer to go live. So if you think about our sales team that was hired at the beginning of the year, by the time they get their training groups and are ready to go and really start to be impactful, that's middle of 2026, which means it's unlikely that they'll even see revenue coming from the efforts until the beginning of 2027. So by that logic, hiring people throughout 2027 will yield results in 2028.
But the goal is to kind of increase the level of the rate of growth.
Operator: [Operator Instructions] Your next question comes from the line of [ Daniel Wilson ].
Unknown Analyst: Ilan, great quarter. Love to see the progress and some of the ambitious targets that you've thrown out there. Just zeroing in on the $10 million product sales run rate exiting 2027. Just curious what the bridge looks like just given how long it takes to ramp the new reps and the fact that you're in process trying to hire sales folks at the moment. Kind of just bridge out for us maybe how much of it is customer conversations that are already underway versus a gap that you're trying to fill between now and Q4 2027?
Ilan Danieli: Yes. Thanks, [ Daniel ]. So I can tell you our pipeline today, if we convert half of it, we're there. So we've got a pretty good pipeline of customers that are in various stages of discussions and onboarding, et cetera. And I've always said, and I hate to kind of sound like -- a complaining broken record, but it's so hard when you start with a customer to actually foresee when the first order will come in. But with our current pipeline, and that's why we have the confidence to kind of get to the first time the, sort of, guidance number, we believe we're going to get there.
And obviously, our sales team isn't just sitting around, that pipeline continues to grow. So I think we're pretty confident that we can beat the numbers that we've provided and kind of throughout the year, see a gradual acceleration to reaching that run rate.
Unknown Analyst: That's awesome. It sounds like a substantially larger pipeline than you've had in the past if half of it gets you to that run rate. Has the pipeline been expanding pretty steadily as you've added reps? Or maybe some of that goes back to getting the distributor recipe right as well? Maybe if you could give an update there.
Ilan Danieli: Yes, it's a little bit of both. So obviously, our sales team does not sit quietly and kind of [indiscernible] them. So they're working and doing a great job at interacting with distributors and getting customers to the qualification place where they actually become part of the pipeline. So the pipeline is a constantly growing number that we have. And again, part of the goal of increasing the sales team is to accelerate that pipeline and have that pipeline convert. So if we look at this quarter, we grew by $100,000, right? That's nothing.
We want to see getting to an increase of $0.25 million a quarter and even $0.5 million a quarter so that we can really grow this thing and capture more market share.
Unknown Analyst: Great. And just one more for me. If we kind of circle back to the pathology business and the $30 million run rate target there, I think the pathology revenue growth rate has slowed over the last couple of quarters, and it looks like maybe expecting a bit of a pickup. Could you just tell us a little bit maybe what would drive that? Is it new customers, new products? What would drive growth between now and the end of 2027 on the pathology side?
Ilan Danieli: Yes. Thank you. Great question. I think there's 2 factors. I think number one is certainly new customers, and we are expanding actually the interaction between our product customers and our pathology side of the business. So we've actually seen quite a bit of success with customers that are on the product side that we've actually had to pull in to providers to deliver pathology revenue. So that's one area. We're probably going to hire 1 or 2 more reps on the pathology side as well. And I think ultimately, [indiscernible] management retention.
We've been really focused this year on the product side and all the things we talked about, figuring out the recipe, really building a strong team, building the marketing backbone [indiscernible] for this. And I think next year, this will allow us to -- the increase in the team will also allow us to refocus a little bit of our efforts on the pathology side of the business as well, and that should result in an increase in customers. There's not really any change to any products. The services side is pretty standard in terms of the analysis we do for patient samples that come in. So that stays the same. Hopefully, that answers your question.
Operator: And I'm showing no further questions at this time. I would like to hand it back to Ilan Danieli for closing remarks.
Ilan Danieli: Thank you, everyone, for joining and wish you all a nice holiday season, and we'll see you in the next year. Have a good evening.
Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
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