Release Date: November 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Operating revenue increased by 1.4% compared to the previous half, indicating some growth despite challenges.
- The company has maintained a strong balance sheet with $35.9 million in cash and short-term deposits.
- Pacific Edge Ltd (PFGTF, Financial) has seen a 25% increase in average sales price over the past two years, reflecting improved pricing strategies.
- The company is making progress in international markets, with growth in New Zealand and Australia, and early-stage activities in Southeast Asia.
- The integration with Kaiser Permanente has been successful, with all 15 sites using the EMR integration, supporting adoption and providing room for growth.
Negative Points
- The company reported a net loss of $14.5 million, indicating ongoing financial challenges.
- Global test volumes have decreased compared to the first half of FY24, reflecting a decline in demand.
- There is uncertainty regarding Medicare coverage, which could impact future revenue streams.
- The sales force has been reduced, which may limit the company's ability to expand its market presence.
- The company faces potential headwinds from a possible non-coverage determination from Novitas and negative responses from commercial insurance.
Q & A Highlights
Q: What is the reason for the extension from Novitas, and is there a timeline for this extension?
A: The extension is due to unprecedented feedback that Novitas needs to respond to. There is no specific timeline given, and this is the first extension under the 21st Century Cures Act, making it an unusual circumstance. Historically, only one extension has occurred, which was automatically retired.
Q: If coverage is lost, can Pacific Edge regain it with current cash reserves? What assumptions are underlying this?
A: Even if coverage is lost tomorrow, Pacific Edge believes it can regain it with current cash reserves due to potential business changes and the timeline for clinical validation. The drive data publication in Q2 2025 is expected to support reconsideration for coverage.
Q: What gives confidence that Novitas would grant coverage for the new Triage Plus test in 2025?
A: Reliable reimbursement requires a code, price, and coverage determination. Triage Plus already has a PLA code and is on the list of codes guiding existing products for coverage. The 21st Century Cures Act supports coverage on a case-by-case basis unless there is a non-coverage determination.
Q: How is the non-CMS US revenue growth attributed, and is it consistent with Kaiser growth?
A: The growth is largely attributable to Kaiser Permanente (KP). There hasn't been a significant change in the mix of other traditional products or markets, indicating that KP is the primary driver of the growth.
Q: With $35 million in cash, what is the plan if the Novitas decision is unfavorable and AUA guidelines are not met?
A: There is no comment on the need to raise capital. The company is confident that the clinical evidence being generated and published by Q2 next year will be sufficient to regain coverage. The quality of research and publications aligns with what Novitas and CMS require.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
