ImpediMed Limited

We'll be referring to the 4C Quarterly Activity Report and presentation we lodged this morning with the ASX. The presentation is a summary of the more detailed 4C Quarterly Activity Report. After our remarks, we'll be answering questions. You can lodge questions throughout the presentation using the Investor Hub QA function. So let's begin with slide three with a quick overview of the agenda for today's call. We'll start with a business overview, including key highlights, and take you through the updates for the three business segments. I'll then hand over to McGregor Grant to present the financials. And to finish off, I'll cover the outlook for the balance of the initial year before commencing the Q&A session. Now, turning to slide five, we will touch on the key highlights for Q2. We have made a lot of progress as a business to capture the value of SOZO and the new SOZO Pro in three large and growing market segments, breast cancer-related lymphedema, heart health, and wellness and weight management. While the rest of the world's sales were positive, and while US BCRL sales for the quarter were disappointing, we remain very positive about the growth potential due to strong clinical demand a strong sales team led by Scott Long, a growing emphasis on cancer survivorship and reimbursement now well in place. There are over 700 opportunities in our pipeline that we are focused on converting as well as growing with the extensive conference attendance and direct sales activities underway. In terms of the financials, Gregor will go through the metrics in detail later in the presentation, but clearly there were some positives and some negatives. The sales metrics are well below where we would like to see them, but the quarter-on-quarter revenue has increased as did customer receipts, and importantly, we saw a significant reduction in operating cash flow extending our runway. This will continue to be a strong focus for the business. We are very, very encouraged by the increase in reimbursement, now at 93% national coverage. Now, more than ever, reimbursement is critical when hospitals are evaluating purchasing decisions. Importantly, SOZO and BCRL are new service line opportunities, not a cost item. National coverage now sits at 93%, representing 323 million covered lives. This is another 5% increase on last quarter and gets us closer to our goal of 100% coverage for breast cancer survivors. In terms of sales, overall unit sales were up on the prior quarter, but US sales were softer than anticipated. West of World sales were stronger and on the back of ours, Australian distributor ordering SOZOs as well as our new SOZO Pros in advance of our expansion in 2020. the Australian heart health market. In the US, we saw a continuation of what we experienced last quarter. Contracts approvals were being delayed due to budget pressures or constraints in hospitals, but the BCRL opportunities are there and will as evidenced by our opportunity depth and continued discussion and dialogue with clinicians. We remain confident in the BCRL market, supported by a market outlook that operating conditions for U.S. healthcare providers will stabilize in the coming year. With reimbursement at 93%, SOZO is a profitable service line, and we continue to reinforce this messaging with providers. We are accelerating activities in the growth segments of heart health and wellness and weight management. Over the last 12 months, we have made enormous progress. Our first heart health sales are now actively in progress. and wellness and the weight management team is in place, and the go-to-market activities and sales are well underway. Today, we launched a new revamped impediment website and wellness microsite to support our growth in these areas. On other very positive news, we received FDA clearance this morning for our new bilateral lymphedema algorithm. enabling physicians to monitor the subset of patients who are at risk of bilateral lymphedema. On Monday this week, we also filed a new 510K for an expanded body composition offering that better targets that wellness and weight management market as well as cancer survivorship. Turning to slide six. The value proposition that the Sozo Digital Health Platform provides is becoming more evident as we address now three of the fastest growing healthcare needs across the world. Cancer survivorship, GLP-1 therapy, and heart failure. The Sozo Digital Health Platform is a best-in-class platform providing valuable patient information for clinicians. The company has made a significant investment over the years in Sozo Pro, and we have now launched this into the market. The inbuilt scales, the ability to measure patients up to 220 kilos, and the removal of the cardiac implantable contraindications, beta helps us tie back the heart health and wellness and weight management opportunities that are significant. Clinicians find the device quick and easy to use, and in larger hospitals, they continue to add their devices across new departments with different use cases. We're in a unique position. We have the only device of its type, a BIS device with multiple applications that stand apart from the competition in terms of multiple FDA clearances, accuracy, usability, and applicability. We have a platform we can build off to attack these new growth segments. With over 600 devices now across the U.S. healthcare system, including SOZOs and 18 of the top 25 U.S. hospitals, and 27 master service agreements with major IDNs covering pricing, IT, and BAA approvals, which are contract approvals with customers, making it much faster to deploy additional devices. Now let's turn to slide seven. where we look at this value proposition across these three market segments. You're all very familiar with the BCRL value proposition. SOZO offers the hospitals a revenue-generating early lymphedema detection program to improve breast cancer survivorship. This is FDA-approved, guideline-endorsed, and clinical validation. All of the hard work has been done. We are now executing these into sales. The cardiometabolic health area covers both heart health and wellness and weight management. In wellness and weight management segment, this value proposition is different. In this segment, Sozo is providing objective clinical data to allow clinicians to engage, inform, and ultimately retain their customers. This is primarily an out-of-pocket market segment. For heart health, weight is not a reliable indicator of fluid status, particularly in a GLP-1 world where weight can and does change rapidly, both up and down as compliance decreases. SOZA provides a valuable non-invasive fluid and body composition insight to aid clinicians to guideline to optimize guideline-directed medical therapy, essentially helping physicians to catch increases in fluid, enabling them to adjust therapies and reduce the potential for readmission, a major drive of US healthcare system costs. Now let's turn to slide eight, and I'll give some more details about the BCRL operating environment and how we are positioning SOZO. Although we had a sluggish quarter for US bestial sales, we continue to believe that we are very well positioned and there are several tailwinds that will drive long-term growth. Clinical demand does remain strong and there continues to be a growing acceptance for the need for cancer survivorship programs. We have built a strong foundation across many of the top hospitals in the United States. We have guideline support and we have seen a significant improvement in reimbursement over the last six months. And now more than ever, reimbursement is critical when hospitals are evaluating purchasing decisions. As noted, coverage sits at 93%, representing 323 million covered lives. Since the beginning of the financial year, we have had significant increases in the depth of coverage. States with over 90% coverage has increased fivefold from seven to 39. Last quarter, you met Scott Long. Scott has built a strong sales and clinical support team. with considerable experience in breast cancer medical devices and has built out our BCRL pipeline with his team. All these factors combine to paint a very positive picture for BCRL. In the short term, we have seen some headwinds. Hospital budgets are under pressure. Wage inflation and the cost of imported products, along with the reduction in grants and funding for Medicaid insurance, have impacted hospital budgets. However, we remain confident in BCRL and are supported by the market outlook that operating conditions for U.S. healthcare providers will stabilize. Importantly, we continue to reinforce the messaging to multiple stakeholders within hospital systems that this is a service line, which strengthens as reimbursement increases. The good news is we have a very strong story to deliver. We are launching SOZO Pro into lymphedema, where in addition, the scales better enable SOZO to fit with the established patient workflow, where weight is taken at the start of the patient journey. In addition to improve customer experience and stickiness, we are improving the EHR interface to optimize clinical workflow, and we are also building out AI programs to improve customer responsiveness. Over to slide nine. I want to touch base a bit on cancer survivorship. One of the areas that we see the potential to increase penetration is medical oncology. This also helps us build program depth, so both in the breast cancer surgeons as well as downstream into the medical oncologists. Although Breast Cancer Care Pathway starts with breast surgeons, medical oncologists usually have the long-term relationship with a patient and support survivorship. Cancer survivorship is experiencing a significant upward trend. with five-year survival rates for all cancers combined now reaching approximately 70%, up from 50% in the mid-1970s. Driven by early detection, advanced therapies, and an aging population, the number of people living with a cancer diagnosis is at a historic high. This shift treats many cancers as chronic conditions requiring long-term management. Across the U.S., there are now 1,500... commissioned on cancer centres that require a cancer survivorship program for accreditation. Breast cancer is one of the largest cohorts of survivors, with physical issues such as lymphedema, maintaining muscle mass and bone loss, in addition to the emotional and social needs that need to be addressed over the long term. Sozo fits in very well with survivorship, both in BCRL as well as in body composition changes that occur during treatment. tying in with a renewed focus on the positive effects of exercise during chemotherapy. We are actively expanding our messaging on body composition, both to breast surgeons as well as medical oncologists, with over three abstracts accepted at ASPS, news that we found out this morning, which is fantastic. Following a detailed voice of customer survey with medical oncologists, we have refined our body composition offering to these clinicians, And on Monday, we filed a new 510 regulatory filing with the FDA to further support this. Now, going to slide 10. Heart health and wellness weight management opportunities are compelling and are a strong fit with SOZOPRO. Heart failure is a substantial opportunity as it poses a significant economic burden in the United States, with costs projected to reach $70 billion by 2030. One of the primary guides to determine rapid changes in fluid level in patients, a sign of decompensation, has been weight. However, cardiology patients are now indicated to use GLP-1s. which basically reduces weight and also potentially causes a rebound weight gain post-discontinuation, making weight a less reliable surrogate marker for fluid, and additional non-invasive data is needed. Feedback from U.S. cardiologists on Sozo Pro has been very positive. They've been impressed by the clinical utility of Sozo and its ability to monitor fluid levels as well as body composition. We have the first heart health sales in progress and we are very positive about the potential and have established a lean, dedicated heart health team to build up this opportunity and validate the go-to-market pathway. Now moving to slide 11, wellness and weight management. Our view on wellness and weight management opportunity only gets brighter as we spend more time with potential customers. In the U.S., there are over 30,000 sites of care have been identified across various market segments, including specialty medicine, exercise oncology and rehab, weight loss clinics, wellness clinics, IV clinics, and sports medicine and research. The segments we'll be focusing on directly at the moment have an addressable market size of over 200 million. Wellness and weight management activities have commenced with the appointment of an experienced commercial lead managing a team of three dedicated body composition reps in the US. This team has already actively identified over 3,000 leads in this space, which they are validating and converting into direct sales. Feedback has been very positive from the first three conferences the team has attended, with another six conferences planned for the second half of the year. With a strong pipeline in place, we're expecting sales to build over the calendar year. Over to slide 12. We are tailoring our messaging for different market segments, particularly within this wellness and weight management space. This is an example targeted towards lifestyle medicine, which is a more clinical approach. Onto slide 13. We're excited to share that we've launched a new wellness microsite. This is a different look and feel of a wellness offering that's targeted towards the med spa space. As I noted, all of our new sites, including our new Impedimed website and this wellness microsite, have been launched today. Many thanks to our marketing team who have done a lot of work in getting these ready to go. I'll now turn over the presentation to our CFO, McGregor Grant, to go through the financials.

Thanks, Pam Jott. We'll start on slide 15. As mentioned last quarter, we expected a substantial improvement in cash outflow this quarter. The result was slightly better than we forecast at $2.9 million and well down on the $5.6 million reported in quarter one. Improvement was driven by higher cash receipts that rebounded to $3.8 million, non-recurrence of a one-off payment for long lead time electronic components, and the expected receipt of the $1.2 million in relation to the R&D tax incentive. You will notice that staff costs of $5.3 million were slightly above the previous quarter's $4.9 million. This was largely a result of redundancy payments later in the quarter. Financial discipline continues to be a core goal of this 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 strengthening Australian dollar relative to the US dollar resulted in further unfavourable impacts on cash, as well as affecting items such as ARR. The company's cash balance of 31 December was $18.9 million, equating to 6.5 quarters of operating cash flow. Moving on to slide 16. TCV for the quarter reduced from $4.7 million to $4.1 million. The reduction was a result of fewer devices sold in the quarter and a smaller number of contracts due for renewal compared with the previous quarter. We continue to be very pleased with the quality of accounts initiated or renewed in the quarter, together with continued solid price increases on renewal, averaging 14% for the quarter. Contracts in place at 31 December 2025 are expected to generate core business annual recurring revenue, or ARR, of $14.4 million for the 12 months to 31 December 2026. That equates to a 15% year on year increase. The stronger Australian dollar reduced the increase in ARR as the FXX is applied to the whole balance. Moving on to slide 17. Revenue for the quarter was a record at $3.9 million, up 18% year on year and 8% on the previous quarter. This was despite the US revenue result being affected by the Australian dollar, as we discussed. The strong increase in rest of world revenue, up 67% on quarter one, was on the back of the company's Australian distributor ordering Sozos as well as Sozo Pros for expansion into the heart health market. As forecast, cash receipts from customers rebounded to $3.8 million, up 12% quarter-on-quarter. On to slide 18. As Palmjot has already discussed the sales, as you can see, patient testing continues to trend upward, up 1% on the prior quarter with a three year compound growth rate of 15%. The Thanksgiving and Christmas holidays affects the testing volumes as it has in previous years. I'll now pass back to Palmjot to wrap up before we go to questions.

Thanks, MacGregor. Over to slide 20, the outlook for the rest of the financial year and some comments on the company. When we look back at the outlook statement for the first half, we've achieved most of the goals that we've set with a small but very focused team of 75 experts across our business. Sales for the quarter were behind our expectations, but we are confident of growing the business with over 700 validated opportunities in the pipeline that the team is actively working through. These opportunities will continue to grow with the upcoming conference attendance and direct sales team promotion. Improvements in reimbursement were excellent, and many thanks to our market access lead, who was remarkable. And we continue to focus on expanding coverage with a target of 100% reimbursement across breast cancer-related lymphoedema. Heart health and wellness and weight management opportunities are exciting growth opportunities that are being executed with the data and product that we have today. Heart health already has a CPT code, which has extensive coverage. We will continue to validate and refine the offering and the go-to-market pathway with customer feedback as we move into these new market segments. And we do all of this while driving our financial discipline and constantly refining our cost base. Penny, thank you for your support. I'll open the webinar up now for questions.

Just a reminder to ask questions, use the Q&A function on the top of the webinar page. We'll endeavour to get through as many questions as possible, and if we don't answer your question, then we'll follow up offline. The first question comes from Shane Story, and it is, can you describe the clinical settings where the body composition aspect is to be commercialised first? We'd like to understand how this assessment is introduced in a typical GLP-1 patient care pathway, for example. Thanks.

Absolutely. So the body composition, as I noted, has area opportunities, have over 30,000 sites of care. Sozo is a prescription medical device. So we are targeting areas where there is clinical oversight for the product. In terms of where it's being used, it's basically being targeted towards lifestyle medicine is a key area, if I can give you an example of that. A number of these hospital systems, many of which we're already in, have got extensive lifestyle medicine practices. Part of this GLP-1 is being prescribed quite extensively around the United States with over 13 million people having GLP-1s. The SOZO is used both in terms of helping support the baseline body composition for patients, so looking at their muscle mass, and fat mass and their weight, and then helping them track that and train that as they go through treatment. And so we've got some great case studies, and including on our new website, you can look at patient tracking of GLP-1 use, looking at their fat and muscle mass. and then helping both create the patient understanding of their journey. It helps create stickiness for the customers, our customers in terms of clinicians, where patients will come back in and get repeat measurements and can be monitored for their care. The other area that we are actually extending the body composition space is really linked around cancer survivorship. As I noted, we've done some extensive voice of customer research with medical oncologists, and really they're interested in looking at the body composition outputs, particularly as these patients reduce muscle mass during chemotherapy care. And now exercise oncology has been validated as an outcome, as a potential mechanism of helping address muscle mass loss. They are using body composition to help monitor patients' kind of muscle mass and that. So the three abstracts that were accepted at the ASBS conference, which is coming up in April, early May, we've actually got use cases of clinicians that have been using the body composition aspect of our device to help support cancer survivorship. So kind of multiple areas and right now there's kind of multiple use cases. What we're really doing is focusing on which ones are resonating the most because we have got a very small team and then which ones we can kind of really focus in and target in more depth.

The next question comes from Jeremy Thompson. It is, the two first half results following the NCCM guidelines released in March 2023 represent a growth rate of approximately 25% year on year. Noting the reimbursement coverage progress over the last two years, is the revenue growth rate expected to increase above 25% current rate?

We have got, we would hope so, we've got a very strong pipeline in place with over 700 opportunities identified and a new sales team. And so we are kind of confident that this will continue to grow, the BCL business in particular. We were also looking to see growth from those new indications of heart failure and that specific body composition type of thing.

We have a few questions from Andrew Hewitt. First one is, if so-so is a cost benefit to hospitals, why is budget constraints an issue?

Because when they first look at making the assessment, the hospitals will always look at what budget is allocated. So it is still there as an issue. And so what we are just making sure we do is reinforcing the message that it's a service line. so i.e. a revenue-generating opportunity towards hospitals. So we continue to make sure we're very strong in that messaging. That increase of reimbursement up to 93% across many states, with multiple states over 90%, is going to be a really strong reinforcing point in this one.

A follow-up from Andrew, what do Australian hospitals see compared to US in the value of SOZO as we have 500 machines servicing 30 million people compared to 300 million people in the US?

Yeah, I think Australia has actually benefited from a a number of KOLs and clinicians, you know, led a lot by the alert system and Louise Kohlmeier at Macquarie University and Professor John Boyages, who have really established a very strong model of care in the prevention of breast cancer-related lymphedema. So there is a very strong established ecosystem in Australia that has rebuilt this and it has been a focus for a large number of years in Australia. Australia was really unique, and now the US is moving up towards that space. Australia basically was just kind of clinical practice and standard of care. The US, fortunately, is now moving up to standard of care, but as I noted in previous slides, Quarterly, I went up into the European market, and it's really not standard of care there. So that's why we're kind of focusing primarily on the U.S. market. And with the NCCN guidelines, NAPPC, health care reimbursement, it is now becoming standard of care, but it is just taking time.

I have noticed on social media a biz measuring device that's available to the general market. Looks a little bit like a standard weight machine and you pull bar from the base that's attached to a cord. I realise it's not FDA, but what are the competitors in both the medical and cosmetic side of the business?

Yeah, so in terms of that body composition space, it is highly competitive. So we are not – so there's a number of these devices. I suspect the one you're seeing may be the human health one, which my husband also says he's being spammed with. So they are very cheap, kind of $200 devices that are primarily targeted into the telehealth space or at-home consumer space where patients are tracking body composition. They're not as accurate. You know, we've had feedback from clinicians – They're not a device that you put in the home. And so our Tybit space and the weight management space is a device that supports the clinician to generate validated clinical data that enables them to help retain their customers and increase their revenue flow. In terms of that clinical setting, the kind of devices I mentioned before is the InBody seeker to need it. So there are devices that are out there in that clinical space, the kind of large established devices that fit within that clinical workflow. I guess maybe just one final point, but our differentiating point within that clinic, and it is resonating, is the fact that we are the only device that's got that FDA clearance. We are a prescription medical device. That clearance and that accuracy is really resonating with these clinicians.

A question again from Andrew Hewitt, but also I'll roll Rod W's question into it as well. They're both asking about what the US sales reps are doing in terms of if there's no sales eventuating. And Andrew mentions that last call, I think it was Scott that suggested that 80 sales per quarter would be a pass. And so looking at this quarter, it would suggest that it's significantly lower than a failure. And also that there was a number of units that were close to sale but missed on the last quarter. If that's the case, the quarter would seem even poorer. Why the fall away? And is there pent-up demand for the pro version? And could this be a cause of the delay of purchase in the last quarter?

Yeah, okay. So lots of questions there. We have got a new sales team. So Scott has rebuilt a new sales team, a very strong sales team that – We do have confidence that they will get up to speed and they will get their sales through. There are a number of multi-system sales sitting in that pipeline. We are chasing that final purchase order signature on a number of these sales. And we acknowledge they were disappointing, right? It was an extraordinarily frustrating quarter, but we are confident and Sales Team is confident that these numbers will come up. In terms of Sozo Pro, we haven't actually marketed that proactively previously, but in this last quarter we have been looking at customers where that Sozo Pro may help get the get the sale across the line. And I'll give you some examples, particularly in smaller breast surgeon offices, where we can use it to replace the scale, where there's limited space. Basically, if Sozo Pro has a built-in weight scale, it can actually fit in kind of better with workflow. And so we are, quite frankly, leveraging every opportunity right now. The market has not been that aware of SOZO Pro. We've done that on purpose just as we kind of get the SOZOs moved out. But we are launching into the SOZO Pro and it is now being offered into the customers.

A couple of device questions. How does SOZO compare to a DEXA scanner?

Really interesting. Comparable, so we've kind of a lot of the data just shows that from a muscle mass perspective that's comparable and we are actually working on an output right now which has got comparability from a bone mineral density perspective, but that's going to require a filing. So we're very confident in that. We're actually better than DEXA at fluid. DEXA does not measure fluid well and that's really one of the areas that we can differentiate and we're kind of working on some updating algorithms that actually improve our output with regards to fluid in that space. So kind of DEXA has been established as a bit of a gold standard. So we're confident against DEXA. We actually think in some areas we're actually better than DEXA. So we see a vision where, particularly in that body composition space, we can replace DEXA because we know DEXA causes kind of radiation exposure to patients, particularly those in the cancer space. You want to limit that. And that was one of the points that really resonated with medical oncologists as well.

Is it possible to link data from sozo to patient Apple Health? And is it something you could look at to create patient stickiness?

Yeah, we are, there's a number of, you know, I think telehealth is growing substantially and this kind of remote wearables and monitoring space. We are actually in discussion with potential partners, particularly around the body composition and heart failure space, both just kind of help manage that patient journey and from the clinic into the home. So we are actually exploring a number of these opportunities with some direct and proactive discussions underway, which, you know, as we progress, we can bring forward to the market.

And a question from Grant Percy. Will CHF SOZO be placed in hospitals and the home?

Primarily hospital, clinical. So SOZO is, just by the virtue of its size, or SOZO Pro will actually be the device with the cardiac implant or chronic medication removed, will be in primarily the hospital and the outpatient department as well as private cardiology clinic department. We do not have an at-home device, but that's one of those opportunities that we're looking at that collaboration on. Like, can we kind of do a follow-up pathway all the way into the home for patients for heart failure. But right now the focus very much, because we're just launching, is hospitals. So within the heart failure wards at discharge and then at follow-up care within the outpatients department where we can track patients' fluid status and hopefully prevent that decompensation and readmission as well as kind of ongoing private clinic follow-up.

That was the final question. There are no more questions. I'll hand back over to Dr. Baines for closing remarks.

Okay, thank you. Thank you, everybody. So just to kind of, I guess, many thanks often to the team. Ed and Peter Mead, who has done a lot of work. So this morning we launched... Whole new website. We've got an FDA clearance on bilateral. On Monday, we launched, we submitted a new 510K. We've got a heart failure, sorry, sales team that is out in the market. We've got 19 conferences coming up over the next quarter. There is a lot of work underway. And so we are working very hard on launching into these new spaces and making sure that SOZO gets to those patients that need it. So many, many thanks to you all for listening.