Good morning, everybody, welcome to the Pacific Edge results presentation for FY 2023. Dr. Peter Meintjes, the CEO of Pacific Edge, with me today is Grant Gibson, our CFO. In the room here with me are two of our Board members, Sarah Park and Anna Stove, with our chairman, Chris Gallaher, joining remotely from Melbourne. Just as a reminder, by participating on this call, you agree and understand to all of the terms and conditions on this slide. Moving quickly to our highlights. Global testing volumes are up 37%. Commercial volumes are up 39%. Growth in operating revenue up 71%. This does come with a net loss after tax of NZD 27 million, but we remain with a healthy cash balance of NZD 77.8 million.
Qualitatively, when we summarize this year, we are focused on a year of strategic delivery. Obviously, we're very impressed, I've been very impressed by the team, for delivering strong results in the key U.S. market with a rise of 44%, to get to 27,217 tests for the year. Behind that is an increase in the number of ordering clinicians, a rise of 46%, to 1,150, over 789, from the same quarter prior year. The number of tests per clinician, remains steady as we are adding those new clinicians.
We've diversified the commercial roles, basically addressing some of the major gaps in our organization that I was aware of a year ago in our strategy for growth, to now include Medical Affairs, market access, national accounts, virtual teams, among others. We are also very pleased that our progress with Kaiser Permanente means that now two of those accounts are in our top 20. As announced back in March and repeated in April, we are technologically complete with Kaiser, hoping to move that through in the next couple of months.
Our second pillar is evidence coverage and guidelines, and the major milestones there are that we've reconfigured and expanded our clinical studies, framed by the Analytical Validity, Clinical Validity, and Clinical Utility framework focused on guidelines. We've increased enrollment in site monitoring resources for our long-term studies, for Utility, STRATA, and for Validity, in a veterans cohort DRIVE, for faster completion. We have focused on coding and coverage for Triage, which we received in January, which also lays a path for Cxbladder Detect. Sorry, Cxbladder Detect+, which was the result of R&D work over the course of a number of years.
In our third pillar, research and innovation, of course, that is the Detect+ product, adding DNA SNPs to our existing RNA products to significantly improve the performance of Cxbladder. Was announced in late December and finally published, available for everyone to read in January. Our research and innovation teams have also continued then to transfer that technology out of the R&D group into the commercial labs for PEDNZ and PEDUSA., and this is in progress. We continue in our R&D team to investigate the potential of adding similar DNA SNPs to a Monitor Plus product for the surveillance, for an improved surveillance product. Just backing up and offering everyone a reminder of the global challenge that we are trying to address as a company.
Bladder cancer is the sixth most common in men, and the 10th most common worldwide, 17th most common in women. It affects a large number of people annually, and the number of cases are growing. It also has the highest recurrence rate of any cancer, with greater than 70% recurrence. There is an opportunity globally for Cxbladder, which our company estimates at about $7.6 billion across the world. We have we've done market research estimating that with the territories marked here. At a glance, Pacific Edge is headquartered in New Zealand, as we all know, with operations in Dunedin and with operations in Hershey, Pennsylvania.
With clinical trials activity in Singapore and Australia, United States, and Canada, and with distribution partners now announced, in Israel. Importantly, you know, we are focused on the continuum of taking technology or taking ideas, through various stages all the way through to patients. We have four patent families, with more than 80 patents, in our IP portfolio, that underpin the Cxbladder product, which is an advanced genomic biomarker test from a non-invasive urine sample for the early detection and management of bladder cancer.
We take that product, and we make sure that we are generating the best possible clinical evidence for it to publish peer-reviewed clinical validity and utility data. So that we can subsequently take that to healthcare payers to drive reimbursement primarily in the United States, but in the future, all around the world. This is all for the betterment, better, the better for patients, who we are trying to empower with non-invasive alternatives to invasive cystoscopy procedures. In many cases, those cystoscopies are unnecessary. Where does Cxbladder sit in the value chain of molecular diagnostics? We highlight this to establish for our investors and our analysts, you know, where we are delivering value.
Cxbladder does not currently operate in genomic screening or asymptomatic screening. However, when a patient presents with symptoms, blood in the urine, in our case, hematuria, they enter the care pathway as a patient when they go and see a primary care physician and subsequently a urologist. We have two products for hematuria evaluation, which is in the section of the patient disease management. We have one product in the surveillance setting, which is Cxbladder Monitor to surveil for recurrence of bladder cancer disease. The details of our products are established here. You know, Triage and Detect both used in the hematuria evaluation setting, with Triage focused very much on a high NPV to safely de-intensify hematuria evaluations from low incidence populations.
For while Cxbladder Detect is typically used to adjudicate diagnostic dilemmas at secondary care level, including atypical cytology and equivocal cystoscopy, relying not just on the high NPV, but also the high sensitivity and specificity to make those adjudications. In the surveillance setting, we have a monitor product, which again, relies on a very high negative predictive value to assist clinicians in monitoring for bladder cancer by reducing the number of cystoscopies and improving patient compliance. We estimate the size of the U.S. market opportunity at $3.5 billion with 4.5 million testing opportunities established for Cxbladder from a number of different reference sources. Importantly, there are a large number of patients that are presenting with hematuria.
Of those, not all are referred for a clinical workup, but a very high percentage of them are, and at 3.4 million patients. Not all of those patients even receive a cystoscopy. We estimate our market, based on the 3.4 million testing opportunities for hematuria evaluation, where all patients would be able to receive a Cxbladder result. We outlined this, the value creation slide, for investors last year, and I wanna focus in the coming slides on how we have performed against the three major pillars here. Also mentioned on earlier in the presentation, adoption, retention, and revenue generation, evidence coverage and guidelines, and thirdly, research and innovation.
As a reminder, you know, what we proposed last year was focus areas that I'm not going to read all of the details on the slide, but we did want to focus on revamping how we went to market in terms of our sales process, in terms of the diversity and role structures that we had. We want to focus on convincing physicians to use Cxbladder on every patient that meets a certain set of criteria, which we call protocolized adoption. We want to amplify the evidence from our clinical evidence generation program through the sales and marketing processes, establishing medical policy through our market access teams, and also a patient-focused awareness campaigns and advocacy initiatives to drive the patient's role in their own clinical decision-making.
New for this year, we are focused on two Fit for Growth initiatives, which are digitalization and performance excellence to improve the effectiveness and the efficiency of the investments that we've made in FY 2023. Just zooming in specifically on the sales and marketing, you know, what has changed? What have we done? What are the achievements here? We have, over the course of FY 2023, diversified the role types and created specialized sales roles and responsibilities for national accounts, regional sales, virtual sales, Medical Science Liaisons, and market access teams. We have also standardized our sales process across a number of different customer types, but also differentiated them between different customer types.
We've established collaboration with the Medical Affairs Team, and we've stood up the Medical Affairs Team from nothing over the course of FY 2023. They are very strongly focused on education events and communicating clinical evidence. We have improved our U.S. geographic coverage by making sure we have people in every territory. We increased the number of territories, we increased the number of sales reps. Importantly, we also added a virtual team where it may not make sense in lowly populated rural areas for a sales rep to drive very long distances.
We have virtual teams that can allow that underserved rural population to have access to Cxbladder, and we can provide them with kits through the patient in-home sampling system. Our marketing and support, we've increased resources there. The major achievements are how we have improved our ability to target customers, and separating out our Key Opinion Leaders and ensuring our Key Opinion Leaders have an assigned Medical Science Liaison from the Medical Affairs Team. Improved new hire training and refresher training to ensure a very high standard of education level among our account executives.
We have supported a program of more than 50 smaller urologic conferences through the year, in addition to some of the marquee ones that you may have read about in our quarterly investor updates. We've enhanced our advertising, our patient outreach, and advocacy, and we work with all of the major relevant publications in this space, UroToday, Urology Times, the Bladder Cancer Advocacy Network, and the New Zealand Cancer Society. We've also taken some initiatives through a combination of the People & Culture Committee and the Marketing team to improve internal communications and employee engagement. As we continue to invest for growth, you know, the major thing that we changed last year was the introduction of Medical Affairs.
As you will have noted from earlier announcements, I'm delighted that Tamer Aboushwareb has already been promoted to Chief Medical Officer after joining us as VP of Medical Affairs with the outstanding work that he's doing. The fantastic Medical Science Liaison team and Medical Science team in general that he has brought on board. That's a fairly big department to stand up, but it has fundamentally changed the way in which we interact with physicians. All of the people in the Medical Science team are either MDs, PhDs, or nurses. It is a way that medical professionals interact with other medical professionals who are our customers. We've established a highly credible medical education program.
We have improved scientific and medical communications to support our sales operations and our marketing efforts. This is alongside the other components of clinical science that we were already doing in terms of the evidence generation, and that is needed to gain coverage and support guidelines inclusion. We've increased engagement with our KOLs at the physician level and at the institutional level through our national accounts team. We've also more recently established a framework for U.S.-led investigator-initiated trials, this is ways in which we can generate clinical utility data on a modest scale to supplement our primary clinical utility studies for guidelines inclusion. It's also an excellent way to engage with those Key Opinion Leaders.
We are also working on registries and research partnerships, and we will have, you know, more updates for our investors as and when those materialize. We've taken big steps with the appointment of Tamer as CMO, to align our clinical development, and with our Medical Science teams, and this allows us to improve patient enrollment, the clinical trials monitoring, and all of the Medical Affairs education. That's been a big achievement over the course of this year.
Market access and reimbursement, not a huge headcount add, but a very tactical and very important role for continuously improving the rate at which we get paid for our tests, which often relies on the quality of the documentation that we receive through the ordering process, so that we can establish medical intent and medical necessity in the eyes of the payers. All of that work is has been improved since David Soya has joined our team. We have also established a distribution agreement in Israel, which is the first of its kind to come through PEDUSA rather than through the New Zealand business.
We also have, you know, continued to engage with Novitas and National Medicare regarding our current LCD, where that's appropriate, and through our partners on the draft LCD. We also had a milestone achieved in January. We received coding and coverage for Cxbladder Triage through an LCA. We wrote about that in the quarterly update. We believe that this may also establish a path Detect+ to receive coverage, provided that the coverage landscape remains unchanged. How did we do from a financial perspective, just looking at the global numbers? Global total laboratory throughput increased 37% to 31,565 tests.
Of that, the vast majority is commercial testing revenue, that's very important, 26,691 tests, with the remainder being, you know, part of clinical trials. Global TLT is driven by U.S. growth, U.S. growth is driven predominantly by growth in Detect. While hematuria evaluation that you can see in the, as we break down the different products, is almost exactly what we would expect from the market estimates that we had on an earlier slide, where the market for Triage and Detect collectively is roughly three times the surveillance market. We've continued to observe strong growth in the U.S., which is our largest market. We continue to have coverage with Medicare, this is important.
We Cxbladder is has a majority Medicare and Medicare Advantage population because the average age of a patient presenting with hematuria is 73, so many are covered by Medicare insurance. Medicare and Medicare Advantage represent 20% of the general population. However, in the Cxbladder population, it's actually approximately 60% of all the commercial tests ordered. We acknowledge that there is some uncertainty by the proposed LCD, but at this stage, Novitas, our Medicare administrative contractor, continues to reimburse Pacific Edge at $760 per test. Our other major contract is with the Kaiser Health plan. As mentioned earlier in the presentation, two Kaiser sites are in the Pacific Edge's top 20 accounts. 14 Kaiser sites across Southern California are ordering in FY 2023.
While the EMR software development project is not completed, or is not live, the development and testing has been complete, and both teams at Kaiser Permanente and Pacific Edge are working towards a revised go-live date, at which point we will advise the market. The Veterans Administration is another very important capitated system, represents a large strategic account for us. We have not demonstrated much progress to date, and it will be a focus going forward. We are contracted with Veterans Affairs, and we have clinical studies with the Veterans Affairs, and consequently, this gives us the opportunity to go site by site in our approach to establishing volume through the VA.
The unique number of clinicians, unique ordering clinicians in the United States is continuing to grow, and we're very pleased by that. Two of the within the Fit for Growth initiatives that we've broken down as digitalization and performance excellence, and there is a strong end goal here of making our internal teams more efficient and more effective. From a customer perspective, we want our customers to become stickier as a consequence of the improved processes that we have. We're really, we're reevaluating the entire customer experience, and having a commercially led product management for end-to-end customer experience supported by digital workflows for the entire experience in the way that our customers interact with us as a company.
This will include specific initiatives associated with EMR integrations at a larger scale than just the one we have currently in progress with Kaiser Permanente, but finding ways to repeat that experience for all of our customers. To provide a customer portal for those who don't wish to go through the integration process, where they can digitally send and receive testing results. We're also focused internally upgrading older hardware and IT systems, and performance excellence for the laboratory operations and the customer service. Within New Zealand, the APAC testing volumes have stayed basically the same. Unfortunately, we are still looking for more growth to come out of the APAC market. The volume that we do see has come primarily from New Zealand.
Australia and Southeast Asia are still in business development. To drive things forward here, we have recruited a new APAC president who started in March. We wanted to include this slide to give our investors a sense of what it means to scale up our marketing activities at conferences. We really do have a world-class presence at a very well-attended medical meeting in the form of the AUA, which is the world's largest gathering of urologists. The second major area of focus that we announced last year is evidence coverage and guidelines. We want to use when generating high quality clinical validation clinical utility evidence, this is the best supporting evidence that we can generate for inclusion in guidelines.
The adoption of Cxbladder by the clinicians, insurers, and hospitals prior to guidelines, inclusion, you know, is still possible, but we do need to be demonstrating a path in that direction. We can do that through the communication of the ongoing studies and the education events. We are looking to foster a series of relationships with all of our Key Opinion Leaders, and the Medical Affairs Team is really driving that activity. We have also established a scientific and clinical credibility of the Cxbladder brand in the process of re-engaging in this manner. The addition of DNA biomarkers to our gene expression profile test to Cxbladder did provide dramatic improvements in performance.
While we evaluated a number of different combinations of tests, including, the original Triage test, the original Detect test, and adding the DNA markers to both Triage and Detect, what we observed is that the Cxbladder Detect+ product was the best performing product on all metrics. Consequently, we are able to have a single product for hematuria evaluation, rather than two products going forward.
This study was published in the AUA Journal of Urology and has been very well received with customers with whom we have discussed the clinical evidence. It provides the starting point for the coding coverage and pricing process, but we will need additional clinical evidence from the completion of the studies mentioned here, DRIVE, microDRIVE, AUSSIE, and STRATA, to complete the coding coverage and pricing for Detect+. Importantly, you know, no impact is expected on existing Triage detection monitor revenues because the Detect+ product will only be promoted in full to the market outside of academic collaborations and outside of clinical evidence generation initiatives until the reimbursement is established through those initiatives. We are continuing to investigate the potential for DNA SNPs to create a Monitor Plus product.
We will update our investors to the status of this as that project matures. A summary of our clinical evidence generation is all available here. STRATA is our utility study for focused on Triage. DRIVE is our validation study focused initially on Triage, but will also be able to give us a CV for Detect+. The AUSSIE study will augment that and provide clinical validation of Detect+ in an Australian cohort. The microDRIVE study will also specifically look at microhematuria, but will also specifically use a veterans cohort to do this.
That is to provide a greater tumor count, which is the important thing from a study perspective, in terms of the power of the clinical evidence, in the microhematuria population. That, the microDRIVE, the DRIVE study, and the AUSSIE study will be combined in a pooled analysis for microhematuria, and that will allow us to have established the highest possible clinical evidence, clinical validation evidence, for AUA and NCC guidelines inclusion in a microhematuria population, which is the largest population. We also continue to have the LOBSTER study in a surveillance setting as well, that is, we have three sites enrolled and more are underway. Our Medical Affairs Team is speaking the language of our clinical opinion leaders.
We have focused on Clinical Dossier development, we have focused on communication of our ideas through podiums, presentations, posters, and publications. As I've mentioned, we've focused very, very strongly on building the right kinds of Key Opinion Leader relationships. Something that we have only started to establish is that we are looking at investigator-initiated trials, and we're creating which is where a principal investigator comes to us with a suggestion, and we work with them, which only costs us the cost of goods to create modest clinical utility evidence for Cxbladder in a often a novel or specific niche. In many cases, that niche may be local data development for market access purposes in other countries.
We are also looking to establish a Cxbladder registry, multi-site real world evidence to support the existing AV, CV, and CU, core evidence that we are generating, and where the main outputs here are the publications and other medical, other information that we can communicate through the Medical Affairs Team. Our market access team has, you know, the strongest focus has been on Medicare. We have preemptively, after the completion of the Detect+ publication, we have approached Novitas for a reconsideration request, and that is to move from coverage through the LCA to try to get specific coverage on an LCD.
That reconsideration request has been accepted, but there is no timeline available as to when they will give us a result for that. That is a stronger level of coverage than we enjoy today under the 21st Century Cures Act, which is coverage of medical necessity. We are also working towards PLA coding, coverage and pricing for Detect+, and we have an active program of appeals and prior authorization workflows to increase the payments from Medicare Advantage plans. We are, for the first time, starting to look at, in a dedicated fashion, a private payer strategy to improve our rates of payment from certain private payers.
Underpinning that activity is also the health economics, which is something that we have been working on for a while, and hopefully we'll have more to update the market in one of our future quarterly company updates about the status of that. For the first time, we have established a distributor relationship directly through PEDUSA, rather than the New Zealand business. We will continue to evaluate opportunities that come to us, and whenever we believe there are suitable partners for that purpose. Our third pillar is research and innovation. Our focus is, here is unchanged. We want to evaluate products, concepts that address unmet clinical needs and looking at all of the cutting-edge technologies, and to build a patent portfolio that supports novel clinical applications and behavior-changing products.
To take that patented technology through to clinically validated molecular diagnostic tools that address an unmet clinical need. One of the clinical studies we have underway in this regard, is the MONSTER study, where we are looking at opportunities within six months of the intervention to TURBT, to drive a minimal residual disease product or a therapeutic response monitoring product. This stuff is in its infancy. We will continue to update the market as and when we make progress. I'll turn now to Grant for the specifics of the financial results.
Great. Thanks, Peter. On the slide, you can see that there's been continual half-on-half growth, with operating revenue, with the strong U.S. commercial growth volumes driving a 71% increase in the financial year 2023. Second half revenue was up 25 %-odd on the first half, and it was also up 80% on the equivalent half in the prior financial year. With the U.S. growth, it reflects an increasing concentration of revenue coming from the U.S., with 96% of revenue based out of that region. Operating expenses increased 58%, and that continues the theme that Peter's been talking about with continued investment for growth. Sales and marketing and research received 73% of that investment. With the majority of expenses and revenue U.S.-based, currency movements between years have also impacted results.
It's done this by increasing both revenue and expenses that we've seen. If we remove the foreign exchange currency movements and look at it on a like-for-like basis, revenue is up 55% and expenses are up 47% on the prior year. As we drill into the operating expenses, scaling the global team has been a major driver for the company, and we're seeing that with 52% of the increased expense driven from people costs. This is over a number of different areas, sales and marketing has received the lion's share of this investment, as we mentioned before, with a 56% expense growth year-over-year. Lab costs are largely driven by volume.
Research and development has been largely driven by increased investment in people focused on, the slides that Peter just talked about, and a real focus on guideline inclusion. We have a strong balance sheet and, we're well positioned for growth.
Thanks, Grant. Just moving on to our ESG strategy. We wanted to highlight our ESG focus. One of the important things to remember is that Pacific Edge is a company that is founded on improving social outcomes, particularly for bladder cancer patients and their families. We are working to build products that deliver actionable information that can contribute to a clinically meaningful improvement in bladder cancer treatment, improving the lives, and improving the healthcare equity across populations and the healthcare outcomes for patients. This is at the heart of everything that we do. Through the course of FY 2024, we're preparing for the reporting requirements that we have this time next year.
We're integrating the oversight of ESG matters, including carbon reporting into the audit and risk committee charter. Within New Zealand, we've measured carbon emissions, and we're looking at scopes one, two, and three in FY 2023, so that we are positioned next year to be able to provide information this time next year. We are working with Toitū Envirocare to accurately audit and measure our greenhouse gas emissions as we work towards achieving certification in respect of FY 2024. We are updating and developing strategies and policies and evolving our risk management framework to meet these reporting requirements.
We also, you know, we have worked quite hard on attracting and retaining talent at Pacific Edge over the last year to drive some new policy updates there. We actively promote diversity, inclusion, engagement, and fair remuneration. I wanted to also just point to the slide, or sorry, the image on the right-hand side of your screen as you look at it. You know, one of the things that Pacific Edge or specifically Cxbladder is able to do through a combination of protocolized healthcare and in-home sampling in New Zealand, is that we are able to promote healthcare equity. This is a quote from Peter Davidson, who's one of the users of our products in the Canterbury region.
That following the introduction of Cxbladder into primary care, into Te Whatu Ora, Canterbury, referrals to urologists are safely reduced and urology waiting lists fell by 25%. When you're able to reduce waiting list time, you're able to, you know, you're able to deliver a more standardized care, more equitable care to a greater number of patients, who may not have had the ability to wait. We see that as an important step in the right direction for us achieving our social mission. Onto our final slide, you know, echoing things I said earlier and echoing Grant's comments that, you know, FY 2023 was a building year. It was an investment year. We believe we invested prudently during the course of that year.
We will continue to make modest investments through the course of this year in effectiveness and efficiency processes, digitalization, and performance excellence initiatives are focused on effectiveness metrics, which is really making sure that it's not just about throughput, but it's about throughput per headcount or the throughput per clinician. That applies in the commercial space as well as the laboratory space. The headwinds that we anticipate is, and everyone is well aware of this, is that Novitas has remained silent since we provided it with comments on September 6th last year. It remains a headwind, the uncertainty associated with that.
Similarly, if Novitas publishes a final LCD, in which Pacific Edge retains coverage, we view that as a catalyst for FY 2024. We maintain the view that other catalysts are the Kaiser EMR integration going live, initially in Southern California. One of the things that we've, that we've created in the U.S. is a level of sales force, territory stability and maturity. We're not shuffling territories around, we're not adding new reps. We're maintaining that stable, and we're asking everybody to become more efficient and more effective in the territories that they currently operate.
There, there is the possibility of working with Te Whatu Ora on a national contract, and so we maintain vigilance there about how we can push that opportunity forward. New clinician-generated clinical utility evidence through investigator-initiated trials, can add to our, can add to the way that we are perceived in the market as those studies are completed. Importantly, we have a world-leading technology, a strong balance sheet, and we are building momentum in the U.S. and establishing footholds in new markets. I thank you for your time, and we move on to questions.
We are going to take questions via phone first. I believe that those are teed up and, you know, we're asking our phone callers just to limit themselves to two or three questions. If you do complete your two or three questions, you may go to the back of the queue and ask some more after that. We want to try to get through all of the callers that we have coming through today.
Thank you. We do have a few questions on the phone today. Your first question comes from the line of Robert Morrison. Your line is open.
Hi, Rob.
Good morning, guys. Can you hear me?
Yes, we can.
Good, good. Hey, congratulations on another year of good growth. I think we're all pleased to see that the great initiatives you've brought in are starting to feed through, and indeed they're continuing. First question is, as of today, how many full-time employees do you have? I think you had 114 at the end of March. How many is it now? Is there any, like, notable contracted labor you guys use?
There. I don't have that figure to hand, Rob. We have continued to hire since March 31st. There is a modest increase in headcount from the 114 published. Yes, we do make use of contractors. We don't particularly in New Zealand for software development, that's a big one. Often those are ways to have flexible and scalable resources very quickly.
Thank you. It looks like average price per U.S. commercial test rose in U.S. dollars in the second half. I'm just wondering if what the drivers are on that? Has there been a notable increase in collectability, say, percentage of tests where the revenue is collected? Is that from the efforts of the your market access team or?
I can answer that one, Peter.
Yes, we are seeing a gradual lift in the recoverability and the percentage paid for Medicare Advantage in particular. That is through increased evidence, increased publications, and the work of the medical reimbursement team. Also, Kaiser is slowly making a greater percentage of the tests that we're doing, which is lifting their average sales price.
Triage being.
Correct.
Coverage for Triage, has also increased marginally the rate at which we get paid for that test, so.
Yeah, just to clarify on that, we had always been getting some reimbursement, reasonably strong with Medicare Advantage. Now with coverage under Medicare, that reimbursement rate has strengthened from first of January.
Cool, thank you. I'll ask one more, if I may. What kind of churn rates are you seeing in clinicians? You know, what was that level, say, at the start of the year, middle of the year, now and post-balance date?
We do monitor the churn of clinicians, Rob. I guess there are a couple of factors here. It is higher than we would like it to be, but the definition of churn also matters. There are very few clinicians that we see Stopping their use of the product. There are clinicians whose volume fluctuates, and we have to continue to provide effort from our sales force to make them continue to order. That's something that through stickiness initiatives we are looking to address. In the sense that churn means losing customers entirely, it's very low. In the sense that it means it continues to fluctuate and we need to do more work to keep them, then a different answer. That is more common than we would like. We are working hard to address it.
Okay, cool. Hey, thanks guys, very much. I'll go to the back of the queue.
Thank you.
Your next question comes from the line of Christian Bell. Your line is open.
Yeah. Hi guys . Firstly, can you hear me okay?
We can indeed.
We can. Hi, Christian.
Hi. Hi, guys. Firstly, well done on the progress that you've achieved this year. First question from me, though. At the third quarter update in January, you had said that you were targeting FY 2024 as the year where investment and people should be driving a meaningful contribution, to financial and operational performance. Basically five months on and two months into this financial year, how are you tracking to that expectation? Are you kind of meeting, expectations, exceeding, or underperforming?
I think the honest answer there is we're meeting expectations. We're on track with that at this point.
Okay, cool. Second question, I guess which kind of leads into this one. I'm also interested in exploring one of the comments made by the chair in the commentary provided this morning that you have sufficient cash regardless of Novitas' position. I guess that's kind of echoed in the comments around having a strong balance sheet in everything. Even with ongoing reinvestment, you're burning close to NZD 30 million, which basically means you need to start breaking even in three years' time or so. Given the much larger cost base now, you must be anticipating significant volume growth, otherwise you're likely going to need more capital. Is that a correct interpretation to take? If not, what conclusion should we be drawing?
So, there's no capital raise planned in this current year, and we're looking to use the capital that we have as efficiently and effectively as possible to grow the revenue. The investments that we'll continue to make through this year is, as you, as you noted, Christian, you know, we are trying to signal to the market that we have filled the larger, largest of the gaps that we saw in capability. We filled those during FY 2023. Now we will continue to make investments because we need to continue to grow and grow faster. But those will be more around Fit for Growth, performance excellence, and digitalization to get the most out of the resources that we have already hired. That's how you should think about the cost base. You know, what you should also think in terms of how the continued revenue growth that comes from that as well.
Okay. Because, I mean, obviously the cost base isn't going anywhere. You know, I realize you're not looking to raise capital in this year or the next. I mean, the key variable is really, and I know this is an almost impossible to answer, but is gonna be revenue in three to four years' time. I mean, are you sufficiently comfortable with your current capital position that you wouldn't need to raise given the current investments, and investments going forward?
I'm confident in that for FY 2024, yes. There are always scenarios in which someone might.
Okay. Sorry.
There are always kind of scenarios in which a company might choose to look for additional capital. We expect of ourselves that we have additional capital. Sorry, sufficient capital to drive ourselves towards a cash flow break-even point.
Cool. Thank you. I better leave it there, and I'll jump back to the back to the queue. Thanks, guys.
Thank you.
Your next question comes from the line of Matt Montgomerie. Your line is open.
Good morning, guys, and thanks for the result. I appreciate the ongoing improved disclosure across the board. I might just piggyback with a slightly more direct line on Rob and Christian's questions. You know, 114 FTEs, you know, maybe 120 now. When you comment, Pete, in terms of that investment is largely complete, you know, can you give us more direct, you know, quantitative read-through, I guess, into, you know, maybe how you think that FTE will track and in particular, in what roles, you know, do you think you still need to make increased investment?
Yeah. Matt, as you know, we don't give guidance at this time. We can't give you anything concrete. Qualitatively, I would say, you know, we have made significant investments, and we're gonna have to cover the full-year costs of those. Some of those we made late in FY 2023, and so we're gonna have to carry the full-year cost of those 114 hires and of course, the additional ones that we make in FY 2024. The hires that we would like to make in FY 2024 are around making the existing team more effective and more efficient. The digitalization is an important component of that. You know, what does it mean, right?
It means some of it means internal systems that make our people able to, you know, process more samples in the lab faster. It means automation in the lab by the same token. It also means that there are more resources for deploying EMR integrations at scale. We're gonna need software development for that. There are qualitatively, there's some things that hopefully allows you to get to a good estimate of how we're thinking. And performance excellence is slightly different.
The digitalization efforts are more about are continuing to stand up processes and that don't yet exist at Pacific Edge, whereas the performance excellence is about improving the processes that already do exist at Pacific Edge and reanalyzing those from the ground up and saying, you know, what are we doing well? What are the KPIs associated with every step in our workflow? That includes, by the way, the end-to-end customer experience and not just the laboratory workflow. How can we make both cost-saving gains and performance improvements at the same time? Those are the dual outputs from a performance excellence initiatives.
We do not, we the types of people that we're hiring, or using through third parties, either as contractors or consultants, are going to be designed to make the current cost base more efficient and more effective.
Right. That's, that's very clear. Then just secondly, I'd just be interested in, you know, if you know, the LCD was an adverse outcome from a company perspective, how would you think about managing the cost base in that event? Would you look to wind it back, or is it a matter of just for you guys driving through for irrespective of reimbursement?
Matt, we've modeled a number of different scenarios for that. Importantly, even though coverage and non-coverage are binary, right? The path back towards coverage is would have to be will be established only with our clinical evidence generation program over the course of the year. With every new publication, we improve the Clinical Dossier, and we improve, you know, are able to take that to AUA, NCCN, or Novitas and say, you know, "Here is additional clinical evidence.
Just on the U.S. commercial test mix, looking back on my notes last year, sort of a number you've referenced for a while is a CMS mix, you know, more like 2/3 as opposed to the 60% number that's in the report, in the presentation. Sorry. Firstly, is this correct? Then maybe secondly, if so, you know, it looks to be quite a big step up in sort of other U.S. commercial test volumes. You know, maybe 60% type growth. You know, clearly Kaiser's some impact, but I think even stripping that out appears to be quite good growth elsewhere. Can you just sort of talk to, you know, the drivers of this in particular, ex CMS and Kaiser?
Yep, I can, I can pick that one up. As we've grown the, grown the number of account executives out there in new different areas, there's a slight, changes in the composition of patients. We are also seeing that Medicare Advantage is dropping just slightly. We're still doing further analysis on trying to get to the, get to the understanding about where that is, but we've also got KP that is increasing. The 60% is, you know, it isn't 60%. It's slightly higher than 60%, but it's not as high as it was last year, and we said it was around 2/3.
Yeah. Matt, the trend you've noticed is accurate and your interpretation is accurate. We are internally we are trying to understand whether there is a larger there. At this point, this is just an evolving payer mix as a consequence of adding new territories.
I think the important thing to note as well is that the average sale price is continuing to increase, so the mix isn't impacting revenue. It is just part of that industry mix that we're now moving into. You know, we don't see it as an area of concern, but just we are focusing on trying to understand it a bit better.
Great. No, that's very clear. I'll leave it there for now. Thank you very much.
Thank you.
You have a follow-up question from Robert Morrison. Your line is open.
Hey, Rob.
Oh, hey, thanks. Just regarding, I think you mentioned that, you're pursuing an alternative pathway with Novitas via some other, LCD. Do you think you could give an overview of that?
This is something that we've done a number of times previously. And it's just prudent practice to approach Novitas every time you have additional clinical evidence. And you go through what's called a reconsideration request, where we provide them with all of the publications, essentially either the Clinical Dossier directly or the individual papers that make up the Clinical Dossier, and we submit that to Novitas. And they have told us so far that our submission is a legitimate submission, but that does not imply success or failure. That would be to have our codes, 'cause our codes are currently covered on a local coverage article, as I know you know, so on the LCA. This would be to have the codes explicitly mentioned on an LCD. That's what we have asked for.
Great. Thanks. With five minutes left, I have got a couple that have come in, online, so I'll just switch to those quickly. The first one's from [Andrew Ott]. The test per clinician is steady. Can you comment on when we might see growth in this ratio?
Inherently, that statistic, as you're adding new clinicians, that will naturally drag down the average of a statistic like that. However, your point is still a salient one. We are continuing to put effort into increasing the number of tests per clinician. We believe a trigger point for that will be some of the digitalization efforts that we have outlined this year, where we want to implement more EMRs at more customer sites. As a consequence, making it easier and easier for patients to order should increase. Sorry, for physicians to order should increase the stickiness and the repeat usage of our tests for the appropriate patient cohort.
Great. Thank you, Peter. Another question from Andrew, which I believe has been addressed with the focus on digitalization and performance excellence. Got a question from Steve. Are you able to update investors on the sales start to the new financial year?
Actually, we prefer not to comment on that because this is a results call for the FY 2023. We'll update everybody in the first quarterly update, so that'll be in and around July 15th or so.
Great. Thank you. Are there any more callers on the phone?
We do have a further question from Christian Bell. Your line is open.
Yeah. Hi, guys. just on to Kaiser, I understand, you didn't have a prior enough of an update there, but is there any sort of thing that you could, say given that it's such a key kind of, swing factor for FY 2024? I mean, would you be surprised if this process took more than three months or, took more than six months or something like that?
Sorry, Christian, the audio didn't come through as clearly as I wanted. Are you asking about the reconsideration request?
No, no. Sorry, can you hear me better now?
Yeah. Go ahead.
Hello. Hi. Oh, yeah, cool. No, it was actually for Kaiser. I understand you haven't provided much information on purpose, but just given that it is one of the key you can get, can provide us.
We won't give firm guidance on a timeframe. What we will say is that we are working with the KP team, and the KP team's internal project managers have a timeline established. We do in our discussions with them now have a timeline reestablished.
Okay, cool. If I could just squeeze one more in. Just interested, obviously Detect is your, by far the most used test by your current clinicians. In what kind of modality are they using it? Are they using it in a risk stratification sense or, as a, I don't know, substitute for cytology or something like that?
It is. There is varied use of the Detect test. Some physicians do use it more for its adjunctive use. Others use it for its NPV. That is the risk stratification that you're asking about. Our goal as an organization is to, a ll of them use it prior to a cystoscopy. What's important is that we actually, we need to move them further up the chain, so they're actually making, they're using the Detect, or Triage. When they are using, when they're using Detect, our goal is to make it so that they are seeing the Detect results prior to making the decision for a cystoscopy. That does happen. That, we have.
I couldn't comment on the percentage because we don't get to see that information when it is ordered. Anecdotally, like when we, you know, when we discuss with our sales team the appropriate selling context for the test, it's okay to have it used for adjunctive use, you know, where the result is not necessarily known prior to the cystoscopy, to get your foot in the door with a customer. Over time, we expect our sales force to move that up the funnel so that the Detect result is known prior to the decision to perform a cystoscopy.
It would be fair to say the current kind of usage for Detect is not really being optimized in the sort of capacity that the test was actually intended to be used for. I guess, how do you, w ould Detect+ is probably quite a key, is obviously a very key kind of milestone, given that I guess it'll make your salespeople's jobs a lot easier trying to get up the tunnel.
We definitely do view Detect+. The performances of that test is very, very good, consequently, we do believe that that will have a positive impact on our ability to sell the test in any modality. Again, The way that we have asked our account executives to sell this test is to focus on the NPV and to find the appropriate patient population that a physician they're talking to will say, "Yes, this is a population of patients that if I get a negative result, I will gladly forego the cystoscopy." But that doesn't necessarily happen straight away. You start with that conversation, you may end up having to acquiesce to a different modality of usage initially.
That will always be the goal to continue to work them back up once they have confidence in the product for a narrower use case, to get them back to the optimal use case, as you highlight, which is to use it in the majority of hematuria patients, for which it may be appropriate that they don't receive a cystoscopy.
Right. Sorry, just, you mentioned a number of people already using Detect+. Is there kind of quite a significant shift in the feedback that you're getting from that test compared to the first generation?
Sorry, if I said that, I misspoke. There are a number of people who use Detect for its NPV, which is how we imagine Detect+ will be used and how Triage should be used. There are people who have read our publications, and we've had discussions with about Detect+. They are impressed with the performance characteristics that they have observed. We are still in the process, it was on one of the slides in the presentation, of transferring the intellectual property from essentially [PED] to the two commercial labs, PEDNZ and PEDUSA, with PEDUSA being the priority, and those two milestones are not yet achieved.
We will update that kind of information, in a quarterly company update, sorry, a quarterly shareholder update, as and when those milestones are achieved.
Great. Thank you.
That's gonna be it.
Thank you.
Thank you, Christian.
Bye-bye.
Thank you, everyone.