ImpediMed Ltd

ASX:IPD

Earnings Call Transcript 2023-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 Mr. Rick Valencia, Managing Director and CEO. Please go ahead.

[Richard Valencia, executive]

Thank you, Zach. Good morning, everyone, and thank you for joining us on our quarterly 4C call today. We had a strong close to our fiscal year 2023. As we suggested would happen after our inclusion in the NCCN Survivorship Guidelines, we're gaining significant momentum with private payers with our first top 5 national payer publishing medical policy in less than 5 months from our inclusion in the guidelines. In addition, our pipeline has never been richer and the level of customer engagement has markedly improved. For example, we closed on an 8 SOZO system deal in Michigan last quarter that was upsized at the last minute because of the significantly improved ROI we delivered after getting the critical mass in that market. That's just one example of the type of enhanced engagement we're seeing in our pipeline.

With all of this momentum and the capital we raised in May, we're now in a position to invest in the people, processes and systems to begin to capitalize on the opportunity that the NCCN Guidelines and private payer reimbursement affords. In a minute, I'm going to shift gears into the specifics of the private payer momentum. But first, I want to point out the direct impact the NCCN Survivorship Guidelines are having on the way payers are updating their medical policies and how they're directly benefiting ImpediMed.

So far, every positive medical policy change has included the following. Language that specifically requires bioimpedance spectroscopy. ImpediMed is the only company that offers an FDA-cleared solution for identifying the early onset of lymphoedema. ImpediMed, SOZO and/or L-Dex are included in the wording of every medical policy, one of those 3. No requirement for prior authorization, which speeds provided workflow and patient care. They don't dictate -- none of the policies dictate or restrict testing protocol and instead allow for the providers to decide when to test if they deem it medically necessary. Reimbursement rates meet or beat our estimates to support our pricing model and our customers' ROI model. These policies are not limited to breast cancer and instead applied to all cancer patients at risk of lymphoedema. It just couldn't be any better for us in the first 5 medical policies that have been published.

Now on to the specifics of the coverage policies to date. There were 7 positive medical policies published in just 4 months since the inclusion of SOZO and BIS in the NCCN Guidelines. The positive medical policies were led by our first top 5 national payers, Cigna and 4 Blue Cross Blue Shield policies. We have confirmed 5 additional regional medical policy revisions that are now pending publication. 23 payers are currently providing silent coverage for CPT code 93702. And we've now reached critical mass, which is greater than 80% covered lives in Michigan and also in Alabama.

There were a handful of policies that were reviewed on cycle and based on the NCCN Guidelines for breast cancer, not survivorship that they did not update their medical policy. We're currently working with these payers to educate them on how the Survivorship Guidelines -- on the impact of the Survivorship Guidelines for their next review. Positive coverage policies from all of those payers is still expected within the forecasted time lines we previously reported to the market. Most importantly, the first national payer, Cigna updated their medical policy. They provide coverage in all 50 states for 16 million covered lives and they're a top 5 payer in 38 states.

The policy specifically names ImpediMed, SOZO and L-Dex, it provides coverage to all cancer patients at risk of lymphoedema and they also do not require prior authorization before administering the measurement. This is really a home run national policy for us. And as Shane Storey recently wrote in his analyst report, and I quote, "It's only a matter of time before the rest of the payers start falling. Previous discussions with key personnel within the insurer market suggest top national payers publish identical medical policies in 95% of the cases to ensure they retain share".

Let me wrap up the reimbursement discussion to reaffirm our expectations through the end of our fiscal year. First, we achieved all of the goals we previously committed to you, including getting to critical mass in one market, now 2, and we exceeded our own expectations by receiving positive medical policy change with the first top 5 national payer. We continue to expect roughly 50% of the private payers to publish coverage by the end of the calendar year 2023 and approximately 95% of the private payers to publish by the end of our fiscal year or June 30, 2024.

With that, I'll turn it over to Tim for system sales and financial update.

[Timothy Cruickshank, executive]

Thanks, Rick, and good morning, everyone. A few housekeeping items before I get started. All figures are stated in Australian dollars unless otherwise indicated, and our percentage changes are presented on a constant currency basis unless noted. The company is still planning to move to USD-based reporting in FY '24 on the other side of the upcoming release in the FY -- of the FY '23 annual account. So for the time being, we have a constant currency noted. And for this quarter's financial results presentation, we focused on SOZO system sales, revenue, SaaS metrics and cash flow. So I'm starting on Slide 7 of our presentation that was posted to the ASX today.

For SOZO system sales, we saw a strong initial growth in SOZOs during the quarter with 54 systems sold globally, up to 200% increase quarter-over-quarter in the number of SOZOs and well above our rolling 2-year average of system sales. 34 of those SOZOs were sold in the U.S. are key markets. The sales came from a healthy mix of new and expansion accounts. We added 15 new logos to our roster, many of which were accounts that were in our pipeline and sitting on the sideline waiting for private payer coverage news.

The new customers came from across the geography of the U.S., not just in areas where coverage was achieved during the quarter. So this, coupled with the overall responsiveness and excitement of our customers and our prospects is a strong indicator that they understand the power of the NCCN Guidelines and the positive financial impact that comes with the impending payer policies. We have strong momentum heading into FY '24, as the additional positive payer policies are published during the period in our stated time lines.

For revenue, total revenue for the quarter exceeded $3 million for the first time in company history and revenue from the core business was $2.4 million of that, 29% growth year-over-year. The revenue growth was primarily led by our SOZO system sales in the period with these systems leading to increased SaaS revenue as we head into FY '24. A reminder, this initial revenue growth has been achieved prior to broad reimbursement.

As we move on to Slide 9 and our SaaS metrics, new system sales and renewals were both strong during the quarter. We signed a record $4.2 million in total contract value in Q4 FY '23, $3.8 million of which related to the core business. ARR grew to $9.4 million, of which $9.3 million related to the core business, a 22% increase year-over-year. We continue to see strong increases in the average monthly license fees for both renewals and new sales. 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 $9.3 million of core business ARR is worth over $11 million now in 1 years’ time prior to selling any new SOZO systems.

The SOZO systems sold during the quarter averaged over USD 2,000 based on the year 3 pricing. We're focusing on year 3 pricing, and it allows us to partner with our customers to get them a positive ROI in the early years and reduced sales cycle plans, while also ensuring the lifetime customer value is in line with our TAMs. And as we achieve broad reimbursement over the course of this financial year, pricing in years 1 and 2 of our contracts will increase. But for now, that flexibility is a great tool to start accelerating sales and reduce sales friction in the pipeline.

In addition, we continue to maintain in excess of 90% gross margins on our SaaS revenue business and have a negligible churn rate of less than 3%. We expect churn to stay in that range, if not lower, as even more payers come on board in the coming quarters, which further enhances our value drivers that we bring to our customers. And finally, on cash flow, we ended the period with $45.7 million of cash on hand. Cash receipts in Q4 were a bit lumpy due to the timing of international sales but were in line with our annual forecast. We completed FY '23 with a record result for cash receipts at $11.5 million.

Our net operating cash outflow was $3.1 million, in line with expectations. Gross operating cash outflow when you take cash receipts out was $5.8 million, which is reflective of our $23 million and $25 million cost base we've been educating the market on. And so with the completion of the placement in SPP in Q4, we have the funding available to get accelerated private payer opportunities and the scaled roll-out of our SOZO systems in the U.S. We've now built out the market access team and are focused on building out the sales team, including the expectation of 4 additional sales reps hired in Q1 of FY '24. We look forward to updating you on our payer and commercial progress throughout '24.

And with that, Rick, I'll turn it back over to you.

[Richard Valencia, executive]

Thanks, Tim. And I made a conflicting statement a bit earlier. I want to clear up real quickly right now. Here's exactly where we're at in terms of coverage policies. There were 7 positive medical policies published in just 4 months since the inclusion of SOZO and BIS in the NCCN Guidelines. The positive medical policy changes were led by our first top 5 national player, Cigna and 4 Blue Cross Blue Shield policies. We've confirmed 5 additional regional medical policy revisions that are pending publication, and 23 payers are currently providing silent coverage for CPT code 93702. I'm sorry if I confused before.

Okay. Before I wrap up, I'm going to give a quick regulatory update. Just this week, we submitted our 510(k) application to the FDA to clear contraindications for heart failure. We've done extensive bench testing with most all of the active implants that were the cause of contraindications and we're very confident of our eventual clearance. While I've told you we plan to stay focused on cancer-related lymphoedema for the time being, we do not plan to lose sight of other attractive markets as this FDA submission shows.

We are also currently working with regulators on a change to our SOZO software to address an issue -- to address an issue with our SOZO Digital Health platform -- I'm sorry, that our SOZO Digital Health platform helped us identify. It pertains to a very small segment of patients who may be at risk of lymphoedema in both arms or bilateral lymphoedema. Our data has shown us that those measurements don't meet our high standards of accuracy and our customers sometimes inadvertently use that measurement when a patient should be getting measured for unilateral lymphoedema or single lymphoedema. To address the issue and ensure every patient is given the correct measurement, we decided to make an update to the SOZO software to ensure better accuracy and help our customers avoid selecting the wrong measurement. This change affects such a small percentage of measurements that it will have no impact on our sales forecast, pricing model or customer ROI models.

Okay. Let's wrap this up. First, I'd like to draw your attention to the 2 new Board members who joined us this fiscal year; Dr. Michael Seiden, MD, PhD and a Board-Certified Medical Oncologist in the U.S. Michael brings decades of his oncology background to the Board, along with decades of operating experience that will be very helpful to me as I run and build and scale this business. Danny Sharp, CFA, is a longtime banker in Australia, who is likely no stranger to many of you. His decades of experience will help us support our Australian shareholders and capital market activities. I'd like to thank our retiring Board member, Dr. Robert Graham for his over 5 years of service to the company.

It's an exciting time at ImpediMed. We've made great strides in the last several months and closed out a very strong year. Now the hard work begins. Market access is fully built out and reorganized sales, customer success, medical affairs and manufacturing are all underway and progressing well. Our momentum continues to build and we expect another solid year while we work to prepare ourselves for scale.

Thank you, and I'll turn it back to Zach.

[Operator]

[Operator Instructions] Your first question comes from Elyse Shapiro from Canaccord.

[Elyse Shapiro, analyst]

[indiscernible] 1Q '24. How many reps do you think you need to get to, to get kind of fuller broad geographic coverage across the U.S.

[Richard Valencia, executive]

Elyse, I'm sorry to interrupt. But we only got a portion of your question. Could you start again?

[Elyse Shapiro, analyst]

You mentioned hiring 4 reps in first quarter '24. How many reps do you think you need to hire to get to fuller geographic coverage across the U.S.?

[Richard Valencia, executive]

We're still estimating in the 20 to 25 range eventually. We've come to -- we are going to be building out the team, both in sales and support in other areas in market access. But we're going to be pacing ourselves for a number of reasons, not the least of which is identifying the right type of talent in the U.S. market right now is a bit of a challenge. So it's just realistically going to take us some time. Our primary focus, though, is on those sales resources to get them on board as quickly as possible because as we've talked about before, it takes several months to get them productive. But we've got a good plan in place and the hiring is underway.

[Elyse Shapiro, analyst]

And how many reps do you have right now?

[Timothy Cruickshank, executive]

6.

[Elyse Shapiro, analyst]

6, okay. Maybe looking at that customer pipeline, especially now that you have critical mass in Alabama and Michigan, how many sites does that equate to in terms of near-term targets?

[Timothy Cruickshank, executive]

Yes. So for Michigan, we figure somewhere in the range of 500 to 1,000 sites of service. It's a really strong target market for us. We've seen strong reimbursement rates in that area as well to facilitate some additional headroom in terms of our pricing model. So Michigan is definitely the key focus. We've even had an example of one of the largest health systems in Michigan approaching us. They've been a longtime supporter of SOZO, but prior to having the financial ROI component, they have been taking systems one at a time. They've approached us in relation to a master service agreement to look at a broader roll-out of SOZO over time. And so that was a really exciting indicator of the strength of the market that we have in Michigan.

Alabama has historically lower reimbursement rates compared to national averages. So it's an area where we haven't had much penetration in the past. It's about 100 -- there's about 100 hospitals in the state. If you look at relevant hospitals and then relevant sites of service, it's in the 300 to 400 range of relevant sites of service. So that would be about a $10 million to $20 million TAM for that market in Alabama. So a smaller market, but one that can still make a solid impact on our financials in the short term. So we'll look to build that out now. But I'm still with Michigan being where the larger opportunity, definitely yes.

[Operator]

Your next question comes from Madeleine Williams from Wilsons.

[Madeleine Williams, analyst]

I just had a question in regards to just thinking about the roll-out now that you're achieving forward coverage. I know you sort of, have spoken to it a little bit, but just sort of, understanding how quickly it really can occur. I mean, obviously, we're sort of, looking to head back towards device placements and what that will look like in the next couple of quarters. So I'm just wondering whether you think there'll still be a couple of quarters of delay in ramping up the device placements? Or you expect that, that will sort of happen immediately?

[Timothy Cruickshank, executive]

Yes. Thanks for the question. We're -- we need more data, we need more facts from the market to be able to accurately forecast the rate of growth that we expect. We do expect for our system sales to pick up. We think it's going to take at least a couple of quarters to have direct impact. It's a combination of things. One, we are getting broader and broader coverage. We're the first national payer, obviously, that helped in a lot of markets. But it gets a number of markets to 41%, 44%, 50%, 61%, 64%, one of them is 74%, but it's why it's not a really big state.

And so we're getting closer and closer, but it really does take getting to that critical mass breakpoint before it's a market you can go in and sell the complete ROI model. And so -- and it's hard to predict exactly when the payers will update their medical policy and then, of course, the biggest step in the process is how the providers either plan for or wait for reimbursement to actually take place. This is a very novel circumstance that's happening right now with the new measurement technology that's coming into clinical workflow, brand new for -- a condition that's been around for ages.

So seeing how they respond, we want more data before we get too far ahead of ourselves around forecasting the rate of growth. But at least a couple of quarters before we see things pick up. But thereafter, we do expect a pick up. And in 2025, especially, that's when we really feel the growth is going to kick in. By then we are going to have pretty near 100% private payer coverage and critical mass in most every market. And it will give us the time, though, as I've talked about before, to ready ourselves for the scale that's coming.

[Madeleine Williams, analyst]

And just a -- this is in follow-up to that. Do you see any issues of being able to sort of make the devices available to the customers as they do ramp up and then thinking about, I guess, the manufacturing but then also the, I guess, clinical support piece and if there will be, I guess, the transition, as you said, from a standard of care to this new device? Do you expect there to be a delay in that occurring?

[Richard Valencia, executive]

I'll answer the second part of the question, and I'll let you let Tim jump in on the first part. With regard to the support organization, I think we'll be ready by the time things really start to kick off. We're investing right now, we're looking for a new Chief Medical Officer, a new Chief Commercial Officer, a new Head of Customer Success. We're targeting people with extensive experience in going through the scaling process that we're going through ourselves right now and making good headway on those hires and we're building out the teams underneath as well. So we've got a really good plan for making sure that we're ready when the scale really starts to hit. As we saw in the last quarter, things are really picking up, so we do expect them to pick up and we've got to be ready to. But for the big burst, we think by then, we're going to be ready.

Tim, do you want to talk about the SOZO systems?

[Timothy Cruickshank, executive]

Yes. From a manufacturing standpoint, we've got a strong inventory of SOZO 1s currently that will continue to sell through over the course of FY '24 when we launch SOZO Pro, we'll begin manufacturing and building out that fleet of systems as well. So we've got plenty of inventory for the short-term while we sell through our current SOZO products. And right on the heels of learning about NCCN, we immediately began ramping up our manufacturing capabilities for SOZO Pro. And so I think right around that time, we had about 500 systems we could manufacture on a quarterly basis, which is already -- we've already ramped up beyond that at this point.

So from a manufacturing standpoint, we're staying well ahead of our short-term forecast for systems. And longer-term, the bigger focus on manufacturing is the long lead time parts. And so part of the capital raise and with the funding that we secured, we'll be keeping our eye on the forecast and those long lead time parts so that we can stay, stay far enough ahead of those so that we can manufacture devices quickly.

[Richard Valencia, executive]

I'll also add that while SOZO Pro is our second-generation technology is a better technology. It has more features and has the weight scale included. We've been very, very good at keeping that under wraps even though it's FDA cleared. So there's no market pressure for us to launch SOZO Pro. And since we've got plenty enough inventory to get us through this next fiscal year, I don't want that to become a distraction to the company while we have so many other moving parts to get ourselves ready for the scale nor do we want it to become a distraction for our customers who decided to wait or want a more full-featured system. So we're pacing ourselves with regard to the commercial launch of SOZO Pro right now. We want to get a little bit more momentum and get a little bit more of the team built and ready for scale before we do that commercial launch.

[Operator]

Your next question comes from Steve Wheen from Jarden.

[Steven Wheen, analyst]

Just to call for you -- a question for you, Tim. Just with regards to the average pricing per scan from the payers. I think you've previously spoken of a range around $110 to $220. Just wondering if you might be able to shed some light on what the 5 national payers, rough average might be since you brought them on board?

[Timothy Cruickshank, executive]

Yes. So just to clarify, thanks for the question, Steve. To clarify, the Medicare rate is around $145 nationally. That's about 30% to 50% of covered lives, depending on the region, typically 30%, 35% in a given state or region. The private payer amounts, we model at between $200 and $220 per measurement. And so far, the policies that have been coming back are in excess of that on average. So in some smaller markets like Alabama, like I mentioned, we are seeing below $200, but that's in line with our expectations. If you look at the blended average across the U.S., it's well in line with the $200 to $220 range. And we have examples of some payments over $300 in areas as well. So a lot of headroom available in the key markets that we need where we were expecting some of those more robust reimbursement rates. So $200 to $220 on average is a very safe number to use for forecasting and for modeling.

[Steven Wheen, analyst]

And then I just wondered if you've got any way or insight into of the more recently placed devices, what the run rate is of the scans per month?

[Timothy Cruickshank, executive]

We didn't see a significant increase in the number of patients tested last quarter. For the last 3 quarters we've been doing in excess of 50,000 total measurements per quarter. We did just over 56,000 last quarter, which was a double-digit increase, but not to the level that we would expect on the back side of broad reimbursement. And one of the keys to our ROI model is ensuring that our customers are testing according to protocol, getting patients coming back in for repeat test, but really the compounding nature of it.

So as Rick stated in kind of -- in our measured approach to going about this, we know that one of the keys now that we've built out the market access team, which can help private payers and providers in terms of policy language, the next key step beyond sales reps is building out that integrated customer success teams where those individuals will be focused on building out that patient testing. So we haven't seen a market increase yet, although we wouldn't have anticipated at this point seeing a massive increase in patient testing, but that over time will be critical to the -- ensuring that we have adhere, our customers adhere to the protocol that's inside of their ROI. So we'll continue to be monitoring that.

[Richard Valencia, executive]

And with the guidelines having been published just recently, the health systems are just starting to digest that and begin developing their practices around that. Just as important with private payer reimbursement coming about with them not limiting the testing protocol, providers have the ability with all of the published policies so far to determine themselves when they deem it medically necessary and therefore, do the test. As we sell these days and we're seeing it already in the pipeline and the deals that were just closed, they're much more oriented towards our ROI model, along with the patient care piece of it and the adherence of the guidelines. But we believe we're going to see a significant increase in utilization, both to adhere to the guidelines and to ensure that they're benefiting financially from the new program that they're deploying.

[Steven Wheen, analyst]

Thanks for that explanation. I just wanted to -- have 2 more, if I may. The proportion of the sales, whether any of that was customers upgrading their SOZO to the Pro in light of the new guidelines? And then secondly, just wanted to understand the implications of silent coverage and what the pathway might be for that to become a little bit more -- well, obvious within policies of the various payers?

[Richard Valencia, executive]

So Steve, just to be clear, SOZO Pro is yet to be commercially launched. So there were no upgrades from SOZO to SOZO Pro. We did have some account expansions. We did have account renewals. We did, of course, a lot of -- Tim had mentioned the new customer logo sales that we've got this quarter as well.

Do you want to provide a little bit more detail there, Tim?

[Timothy Cruickshank, executive]

Yes. So 15 new customers in the period, definitely one of our strongest in terms of the quantity of new accounts coming on board. There was still a strong -- it was a healthy mix, as I indicated, in terms of expansion accounts as well. 11 NCCN centers, so 1/3 of the NCCN centers transacted with us last quarter. We added 1 additional NCCN center and the other 10 either expanded with additional SOZOs or renewed their contracts at increased prices. So it was a really strong indicator from that sense and a really healthy mix of both new and existing accounts.

[Steven Wheen, analyst]

And just on the silent coverage, did you have any comments on that?

[Richard Valencia, executive]

I'm sorry, Steve. I think I missed the silent coverage part. I was thinking about the first part of your question last time. Could you just...

[Steven Wheen, analyst]

I just was wanting to know what the implications is of silent coverage from those payers. And is it -- do you deem it necessary for it to become to progress towards something that's a little bit more obvious within the policy guidelines of each of the insurers or payers?

[Richard Valencia, executive]

At the end of the day, we obviously want positive medical policy that clearly states reimbursement for our technology and whatever conditions exist. Silent coverage is actually kind of pretty good because it still means that we end up getting reimbursement for our customers, but it's because that they've chosen not to create a policy or put us on experimental technology risk that then gets the claim denied through kind of that backdoor process. So ideally, having written medical policy for the technology is what we want. And with this momentum that we're building and now having the first national payer, it's all coming. It's just a matter of time. But in the meantime, it's nice having a handful of these that are silent coverage. It turns out for the number of the ones that have silent coverage right now are in relatively small markets also and so we don't significantly move the needle in terms of getting to critical mass. But again, it's better than not having it.

[Operator]

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

[Unknown Attendee]

On the ROI that's been talked about, given that lymphoedema take a couple of years potentially to present and how all the medical policies are coming out, you already have, in the last 12 months, 1.1 million potential patients that are susceptible to lymphoedema. So has anyone thought or discussed with doctors, hospitals about not only just setting the baseline with new patients, but going back and starting to follow-up on recent cancer patients that have had treatment that are still potentially susceptible to lymphoedema, because that would obviously dramatically change the ROI needle?

[Richard Valencia, executive]

Am I clear on the question that you're asking about the -- about going back and talking about other cancer types?

[Unknown Attendee]

No, not our cancer types, but you guys have put out that there's 1.1 million patients every year get cancer in the U.S. that are potentially susceptible to lymphoedema, correct?

[Richard Valencia, executive]

Yes. Correct.

[Unknown Attendee]

Okay. So in the last 12 months, there's 1.1 million people sitting at home that have had cancer treatments who can potentially still get lymphoedema, but nobody is testing them. So has anyone thought about, okay, here is a pool of potential patients or not actually potential, but real patients that should be covered. So instead of hospitals having to wait to get new patients through the door to work on the ROI from getting the $200 or whatever it is for every new patient, there's a pool of 1.1 million for the last 12 months that already exists. So is anyone thinking about them?

[Richard Valencia, executive]

I get it, [ Ian ]. And thank you for clarifying.

[Unknown Attendee]

So that would dramatically...

[Richard Valencia, executive]

That makes sense.

[Unknown Attendee]

Dollars every way.

[Richard Valencia, executive]

Yes. Well, [ Ian ], those people are not just sitting at home because they've already gone through their cancer treatment. In most cases, a majority of those people are still at some stage of their cancer treatment. And generally, they're continuing to follow-up with their metal oncologists. They're in some form of physical therapy, and they're being touched by these -- our customers and our customers will now be recommending that not just the newly diagnosed patients, but patients that have been rolling through their clinics and continue to roll through their clinics, get tested as well.

There's not really an effective way to target folks that aren't in the system unless you're more of a consumer-centric organization selling direct-to-consumer, very far cry from what we do right now. So the pickup for us will need to be through the clinic through the hospital, through the cancer center. But again, I believe from personal experience that those patients are still in the system and will be for quite some time.

[Unknown Attendee]

Okay. It's just that everyone -- all the conversations I've had previously with the companies about the reason why you've got the low start-up monthly that price is they've got to build that and [ nurse ] with number of patients being tested and that's from new patients, but there's new patients. And as I said, it's 1.1 million and sitting at home with just a generic term. I'm not saying that's what they are doing, but they're not getting treated like having the surgery and radiation, what have you at that time. So that's a pool of 1.1 million people that could theoretically just get plugged straight in and get charged by the new care or the reimbursed -- the private reimbursement rate. So it would shift the ROI almost straightaway to positive, you would assume for just about every user?

[Richard Valencia, executive]

We do, do quite a bit of work from a marketing standpoint of raising awareness about the technology. We also work with patient advocate groups to try and ensure that they are aware of the test. So we do everything that we can short of being a direct-to-consumer company that would be investing in that type of marketing effort to go after those types of patients or survivors. But again, I think a good chunk of those, [ Ian ], we would be picking up. The point about the 1.1 million is that, unfortunately, there is a continuing stream of new customers every year for our measurements and will be, unfortunately, for a long time going forward.

[Operator]

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

[Unknown Attendee]

Also congratulations to you and the team for the great [ here ] that's been achieved on reimbursement. I'd like to build a little on some discussion that there's been already about rate of testing and ask you about the customer success team's role in getting the critical doctors and nurses, the practitioners on board so that they clearly use where they should, so that they become excited about using it. And so that they actively talk to all of their colleagues and peers and other institutions about what a great job SOZO does to help them do a better job of treating their patients.

[Richard Valencia, executive]

Great question. So a couple of things. First of all, one of the things that I observed very soon after coming on board and meeting with customers going actually to the cancer centers and seeing how they use our technology, talking directly with everyone from the surgeons to technicians that really just run people through the test and pass them on to a nurse or a doctor, there is no shortage of enthusiasm around what the SOZO technology can do for the benefit of a patient. It is through the roof.

You've heard I'm sure that we have an 80-plus Net Promoter Score, which is unheard of, especially for a health care or health technology company. But our customers are passionate about the technology. The challenge, of course, has been the -- you can have an early adopter who is very passionate about the technology that wants to put it on -- or use the measurement for every patient who wants to have in every room, then you have the reality of the administrative part or the finance part of that organization that says, well, it's great, but we can't afford it because there isn't a private payer reimbursement. We can't get it paid for. And if we just use Medicare with our mix of patients, we'd have to maybe charge people directly for it, so a lot of complexity there.

Private payer reimbursement clears up all of that. And so the great news there is that we've already got -- with the current customer list that we have already, we have these evangelists placed in lots and lots of organizations but we'll sing our praises to the finance department, to administration to help us now that we've got a full-blown ROI model to sell with. So first, that's first order of business. Second order of business is that our customer success team is going to be part of our commercial organization. So that will report up into our Chief Commercial Officer. They will be very incented to ensure utilization has increased and that we continue to expand our footprint in those accounts.

Another thing that I learned early on here was that there's been of disconnect from utilization at our customer site and our subscription fee because they're separate from one another. They don't pay us on a per test basis. There's lots of reasons for that. And for the time being, we're going to stick with that model. But it can cause us to lose sight of the fact that we might have customers that are low utilizers and may not stick around or may not expand if we don't get them utilizing more. So we've now changed that dynamic. And with our new Chief Commercial Officer, I'll be putting a lot of emphasis on that with that person to bring that into the organization to ensure that we're tracking and we're sharing best practices with our customers, what they should be doing, what they're leaving on the table, both in terms of great patient care and also in terms of financial return so that they're -- and that group will be -- will have some variable pay associated with how well we do on the utilization front, including how well they do on expanding the account.

[Unknown Attendee]

Can I suggest that in future presentations like this, you provide the steps about some rate of testing and perhaps the rate of testing per machine so that we get a sense as to how that's tracking?

[Richard Valencia, executive]

You bet.

[Unknown Attendee]

And also, can I just ask a question to Tim about the comment on Slide 10, the lumpy results due to time of international sales. Can you just expand a bit on that and also what's happening in the international space?

[Timothy Cruickshank, executive]

Yes. So we continue to get a pretty consistent amount of sales in the international space. The timing of the payment on those sales went into last quarter as opposed to this quarter. So you might recall, we had $3.2 million in cash receipts last quarter, which was higher than our revenue figure. So we actually -- the timing of the payment of those went into the previous quarter. On the whole, it was $5.9 million for the half year in cash receipts, which is in line with our expectations. So it was just a matter of payments coming in, in Q3 instead of Q4.

[Operator]

Your next question comes from Richard Mews from Pacific Union.

[Richard Mews]

Congratulations. My question is that you sold apparently 20 systems outside the United States. And I wondered which countries were most important appreciating that the U.S. is going to be your focus for the next 2 or 3 years, but that seems a pretty good result given that our focus is on the U.S. Could you just comment on that? And whether you expect that to continue and grow and you're able to manage that while the focus is still on the U.S?

[Timothy Cruickshank, executive]

Yes, great question. Thank you, Richard. Yes, we have a strong distributor partner in the Asia-Pacific market. And -- this is the little feedback -- I don't know if it's coming from you, Richard.

[Richard Valencia, executive]

Richard, could you mute, while we answer and then you can come back on. There we go.

[Timothy Cruickshank, executive]

Thank you. So we have a very strong distributor network in the Asia-Pacific market. They've been consistently ordering from us in the past. We do see some signs of growth there. Although when you look at the average license fees, it's about 1/10 the amount that we get in the U.S., just solely based on the reimbursement or lack of available reimbursement in the Asia-Pacific market compared to what we have in the U.S. So we'll see some incremental growth in the international market over the coming year too. But really the focus and where the significant addressable markets are in the U.S. So we're going to maintain our resources and our company vision and focus on that U.S. market.

Over time, Rick and a number of people in the organization have strong backgrounds in expanding into Europe and we'll look into that when the time allows. But given the size of our organization, the sheer size of the market opportunity in the U.S. that will continue to be our primary focus until we're heavily penetrated in that market and then we'll expand out into the other regions.

[Richard Valencia, executive]

And one other great thing about -- so today, our business model is hard to support in every market. We could in some markets that are more like the U.S. health care market. Thankfully, not too many of are like the U.S., but there are some that can support our business model. However, what happens when you become in the guidelines in NCCN is you do become the standard of care and people practicing medicine anywhere in the world look up to institutions that -- well, NCCN institutions and they look to the guidelines because they want to be an NCCN institution or an NCCN like institution as well.

And so as we become more and more of the standard of care, we need to develop solutions both in terms of our product offering and our pricing models that can address these other markets. But to Tim's point, while we've got some experience and I plan to make sure our Chief Commercial Officer has experience around the world as well, where there's so much opportunity immediately in front of us here in the U.S. that, that's going to be our primary focus for the next -- for the foreseeable future.

[Operator]

At this time, I would like to hand over the conference back to Mr. Valencia for his final remarks.

[Richard Valencia, executive]

Thank you, again Zach, and thank you all once again for joining us this morning. Again, we've had a -- we're very proud of how things have gone in the last 7 months since I've been here. The company is set up for a good year and really want to thank all of you for the support and the capital raise. You positioned us to take advantage of this opportunity in a way that gives me a lot of comfort that we're going to be ready for the scale. And as mentioned, it's going to take a quarter or 2 for us to really significantly see it, but we're seeing it right now. We're feeling it right now and you'll see it in the coming quarters as well. But again, thank you very much, and I hope you all have a great day.

[Operator]

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