ImpediMed Limited

Thank you for standing by and welcome to the Impedimed Limited Q2 FY25 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. We would now like to hand the conference over to Dr. Palmjot Bains, CEO and MD. Please go ahead. Thank you.

Good morning and thank you all for joining us to discuss the Q2 FY25 results. I'm pleased to be here with Maguga Grant, our CFO and COO. Today we'll be referencing the 4C quarterly activity report and presentation we lodged this morning with the ASX. The presentation is a summary of the more detailed 4C. After our remarks, we'll be taking questions. I'll begin on page three and quickly go through the agenda for today's call. To page three, consistent with the previous quarter, we will start today with a brief strategy recap. Then we will cover on the key highlights and financial performance for Q2. We will touch on other key metrics in the business. And to finish, we will cover the outlook for the next quarter before commencing the Q&A session. Now, turning to page four. I would think it's worthwhile to start with a reminder of what our immediate strategy is. It's to execute to break even on profitability with a focus on sales, marketing, and clinical execution in BCRL. We've come a long way and made a lot of changes in the 12 months that I've been here. The team has done a lot of work and we're really proud of the achievement that was made. When we assess our achievements against the goals we set in Q3 last year, it's frankly been a bit of a frustrating quarter with delays in US orders coming through despite our pipeline growth. We are focusing now on how we can accelerate this pipeline conversion. In a historical context, this is a good result. We saw record results in terms of revenue and cash receipts with good cost control and operating cash flow. We will continue to make great progress in reimbursement, which is still the key success for BCRL, and the focus on sales process is driving significant lead generation. Everything is heading in the right direction. But as a board and management team, we still don't accept this current status quo. The business is not quite where we want it to be in terms of US sales, and we're challenging all aspects. I've just, in fact, flown back in from the US this morning after conducting a very detailed quarterly analysis of our pipeline at a granular level with every part, which are basically comprised of our individual sales reps, clinical program specialists, and reimbursement teams. This coming quarter, we've got 15 trade shows in the next half year to continue to generate leads, and we're looking at all the initiatives we can take to accelerate our lead conversion. When I look at the progress that's being made, the results being delivered from the processes we have put in place, and when I talk to our customers and potential customers, I continue to be very confident that we will execute on the opportunity. Turning to page five, let's talk about what's going right and why we have confidence in the business model. Firstly, we have a very strong foundation. The strength of the ARR business model is that it builds on itself in every contract. The quality of our customers, even with a list of the new and renewing customers this quarter, it's a who's who of quality world-renowned institutions, NCCN centers like the Cleveland Clinic, the Models on Kettering, Vanderbilt, and Mass General, large IDNs like Sata, Baylor Scott & White, and Northwell. We have inclusion with the most widely regarded guidelines, NCCN, and recently NAPBC. Last quarter, we were recognized as a technology market leader by Foster & Sullivan. Secondly, we are seeing the pipeline expanding, responding to our marketing and sales perspective efforts. The clinicians are excited by the ability of SOSA to improve cancer patient survivorship. Critically, we see reimbursement is reaching a tipping point. In today's post-COVID environment where hospitals are still struggling financially, it's more important than ever to have high levels of reimbursement, not just for financial sustainability for the system, but also to reduce the administrative burden as they have to manage reimbursement. This is one of our key learnings. So that understanding gives us the confidence to further allocate resources into sales. We want to see an acceleration of the conversion of the opportunity pipeline that our team has so diligently built in the last 12 months. Finally, our cost discipline is critical and is now providing us with a runway to invest and reallocate where we are spending our resources to underpin this growth. Now, turning to page six, we'll touch on the key highlights for Q2. As I mentioned, there is a lot to like in the result. In the financials, we recorded record revenue and cash receipts. Operating cash flow reduced significantly quarter on quarter, even after you adjust for the R&D tax credit. And we continue to have a healthy cash balance and have actually increased our runway quarter over quarter. On the reimbursement front, we continue to see growth in payer coverage. And with everything the company has done, the clinical trials, the guideline submissions, the CAP programs, it's all about getting coverage for patients so they can receive the SOZO measurements to prevent breast cancer-related lymphedema and help support financial sustainability for healthcare clinicians. Institutions differ. The markets differ depending on what state you're in. So there's no hard and fast rule, but we believe our reimbursement is now reaching a level where we should see it start to make a meaningful impact on sales, and in doing so, ultimately patient health. And finally, for sales, the revenue trend is positive. For devices, there was a 75% increase quarter on quarter, but it's really not where we want it to be. As I mentioned, we're not happy with the US number yet. but we are confident that we have all the components and processes in place, putting us in a position to capitalise on this opportunity. Internally, we can see we're at the point where it now makes sense to invest more into sales, although keeping our costs in mind, we are reallocating existing resources into more frontline roles. I now turn over the presentation to our CFO, McGregor Gantt, to go through the financials.

Thanks, Pamjot. Starting on page seven, as Pamjot mentioned, it was a positive Quarter financially, we achieved record quarterly cash receipts of $3.4 million. Headline operating cash outflow reduced to $2.5 million from $4.8 million last quarter. Major drivers included receipt of the cash, the R&D tax credit and lower administration costs. As we mentioned at the time, the last quarter's operating cash flow was about 10% higher than budget, mainly due to timing. And as the timing issues reversed, operating cash outflow was expected to decrease to under 3.5 million this quarter. We did, in fact, see just this. Once you add back the R&D tax credit, the operating cash flow was 3.4 million in line with guidance. Cash and cash equivalents of 30 June 24 was 17.7 million. We got the opposite effect from exchange rate movements compared with last quarter. This quarter, there is a notional FX benefit affecting the balance. As with last quarter, this is largely unrealised. As a result of the cash balance and the reduction of the operating cash outflow, the result in today's 4C is showing 7.2 quarters of operating cash flow. When you adjust to the R&D credit, it comes in at 5.2 quarters, still a good improvement on last quarter's result. Over to page 8. Last quarter's revenue was the only slightly disappointing aspect of the result. This quarter, it bounced back nicely. And as with the cash flow case, the factors that caused the disappointment last month reversed this month. Revenue came in at 3.3 million, up 24% versus quarter one. Last quarter, although rest of world sales continued at anticipated levels, the timing of distributed inventory restocking, which is reported as rest of world sales, was smaller than anticipated. quarter we saw reordering from the distributor resulting in a higher rest of the world figure of about 400,000 as you can see in the graph. The second factor was the strengthening of the US dollar versus the Australian dollar. Importantly, you can see in the revenue chart that the trend line is positive. We've included a longer term revenue graph to further illustrate this point. There is a definite upward trend in the core business. You can look at an even longer-term graph, and it tells the same story, a business that is incrementally improving, and this is prior to full reimbursement. Looking at page nine, firstly to ARR, again, a nice upward trajectory as TCV gains translate in annual revenue. TCV contracts in place at 31 December 24 are expected to generate core business annual recurring revenue or ARR of 12.5 million for the 12 months to 31 December 25. That equates to a 23% rise year on year and with ARR at December 31, 23 of 10.1 million. Looking at TCV contracts, The value of new contracts signed during this quarter, which we refer to as total contracted value or TCV, was $3.2 million compared with TCV of $4.8 million signed during quarter four FY24. The reduction reflected two factors. The largest factor was the reduction in the number of units due for renewal compared with the previous quarter. As we called out at that time, last quarter included the renewal of one of our largest customers with a large number of units. The second factor was the reduction in the number of units sold during the quarter. On a positive note, we continue to be pleased with the quality of accounts initiated or renewed in the quarter, together with continued strong price increases on renewal averaging 23%. I now hand back to Palmjot to continue through the remaining slide.