Thank you for standing by, and welcome to the ImpediMed Q3 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Dr. Parmjot Bains, Managing Director and CEO. Please go ahead.
Good morning, and thank you for the opportunity for us to present and discuss our Q3 FY 2024 results with you. As usual, with me today is McGregor Grant, our Interim CEO-CFO, and Executive Director. Also joining us today is our Chief Medical Officer, Dr. Steven Chen. On this call, I will provide an overview of the activities for the last quarter. Dr. Chen will then discuss the update to the NCCN guidelines and the recent publication of this technology on the National Cancer Institute webpage and explain why this is important for ImpediMed. He will also provide an update on the recent American Society of Breast Surgeons meeting. I will then hand over to McGregor to talk through the financials, and after that, we'll open the line for questions.
The business has made significant progress in the last quarter to build the sales pipeline and to manage our cost base. As announced on the 27th of February, 2024, ImpediMed has been introducing measures to grow sales and more tightly manage cash flow and establish greater cost discipline in the business, with the aim of reducing annualized operating costs by 10%-15% by the end of FY 2024. On the 17th of April, 2024, we implemented a range of organizational changes that will support increasing sales and reducing costs. Following these changes, I am pleased to announce our new executive leadership team. This team has the necessary skills and experience in sales, marketing, medical affairs, R&D, finance and operations, and I am confident that we are well positioned to accelerate the growth of this business.
I am very pleased to welcome Mr. Tim Benkovic to the role of Senior Vice President, Sales and Customer Success, based in the United States. Tim is a very highly capable healthcare sales executive with over 30 years of experience working for organizations including Fresenius, Hill-Rom, Welch Allyn, and most recently, Nanosonics, where he led a large team of sales professionals organized in a pod structure across North America, which achieved significant growth. At ImpediMed, we have organized our sales teams now into four regional pods and recruited two new business development resources who will support these pods in building our leads pipeline. As part of the organizational changes implemented on the 17th of April, Director Andrew Grant has been appointed as Vice President of Product Development and Customer Solutions in an interim capacity. It is expected that Mr. Grant will serve in this role for up to six months.
During this period, one of Andrew's key responsibilities will be to lead the development of ImpediMed's new product roadmap and commercialization strategy, and to ensure that the company has the appropriate organizational structure and capabilities in place to deliver on its plans. The key commercial highlights for Q3 include the publication of the 2024 NCCN Survivorship Guidelines, which continue to reference BIS where available. The addition of BIS as a modality for diagnosis of lymphedema on the National Cancer Institute's webpage. The continued growth in reimbursement coverage, with 140 million covered lives in 16 states at critical mass, and attendance at five key conferences, including ASBS, Miami Breast, and a first-time attendance at conferences which aim to reach new stakeholders, including the National Consortium of Breast Centers and the Association of Community Cancer Centers.
It is important to note that attendance at these conferences is critical to our lead generation activities. March was Lymphedema Awareness Month, and in our presentation, we have highlighted the numerous activities undertaken during this month to raise both patient and health professional awareness of lymphedema. As a result of these activities in the last quarter, our new leads generated have increased by 50% compared to quarter two. The new teams and leadership will continue to validate and close these leads, as well as continue to build our lead generation activities over the future quarters to build and maintain a strong pipeline. We continue to refine our operations to accelerate our sales lead time to take these leads to execution faster. Most recently, we established a dedicated capability to support customers in IT implementation, with a customer solutions lead as the key point of interface with customers.
During this last quarter, I continued to visit customers in the field, including our key customers across Texas in April. They represent 80% of the Texas market. ASBS was also a very critical event where we met our key opinion leaders, as well as the surgical leaders of large integrated delivery networks. We are continuing these conversations to support clinicians and build lymphedema prevention programs across the U.S. I would now like to introduce our Chief Medical Officer, Dr. Steven Chen.
...Dr. Chen is a practicing surgeon, past president of the American Society of Breast Surgeons, and presently serves on committees for professional societies, including the American Medical Association, the Society of Surgical Oncology, and the American College of Surgeons. Dr. Chen will discuss the recently updated NCCN guidelines and the publication of BIS technology on the National Cancer Institute webpage and why this is important. He will also provide an update from the recent ASBS meeting. Steven?
Thank you, Parmjot. So to start with the NCCN, so the National Comprehensive Cancer Network is an alliance of 33 leading cancer centers across the United States, who publish evidence-based guidelines for the treatment of cancer. These are widely referenced, and arguably the most prominent guidelines utilized in both academic and community hospitals, with over 15 million downloads of their 85 total guidelines in 2023 alone. Their committees meet regularly to update these guidelines, and inclusion is a stamp of acceptance for both physicians and payers due to their prominence and reputation for independence. This was first added to the survivorship guidelines in 2023, and we're pleased that they are once again included in the 2024 guidelines as a tool for objective monitoring for lymphedema, for those at risk.
This guideline does apply across multiple tumors, although obviously at ImpediMed, our commercial focus to date has primarily been on breast cancer. This also continues to gain exposure in other venues, perhaps most prominently this year on the National Cancer Institute's cancer.gov website. The NCI is the U.S. Federal Government's principal agency for cancer research and training, and operates a website for patient information that includes information about cancer and its treatments. Being added to their patient-facing website as a test that can find lymphedema, including where it states that the tool is sometimes used to help prevent lymphedema in patients who are at risk, will likely be seen by many people and referenced by other websites over time.
Again, having this mentioned by these independent sources as a method to detect and prevent lymphedema, will help continue to move the needle on patient awareness that can generate the demand for providers and aid with payment from payers. Moving on to other conferences, the American Society of Breast Surgeons meeting is a key conference for ImpediMed, as it's the largest gathering of surgeons who have a strong interest in breast disease in the country. With over 1,700 attendees, most of whom are surgeons, as well as some of their nurse practitioners and physician assistants, this meeting is an opportunity to hear the latest research, discuss and debate unresolved breast cancer treatment topics, and to network and build relationships with each other and with industry supporters.
In addition to exhibiting, ImpediMed also takes the opportunity to meet and discuss topics with leadership of the ASBS, as well as with other key opinion leaders through its support of the Society as part of its Industry Relations Council. This allows for exposure of our progress to these leaders, as well as to receive their feedback on the future directions for ImpediMed. Even beyond those meetings, though, ImpediMed's presence was felt in a number of ways. At a pre-meeting course for surgeons involved in lymphatic surgery, attendees had an opportunity to use those devices and see how they might integrate into their practices. We also sponsored and gave a product spotlight at a course aimed at nurse practitioners and physician assistants, who are often the ones who primarily perform the exams for breast cancer survivors.
In the main program, authors from our original PREVENT trial, as well as myself, presented a poster to detail the timing of lymphedema triggering in the PREVENT trial over time, demonstrating that even as far out as three years, which is as far out as the trial followed people, lymphedema events continue to occur, further demonstrating the need for regular routine surveillance. We hope to get these results published in a peer-reviewed journal as well. Having research presented at these meetings and published will continue to be a cornerstone of expanding the reach of ImpediMed's products. These presentations and publications form the backbone of evidence that becomes incorporated into future guidelines that reinforce the importance of lymphedema detection.
We're also gratified to have been approached by a variety of physicians in various fields, both in surgical oncology and other areas, with ideas how ImpediMed's technology for fluid detection and body composition measurement can be helpful in treating a variety of other diseases, from lymphedema, from treatment for other cancers, such as melanoma or gynecologic cancers, to a variety of other uses in monitoring for various disease states. ImpediMed is looking to encourage physicians to utilize our devices in their studies as appropriate, and we'll work to build the infrastructure to support trials with devices or assistance in analysis where we can.
Finally, as Parmjot noted earlier, Lymphedema Awareness Month was during this quarter, and during this time, we really made a concerted effort to further increase lymphedema awareness with a primary message that pre-symptomatic lymphedema is detectable, and that intervening early can yield benefits for patients and have a higher likelihood of preventing long-term chronic lymphedema. I'll now hand this back over to McGregor to cover the financials.
Thanks very much, Steven. During the quarter, ImpediMed recorded unaudited revenue of AUD 2.6 million, compared with AUD 2.3 million in the quarter ending 31 December 2023. The company sold a total of 18 SOZO units during the quarter, of which 13 units were sold in the U.S. This compares with a total of 37 units sold in the preceding quarter, of which 13 units were sold in the U.S. The value of new contracts signed during the quarter, which we refer to as total contract value or TCV, was AUD 2.2 million, compared with TCV of AUD 1.6 million signed during quarter two, FY 2024. The existing contracts in place as at 31 March 2024, are expected to generate core business annual recurring revenue, or ARR, of AUD 10.8 million for the twelve months to 31 March 2025.
This compares with the ARR as at 31 December 2023 of AUD 10.1 million and AUD 9.3 million as at June 2023. During the quarter, the company had net operating cash outflows of AUD 6.3 million, compared with AUD 3.6 million in quarter two, FY 2024, and AUD 3.1 million in quarter one. The operating cash outflows in the quarter included severance payments of AUD 1.4 million. It should also be noted that in Q1 FY 2024, it included receipts associated with the federal government's R&D credit scheme of AUD 2.1 million, and in Q2, included receipts of AUD 1.3 million associated with the U.S. government's employee retention credit scheme. Cash and cash equivalents at 31 March 2024 were AUD 30.7 million, compared with AUD 36.9 million at 31 December 2023.
As mentioned earlier, we have implemented measures to more tightly manage cash flow and establish greater cost discipline in the business. As a result of these and other changes, after allowing for one-off costs incurred in FY 2024, the company anticipates annualized operating costs on a cash basis in FY 2025 will be lower by 10%-15% compared with FY 2024. With that, we will now open the call for questions. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tom Godfrey from Ord Minnett. Please go ahead.
Oh, good morning, guys. Thanks for taking my questions. Can you hear me okay?
Yeah. Thank you.
Fantastic. Maybe if I could just start with the uptick in leads generated for the quarter. Parmjot, if you're happy to sort of just give us a bit of color around where those leads are coming from. Are they in states that have hit critical mass? And are they potentially in sites across your install base already, or are they new customers? Maybe just a bit of color around where that's coming from.
Oh, absolutely. They really come from a range of areas, but promisingly from a number of larger IDNs, who are now expressing interest in rolling this device out across their systems. A lot of the leads, you know, we had significant lead generation during ASBS. You know, they really vary across the network, but positively, you know, we are now starting to see some significant interest from those larger IDNs, and critical mass states.
Gotcha. And you mentioned in your prepared remarks, you've been spending a bit of time with some of the bigger systems in Texas. That's obviously a state that hasn't hit the critical mass threshold yet. I mean, just any sort of insight you can give us in terms of how they're thinking about full lymphedema prevention programs? Will they wait for it to hit critical mass? How do we sort of think through the timing there?
Oh, absolutely. No, we are obviously we're in discussions with Texas, which is why I would, you know, spend significant amount of time there. They are interested in the program as a lymphedema prevention program, and we already have doctors or, you know, within Texas using the device, you know, including at MD Anderson, across the Texas Breast Network, Houston Methodist. So we already have users who have validated the technology and shown, you know, that they are getting reimbursement, that does cover their costs. And so we have interest from providers within that state, even prior to achieving critical mass. We're working closely with a number of those systems to see how we can expand.
Got you. Maybe next one from me. McGregor sort of pointed out that the TCV stepped up quarter-over-quarter, but size of sales are pretty flat. It sort of speaks to some increased renewal rates. I suppose the question was just around what you're seeing in terms of repricing when you are getting contract renewals, particularly in critical mass states. Are you seeing that sort of pricing uplift come through on the SaaS?
Yes, we are. You know, I think as reimbursement increases across the U.S., our ability to get an uptick in pricing is coming through as we are renewing contracts. So generally speaking, that's that is the case.
Gotcha. And then last one from me, McGregor, just around the cost out. It sort of sounded like that was mid-April, that a lot of that was put through, but will we be able to see sort of, some of the annualized 10%-15% in the fourth quarter, or is that more, more do we wait for first quarter 2025?
Yeah, we'll need to wait for first quarter 2025 to see the benefit of that flow through.
Great. That was all I had. Thanks for today.
Yeah, great. Okay, no worries.
Thank you. Your next question comes from Shane Storey, from Wilsons Advisory. Please go ahead.
Morning, everyone. Just a couple of questions on the critical mass state conditions. We've been impressed by the rate of growth there. I just wanted to know whether the three that were added in the period came from the four that you called out at the last quarter, in you know belonging to that sort of 11 states, where you felt that the setup and awareness was you know appropriate to support success.
The three additions were not in the three critical mass states. They were in, but they are in states that are looking at increasing uptake. So of the critical mass, I think eight-- the key states that we, we want, you know, priority states , eight out of 11 have now got critical mass, and we continue to work with payers to get those other three over the line. Then there were three additional outside of those that have come across.
It feels like that activity is sort of, you know, kind of progressing on its own accord in a way. I mean, can you sort of, can you maybe describe the assistance or resources that you're applying to that? Do you have any... and do you have much visibility in terms of the... sort of states you'd hope to add over the next, say, six to twelve?
Yeah. No, absolutely. So we have a market access VP market access, who works very closely with, you know, various payers as they go through a policy review, both in cycle and out of cycle. So she works to really see what data and information we can provide, even from our medical side. You know, we work with society to, you know, provide letters of support or doctors to provide letters of support to these payers to, you know, show that it's on the guidelines and that society is supporting. There's a lot of work that's going on.
And then in states where, you know, we are looking to convert across, we also, you know, work with our health care providers to get letters of support from them that get through the policy committee. So there's a lot of work that goes on behind the scenes, to work with-
Right.
these various policy committees and insurers. Then the other key thing is, in states where there isn't reinvestment, we encourage our providers that are using the device to bill, because, you know, as these health insurance see billing coming through, that's when, you know, they see the demand that's been generated in the system. So it really is a multipronged effort that goes on, but it ultimately it's up to the policy committees to make the decision. So we do what we can do, and then, you know, we kind of rely on them to use the technology for patient care.
Finally, just a nerdy one from me. Just when you look at the scan volumes, say, from within the critical mass states where, you know, private pay coverage is happening for you, what are you seeing there in terms of the mix? Are you seeing a decent portion come through, you know, that's other than, say, breast cancer-related lymphedema? Are you seeing lower limb, for example?
Yes, and I think, we didn't put it on here, but last, in the last results, I indicated that between 9%-10% on the local, this is global, 9%-13% are being used on lower limbs. So we are seeing use in other areas other than upper limb. We can't differentiate, you know, upper limb, it could be breast or melanoma, but we really can't differentiate that on our-
Sure.
-because we just see the measurement standards for those. But there is-
Oh, okay.
There is the... Yeah, we just see if it's usually for these.
Understood. Understood. Thanks. That's, that, those are all the questions I had. Thank you.
Thank you. Your next question comes from Ian Hyde, private investor. Please go ahead.
Good morning, all, and thanks for your time. Just, Parmjot, if we could get some clarification just around exactly what you mean by lead. I know that there's a number of things that would go into that, but is that just, say, a hospital or doctor that's inquiring, or is it something that's formally in your process and system to actually work to actually getting completed? I assume there's probably a number of, of either or, and more, but just something around that as to see how strong the leads that you're talking about actually are.
Yeah, no, they're all inquiries that then lead and that go into the system and then get worked through. So, yeah, they're all strong, and they all get worked through as we work with doctors and quotes, and they'll go through the normal process of the lead coming in, and then it'll, you know, further the discussion of budget availability, and then it goes through contracting through the kind of execution process, which, as you know, takes up to six months. So, you know, we're, it's a strong lead pipeline. The lead pipeline has been built up.
Cool. Okay. So, and if the leads are up 50%, it's easy to say we've got over 450 leads as it stands now, based upon the 300 you said in February?
Yep, roughly around that amount. Yep.
Cool. Okay. Something for Dr. Chen. You still on the call?
Yes.
Thank you. Firstly, welcome. It's good to hear you. We haven't really had CMOs talk before, so thank you. It's great. From a layman's perspective, can you please describe just how strong the guidelines from NCCN are? Because in the world, outside of medical practice, a guideline says, "Oh, here's something you can do," but, like, you don't really have to follow it. So from a medical and practitioner perspective, just how strong, robust is the... or are these guidelines or not? And as a practicing doctor, hospital, what have you, how much does this actually say, "Well, you guys have got to do it, or you don't really have to," or what have you? Does that make sense?
Yes, I think so. And if I don't answer it completely, please feel free to follow up. So with the NCCN guidelines, obviously they are made by this volunteer group of high impact institutions that all participate in this, and they are the most referenced guidelines across the US, and they have some international heft as well. I would say for programs that have organized cancer programs, we constantly reference them to check our own biases and make sure that we are practicing as well as we can. Having said that, they are guidelines and they first of all are not checked by everyone daily, right? They are updated periodically, but people practice it and sometimes have to be told that they have been updated.
Second, the way the guidelines are structured, these are the recommendations, but it's understood that every patient is different, and so sometimes you will choose to not use this guideline in this particular case, because you feel that the evidence that went into that guideline doesn't apply to this patient or another. For instance, if you're choosing chemotherapy, you might choose one versus another based on what side effects the person in front of you might be most concerned about, right? Just as an abstract example. For the perspective of ImpediMed, the guideline says that you should check people for lymphedema regularly, and if you have it available, you should use this.
And so we have encouraged people to see this as a preference, to say, if you should have it available. If you don't have it available, obviously they want you to use something. But we're trying to encourage people to say, "Hey, it says if you have it available, you should use this," so you should try to get it available for your site. And that's the conversation that our sales team and our medical folks are constantly having. Does that answer it well?
Yeah. I wasn't sure how you could, because it's a bit of a lot of gray in there to try to understand it, but thank you. More on a half medical, half business. For a patient now, they get a baseline test, and then they have their procedure, and then they get tested post that. From a business perspective for the hospital, for the last 12 months, there's 1.1 million cancer patients that are susceptible to developing lymphedema post-treatments. Now, they've already been treated in the last 12 months. Is there any way, as a doctor or hospital, that—I know you can't do your baseline test now because they've already had their procedure, but these people are still also at risk of getting lymphedema.
So is there some way hospitals, doctors that are actually taking on SOZO can utilize existing patients that have been tested prior to them setting up SOZO so that they've got a ready-made business model, that okay, we can now plug these people in? Is that feasible, doable, or because you can't do the baseline test 'cause they've already had treatments, that's just no longer possible?
So, obviously we promote using a baseline first, because that is going to be your most sensitive way. If you know what someone looked like before they had treatment, then it's far easier to detect if there's been a change. And it sounds like you understand that very well. What you're asking about is for people, when we install it, they've had all these people who have been treated, and they don't have a baseline. And the answer is yes, you can continue to, you can also test those patients as well. Now, the difficulty is, of course, that you don't know their baseline, and so we have other recommendations of how to utilize this.
But here's where there's some more nuance in understanding people's clinical situation, because let's say it's been six months since they got treatment and you just got your first SOZO, they might have already developed lymphedema at that time. So when you measure them, you might say, "Oh, this looks high, and you have symptoms, you probably already have lymphedema." Or you might be measuring someone at six months, and they have absolutely no symptoms. Their arms look exactly as they did at baseline. You might say, "Well, this might be your new baseline," and this is where clinical judgment comes into play. However, we do have recommendations that if you exceed a certain amount of distance from the norm, that that is probably lymphedema, even if you don't have a baseline.
And so we, we do teach clinicians how to utilize this data, but understanding that we still would maintain that having a baseline is your best method of using it.
Cool. Okay. And lastly from me, regarding your presentation at ASBS, can you summarize just how successful it was? How many people attended, feedback, leads, contacts, et cetera?
Yeah. So, we had a poster up in the poster session, and basically, what we were showing there was that people continue to have lymphedema even at year two and year three and that's as far as the trial data went. The reason why this was important to show is that there's some perception that lymphedema primarily happens in the first year. And that was true in our study, that 50% of people, it occurred in the first 9 months. But the other 60% of people happened further out. So it's important for people to have a way to measure this and to continue to measure it all the way through. And that's a message that needed to be given and is well received as people hear it.
They know it intuitively, they understand it anecdotally, but to have data, to be able to tell patients 50% of the time it happens after month nine, is powerful in having patients remember to come back.
Mm-hmm. Okay, thank you. That's all for me.
Thank you. Your next question comes from Elyse Shapiro from Canaccord. Please go ahead.
Hi, guys. Back in October, you spoke to about 85% coverage by the end of June 2024. How are you tracking with that metric? Or, or do you think that that's gonna kind of get pushed back?
We're still continuing to work with the providers for the payers, just to see if we can get that coverage. So right now it's, you know, we're probably not putting out any guidance on it, any change in guidance, other than that we'll just continue to work with the payers, to see if we can get that target. We are, you know, and I, as I mentioned before, we can do what we can do around guidances and, and working with societies and, seeing if we can work with policy councils of impact. So right now, no, no change in guidance and just continuing to work through to that target.
Got it. And then, you've kind of previously also, you know, kind of spoken to, or I guess previous management had spoken to, you know, a nine-ish month lead time. You've discussed a few initiatives that you're taking to help accelerate that. Are you able to quantify that lead time in some of those new leads that you do have, just to get a better idea of when they might convert?
It's... We're kind of working on a six-month lead time. They just to kind of get these sales across, we do have 20 mature managed services agreements with some large IDNs. So that obviously helps us cut that lead time down, because a lot of those agreements and IT systems and things are in place. So, you know, six months is probably what we're seeing on the average, but we're really working on how we accelerate and maybe get into some of these larger IDNs. Once, you know, we've got a couple of devices that could accelerate up because some of that lead time has been shortened down because the contracting is already in place.
It's been a big focus for us, particularly on that customer success, which is why with Tim coming on and this move into the pod structure and then having the dedicated IT point of contact, we really are just working on how we accelerate that lead time to bring these sales across the line. We've been working on that since we started. For me, it's now been four months enrolled. It's been a key priority just to really streamline our sales process.
Great. Thank you.
Thank you. Your next question comes from Peter Gregory, private investor. Please go ahead.
Good morning, and thank you for taking my call. I have a couple of questions that I want to ask around slide 15, the installed base and patient testing data. In looking at that, I see that the growth that's happened in the U.S. and the rest of the world is quite similar. I think there's a little bit of difference, but basically the same. Also, the number of devices out there is also quite similar. I'm a bit surprised that the growth in the US is not higher, considering the amount of effort that's been put into the U.S. market, and also considering that, as I understand it, the rest of the world is largely through distribution rather than direct.
Are you able to comment on that?
Maybe I can just start, and then McGregor can come in. The rest of the world, a lot of that is in Australia, which has a very large installed base, and we had put the numbers out, I think it's 345 devices across Australia, and Australia's had a very long lead time, very well established at the lymphedema prevention programs, very strong key opinion leaders. And in fact, this week I'll be at the ALA Annual Lymphoedema Association Conference in Adelaide, Thursday, Wednesday, Wednesday, Thursday. So there's, you know, I think Australia had a very long head start, and Australian pricing is quite substantially different. So it's on a, device sale, a one-off sale, as opposed to a subscription model. So two very different markets, when you look at the dynamics.
The U.S., you're right, it has been slow, and I think the key things here are, and, and, you know, is that it is slower than we expected, the sales. But, but reimbursements really only just come in. There was nothing there in June last year. And, you know, NCCN guidelines, you know, now a year out, are still relatively recent. And so there just still has to be a lot of information and communication to the market as part of your product develop- launch, right? So effectively, this- I'd say this product is being in launch phase. It has been in launch phase for the last year, and, you know, there's always going to be a ramp up, to get to, to peak sales, in this device.
So we are seeing with the growth in leads and after the ASBS conference, just significant momentum and increasing discussion around the edema prevention, increasing awareness around the new reimbursement story, and then, you know, these guidelines and then increasing guidelines that are coming through. So I do remain very positive around the growth that the U.S. market will get with this. But maybe McGregor or Steve, if you want to add any points.
I think you've really covered it well there, Parmjot.
Can I just ask, perhaps you, McGregor, from Parmjot's comment about pricing, I assume that the gross margin of the rest of the world is quite a bit lower than in the U.S.?
Yes, because the majority of those units, as you mentioned, are sold through distributors, and it's a kind of a one-time capital sale, so you don't get that, you don't get that ongoing annuity revenue at the high margin coming through for that. So yeah, it is a different economic model.
Okay. But the cost of the hospital or the clinic is similar, is it? To the U.S., in Australia?
No, no, substantially less. It's a one-off-
Okay, thanks.
-capital cost.
It's a one-off purchase in Australia.
Yeah.
Yep, okay. Also wanted to ask you about patient testing. Looking at the information that's on the chart, my rough calculation is that you're getting about 240 tests per device. And Parmjot, this morning I listened to your Spilt Tea podcast with Grace, where you talked about initial testing and then three times follow up a year, which would mean for each patient, four tests per year, that would bring it down to about 60 patients being tested by a machine. Would that be valid calculations?
It really varies. And Steven, I might need you to drop in as well. We really think a range, and we are tracking, you know, a number of systems have only just started putting it in, so they're bringing the patients through. But it's hugely variable. And we do have a team, the clinical support team, that works with each install, and just to make sure that they do track, and they are moving towards protocol, which is their three to four tests a year. Mm-hmm.
Okay. And, and if you, if you get to, all patients going through the, you know, the testing protocol that you'd expect... I'll, I'll ask it another way. Do you have a, an understanding of what percentage of patients are being tested by, by, by a clinic?
We don't see their total patient numbers, so we can't see how many are coming in, but we see of those patients, how many - No, because we can't see their total patient numbers, right? So we can't, we don't get a view of what the total clinical volume is. But we can, we can make an estimate that 80% are applicable to be using this technology. And so when we do the return on investment calculation for the sites, and we put the devices in, that's what we base the numbers and the treatment flows on.
Okay. No, thanks for that. In terms of the amount of use that's happening within a clinic and the proportion of patients being tested, is that part of what customer success looks like? And is that part of the accountability for Tim?
Yep, absolutely. Utilization. So, got a key metric that the customer success team looks at, is utilization of the device, just making sure that, that the device is being used across the clinical, the treatment flow, that it's being reimbursed, that they're basically being the billing on the device, utilization, billing, and then churn are the key areas that Tim will also focus on. And so we have a customer success, customer success team that's led by Katie, who looks at that, and these people go out, and, and work with each system install to track those metrics.
Okay. No, that, that's it for me. Thank you.
Thank you. Your next question comes from Victor Windeyer from Australian Unity. Please go ahead.
Oh, thanks very much. So Parmjot, you're about four months in, I think, into what was an interim appointment for six months or something, with McGregor, I believe. So, you know, I just want to understand where we're at in terms of, you know, firming up your, you know, equity participation and ongoing role in the business. Is that a concern?
I guess I wanted to sort of understand, you know, there's a structural governance issue with having so many executive directors, and notwithstanding that you're all expected to be running the business, there's a moral hazard in that structure, I think, which means it's unusual from this perspective to have so many, a majority of executive directors on the board, because it potentially means that the benefit that you, as executives, can bring to the company, may not be experienced necessarily with the shareholders of the company, that might be preferentially harvested by the business. So, I mean, I know that's all theoretical, but I just wanted to understand where we're at in the transition of the governance of this business.
Yeah. Okay. Thanks, Victor. I'll take that. So, Parmjot Bains and I are in the process of ... in the final stages of the process of confirming our appointment on a permanent basis, and I expect that we'll be able to announce something around that around that fairly soon. So, yeah, that's been our intention and still is our intention, and I'm sure we'll be able to communicate that shortly. In relation to the challenges around the number of executive directors and sort of the board size and the like, that's come particularly most recently as a result of Andrew's participation in an executive capacity. Yeah, we're certainly, you know, acutely aware of that and the challenges that flow from that.
As we've said in the past, we are in the process of discussing, and we are in active discussions now with a couple of potential new independent directors to join the board. So we expect to be able to announce something on that fairly soon. You know, it's a balancing act. You know, we're on a journey, and you know, we're certainly aware of the challenges of the situation we've got. But I think, we're also, you know, I think we just wanted to make it clear that you know, we, we're on a journey, and we're aware of the challenges, and we're working through it.
I would like to think that by the end of June, going into the new year, that we'll have some of these issues completely addressed. You know, it's always a balancing act between you know, overloading the board. I mean, we're obviously needing to be mindful of you know, managing costs and so on, but you know, clearly having an independent and functioning you know, a truly independent board is very important as well, and we must get to it.
Well, I mean, there's an alternative to just expanding the board, that some of the executive, you know, could stand down or... But anyway,
Well, I think all of those options are being considered.
Yeah. What's the situation in regard to, in regard to, you know, the finance functions of the group? Because, you have the, you know, the audit committee and so forth. Is that, is that being changed, or is that being changed as we come into the end of the financial year?
Currently, so, you know, I started off as the chair of the audit committee, and then as I joined in the executive role, Andrew took that on. And now, Janelle is currently chair of the audit committee, so she's independent.
Mm-hmm.
That is an area that we do need to address, and having the right sort of financial skills from an independent director is something that we're focused on.
Yeah. And just in terms as we go forward in coming through into next year, are you gonna provide what sort of guidance are you gonna provide? Given you know, you want to have a decent opportunity to see the market play out before anybody. What can we expect in terms of guidance or-
It's sort of results. Sorry, if I didn't quite hear your question, in terms of results guidance?
Yeah, yeah, like guidance for FY 2025 at the, at the-
Ah, right. Look, look, I think at this stage, that's way too early for us to be considering that. I think, as you know, we are wanting to see the... We want to get some greater certainty on sales and get some momentum going on that before we, before we start providing some guidance. And I think that will probably through the course of the next year or so, we'll just have to see how that plays out.
Yeah. Okay. All right, thanks very much.
Okay, thank you.
Thank you. Your next question comes from Greg Harrison, private investor. Please go ahead.
Hi. Good morning. I just wanted to ask, look, look, obviously a lot of foundational stuff you're building towards sales and focus on it. When do you expect sort of to see a material uplift or a reasonable uplift in sales? You know, how many quarters out are we looking at? I've been an investor for about five years in IPD, so I've been fairly patient, but I'm just interested in what your expectations are over the next two, three, four quarters.
Having seen what we're seeing in terms of leads and interest from hospital networks and doctors, I'm very positive that we will start to see something from the next quarters. Just for that lead cycle, you know, long lead cycle kind of highlighted, the work has been put into place now, six months lead cycle. Yeah, you know, we will start to see momentum, but we've kind of all indicated two to three quarters, yeah, to get some momentum here.
What sort of conversion rate? I mean, I know we talk about leads, but, you know, is it qualified pipeline versus leads? Are you seeing, even in the last couple of quarters, an improvement of that, or-
Not yet.
Around that.
Not yet, because of only just the 15 sales in the last quarter. We should see it soon as we start to, you know, try to ramp up the velocity. But, you know, obviously searching devices in the U.S. this quarter and last quarter show that that conversion is not happening yet to the extent that you'd expect, so big area of focus for us.
Okay. Look, look, thanks. Yes. I mean, just with 10 salespeople, there's 18 units being sold-
Yeah.
You know, it's unsustainable.
Yeah. Yeah, not, exactly.
Yeah.
But I think a lot of it is in that product launch phase and really getting that awareness out there, and absolutely, we're absolutely aware, Greg.
Okay, perfect. Thank you.
Thank you. There are no further questions at this time. I'll now hand back to Dr. Bains for closing remarks.
All right. Well, thank you. Thank you, everybody, and you know, like many of you, like Greg, are long-term shareholders in this business. I really am confident that with the team, the new team, the flattened structure, the focus on cost, the focus on sales, that we will start to see some very significant momentum. If you look at our org structure, I think almost all of the leadership team is relatively new. We've had some significant change, but we've got some really great, great capabilities, and it's great to have Steven here today to, you know, for you guys to meet him and really understand, I think, where we're going with the business going forward. So, thanks for your support and, hopefully, you know, as we kind of present again in the following quarters, we will start to see the significant momentum.
Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.