ImpediMed Limited (IPD) Earnings Call Transcript & Summary

I'll begin on Slide 3 with an overview of the agenda for today's call. I'm going to start with a business overview, including key highlights and take you through an update on each of the 3 business segments. I'll then hand over to McGregor to present the financials. And I'll finish with some closing remarks and cover our outlook for this quarter before [indiscernible]. If we turn to Slide 5. Most I know many of you who have only had a chance to briefly read the 4C activities report. In order to make a step change here from previous reports and that I very purposefully added CEO commentary, both within the report and in the concluding notes. I understand the market is keen to get my takes on the business, and you'll see and hear those things in the report, in this webinar and in the Q&A and meetings with you that follow. So number1, a strong foundation. We start from a genuine strong foundation, FDA-cleared, TGA-cleared CE marked digital health platform now paired with a new executive leadership team focused on turning that technology into disciplined commercial execution. We're playing in 3 segments that are all moving in our direction. Cancer survivor shift towards longer-term patient care, the growing clinical and economic burden of heart failure readmissions, and the GLP-1 driven need to actually measure, not just assume, muscle mass and body composition. Lastly, we're leveraging this investment across multiple indications. What makes this a durable platform itself 642 devices in leading U.S. health care systems, 27 IDN partnerships representing over 1,400 hospital opportunities and an infrastructure we can leverage across BCRL, heart health, and body composition without rebuilding from scratch for each one. And now as we move to Slide 6 and the financials, McGregor will go through the financials in detail later in the presentation, but clearly, there were some positives as well as some areas we'd like to do better. The sales metrics are encouraging, but definitely below where we had plan to see them. Quarter-on-quarter, revenue increased as did customer receipts. During the quarter, we completed the capital raise, raising $15.3 million, of which $5 million was used to partially repay the loan. Regarding sales, overall unit sales of 40 units was up on the prior quarter, with 36 units sold in the U.S. compared with 30% in the prior quarter. Again, this is not something we as a team were or are satisfied. But with 1 thing worth calling out, and not including the 17-unit rest-of-world order we received a few short weeks ago. We're already tracking ahead in BCRL in cancer survivorship unit sales this month compared to where we were at the same time last quarter. It's an encouraging early signal. I want to be clear, though, the commercial team needs to show they can execute on the pipeline across all 3 months of the quarter, not just get off to a decent start, but it's a good sign, and I wanted to share it. On the reimbursement side, we're very encouraged by the continued increase in reimbursement with national coverage now at 95%, representing 331 million covered lives up from 94.3% reported in Q3. This level of coverage supports new customer acquisition and reengagement with existing accounts, given our clinical and customer success teams a concrete reason to help our customers increase utilization. Turning to Slide 7 to discuss BCRL and cancer survivorship. I have spent a significant amount of time with customers and leading key opinion leaders, which has reinforced for me that cancer survivorship is receiving more attention than ever before. Recently, we recruited several highly respected and passionate KOLs who are now working alongside ImpediMed, strengthening our clinical and commercial momentum. It's really important to understand the sales cycle remains complex, involving multiple stakeholders, breast surgeons, among others, champion the clinical case, oncology operations and finance leaders own strategic priorities and budgets, and nurse navigators play a critical role in driving program adoption and day-to-day utilization. I am highly confident in our lymphedema plus strategy, which is resonating strongly with both existing and prospective customers as well as our internal team. Interest in body composition data in addition to prospective surveillance for lymphedema continues to grow as providers increasingly focus on the overall wellness and long-term outcomes of cancer survivors. This demand is being driven by patient needs with up to 60% of cancer survivors reporting a fear of cancer recurrence. SOZO is uniquely positioned to support our survivorship programs by providing objective assessments for lymphedema screening serving as a clinical anchor with an emerging exercise oncology and survivorship programs and supporting broader patient wellness initiatives. We see a substantial opportunity to accelerate our land-and-expand strategy. Our platform enables us to establish deeper partnerships with integrated delivery networks, oncology groups, and health systems. We can tailor programs and pricing to our customers' patient flow and operational requirements, creating greater value, and stronger long-term relationships. As customers continue building comprehensive survivorship programs, SOZO can become a core component and trusted platform within those pathways. This represents a significant growth opportunity for ImpediMed and is a key reason why our new customer success leadership role includes a strong focus on strategic accounts. Importantly, this is a commercial growth playbook I know how to execute and what I believe positions the company well for future expansion. I want to turn to Slide 8 that helps illustrate the patient cancer journey and why we have so much opportunity for growth. I mentioned a moment ago, how many different stakeholders are involved in a complex sale like this, and I want to actually show you what that looks like. This is the kind of map I want our commercial team working from on every strategic account. Real clarity on who the champions are, who influences the decision, who is key for a very successful implementation, and who controls the budget. It's exactly why we built our customer success and strategic accounts function the way we did because winning here isn't about 1 relationship. It's about coordinated engagement across clinical operational, financial, and executive stakeholders, all at once. This is what allows us to work within a customer's own framework towards programmatic solutions positioning SOZO as a critical service line in the cancer patient's journey. And now on to Slide 9 to discuss the progress we're making in heart health. We continue to build the commercial infrastructure required to scale the heart health segment. We've established a dedicated clinical sales territory structure and completed state-by-state reimbursement mapping for HF-Dex. We have also engaged directly with cardiologists to refine HF-Dex positioning within clinical workflows. SOZO Pro remains the only FDA-cleared bioimpedance spectroscopy device for patients with cardiac implantable devices and the Medicare National Coverage Determination currently supports access for approximately 75% of Medicare heart failure patients. We believe the indication is important for us to continue as a key catalyst that convert early health system interest into scalable commercial pipeline. The U.S. outpatient heart failure monitoring market represents an estimated USD 600-million opportunity. This market need is driven by the urgent focus by our hospitals on reducing readmissions and improving fluid monitoring. There are approximately 6.7 million heart failure patients in the U.S. with about 1 million new diagnosis annually. Our focus today is on building the foundation for scalable growth, including infrastructure, reimbursement pathways, and clinical engagement. Feedback from clinicians in major heart failure conferences continues to reinforce strong enthusiasm for the technology. Our long-term vision is for HF-Dex to become the objective clinical standard for heart failure management, similar to our SOZO's leadership position is in oncology. Let's turn to Slide 10 to discuss body comp and weight management. We're seeing strong momentum in the weight management segment with a growing pipeline of convertible opportunities across primary care, sports medicine, and research aesthetics, med spa, and dedicated weight loss clinics. The rapid growth of GLP-1 therapies is expanding demand for body composition monitoring as clinicians recognize that rate alone is not an adequate measure of treatment success. SOZO provides the clinical grade body composition data needed to assess outcomes such as muscle preservation, fat loss, and overall patient health. Providers increasingly want more than a one-time scan. They are looking for data-driven platforms that improve patient engagement, inform treatment decisions, and supports long-term retention and ongoing care. SOZO is meeting this need through precise longitudinal data that helps providers track progress and optimize patient outcomes over time. We are seeing tangible commercial wins across our priority segments, particularly in GLP-1 and medically-managed weight loss programs. Our strategy remains focused on disciplined execution rather than hype, ensuring sustainable growth as the market develops. To accelerate adoption, we have introduced greater pricing flexibility, including third-party financing options, reducing upfront capital barriers for this customer base. During the quarter, we established a partnership with a globally recognized position, who has successfully integrated traditional internal medicine with cash pay aesthetics. This partnership further validates the value of SOZO as a tool for delivering personalized evidence-based patient care. While still early in the market opportunity, we're encouraged by the trends we are seeing and remain focused on delivering results as momentum builds over the coming quarters. We can now go to Slide 12, and McGregor will go through the financials.

Thanks, Eric. From a cash flow summary, you can see the total operating cash outflow for the quarter came in at $4.9 million, which was in line with our expectations. Factors impacting the quarter's operating cash flow included higher cash receipts, which were a record $4.3 million and included 2 large receipts from customers that paid the full contract value upfront. Product-related costs were up $600,000 compared with quarter 3 and this was mostly driven by inventory purchases. Staff costs are the largest component of the business and were $4.9 million for the quarter, up $400,000 versus quarter 3. This increase mostly relates to one-off costs associated with the organizational changes that we have made. The actions to reduce the annualized operating cost base by $5 million with the reduction in operating costs have been made with the reduction in operating cost effective from 1 July 2026. As we've highlighted on numerous occasions, financial discipline continues to be a core goal of the business. We will maintain an operating -- an ongoing program of cost control as part of our target to reach cash flow breakeven. The company's cash balance at 30 June was $15.3 million equating to 3.1 quarters of operating cash flow. During the quarter, the company raised $15.3 million for an institutional placement and an oversubscribed share purchase plan. $5 million of the proceeds from the capital raise were applied towards the partial loan repayment of the company's loan facility, which has been reduced by USD 3.5 million to $11.5 million. Moving over to the next slide on TCV and ARR. TCV for the quarter was $5.4 million. In constant currency, quarter 4 TCV was up 2% versus quarter 3. As a reminder, TCV includes the revenue associated with new device sales as well as the revenue associated with renewals. On average, there was a 6.7% price increase for renewed contracts during the quarter. As previously mentioned, we sold 40 SOZO units in the quarter, of which 36 were in the U.S. Pleasingly, in the first week of July, our Australian distributor placed an order for 17 units, getting this quarter off to a good start. Regarding annual recurring revenue, contracts in place as of 30 June 2026 are expected to generate annual recurring revenue of $14.4 million for the 12 months to 30 June 2027. On a constant currency basis, compared with quarter 3 FY '26, Q4 ARR would have been $4.6 million, representing a 4% increase. And compared with Q4 FY '25, ARR would have been $15.8 million, equating to a 13% year-on-year increase. Turning to the next slide. As Eric has already discussed the unit sales. And as you can see, the installed base is now over 1,230 units with 642 units installed in the United States. Patient testing continues to trend upward, up 6% on the prior quarter with a 3-year compound growth rate of 16%. I'll now pass back to Eric.

Thank you, McGregor, and let's go over to Slide 15. Before I review the Q1 outlook, I'd like to offer some additional thoughts. After just over 4 months in the role, and spending that time deeply engaged with our team, customers, partners and our strategy, my confidence in the business has only increased. Today, I'm even more excited about the company's potential than I was when I first stepped into the role. One of the key themes I've always focused on throughout my career is people, performance, and culture. As I stated in the 4C, these are not buzzwords to me. And since joining the company, I've been relentlessly focused on understanding and strengthening our talent base, building a scoreboard driven-performance culture, and ensuring goals are tightly aligned with individual roles and responsibilities. As part of that focus, we've strengthened our leadership team with 2 key executive appointments, both reporting directly to me, and they are already making an impact. Our Head of Commercial Operations is responsible for building the infrastructure required to support scalable commercial growth and is hyper-focused on forecasting and commercial analytics, territory design and market segmentation, CRM integrity and data quality, sales quota architecture, and scalable operating processes. All of this provides the visibility and discipline needed for stronger decision-making and execution. Our Senior Director Customer Success and Strategic Accounts leads the customer success and clinical organization. This role is focused on driving customer utilization and outcomes, expanding relationships with strategic IDN customers and partnering with the sales teams to grow footprint and patient reach. I'm convinced that tight alignment between commercial, clinical and customer success teams will drive stronger customer outcomes, deeper partnerships, and improved growth opportunities. As part of building a performance-oriented culture, we've recently made changes across several frontline sales roles as well as select physicians in other functions. These changes create opportunities to bring in exceptional talent that is fully aligned with our focus on execution and win. We've also made solid progress on head count optimization and cost management while maintaining alignment around our highest priority growth initiatives. Aligning the organization around common goals has clarified where we should invest to generate the strongest returns. While I'm encouraged by our progress, I know there's still significant work ahead. My priorities remain clear, the right talent, disciplined processes and execution and relentless focus on results. My responsibility is to set the strategic direction and build a championship caliber team capable of delivering on that mission. Executed with urgency, I see the clear pathway to cash flow breaking. I also see growing opportunities for strategic partnerships across all 3 business segments as health care continues to consolidate. I remain confident in the path we're on, and I'm excited about the opportunities ahead. For the next quarter, we remain focused on building out and growing each of the market segments, maintaining cost discipline, and leveraging our talented team. Thank you to our investors for your continued support and to our employees around the world for your commitment to achieving our shared goals. We'll now open the webinar for questions.

Thanks, Eric. [Operator Instructions]. We'll endeavor to get through as many questions as possible. If we don't get to answer your question, we will follow-up with you off-line. We received a few questions from [ Andrew Hewett ]. So I'll just touch on those. Those were placed for you, Eric, I'd say. First question is $5 million cost saving is a good start. But can we expect more cost savings in the future?

Yes, Andrew, I think we're looking at that closely. I think right now, it's really modern. The majority of the costs where we're focused on not trying to cut too much from or cut from, frankly, is on the commercial side. And we're taking a real disciplined approach in the other 2 segments, BodyComp and heart health. We don't want to overspend that we want to learn as much as we can and be disciplined there. While we know we have tremendous technology, and then as I think about how do we maximize all of our customer-facing roles, when you think about sales and the clinical teams and how we can divide and conquer as teams and partner together. And some of the things we've even tweaked is the sales commission plan, driven far more by results versus activity. So we -- I want to be cautious on the cost profile, knowing that it was a tremendous effort by McGregor and team with a lot of things that have moved from the U.S. to Australia, some things to the Philippines, to get where we are today. And we're always going to be looking at ways to drive more leverage. But right now, it's -- I really want to get that top line cranking, and I'm not asking us to go back on that and spend more to do that. We're just trying to maximize everything we have now. I hope that helps, Andrew.

The next question is in relation to our pipeline, which Andrew suggested there's been -- seems to be a little progress in converting them to sales. What's the holdup? Initially, we were told the conversion was 6 months. So we should starting to see growth by now.

Yes, it's a good question. I think a lot of things going back to that, the head of commercial operations. We've been able to get so much better visibility into the pipeline. And it's not so much -- it's a cleanup. It's the hygiene of the pipeline and where these deals are at in the process and what else we're doing to drive that going back to that stakeholder map. I certainly, you can go back and look at historicals on how long some deals take to close. We've got some come in this year that took -- that were originated a year ago and then some go faster than others. So agree the pipelines there, and we're constantly looking at ways to accelerate. I think that's part of the reason why I showed that stakeholder map not as a reason or an excuse why these things take longer. But if we're not leveraging all those players, we're not getting ahead of things like even with our implementation team, Andrew, thinking ahead, partnering with the customer on what to expect and get IT involved earlier and often versus them being a gating factor that can add a month to a deal because there's a bunch of other things on IT's plate from a cybersecurity standpoint. So I think it's just us continue to get better, sharper, more disciplined, and I'm pleased with just so much better visibility of the pipeline now and even just rigorous discipline like forecast calls and where are the teams at with the forecast. Was just on 1 this morning at 6 a.m. Australia time with our sales team.

Thanks, Eric. And the last question is in relation to churn, what is the current churn rate?

Yes. I think churn has continued to go down quarter-on-quarter. And I think how I look at churn and I get a detailed list, I want to know everything that's happening and what's the reason. There's no major red flags of some of the churn we've had. A lot of times, it's a facility closes, a breast surgeon that was a private clinic retires. We've also seen other things. We saw 1 where a system is going to churn because a surgeon is moving. And part of the surgeons at our new office, where we don't have SOZO as mandated as part of her negotiation with the new site that SOZO is installed. And so I think when you look at -- and the other thing I would say that's exciting to me, going back to the customer success team and our clinical team working together with sales we had a deal that's come in this month, where it was an actual -- it was a churned unit that had been collecting dust for over a year that is now turned back on. And that's the team going back to these customers, telling the reimbursement story, telling the broader picture story, talking about [ lymphedema plus ] and so we see some encouraging trends there. And then I'll say, as I think about churn, the new leader has implemented goals with his team to how do we stop the churn? How do we look at everything that could possibly churn. So it's encouraging to see the goals and even the commission plans and comp plans for our clinical team, where they're able to flag an account or a customer that maybe has slowed their utilization down at a significant rate versus this time last year or even this time last quarter, really dig into what's potentially going on here, maybe that's some staff turnover, some changes, new doctors and what do we do to get them back going. So it's on our mind, but there's no major issues than out of the past with churn.