Pacific Edge Limited Analysis

Overview

Pacific Edge Limited (NZX: PEB) is a New Zealand publicly listed, cancer diagnostic company specialising in the discovery and

commercialisation of diagnostic and prognostic tests for better detection and management of cancer. Its Cxbladder suite of

non-invasive, simple to use and accurate diagnostic tests provide actionable results, and better detection and management of

urothelial cancer. The company is developing and commercialising its range of Cxbladder bladder cancer tests globally through

its wholly owned central laboratories in New Zealand and the USA. The company’s products have been tested and validated in

international multi-centre clinical studies.

Performance

The following information was extracted from Pacific Edge Limited's half year results, released on 26 November 2024:

1H 25 FINANCIAL AND PERFORMANCE HIGHLIGHTS

• Operating revenue increases 1.4% on 2H 24 to $11.0 million; down 16.3% on 1H 24 reflecting Medicare uncertainty and the reduced reach of a smaller sales team. Total revenue is down 4.4% on 2H 24 to $12.2 million
• Total laboratory throughput2 (TLT) of Cxbladder tests down 1.1% on 2H 24 to 14,233; down 22.0% on 1H 24, commercial tests increased 3.2% on 2H 24 to 12,323 tests
• Strong performance from the Southern California Permanente Medical Group, increased APAC volume and sustained sales force efficiencies dilute the impact of Medicare uncertainty on test volume demand - US test sales/FTE of 379, down 3.8% on Q1 25; US ASP3 increases to US$618 vs US$613 in 2H 24 and $562 in 1H 24 as operating efficiencies and cash collection gains achieved in 2H 24 retained
• Net loss after tax of $14.5 million, steady on the $14.3 million net loss in 2H 24, down 4.9% on 1H 24 net loss of $15.3 million
• Cash and cash equivalents and short-term deposits at $35.9 million; cash burn of $14.3 million is higher than $11.9 million in 2H 24, but steady after adjusting for the seasonal impact of higher weighting of costs in 1H 25

FINANCIAL RESULTS

Operating revenue of $11.0 million was up 1.4% from $10.8 million in 2H 24, but down 16.3% on 1H 24 reflecting the reduction in test volume in the wake of the ongoing Medicare uncertainty and the reduced reach of the sales team following the restructuring at the start of 2H 24.

TLT of 14,233 tests was down 1.1% on the 14,393 tests in 2H 24 and down 22.0% on the 18,240 tests in 1H 24. Rising demand from the Southern California Permanente Medical Group, rising APAC volumes and the sustained sales force efficiencies achieved as part of the restructuring provided some mitigation to the impact of Medicare uncertainty. Commercial test volumes rose 3.2% on 2H 24 to 12,323 tests.

The average sales price of commercial tests in the half year increased to US$618 vs US$613 in 2H 24 and $562 in 1H 24 demonstrating that we have cemented these improvements in cash collection. As disclosed in our Q2 25 investor update, sales per average FTE in Q2 25 was down to 379 tests from 394 in the prior quarter, consistent with the lower US volumes. Tests per unique ordering clinician (our preferred metric for measuring customer commitment to Cxbladder) was down slightly to 6.4 in Q2 25 from 6.8 in Q1 25 reflecting the lower volume in the quarter (ordering clinicians in Q2 25 was slightly higher at 890).

The net loss after tax of $14.5 million was steady on the 2H 24 net loss after tax of $14.3 million, but 4.9% lower than 1H 24 reflecting the benefits of the cash conservation initiatives. Cash and cash equivalents and short-term deposits stood at $35.9 million at the end of September 2024, down from $50.3 million at the end of March 2024. The cash burn of $14.3 million in 1H 25 was higher than the $11.9 million in 2H 24, with the first half of each financial year incurring a higher cash spend related to payments that cover a 12-month period. Excluding this higher weighting of spend in the first half of the financial year, the underlying cash burn was steady as operating cash conservation initiatives continued to deliver.