Good morning, everyone, and welcome to D&B Carnegie. My name is Maria, and I'm an analyst here at the bank. Today, I'm thrilled to be joined by Richard Paxman, CEO of PAXMAN. Please welcome Richard. We're going to dig into the Q3 numbers, talk about Dignitana integration and the CIPN process, and many more things, I think. I think we'll start with a presentation from you, Richard, and then we'll continue on with the Q&A. Please feel free to ask questions in the chat.
Wonderful. Thank you, Maria, and great to be here again, and looking forward to presenting our Q3 results and some other information. I think you all know me by now, or most of you do. Richard Paxman, just talking a little bit about the organizational structure, no major changes from the last time we presented in terms of overall numbers at 142. I think it's important to understand, although we've made certain changes in the Dignitana organization, technically those even that are leaving are still employed by the group. We'll soon see some reductions in the Dignitana AB business, just down to two employees. You will see a little bit of a stabilization for a short period before we start then looking at further employees to support our CIPN commercialization plans, which is exciting.
Continue to have a strong leadership within the group and a really great team, and can't thank them enough for what's happened this year. It's been a busy year, and they all continue to perform wonderfully. Just taking a look at the consolidated figures and the group, the new group achieved net revenue of about SEK 86.9 million compared to SEK 64.8 million in the same period in 2024. That's a 34% growth and our highest level of sales to date, which is fantastic. It only comprised of SEK 1.1 million of organic growth from 2024. That's partially because of the VA order that we had back in 2024, which meant the growth does not look as good from a comparable period, and about SEK 21 million of acquired revenues.
If we actually look, though, at the U.K. entity, we achieved really strong revenues of SEK 3.4 million on budget and about SEK 2.9 million the prior year. So in line with what our expectations were, the US entity achieved $3.6 million compared to $4.2 million that prior quarter as well. That really is back down to that Veterans Affairs order, which was about $1 million overall. If you look at our cost structure and EBITDA, of course, there's going to be some impact from our CIPN commercialization activities, which weighed on margins, as well as, of course, the work that we're doing with Dignitana. The company delivered an EBITDA of about SEK 7.8 million, which is a 9% margin, and an operating profit of about SEK 1 million overall.
Profit and loss, as I said, was affected by the merger, which equated to about SEK 7.5 million impact. SEK 3.4 million of Dignitana costs and SEK 1.6 million. Sorry, about SEK 1.6 million estimated as our goodwill amortization. I think taking a step back and looking at these overall, we are really, really pleased with where we're at. We think we've got a strong performing business. Back to where we thought we were from a budgetary perspective, we're up on the U.K. business and about $1 million behind where we thought we were as a US entity. That's primarily the direct provider of the insurance-based billing model not delivering quite where we wanted just yet, but still strong expectations for the next year. Cash flow, of course, has been affected by the acquisition and restructuring.
That has led to a negative operating cash flow of about SEK 6 million. Investments have totaled about SEK 6.8 million for the period. Again, SEK 2.5 million Dignitana related, SEK 1.3 million related to CIPN, and then the rest with those typical investments you normally see. An overall cash outflow of nearly SEK 20 million. That does seem probably our highest cash outflow overall for, I think, for our history. Let's not forget what we're doing. Investing in Dignitana, paying off some of those debts that Dignitana had, and also investing in the future CIPN, which is exciting. We're still in a very, very strong position, SEK 130 million of cash in the bank, giving us a solid base for that commercialization going forward and completion of the Dignitana integration. Forward.
Just looking at about where sales are coming from around the world, that US piece is growing because it's actually a stronger part of the business than overall. That's where we're putting our investments. We've got to remember that we put a large proportion of effort and focus into the US market as opposed to rest of world markets. They do continue to perform, though. U.K. is reasonably static year on year at the moment. However, if you look at our rest of world markets, we're seeing that 20% growth year on year, which I think is strong. We can't forget that. That's without significant investment at the moment. That's the trend we'll continue to see as our focus remains primarily US reimbursement and peripheral neuropathy. Longer term, that, of course, will change as we start to develop those new markets.
ADTR revenue, of course, is growing, amounted to $52,000 for Q3 2025. That was actually a decrease if you look at it without Dignitana and again without the VA. You look at what it looks like with Dignitana in the mix, $70,000, nearly $1.8 million, $80,000 per day. 41.9% increase from Q3 2024. Very excited about what this means for the organization. Even more excited about what this means when we can start to see that drive in reimbursement and really start pushing forward with that stronger utilization when we remove those cost barriers. We all know why we carried out the directed issue earlier in the year, but I'll just remind ourselves, commercialization of CIPN. I'll touch on that later. Our new facility, which I'll touch on also later.
Future investments into novel therapies, which is the work that we've not actually started yet, we expect to look into that early into the new year. All the discussions are well on the way. In terms of where our spend has been in terms of that raise so far, just about SEK 5.5 million of P&L impact. That's really on headcount, reimbursement work for CIPN, rebranding and positioning of the business, non-capital R&D, some marketing and regulatory work, of course. From a cash impact, it's around SEK 10.5 million. Overall, heavier spend will start in the new year when we start to roll out capital for the CIPN commercialization. The merger, I think everyone's wondering how this is progressing. I've got to say, I'm delighted with the progress. It's been a learning curve for us all, of course.
This is my first merger or acquisition and my team's, but I think I'm delighted at how we've performed, how Dignitana have welcomed us, as I've said in previous meetings. We now have 100% of the shareholding in Dignitana, which is fantastic. Looking at terms of cost and associated costs from a P&L impact, we're about SEK 7 million, as we've previously said, and a cash impact at the moment of about SEK 6 million. We do expect some larger cash impact happening next in Q4, and that's really about the squeeze out and buying back those shares that didn't transact during the offer period. Again, this is all planned for and expected. No hidden surprises. Integration progressing very well.
Just got back from Philadelphia where we had all our US teams together for the first time, and it was great to see how everyone was building relationships and actually excited for the future. We really do believe we will be stronger together. I think this map demonstrates that. Looking at now, there's 942 locations we've got across the United States, which is incredibly exciting. We look at the revenue we are generating today. We look at the improved utilization when we change to IBBM. This really allows us to put ourselves in a position where we can drive revenue, drive utilization, and keep ourselves ahead of the game and in a very, very strong position. We've been looking at a new structure, and it's a relatively simple business, Dignitana so far, thankfully.
The Dignitana AB business will pretty much close down if there are two people who will support our international efforts. That will have all finished by the end of the year, and we're grateful for the Lund team for all that they've done. Our main focus will be on the US business, of course. That is the main interest from the acquisition with the large volumes of sales that are already showing an impact and profitability to Paxman AB. We've had some changes and put some new reporting structures in place, but overall, we're working on better processes, more support, reviewing appraisal processes, standardizing salaries, etc., and focusing on improving culture going forward. I think we're making a really good start there.
In terms of feedback and looking at how the integration's progressed from a people perspective, which is important to me and my colleagues, we've had about a 94% response rate to our post-merger integration survey from the Dignitana team. It's been overwhelmingly positive. I'm not going to go through all of these, but from the survey, but also being in Philadelphia, it is wonderful to hear the positive feedback. We've not always got it right. We've got some positive feedback, but we've also got some feedback in how to improve in terms of communication. That's key going forward, and that's something that we're going to continue to invest in and make sure that culturally, but also process-wise, we're working well together. I think we'll definitely achieve that by the end of the year.
Touching on reimbursement, which is obviously a key consideration for us all, I think it's important to understand that although the Q2 results, Q4 result didn't look as good as we might have expected, and actually the year on year, if we looked at insurance-based billing income, that actually rose nearly 12% from the prior year. Self-paying income actually rose 25%. Where at the beginning of this year, we were expecting a slightly different mix, what we've seen is still strong levels of growth throughout, which is good. I think we should be happy with that. I think if you look at the number of locations driving revenue, less than 18% of our locations are in non-shipping, are part of insurance-based billing, apologies. That's driving 35% of our revenues. Again, it shows, doesn't it, that when we're switching, we're getting better utilization at those locations.
I'm hopeful by the end of the year to provide you some more utilization statistics so we can really start to understand more about that impact as well. We may even share some of those data points at the capital markets day in the next couple of weeks. Coverage still remains strong where we're actually collecting benefits investigations. Over 3,000 patients now treated or 3,000 benefits investigations now carried out, still showing 75% of coverage. We do believe longer term that will improve and that will improve based on CPT-1 coding, but also the work that we're doing on coverage and payment discussions. We're really focusing on this simple switch. We have to get better at moving to where customers are on our new model. That has been a little bit of a struggle. We're not where we wanted to be.
We've just run a webinar. Some of you actually, I think, joined. What a response, what an interest. I'm also just back from Accelerate, a US Oncology and Unity on Mark conference, so very much about the community Oncology base. There is an overwhelming interest in the new model. What we need to do, though, is give them confidence that this is a de-risked opportunity for them, which gives better access for the patient. We believe it, but we've got to demonstrate it. I think the first part of the year will be focusing really hard on the payers, getting the coverage policies right, getting customers to switch, giving them the support that they need to get confidence to move forward. The legislative mandates are flying in. It's brilliant. Two more have just been published, both in Ohio and in Pennsylvania.
We all know about the New York bill and the Louisiana bill. The other bills are progressing as well. An area which we have been really standoffish for a while, but based on our integration with Dignitana, based on the fact we've got more people now in our organization, we're actually able to put some more focus into this. There is a lot of hype around these bills and actually a lot of potential success to support those coverage policies going forward. Excited at where these will continue to go and we'll keep you updated on what's happening over the coming months. These rulings that we've all been waiting for have been delayed. NPFS, which is the community Oncology in reality ruling, has come out, the final rule. It is pretty much as it was.
We're going to give more detail shortly, but we're reasonably satisfied where NPFS sat anyway. We would have liked it, would have liked it being higher, but actually we're not too concerned about where it ended up. The conversations I've been having with community Oncology providers actually think, "Oh, if you break even with Medicare, that's a really good start." That is a good and confidence-boosting piece of information. The final rule for OPPS is yet to be delivered. Very frustrating, but we hope by the end of the month we will have that. I wake up every morning, check it. I think Maria does as well. Unfortunately, no news yet, but let's hope they're working on some positivity for scalp cooling. It's taking a bit longer. From a peripheral neuropathy development standpoint, we're making really good headway.
We recently presented our latest data at ESMO with some hard hitters from the U.S., which was fantastic. Two hundred people attended this session. It's a competitive conference, but really well attended, lots of interest, and so excited about the potential for this product. As I said, we presented the data at ESMO. We've shared this in a press release. For me, the biggest highlight is the levels of patients that can continue without dose reduction, which really affects outcomes, but also typically in the historical data, the data that's available for us all. We're seeing 30%-40% of patients with taxon-based therapies have grade 2 peripheral neuropathy. That can be debilitating, painful, creates lots of sensitivity, difficulty to walk. Our results have reduced that to 2.5% of patients. That is impressive.
It has such a huge impact on the patient, its quality of life, but also the cost burden. Hopefully, again, at the meeting in a couple of weeks, I'm going to share some of that information on cost burden with you so you can understand the real financial impact, not only the quality of life impact to patients. We continue to progress well with our US study. We've got 483 patients in, which is excellent and positive feedback so far. We've got a slight delay in our Dana-Farber study, only five patients in, but we're going to put a little bit more investment in there to support with the research nurses so we can get through the patients. Really, the bottleneck at the moment is the research nursing staffing requirement. Put a bit more resource into there and we'll start to collect that data much quicker.
Timeline as it is, as it was, everything submitted by December with a view for FDA clearance in March. Still need to determine exactly where we commercialize, but this puts us in a really strong position to deliver. The building continues to take far too long. We are expecting to go to planning committee in the next couple of weeks. We have everything crossed. We're pretty confident we will get it. It is just a process, but very excited for our state-of-the-art facility for Paxman. We have temporary location. Don't worry, that's not our warehousing. It's not that messy, but we have space to start building our CIPN product, and we will be moving into that facility within the coming weeks. Again, very excited about progress and nothing is holding us back. Thank you very much.
Look forward to responding to any questions that you might have, and thank you for your continued support.
All right, let's dig out some details. I have gotten some questions here in the chat, but I think I'll start with a pretty general one on the top line. It's a record quarter, but most of it came from Dignitana. What were the underlying trends in the U.S.? What happened there in this quarter?
Yeah, so I think, go on. If you look at the US figures, overall, those had improved. We did still see growth. What you need to look at is the UK figures. It was actually our sales into the UK market, which were lower than the prior quarter, as well as, I believe, our overall rest of world sales. That pulled the overall growth from quarter to quarter down a little bit.
Am I concerned? No. Timing. I think we've delivered pretty much quarter on quarter for many quarters. So we're confident in what we're doing. We need to push harder with the insurance-based billing to catch up with where our overall expectations are. If you looked at our budgets, as I sort of mentioned, we're actually roughly where we thought we were. So the board and myself are really pleased with our performance.
A little bit of a follow-up on that here from the chat. Would you say that the time and resources that were attributed and are attributed to the Dignitana integration have some kind of a negative impact on sales development, meaning that maybe sales focus is a bit lower at the moment?
No, I'd like to say that was a good reason, but no, I'd be I wouldn't be telling the truth. No.
Our sales teams ultimately are out and not being affected by the integration. People like myself are affected and the senior leadership team, but it shouldn't deter sales. It's just timing more than anything. We're confident in progression. The biggest slowdown that we have in terms of where we should be relates to ultimately this switch of insurance-based billing. If you look at our projections from a US perspective, ignoring rest of world, although that was where probably the weakness was for Q3, is about we thought we would have more customers switched onto the new business model. Switching on the new business model drives utilization, and that drives revenue growth. If they're not switching at a rate that we thought they were, we're not seeing that same utilization increase as we'd like to see. It's our job really to focus on getting those customers switched.
If we continue on the level type of thinking here, we talked a little bit about the top line, gross margins. With Dignitana now included, could you provide some details how that picture is going to look maybe in the next quarter and why it looked the way it looked now?
Yeah, gross margins overall are a little bit lower, some higher service costs. Sales mix is always a little bit different, so that does affect margin. Adding Dignitana, excluding the AB business and not looking at doing capital sales, if that makes all sense for everyone, really actually drives and improves our margins. Dignitana have some great gross margins in the US business. Longer term, we improve margins throughout.
Can you comment on you named the utilization that you were going to maybe provide some more detailed info for us towards the end of the year, but what are the underlying trends that you've seen in the quarter maybe?
Yeah, it's a bit patchy if you look at it overall from a sort of new group perspective. That's why we need to pull out and look at the revenue in a bit more detail. I'm trying to get some more accurate figures in terms of what our IBBM sites and how they're performing. We have general trends in IBBM sites perform much better than self-pay sites in utilization, but I'd be wrong to give you any more detail than that.
We're hoping to have some more granular work versus the idea would be new location on a self-pay, new location on an insurance-based billing, and then switched self-pay site from IBBM site, and we can look at what the impact is overall. That is the plan, just getting the data right. We are going to try and share some utilization figures from Dignitana as well.
Perfect. There is a little follow-up to the gross margin question here in the chat. If tariffs had something to do with that, it is quite a short one.
Yeah, tariffs could have had a little bit to do with that, although we tried to push on pricing at the other side, but there may be some timing and delays where pricing has not fully had a full impact as yet.
The prior quarter, we wouldn't have had the full impact of the tariffs because we'd have had stock without tariffs in the business as well. I think we'll manage to resolve that throughout the year, and it just might be a bit bumpy. You've also got in the U.S. a fixed service cost as well associated with the business, so that doesn't help. Driving growth will ultimately give us stronger margins as well.
Here is another question on the installed systems base in the U.S.. You've installed nine systems in North America during Q3. What is the reason for this relatively low number?
Good question. Timing probably. I'd need to just double-check on that. That does seem low. Let me just pull that figure up. That is well spotted. I actually think that could well be a typo on the report.
Embarrassing, but I like to be transparent and honest. Typically, we would be installing about 30 systems into the U.S.. Let me check that, and we will make a small tweak. We probably will not make the change to the actual report, but I think it is most likely a reporting error that we have all not picked up. We are a bit late on our reporting than typical this year based on a lot of moving parts.
Yeah. We appreciate the transparency always here in the market. It is the same. Yeah, it is best. Here is another question about IBBM revenues grows 12%, but looking at the number of delivered caps, it looks more like 35%. Can you provide some explanation?
Good question. You are seeing growth of 12%, but you are saying it looks like 35%.
On delivered caps, it says here, yes.
Again, let me check that figure.
It could be timing with McKesson versus a patient assistance program cap, so a mixture of things.
All right. Since you've named McKesson, the recent visit, you've mentioned quite high interest in the talks that you've been having, but can you give us some more details on what you're hearing in the field about scalp cooling? The permanent codes are going to go live soon, and what's the general sentiment? What do you hear out there?
Yeah. The sentiment is good, but still some hesitancy. As I said, I was at the McKesson conference, and they have a large community Oncology Group called US Oncology and Florida Cancer Specialists. They take up a large proportion of the community sites. They seem reasonably positive, not all groups.
I think they're all keen on probably someone starting before them, if that makes sense, so we need someone to commit. I think we've got a commitment from one of the large groups. We're just working on that at the moment, so that's positive. From an OPPS perspective, we're keen on getting that final rule out, but I think more importantly, we're already seeing contracting. We've had contracting from NYU, contracting from Yale, another large health system. That's about them contracting now and then starting in the new year. I do think it's important to understand it is not a light switch on January the 1st. We're calling it a simple switch, but it's not as simple as one might think. That first quarter is going to be bumpy. I think then we'll start to see some more traction.
It takes time for the codes to work their way through the system, if that makes sense as well. We are going to be investing in some support from our consultants and partners to make sure we can handle those questions and difficulties. We can start working with the payers very closely and communicating with them appropriately to say, "Look, these are the problems we're seeing in the field. Why are we seeing them in the field? What are you going to do about them so we can resolve them quickly and efficiently and not get people to lose confidence?"
We are approaching the end of this interview, but we're also approaching the end of 2025. If we zoom out from the Q3 a little bit, what are your top reflections for the year, and what are you looking most forward to in the next coming year?
Perfect. Yeah, so top reflections. I mean, Dignitana integration has been phenomenal, and the progress with our peripheral neuropathy product and the future looks incredibly exciting. I think going into the new year, for me, it's all about the simple switch. It's got to be. We have to see that momentum as well as pushing for FDA clearance, European regulatory approvals, and launching the product. I think the integration at that point will be fine, and we will become one, and it will be a smooth process going forward.
Excited for 2026 and starting to see that substantial growth again, that positive momentum that we've seemed to falter a little bit back end of the year, but still 100% confident in where we're heading.
Perfect. Thank you very much, Rich, for joining us, and thank you everyone for joining us online to watch this earnings call. Talk to you in Q4.
Look forward to it. Thank you. Goodbye