Genetic Signatures (ASX:GSS) used its first-half FY26 results call to outline a modest increase in revenue, a weaker gross margin, and steps the board says it is taking to address a cash burn level it described as unsustainable for the company’s current scale. Chair Caroline Waldron and interim Chief Financial Officer Anne Lockwood also discussed a slower-than-anticipated ramp in U.S. sales of the company’s FDA-approved enteric test, while incoming CEO Maria Halasz described a 90-day plan centered on cost discipline and revenue acceleration, with artificial intelligence positioned as a key enabler.
U.S. growth slower than expected; two new customers signed
Waldron said the company’s first-half performance was consistent with its prior quarterly announcement, but acknowledged management and the board were not satisfied with the pace of U.S. market penetration for its FDA-approved enteric test. She said the company still views its U.S. fundamentals as “robust,” pointing to its proprietary 3base technology and intellectual property as providing an advantage in the range and specificity of pathogen detection.
First-half financials: revenue up slightly; margin pressured
Lockwood reported revenue of AUD 8.7 million for the half, up from AUD 8.5 million in the prior-year comparative period. Gross profit declined to AUD 4.8 million from AUD 5.0 million, as gross margin fell to 55.7% from 58.8%.
She attributed the margin pressure primarily to increased costs for consumables and raw materials, mainly related to respiratory kits. Lockwood said the company had been testing different suppliers to improve supply chain robustness and sustainability, which contributed to higher costs when buying smaller batches. She said supplier arrangements had since been “bedded down,” with the company beginning to purchase in larger batches and expecting further improvement in cost of sales in the second half.
Underlying operating loss improved to AUD 6.4 million from AUD 8.4 million in the prior comparative half. Lockwood noted the comparison was net of non-recurring impairment expenses of AUD 6.8 million incurred in the prior period, and said the improvement was largely driven by higher R&D tax incentive income of AUD 1.6 million, along with cost savings or reductions of AUD 600,000. Of those savings, she said AUD 400,000 related to costs “above the EBITDA line,” with AUD 200,000 tied to depreciation and amortization.
Cash position and burn rate draw focus
As of 31 December, Lockwood said cash stood at AUD 29.9 million, compared with AUD 31.3 million at 30 June 2025. She added that cash “today” was approximately AUD 28 million. Net assets declined by AUD 6 million, which she said reflected an improved working capital position of AUD 4.3 million and cash used of AUD 1.4 million during the half.
Lockwood said cash used in operations was AUD 5.2 million, but highlighted that the improved working capital position included AUD 2.4 million related to a government grant and AUD 1.9 million related to underlying operations. Normalizing for working capital, she said first-half cash burn was around AUD 7 million, or just over AUD 1 million per month.
Lockwood said the board recognized the burn rate was “too high” and that operating costs were above a sustainable level given the current status of the business.
Board-initiated review and instrumentation development
Waldron said the board has initiated a forensic review of the company’s operational and financial performance, including a line-by-line analysis of operating costs. The goal, she said, is to reduce costs proportionately to the business while not compromising scale and growth opportunities. She said savings from the review would be realized over FY27 and that additional detail would be shared after the incoming CEO has an opportunity to test underlying assumptions and recommendations.
Separately, Waldron said the company is progressing next-generation instrument development in response to U.S. labs seeking deeper automation and throughput. She said the board has also appointed advisors to assist with a broader review of marketing approach, commercialization of the existing product portfolio, and strategy for future growth, with any outcomes to be communicated in line with continuous disclosure obligations.
During Q&A, Waldron declined to name the external advisors conducting the review, saying the company did not believe disclosure was necessary but that the selected advisors had the right skills and understanding of the company’s market space.
Incoming CEO outlines 90-day plan; AI emphasized
Incoming CEO Maria Halasz told shareholders she would run a “focused and hands-on 90-day program” and expected to deliver “a clear and executable plan” to reset performance and drive growth. She said her approach would focus on two objectives: cost discipline and revenue acceleration, with AI as a “core enabler.”
On cost discipline, Halasz said she saw near-term savings opportunities, including using AI across marketing, administrative functions, and internal workflows. She cited campaign development, marketing collateral creation, customer segmentation, reporting, and routine administrative processes as areas that could be streamlined.
On revenue growth, she said she was committed to exploring ways to drive greater sales growth in the U.S., which she called the company’s most significant opportunity. Halasz highlighted the company’s FDA-cleared EasyScreen Parasitic test as offering a unique value proposition with broad detection capabilities and targeting a large addressable U.S. market. She said AI and market intelligence could strengthen commercial execution, including improving targeting and lead qualification and optimizing resource allocation.
Halasz also said the company would evaluate embedding AI within product development, deployment, and regulatory processes to shorten time to market, improve scalability, and enhance customer value and experience.
In response to a question about profitability without revenue growth, Waldron said significant cost cuts would be required at the current revenue base, while adding the company remains focused on investing for the future, including instrumentation that improves automation and throughput for U.S. customers. She said the instrumentation effort, as previously disclosed, would take a couple of years.
U.S.-based director Mike Aicher said the company had engaged large laboratories in the U.S. and that those labs had participated in setting specifications for the instrumentation under development. He said larger labs are looking for higher-throughput automation, and he described the current approach as simpler and capable of increasing capacity per instrument by about three times compared with what they could do now.
Management said the company’s customers are the service providers—such as hospitals and laboratories—rather than physicians who prescribe the tests.
About Genetic Signatures (ASX:GSS)
Genetic Signatures Limited operates as a molecular diagnostic (MDx) company in Australia, the Asia Pacific, the Americas, Europe, the Middle East, Israel, and Africa. It designs and manufactures a suite of real-time polymerase chain reaction-based products for detection of infectious diseases under the EasyScreen brand name. The company also provides MDx 3Base platform technology that enables hospital and pathology laboratories to screen for a range of infectious pathogens. In addition, it offers detection kits for gastrointestinal infections, respiratory, sexual health, anti-microbial resistance, meningitis, and tropical disease.
