Applied DNA Sciences Reports 34% Revenue Growth but Incurred $17.5 Million Net Loss

Applied DNA Sciences, Inc. reported its financial results for the quarter ending December 31, 2024, revealing a total revenue of $1.2 million, a significant increase of 34% from $891,164 in the same period last year. The growth was driven by a 61% rise in product revenues, which reached $495,847, and a 52% increase in service revenues, totaling $374,444. However, clinical laboratory service revenues saw a slight decline of 3%, amounting to $326,326, primarily due to reduced demand for COVID-19 testing services.

The company’s gross profit surged to $684,107, reflecting a gross profit margin of 57%, compared to 26% in the prior year. This improvement was attributed to a favorable product mix, particularly in the DNA Tagging and Security Products and Services segment, which contributed higher-margin revenues. Despite the increase in revenues, Applied DNA Sciences reported a net loss of $17.5 million for the quarter, a substantial rise from a net loss of $1.2 million in the same period last year. This loss was exacerbated by a deemed dividend related to warrant modifications amounting to $14.9 million.

In terms of operational changes, the company announced a strategic exit from its DNA Tagging and Security Products and Services segment, which will involve a workforce reduction of approximately 20% and is expected to incur one-time personnel-related charges of about $300,000. This decision aligns with the company's focus on its Therapeutic DNA Production Services and MDx Testing Services. The company is also engaged in a strategic review of its MDx Testing Services segment, which includes its pharmacogenomics testing services that received full approval from the New York State Department of Health in June 2024.

As of December 31, 2024, Applied DNA Sciences had cash and cash equivalents of $9.3 million, an increase from $6.4 million at the end of the previous quarter. The company generated negative operating cash flow of $3.3 million during the quarter, raising concerns about its ability to continue as a going concern. The company has historically financed its operations through the sale of equity and equity-linked securities, and it recently closed a registered direct offering that yielded approximately $5.7 million in net proceeds.

Looking ahead, Applied DNA Sciences is focused on expanding its Therapeutic DNA Production Services, particularly through its LineaDNA and Linea IVT platforms, which are designed for the production of synthetic DNA and RNA for therapeutic applications. The company aims to secure commercial-scale supply contracts and enhance its market position in the rapidly growing mRNA therapeutic market. However, the company acknowledges the challenges it faces, including the need for additional funding and the potential impact of regulatory changes on its operations.