What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-27 compared with 2022-03-31 · 310 added, 292 removed, 290 unchanged (67% of the section changed)

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See Forward-Looking Statement Information at the beginning of this

are an emerging leader in enabling precision medicine principally in oncology by offering specialized services along the therapeutic

value chain from early diagnosis and prognostic planning to targeted therapeutic applications through our clinical and pharma services.

Through our clinical services, we enable physicians to personalize the clinical management of each individual patient by providing genomic

information to better diagnose, monitor and inform cancer treatment.

Our clinical services provide clinically useful molecular diagnostic

tests, bioinformatics and pathology services for evaluating risk of cancer by leveraging the latest technology in personalized medicine

for improved patient diagnosis and management.

Through our pharma services, we develop, commercialize and provide molecular- and biomarker-based

tests and services and provide companies with customized solutions for patient stratification and treatment selection through an extensive

suite of molecular and biomarker-based testing services, DNA- and RNA- extraction and customized assay development and trial design consultation.

Our pharma services provide pharmacogenomics testing, genotyping, biorepository and other specialized services to the pharmaceutical

and biotech industries and advance personalized medicine by partnering with pharmaceutical, academic and technology leaders to effectively

integrate pharmacogenomics into drug development and clinical trial programs with the goals of delivering safer, more effective drugs

to market more quickly, and improving patient care.

are a fully integrated commercial company that provides molecular diagnostics, bioinformatics and pathology services for evaluation of

risk of cancer by leveraging the latest technology in personalized medicine for improved patient diagnosis and management.

and commercialize genomic tests and related first line assays principally focused on early detection of patients with indeterminate biopsies

and at high risk of cancer using the latest technology.

Disposition of Pharma Business

August 31, 2022, the Company and Interpace Pharma Solutions, Inc.

(the “Subsidiary”) entered into an Asset Purchase Agreement

(the “Purchase Agreement”) with Flagship Biosciences, Inc.

(the “Purchaser”) pursuant to which the Purchaser

agreed to (i) acquire substantially all of the assets of the Subsidiary used in Subsidiary’s business of complex molecular analysis

for the early diagnosis and treatment of cancer and supporting the development of targeted therapeutics (the “Business”)

and (ii) assume and pay certain liabilities related to the purchased assets as set forth in the Purchase Agreement (collectively, the

“Transaction”).

The Transaction closed on August 31, 2022.

consideration for the Transaction, under the Purchase Agreement, the Company received a total purchase price of approximately $6.2

million after working capital and other adjustments ($0.5 million of which was deposited into escrow), subject to the assumption by the Purchaser of certain specified liabilities.

addition, subject to the terms and conditions set forth in the Purchase Agreement, Purchaser was obligated to pay the Company an

earnout of up to $2.0 million based on revenue for the period beginning September 1, 2021 and ending August 31, 2022.

received an earnout payment of approximately $1.0 million in September 2022 which is the fully settled amount and there will be no

further earnout payments in the future.

Purchase Agreement includes a one-year commitment of the Company not to compete with the Business, recruit or hire any former employees

of the Subsidiary who accept employment with the Purchaser in connection with the Transaction, or divert or attempt to divert from Purchaser

any business to be performed from any of the contracts or agreements with customers as set forth in the Purchase Agreement.

Agreement also contains customary representations and warranties, post-closing covenants and mutual indemnification obligations for,

among other things, any inaccuracy or breach of any representation or warranty and any breach or non-fulfillment of any covenant.

connection with the Transaction, on August 31, 2022, the Company, the Subsidiary and the Purchaser entered into a Shared Services Agreement

(the “Shared Services Agreement”) pursuant to which the Company agreed to provide, or cause its affiliates to provide, to

the Purchaser certain services set forth in the Shared Services Agreement on a transitional basis and subject to the terms and conditions

set forth in the Shared Services Agreement (the “Services”).

As consideration for the Services provided by the Company, the

Purchaser is paying the Company the amounts specified for each Service as set forth in the Shared Services Agreement.

The Company’s

obligations to provide the Services will terminate with respect to each Service as set forth in the Shared Services Agreement.

Purchaser is identified as a related party of the Company and is as an affiliate of both Ampersand 2018 Limited Partnership (“Ampersand”),

a private equity investor in the Company, and BroadOak Fund V, L.P.

(“BroadOak”), a secured lender to the Company.

and BroadOak have each provided equity financing to the Purchaser, collectively own a majority of the Purchaser’s outstanding equity

securities and are represented on its Board of Directors.

Company is using the remaining net proceeds of the Transaction to fund its future business activities and for general working capital

As a result of the sale, the gain on sale and all operations from the Subsidiary have been classified as discontinued operations

for all periods presented.

of Our Reliance on CMS and Novitas

January 2022, CMS stated they would no longer reimburse for the use of the Company’s ThyGeNEXT ® and ThyraMIR ®

tests when billed together by the same provider/supplier for the same beneficiary on the same date of service.

However, on February

28, 2022, the Company announced that the National Correct Coding Initiative (NCCI) program issued a response on behalf of CMS stating

that the January 2022 billing policy reimbursement change for ThyGeNEXT ® (0245U) and ThyraMIR ® (0018U)

tests has been retroactively reversed to January 1, 2022.

In May 2022, the Company was notified by CMS/NCCI that processing of claims

for dates of service after January 1, 2022 would be completed beginning July 1, 2022.

However, on June 9, 2022, the Company was notified

that Novitas re-priced ThyGeNEXT ® (0245U) from $2,919 to $806.59 retroactively effective to January 1, 2022.

2022, the Clinical Diagnostic Laboratory Tests (CDLT) Advisory Panel affirmed a gapfill price of $806.59.

As a result of the ThyGeNEXT ®

pricing change, the Company reduced its NRV rates for ThyGeNEXT ® Medicare billing to reflect the $806.59 pricing

for tests performed during the second quarter of 2022.

In addition, in order to reflect the retroactive pricing change to January 1,

2022, the Company recorded an NRV adjustment of $0.7 million during the second quarter of 2022 to reduce revenue recorded during the

first quarter of 2022.

The Company estimated the ThyGeNEXT ® pricing change would negatively impact Fiscal 2022 revenue

by approximately $5.0 million.

During July 2022, the Company began implementing cost-savings initiatives including a reduction in headcount

and incidental expenses and a freeze on all non-essential travel and hiring.

In August 2022, the Company sold its pharma business.

January 1, 2023, the gapfill price for ThyGeNEXT ® was set at $1,266.07.

along with many laboratories, we may be affected by the Proposed Local Coverage Determination (“LCD”) DL39365, which was

posted on June 9, 2022 with comments extended to September 6, 2022 due to changes made to the related draft and is currently under consideration

by our local Medicare Administrative Contractor, Novitas.

If finalized, this Proposed LCD, which governs “Genetic

Testing for Oncology,” could impact the existing LCD for one of our molecular tests, PancraGEN ® .

If Novitas restricts

coverage for PancraGEN ® , our liquidity could be negatively impacted beginning in Fiscal 2023.

of COVID-19 Pandemic

COVID-19 pandemic, together with related precautionary measures, continues to impact portions of the regions in which we operate.

regions are attempting to address the COVID-19 pandemic in varying ways, including stay-at-home orders, temporarily closing businesses,

restricting gatherings, restricting travel, and mandating social distancing and face coverings.

The level and nature of the disruption

caused by COVID-19 is unpredictable, may be cyclical and long-lasting and may vary from location to location.

in the first quarter of 2021, there has been a trend in many parts of the world of increasing availability and administration of vaccines

against COVID-19, as well as an easing of restrictions on social, business, travel and government activities and functions.

hand, infection rates and regulations continue to fluctuate in various regions and there are ongoing global impacts resulting from the

pandemic, including challenges and increases in costs for logistics and supply chains.

We have also previously been affected by temporary

laboratory closures, employment and compensation adjustments and impediments to administrative activities.

The level and nature of the

disruption caused by COVID-19 is unpredictable, may be cyclical and long-lasting and may vary from location to location.

addition, we have experienced and are experiencing varying levels of inflation resulting in part from various supply chain disruptions,

increased shipping and transportation costs, increased raw material and labor costs and other disruptions caused by the COVID-19 pandemic

and general global economic conditions.

continuing impact that the COVID-19 pandemic will have on our operations, including duration, severity and scope, remains highly uncertain

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cash flows and financial condition in the future.

this time, the Biden Administration does not plan to renew the COVID-19 national and public health emergencies when they expire on May

11, which has been extended every 90 days since they were established in 2020.

This decision, therefore, appears to represent a de-escalation

in the way the government treats the pandemic, as well as a perception that most people have either been vaccinated or have recovered

from a COVID-19 infection (or both), Despite this anticipated change in policy, COVID-19 is still with us and as the virus continues

to reproduce and mutate, the Administration’s policy may need be adjusted.

continue to monitor the COVID-19 pandemic and the guidance that is being provided by relevant federal, state and local public health

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our operating plans in reaction to developments that are beyond our control.

closures experienced thus far by the Company have consisted of periodic, temporary work stoppages to clean and disinfect the labs;

this could change in the future based upon conditions caused by the pandemic.

It is also possible that we could experience supply chain

shortages if the pandemic worsens and if one or more suppliers is unable to continue to provide us with supplies.

For the foreseeable

future, however, we do not anticipate supply chain shortages of critical supplies.

have developed contingency plans and will continue to monitor and update them in order to mitigate pandemic-related, adverse financial

impacts upon our business.

of the ongoing military conflict between Russia and Ukraine.

February 2022, Russian military forces invaded Ukraine, and although the length, impact, and outcome of the ongoing war in Ukraine is

highly unpredictable, this war has led, and could continue to lead, to significant market and other disruptions, including instability

in financial markets, supply chain interruptions, political and social instability, and increases in cyberattacks, intellectual property

theft, and espionage.

We are actively monitoring the situation in Ukraine and assessing its impact on our business.

have no way to predict the progress or outcome of the war in Ukraine or its impacts in Ukraine, Russia, or Belarus as the war, and any

resulting government reactions, are rapidly developing and beyond our control.

The extent and duration of the war, sanctions, and resulting

market disruptions could be significant and could potentially have a substantial impact on the global economy and our business for an

unknown period of time.

Any of the above-mentioned factors could materially adversely affect our business, financial condition, and results

of operations.

Any such disruptions may also magnify the impact of other risks described in this Annual Report on Form 10-K.

clinical services provide clinically useful molecular diagnostic tests, bioinformatics and pathology services for evaluating cancer risk

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enabling physicians to better assess risk of pancreaticobiliary cancers using our proprietary PathFinderTG® platform; ThyGeNEXT ® ,

which is an expanded oncogenic mutation panel that helps identify malignant thyroid nodules; ThyraMIR ® , which assesses

which is an expanded oncogenic mutation panel that helps identify malignant thyroid nodules; ThyraMIR ® v2, which assesses

thyroid nodules for risk of malignancy utilizing a proprietary microRNA gene expression assay;

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mission is to provide personalized medicine through genomics-based diagnostics and innovation to advance patient care based on rigorous

Our laboratories are licensed pursuant to federal law under CLIA and are accredited by CAP and New York State.

leverage our laboratories to develop and commercialize our assays and products.

Our laboratory is licensed pursuant to federal law under CLIA and are accredited by CAP and New York State.

leverage our laboratory to develop and commercialize our assays and products.

We aim to provide physicians and patients with diagnostic

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global molecular diagnostics market is estimated to be $23.2 billion (USD) in 2022 and is expected to grow to $30.2 billion (USD) by

2026 with a CAGR of 9.0% between 2021 and 2026, according to Market Data Forecast’s Molecular Diagnostics Market report (ID:

published January 2022).

2027 with a CAGR of 5.4% between 2022 and 2027, according to Markets and Markets’s Molecular Diagnostics Market report (Report

MD 2521, published May 2022).

believe that the molecular diagnostics market offers significant growth and strong patient value given the substantial opportunity it

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sectors in which we operate.

In January 2022, we announced

that CMS issued a new billing policy whereby CMS will no longer reimburse for the use of our ThyGeNEXT ® and ThyraMIR ®

tests when billed together by the same provider/supplier for the same beneficiary on the same date of service.

On February 28,

2022, we announced that the National Correct Coding Initiative (NCCI) program issued a response on behalf of CMS stating that the January

2022 billing policy reimbursement change for ThyGeNEXT ® (0245U) and ThyraMIR ® (0018U) tests has been retroactively

reversed to January 1, 2022.

CMS is currently reimbursing the Company for one of its two thyroid tests, and has agreed to retroactively

reimburse for the second test once they have completed their internal administrative adjustments.

We have been notified by CMS/NCCI that processing of claims for dates

of service after January 1, 2022 will be completed beginning July 1, 2022.

As of the date of this filing, we have not yet realized the full cash collection

benefit of current and retroactive Thyroid testing and such cash collections may be temporarily reduced or delayed until we resolved

the matter with CMS.

pharma services provide pharmacogenomics testing, genotyping, biorepository and other specialized services to the pharmaceutical and

biotech industries.

Laboratory and testing services are performed for pharmaceutical and biotech companies engaged in clinical trials

and focuses on providing these clients with oncology specific and non-oncology genetic testing services for phase I-IV clinical trials

along with critical support of ancillary services.

These services include:

biorepository, clinical trial logistics, clinical trial design,

bioinformatics analysis, customized assay development, DNA and RNA extraction and purification, genotyping, gene expression and biomarker

We also seek to apply our expertise in laboratory developed tests to assist in developing and commercializing drug-specific

companion diagnostics.

We have established business relationships with key instrument manufacturers to support their platforms in the

market, and to drive acceptance among biopharmaceutical sponsors developing innovative immuno-oncology therapies.

and biomarker-based testing services have been altering the clinical trials landscape by providing biotech and pharmaceutical companies

with information about trial subjects’ genetic profiles that may be able to inform researchers whether or not a subject will benefit

from the trial drug or will experience adverse effects.

Streamlined subject selection and stratification, and tailored therapies selected

to maximally benefit each group of subjects may increase the number of trials that result in approved therapies and make conducting clinical

trials more efficient and less costly for biotech and pharmaceutical companies.

In 2021, over 50 new drugs were approved by the

FDA, and 20% of these drugs were oncology-focused, highlighting the potential value of incorporating genomic information into

oncology clinical trial design.

addition to the tests and services provided to our pharma customers, we custom develop Next Generation Sequencing (NGS) panels for our

customers focused on pharmacogenomics and oncology.

also utilize our laboratories to provide clinical trial services to the pharmaceutical and biotech industries to improve the efficiency

and economic viability of clinical trials.

Our clinical trials services leverage our knowledge of clinical oncology and molecular diagnostics

and our laboratories’ fully integrated capabilities.

We believe our laboratory is one of a few with the capability to combine somatic

and germline mutational analyses in clinical trials.

We operate through a CLIA certificated and CAP accredited laboratory located in

Morrisville, North Carolina.

laboratory possesses capabilities in histology, immunohistochemistry (IHC), flow cytometry, cytogenetics and fluorescent in-situ hybridization

(FISH), as well as sophisticated molecular analysis techniques, including next generation sequencing.

This allows for comprehensive customized

testing within one lab enterprise, with our CAP-accredited biorepository laboratory serving as a central hub for specimen tracking.

this approach, we are able to support demanding clinical trial protocols requiring multiple assays and techniques aimed at capturing

data on multiple biomarkers.

Our suite of available testing platforms allows for highly customized clinical trial design which is supported

by our dedicated group of development scientists and technical personnel.

also provide genetic testing for drug metabolism to aid biotech and pharmaceutical companies identify subjects’ likely responses

to treatment, allowing these companies to conduct more efficient and safer clinical trials.

We believe pharmacogenomics drug metabolism

testing helps deliver the promise of personalized medicine by enabling researchers to tailor therapies in development to differences

in patients’ genomic profiles.

optimize the operations of laboratory operations within our pharma services, we transitioned activities from the Rutherford, NJ facility

to our Morrisville, NC facility.

We invested several million dollars to facilitate this relocation which was completed in March 2021,

including but not limited to the transfer of personnel, expansion of the Morrisville facility and validation of transferred processes.

We believe that this investment will result in a reduction in future operating costs;

however, it is not certain whether we will fully

realize the anticipated savings.

We have also undergone several other cost-cutting initiatives, primarily reductions in headcount, and

those costs are categorized as transition expenses as well.

January 2022, we announced that CMS issued a new billing policy whereby CMS will no longer reimburse for the use of our ThyGeNEXT ®

and ThyraMIR ® v2 tests when billed together by the same provider/supplier for the same beneficiary on the same date

On February 28, 2022, we announced that the National Correct Coding Initiative (NCCI) program issued a response on behalf

of CMS stating that the January 2022 billing policy reimbursement change for ThyGeNEXT ® (0245U) and ThyraMIR ® v2

(0018U) tests has been retroactively reversed to January 1, 2022.

CMS is currently reimbursing the Company for one of its two thyroid

tests, and has agreed to retroactively reimburse for the second test once they have completed their internal administrative adjustments.

We have been notified by CMS/NCCI that processing of claims for dates of service after January 1, 2022 will be completed beginning July

As of the date of this filing, we have no remaining outstanding collections regarding this matter and are fully up to date with

Effective January 1, 2023, the gapfill price for ThyGeNEXT® was set at $1,266.07.

February 16, 2021, the Company received a delisting determination letter (the “Letter”) from the Listing Qualifications Department

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common stock commenced on OTCQX at the open of business on February 25, 2021 under the trading symbol IDXG.

January 5, 2023, we received notice from the OTCQX indicating that the Company’s market capitalization has stayed below the required

$5 million for 30 consecutive calendar days preceding the date of such notice, and that the Company no longer meets the standards for

continued qualification for the OTCQX U.S.

tier under the OTCQX Rules for U.S.

Companies section 3.2.b.2.

The Company is provided 180

calendar days from the date of such notice, or until July 3, 2023, to maintain a market capitalization of $5 million for ten consecutive

trading days.

If the Company cannot meet this requirement, its common stock will be removed from the OTCQX to the OTCQB.

OF REPORTING SEGMENTS

operate under one segment which is the business of developing and selling diagnostic clinical and pharma services.

operate under one segment which is the business of developing and selling diagnostic clinical services.

ACCOUNTING POLICIES

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Company’s revenue is primarily generated from the performance of its proprietary molecular diagnostic tests for its clinical customers.

and its DNA-based testing services in support of clinical trials for its pharma services customers.

The Company’s performance obligation

is fulfilled upon completion, review and release of test results and subsequent billing to the third-party payer, hospital or service

provider, or biopharma companies.

Prior to the disposition of our Pharma business in August 2022, we also generated revenue from DNA-based testing services in support

of clinical trials for its pharma services customers.

The Company’s performance obligation is fulfilled upon completion, review

and release of test results and subsequent billing to the third-party payer, hospital or service provider.

606 Revenue Recognition

services derive its revenues from the performance of its proprietary assays or tests.

The Company’s performance obligation is fulfilled

upon completion, review and release of test results to the customer.

The Company subsequently bills third-party payers or direct-bill

payers for the tests performed.

services derive their revenues from the performance of their proprietary assays or tests.

The Company’s performance obligation

is fulfilled upon completion, review and release of test results to the customer.

The Company subsequently bills third-party payers or

direct-bill payers for the tests performed.

Revenue is recognized based on the estimated transaction price or net realizable value (“NRV”),

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such variances become known.

our pharma services customers, performance obligations are satisfied at a point in time as the Company processes samples delivered by

the customer.

Project level activities, including study setup and project management, are satisfied over the life of the contract.

are recognized at a point in time when the test results or other deliverables are reported to the customer.

Company determines if an arrangement contains a lease in whole or in part at the inception of the contract.

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impairment charge should be recorded and the amount of such charge if an impairment loss is deemed to be necessary.

a result of overall economic conditions related to the coronavirus pandemic, the impact of the coronavirus pandemic on the Company’s

financial results, and the decrease in the price of the Company’s common stock noted during the third quarter of fiscal 2020, the

Company performed an internal review of its long-lived assets.

Due to an extended delay in the launch of the Company’s Barrett’s

test, the Company believes there was a triggering event in Fiscal 2016.

The Company applied the required procedures under ASC 360 and

assessed the estimated future cash flows related to the Barrett’s intangible asset on an undiscounted basis.

It was determined

that the carrying value of the asset was in excess of the undiscounted cash flows as of December 31, 2016.

As a result, the Company performed

a formal valuation of the asset on a discounted basis in order to measure the related impairment.

Additionally, the Company concluded

that amortization of both the Barrett’s intangible asset and its Thyroid intangible assets should have commenced upon acquisition

of those assets as opposed to the Company’s previously disclosed policy of beginning asset amortization when the product was launched

and generating revenue.

Contingencies

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NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

tax credit carry forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest

of significant stockholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue

Code of 1986, as amended, or the Code, as well as similar state tax provisions.

The amount of the annual limitation, if any, will be

determined based on the value of our company immediately prior to an ownership change.

Subsequent ownership changes may further affect

the limitation in future years.

tax credit carry forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership

interest of significant stockholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Code as

well as similar state tax provisions.

The amount of the annual limitation, if any, will be determined based on the value of our

company immediately prior to an ownership change.

Subsequent ownership changes may further affect the limitation in future years.

Additionally, U.S.

tax laws limit the time during which these carry forwards may be applied against future

taxes, therefore, we may not be able to take full advantage of these carry forwards for federal income tax purposes.

During 2021, the

Company completed a 382 assessment of the available NOLs under Section 382 and determined that the Company underwent an ownership change

on September 30, 2017 and July 15, 2019, and as a result, NOLs attributable to the pre-ownership change are subject to a substantial

annual limitation under Section 382 of the Internal Revenue Code due to the multiple ownership changes.

The Company has adjusted their

NOL carryforwards to address the impact of the 382 ownership change.

tax laws limit the time during which these carry forwards may be applied against future taxes, therefore, we may

not be able to take full advantage of these carry forwards for federal income tax purposes.

During 2021, the Company completed a

382 assessment of the available NOLs under Section 382 and determined that the Company underwent an ownership change on September

30, 2017 and July 15, 2019, and as a result, NOLs attributable to the pre-ownership change are subject to a substantial annual

limitation under Section 382 of the Code due to the multiple ownership changes.

The Company has adjusted their NOL carryforwards to

address the impact of the 382 ownership change.

Compensation Costs

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Related party interest

Other (expense) income, net

Note payable interest

Other expense, net

Loss from continuing operations before tax

(Benefit) provision for income taxes

Provision (benefit) for income taxes

Loss from continuing operations

Loss from discontinued operations, net of tax

revenue for the year ended December 31, 2021 increased by $8.9 million, or 28%, to $41.3 million, compared to $32.4 million for the year

revenue for the year ended December 31, 2022 decreased by $1.3 million, or 4%, to $31.8 million, compared to $33.1 million for the year

ended December 31, 2021.

The increase in net revenue was driven by increased reimbursement rates and increased clinical services volume

as the year ended December 31, 2020 was impacted by the pandemic.

This increase was partially offset by a fairly significant decrease

in volume within pharma services.

The decrease in revenue within pharma services was approximately 32% from the comparable prior year

cost of revenue for the year ended December 31, 2021 increased by $1.7 million, or 8%, to $23.4 million, compared to $21.7 million for

The decrease in net revenue was largely driven by the NRV adjustment related to the Medicare pricing change

on ThyGeNEXT ® discussed in “Impact of Our Reliance on CMS and Novitas” above.

cost of revenue for the year ended December 31, 2022 decreased by $0.7 million, or 5%, to $13.6 million, compared to $14.3 million for

the year ended December 31, 2021.

This increase is primarily attributed to the increased volume associated with the clinical services

gross profit for the year ended December 31, 2021 increased $7.2 million, or 67%, to $17.9 million, compared to $10.7 million for the

This decrease was primarily driven by lower employee costs.

gross profit for the year ended December 31, 2022 decreased $0.6 million, or 3%, to $18.2 million, compared to $18.8 million for the

year ended December 31, 2021.

The increase can be attributed to increased reimbursement rates as well as the change in the gross profit

The decrease can be attributed to the decrease in revenue.

and marketing expense

sales and marketing expense was $10.1 million for the year ended December 31, 2021, as compared to $9.3 million for the year ended December

As a percentage of revenue, sales and marketing expense decreased to 24% from 29% in the comparable prior year period due to

the higher revenue for the year ended December 31, 2021.

and marketing expense was $9.1 million for the year ended December 31, 2022 and $9.2 million for the year ended December 31, 2021.

a percentage of revenue, sales and marketing expense increased to 29% from 28% in the comparable prior year period due to the lower revenue

for the year ended December 31, 2022.

and development

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to lower professional services and employee costs.

As a percentage of revenue, research and development expense decreased to 5% from

9% in the comparable prior year period.

As a percentage of revenue, research and development expense decreased to 2% for the

year ended December 31, 2022 from 5% in the comparable prior year period.

and administrative

and administrative expense for the year ended December 31, 2021 was $13.7 million as compared to $18.2 million for the year ended

December 31, 2020.

The decrease can be primarily attributed to the closing of the Rutherford, NJ office as well as employee and consulting

costs associated with the closure.

The year ended December 31, 2020 also included approximately $1.1 million in executive severance costs.

and administrative expense for the year ended December 31, 2022 was $11.0 million as compared to $10.7 million for the year ended December

The increase can be primarily attributed to an increase in employee compensation costs and an increase in professional fees.

As a percentage of net revenue, general and administrative expense was 34% for the year ended December 31, 2022 as compared to 32% for

the year ended December 31, 2021.

expense was approximately $2.6 million for the year ended December 31, 2021 and $2.6 million for the year ended December 31, 2020.

expenses are primarily related to the Rutherford, NJ lab closing and subsequent move to North Carolina, as well as other cost-saving

initiatives, primarily reductions in headcount and the implementation of a new laboratory information system.

expense was approximately $0.9 million for the year ended December 31, 2021.

In 2021, these expenses were related to one-time legal expenses

and employee severance costs.

on DiamiR transaction

the year ended December 31, 2021 there was a loss of $0.01 million on the disposition of New Haven, CT laboratory to DiamiR in April

the year ended December 31, 2021, there was a loss of $13,000 on the disposition of the New Haven, CT laboratory to DiamiR in April 2021.

related amortization expense

the years ended December 31, 2021 and December 31, 2020, we recorded amortization expense of approximately $4.1 million and $4.5

million, respectively, which is related to intangible assets associated with our acquisitions.

the years ended December 31, 2022 and December 31, 2021, we recorded amortization expense of approximately $1.3 million and $3.2 million,

respectively, which is related to intangible assets associated with our acquisitions.

in fair value of contingent consideration

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and 2021, respectively.

provision for income taxes

income tax benefit was approximately $0.7 million for the year ended December 31, 2021 and which primarily pertained to the Company’s

sale of NOLs of approximately $0.7 million under the State of New Jersey’s Technology Business Tax Certificate Transfer Program.

Income tax expense of $0.1 million for the year ended December 31, 2020 was primarily driven by minimum state and local taxes.

The decrease in operating loss was primarily attributable to the decrease in acquisition related amortization

the years ended December 31, 2022 and December 31, 2021, there were other expenses, net of approximately $1.2 million and $0.4 million,

respectively.

The increase was primarily related to the $1.2 million in fair value adjustments recorded on the note payable.

(benefit) for income taxes

tax expense of $29,000 for the year ended December 31, 2022 was primarily driven by minimum state and local taxes.

The income tax benefit

was approximately $0.7 million for the year ended December 31, 2021 which primarily pertained to the Company’s sale of NOLs of

approximately $0.7 million under the State of New Jersey’s Technology Business Tax Certificate Transfer Program.

from discontinued operations, net of tax

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operations of $7.9 million for the year ended December 31, 2021.

The increased loss for the year ended December 31, 2022 was primarily

attributed to the impairment of goodwill and intangible assets associated with the disposition of the Pharma business in August 2022.

Financial Measures

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Adjusted EBITDA is defined as income or loss from continuing operations, plus depreciation and amortization,

acquisition related expenses, transition expenses, non-cash stock based compensation, interest and taxes, and other non-cash expenses

including asset impairment costs, bad debt expense, loss on extinguishment of debt, goodwill impairment and change in fair value of contingent

consideration, and warrant liability.

The table below includes a reconciliation of this non-GAAP financial measure to the most directly

comparable GAAP financial measure.

acquisition related expenses, non-cash stock based compensation, interest and taxes, and other non-cash expenses including asset impairment

costs, goodwill impairment, change in fair value of contingent consideration, change in fair value of notes payable, and warrant liability.

The table below includes a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

Reconciliation

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in thousands)

Loss from continuing operations (GAAP Basis)

Bad debt (recovery) expense

Loss on DiamiR transaction

Receipt of HHS stimulus grant

Transition expenses

Legal and professional services

Depreciation and amortization

Stock-based compensation

Taxes (benefit)/expense

Interest accretion expense

Financing interest and related costs

Mark to market on warrant liability

Change in fair value of note payable

Change in fair value of contingent consideration

Adjusted EBITDA

from continuing operations (GAAP Basis)

on DiamiR transaction

and amortization

expense/(benefit)

accretion expense

interest and related costs

to market on warrant liability

in fair value of note payable

in fair value of contingent consideration

AND CAPITAL RESOURCES

the fiscal year ended December 31, 2021, we had an operating loss of $14.0 million.

As of December 31, 2021, we had cash, cash

equivalents and restricted cash of $3.3 million, total current assets of $12.2 million and current liabilities of $15.7 million.

As of March 18, 2022, we had approximately $2.7 million of cash on hand, excluding restricted cash.

the year ended December 31, 2021, net cash used in operating activities was $8.7 million.

The main component of cash used in operating

activities was our net loss of $14.9 million which was partially offset by non-cash depreciation, amortization and stock compensation

expenses of $6.6 million.

During the year ended December 31, 2020, net cash used in operating activities was $14.0 million.

component of cash used in operating activities was our net loss of $26.5 million which was partially offset by non-cash expenses of $7.7

the year ended December 31, 2021, cash provided from financing activities was $9.0 million, of which $7.7 million were the net proceeds

from the BroadOak loan and $1.5 million borrowed under our line of credit.

See Note 13, Notes Payable, for more details.

For the year ended December 31, 2020, cash provided from financing activities was $16.6 million, $19.2 million which resulted from the

issuance of preferred stock in January 2020 and $0.4 million from sales of Common Stock, partially offset by the repayment of $3.0 million

of borrowed funds under our now terminated revolving line of credit with Silicon Valley Bank.

the year ended December 31, 2021, cash used in investing activities was $0.4 million, primarily related to the purchase of lab equipment.

For the year ended December 31, 2020, cash used in investing activities was $1.6 million, primarily related to capital expenditures associated

with the moving of our Rutherford, New Jersey lab to North Carolina.

January 7, 2021, the Company entered into secured promissory notes in the amount of $3 million and $2 million with Ampersand and 1315

Capital, respectively.

See Note 13, Notes Payable of the notes to the financial statements.

On May 10, 2021, the Company amended

the Ampersand Note to increase the principal amount to $4.5 million and amended the 1315 Capital Note to increase the principal amount

to $3.0 million.

The maturity dates of the Notes were the earlier of (a) June 30, 2021 and (b) the date on which all amounts become due

upon the occurrence of any event of default as defined in the Notes.

On June 24, 2021, the Company and Ampersand amended the Ampersand

Note to change its maturity date to the earlier of (a) August 31, 2021 and (b) the date on which all amounts become due upon the occurrence

of any event of default as defined in the Ampersand Note.

On June 25, 2021, the Company and 1315 Capital amended the 1315 Capital Note

to change its maturity date in a similar manner.

On August 31, 2021, the Company and Ampersand amended the Ampersand Note to change its

maturity date to the earlier of (a) September 30, 2021 and (b) the date on which all amounts become due upon the occurrence of any event

of default as defined in the Ampersand Note.

On August 31, 2021, the Company and 1315 Capital amended the 1315 Capital Note to change

its maturity date in a similar manner.

September 29, 2021, the Company and Ampersand amended the Ampersand Note to change its maturity date to the earlier of (a) October 31,

2021 and (b) the date on which all amounts become due upon the occurrence of any event of default as defined in the Ampersand Note.

September 29, 2021, the Company and 1315 Capital amended the 1315 Capital Note to change its maturity date in a similar manner.

October 2021, the Company and its subsidiaries entered into a Loan and Security Agreement (the “Comerica Loan Agreement”)

with Comerica Bank (“Comerica”), providing for a revolving credit facility of up to $7,500,000 (the “Credit Facility”).

The Company may use the proceeds of the Credit Facility for working capital and other general corporate purposes.

October 2021, we entered into the Comerica Loan Agreement with Comerica, providing for a revolving credit facility of up to $7,500,000

(the “Credit Facility”).

The Company is using the proceeds of the Credit Facility for working capital and other general corporate

amount that may be borrowed under the Credit Facility is the lower of (i) the revolving limit of $7,500,000 (the “Revolving Line”)

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Line for such quarter.

See Note 19, Line of Credit ,

See Note 18, Revolving Line of Credit , for more details.

Comerica has a first priority security interest

in substantially all of the Company’s and its subsidiaries’ assets.

As of March 17, 2023 the Company owed $2.3 million on the line of credit

and had approximately $1.5 million available to borrow on the line.

addition, also in October 2021, the Company entered into the BroadOak Loan Agreement with BroadOak, providing for a term loan in the

aggregate principal amount of $8,000,000 (the “Term Loan”).

Funding of the Term Loan took place on November 1, 2021.

Term Loan matures upon the earlier of (i) October 31, 2024 or (ii) the occurrence of a change in control, and bears interest at the rate

of 9% per annum.

The Term Loan is secured by a security interest in substantially all of the Company’s and its subsidiaries’

assets and is subordinate to the Company’s $7,500,000 revolving credit facility with Comerica Bank.

The Term Loan has an origination

fee of 3% of the Term Loan amount, and a terminal payment equal to (i) 15% of the original principal amount of the Term Loan if the change

of control occurs on or prior to the first anniversary of the funding of the Term Loan, (ii) 20% of the original principal amount of

the Term Loan if the change of control occurs after the first anniversary but on or prior to the second anniversary of the funding of

the Term Loan and (iii) 30% of the original principal amount of the Term Loan if the change of control occurs after the second anniversary

of the funding of the Term Loan, or if the Term Loan is repaid on its maturity date.

Upon receipt of the term loan, the proceeds were

used to repay in full at their maturity the notes extended by Ampersand and 1315 Capital discussed above.

See Note 14, Notes Payable,

for more details.

Comerica has a first priority security interest in substantially all of the Company’s and its subsidiaries’

addition, also in October 2021, the Company entered into a Loan and Security Agreement (the “BroadOak Loan Agreement”)

with BroadOak, providing for a term loan in the aggregate principal amount of $8,000,000 (the “Term Loan”).

Funding of the

Term Loan took place on November 1, 2021.

The Term Loan matures upon the earlier of (i) October 31, 2024 or (ii) the occurrence of a

change in control, and bears interest at the rate of 9% per annum.

The Term Loan is secured by a security interest in substantially all

of the Company’s and its subsidiaries’ assets and is subordinate to the Company’s recently established $7,500,000 revolving

credit facility with Comerica Bank.

The Term Loan has an origination fee of 3% of the Term Loan amount, and a terminal payment equal

to (i) 15% of the original principal amount of the Term Loan if the change of control occurs on or prior to the first anniversary of

the funding of the Term Loan, (ii) 20% of the original principal amount of the Term Loan if the change of control occurs after the first

anniversary but on or prior to the second anniversary of the funding of the Term Loan and (iii) 30% of the original principal amount

of the Term Loan if the change of control occurs after the second anniversary of the funding of the Term Loan, or if the Term Loan is

repaid on its maturity date.

Upon receipt of the term loan, the proceeds were used to repay in full at their maturity the notes extended

by Ampersand and 1315 Capital discussed above.

In May 2022, the Company issued a Convertible Note to BroadOak, pursuant to which BroadOak funded a term loan in

the aggregate principal amount of $2.0 million.

See Note 14, Notes Payable , for more details.

As of the date of this Report, the

Company currently anticipates that current cash and cash equivalents and availability on the revolving credit facility with Comerica

will be sufficient to meet its anticipated operating cash requirements through at least the end of the first quarter of fiscal 2023.

The BroadOak Loan Agreement

contains affirmative and negative restrictive covenants, including restrictions on certain mergers, acquisitions, investments and encumbrances

which could adversely affect our ability to conduct our business.

The BroadOak Loan Agreement also contains customary events of default.

The Comerica Loan Agreement contains affirmative and negative restrictive covenants that are applicable whether or not any amounts are

outstanding under the Comerica loan agreement.

These restrictive covenants, which include restrictions on certain mergers, acquisitions,

investments, encumbrances, etc., could adversely affect our ability to conduct our business.

The Comerica Loan Agreement also contains

financial covenants requiring specified minimum liquidity and minimum revenue thresholds and also contains customary events of default.

However, if we are unable to meet the financial covenants under the Comerica Loan Agreement, the revolving line of credit and notes payable

will become due and payable immediately.

BroadOak Loan Agreement contains affirmative and negative restrictive covenants, including restrictions on certain mergers, acquisitions,

investments and encumbrances which could adversely affect our ability to conduct our business.

The BroadOak Loan Agreement also contains

customary events of default.

The Comerica Loan Agreement contains affirmative and negative restrictive covenants that are applicable

whether or not any amounts are outstanding under the Comerica loan agreement.

These restrictive covenants, which include restrictions

on certain mergers, acquisitions, investments, encumbrances, etc., could adversely affect our ability to conduct our business.

Loan Agreement also contains financial covenants requiring specified minimum liquidity and minimum revenue thresholds and also contains

customary events of default.

However, if we are unable to meet the financial covenants under the Comerica Loan Agreement, the revolving

line of credit and notes payable will become due and payable immediately.

January 2022, the Company’s registration statement for a rights offering filed with the Securities and Exchange Commission (SEC)

became effective;

however, the rights offering was subsequently terminated later in January 2022 when the Company announced that the

Centers for Medicare & Medicaid Services, or CMS, issued a new billing policy whereby CMS will no longer reimburse for the use of

the Company’s ThyGeNEXT ® and ThyraMIR ® tests when billed together by the same provider/supplier for

the same beneficiary on the same date of service.

On February 28, 2022, the Company announced that the National Correct Coding Initiative

(NCCI) program issued a response on behalf of CMS stating that the January 2022 billing policy reimbursement change for ThyGeNEXT ®

(0245U) and ThyraMIR ® (0018U) tests has been retroactively reversed to January 1, 2022.

In May 2022, the Company

was notified by CMS/NCCI that processing of claims for dates of service after January 1, 2022 would be completed beginning July 1, 2022.

However, on June 9, 2022, the Company was notified that Novitas re-priced ThyGeNEXT ® (0245U) from $2,919 to $806.59 retroactively

effective to January 1, 2022.

On July 20, 2022 the Clinical Diagnostic Laboratory Tests (CDLT) Advisory Panel affirmed a gapfill price

for ThyGeNEXT ® of $806.59.

As a result of the ThyGeNEXT ® pricing change, the Company reduced its net realizable

value, or NRV rates for ThyGeNEXT ® Medicare billing to reflect the $806.59 pricing for tests performed during the second

quarter of 2022.

In addition, in order to reflect the retroactive pricing change to January 1, 2022, the Company recorded an NRV adjustment

of $0.7 million during the second quarter of 2022 to reduce revenue recorded during the first quarter of 2022.

Effective January 1, 2023,

the gapfill price for ThyGeNEXT ® was set at $1,266.07.

August 31, 2022, the Company closed on the sale of its Pharma Solutions business for a total sale price of $6.2 million after a post-closing

working capital adjustment.

In addition, we received the earnout payment of $1,043,000.

See Note 4, Discontinued Operations .

the year ended December 31, 2022, we had an operating loss from continuing operations of $3.6 million.

As of year ended December 31,

2022, we had cash and cash equivalents of $4.8 million, total current assets of $12.2 million, net of restricted cash, and current liabilities

of $14.3 million.

As of March 17, 2023, we had approximately $5.7 million of cash on hand,

net of restricted cash.

the year ended December 31, 2022, net cash used in operating activities was $7.7 million.

The main component of cash used in operating

activities was our net loss of $22.0 million, partially offset by depreciation and amortization expense of $2.6 million and non-cash

impairment charges of $12.4 million.

During the year ended December 31, 2021, net cash used in operating activities was $8.7 million.

The main component of cash used in operating activities was our net loss of $14.9 million which was partially offset by non-cash depreciation,

amortization and stock compensation expenses of $6.6 million.

the year ended December 31, 2022, net cash provided from investing activities was $6.2 million, which primarily pertained to the net

proceeds received from the sale of our Pharma Solutions business unit.

During the year ended December 31, 2021, net cash used in investing

activities was $0.3 million, primarily related to the purchase of lab equipment.

the year ended December 31, 2022, cash provided from financing activities was $3.0 million, of which $1.0 million was from the drawdown

on the Revolving Line and $2.0 million was the Convertible Debt agreement entered into with BroadOak.

See Note 14, Notes Payable,

for more details.

For the year ended December 31 ,

2021, cash provided from financing activities was $9.0 million, of which $7.7 million were the net proceeds from the BroadOak loan and

$1.5 million borrowed under our line of credit.

See Note 14, Notes Payable, for more details.

did not generate positive cash flows from operations for the year ending December 31, 2022.

We intend to meet our ongoing capital needs

by using our available cash and availability under the Comerica Loan Agreement, as well as through targeted margin improvement;

of accounts receivable;

containment of costs;

and the potential use of other financing options and other strategic alternatives.

if we are unable to meet the financial covenants under the Comerica Loan Agreement, the revolving line of credit and notes payable will

become due and payable immediately.

Company continues to explore various strategic alternatives, dilutive and non-dilutive sources of funding, including equity and debt

financings, strategic alliances, business development and other sources in order to provide additional liquidity.

With the Company’s

delisting of its common stock from Nasdaq in February 2021, its ability to raise additional capital on terms acceptable to the Company

has been adversely impacted.

There can be no assurance that the Company will be successful in obtaining such funding on terms acceptable

to the Company.

along with many laboratories, we may be affected by the Proposed Local Coverage Determination (“LCD”) DL39365, which was

posted on June 9, 2022 and is currently under consideration by our local Medicare Administrative Contractor, Novitas

If finalized, this Proposed LCD, which governs “Genetic Testing for Oncology,” could impact the existing LCD for one of our

molecular tests, PancraGEN ® .

If Novitas restricts coverage for PancraGEN ® , our liquidity could be negatively

impacted beginning in Fiscal 2023.

of December 31, 2022, contractual obligations with terms exceeding one year and estimated minimum future rental payments required by

1 unchanged sentence

Operating lease obligations

the Company is targeting to achieve adjusted EBITDA and cash flow breakeven during Fiscal 2022, we may not generate positive cash flows

from operations for the year ending December 31, 2022.

We intend to meet our ongoing capital needs by using our available cash and availability

under the Comerica Loan Agreement, as well as through revenue growth and margin improvement;

collection of accounts receivable;

and the potential use of other financing options.

Company is exploring various dilutive and non-dilutive sources of funding, including equity and debt financings, strategic alliances,

business development and other sources in order to provide additional liquidity and expand the business through acquisitions or other

strategic transactions.

With the Company’s delisting from Nasdaq in February 2021, its ability to raise additional capital on terms

acceptable to the Company may be adversely impacted.

In January 2022, the Company’s registration statement for a rights offering

become effective.

The rights offering was subsequently terminated in January 2022.

There can be no assurance that the Company will be

successful in obtaining such funding on terms acceptable to the Company or at all.

of the date of this Report, the Company currently anticipates that current cash and cash equivalents will be insufficient to meet its

anticipated cash requirements through the next twelve months.

These factors raise substantial doubt about the Company’s ability

to continue as a going concern.

With the proceeds received from the sale of the Pharma Solutions business, as well as the expected improvement in future operating cash

flows associated with the disposition, as of the date of this filing, the Company anticipates that current cash and cash equivalents

and forecasted cash receipts will be sufficient to meet its anticipated cash requirements through the next twelve months.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis