ImpediMed Limited

Pamjot Bains, the CEO and Managing Director of Impedimet. Pamjot.

Great. Thank you. Good morning and thank you for joining us to discuss the Q1 FY26 results. We're using our new Impedimet Investor Hub to host the webinar and I'm pleased to be here with McGregor Grant, our CFO. and Scott Long, our SVP of Sales. We'll be referencing the 4C quarterly activity report and presentation we launched this morning with the ASX. The presentation is a summary of the more detailed 4C. After our remarks, we'll be taking your questions. You can lodge your questions through the presentation, throughout the presentation using the Investor Hub Q&A function. A couple of opening remarks. I've just returned from two weeks traveling through the US, managed to get a cold, hence the voice is a bit weak. I've spent much of the time in Texas meeting with customers and potential customers in lymphedema, heart failure, and in body comp. It's always been really invigorating meeting with the clinicians who are using SOZO with their patients and also seeing the opportunity that is created through the lymphedema business to extend into other indications. The demand for SOZO and the value it generates for patients and clinicians is clearly very evident. I was especially encouraged with our heart failure meetings and the feedback we received for SOZO Pro and the level of information that the new device provides. And I think also what's happening with body comp in the United States is nothing short of astounding. We just don't have anything like it happening in Australia, although I say that yet. From med spas to longevity and hydration clinics, the entire space is exploding on the back of the GLP-1 drugs, with many of these clinics now prescribing GLP-1 drugs to provide weight loss management services with customers. It's something we'll talk about, but it's clear that ImpedaMed has a bright future with lymphedema, heart failure and body comp. So let's move on to the presentation and begin on page three with a quick overview of the agenda for today's call. Great. So we'll start with a business overview, including the key highlights, and then take you through the updates for the three initial business segment updates. Scott Long, our SVP of sales, is on the call, as you can see, to provide his perspective on the first six months at ImpedaMed. I'll then hand over to McGregor to present the financials. And to finish, we'll cover the outlook for the balance of the calendar year before commencing the Q&A session. Now turning to page five. One clear insight that was reinforced on my trip for the last couple of weeks was a value proposition that the Sozo Digital platform provides. We have a best-in-class product that provides valuable patient information for clinicians. Clinicians find it quick and easy to use, and in the larger hospitals, they continue to add new devices across departments with different use cases. And we expect that will only continue with focus and effort. We're in a unique position. We have the only device of its type, a best device with multiple FDA clearances across the applications, and have invested in the device so that it stands apart from the competition in terms of FDA clearances, its accuracy, usability, and applicability. We have now over 600 devices now across the US healthcare system, including SOZOs and 18 of the top 25 US hospitals. And it's not just about the validation that this provides, but also the ability to leverage these relationships that we have built and leverage the time and effort in meeting the requirements for the security of patient data that enables us to extend the product. It's easy to underestimate the processes required to become established in these hospital systems. Getting a device approved at a hospital isn't quick. There's legal contracts, budget and IT approvals, and it can take months. But once these are completed, adding a second or third device within a hospital system is a much faster process because these hurdles have already been cleared. That's an exhaustive process, but once done, it applies to secondary devices in that hospital or other hospitals within that system, irrespective of the application, i.e. lymphedema or heart failure or body composition. And we have multiple MSAs and master service agreements that open up the potential for expansion in over 1,500 related hospital networks. That's a big advantage. The opportunity for us is to leverage everything we have done and maximise the revenue across the cost base that is largely set. And thankfully, it's happening to coincide with some of the fastest growing thematics in healthcare, cancer survivorship, GLP-1 therapy, and the going cost of treating heart failure. I remain very positive for the long-term outlook of Impedamed. Now, turning to page six, we will touch on the key highlights for Q4. So financial metrics, they remain positive, and I'll let McGregor go through the metrics in detail later in the presentation. Reimbursement. Now, this was clearly the standout for the quarter. Reimbursement is absolutely critical for the success of US medtech companies. And since June 30th, we have seen a reacceleration of payers updating their policies to include BIS as medically necessary. In the last quarterly, we mentioned a large payer commencing coverage. Since then, we've announced another top team player, publishing positive policy. And even more recently, another four Blue Cross Blue Shield plans have updated their policies to include this. To put this into perspective, since the 30th of June, states with over 80% coverage have jumped from 25 to 42. And states with over 90% coverage has almost quadrupled from 7 to 27. And these aren't small states. The top nine states in population in the United States now have more than 90% coverage. These changes are recent, as we expect they will have a positive impact on sales over the coming quarters. In terms of sales, overall unit sales were up on the quarter prior, but US sales were softer than we had anticipated. Even deep into the quarter, we're expecting a closer result to what we produced in the last quarter and in line with our own internal forecasts. We tracked the opportunity through the process and a number reached the final sign-off. but were then held up, not denied, but just not approved yet. Some have come through post the end of the quarter, and some are still sitting on the CFOs and purchasing managers' desks. We do expect to see a bounce back this quarter, and the team is working hard to deliver. We've also brought Scott Long, our SVP of sales, to the call, and I'm looking forward to introducing Scott shortly to give you his perspectives. Now we're going to touch base on the three applications for SOZO, lymphedema, heart failure, and body comp. So first, over to the breast cancer-related lymphedema. I've touched on a number of these points earlier in the presentation, so I won't go through them again. But what I want to do as a takeaway for you is that lymphedema is primed for growth, and we remain very optimistic about the opportunity. And what I'd like to do now is introduce Scott Long, our SVP of sales. We were really pleased to have Scott join Impedimed. He brings with him over 30 years of experience in breast cancer medical devices, and with that, a deep understanding of the space. He spent his career building strong relationships with breast surgeons, and he's used to working with sales teams in smaller companies. This means he not only knows how to get results, but he's got a great network of top-tier sales talent. I've asked Scott to talk about what he's seeing at the cold face, as well as his first impressions of Sozo, the opportunity, the team, and why he's optimistic. So, Scott, over to you.

Thank you, Parmjot. Thanks, everybody, for having me on the call. I do appreciate it. Just a little bit about my background. As Parmjot mentioned, I've got 30 years of experience here in the breast cancer field, working primarily in early stage care. startup companies, a number of them that eventually had successful exits. In addition, my big company sales management experiences with Ethicon Endosurgery, operating division of Johnson & Johnson, and Hologic. So I feel like I bring a unique perspective to the company, as Parmjot mentioned, as a function of having been around for as long as I have. I have not only quite a network of physician friends that I've accumulated along the way, many of whom are either already our customers or are on the way to becoming our customers. But I also have a network of industry colleagues that I've worked closely with through the years. One of them, Lisa Prom, as everybody probably knows, is one of our cornerstone people here at Impedimed. So, you know, what I've learned, from my seven months on board with the company now is that we've got a great opportunity at hand here. As Parmjot mentioned, we've got one of a kind technology. We have no commercial competitor. We have a growing reimbursement network and we have societal guidelines support. So those are unique attributes that most companies don't really have as they go into their competitive markets. As she also touched on, this is a multilayered sale that involves various aspects of the hospital, different stakeholders, oftentimes siloed stakeholders that don't readily and often communicate with one another. So it is the very definition of a complex sale. And as a result, it does take, quite a while to get these deals over the finish line. All that said, we have also some great work on Lisa Prom's part with our master service agreements. So we have an opportunity here as we enter into those systems to go deep into those systems. And I think as a result, once we get our foot in the door in those systems, I think the opportunity for us to sell 10, 15, 20, maybe even 30 devices is very real. Now, upon coming into the company, the only person I knew here from my past lives was Lisa Prom. So I had to sort of size up the sales talent that I inherited here. And there were some really excellent people here, not just Lisa, but Adam Brown comes immediately to mind. And there's some very good, stable, solid people. We did have some holes and some weak links as we deem them to be, and we made some quick replacements and upgraded the profile of our sales team. We brought in three individuals that I had worked with previously, all of whom are A-list players in the breast cancer field. oldest of which at this point has only been on board with us for four months. The newest has been on board less than two months. So they haven't yet really started to contribute the way that I know they will in this upcoming quarter. But I think that's one of the big opportunities for us. One of the things that was critical to me to do was to really change the culture of the sales organization and get people that were very results-oriented, very successful track records, people that were very positive, optimistic, self-starters, and people that really wanted to be part of a winning team. We want to stabilize our sales team here. We've had an issue with turnover of key players in the past, some of which were very good players. We're going to bring that to a stop here under new leadership, and I'm very, very optimistic we can do that. As far as the market opportunities themselves, as Parmjot touched on, breast cancer-related lymphedema is a platform that I believe will grow steadily over time. And I think over time, it'll be a tremendous business for the company that we can all look back and be proud upon. It's really the legacy of the company. Body composition is very exciting. There's this new emerging area called exercise oncology that's garnering a lot of podium time at breast cancer meetings. So I think we're uniquely positioned to capitalize on that. It's a more competitive marketplace, but we've got best of breed technology. And although we don't have a CPT category one code, in that area. I think there are ways around that and we've been creative in putting forth programs that I think the market will readily adopt as we get a little further into this. We're still very much in our infancy with Adam Brown heading it up for the company. Last but not least is heart failure, which certainly cardiovascular medicine is part of my background. I had a seven year stint in CV medicine before I got into breast cancer care. And I think that Sozo Pro is really uniquely positioned to really have an impact. and help heart failure patients everywhere. I think it's really going to be probably the greatest value driver for the company over time. And I think it'll benefit patients, our employees and our investors alike. And I'm really looking forward to what I think the next couple of years will hold within the heart failure franchise.

Brilliant. Thanks, Scott. That was very comprehensive. So we go to slide eight. Brilliant. We're just finishing up Breast Cancer Awareness Month. I think tomorrow is the last day. Right around the world, there's such a coordinated effort to increase awareness around breast cancer and also breast cancer-related lymphedema and the side effects of breast cancer treatment. We continue to engage in activities that support our clinicians and help drive awareness of breast cancer and the longer-term challenges for survivorship, which include lymphedema, but also high-risk patients and body composition. This quarter we attended several conferences that coincided with breast cancer awareness month. And we also participated in a number of events where clinicians hosted some very well attended webinars. One of which was really focusing on the lymphedema prevention program, along with body composition by Dr. Weintraub, which is part of the US Oncology Network in Virginia. These activities not only support our clinicians, but they also help raise awareness for SOZO and generate leads. Now turning onto page nine, which is really around heart failure. It's one of the focus areas of my recent trips to the US and the meetings went extremely well. And I returned back to Australia, not only with a cold, but also knowing that the opportunity was very large. The data that we've had from recently completed investigator-led clinical trials has reinforced the clinical utility of SOZO through the potential to manage fluid levels as well as body composition within heart failure. and it was very well received. As I mentioned in the last quarterly, heart failure is one of the biggest issues that healthcare systems face. It affects over 64 million people globally, and it's one of the top causes of hospitalization. It's not just a clinical issue. It also places a significant burden on healthcare systems because of complexity of care, high readmission rates, costs, and a sheer volume of patients involved. Each US hospital readmission for heart failure costs between 10 to $20,000. And talking with clinicians across the US, some of these readmission rates can vary from 10% to up to 30% of patients that were discharged. A lot of hospitals are looking to see how they can address this. And Sozo has a really great fit and opportunity. We have FDA clearances in place. Sozo is the only product of its type that can be used with patients with cardiac implantables. It fits into the standard model of care. So all of these heart failure patients will come into a clinic and get a weight. The new SOZO Pro has a built-in weight scale, so the SOZO can actually fit in the pathway of care and their data can be integrated into EHRs for clinician review. There is Medicare coverage and private reimbursement available in some key states, and they've been the area of focus for the visits and the early pilots. We have a couple of investigator-initiated studies underway in the US already, both exploring key heart failure markers alongside SOZO measurements to give us even more data to help support clinical adoption. And we're also looking at how we can increase this pay coverage. We're initiating key commercial pilots in the US with key clinicians across different sites of care. And by that, I mean the inpatient, the outpatient, and the private cardiology clinic. Now, if I move on to page 11 of body composition, which is the other area of focus. So US go-to-market activities have commenced with two new dedicated body composition reps. We've initiated active sales with our current product offering. Initially, we talked about oncology as a natural adjacency, and Scott referenced the exercise oncology space, and that continues to be a focus. But we're also looking at how we can leverage SOSA's unique position within hospitals to support clinically managed weight loss and cardiac rehab guidelines. What makes this especially compelling is our unique position in the market in terms of being the only best declared device at a time when leading medical societies are specifically calling for muscle mass monitoring during pharmacological weight loss using BMI, using BIS rather than purely weight or BMI. Although we've highlighted the TAM on the slide to be just body composition analysed for US hospital and clinical market, we see a much larger opportunity being in the wellness market, which is the medical spas, longevity clinics, hormone replacement clinics, and hydration clinics, many of which are prescribing GLP-1s. My time in the US was eye-opening. There's a generational opportunity emerging around the rise of these weight loss drugs and the sheer number of facilities now prescribing it and needing to manage muscle mass and body composition. We've begun a measured expansion into this space, assigning two dedicated sales resources to build up the market. And over the next couple of weeks, the team will be attending a couple of key conferences, including MedSpa Pro in Florida and the Lifestyle Medicine Conference in Dallas. And we'll gather early feedback from customers in terms of how we accelerate our go-to-market approaches and also the needs, whether or not we need to optimize our current product outputs. In terms of feedback from the market, both in heart failure and body composition, the outputs that we provide are actually enough, particularly in heart failure space, but we're always looking to get feedback from customers. Now I'll turn the presentation over to MacGregor, our CFO, to go through the financials. So MacGregor, over to you.

Thanks very much, Pamjot. So starting on page 12, as Pamjot mentioned, the financials remain positive. Financial discipline continues to be a core of the business, core goal of the business, and the company maintains an ongoing program of cost control as part of the target to reach cash flow breakeven. We continue to adjust our cost base as required. The previously announced one-off payment for key electronic components impacted some of the metrics this quarter, along with the continuing strengthening of the Australian dollar relative to the US dollar. The company reported an operating cash flow of $5.6 million for the quarter. This number was inflated by the previously announced one-off $1.2 million payment for the electronic components that was originally planned for quarter four FY25. Cash receipts from customers for the quarter were 3.4 million, down on the 3.8 million reported last quarter. Due to the timing of receipts, we expect this number to increase, consistent with the overall growth in revenue. The company's cash balance at 30 September was $23 million, equating to 4.1 quarters of operating cash flow. Excluding the one-off payment, the normalized quarters of operating cash flow would be 5.3 quarters. With the expected increase in receipts from customers, the receipt of the company's R&D tax offset and no recurrence of the one-off payment, Q2 operating cash flows is expected to be approximately $3 million. As previously mentioned, the strengthening Australian dollar relative to the US dollar resulting in an unfavourable impact on cash of $700,000, as well as unfavourably impacting other items such as annual recurring revenue. If we turn over to the next page, TCV and ARR, TCV for the quarter reduced from the record $6.3 million to $4.7 million. The reduction was a result of less devices sold in the quarter, and a smaller number of contracts up for renewal compared with the larger number renewed in the previous quarter, which we'd mentioned at that time. We continue to be very pleased with the quality of accounts initiated or renewed in the quarter, together with the continued solid price increases on renewals, averaging 10% for the quarter. As indicated, churn remains low, below 3%. As we know, the ongoing sale of new contracts translates to growth in annual recurring revenue. Contracts in place at 30 September 25 are expected to generate core business annual recurring revenue, or ARR, of $14.4 million for the 12 months to 30 September 2026. That equates to a 24% year-on-year increase and a 3% increase on the prior quarter. The stronger Australian dollar reduced the increase in ARR as the FX effect is applied to the whole balance. Now turning to page 14, Revenue for the quarter was a record at 3.6 million, up 33% year on year and 9% on quarter four. This was despite the US revenue result being affected by the impact of the Australian dollar. And rest of what revenue was up significantly as a distributor reordered inventory at the beginning of the quarter. Cash receipts from customers are 3.4 million, significantly up on a year ago, but down 11% quarter on quarter. The reduction from Q4 was largely due to timing of customer receipts, as I've mentioned. And as previously stated, we expect to see this number increase in the coming quarters as our revenue grows. On to page 15. Palmjot and Scott have already discussed sales. Testing continues to trend upward, up 4% on the prior quarter, with a three-year compound annual growth rate of 16%. We continue to monitor testing numbers closely. Program health is essential to patient outcomes and essential for renewals, so they remain a priority for the company. Like many things in this business, patient testing growth rates are also correlated to levels of reimbursement. As reimbursement increases, we believe the frequency of patient visits will increase until they more closely match the protocol used in the PREVENT trial. This will result in increasing patient testing growth rates over time. I'll now pass back to Pamjot to wrap up before we go to questions.

All right. Thanks, McGregor. Last quarter we set the goals for the first half of the year and overall we remain on track. The sales for BCRR were behind our expectation, but as I mentioned, we expect them to rebound this quarter. Reimbursement is ahead of expectations with six new payers reimbursing and we've set ourselves a new target of 100% reimbursement for breast cancer related lymphoedema. Heart failure and body composition are on track and we're working hard to progress these opportunities rapidly and convert them into early sales. We'll do this while driving our financial discipline and constantly refining our cost base. Now we'll open up the webinar for questions.

Thank you, Panjan. Just a reminder to ask questions, use the Q&A function on the webinar page. We will endeavour to get through as many questions as possible, and if we don't get to answer your question, then we'll follow up offline. The first question comes from John Hardy, and John's question was, what steps are you taking to increase sales and reduce costs? Breakeven seems to be unachievable on the current trajectory. What is your plan to raise more capital? have you explored interest in the sale of the company? If so, what result? If not, why not?

Yep. Thanks, John. So I'm going to pass the question over to McGregor.

Sure. Thank you. Thanks, John, for your question. Look, everything we've done to date has been about increasing sales. As you saw in last quarter's presentation, we've started by building a pipeline of leads and opportunities. You can't accelerate sales without growing these opportunities. And we've invested in systems and in our marketing that is now well developed to support that. As we know, reimbursement is key. We need critical levels of reimbursement across the states. That's taking time, but we are seeing that come through now strongly. Regarding break even, clearly on the current trajectory, that's the challenge. We need to see sales accelerate and we're confident that that's what we're going to see. We have no plans to raise capital. And if you look at the current numbers, the operating cash flows are running at over four quarters. And with the expectations we've just communicated, next quarter we should see that increase. We have supportive shareholders and the message that we get is to focus on sales. So that's exactly what we're doing. There are no plans to sell the company. We think the company is undervalued currently. Not many companies have the kinds of opportunities that we have in front of us in terms of FDA approvals, large markets, growing reimbursement. And at this stage, we just don't think that's in the interest of shareholders to pursue that.

Thank you. The next question comes from Paul. Read the new areas of expansion, heart and wellness. How much investment do you see that requiring?

So I'll take that question. Both heart and wellness, the product exists and the data is there to basically go out and capture that market opportunity. Really the investment is just getting out to the customers and out with the field force. So we've already done a measured expansion into a couple of body composition reps that are focusing on driving those sales and adoptions underneath Adam Brown, who's one of our existing reps in that space. Heart failure, we are currently working on very small clinical pilots to drive adoption in a couple of key states. then we'll reassess that but it will need to be done and so it'll be around sales sales team growth but we are working on that go-to-market model for how we capture that cardiovascular market opportunity which may include partnerships or other ways of of capturing that growth with probably minimal investment so from a product perspective we really don't see a lot of need for investment if there's additional data required We are generating it through investigator-initiated grants, which generally are funded by investigators and we provide a device.

Thank you. Question from Ian. Cash receipts have fallen for two quarters in a row. Can you provide details as to why with sales renewals increases this has occurred, particularly since previous quarter had a record TCV?

So I'll pass that to McGregor.

Yeah, thanks, Ian. The answer to the variation in receipts from customers is down to timing. We've looked very closely at that. Some customers pay for a significant portion of their contract in advance and others pay over time. So it is ultimately a question of timing. Internally, we also track day sales outstanding. That metric continues to improve, which gives me confidence that overall we're managing our receivables correctly and well and that receipts from customers. Therefore, the fluctuation of receipts from customers really is just a function of the timing of invoicing and payment and the nature of invoices. So we have seen variation in the mix from quarter to quarter, which is the result that you see.

Next question comes from John. Has the board considered listing on NASDAQ where the market has a better knowledge of how to value a tech business such as IPD?

I'll take that. So yeah, John, thanks again for your question. This is something that has been discussed in the past. The issue with US markets, you need to be considerably larger than we are to attract the kind of interest that's necessary. There are many Australian companies that have tried that with limited or no success. We have a very supportive shareholder base here. And when a medtech company like ours starts to perform, the share price performance can become very meaningful. So it's not something we're considering at this time.

Thank you. Next question comes from Chalky, he has two questions. Good to see Impediment progressing well with the expansion of SOZO. These expansions, including body composition and heart failure, being two such examples, can you please confirm if there are further proposed SOZO expansions into areas such as sarcopenia and frailty screening, pediatric growth and fluid disorders, liver disease, and pregnancy monitoring? just to mention a few. If expansion beyond body composition, heart failure and lymphedema, how challenging would hardware and software be? And his second question, it would seem that the expansion potential for the SOZO device and software platform are numerous, which could add significant opportunities moving forward. If the organisation has addressed the potential for SOZO expansion beyond the current capabilities, how cost prohibitive, if at all, would it be to affect the necessary hardware and software changes?

Okay, great. Thanks for your question. So sarcopenia and frailty come under body composition and also in heart failure and are differently on our radar and our device does actually measure that. One of our clinical sites that's using it for heart failure is actually measuring frailty under the frailty index for heart failure patients and we've got clinicians in NYU using sarcopenia and frailty as they look at doing transplant patients. So it's definitely there and it's under the radar. And we are working on how we kind of tweak or adjust the outputs on the SOZO software to do that. Pediatrics are always difficult. And we've kind of, we keep an eye out on other opportunities like venous insufficiency and end-stage renal disease. But as a very small business, we have focused and prioritized ourselves on lymphedema and body composition and heart failure based on the major trends that we're seeing and the likelihood of clinical adoption within the US healthcare system. In terms of these growth opportunities, hardware and software aren't limiting factors. The devices now already exist. The Sozo is a current device and the Sozo Pro is a new device. Both are now in the market and are being used and adopted. So we don't need any devices. From a software team perspective or software perspective, We don't actually need any new applications. We've already got these software screens developed. We have a new head of product, our chief product officer, Scott Savage, who joins us from a very long history at Google and Mabel and ResApp more recently. And he has built a really great mindset and capability around any software development that we need in terms of streamlining and accelerating that. So really, we're not aiming on investing a lot of work on software development. Really, right now, it's just tweaking and refining the outputs with the team that we've got and the data that we've got. So hopefully that answered the questions.

Thank you, Parmjit. Next question from Peter. Every day there are thousands of decisions made by caregivers as they receive a breast cancer survivors, whether to sozo test or not. If each of these daily decisions will be determined whether our company's success, it should be. therefore for shareholders needing to understand how well the company will do it is a some base line tests completed and the sum of the follow-up tests completed is the most important indicator of the future for our company can you please share the number of baseline and number of follow-up tests this last quarter split into us and the rest of the world and can you commit to providing this on a continuing basis

Thanks, Peter.

Look, monitoring patient numbers, as we've mentioned, is a very important part of what we do and we monitor very closely and it's really tied into monitoring the health of the programs that our customers deploying which we call our lymphedema prevention program and so our clinical sales specialists work very closely with our customers to once the devices are installed get the first measurement and then to monitor progress against the protocols And as the reimbursement improves, we will see hospitals continue to develop and implement and comply with these protocols, and we'll see an improvement in the overall utilization of the devices. It's information we track internally, and the slide that we provide gives a very good idea of how overall measurement use is growing.

Thank you. Question from Tom. Scott, how long for your team to hit its straps and do you have a target of US units per quarter?

Yeah, thanks for the question, Tom. As I mentioned, we are in the process of building out our team and it always takes time, even for highly pedigreed, experienced people with relationships in their areas to really start to hit their stride. So it'll be a little bit staggered as a function of when people have come on and when we get them up to speed. But I think in round numbers, I think it's realistic. for people to land in that 8 to 10, perhaps even 12 on the upside. Number for devices sold per quarter, I think that's a reasonable target. I think it's achievable. It may take a quarter or two to get there, but I'm confident we can.

Yeah. Thanks, Scott.

A question from Paul, really all the new areas of expansion, heart and wellness, how much investment do you see that requiring?

So heart and wellness, heart failure, really, as is noted, it's going to be around field force and getting reps out to the market. In terms of heart failure, we are doing, as I said, measured commercial trials because there's already reimbursement coverage. Medicare coverage, Medicaid coverage. Many of these heart failure patients are over the age of 65 and are generally covered by Medicare, Medicaid across the United States. The clinical data already exists. We know from previous data that was done by the organization that there is a measure that we call HFDex, which is a measure of extracellular fluid over total body water, which is high in heart failure patients. And a number over 51 has a fourfold increase likelihood of readmission. that we have also shown that um our hfdx is twice as sensitive as weight which is really kind of one of the key measures that's used to date in terms of managing or decompensation for heart failure decondition for heart failure so the data exists we've checked it out and validated it with a cardiologist and i've had a number of discussions with the teams around that the reimbursement pathway exists what we are doing now is just starting the commercial pilot so From a heart failure perspective, I think we've got what we need. You know, there's always opportunities to add more data and we're looking at investigative trials to do that and also talking with payers to see where we don't have some payers covered, you know, how can we get that extended in partnership with a number of clinicians. who are very, very interested in using the device and actually, you know, reached out to us around that. In terms of the body composition space, we're looking at, you know, building this out and building out the teams. A lot of our existing reps already call in that space. So within the hospital space, it's about taking that current sales force and moving into the next department. So taking on those adjacencies, both, you know, the lymphedema, but over into bariatrics, weight loss and other clinics. In terms of that med spa and lifestyle medicine space, that's where we put the additional dedicated reps. A lot of these are actually large chains in the United States. And so really, it's not about going out and targeting the one to one kind of individual clinics, but really looking at these kind of corporate deals. And so the attendance of these conferences is actually critical. particularly these ones that are coming up over the next couple of weeks to really look at how we build up those relationships and do that fast. So it's a big area of focus for us. In terms of product, I know that we don't actually need to do anything else with our product. We've got a great product. The software already exists. We will continue to kind of tweak some of these measures, particularly as we look to get that sarcopenia indication and make sure that we continue to differentiate ourselves in the market. But that's really leveraging the existing software team that already exists.

Thank you. Another couple of questions for Scott. We'll take them one at a time. First one, as a result of receiving greater than 90% coverage in the nine largest states, can you speak of one, likely improvements in the efficiency of customer conversion, e.g. the number of sales visits required before conversion, and two, likely percentage of customers signing from their own inbound inquiry versus your sales team outbound sales? Thanks.

Yeah, I think, look, the improving reimbursement landscape certainly is a bit of wind in our sails. It's very helpful. In the end, it's sort of a supplemental question that the hospital needs to do their own due diligence on and decide the value of it. And what I mean by that is that the sale, first and foremost, is really a clinical sale. The clinical stakeholders have to believe that lymphedema is a legitimate problem in their facilities. It's one that they want to address. And they want to make sure they validate our technology as the best solution to address it. That's really kind of the long pole in the tent in terms of how long everything takes. Reimbursement, certainly having it does retire a key objection, but I don't know to what degree that will accelerate sales. It certainly won't hurt, but it's hard to put a value on how much and how fast it will accelerate the process. And I'm not sure I caught the second question.

No, I haven't given it to you yet. So it was a follow-up from Andrew. Is that eight to 12 units per sales exec and how many sales personnel are there now?

Yeah, that would be the number that we're going to shoot for for each one of our people. Right now, we've got eight people. We have two openings. We did have the loss of a key person who'd been with us for six years, our Denver-based Rocky Mountain KAE just a couple of weeks ago. We have a strategy in terms of how we're going to cover that area. We do have a Southern California candidate in the queue that we like. Parmjot actually just got done interviewing him within the hour. So hopefully we'll have that key slot filled here before too long. And then we've got one more opening we need to fill.

A question from Ian. As Texas has now broken 80% reimbursement and McKesson's the base there, any feedback on activity there and also with ITNs in general?

Yep, absolutely. So let me answer this one. So absolutely, US Oncology is kind of one of our key customers in the US healthcare landscape. And we actually have Lisa Prom as coordinating all of our US Oncology activities. We are attending the McKesson Accelerate Conference next week. So we are going to be presenting at the US Oncology, at this conference, and they have a program that they have initiated around managing the high risk patient. And so the SOZO product, both in terms of lymphedema and body composition fits really well. That webinar that I highlighted in the presentation deck was actually given by US Oncology surgeons. and their PA who manage this high risk patient population. In terms of Texas, it is one of the biggest US oncology areas and one of our top sales reps focuses on the Texas market. So with the addition of the Blue Cross Blue Shield provider that has now provided coverage, we are getting a lot of positive momentum in that market. And this is a market where reimbursement does matter. And we are seeing that. I was actually, I've been in Texas for the last, a couple of weeks ago and meeting with these surgeons. And so this, you know, they're in that program and they need to see that adoption and that reimbursement come through for them to grow out and expand that opportunity. But very much an area of focus with a dedicated project manager at the organization and also a dedicated key accounts exec, Lisa Prom, our most experienced exec, taking the lead on getting those sales through. terms of the other idns we had as i noted in the the deck we've got a couple um additional msa so we've got 27 in total um a couple of them like ascension and combined in indiana combined with the indiana reimbursement going up to 90 along with an amazing new rep julie davis gives us a lot of um cause to be very pos optimistic that uh we will be able to get out there and drive sales but i might just let scott scott add in i think you probably but the same, right? A lot of these IDNs are starting to come on board. Got some big ones sitting there where they've got one or two devices and really We just need to kind of grow it. But I don't know, Scott, you want to add?

Yeah, no, you're right. I think you referenced Ascension. Julie Davis had worked with me with a past company where she did a really nice job in Ascension facilities throughout the Midwest, particularly in her home state of Indiana. I do think we also have a big opportunity out in the western U.S. in the Intermountain Health area where we've got one device in play right now pending a successful implementation and associated reimbursement. We have every expectation that we can grow that number to double digits, perhaps within the next quarter to certainly before the end of the fiscal year. So I think the key to our success is going to be really going deep into those IDNs where we have MSA agreements. Again, Lisa Promise done a masterful job of providing us with that entry point. And it's really a sales execution issue now.

So a follow-up on the same topic, while it would not be the same for all, what is the level of cover that IDNs look to to start their programs?

You know what, a lot of MSAs have been started without the coverage, right? So high level of coverage. And so, because a lot of it, as Scott said, drives around clinical need and clinical adoption. But what you find is that when you're at the cold phase, there are those IDNs that, know these assessments go through a value committee right and so they do look at that reimbursement um and they do look at the the financials coming in and you know we're not hearing a lot around you know the costs in the us healthcare system and if there's an impact but but it does matter and so that reimbursement does matter um they will vary um on what they're doing but you know in terms of when we start to see outreach from clinicians particularly around some states like texas they are, when the reimbursement changed, we got the outreach, more outreach. So it kind of varies, right? I mean, yeah, I might slip it at that.

Okay. And a question from Gary. Do you have a value of the number of units in the sales pipeline?

We did put that out last quarter, actually, and it didn't come in this one. So over 700 in the opportunity pipeline. we didn't actually put it out this current quarter. So we do track that very closely. And the goal for us is to get those opportunities converted to sales a lot faster. And that's been the big area. And Scott is out in the field most days, helping the team get that over there. And so just in terms of the ones where we've got active opportunities under management, it's high. And then we noted in this current 4c where we've got these idn networks um master services agreements in place they represent over 1500 devices that can be put into their system so the opportunity is there and the opportunity is large it's a matter of of trying to accelerate this execution um with with better you know with this new sales team with this higher cut reimbursement coverage and just and some some more urgency of action

And just a question again from Paul. You mentioned that sales can take time. Respectfully, you highlighted this a number of quarters ago and that the timeline seems to be ever extending. As a shareholder, this is concerning. How many more quarters do you believe we need to wait and see meaningful sales come through?

You know, we started to see adoption and pickup. And so, you know, we were looking at this quarter, like the previous quarter, we had record number of sales and record number of TCV in the US system. We actually thought we were on track to get the same and continued growth. And I think as Scott's highlighted with the new reps, we are expecting this to accelerate and to get all those reps to get on board and get some meaningful adoptions.

Great. So a question from Andrew, apparently we missed one of his questions, but I'll get back to that. Thanks for answering my follow-up. I refer back to my initial question about linear versus exponential growth. Are we expecting 80 to 100 units per quarter static or growing? And are we expecting any fails as they were mentioned in the previous briefings, i.e. 10 plus single sales point, single point sales?

Yep, so if you kind of add up the numbers, it should be at that run rate when everybody gets up to speed. And there are definitely some multi-system deals sitting in those offerings. We had the big one that went across with Legacy in the last quarter with the nine-system deal, which is now an active implementation of growing into a very healthy program, which the rep actually sent us a note. Kevin sent us an update note around that this morning. There's a number of them where they are starting with four to five and then they will grow out. So what we typically see is they'll start with a smaller number and then they will keep adding them on. And that's what we saw with Robert Wood Johnson. Started with one or two and then basically by the end of the last quarter, they had nine to 10 across the whole system. It's unusual to get all 10 at once just because it takes time to get all the adoption set up and each clinician often needs to get buy-in. It typically tends to be a smaller number that kind of grows out within the system. But that's in breast cancer-related lymphedema, but we do see body comp really picking up and then heart failure also picking up into the next quarters, but body comp definitely.

Question from Andrew. Are you looking into data from test results, mining for research, and how can that be utilized?

Absolutely. So as we look at, so we've got, you know, gosh, over a million tests and a significant data set that sits in behind. And with Scott as part of the new team, we've restructured our team so that the data R&D and data analytics people now report into Scott Savage from a product perspective. So we basically both look at our existing data set, but we also work with clinicians that are using the SOZO device to look to see how we can refine offerings. So some of the areas that we're working on that we're using our data and correlating it with DEXA is around trying to build a bone mineral density application, because that is the one thing that we think would add value as we kind of build up the offering. So we absolutely look at that. We also look at that data when we're looking at creating a proposition towards customers and one that we're in discussions with is around Kaiser, where we've got clinicians already using their device. And so we can show them what that lymphedema program looks like, the rates of lymphedema that have occurred within the system, and then the savings that they get from early detection and prevention. And we've used that as part of a pitch towards the corporate head office. So we absolutely take a look at our data, both from a development perspective, but also from a sales and marketing perspective. And so that one site that Scott's referencing in terms of Intermountain will look at that data as well. So they will get the program going and then they'll look at what, you know, from a real world evidence perspective, how successful has their program been and therefore look at how they roll that out across the network. And so we have a whole team that goes in and can support that from a data and analytics perspective.

Part of this question has been answered, but there's a second part that hasn't. This is from Andrew. This is a disappointing quarter. What can we expect the next quarter? Which I think you've answered. And where can you see future savings occurring?

Yep. I might just pass it over to McGregor in terms of savings. But noting that we are constantly looking at our cost structure, very constantly, and very tightly managing that cash burn. But McGregor, I'll get you to jump in.

Sure, I think it's just to re-emphasise the fact that we are constantly looking to manage our costs very carefully. It's important we don't go too much into the specifics of that, but to be assured that wherever the opportunity presents itself to achieve savings, through perhaps increasing the number of roles where it makes sense, like in Australia, as we've done, we'll continue to do that and to ensure that we're focused on only incurring costs on things that are really directed towards driving sales in the near term.

And a question for Scott, can you explain the sales process given the complicated nature of the sale and the long lead times? How do you monitor the sales progress on a weekly basis?

Yeah, it's a great question. It really begins with a breast surgeon champion. Typically, the breast surgeon is the quarterback of the care team. They're the ones who are most inclined to get behind a lymphedema prevention program and use their political capital in the hospital to start the process. Really, that's the clinical checkbox. We have what we call a CLIF process, C-L-I-F. It's clinical, finance, legal, IT, and finance. And we sort of walk through those steps progressively. We have that documented on a dashboard that Mike Bassett, Parmjot, and I view religiously. We have... green, yellow, and red in terms of where we are in the process with each one of those key stakeholders. They can take varying amounts of time, but we are very much on top of where we are with each and every one. And we don't graduate an account from the upside or long shot category as we have it laid out into the forecast until we have all those boxes checked and we have four greens across the board. So that's sort of the methodology we use

to track our targets and it's all automated um it's all linked comes out of crm um and we do regular kind of calls with each of the sales team just to make sure that it's tracking through we have a dedicated it person that that supports um all these these it assessments within each customer and then contracts and legal person that accelerates that legal process and finances really, you know, making sure that each system has their budget approved as we work through the value analysis committees.

A question from Andrew. Is there any plan for recurring revenue from rest of world markets as I don't see a pathway to profitability from single unit sales for a rest of world sales?

In terms of recurring revenue, we are constantly kind of looking at that market. It's a non-reimbursed market, particularly around lymphedema. So a lot of it's really around that capital sales model. Right now, we've kind of kept it as a focus on a capital sales model because it's done through a distributor. But we do look at that. The challenge is, particularly in Australia, is lymphedema is kind of reimbursed under the chronic care management code. Under Medicare, it's really not available to be reimbursed because it's all covered under the state-based healthcare system rather than the Medicare-based system at the national level. So, you know, we constantly keep kind of reviewing it and we would love to get it to that, but right now it's really the capital sales is the key kind of area of focus. We are looking at that body composition space to see if there are opportunities to work with providers, distributors, and potential customers around getting it to a recurring revenue kind of SaaS business model in that space. But the US really at the end of it is the core market for us because that's really where a lot of their growth is.

A question for Jonathan. Do you expect to separately report revenue on body comp and heart failure?

I'll pass that to MacGregor.

Yeah, as the revenue from these other indications becomes material, I think we will look at the best way to reflect that revenue.

And I think that covers all the questions we have, and given it's three minutes to the hour, I'll pass back to Palmjot for closing remarks.

Right, okay. Thank you, everybody. Thanks for the questions and your continued support. Hopefully today was a bit of experience with the new Investor Hub and webinar function. Keep an eye out on our updates on Investor Hub. We will look to put more regular updates and a lot more narrative so that you can better understand some of these new market opportunities like heart failure and body composition, you know, and why we're so excited about this space. We look forward to catching up again on the next quarter. And, you know, Scott, it's over to you to get those sales going.

yeah thank you thank you very much thank you very much that concludes our call for today right