ImpediMed Ltd

ASX:IPD

Earnings Call Transcript 2023-Q3

[Operator]

Thank you for standing by, and welcome to the ImpediMed Limited Quarterly Results Conference Call and Investor presentation. [Operator Instructions] I would now like to hand the conference over to Mr. Rick Valencia, Managing Director and Chief Executive Officer. Please go ahead.

[Richard Valencia, executive]

Thank you, Winnie, and welcome, everybody, to our third quarter 4C and investor presentation. We've got some good updates for you. We've got 3 key updates that we want to cover today.

First of all, as we talked about a few weeks ago, the NCCN survivorship guidelines were updated very favorably for us. And that has turned into a very transformative moment for the company in a number of ways, and we're going to get into a little bit more detail as to how after we give you a third quarter update in a few minutes.

We're also achieving significant momentum with payers in the U.S. We talked a bit about that, and I believe some folks were a bit frustrated that we couldn't give you a little bit more detail around the pace at which payers would respond to the guidelines and begin reviewing their medical policies and actually making changes.

We were -- we didn't know and it really is something that you can't know until you witnessed what's going on in the real world in reaction to the guidelines. The good news is in the last 3 weeks, it was only on March 24, when the guidelines came through just over 3 weeks ago.

We've seen significant traction with the payers. And I'll get into the details of that in a little bit, but we're really excited with the pace at which they have reacted and are engaging in medical policy reviews.

But I intentionally chose to be conservative about the approach last time. The company has a bit of a history of not being able to follow some of the promises that it's made. This is early on for me. I've been with the company just over 120 days now. And I wanted to set the stage that going forward, we're going to be very intentional about what we read out to the market.

And I want to lead with facts. And so we've come back with facts around how the payers have responded, and I think you're going to be real happy. The survivorship guidelines as they are written has really dramatically impacted our total addressable market in a very good way. We have mentioned already that the survivorship guidelines apply to all patients at risk of lymphoma all cancer patients, and that has opened the door for us to pursue other cancer types.

It's also the reimbursement alone has increased the amount that we believe we can charge because the economic model for our customers has significantly improved as a result of reimbursement. So we'll get into a little more detail there as well. But those are the 3 key points we want to cover today.

So on the first point, the highly transformational piece of it. We talked a lot already about the guidelines themselves and why that's transformational. But as a company, we're going through a pretty significant transformation as well.

When I came into the business, I observed a company that wasn't functioning at the level that I felt we needed to really succeed in a market that was developing, especially if we got these guidelines to be a market that we could own if we were prepared to execute on it and work is a really good team.

So we worked on -- it actually -- timing-wise, just after the guidelines the following week, we had an offsite with the team. And we focused on 3 things in that offsite. What's our purpose? Why are we here? What's our north star or our vision? How do we create unbeatable team?

I believe that if you create the right team dynamic with your senior leaders, you can create a competitive advantage that really gives you a leg up on competitors and it's something that's really at my core that I worked very hard at, and I saw that the team needed that sort of leadership in that sort of approach and the response has been phenomenal.

And then also, how do we operationally transform the business to be able to scale with this great opportunity that we have given the readout on the guidelines. So on Slide 4, we have our reimagined vision, and I'm going to read it, transform medicine by providing clinically relevant insights that improve lives.

We spent a lot of time with that, and it's very intentional. In the deck, I've actually put the definitions of the 3 key terms there. Transform or change something completely and suddenly so that is much better. The guidelines as they're written will enable us using our bioimpedance spectroscopy technology or SOZO to completely and suddenly change lymphedema care, care of cancer patients and help avoid lymphedema entirely.

Clinically relevant, the ability of a therapy to improve how patient feels, functions and/or survives. Clearly, if we can help avoid lymphedema, we can help improve patient lives.

And finally, insights, the capacity to gain an accurate and deep intuitive understanding of a person or a thing. Our SOZO platform is all about capturing data, delivering back to the patient at the point of care, but also having that data with our digital health platform to continue to build into -- build new features into our solution and move into other cancer types over time.

So we spent a lot of time with this vision, and we've got a team now that's very focused on this and very bought into our new vision for the company. The other 2 things around the team and around execution, I'm a big believer in the book, the 5 dysfunctions of the team.

It's sort of my team building bible that I bring with me everywhere. And my favorite quote is not finance, not strategy, not technology. It's teamwork that remains the ultimate competitive advantage, both because it's so powerful and so rare.

Those last 2 words are really powerful. It's so rare. It really is rare to create a team dynamic where people are truly working with one another, helping one another out and really focused on results.

And the team when I came in was much more oriented towards building new technology, identifying new market opportunities for that technology, but not certainly not very commercially oriented, and we did not have a lot of discipline around execution.

And so my focus is going to be creating a great team that believes in that and then creating the methodology that we'll use to ensure that we -- when we make our -- when we make commitments to the market, we make commitments to our Board, we're going to track those commitments, and we're going to live up to that. And that gets us to focused execution.

Focused execution means 2 things. One, given the guidelines, given the mention that it's for all cancer patients at risk of lymphedema, this has just really blown up our opportunity within oncology.

And as you know, we've got a very good footprint already in a lot of the best cancer centers around the country in the U.S. It would be foolish for us to do anything but execute within oncology for the next several years because we have a license to go in, and it's ours and ours only.

There's no competition that can do what we can do in survivorship around lymphedema. So we're going to be focused on breast cancer-related lymphedema initially, but then moving out into other cancer types for the next few years. We're not giving up on heart failure. We're not giving up on renal. We're not giving up on other opportunities that our -- so platform can deliver on.

But our primary focus is going to build the foundational business in oncology and make sure we lock down every cancer center we possibly can because once you're in a health care and you're delivering a great solution like we have, we don't think we can be unseated.

The other part of focused execution is, again, around the team and how we operate. I leverage a tool called 4 disciplines of execution where we get really focused on a number of high-level goals for the company. And then we track leading indicators, the things that we do on a day-to-day basis to ensure that we'll reach that end objective. And everything else is white noise.

We deal with it in our separate time, but our daily focus is around our key company objectives. And you're going to see us being much more disciplined, especially as we move into this commercial deployment around the guidelines. And a lot of things have to change for us to live up to the scale that's about to come. So that's where we're going to be focused.

So I'm going to come back and give you a little bit more detail in a few minutes, but now I'm going to turn it over to Tim, who will share our Q3 results. And Tim? Thanks, Dave.

[Timothy Cruickshank, executive]

Great. Thanks, Rick. Good morning, everyone. For this quarter's presentation, we want to get into the meat of the result -- or meat of the information related to reimbursement. So we boiled the financial slides down into 3 key slides related to revenue, SaaS metrics and cash flow.

So on Slide 6, the key here is the continued incremental growth in the core business. Core SaaS revenue grew by 25% year-over-year on a constant currency basis. With the NCCN guidelines update announced just a few days prior to the end of the quarter on the 24th of March, there's no impact in the quarterly results related to this transformative development for the company.

Therefore, the incremental growth in the core business and the slight decline in total revenue were broadly in line with the expectations that we had in a pre-reimbursement environment.

The decline in total revenue was primarily due to the timing of international SOZO sales, which was largely offset by the incremental growth we saw in recurring revenue from the core business. As we go through on later slides, the continued incremental growth ensures that we maintain our footprint in key cancer centers, and that's the key.

During the period, we went from having 20 to 22 NCCN institutions utilizing SOZO. We went up to 17 of the top 25 IBMs. Within a vast number of these centers, we have IT and legal clearance at a corporate level as well as established business associate agreements and even pricing.

So our foothold in maintaining these key centers as we build reimbursement now offers us access to over 10,000 sites of service that we can begin to go after with an expectation that take-up of SOZO will rapidly accelerate as private payers now come on board in the coming quarters, which Rick will get into in this slide.

As we turn to Slide 7, the strength of our renewals and our continued low churn are 2 of these key fundamentals for the business and strong drivers of growth.

For the fourth consecutive quarter, we achieved 30-plus percent increases in the renewal license fees on U.S. contracts. This has been achieved in the world prior to the NCCN guideline inclusion and prior to private payer reimbursement.

With the NCCN guidelines inclusion, these increases will accelerate as private payers now come on board. We signed $3.2 million in total contract value during the period, which primarily related entirely to our core business. ARR grew to $9.2 million, of which $8.7 million relates to the core business, that's a 15% increase year-over-year. And as we've noted for a number of quarters now, our stair step pricing model locks in price increases year-over-year.

So that same $8.7 million in ARR is worth $10.2 million in 1 years' time prior to selling any new [indiscernible] devices systems, I should say. In addition, we continue to maintain in excess of 90% gross margins on our SaaS revenue business and a negligible churn rate of 2%.

Slide 8, finishing up with cash flow. The cash flow result for Q3 FY '23 was very positive, as outlined in last quarter's cash flow guidance. Net operating cash flow was below $3 million for the quarter coming in at $2.79.

That was a result of us now seeing the impacts of the recent cost realignment come through in the numbers as well as a record result for cash receipts from customers. Q3 FY '23 resulted in $3.2 million in cash receipts, which is a 25% increase year-over-year. So we finished with a cash balance at 31 March 2023 of $21.4 million, yielding us 8 quarters of cash on hand prior to additional growth.

As a result, we remain well on track to steadily achieve our objective of cash flow breakeven within our existing capital and we'll accelerate the business as we see private pay reimbursement. Now take hold.

Rick, back to you.

[Richard Valencia, executive]

Thanks, Tim. All right. On Slide 9, I'm going to take you back through the impact of the guidelines just to re-center everybody around what this actually means to us. So in the guidelines, first of all, the screening that was recommended as regular screening for patients.

And the real key change here is that it's now all patients at risk of lymphedema, not patient-reported, not -- so the burden now has been shifted to the provider to ensure that patients get regularly tested. And we have a lymphedema prevention program that addresses that regular testing.

It -- that's something that we've been promoting for quite some time. We have a number of customers using that protocol. It just so happens that it fits very well with the recommendations around screening in the guidelines. It specifically names bioimpedance spectroscopy, really important.

No other device, but SOZO, our SOZO system uses bioimpedance spectroscopy that is FDA cleared. You'll hear some noise in the market of other systems that claim to have bioimpedance but not bioimpedance spectroscopy.

And one of the things that we'll be doing is we're talking to payers is educating them on bioimpedance spectrosopy technology, what is and what is not to make sure that in the updated medical policy that they're very specific around bioimpedance spectroscopy and not including technologies and companies with -- that might attempt to use that reimbursement code.

At risk cancer survivors, again, I mentioned this a little bit ago that now the providers need to test every patient at risk. But the big news there, of course, is that, that increased our TAM dramatically, and I'll get into details in just one minute.

Uniform consents, as we've talked about this, the 2A category is the default category. So virtually all guidelines changes that are approved are in this 2A category. That means that there was uniform NCCN consensus. And it is what payers use to determine whether or not to change medical policy to reimburse.

And it's what providers use, particularly NCCN providers, leading cancer centers to determine how they provide care. Finally, it helps us to establish the standard of care. If some people would say guidelines is the standard of care. It's effectively correct.

However, until bioimpedance spectroscopy is being used in patients at risk of lymphedema are being tested on a regular basis, and this is being done in mass. It's hard to call it the standard of care, but that's going to be our work over the next few years is to make sure that in the guidelines that says to use bioimpedance spectroscopy if available, it's our goal to go out and make sure that they've got it so that they can provide the screening for patients.

On Slide 10, this is the big reveal slide around the payer response since we last got with you. Again, I wasn't sure how quickly they would respond. But in just 3 weeks, we've been able to get our physician advocates, our customers, people that believe in using bioimpedance spectroscopy for helping patients avoid lymphedema reach out to the payers in the U.S.

We don't do it directly, but we do support them. So we provide them with some of the tools, some of the terminology that they need to use some of the other bits of evidence that they then bring to the payers to request a medical policy change.

They typically don't do out-of-cycle changes unless something very dramatic has occurred. Well, in this case, 45 of them chose to do a review, 42 chose to do it off cycle. So doing an off-cycle review means that they've taken it very seriously.

They could simply just wait and decide to do the review of their medical policy when their next annual review comes up. That's how they do most of the potential changes. But the NCCN guidelines are very powerful, and that caused a very quick reaction by these 45 payers to do reviews.

The 3 that are on cycle reviews, those happen to be between now and the middle of June. So why do an off-cycle review when you're on cycle review is coming up pretty quickly. So all of them -- all of these reviews should be done within the next few months, 2 or 3 months.

And another really important point about the 3 on-cycle reviews that 2 of them are national payers. So national payers doing reviews and changing their medical policy to include bioimpedance spectroscopy for monitoring for lymphedema is going to -- it's something that we weren't dreaming of before NCCN.

Our strategy had us working with multiple regional payers and the national ones we put at the end of the list because they're harder to work with, and they need to feel some competitive pressure in the marketplace with the regional payers agreeing to reimburse before they take it seriously.

But the guideline has changed all of that. So we're really excited to see that even national payers are moving very quickly. Of these 63 payers that currently have experimental policies meaning non-coverage, 45 now are going to be doing reviews within the next 2 to 3 months. 17 were are waiting on hearing background.

We just haven't heard back. And that doesn't mean that they're not going to do an in cycle or off-cycle review. In fact, we were putting together our deck on Friday in the U.S. And before the end of the day, we had to put one more in the bucket of off-cycle reviews because we'd heard from one.

We're expecting through the week, we'll probably hear more and it won't be very long before we get feedback from all 17, so a total of all the 63. So moving very quickly. So that's the payer update.

In terms of the TAM update on the next slide, Slide 11. We've done quite a bit of work bidding into what this really means around cancer-related lymphedema going beyond breast cancer-related lymphedema. And also just the impact of the guidelines and the reimbursement that's going to follow on our ability to charge more and still create a great economic model or ROI for our customers.

So we've been reporting out a $600 million TAM for quite some time for breast cancer-related lymphedema. That was based on an average $1,500 a month fee. We're seeing significant increases in that, as Tim mentioned earlier, when we renew our contracts. And we have some as high as $4,000 a month.

But we believe that just the impact of reimbursement will enable us to get to $2,500 per month on average with our customers as they renew and as we sell new accounts. So that extra $2,500 moves our total addressable market in breast cancer-related lymphedema to a billion dollar.

In addition to that, there -- in these other cancers where the lymphatics are involved and patients become at risk for lymphedema, we believe that we can license the ability to use SOZO for these other cancer types and through that, increase our monthly fee to around $4,000.

That equates to a $2 billion market, and that's before we even consider additional sites of service. There are cancer types that are contained and will have completely different sites of service than -- and a good example is gynecologic cancers are generally handled very differently.

And so there are more sites available as well over time. But conservatively, we're thinking this is a $2 billion TAM now and what we will need to do is we will need to go get data that shows the same impact that we have on breast cancer-related lymphedema in these other cancers, but we're -- our systems are in place at the research institutes that can perform the research for us the end that we need compared to our 1,200 patients that we had in our PREVENT study, that end goes way down.

You only need a few hundred typically. And we've already got the systems in place. So the path to getting that data to get other cancers approved is relatively short.

So we're convinced that we've got a much bigger TAM today and that the path to getting to that is relatively short, which is why we believe that we should stay very focused on the oncology market, and I'll explain in the next slide a little bit more as to why.

But I do want to point out one last thing. We've called out the $10 billion market in the U.S. That's the annual cost of lymphedema treatment. So that's caring for patients that were not tested clearly, and they're their lymphedema progressed to Stage 3 or 4. That's when it becomes an incurable chronic condition.

And the treatment market for dealing with this horrible chronic condition is $10 billion. So our $2 billion TAM really is all about going after that $10 billion treatment market and dwindling that as much as humanly possible.

On to the next slide, on Slide 12. This talks about where we're going to focus and why. So if you take a look at the right-hand side, that's our addressable market, 24,000-plus sites of service in all the cancer types. We currently have 500 SOZO deployed with the customers that we have today.

In that customer base, just within the customer base that we've already got signed, we already have BAAs with. We have a total of 10,000 sites of service available to us. So as those customers are currently only have 500 build full programs to be able to surveil their patients at risk of lymphedema.

Before we go anywhere else, we have 10,000 additional sites of service that we can be going after. We're currently in, as mentioned several times, 22 of the NCCN institutions, 17 of the top 5 IDNs or integrated delivery networks in the U.S. and 150 of the top 500 cancer centers.

Again, just those represent 10,000 sites of service. So we'll be pushing first and foremost, into the rest of the NCCN institutions. It's their own guidelines. They'll want to treat according to their guidelines very quickly.

So that will be our #1 focus. Then we'll go into the integrated delivery networks. Next, we'll do the rest of the cancer centers. And then, of course, all the other sites that are available that could be corporate type accounts, a number of different type of accounts that we'll be going after to wrap up this full 24,000.

But again, this is a market that is ours to winter loose. We're the only company that can execute right now into this -- the guidelines as they're stated today. And now it's up to us to prepare ourselves to go take advantage of that opportunity. And that gets us to our final slide here, which is summarizing the 3 key points.

So immediate response from payers as mentioned. It will take a few months, by the way, even though they're doing their reviews. It will take a few months for them to do their medical policy review internally and make the change and publish the change.

There's a period of time also where there has to be a public notice where people can weigh in on it a 30-day period of time. So that will take a little bit of time. However, what we're seeing already is a very rapidly accelerating sales pipeline.

Deals in the pipeline today just advanced a huge step. We track our deals in our pipeline with what we call the cliff process, CLIF, clinical, legal, IT and finance. So when you move down the funnel of our pipeline as you get clinical bought in, legal, engaged, IT supporting and finance, of course, signing off in the end.

So knowing that reimbursement is on the way, that finance piece, which is always the hardest clinical, we always get buying. They love the technology, legal and IT. That's just their job. When someone tells them to do it, they do the work finance. They're the ones that are the tougher one to get cleared. And of course, we need to prove that there's an economic model beyond the important patient care piece of it.

And so that's progressed every deal that we have in our pipeline significantly as a result of getting the guidelines and the reaction from the payers. We're also getting a lot of anecdotal data from our sales team.

We prove them before we headed out here from the field. They're getting responses to their phone calls and ways that they didn't get before. So there's this renewed sense of urgency and interest in deploying SOZO now and not just our existing customers, but in prospects.

And then finally, preparing for operational scale. So you can imagine a company like ours, we've been pretty thinly stretched resource-wise very focused on managing the cash that we had to move the business to cash flow breakeven.

We're still on that path today. We've been able to make some really good adjustments. I had mentioned in the last call that we moved our -- a couple of people around within the organization, brought in someone who used to work for the company, and we moved our sales team from 4 people in the field to 6.

So we've got an extra 50% horsepower there in the field already, and we're making some other changes in our case systems program. But we have to completely reimagine all of those organizations and get ready for scale. Our sales organization is going to grow significantly.

Our case assistance program has to morph into more of a market access program where we're doing less case assistance work and filing appeals for our customers and more just supporting them and how they go about getting reimbursement so that their reimbursement kicks up quickly out of the gate, and they're happy with the ROI for the program.

We're moving away from sort of a disjointed customer support. We have technical support. We have customer support. We have implementation. We have clinical sales support. We're moving that into a customer success organization so that we're all very coordinated and we can help get customers deployed and scaled much quicker.

We talked about meeting a Chief Medical Officer. We continue to be underway and finding a Chief Medical Officer. We're building out a medical affairs capability that was very thin as a result of some of the cost reduction measures that we took.

We need that to go after these other cancer types as quickly as we possibly can to build the evidence for that. And also a Chief Medical Officer who can communicate with our clients and payers at the CMO level to help us move forward faster.

And then ultimately, manufacturing. We've shared with you that we feel pretty confident that we're in a good place right now with inventory and with SOZO Pro coming out next year that we'll be able to track well. But if -- once things really get going here, we clearly have to prepare ourselves for significant scale in the manufacturing side.

So again, we're reimagining everything and we're getting the company ready for scale, and we're building a discipline around how we do that, so that we're very execution-oriented, tracking everything that we commit to. And we want to do all of that while maintaining our 80-plus Net Promoter Score and customer satisfaction.

So we are off to the races. We've got a lot of work to do, and that is it for me for today.

We'll go back to Winnie for Q&A.

[Operator]

[Operator Instructions] Your first question comes from Shane Storey from Wilsons Advisory.

[Shane Storey, analyst]

It looks like you've recut some of the addressable market assumptions there. So if you don't mind, I just want to step through a few of those. Maybe just if we could start with the 24,000 lots of service, and I see that breaking down over 5,600 facilities just 4 sites of service per facility.

I mean that's a bit larger than what we would have anticipated. Would just say that it reflects, I guess, how the 500 footprint that we have in the field today is distributed?

[Richard Valencia, executive]

For the most part, we don't have customers that are doing both programs. They generally are early adopters who really believe in the technology and what it can do to benefit their patients. So they've got 1 or 2 systems, and they don't use our LPP. They don't really use a protocol.

They don't test on a continuous basis as is called out in the new guidelines. So our expectation was always that when we got to that point that we would end up in surgery, in [indiscernible], rehab PT and also outpatients. So that's 5 different locations. We're estimating 4 when people build out real program. That's how we get to those numbers.

[Shane Storey, analyst]

Got it. So okay. So it's just an appreciation of the extra volume there that needs to be processed. But when we look at the -- when I look at your overall TAM, I guess, the new sort of number of $1 billion for breast and I think 2 overall. Traditionally, we used to model that CRL is about 25% of the overall TAM based on incidence rates? But here it's kind of 50. I hear what just said about pricing. But has anything changed with respect to how you're seeing the other indications potentially [indiscernible].

[Richard Valencia, executive]

Have some background noise there and I didn't quite get the question you get on it Tim [indiscernible].

[Timothy Cruickshank, executive]

So it's still the same data that's being looked at 15% of the incidence rates are breast. And then of that -- of the total incidence rates, 58% is all cancers that are relevant to at-risk lymphedema? Is that your question, Shane?

[Shane Storey, analyst]

Yes. Yes, that's perfect Tim. Finally for me, I'm conscious in noisy background. The just on pricing, -- can I just -- just really a clarification. Can you please confirm that the TAMs there by $4,000 a month because I noticed there's a site and I'm wondering if pleasant circumstances that might support the higher level this?

[Richard Valencia, executive]

Yes... The currently is based on [indiscernible] -- the new $1 billion TAM is based on a $2,500 amount of average. The $2 billion TAM with the other cancers, the assumption is, is that we can license those other cancers as we develop the data and get reimbursement on to the same systems.

And an increase from 2,500 to 4,000 because now they can use the LDX for all these other cancers. We have yet to add additional sites of service that at some point will be upside to this number. But that's how we're getting the right...

[Timothy Cruickshank, executive]

And there are some sites that get to 5,500. So that's why it calls out up to 50 -- to 5,500. But on average, across all cancers, we're modeling $4,000.

[Operator]

Your next question comes from Elyse Shapiro from Canaccord.

[Elyse Shapiro, analyst]

You've talked to guidance before of a loss of operating cash burn of $3 million a quarter. Are you kind of maintaining that even with some of the new hires that you're making into medical affairs and the CMO?

[Richard Valencia, executive]

As of right now, yes, we are.

[Timothy Cruickshank, executive]

Yes. So we're learning new things every day about the speed at which reimbursement is going to occur. Our modeling is still based on less than $3 million. And eventually, it will come down to the pace at which we want to accelerate our growth as we start to learn more and more concrete evidence.

But with the time it takes for some of these payers to write their policies and then with the different regions that we're going to learn where we have first access, we should be able to lean into our growth a little bit and fund it through the short-term growth that we're seeing before we have to go to full scale.

[Richard Valencia, executive]

[indiscernible], I want to jump in real quick. The type of work that we need to do in order to be ready for scale. It's not the type of thing you can wait until you're seeing high demand and closing deals at a much rapid -- more rapid pace because we'll get overwhelmed.

So we are going to have to be thinking about how we invest, how we reorient our investment and how we're ready for that scale because we're not ready today for that scale. We've got a lot of work to do in terms of getting the right types of resources in place to manage the level of scale that I expect to see soon.

[Elyse Shapiro, analyst]

Great. And it looks like you've been making some progress on the payer side. You talked -- I think it was -- you said 2 national payers. But can you give a bit more -- a bit more color around the profile of some of those other payers in terms of covered lives or specific geographies?

[Richard Valencia, executive]

Well, the -- if we had the 42 come back and make positive medical policy changes, we would be in a place where we have critical mass coverage in almost every state in the union. So we actually just had this conversation with our Head of Reimbursement yesterday.

And we getting these 45 over-the-top on changing their medical policy will -- it will actually -- the context that it came up and when we have the conversation with is around our original focus on 7 markets and we still have momentum there.

We've got the right clinical advocates there. We've got the NCCN institutes there. But with the guidelines and reimbursement coming around so quickly, it's sort of non-operative any longer. That isn't necessarily where we need to focus because what's going to happen is these 45 start changing medical policy is that we're going to see broad-based coverage that has reached that threshold in multiple states all around the country.

And so we're just going to focus where it happens first. And we still have real high hopes that Michigan, Tennessee, those were some of the early focused markets are going to probably go first. But now it's really going to just be watching how it plays out and where we get to critical mass, fastest, and that's where we'll put our sales effort.

[Elyse Shapiro, analyst]

Great. And I know it hasn't been a huge amount of time is the guideline inclusion, but are you starting to get more inbounds from doctors, hospitals or even sort of patient advocacy groups.

[Richard Valencia, executive]

You bet. Yes. It's a very different world since the guidelines have come out and just -- there's a buzz, if you will, in the market. We're actually going to be at the ASBS conference week after next. And they're very excited to have us there. And there's a lot of discussion that's going to be going on there around the updated guidelines.

Survivorship, of course, is not the biggest part of a conference like that. But it's really survivorship, the issue of having these related problems after cancer. You beat cancer and your reward is you end up with lymphedema or some other horrible survivorship issue or side effect.

So the awareness of survivorship issues is growing quite a bit. And so that's why there's quite a bit of survivorship talk there on the agenda, and they're going to be really excited to hear us. But yes, we're getting a lot of inbound. The sales team is reporting a lot of good, solid communications that are much better than they were before we had the guidelines.

[Operator]

Your next question comes from [ Peter Gregory ] from Profit Investa.

[Unknown Analyst]

I guess, it's probably a different time of day for you guys. Thank you very much for your presentation, and it's really great to hear the update. I'd like to make a fairly simplified statement about the marketplace, and that is to say that sustainable growth will come from 2 steps of circumstances.

Firstly, placements of new systems, which will yield immediate sales. And then secondly, from increased usage of already placed systems, which will have a slower impact on revenue, which will demonstrate longer-term commitment from facilities and the practitioners.

Could you talk me through how the customer-facing resources have been directed to each activity? Do you have a priority for one or other of these? And how is the remuneration of these people structure to reward customer-facing people for each of these activities?

[Richard Valencia, executive]

Those are excellent questions, Peter. And by the way, we're here in Sydney right now. So we're in the morning as well. But we're -- so our commercial -- our revenue model is that we charge a subscription. We license our SOZO digital health platform in charge a monthly subscription fee for that.

Our customers get paid per test. So they get paid through either Medicare or Medical and now private payer reimbursement on a per-test basis. Those 2 are not connected and it's very deliberate.

The reason that we don't want to have them connected is that we don't want them limiting the number of people that they put on our platform because they're worried of the cost associated with it. We want them to put as many people as humanly possible on to the platform.

We really want to get the data as much as we possibly can. We want them to treat every patient that's at risk. And we want to have a fair share of the remuneration that they'll receive through reimbursement, but that typically runs in the 30% to 40% range, and that's roughly where we are right now.

We are thinking about over time, putting thresholds. We think we have a long ways to go before we really have to worry much about that, but there might be a time where we see some of the bigger institutions at super high volumes where we will need to put a limit of how many measurements can be done at a $2,500 a month charge for example.

But for now, we just charge the monthly fees. We do have -- we do increase those every time the contract renews, and we're very successful in doing that. But I wanted to explain our revenue model first. We have -- we have a commercial team that is heavily incented to sell.

So their compensation is heavily weighted on the variable side of things. They get a base pay, but they get -- they make their money when they close deals and do system sales.

On the customer success side of things or support -- we have a very, very high customer satisfaction rating today. It's mostly because they really love the technology and what it does to benefit their patients because it's mostly the clinical side of the shop that works with it, and they're not getting much reimbursement, but they don't care because they really just want to provide great care to their patients.

So we get great feedback from them. But when I went and visited customers, I saw that very few of them had a real program in place, one that would be able to fully monitor all of their patients. Part of it was because they couldn't afford to buy multiple systems. Part of it was this workflow issues.

A big part of it was because we weren't in the guidelines. We weren't "standard of care" -- so now that we are, we expect that they're going to be deploying systems in these multiple locations, the 4 locations that I've mentioned before and build out a full program.

So the patient on their journey through their care with their cancer, they're not going to always be at the same spot. They're not going to be there at the right time.

So it's important that you place these systems that map to the patient journey. And so our job in transforming our customer support team into a customer success team is ensuring that as we build these bigger programs, they're complex and our customers are going to need a lot of help that we stay very coordinated as a company and that we're helping them build these programs, maximize utilization and continue to remain very happy with the technology.

I hope that answers the question. It's a little bit different than what you'd asked because we are -- the way that we operate is a little bit different than what you suggested. But...

[Unknown Analyst]

No, that's fine, Rick. If I could just summarize, you've got a sales team that's out there basically responsible for getting new placements in new sites or new placements in existing sites and a customer success team that responsibility is to make it easy for customers to have a lot more test being done.

Right now, you're not too worried about charging for the number of tests, you're more worried about getting the activity happening, and that will build opportunities for more revenue over time.

[Richard Valencia, executive]

Very summarize. You got it.

[Unknown Analyst]

Can I also just ask about that with the wind down of the clinical business. Has there been any spinoff of business from facilities involved in the AstraZeneca trial?

[Timothy Cruickshank, executive]

No, there has not materially. A lot of these sites are international, and we've maintained our focus on the U.S. So it has given us access to additional sites in the U.S. included in getting some of the IT, legal and BAA pieces behind us.

So that's the primary benefit that we're seeing there that now we have more additional sites of service that we can go after at a faster pace. But the international ones, we have not focused on spinning off.

[Unknown Analyst]

Okay. Tim, that actually leads into my next question. The final question is, can you just give me an update on what's happening internationally. I think you've got district better set up in certain countries. Just wondering what's happening outside of the U.S.

[Timothy Cruickshank, executive]

Yes. We have a pretty solid penetration rate in terms of our -- the lymphedema business in Australia in -- primarily the Australia and New Zealand region. So we'll continue to work away at that. Our primary focus is the U.S. market and the numbers that you saw in terms of our addressable market.

I mean it's -- with the news on NCCN guidelines and what this means for the company that's going to remain our primary focus area. We'll be opportunistic in other areas in Europe and the Asia Pacific region as opportunities present themselves. But it will be just that opportunistic until we have a strong penetration rate in the U.S.

[Unknown Analyst]

I understand that. But do you have distribution in place in your so that if people -- you get excited by what's happening in the U.S. and want to take advantage of the technology.

[Timothy Cruickshank, executive]

Yes. Yes. The complexities of the data play in Europe are still things that we need to work through that before we really address that market in a material manner. So there's work to be done before we get overly excited, but there will be a natural -- we'll be grabbing I'm sure some attention based on the NCCN guidelines. But that's a few years down the road for us.

[Richard Valencia, executive]

Then, I'll just add, by the way, thank you, Peter. I'll add that -- with the remaining NCCN institutions, the remaining top IDNs remaining top cancer centers that has to be our company's focus. As mentioned, this is our business to win or lose right now. We have the only technology that can serve the guidelines.

And so we need to get in and lock down every single one of those and begin building programs. So that's a lot of work. And it's a lot of work for a company that really doesn't have capacity to -- currently to be a scaled organization to deliver on that.

So a lot of things have to change. And -- but the great news is that the opportunity is right there in front of us right in the U.S. market, and we'll get to other markets down the road, but it would be a shame if we let this opportunity pass that's presented to us now with the updated guidelines. Next question...

[Operator]

Your next question comes from [ Hamish Jones from Buchan Base Limited ].

[Unknown Analyst]

I guess, I'm quite interested in understanding your thoughts on kind of the timing and the kind of the evidence you'd expect to see in the performance of the business before you kind of start to take a more aggressive approach in terms of the investments in your overheads and was what you commented preparing for operational scale.

When will you kind of -- what do you need to see before you kind of start to press the button on kind of making those investments because obviously, that go goes against your other goals that you've communicated to the market of being -- achieving breakeven is kind of a bit of a -- you see a time where you -- it could become highly advantageous to kind of actually the significant amounts of money in some of these actions to take advantage of the opportunity.

But just trying to understand how you see that kind of playing out this kind of change from the current regime to kind of really making the most of the opportunities and investing to do that?

[Richard Valencia, executive]

Yes, it's the question of the day to be frank. We didn't expect that when -- when I was planning this trip well for the 24th of March. I was planning a very different type of trip. I didn't expect that the guidelines would be in, and I was worried that we may not make it this year in the guidelines.

So the fact that we not only were included in the guidelines, but we were including survivorship, which is every cancer patient at risk of lymphedema. And the fact that 45 of the 63 payers' in the U.S. are doing medical policy reviews, 42 of cycle tells me that this is going to go a lot faster than any of us had anticipated.

And I have to tell you, this is very unusual. What's happened here is not typical. It happens sometimes in the drug world. But in therapies or in the device world, it's really unusual that you have a condition like lymphedema that's been around forever that really didn't have any sort of means of measuring to avoid becoming a chronic condition yet tape measure, but it was very ineffective and not used very often.

So having something like this brand new to help prevent this horrible chronic condition and end up in the guidelines is really something that is rare, very rare. And a lot of the people we're working with, including our Head of Reimbursement, who came to us from a consulting firm by the name of Micra, which is the best reimbursement consulting firm in the country in the U.S.

She's been with us now for a few years. But in all of her time, she's never seen anything like this. So it's -- when I say that we're surprised, it's because there isn't a lot of data points that we can refer to comparisons of this having happened before.

So we have some thinking to do about just that because we may already be at that point where we need to really consider investing more heavily to take advantage of this opportunity because once again, it's ours to winter leaders. There's nobody else that can take advantage of this than our company. And providers are going to want to providers are going to want to provide care under the guidelines.

[Unknown Analyst]

Got it. So simply reviewing and taking out that develop a kind of a very present consideration. That's great...

[Operator]

Your next question comes from [ Ian Hyde ], a private investor.

[Unknown Attendee]

Just quickly about the 45 insurers that are looking at reviewing the policies. Will they actually notify you when they've changed their policy? And if so, I assume then you'll be advising the markets. So if you can just explain that one...

[Richard Valencia, executive]

Yes, that will become public record. What they have to do is in advance of making the policy change. They have to publicly post the medical policy. We'll be working directly with all of them, helping them craft their medical policy change.

They won't necessarily take our input in all cases, but they'll look to us for some help also in making sure that if they're going beyond modality, but naming examples of the types of companies that would fall under that, we want to make sure that they're not picking up companies that aren't truly bioimpedance spectroscopy [indiscernible] some out there, they're going to try and take advantage of that reimbursement code.

So we'll be working with them on that. But ultimately, they'll have to publish and have to give 30 days for people to get feedback on the policy change. So the world will know as they publish and we'll be able to report out on that as well. So 30 days after that, it will become their policy.

[Unknown Attendee]

Sure. Okay. And Tim, with the new guidelines and what you've talked about for the monthly device cost, how many is the magic number so the company can then get to breakeven now, please?

[Timothy Cruickshank, executive]

So the goals remain the same. It's still that 250 number to 300 down in the midterm at 2,500. The good news is the pace at which we can get to that has now increased with NCCN guidelines. And then obviously, it's just going to come down to what additional investments we make to accelerate the business that might drive that number higher.

But it will be an equal scale of speed of adoption with investment into the business. So effectively, that 250 to 300 range stays the same.

[Richard Valencia, executive]

And keep in mind, Ian that we have a whole bunch of accounts that are in the pipeline that have contracts that we've already put out there with pricing. But we've put out a notice to the sales team to share with those prospects that, that will be good through the end of our fiscal year, and then we'll be re-proposing pricing at that point. So that's why you're not going to see an immediate change in the unit count or the system count.

[Operator]

Your next question comes from [ Marie Molly from Profit invest ].

[Unknown Analyst]

Well, I hope we're going to get a few more minutes on top of the hour was advertised as being a 1.5-hour. Anyway. Yes. Well, look, I asked the big one that assessed me and worried me the most, which is relating to competition. There are some other bioimpedance spectroscopy devices, one made in [indiscernible] of man, I think.

Now is there any chance that they could apply and get [indiscernible] clearance. I know they won't have done the huge prevent trial, but now I've had bioimpedance when bioimpedance got a clearance in 2018. Are you monitoring people who are -- I mean other companies who might be putting in requests to have their devices cleared. Are you able to monitor them -- do you only find out about that afterwards?

[Richard Valencia, executive]

No. We are on top of our competitive landscape and tracking. We actually have in the appendix of our -- of the presentation that we have today a little bit more detail around some of the competitive solutions there.

There's a lot of work that needs to be done. And on the left-hand side of that document, it shows all of the steps that need to be taken to get to a point where you're not only FDA cleared, but you meet the -- you've got data that shows that your device will work for breast cancer patients and other patients -- other cancer patients.

So that means a very large study that takes a lot of time and -- it certainly could be done. But that's why we're really having to think about how quickly we want to lean into this and invest and make sure we lock down as much of the market as possible.

This -- we have a big lead. But any time you have something like this happen a change like this occur, there are going to be companies that are going to covet this market and we're going to want to find a way in as well, and there could be some very large companies that just decide they're going to throw a bunch of money at it and try and catch up to us.

But if we really lean in hard now, given the number of accounts that we already have in the key cancer institutes around the country, we can get there fairly quickly and lock down the rest of them and create a protective moat around our business because it's really hard to -- once you've got in, and they've changed their workflow to address that specific solution.

It's pretty difficult for someone to come in and unseat, especially if there's a really good economic model for them an ROI model, which there is.

[Unknown Analyst]

Right. And the other thing is that other devices, which go under the name of bioelectric impedance analysis devices, they're not actually the spectroscopy one. So I mean, I'm actually talking about one called in body, which party in certain places in Asia, Korea, for example, are being used to lymphedema and nephrology.

But anyway, is there a difference in the way that they are viewed because I think it had to do with the initial resistance, one being related to algorithms, bring it back to 0 and one being just a very low resistance am I on the right track? And has the FDA made that difference?

[Richard Valencia, executive]

You're on the right track. If the FDA absolutely knows the difference between the 2. What we have to make sure is that the insurance companies, the payers know the distinction because that's where companies like in-body with the in-body solution can try and take advantage of the CPT code if the payer isn't really smart on the distinctions between the technology.

But that's another part of the solution here that we're going after. When we're communicating with the insurance companies around their medical policy changes, including when they publish, we'll try and get to them before then. But by the time they publish the policy for feedback, we will be weighing in on making sure they're really clear that it's only bioimpedance spectroscopy and that if by chance they're naming -- sometimes they will name a handful of solutions that fit the bill.

And if they're naming some of these companies, we'll make sure that they understand that is not bioimpedance spectroscopy because there is no one else in the world right now that is FDA cleared to monitor for bioimpedance for lymphedema using bioimpedance spectroscopy. We're it.

[Unknown Analyst]

And [indiscernible], of course, uses the electric tissue conference or something like that. Anyway, which isn't the same thing. Apparently, it is SBA cleared that it doesn't have the codes of claiming.

So -- and of course, it hasn't been mentioned in the NCCN guidelines. So at the moment, it's hard to -- I mean, am I right about those 2 things that I've said. So it looks as though it's not really a significant competitor.

[Timothy Cruickshank, executive]

Yes, you're spot on.

[Richard Valencia, executive]

You're spot on. Those are the 2 that we think might try or might perceive themselves as fitting under that CBT code, but they don't.

[Unknown Analyst]

Got it. Well, that to reassuring I have time for another couple...

[Richard Valencia, executive]

We were going to help wrap up here. But we're happy to take a call with you separately.

[Timothy Cruickshank, executive]

Yes. Marie, I'd love to set up some more time where we can go through this individually as well to make sure all of your questions are in.

[Unknown Analyst]

Anyway, thank you so much for a really full complete coverage in that session, which really answered a lot of my questions. And I'm sure I love everybody's questions [indiscernible].

[Timothy Cruickshank, executive]

Great. I'll be reaching out to you.

[Richard Valencia, executive]

Thanks for your questions again...

[Operator]

Thank you. I'll now hand back for closing remarks.

[Richard Valencia, executive]

Well, thank you again, everybody, for participating today. I really appreciate the great questions as well. A lot going on here, as you can imagine, and we're a very different company than we were on March 24. We've got a lot of work to do. We're going to be here for the rest of the week in Australia meeting with other shareholders.

And we look forward to those meetings. Hopefully, we'll be meeting a number of you that are still on the call in person before the end of the week. And thank you -- no more. Anything for them, Tim.

[Timothy Cruickshank, executive]

Thank you. Alright.

[Operator]

That does conclude our conference for today. Thank you for participating. You may now disconnect.