ImpediMed Limited

Thank you for standing by and welcome to the Impedimed Investor Call Q4 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'll need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Palmjot Baines, CEO and MD. Please go ahead. Thank you.

Good morning and thank you for joining us to discuss the quarter four FY25 results. I'm pleased to be here with McGregor Grant, our CSO. We will be referencing the 4C quarterly activity report and presentation that 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. It's been another busy and encouraging quarter. clear signs that the strategy we've been working hard on is starting to pay off. We recorded our highest ever total contract value this quarter, which is a fantastic achievement. On top of that, a major commercial pay began coverage, something we believe will have a significant impact going forward. We also achieved the key goals that we set for ourselves, including exceeding our sales target to trigger access to the next tranche of our debt facility and exceeding the cost reduction targets we put in place. The American Society of Breast Surgeons Conference was another highlight last quarter. It was led by our new VP of Sales, Scott Long, and gave us a great opportunity to connect with both current and potential customers. What really stood out was the importance of survivorship in cancer care, and more and more clinicians turning to SOZO to lower the lymphedema risk for their patients. This quarter, we also initiated a measured expansion into two new clinical areas, both of which represent major opportunities for the business. I'm really looking forward to giving you an update in what was achieved this quarter and where we're headed as we move into the new financial year. Let's move into the presentation and we'll begin on page three with an overview of the agenda. Looking at page three, we'll start with the key highlights for quarter four, We will take you through an overview of the business and give an update on the strategy, including the expansion of body comp and heart failure. McGregor will present the financials, and to finish off, we'll cover the outlook for the balance of the year before commencing the Q&A session. Now, turning to page five. We have delivered on our plan. We've been consistently messaging about building a strong opportunity pipeline and focusing on conversion. This quarter, we started to see the results and we delivered a significant increase in U.S. sales and a record PCV. Today, we're going to walk you through why we had this confidence going into the quarter, and importantly, why we believe that this is just the beginning. To succeed in the U.S. healthcare market, there are a few key pieces that need to be in place, and one of the biggest is reimbursement. We're pleased to announce the news that another major commercial player is now providing coverage. It's a significant milestone and a real credit to our VP of Market Access and the hard work that she has put in. I'm also presenting this morning from my new corporate office in Sydney, and it's great to have a core part of the management team based in Australia. This setup aligns with how other successful Australian medtech companies are run, with governance, product development, finance, operations and business development led out of Australia, and with US sales, marketing and medical affairs staying focused in the US. close to our customers. It's also been positive from a cost point of view as we rationalise our facilities. It's a fantastic team across two geographies that really complement each other and I'm genuinely looking forward to what we can achieve together. My team's approach is that we will touch on the key highlights of Q4. As I mentioned at the start, this was a very pleasing result and I want to leave you with three key takeaways. First, work with PCV, clearly a standout highlight. It wasn't just about new sales, it also reflects the strength and quality of our renewal. When I meet with customers from some of the world's leading institutions and hear first hand about how much they value Sozo and how it's become a game changer in the clinical practice, that really reinforces that we are on the right track. Secondly, sales momentum, 44 units this quarter. That's a 100% increase on quarter three, and it sets a new base for the balance of the year. It also means we qualify for tranche two of the debt facility. This gives us added flexibility to fund the business as we continue executing on our path to profitability. Thirdly, reimbursement, a major step forward. The additional coverage we secured will make a big difference. It's great to see that the number states with coverage above 80% increased from 25 to 36 states. But it's not just about the number of states, but the depth of the coverage within those states. The number of states now with over 90% coverage jumped from 7 to 21. As a result, some states that were difficult to access with low reimbursement moved to very high levels of reimbursement. In one example, a state moved from around the mid-30s to the mid-90s with this range of coverage increase. at the top of things of our population, and it's been hard as a prospect ever before. At times, four major IDNs with potential 80 to 120 devices. That's meaningful. These improvements in coverage will help us move faster and lift us to the next level. Now on to page eight. As we mentioned last quarter, we have very strong foundations that have taken a lot of work. These include, one, the strength of the ARR business model that builds on itself with every contract, and the quality of our customers. Reflecting on our customers, the list is of new and renewed institutions over who's who of world-renowned hospitals. This quarter, our U.S. sales included a standout nine-unit lead contract with Legacy Health, a leading six-system hospital healthcare system serving Oregon and Washington. Legacy is committed to delivering comprehensive cancer survivorship programs that meet the NAPC standards. And that commitment played a key role in the decision to adopt SOGO as the foundation for the Lepidemia Prevention Strategy. Renewing customers continue to validate the value of our offering. Not only are they renewing, but renewing with price increases. Overall, we saw a 13% rise in CCV for these renewals, in turn remaining at less than 4%. Now to page 9. We now have a strong foundation in place to drive the level of sales required. Expanded reimbursement, a strong and growing pipeline, and a well-connected, high-performing sales team. That foundation gave us the confidence to see real results, which will be just incremental. It will be a series of step-by-changes. It was clear from the start we needed to invest in systems and processes to support a more robust pipeline. Quite simply, the volume of leads being generated when we came on board wasn't enough to support the sales needed. We addressed that by rolling out tools like SecurityMD and SeamlessAI, implementing full-force productivity measures and ramping up targeted lead generation activity. That investment has paid off, creating a major uplift in the quantity and quality of leads. As a result, the pipeline is now in excellent shape. It includes multiple multi-unit sales opportunities, 27 master service agreements with healthcare providers that represent hundreds of potential service sites, and with more than enough qualified leads to support our initial goal of being profitable. Now turning to page 10. We have confidence that sales will continue to grow. We have a product that addresses a real clinical need Strong clinical validation and a solid pipeline and a very positive reinvestment environment. The final piece of the puzzle is conversion, turning those leads into sales. Another area we really needed a boost was sales team experience, specifically in breast cancer devices. And that's why we were really, really pleased to bring on Scott Long as our new VP of sales. Scott runs over 30 years of experience with breast cancer medical devices, and was that a deep understanding of that space. He has spent his career building strong relationships with breast surgeons, and he's used to working with sales teams in smaller companies. That means he not only knows how to get the results, but he has a great network of top tier sales talent. Scott has already hit the ground running. He's assessed the current team, led our presence at the ASCS conference, and has been out in the field with the RETs, coaching them and making key introductions from his own network. As part of that, we've recently hired two new peer-counted RETs, both with a very solid birth cancer experience and both who are now on board. It is great to have them on board and we're very excited about the opportunity. It will take a quarter for them to fully hit their stride, but based on their track records, we are very confident that they'll start to deliver impact soon. One factor people often underestimate is the network effect in hospital systems. Getting a device approved at a hospital isn't quick. There are legal contracts, budgets and IT approvals. It can take months. But once these items are completed, adding a sickle cell device within a hospital system is a much faster process because those details are already cleared. That is a big advantage that we will continue to build on. Currently in one state, we're finalising three new contracts that unlock the potential for up to 35 more units, which lines up with improved reimbursement in that state. All these changes are just now taking effect, but the tailwind is strong and as we move through the financial year, we are confident in delivering sustained sales flows. Now turning to page 11. The start of the new year is always a great time to revisit our strategy and check in on where we're headed. We're not making any major changes. We're continuing to appear on the strategy without lines, but there is a natural progression as we move forward. ECRL remains the core focus for us, along with maintained strong financial discipline, and Madhuda will talk about our progress on that front. Over the past couple of quarters, you've also heard us talk about moving into stages four and five of our strategic plan. That is starting to take shape. We recently shared our updated product roadmap with the board, which highlighted two key focus areas. First, body composition. We've initiated active sales in this market with our current product offering. Initially, we talked about oncology as a natural adjacency, and that continues to be a focus. But we're also looking at how we can leverage sales as a unique position within hospitals to support clinically managed weight loss, a space where there is growing and real potential. Secondly, heart failure. We started to re-engage in that space with some early steps. We began with a key investigator-initiated observational cancer trial, which produced promising data that supports the clinical utility of a cell-based diet, both for managing steroid levels as well as body composition in heart failure patients. Building on that, we're now expanding our efforts through additional clinical research partnerships to better define how SOZO can be utilized within that healthcare pathway. Firstly, over to body composition on page 12. As I mentioned, we are continuing our work in body composition within the oncology space. We believe that there is a clear clinical demand to support body composition management in cancer patients as part of their survivorship journey. At the same time, we're seeing a generational opportunity emerging around the whys of the GLP-1 weight loss drugs, like Ozempic and Manjaro, that is supported by new guidelines. What makes this especially compelling is that our unique position in the market, SOZO is currently the only FDA-cared bioimpedance device. At a time when leading medical societies are specifically calling for muscle mass monitoring during pharmacological weight loss, they are recommending validated tools like a bioimpedance as part of best practice care. We already have a body composition application. We have now begun a measured expansion into that space, assigning sales resource to build up the market and gather early feedback from customers to optimise our offering. It is still early days, but the initial signals are very encouraging and we're genuinely excited about where this opportunity will lead. Now to page 13. Hype flow is something that the company identified as a major opportunity quite some time ago. ImpedaMed has invested in clinical trials, developed the heart failure software, explored reimbursement and secured FDA clearance, not just for fluid status monitoring heart failure patients, but also for body composition assessment for cardiac rehab and prehab. ImpedaMed has invested in developing a SOVA with scales to improve workflow and remove the contraindications for implantable cardiac devices. Heart failure is one of the most serious and growing health challenges we face today. It affects over 64 million adults globally and is one of the top causes of hospitalization, especially in older adults. And it's not just a clinical issue. It faces a significant burden on health care systems because of the complexity of care, high rate of admission rates, and the sheer volume of patients involved. That's why we've now started to rebuild our hospital and heart center, and we're doing it in a very smart, needed way. leveraging off investment to date and utilising investigator-led trials to build the clinical utility needed for adoption, which includes leveraging guidance from two previous and head event-run heart failure advisory boards. Professor Sindoni, a leading cardiologist based in Sydney, has just completed a 116-patient observation study on heart failure using SOVO. From that work, abstracts are being presented at the Cardiology Society in Australia, of the Australian New Zealand Conference in Brisbane next month. We also have chemo-investigator-initiated studies underway in the US, both exploring key cardiac study markers alongside size and measurement. It's still early days, but importantly, we have a plan, and we don't expect you to require a major investment going forward. Most of the groundwork has already been done, and it's about leveraging that early investment to shape a clear and practical path forward. Now I'll turn the presentation over to our CFO, McGregor Grant, to go through the financials.

Thanks, Pamjot. Starting on page 15, as Pamjot mentioned, it was a positive quarter from a financial perspective. A significant achievement for the year was making our commitment of reducing the cash cost base in FY25 by 10% versus FY24. We recorded a 16% reduction, which mostly came from a 22% reduction in staff remuneration. with the most significant part from senior management costs. Financial discipline continues to be a core goal of the business as we head into the new financial year. Operating cash outflow came in on budget at $3.5 million in line with last quarter's results. Last quarter we flagged that we expected a one-off $1.2 million payment for key electronic components in quarter four. This will now occur in quarter one, FY26. Cash receipts were at $3.8 million, slightly down on the $4.5 million last quarter due to the timing of customer receipts. The cash balance of $22.2 million that served in June equates to 6.3 quarters of operating cash flow. If we adjust to the additional $5 million U.S. drawdown of the debt facility that occurred in July, there are 8.4 quarters of operating cash flow remaining. The strengthening of the Australian dollar relative to the US dollar resulted in an unrealised FX loss of around $1 million. Moving on to page 16. Clearly the standout financial result was the record TCV of $6.3 million, up 86% year-on-year and 29% versus the prior quarter. As well as a strong contribution from new sales, there was also a large number of contracts removing a quarter, with solid price increases adding to the record results. We continue to be very pleased with the quality of accounts, either initiated or renewed in the quarter, together with continued solid price increases on renewed contracts, averaging 13% for the quarter. Turn remains low, below 3%. The upward trajectory in TCV translates to an increase in annual recurring revenue, or ARR. TCV contracts in place as of 30 June 2025 are expected to generate core business ARR of $14 million for the 12 months to 30 June 2026. That equates to a 27% rise year-on-year and a 3% increase on the prior quarter. The strong Australian dollar reduced the increase in ARR as the FX effect is applied to the whole balance. Turning to page 17. Revenue for the quarter remained close to record levels at $3.4 million, up 15% year-on-year, but down 1% on quarter three. U.S. revenue was flat as a result of the relatively stronger Australian dollar. West of world revenue was down 19%. Millions were sold to the rest of the world compared with 14 units sold in quarter three, FY24. The reduction is the result of timing of distributed inventory restocking. But I know that in July, the company received an 18-unit order from its Australian distributor. Cash-in-sweeps of $3.8 million were up 27% year-on-year, but down 8% against the prior quarter. The reduction from Q3 was largely due to timing of customer receipts. On to page 18. We've already mentioned the significant lift in U.S. unit sales, and I've commented on the lack of worth-of-word sales. We've been investigating several rest-of-the-world options. In BCRL, the work we've done to date suggests that many of the European markets are more focused on treatment than prevention. We continue to work to identify the best way to approach these markets. The Australian distributor continues to make incidental sales, and with over 400 units deployed across Australia and New Zealand, we are working closely with the distributors to explore other applications. and we plan to extend survey sales into the body comp and cardiology markets in FY26. Testing continues to trend upward, up 3% on the prior quarter. We continue to monitor testing numbers closely because the health of the lymphoedema prevention programs by our customers is essential to patient outcomes and essential for renewals. Accordingly, monitoring utilization remains a priority for our company. I'll now pass it back to Pandya to wrap up before going on to Q&A.

Thanks, Magruder. Over to the Outlook for H1 on to page 20. Our goals remain consistent for breast cancer-related lymphedema, so we're adding body comp and heart failure into the mix. We have a very clear focus on growing US sales and BCRLs by leveraging the changes in our sales team and the expansion of payer coverage. We continue to invest to grow that pipeline and drive improvement in our sales metrics. That is our core focus. We are expanding the body comp and heart failure, and we will do all of this while maintaining our financial discipline. Thank you. We'll open the call now for questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tom Godfrey from Audmanet. Please go ahead.

Good morning, Pam. John McGregor. Thanks for taking my questions. Can you hear me okay? Yes. Great. Maybe if I can just start with the major commercial player that's come on from 1 July and noting it gives you an 11 additional states over 80%. Is there any colour you can sort of give around whether Are there any material states in that mix or which states they are and then just whether it unlocks any of your near-term pipeline in terms of bigger sort of IDN deals?

Yeah, no, there is. I think the shift of those state numbers is kind of outlined that already. So it is a major year pair with a material number of states that have sort of tripped, that have jumped across. We aren't sharing the name of the payer in this specific stage, but we do work with our customers within those states to help convert the sales across. So as you noted, it takes up from 25 sets of 80% coverage to 36 states. So there are a large number of IDNs and health services within those additional states. And another set of coverage So over 90% coverage growth in 2021. So it has made a major impact within our payments in the market.

Okay, I understood. It's a little bit hard to hear you, but I think I followed all of that. Maybe just a follow-up to that was, were you expecting to have this major payer come through in terms of when you said, you know, first quarter 26 should be a similar sort of 40 plus and then incremental growth through FY26, or does that sort of help give you more conviction in that view?

So, Evan, will we, I'm not sure the question, Tom, are we, the market activity team has been working very hard with all of the kind of major players, and so the timing is really dependent on them. We just kind of continue to grow the momentum, but having this, pay our coverage, come on board, give us more confidence that our sales will continue to grow. Sorry, I'm not sure I said a bit more. Maybe you want to take the questions? I've answered what you're asking.

Yeah, no, it was just when you gave the trading update a couple of weeks ago, sort of that guidance around, you know, the following quarters and US sales, but you've answered it prime. So thanks for that. Maybe just changing tack slightly, I mean, around the body comps, sort of go-to-market strategy. Can you, in terms of the oncology side of that, can you leverage your BCRL installed base? Like, does that work from a workflow's perspective at those customers, or do you sort of need to be looking at a new installed base for that strategy?

No, no. So the body comp for the oncology process is very much about the BCRL installed base, and it's part of that confidence, extending, leveraging body comp to extend customers down into that cancer survivorship pathway. So into the radiation oncologist, the medical oncologist. So probably medical oncologists are the key ones there would be monitoring body composition because it can impact chemotherapy compliance, medication compliance, and long-term survivorship outcomes. And there's also been some very interesting recent data and literature that just shows the value of exercise in improving cancer outcomes and it was one of the major news articles back in June that just showed the value of exercise on improving colorectal cancer outcomes is significantly better than most drugs. So there is an increasing awareness around intervention programs that can be supported by body composition management and medical oncology.

Got it. And I mean, the medical weight loss and GLP-1 opportunity, does that sort of come off the back of oncology? How do we sort of think about that incrementally?

No, that's a whole new market. So that, and we've already got customers, you know, within bariatrics and endocrine that have been using the device for body composition management. What is interesting is, you know, back in February, I think last year there'd been two major societies and guidance is being put out in the market, which I've put in the deck. One is on the Lancet, and the other one's on the Obesity Society, that now recommends that these patients be monitored for muscle mass using a bioimpedance device, or Dexa, for one or two. So it really is an opportunity for us to build out into this new market space, and given, I think, we all know the growth of those GLP-1 markets is significant. I think it's a generational new opportunity that we think we really just It's great for us to capitalize on. We have an FDA-cleared device for unhealthy patients that's got security compliance in the hospital and we've got contracts really in place in the hospital system that enable us to capture them a bit faster.

Great, that's really helpful. Just last one from me, just one for McGregor. I mean, it was great to see you sort of do better than the initial cash cost reduction target in 25. I just was wondering in the context of You know, body comp and some changes to the sales team. How are you thinking about cost growth in FY26 and whether there's any updated thinking around cash flow breakeven?

The cash flow breakeven is a function of numbers of units sold and the pricing. And we've given an indication in the past on that around 500 units at an average of $2,000. So we're certainly progressing towards that. In terms of cash outflows next year, we have invested some more into our sales team, so that will have an impact there. But overall, apart from, for example, the the purchase of the inventory we've talked about, we'll see other areas of cash flow being largely maintained consistently on there.

Great. That's really helpful. Thanks for taking my questions.

Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone. The next question comes from Peter Gregory, private investor. Please go ahead. Pardon me, Peter, your line may be on mute. Once again, if you wish to ask a question, please press star one on your telephone. We'll now pause a moment to allow for any final questions to register. Thank you. We have a question from Grant Percy. Please go ahead.

Yeah, good morning, Tim. The 44 units that were sold in the quarter, are they included in that quarter's revenue or part included or will that mostly be reflected in Q1 of 26?

Some will be included in the quarter. It depends on the timing of the sale. The sales revenue is recorded over the life of the contract. So to the extent that purchases were made the sales were made at the latter part of the quarter, there won't be much revenue in the quarter. So there will be revenue from all sales in quarter one FY26.

Okay, all right, thank you. And also with Legacy Health, was that the first purchase they've made? Or have they previously trialled something before? And are they part of the NCCN network or the NAPBC network? And I suppose, are you able to... tell us sort of how they've spread those nine units across their hospital system.

Gotcha. Sorry, you're going to that Legacy, right? Yeah, correct. Yeah, sorry. You know, this is our first purchase that Legacy has made. So then they came out and purchased nine systems to really initiate the program across their hospital network. They are... The NACBC accreditation was a key reason for them, or one of the key drivers for buying the device, and we wanted to help them meet those accreditation standards. But led by a very prominent voice surgeon, Dr. Natalie Johnson, who was a strong advocate for survivorship care.

And are you able to sort of give us a little bit more color around how they're using those nine units across cystic hospitals? Is it like two of them taking the nine units or is it spread across one each or?

No, she's building out the program and the kind of locations now just based on the survivorship care. They're probably not more additional information. We'll kind of continue to support her to build them out and then see what sort of guys and women's traditional devices.

Okay, so it's sort of like one each at the moment, and then they'll build on that?

I think it varies. It depends on... It'll vary across the network. It depends on surgical loads, kind of rehab pathways, cancer pathways. Because I've done an assessment of that and got my advice.

OK, all right. That's all I have for today. Thank you. Thank you.

Thank you. Once again, if you wish to ask a question, please press star 14. Your next question comes from Peter Gregory, private investor. Please go ahead. Pardon me, Peter, your line may be muted.

Hello.

Hi, Peter.

Sorry, I've had some trouble. Thanks for taking my questions. 24 new US placements I see in the quarter, but this is 40. Can you tell me how many non-renewals there were and what percent of the contract up for renewal that was?

Was your question a bit of TCV between renewals and new sales?

Yeah. We're having trouble hearing you. Breaking up.

I'm sorry, I've got a phone problem.

We can meet. I think that sounds like it's all the questions. Thank you. Many thanks for your questions and your continued support. And we're encouraged by our progress and our momentum. And we're really looking forward to catching up again next quarter. Thank you.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.