ImpediMed Ltd

ASX:IPD

Earnings Call Transcript 2022-Q4

[Operator]

Thank you for standing by, and welcome to the ImpediMed Limited Quarterly Results Conference Call. [Operator Instructions].

I would now like to hand the conference over to Michael Bassett, Senior Vice President of Corporate and Strategic Development. Please go ahead.

[Michael Bassett, executive]

Welcome, everyone, and thank you for joining us today. We're hosting this conference call to discuss our 4C for the financial quarter ending 30 June 2022. Joining us on the call today is Don Williams, the Chairman of ImpediMed; Dave Anderson, the newly appointed Interim CEO; and Tim Cruickshank, our CFO. We'll be referencing the 4C and speaking from the quarterly activity report we launched this morning Australian time. The presentation is a summary of the more detailed 4C, and the presentation can be found on the ASX website.

After our remarks, we'll be taking questions. Firstly, I'd like to introduce Don Williams, the Chairman of ImpediMed, for an update on the recent management changes and to introduce Dave Anderson. Dave Anderson will then provide some initial observations, and I'll ask Tim to take us through the financials. Over to you, Don.

[Donald Williams, executive]

Thank you, Mike, and thank you to those joining us on this call. I'm excited to formally introduce Dave Anderson as the company's interim CEO. While new to this leadership role, Dave has been a member of the Board of Directors since April of 2020. For over 30 years, Dave has held leadership positions in the health care and insurance industries and is a subject matter expert on the reimbursement strategy. Dave has recently retired from his position as CEO and President of HealthNow New York, the parent company of Blue Cross Blue Shield of Western and Northeastern New York, which is a $3.2 billion health care organization.

He brings a deep understanding of working with medical practices and hospital organizations to develop preferred standards of patient care and third-party insurance reimbursement programs. Dave stepping into this role as Interim CEO will be bringing far more encompassing than simply maintaining the status quo while we search for our new CEO. This will be an opportunity for him to accelerate the path to reimbursement, continue to build out the team and develop a strategic plan to capitalize on our current momentum and achieve accelerated growth and cash flow breakeven.

I think it's important to also say that while we are still working through the details, I believe it noteworthy that Dave has agreed to mirror the remuneration structure of the Board of Directors by accepting 60% equity and only 40% cash. This will align him directly with you, our investors.

It's now my pleasure to turn this over to Dave.

[David Anderson, executive]

Well, thanks, Don. Hello, everyone. It's my pleasure to speak with you today. When I accepted the position, I did not realize that I wouldn't be having a 4C call on my very first day as CEO in the seat. However, we are prepared. I have a great team here with me for support. And what I'd like to do is I'll begin on Page 3, and I'll cover off my background, some of my initial observations and my initial areas of focus.

Don already covered off on my background a little bit, but I thought I should emphasize a couple of points. First, I'm not new to this business. I've been a Director for a little bit over 2 years now and have had the opportunity to see the business progress and derisk over time. What I see is a business with tremendous opportunities in front of it. They have a strong management team that has built a great product and a great platform. And I'm excited to get involved and lend my expertise to assist in unlocking that potential and assist in reaching our goals.

We have received some feedback over the last couple of days since the announcement. So I thought it important to address certain issues right up front. First and most importantly, the company is in a sound financial position, which has enough capital to reach breakeven, but we need to accelerate sales. Incremental growth through COVID has been good. But now we need to accelerate growth, and I believe we are well positioned to do that.

Secondly, we'll go into the keys to accelerating growth, but central to that is reimbursement. I'll talk further about this as we go along, but our internal reimbursement team has made great progress, and I feel we're on track to achieving reimbursement.

Third, as you know, we have a dual-track process for reimbursement, and I can also report that NCCN is on track to have our submissions heard at the annual meeting in late August with the results of that meeting expected by the end of this calendar year. So nothing has changed here.

Now moving to my near-term focus and what that will be. First, utilizing my experience to help with reimbursement. This is the key to accelerating sales. We expect initial acceleration before reimbursement because hospitals are opening up, but long-term growth will require us to be successful in obtaining a reimbursement methodology. Cost control will also be a key focus. We will be looking to managing costs with a focus on achieving breakeven while not stifling growth. It's a balancing act for a company at our stage of evolution and it's one of the most critical focus areas. And a product of the first 3 comments is getting to breakeven with our existing resources. Once we can do that, we can really look to fully leverage the opportunities at SOZO.

And the final focus area are the stakeholders in our business. Starting with our staff. We have a strong and dedicated team, as I mentioned. We'll continue to focus on their development and providing them the support for them to maximize their potential. Next, our patients and customers. Our mission and vision statement have -- both have the patient at its core. We can never forget our core mission, which is improving patient outcomes.

And clearly, we have long-standing shareholders that have stood by us and deserve to see the business fulfill its potential. The Board has listened to your concerns, and we are at all times looking to act in the best interest of the shareholders. We understand your concerns over cash and more dilutive raises, and we are focused on ensuring this won't happen. The Board's committed to better 2-way communication with the shareholders, especially now that COVID will allow us to travel to Australia. We want to see the share price move up higher, and we will achieve that through delivering on outcomes. And at the end, that is -- really, my #1 focus is to deliver on outcomes in the various aspects of our business.

So with that, I will pass over to Tim to run through the financials. Tim?

[Timothy Cruickshank, executive]

Great. Thanks, Dave. And good morning, everyone. I'll be taking you through some of our key financial highlights from the past quarter, which is Q4 FY '22. All figures presented are in Australian dollars, unless otherwise indicated.

So if you go to Slide 4, we finished Q4 FY '22 with $2.8 million in total revenue, $2.6 million of which related to SOZO revenue, which was 15% growth year-over-year. This Q4 results put us over $10 million in revenue for the full year, which is an important milestone in the company's initial growth. And we finished the year with $40.7 million in cash on hand, which is a result of our Q4 cash receipts increasing to a company record $2.8 million and net operating cash outflows being $2.9 million for the period. Based on this, that gives us this -- the organization 14 quarters of available cash based on the ASX 4C definition, and that's prior to factoring in our expected growth and our path to profitability.

So as we turn to Page 5. Total revenue, SOZO revenue and Software-as-a-Service revenue all were record results for the company. We recognize this was just incremental growth. And with hospitals in the U.S. opening up and a growing sales pipeline, we would anticipate expanded growth in our core business in the coming quarters. Annual recurring revenue of key SaaS metrics for the core business was up 19% year-over-year and continued growth in that core business will be critical moving forward as the AstraZeneca contracts eventually wind down in the coming quarters as expected. Our contracted revenue pipeline, CRP, finished at $16.5 million, up 14% year-over-year.

As I've mentioned in previous quarters, with our SaaS gross margins well in excess of 90%, we expect over 90% margins on that full $16.5 million in future revenue that will be recognized over the life of those contracts. Our churn rate remains negligible at just 2% with our annual -- or sorry, with our renewal rate on contracts that were up for renewal in the quarter, coming in at a healthy 93%. The dip from our typical 97% to 100% for renewal rates related to a few customers with multiple devices, where 1 unit was in a remote location with low patient testing.

So to give you some insights into that, these customers likely have 3 units, 2 in the higher-volume areas and 1 in a remote location in order to improve patient care. The customers kept 2 units, [ paused ] the third until they could justify the cost internally. So we wouldn't expect that to continue as reimbursement grows for our customers. And we would expect those devices to even come back online, so this has not been a material trend for the business.

To date, over 880 SOZO units have now been sold commercially since the launch of SOZO. The key here is that the quality of accounts remains at an extremely high level. As Dave will walk you through on a later slide, our growing footprint in hospitals and health systems will serve as a key foundation for an acceleration of growth as reimbursement takes hold.

To touch on cash flow, we recorded $2.8 million in cash receipts, as I noted. As mentioned on last quarter's call for Q4, we anticipated that cash receipts from customers would steadily increase. And we also outlined last quarter that net operating cash outflows, we expect it to come in below $3 million, which it did at $2.9 million for the quarter. So using that Appendix 4C definition, that gives 14 quarters of available funds with the anticipated increase in revenue over time and a cash balance of over $40 million, this provides sufficient cash to breakeven.

In the coming quarter, Q1 FY '23, net operating cash outflows are expected to temporarily increase with one-off expenses associated with the recent management change of the lumpy annual expenses such as insurance and staff bonuses for the past year, which are expected to be somewhat offset by the anticipated receipt of our annual R&D tax refund. So while we're still finalizing our Q1 FY '23 cash flow forecast based on recent changes, what I can say is in the remaining quarters of the financial year, we expect net operating cash outflow to be around $3 million per quarter despite the headwinds associated with the AstraZeneca trials finalizing in the back half of the calendar year. And with continued growth in sales, we would expect net operating cash outflow to move below $3 million per quarter in the second half of the financial year.

On to Slide 6. Our business model is really starting to show its power. I'm excited to see it unfold as we accelerate sales in the coming quarters. I think there's a few key takeaways on this slide for Q4 FY '22. One, we had our largest pool of U.S. SOZO contracts up for renewal this past quarter since we launched SOZO. And in that pool, we saw our largest increase in average monthly license fees per unit. We averaged 34% increases on our monthly license fees this past quarter from those renewal contracts. And next quarter's pool of renewals is even larger. So this, combined with our annual stair-step pricing and monthly fees, is starting to result in tangible positive impacts on our SaaS metrics.

If I put this into perspective, our current contracts in the core business are worth $7.3 million in annual recurring revenue. Those same contracts based on the stair-step pricing are worth $10 million in ARR this time next year. So that's a 37% increase in ARR before we even sell another unit. And this is only the beginning. This will continue to grow as we accelerate sales under this exciting pricing model.

Thank you. Dave, I'll turn it back over to you now.

[David Anderson, executive]

Thank you, Tim.

I'll be turning to Page 7. And to further up from my prior comments, I thought I'd touch on a few points about the platform that's in place and why I'm excited and have confidence in the future.

As has been stated many times previously, patient testing is a leading indicator of the health care business. Clearly, there's been a strong rebound in patient testing this quarter. The strong recovery in patient testing that was mentioned on the April call continued into the June quarter. And why is this so important? To me, it means that U.S. hospitals are indeed opening up. The strong sales pipeline that was mentioned in the -- on the April call, has also continued to grow.

In Q1, we expect to see an acceleration in sales above the more normal incremental growth we've experienced during the last few quarters due to the impact of COVID. And as I mentioned earlier in this call, one of the keys to reaching profitability is reimbursement. I've had a significant experience in this area, and I will tell you these are an impressive set of numbers as shown. Over 3,600 case wins at a rate of 99% and importantly, over 300 external appeal wins. In my experience, this is not a question of whether if we will get reimbursement, but just a question of when.

There is work to be done. But I have to say that I'm very impressed with appeals win rate. And again, from my experience, this is a higher win rate than what was required to achieve reimbursement in other verticals of care. And following along with that, we already have a number of important payer meetings scheduled this quarter, and I'll be looking to utilize my experience and [ contacts ] to ensure that we have everything we need to be successful in those meetings and in that process.

And to NCCN, it's fantastic to have a second string in our bow. Both paths lead to the same outcome, which is reimbursement. Most companies only have the traditional path available to them. We are fortunate to have the NCCN pathway also available to us. Clearly, this would be a fantastic outcome as it would accelerate private payer reimbursement. While it's definitely no certainty, we believe we have a compelling business submission. They will be heard, as I mentioned, at the August 25, 26 Annual Meeting, and we would expect to know the outcome before the end of this calendar year.

One of the most impressive aspects for me are the agreements that we have already signed with corporate accounts and integrated delivery networks we generally refer to as IDNs. And in the last quarterly call, we commented on the growing number of key account agreements and that -- what they could mean in a post-reimbursement environment. They can potentially provide the avenue to significant growth post reimbursement as the top 25 IDNs represent over 1,700 hospitals and 24,000 facilities according to the recent IQVIA report.

With the signing of Kaiser Permanente in this quarter, we are now in 16 of the top 25 IDNs. In addition, we renewed or expanded contracts with an additional 6 IDNs in -- within this quarter and are in advanced discussion with another key corporate account. This is a key part of the platform. IDNs can take over a year to perform technical assessments, business associate agreements and contract pricing agreements they typically don't move very fast. But having a number of these agreements in place affords the company the ability to sell into these important clients as reimbursement becomes available in states where they have representation.

We've covered off on the key achievements from the past quarter, which are listed on Page 9. Therefore, I would like to turn our attention to our summary of key focus areas on Page 10. There are a number of positive initiatives ongoing with the company. We are making good progress with SOZO 2 and had positive steps forward in both heart failure and renal failure for the quarter, and this work will continue.

But the key focus is revenue growth, and we will continue to focus on accelerating unit sales and further increasing the average monthly license fees. We expect good growth over the remainder of the calendar year as hospitals continue to open up even before we account for initial wins in reimbursement. But to get to the next level, we need reimbursement. We keep coming back to it. It is the focus of the business and the key to making ImpediMed profitable.

With that final statement, I'd like to thank you all for your support. I look forward to meeting with many of you as much as I can in the near future as well.

And Travis, I believe I would turn this back to you as we're ready for questions.

[Operator]

[Operator Instructions] The first question today comes from Madeleine Williams from Wilsons.

[Madeleine Williams, analyst]

I just wanted to understand [ referred ] stair-step pricing. That only is for like your new customers or renewals as well? That's sort of the first part of the question. And then just understanding if there's been any pushback in adopting a contract, which increases in price as the contract goes on and sort of how you've proposition this with the customer.

[Michael Bassett, executive]

Tim, I'll let you answer that question, get you to answer.

[Timothy Cruickshank, executive]

Great. Thanks, Madeleine. Yes. So the stair-step pricing is occurring both in renewal contracts and with new customers. So as those contracts are coming up for renewal, that's what you'll -- you see that -- I mentioned the 34% increase inside of that is also a stair-step pricing on a number of contracts. So in the short term, it's a bit of a mixed bag. You're going to -- not all of the contracts will come through with that stair-step pricing, but we'll start to see a majority of accounts have that, both new and renewal.

And you have to remember, our pricing for early adopters is often discounted a bit in order for them to build their reimbursement program out. So there's not a lot of reluctance or pushback in terms of our pricing at this stage because as we show the patient outcomes, the benefits there as well as the health economic benefits, it still fits well within practices. So we still have a lot of room to grow in terms of that pricing before we'll see any real pushback.

[Madeleine Williams, analyst]

Okay. And just -- sorry, and just to -- if I can just clarify, because I noticed that a high percentage of contracts were signed under the pricing model. So just to understand, it means that not every contract will actually be signed under the new model?

[Timothy Cruickshank, executive]

That's correct. Because like -- yes, like Dave mentioned, a number of these IDNs and larger institutions, it takes upwards of a year to get pricing in place. So we had -- we have some pricing in place already. That's still advantageous to the company but might not be at a stair step. So it would be upon renewal of those contracts where you'd see that kick in. So it will take some time for everyone to get on that pricing, but you will see the majority of customers going in that direction over the coming quarters.

[Operator]

The next question comes from Martyn Jacobs from Canaccord Genuity.

[Martyn Jacobs, analyst]

Just interested in the private payer meetings coming up in August. I wonder if you could maybe characterize the size and scope of those particular payers and, I guess, in what states or what part of the country they're in.

[Michael Bassett, executive]

Dave, do you want to answer that? Or would you like me to?

[David Anderson, executive]

Well, go ahead, Michael, and I'll add if I can.

[Michael Bassett, executive]

Yes. Martyn, the -- as you know, the private payers have an annual cycle, and we're just picking them off as they go through. There are -- most in the next quarter are regional payers, which is exactly where we're aiming for, but there's some -- a few that [ really run ] critical to the strategies that we have. Dave?

[David Anderson, executive]

Yes. I would say that these are -- they're phased out based on particular schedules at the payers themselves. They have their own capital deployment processes. Having run one myself, I kind of know and I would schedule opportunities like impediments, specifically, around certain times of the year and when those capital meetings take place. And so we would like to meet with all of them next week if we could. But with reality, what we have to do is meet with them on their schedule. We wanted to identify that there's 10 or more of those scheduled in the very near term. And well, I think we're looking for some good success.

[Martyn Jacobs, analyst]

Okay. And secondly, in regard to the CAP program, so you've had more big wins quarter-on-quarter. I was just wondering whether that is yet translating to unit sales. I mean, it should be translating to doctors charging patients, but is it translating to unit sales? Or do you foresee that it's going to translate unit sales in the near term?

[Michael Bassett, executive]

Dave, do you want to answer that?

[David Anderson, executive]

Well, I don't feel if I can quite yet. But what I would say is that -- if I understood the question, is that has generated the interest and support of the meetings that we just talked about and created that opportunity. And we're early in that game, so that to translate exactly to unit sales is probably early in that game, but it has definitely increased interest.

And Tim's giving me a sign here, so I would turn it over to Tim maybe to add something.

[Timothy Cruickshank, executive]

Yes. And technically, what we're seeing right now from a unit and revenue perspective, we are seeing a lot of traction with renewals. It's with that huge pool of renewals that we had last quarter and that we have coming up this quarter, that 34% increase in pricing that you're seeing, that's reflective of customers understanding the CAP program and getting on that. And so as we see wins with the CAP program in these existing accounts, it will, over time, translate to additional units. Right now, in terms of the numbers and what you're seeing in Q4, it's primarily been impacted on the renewal program.

[Michael Bassett, executive]

And just to be direct, Martyn, we've definitely seen opportunities that have come through the CAP program, working in one area that is now rolled over into other hospitals within their group who are looking to add units. So we're at the beginning of that process, but there's definitely those opportunities that have been generated through the CAP program.

[Martyn Jacobs, analyst]

So just on the IDN. So you've got 1,700 hospitals. They should all probably have 3 units each. So it's a big pool that can be tapped into with the agreements in 60% of them already in place. Once either the guidelines change or various insurers change, how quickly can those hospitals choose to adopt?

[Michael Bassett, executive]

Tim, do you want to answer that? Or do you want me to?

[Timothy Cruickshank, executive]

Sure, I'm happy to, and then feel free to add whatever you might, Mike.

We think pretty quickly. So I mean the biggest encumbrance you'll see to getting in is getting past the IT, getting those security assessments done. That's what takes the longest amount of time. So effectively, getting that part of it done and giving your sales team a license to hunt in these accounts, if you arm them with reimbursement, it's going to accelerate. If you arm them with NCCN, it's going to accelerate even faster than that. So we think very quickly once we get to that point.

[Martyn Jacobs, analyst]

And just finally for me, just on renal. I thought the -- that observational trial was going to be completed by now with some sort of data release to us. Can you just sort of update us on where things are at?

[Michael Bassett, executive]

Yes, certainly. The -- our partners on the other side, both Fresenius and Balboa, have experienced significant staff shortages through that period, which has meant that it's very hard for them to have available nurses to schedule patients through the trial. We've had high hit rates in the areas that we -- in the shifts that we are in, but we're just not getting it across. They basically have 4 shifts a day, and they have, as you know, 2 groups. So you've got the Monday, Wednesday, Friday and the Tuesday, Thursday, Saturday group. And we just don't have enough coverage there.

We're bringing on another site. I've had discussions with the principal investigators in the last week. They're looking at adding more staff. This isn't new. I mean if you listen to the DaVita or a Fresenius call, you'll hear the problems that they're having at the moment. We actually do have the initial data. [ Michelle ] is working on that data as we speak, and I hope to have a good look into that over next week. And in that period of time, then we'll understand how many more patients that we need because we may get away with not actually having the full 50 patients.

So we're about halfway or just a little bit under halfway, but we think that we've actually got a very good data set, and we'll have a look at that over the next week and see what we can do about it. But the -- Balboa and Fresenius have both said to us that they are looking to accelerate now. They are putting extra staff on, and they are trying to help us. So we've got good intentions, and we're working as well as we can through that.

[Martyn Jacobs, analyst]

So just finally, did -- has -- did staff shortages impact the number of tests that were -- or patient tests that were conducted in the quarter?

[Michael Bassett, executive]

Tim, would you like to answer that?

[Timothy Cruickshank, executive]

Mike, you were referring to staff shortages at the clinical sites for the clinical trial, not in relation to our business if I'm understanding Martyn's question correctly.

[Martyn Jacobs, analyst]

Yes, a sort of insight, yes, I was pivoting away from the renal but back into the main business of patient tests for SOZO in lymphedema. I was just wondering, even though it grew 15% year-over-year, I was just wondering if there was any kind of staff shortage impact on the growth rate.

[Timothy Cruickshank, executive]

I would imagine that would have impacted it. We didn't get any direct reports of that, but I would imagine that it's impacting hospitals across the U.S.

[Operator]

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

[Unknown Attendee]

A bit of a switch to the details. You've mentioned previously about data, and you've said today in the 4C that data is accelerating and it's -- also its usage. Previously, the company said that they've had over 1 billion data points, and I'm thinking now, they're probably close to 2 billion. But there's been no mention at all. And is this possible that somewhere in the future that this data can be used for something else besides just the company so they can monetize it in some way? Because everyone knows the world runs on data and you're collecting huge amounts. So is that something that's possible and clearly not at the moment? Or...

[Michael Bassett, executive]

I think at the moment, the data set that we -- like the data that we're collecting will be far more powerful once we have heart failure, renal failure and just general body talk across the group. We're collecting fantastic data, but it's a pretty thin patient set in and around cancer and around breast cancer at the moment. So as we move to more general oncology, then clearly, the data set gets even more interesting. And there are definitely pathways to commercializing that data, but we're way off that, and it's definitely not the focus this week. We've got to get to breakeven. The focus is around lymphedema. We continue to push ahead with heart failure and renal failure. But it's definitely something on our radar, but it's a little way off ahead.

[Unknown Attendee]

Sure. I understand. So I was just curious as to what you're thinking, what the details are. And so with that as well, so SOZO 2 you've mentioned is coming along well. Is there anything you can advise us to say the increase in the data that you can be able or will be able to collect from that or the increased accuracy of the data from, say, changing -- detecting 36 ml of fluid to a lower level or what have you?

[Michael Bassett, executive]

Tim, do you want to do that one and I'll add questions if -- add comments if needed.

[Timothy Cruickshank, executive]

Sure. I mean SOZO 1 is incredibly powerful and accurate, but you get even more accuracy with SOZO 2. In terms of collecting data, it will be seamless or it won't impact how the data is collected. So we're able to do that now with SOZO 1, we don't need SOZO 2 to continue to collect data, but you will see even more accurate measurements, which will help clinicians and then having the scale directly inside of SOZO 2 allows us to put that unit in so many more places. So we'll get that many more measurements from SOZO 2 because we'll be able to get into the continuum of care even more than we can now just in the cancer space.

[Michael Bassett, executive]

SOZO 2 is about changing the workflow, so -- and being able to -- and at the moment, we've got to be alongside a set of scales, and that's valuable space. And being able to take over that set of scales, obviously, because it's more powerful, it gets us into the more general oncology, away from just breast cancer. And importantly, it is critical for things like renal failure and heart failure. And obviously, it gives us the ability to potentially solve the problems around the contraindications. And all that data looks very promising at this stage. And we hope to -- it's relatively on schedule for late this calendar year.

[Unknown Attendee]

Okay. So that was my next question, which you've kind of answered. So CHF is progressing, and there will be something you have about that, and particularly with contra by the end of the calendar year, you anticipate?

[Timothy Cruickshank, executive]

Yes. Correct.

[Operator]

The next question comes from Richard Mews from Pacific Union.

[Richard Mews]

My questions are a bit philosophical. First of all, why has it taken quite so long to get to this point of reimbursement? And secondly, were the philosophical differences between the Board and the recently departed Chief Executive, which actually may affect future policy?

[Michael Bassett, executive]

Dave, why don't you answer the first question on the reimbursement. I'm happy to add some comments to that. And then Don, if you could answer the question on the Board and the previous MD.

[David Anderson, executive]

Yes. So there has been a process in place seeking reimbursement actually for quite some time. Since I have been on the Board for the last 2 years, it has been a process in place. Unfortunately, we're not completely in control of that process ourselves because it involves outside reviewers and it involves medical policy by the providers by the institutions and how they approach that medical policy. And there's -- it must be qualified by the regulators that are typically [ Department of Health ] in the various states. And in the United States, the majority of health plans are regulated on a statewide basis and those regulations are different and often state by state.

So it is an arduous process. And there's -- as we said, we have kind of a dual-pronged approach in order to approach it, which is better than most. But starting well over a year ago, we started with our CAPS (sic) [ CAP ] program, which is a process to set up with the providers a process where they can appeal a claim submission even though it is not a preauthorized contractual reimbursement by the payer. And what our CAPS program does is it helps the providers go through an appeal process. And as we reported in my remarks, is -- the success of those appeals for reimbursement by the providers is about 99%. So it's almost everyone.

What we have to do then is over time, accumulate that data. And so that we can then go out to the providers themselves to -- I'm sorry, to the payers themselves and say, "Listen, this is an established process. You are going to pay to go through the appeals process, which is something the payers don't want to do. And you're going to lose 99% of the time, and you're going to pay the claim anyway." So the process is bringing that information to the forefront so that we can have the meetings we mentioned with the providers and say, "Let's do this in a smarter way, more of a contract, systematic reimbursement process," but we had to build the data in order to be able to do that through the CAPS program.

So it is a bit of an arduous program. It does take some time, but we are at the point where we have that data, and we believe that we can begin to work towards reimbursement here pretty shortly.

[Michael Bassett, executive]

And it's important to note, Richard, that a key piece of that puzzle was the PREVENT trial, and that was only peer reviewed and published in February. So you've seen a real acceleration in those external wins where prior to December, we had literally a handful underpinned and we've now got more than 300, and they're the ones where they're trying to avoid. So we've got 300 plus now of those external wins. So it is accelerating, and PREVENT has allowed us to get there.

[Richard Mews]

Yes. So you basically believe that the -- you're at the top of the mountain and from now on, it's going to be better going?

[Timothy Cruickshank, executive]

I would say that's our sense. I don't know if we're completely at the top of the mountain, but we're close, and we do expect it to be more traction going forward, yes.

[Operator]

The next question comes from [ Jeremy Thompson from Cobley Trust ].

[Unknown Analyst]

The previous investor and the private investor -- the previous investor was going to receive an answer in 2 parts, but the second part wasn't forthcoming, I think that was going to come from firstly regarding Richard Carreon's sudden departure. Having listened to many quarterly calls over many years, I'm interested to know if you see a succinct explanation, an honest one as to what happened. Was it philosophical difference between where Richard was trying to push and where the Board wanted to go or was it something else?

[Michael Bassett, executive]

Tom, would you like to answer that question? It's -- and apologies to the previous caller. He just got cut off before we moved to Don, but Don would you like to answer the question around the departure of the MD.

[Donald Williams, executive]

Sure. This is responding to Richard's original question. And then Jeremy, thanks for reiterating that question. We had been speaking with Mr. Carreon regarding CEO succession planning at the company. Ultimately, he saw this as an appropriate time to step down where he could lead the company in a very strong cash position. And he's leaving us with a strong leadership team that is very well prepared to execute on the plan. Ultimate -- the ultimate goals of the company in achieving reimbursement and cash flow while they are being accelerated have not changed for the company.

[Unknown Analyst]

That's at least an answer.

[Donald Williams, executive]

Jeremy, you just broke up a little bit there. I didn't quite hear.

[Unknown Analyst]

Was that the entire answer?

[Donald Williams, executive]

Is there an additional part to the question?

[Unknown Analyst]

Yes, the CEO's succession plan. Some of the people kind of [indiscernible] the period, and this to be done in a planned fashion. So as an investor [indiscernible] one day that the guy who's been in charge of the team for 10 years is departing on training day, that suggests there's been some conflict.

[Donald Williams, executive]

There was not a conflict, and we did reach an agreement with Mr. Carreon. And I think part of what made that acceptable and achievable was the fact that we had the ability to lean on David Anderson stepping into this as an interim role. And we certainly view what he brings -- what he initially came to the Board with in terms of expertise on the reimbursement side, he will now be able to bring to the company from an operational role as the CEO. We also think that with his involvement, we're going to be able to attract a very strong pool of candidates in order to find a CEO to carry the company to the next level.

[Operator]

The next question comes from [ Peter Gregory ], private investor.

[Unknown Attendee]

I'd like to first ask about some number questions. The company appropriately reports in Aussie dollars. But the bulk of the revenue and the bulk of the cost is in U.S. dollars. I'd appreciate if you could, for the percentages on CAPS 4 and 6, let me know what those percentages would have been in U.S. dollars.

[Michael Bassett, executive]

Tim, would you like to answer that? We might have to get back to Peter on calculated percentages in U.S. dollars, but we can certainly do that, Peter. At that time, Tim, do you want to have a go and discuss that?

[Timothy Cruickshank, executive]

Yes, absolutely. Peter, thank you for that. That's something that we often consider here and take into consideration and do -- we do track revenue in U.S. dollars in the background. So we'll take that into consideration for future presentations. I don't have the U.S. numbers in front of me for this past quarter, but we'd be happy to provide that information.

And we do still have a fair amount of our costs in Australian dollars as we have a presence in Australia with a lot of our large professional service vendors, so there's still been a justification as an ASX company to stay in Australian dollars for overall reporting. But your commentary is noted on U.S. dollar for the revenue side of the business in some of our SaaS metrics, so we'd be happy to take that one on for consideration.

[Unknown Attendee]

Yes. No, that's great. I fully expect you continue to report in Aussie dollars. But if you could look at perhaps some -- alongside that, putting in some form of constant currency reporting so that we can see what's actually happening on the ground. I think the Aussie dollar has fluctuated quite a bit over the last 12 months, so the percentage I see are not particularly for revenue and not that many put in.

[Timothy Cruickshank, executive]

Absolutely, Peter, yes. And that's why we mentioned the incremental growth as well and the expectation for an acceleration of that in -- on a constant currency basis. So I really appreciate your comments, and we'll take that on.

[Unknown Attendee]

If I can ask another question about competition, and I'd like to specifically focus on lymphedema detection and treatment. If you look at the marketplace, excluding tape measures because that's free and excluding ImpediMed SOZO because it's effectively the gold standard, can you talk me through what other methods doctors are using to detect and treat lymphedema? Are these technologies growing faster than ImpediMed? And who are the other players that perhaps provide a lesser offering than SOZO that are -- have a presence in the market?

[Michael Bassett, executive]

Tim, would you like to answer that? Or would you like me to?

[Timothy Cruickshank, executive]

Mike, feel free to add comments on it. I mean, I think from my perspective, tape measure, as you mentioned, is still a competitor, but discounting that, it's spirometry, which is invasive and extremely expensive. So we're not seeing that market grow substantially. So it's really -- ImpediMed is a gold standard, it's, I would say, the fastest-growing market. So it feels of progress with reimbursement. There's no real encumbrances to growth at this point still from an FDA clearance standpoint of medically cleared devices in the lymphedema space.

[Unknown Attendee]

Okay. I've done a little bit of googling and there's a company called Ci-Ca [ Deutschland ]. Does that have a presence in competing with ImpediMed?

[Michael Bassett, executive]

So Ci-Ca -- so Ci-Ca is another bioimpedance device. It doesn't have a regulatory clearance. To my understanding, it doesn't have a regulatory clearance for lymphedema at this stage. So they're not in this market for lymphedema. They're in the markets for body comp. And most of what we come up against is in volumetric measurement. So whether it's water displacement or tape measure, they're effectively gauging volume. And one of the key advantage of bioimpedance is that you're actually measuring fluid increases before you get volumetric increases.

And Tim mentioned spirometry. It is used in some clinical settings in the U.S., but it doesn't have -- my understanding is it doesn't have FDA clearance for that either. So it's been used in a research type. So at the moment, we don't have -- we don't come across competition apart from the [ triggered ] tape measure. And as seen by the PREVENT result, that really isn't giving you the results that you need. You're still getting large -- too large number of patients suffering from lymphedema because hospitals are continuing to use tape measure.

[Operator]

The next question is a follow-up from Madeleine Williams from Wilsons.

[Madeleine Williams, analyst]

Sorry. My question's largely been answered, but I just wanted to clarify, I think I just cut out a little bit. The cash flow increase in the first half '23 was a result of AstraZeneca -- include AstraZeneca trials, is that correct?

[Timothy Cruickshank, executive]

So just to clarify your question, I believe you're referring to my commentary. What we meant was in the first half of FY '23, yes, so the cash receipts will decrease related to those trials. So we'll be offsetting those decreases in cash receipts with growth in the core business. So they don't have any impact on our cash outflows aside from the cash we received from the customer.

[Operator]

[Operator Instructions] The next question comes from [ Jim Mack ], private investor.

[Unknown Attendee]

So this question's actually for David. With your health care background and expertise in reimbursement and obviously, with reimbursement being so critical to the success of the company, why not be considered as the permanent CEO rather than going outside for a new CEO?

[David Anderson, executive]

Well, thanks for your question. I did actively retire at the beginning of this year. And I think at 68, I'm probably not a long-term option for ImpediMed. So I will just do the very best job I can in the time that I have, but the intent is to help find a permanent CEO, best CEO we can find.

[Unknown Attendee]

Fantastic. And one more question. As you alluded to in your presentation, I believe it was Tim that made reference to continuing to manage costs and so forth, will there be consideration to reduce -- how are you going to reduce some of those costs and considerations of maybe extending the feet on the street to accelerate sales, so that's going to be obviously so critical to increasing revenue and so forth?

[Timothy Cruickshank, executive]

Yes. We've always said reimbursement is the key to all of this. So as we see an acceleration in reimbursement, we would look to add to the sales team as necessary. But until that point, we have the full complement of sales resources that we need based on where we're at with reimbursement. But obviously, that can quickly change as we see progress here.

Aside from that, there's no other cost considerations that are particularly acquired at this time because we feel the growth that we're going to see will continue to decrease our cash outflows, but we always have those levers if necessary down the road if reimbursement were to take longer than we would anticipate.

[Unknown Attendee]

And you're saying that your breakeven point in revenues at this point based on cash outflows will roughly be about $15 million in annual revenue?

[Timothy Cruickshank, executive]

We haven't given specifics on that. But if you look, we spent $25 million to $30 million per year in cash outflows. So the number is a bit higher than that in terms of required revenue, but we're already making steps to getting there.

[Operator]

At this time, we're showing no further questions. I'll hand the conference back to Mr. Anderson for closing remarks.

[David Anderson, executive]

Thank you, Travis.

So in closing, I just, again, want to thank all of you for your time. And it really was a pleasure for me to be with you here today. And I think that's -- with that, I think we'd probably just conclude the conference. And thanks all for attending.

[Operator]

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