ImpediMed Limited (IPDQF) Q2 2026 Earnings Call Transcript

2026-01-28 21:22:23 ET

ImpediMed Limited (IPDQF) Q2 2026 Earnings Call January 28, 2026 5:00 PM EST

Company Participants

Parmjot Bains - MD, CEO & Director
McGregor Grant - CFO & Executive Director

Presentation

Parmjot Bains
MD, CEO & Director ...

[Audio Gap]

Grant, our CFO. We'll be referring to the 4C quarterly activity report and presentation we lodged this morning with the ASX. The presentation is a summary of the more detailed 4C quarterly activity report. After our remarks, we'll be answering questions. You can lodge questions throughout the presentation using the Investor Hub QA function.

So let's begin with Slide 3 with a quick overview of the agenda for today's call. We'll start with a business overview, including key highlights and take you through the updates for the 3 business segments. I'll then hand over to McGregor Grant to present the financials. And to finish off, I'll cover the outlook for the balance of the financial year before commencing the Q&A session.

Now turning to Slide 5, we will touch on the key highlights for Q2. We have made a lot of progress as a business to capture the value of SOZO and the new SOZO Pro in 3 large and growing market segments: breast cancer-related lymphedema; heart health; and wellness and weight management. While the rest of world sales were positive. And while U.S. BCRL sales for the quarter were disappointing, we remain very positive about the growth potential due to strong clinical demand, a strong sales team led by Scott Long, a growing emphasis on cancer survivorship and reimbursement now well in place. There are over 700 opportunities in our pipeline that we are focused on converting as well as growing with the extensive conference attendance and direct sales activities underway.

In terms of the financials, McGregor will go through the metrics in detail later in the presentation. But clearly, there were some positives and some negatives. The sales metrics are well below where we would like to see them, but the quarter-on-quarter revenue has increased as did customer receipts. And importantly, we saw a significant reduction in operating cash flow, extending our runway. This will continue to be a strong focus for the business.

We are very, very encouraged by the increase in reimbursement, now at 93% national coverage. Now more than ever, reimbursement is critical when hospitals are evaluating purchasing decisions. Importantly, SOZO and BCRL are new service line opportunities, not a cost item. National coverage now sits at 93%, representing 323 million covered lives. This is another 5% increase on last quarter and gets us closer to our goal of 100% coverage for breast cancer survivors.

In terms of sales, overall unit sales were up on the prior quarter, but U.S. sales were softer than anticipated. Rest of world sales were stronger and on the back of our Australian distributor ordering SOZOs as well as our new SOZO Pros in advance of our expansion into the Australian heart health market.

In the U.S., we saw a continuation of what we experienced last quarter. Contracts approvals were being delayed due to budget pressures or constraints in hospitals, but the BCRL opportunities are there and real as evidenced by our opportunity depth and continued discussion and dialogue with clinicians.

We remain confident in the BCRL market, supported by the market outlook that operating conditions for U.S. health care providers will stabilize in the coming year. With reimbursement at 93%, SOZO is a profitable service line, and we continue to reinforce this messaging with providers.

We are accelerating activities in the growth segments of heart health and wellness and weight management. Over the last 12 months, we have made enormous progress. Our first heart health sales are now actively in progress, and wellness and the weight management team is in place and the go-to-market activities and sales are well underway. Today, we launched a new revamped ImpediMed website and Wellness microsite to support our growth in these areas.

On other very positive news, we received FDA clearance this morning for our new bilateral lymphedema algorithm, enabling physicians to monitor the subset of patients who are at risk of bilateral lymphedema.

On Monday this week, we also filed a new 510(k) for an expanded body composition offering that better targets that wellness and weight management market as well as cancer survivorship.

Turning to Slide 6. The value proposition that the SOZO Digital Health platform provides is becoming more evident as we address now 3 of the fastest-growing healthcare needs across the world, cancer survivorship, GLP-1 therapy and heart failure. The SOZO Digital Health platform is a best-in-class platform, providing valuable patient information for clinicians.

The company has made a significant investment over the years in SOZO Pro, and we have now launched this into the market. The in-built scales, the ability to measure patients up to 220 kilos and the removal of the cardiac implantable contraindications better helps us target the heart health and wellness and weight management opportunities that are significant.

Clinicians find the device quick and easy to use and in larger hospitals, they continue to add their devices across new departments with different use cases.

We're in a unique position. We have the only device of its type, a best device with multiple applications that stand apart from the competition in terms of multiple FDA clearances, accuracy, usability and applicability.

We have a platform we can build off to attack these new growth segments with over 600 devices now across the U.S. healthcare system, including SOZOs in 18 of the top 25 U.S. hospitals and 27 master service agreements with major IDNs covering pricing, IT and BAA approvals, which are contract approvals with customers, making it much faster to deploy additional devices.

Now let's turn to Slide 7, where we look at this value proposition across these 3 market segments. You're all very familiar with the BCRL value proposition. SOZO offers hospitals a revenue-generating early lymphedema detection program to improve breast cancer survivorship. This is FDA approved, guideline endorsing clinical validation. All of the hard work has been done. We are now executing these into sales.

The cardiometabolic health area covers both heart health and wellness and weight management. In wellness and weight management segment, the value proposition is different. In this segment, SOZO is providing objective clinical data to allow clinicians to engage, inform and ultimately retain their customers. This is primarily an out-of-pocket market segment.

For heart health, weight is not a reliable indicator of fluid status, particularly in a GLP-1 world where weight can and does change rapidly, both up and down as compliance decreases. SOZO provides a valuable noninvasive fluid and body composition insight to aid clinicians to guideline -- to optimize guideline-directed medical therapy, essentially helping physicians to catch increases in fluid, enabling them to adjust therapies and reduce the potential for readmission, a major drive of U.S. healthcare system costs.

Now let's turn to Slide 8, and I'll give some more details about the BCRL operating environment and how we are positioning SOZO. Although we had a sluggish quarter for U.S. BCRL sales, we continue to believe that we are very well positioned, and there are several tailwinds that will drive long-term growth. Clinical demand does remain strong, and there continues to be a growing acceptance for the need for cancer survivorship programs. We have built a strong foundation across many of the top hospitals in the United States. We have guideline support, and we have seen a significant improvement in reimbursement over the last 6 months. And now more than ever, reimbursement is critical when hospitals are evaluating purchasing decisions.

As I noted, coverage sits at 93%, representing 323 million covered lives. Since the beginning of the financial year, we have had significant increases in the depth of coverage. States with over 90% coverage has increased fivefold from 7% to 39%.

Last quarter, you met Scott Long. Scott has built a strong sales and clinical support team with considerable experience in breast cancer medical devices and has built out our BCRL pipeline with this team. All these factors combined to paint a very positive picture for BCRL.

In the short-term, we have seen some headwinds. Hospital budgets are under pressure, wage inflation and the cost of imported products, along with the reduction in grants and funding for Medicaid insurance have impacted hospital budgets. However, we remain confident in BCRL and is supported by the market outlook that operating conditions for U.S. health care providers will stabilize.

Importantly, we continue to reinforce the messaging to multiple stakeholders within hospital systems that this is a service line, which strengthens as reimbursement increases. The good news is we have a very strong story to deliver. We are launching SOZO Pro into lymphedema, where in addition, the scales better enable SOZO to fit with the established patient workflow where weight is taken at the start of the patient journey.

In addition to improve customer experience and stickiness, we are improving the EHR interface to optimize clinical workflow, and we are also building out AI programs to improve customer responsiveness.

Over to Slide 9. I want to touch base a bit on cancer survivorship. One of the areas that we see the potential to increase penetration is medical oncology. This also helps us build program depth, so both in the breast cancer surgeons as well as downstream into the medical oncologists. Although breast cancer care pathway starts with breast surgeons, medical oncologists usually have the long-term relationship with the patient and support survivorship.

Cancer survivorship is experiencing a significant upward trend with 5-year survival rates for all cancers combined now reaching approximately 70%, up from 50% in the mid-1970s. Driven by early detection, advanced therapies in an aging population, the number of people living with a cancer diagnosis is at a historic high. This shift treats many cancers as chronic conditions requiring long-term management.

Across the U.S., there are now 1,500 commission on cancer centers that require a cancer survivorship program for accreditation. Breast cancer is one of the largest cohorts of survivors with physical issues such as lymphedema, maintaining muscle mass and bone loss in addition to the emotional and social needs that need to be addressed over the long-term. SOZO fits in very well with survivorship, both in BCRL as well as in body composition changes that occur during treatment, tying in with a renewed focus on the positive effects of exercise during chemotherapy.

We are actively expanding our messaging on body composition to treat both to breast surgeons as well as medical oncologists with over 3 abstracts accepted at ASBS, news that we found out this morning, which is fantastic. Following a detailed voice of customer survey with medical oncologists, we have refined our body composition offering to these clinicians. And on Monday, we filed a new 510(k) regulatory filing with the FDA to further support this.

Now going to Slide 10. Heart health and wellness weight management opportunities are compelling and are a strong fit with SOZO Pro. Heart failure is a substantial opportunity as it poses a significant economic burden in the United States with costs projected to reach $70 billion by 2030.

One of the primary guides to determine rapid changes in fluid level in patients, a sign of decompensation has been weight. However, cardiology patients are now indicated to be to use GLP-1s, which basically reduces weight and also potentially causes a rebound weight gain post discontinuation, making weight a less reliable surrogate marker for fluid and additional noninvasive data is needed.

Feedback from U.S. cardiologists on SOZO Pro has been very positive. I've been impressed by the clinical utility of SOZO and its ability to monitor fluid levels as well as body composition. We have the first heart health sales in progress, and we are very positive about the potential and have established a lean, dedicated heart health team to build out this opportunity and validate the go-to-market pathway.

Now moving to Slide 11, wellness and weight management. Our view on wellness and weight management opportunity only gets brighter as we spend more time with potential customers. In the U.S., there are over 30,000 sites of care have been identified across various market segments, including specialty medicine, exercise oncology and rehab, weight loss clinics, wellness clinics, IV clinics and sports medicine and research. The segments we'll be focusing on directly at the moment have an addressable market size of over $200 million.

Wellness and weight management activities have commenced with the appointment of an experienced commercial lead managing a team of 3 dedicated body composition reps in the U.S. This team has already actively identified over 3,000 leads in this space, which they are validating and converting into direct sales. Feedback has been very positive from the first 3 conferences the team has attended with another 6 conferences planned for the second half of the year. With a strong pipeline in place, we're expecting sales to build over the calendar year.

Over to Slide 12. We are tailoring our messaging for different market segments, particularly within this wellness and weight management space. This is an example targeted towards lifestyle medicine, which is a more clinical approach.

On to Slide 13. We're excited to share that we have launched a new wellness microsite. This is a different look and feel of our wellness offering that's targeted towards the med spa space. As I noted, all of our new sites, including our new ImpediMed website and this wellness microsite have been launched today. Many thanks to our marketing team. We have done a lot of work in getting these ready to go.

I'll now turn over the presentation to our CFO, McGregor Grant, to go through the financials.

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