ImpediMed Ltd

ASX:IPD

Earnings Call Analysis

Earnings Call Transcript 2024-Q4

[Operator]

Thank you for standing by, and welcome to the ImpediMed Limited Quarter 4 Results Conference Call. [Operator Instructions] There will be a presentation followed by a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to Ms. Parmjot Bains, Managing Director and CEO. Please go ahead.

[Parmjot Bains, executive]

Thank you. Good morning, and thank you for joining us for the Q4 2024 financial year results. I'm pleased to be here with McGregor Grant, our CFO. Today, we've got 4 main points to highlight. Firstly, the Q4 achievements. Secondly, that we retain key leadership in the valuable BIS market. Thirdly, the new Board and executive team have set the strategy are now driving meaningful change. And finally, the financials, both revenues and costs are heading in the right direction. We believe we're generating very positive momentum in the business and I'm very confident about our opportunities and our path ahead.

In terms of the key achievements for quarter 4, I just want to highlight a couple of these. Firstly, in terms of total units sold, we sold 38 SOZO units with 23 sold in the U.S. market. This is reflecting the growing acceptance and demand for our technology. In terms of expansion into major networks, within the U.S., we expanded into 3 major networks, now deploying multiple devices that build on our current installations and further solidify our market presence. We have discussions underway now with a number of large networks and are both very encouraged and very focused on the execution with these systems. Lisa Prom, our former VP of Sales is now focused on key accounts and renewals and is driving and supporting these activities.

In terms of our forward-looking view, our lead pipeline, our lead pipeline grew by 168% this quarter and by 380% since quarter 1 financial year 2024. This growth is driven by our robust marketing strategies, active participation in industry events and effective sales lead generation activities. With the focus of the team over the last 6 months towards U.S. BCRL sales, we now have 18 ImpediMed sales and CPS team members who are responsible and accountable for driving leads and sales, along with the leadership team, who is out supporting them in the field, including myself. There are now 11 dedicated members of the sales team. In addition, 7 clinical support team members who are both supporting lead generation as well as device implementation and utilization in the U.S. As an example, the 2 new businesses development reps who joined recently are now making 30 unique customer touch points a day to drive lead generation.

We have been working very hard on reducing that 6-month sales lead time and are seeing some positive momentum in the last quarter, but we will continue to monitor this and have a dedicated new contract [ slate ] and dedicated customer support for IP review and assessment and implementation. A lot of these leads in the last quarter were also driven by key event tenders. Our presence at key conferences such as ASBS, Miami Breast and that first time attendance at the National Consortium of Breast Centers and Association of Communities in CAD Centers have been crucial. These events are vital for networking, building relationships and generating leads. We are now getting ready for the next full season of events.

Patient test growth is really key and saw a 6% increase in patient tests which we indicate that the run utilization of our SOZO unit with a 3-year CAGR at 21%. In terms of U.S. contract renewals, on average, the price of our renewed contracts in the U.S. increased by 38%, with a continued churn 3% globally, which demonstrates the value that our customers see in our platform. We have done some work on cleaning up the U.S. installment devices, which is reflected in the US numbers this quarter. But note that, that 38% of renewal -- average contract renewal price does indicate that customers are committed to these devices and see the value that these are having.

The New South Wales data, which we've highlighted in the deck demonstrates the patient and health systems impact that a lead detection can have and we're working on sharing these findings within the U.S. health care system, both with payers and providers. In terms of reimbursement coverage, we remain at that 140 million covered lives. While our goal was 85% coverage for this quarter, we continue to work with these payers with our efforts and publications, Real-World Evidence generation and guidelines development with key opinion leaders. We have a dedicated in-house reimbursement team, which is essential to navigating process of each payer. Again, our publications were all evidenced in [Technical Difficulty] and our work with KOLs on generating guidelines will be critical to support this increase in payer coverage.

In terms of clinical and publications and achievements, I'd like to note a follow-up for publication. Data from our large randomized PREVENT trial continues to support patient care models with a new significant publication in the Journal of Surgical Oncology. The study titled Timing of Breast Cancer Related Lymphedema highlights that the risk of Lymphedema persists for years and can progress to chronic breast cancer-related Lymphedema years after surgery. This study was co-authored by investigators as well as our Chief Medical Officer, Dr. Steven Chen. We are highlighting and publishing this and sharing it with our key opinion leaders and with our clinical teams.

In terms of, we retained leadership in the BIS market. Our SOZO Digital Health Platform using L-Dex remains the only FDA-cleared BIS technology for BCRL detection and management and sets the standard and reinforces our leadership position. This platform technology is being utilized by multiple stakeholders in the BCRL prevention and treatment journey, [indiscernible] breast cancer surgeons through [Technical Difficulty] and we continue to expand on this customer base.

As we noted, the PREVENT trial continues to be confirmed with Real-World Evidence. Real-World Evidence is absolutely critical. The PREVENT trial previously demonstrated a significant reduction in chronic Lymphedema progression to 7.9%. Emerging Real-World Evidence that we saw in the last quarter in the U.S. and Australia supports that the clinical and financial impact of early detection is significant. Real-World Evidence has demonstrated breast screening and an integrated care model can reduce that Lymphedema rate even further to 1% or 4% from a baseline of 20% to 25%. This generates a significant patient impact and health systems impact, and these are independent pieces of work.

We wanted to also highlight a recent New South Wales economic evaluation of Lymphedema pilot program that demonstrated a 712% return on investment, translating to an estimated program NPV of $52 million. This model of care was implemented across New South Wales since 2021 across 13 Local Health Districts and 31 clinical sites with 25 SOZO systems and highlights the significant clinical and economic benefits of our technology and incented guided Lymphedema potential model of care. Patient testimonials from this trial underscore the life-changing impact of our technology. We are committed to achieving similar outcomes for all patients and all health care systems. In terms of guidelines support, multiple guidelines continue to support Lymphedema, and we are continuing to work and support through the guideline development to facilitate clinical and payer adoption.

In terms of our leadership team, McGregor Grant and I are now confirmed as MD and CEO and Chief Financial Officer and Operations Officer, respectively. We will continue to drive growth and strategic focus. We are excited to welcome Fiona Bones to our Board. Fiona brings over 20 years of global experience in finance, corporate governance and systems transformation, having held significant roles such as Vice President of Finance and International Controller at Google, which she currently is.

In terms of our strategic focus, our primary focus remains on addressing breast cancer-related Lymphedema. As I've noted, we are supporting clinical and patient awareness, publications and Real-World Evidence. We are laser focused on accelerating our progress towards breakeven with our U.S. sales. In terms of product development, our Interim Vice President of Product Development, Andrew Grant, that has come on from the Board for an interim period is leading our product development strategy and focusing on our key initiatives such as [indiscernible] software release, SOZO Pro and the development of new indications, which includes addressing the Lymphedema market, looking at the oncology body composition market and then assessing opportunities elsewhere, such as the field management with [ HFCs ]. Andrew will transition back to a Non-Executive Director by the end of September, will then finalize development strategy in place and we will share that with the market in time.

I will now hand over to McGregor to provide an overview of the financials.

[McGregor Grant, executive]

Thank you, Parmjot. As Parmjot mentioned earlier, this quarter saw the financials, both revenue and costs heading in the right direction. During the quarter, ImpediMed recorded unaudited revenue of $2.9 million, a 12% increase compared with $2.6 million in the quarter ended 31 March 2024. The company sold a total of 38 SOZO units during the quarter, of which 23 was sold in the U.S. This compares with a total of 18 units sold in the preceding quarter, of which 13 was sold in the U.S. The value of new contracts signed during the quarter, which we refer to as total contracted value or TCV, was $3.4 million compared with TCV of $2.2 million signed during quarter 3, FY '24.

Contracts in place as at 30 June 2024 are expected to generate core business annual recurring revenue or ARR of $11 million for the 12 months to 30 June 2025. This compares with ARR as of 31 March 2024 of $10.1 million. During the quarter, the company had net operating cash outflows of $4.7 million compared with $6.3 million in the previous quarter. The operating cash outflows in the quarter included severance payments of $0.6 million. Cash and cash equivalents at 30 June '24 were $24.6 million compared with $30.7 million at 31 March 2024. As previously announced, we have implemented measures to more tightly manage cash flow and establish greater cost discipline in the business. As a result of these and other changes, the company anticipates annualized operating cash expenditure in FY '25 will be lower by 10% compared with FY '24 after allowing for one-off costs and other normalization adjustments.

So with that, we will now open the call for questions.

[Operator]

Thank you. [Operator Instructions] Your first question comes from Tom Godfrey with Ord Minnett.

[Thomas Godfrey, analyst]

Can you hear me okay?

[McGregor Grant, executive]

Yes. Thank you.

[Thomas Godfrey, analyst]

First one for me. I just wanted to pick up on the 2-year strategy slide. I was just wondering if you could give us a bit more detail around the breakeven target. Are we just assuming progress on breakeven in FY '25? And maybe you could give us sort of a bit of help with what level of the cash flow or P&L you're speaking to? Is it free cash flow breakeven, EBITDA, just any additional detail?

[McGregor Grant, executive]

Yes. We're talking free cash flow. And so just to clarify, on the slide that talks about the 12-month priorities, the [ headbox ] is breakeven. But during the next 12 months, we're working on progress towards breakeven. And on the 2-year priority slide, we talk about the goal of reaching breakeven. So that's more of a 2-year timeline that we see for progress towards cash flow breakeven.

[Thomas Godfrey, analyst]

So, FY '26 is a benefit of guide...

[McGregor Grant, executive]

That's a 2-year time horizon.

[Thomas Godfrey, analyst]

Thank you for that.

[McGregor Grant, executive]

That's almost sort of all things being equal.

[Thomas Godfrey, analyst]

Second one for me was just around churn and Parmjot, you made some comments just in your opening remarks, but gross adds of 23 in the U.S. for the quarter, net to 15. Can you just sort of speak to that ongoing cleanup of the legacy installed base in the U.S. and 8 units that did churn?

[Parmjot Bains, executive]

Yes. McGregor, go on.

[McGregor Grant, executive]

Tom, so there are -- from the past, there are quite a number of units that have -- that have been installed, we actually a relatively small number of units actually in the context of the whole installed base. But there are a number of units out there that and not being deployed or not been -- or have since stopped being used. And so there's a cleanup that we've been doing. And what we've seen in this quarter and the last quarter is really just the effect of that.

[Parmjot Bains, executive]

And they really come up as these accounts for the income and for the renewal. And so there might be some systems where number of devices itself, but a smaller number were implemented. So that's now been run through the system and that's what this is seeing here. Won't impact the revenues.

[Thomas Godfrey, analyst]

So, when you say it's been run through, we shouldn't expect to sort of see at that level in coming quarters, Parmjot?

[Parmjot Bains, executive]

No, no, no. Churn remains really low and a 38% increase in average recurring revenue as the contracts renew was really an indication of the customers do see the value in the devices. So, just a couple of one-offs that have come through that we aren't predicting to see going forward.

[Thomas Godfrey, analyst]

No, that's clear. And the 38% was great to see. Last one for me was just around, Slide 21, where you talk to the Texas Oncology Group that added an additional 6 devices from an installed base of 2, so effectively quadrupled their number of SOZOs, state where to my knowledge, you don't already have critical mass at this stage. Maybe if you could just sort of speak to the value proposition there. Are they sort of looking forward to what ROI could be? Just any additional comments, Parmjot?

[Parmjot Bains, executive]

Yes. No, this one, this one is super exciting and I did spend a bit of time in Texas in April. It is a group in Texas that is fairly dominant in the market and is now looking at rolling out a broader program. They are making sufficient revenue and reimbursement based on the current model and are really looking rolling out across the systems. So, we are expecting this system to expand further and really laser focused on helping them get adoption uptake and reimbursement. So even with that lower reimbursement rate, they are seeing sufficient reasons to drive growth, revenue growth, but also just best practice patient impact. So, very positive about this one. And we only can share kind of names and more information we will do so, but right now, we're just focusing on implementing and getting uptake.

[Operator]

Your next question comes from Shane Storey with Wilsons Advisory.

[Shane Storey, analyst]

Just noting that increased pricing there on renewed contracts. I wonder what proportion of contracts are expected to go through that process over the next 12 months?

[McGregor Grant, executive]

The contracts are generally 3 years in life. So, I think mathematically about 1/3 of them will come up for renewal during the next 12 months. So internally, we are focused on continuing to achieve that level of price increase as we renew.

[Shane Storey, analyst]

And then I'm assuming when they are re-contracted, they're going through with a similar level to that it is associated with the new TCV coming into the business this time?

[Parmjot Bains, executive]

Yes. And so -- and that's what Lisa is achieving. And so she has a target of that 40%, so she is getting that 40%. So, really targeting that higher TCV particularly in the states and [ close ] reimbursement, but also as they see the value of the device.

[Shane Storey, analyst]

And when I see the -- just the commentary that you've shared here on pipeline development, you've given some percentage increases. But I was hoping that you might frame that at a, I guess, a way that might help us a little bit with the model. For instance, I mean, have you looked at that funnel, as it sort of stands today, what sort of potential TCV would be sort of across that portfolio? Are you conscious that not all of it's going to land?

[McGregor Grant, executive]

I'm not sure I quite fully understand the data you're trying to get at, Shane.

[Shane Storey, analyst]

Just to try and a bit more quantitative sort of an absolute sort of number on the amount of business that you're sort of in the running for or targeting or sort of having sort of progress? I just didn't find the percentage increases, particularly [Technical Difficulty].

[Parmjot Bains, executive]

Yes. So last quarter, we put our average recurring revenue at $1,400 on in the U.S. system. And so that's -- we're looking at growing that as a base and then really that lead pipeline as states get higher reimbursement, really increasing that from a contract value. So, times that by 3 years, 12 months, but we, as we get into new devices, increasing that up the value of that $1,400 ARR up.

[Shane Storey, analyst]

And then finally for me, you mentioned that the goal, I think, on reimbursement was sort of 85%. I mean where you would just say that, that got to, I mean that 140 million covered lives? Seen that number for I guess a month or so now. But I mean maybe if you could sketch out for us the next sort of 6 and 12 months in terms of where you think that number can get to and how much incrementally above that $140 million, how much of that sort of means to the outlook?

[Parmjot Bains, executive]

Yes. Well, we're trying to get to 85% coverage. So, we really trying to get significant growth on this one. So right now, we've got 16 critical mass status at 80%. The key for us is getting some of the larger payers on board. And then it will leapfrog up. So, it's kind of hard to give a sense of the timing, but we are working with -- [ Chelsea ] and the reimbursement team is working with both a couple of additional national payers, but also some of the local payers that still need additional kind of data. What we also are doing in parallel, though with -- as large health systems come on board, they can go in and request coverage for their patients as well directly to the insurers. So, it's actually a multipronged effort. It's actually -- right now, we're kind of indicating still that 85% target, but it's chicken and egg, but as these payers decide to adopt, for example, in Texas, they can also reach out to get coverage locally. So, it's -- right now, it's 85% is the number that we're putting out there in terms of covered lives to try to get out.

[Shane Storey, analyst]

I think I may have asked 4 or 5 questions, so I might stop there. We'll speak later.

[Operator]

Your next question comes from Peter Gregory, who is a Private Investor.

[Peter Gregory]

I'd just like to follow up a little on the renewal question that's been asked before. Can you let me know how many contracts -- how many units -- U.S. units are due with the contract renewal in last quarter? And how many were not renewed?

[McGregor Grant, executive]

We don't have that data to hand, Peter. But we are having a high degree of success with the contracts that Lisa is working on to upgrade -- to renew. And as we mentioned earlier, about 1/3 of the installed base will be up for renewal during the year. So, we expect to see significant numbers of unit renewals.

[Peter Gregory]

I think you've just -- I think you said this before, that you're expecting a 38% increase in contract value. So that will be a significant hit to increase to revenue over the next 12, 18 months?

[Parmjot Bains, executive]

On renewals.

[McGregor Grant, executive]

On renewals. That's right. Yes. Yes, that's right. And these are contracts that are being renewed that were originally written at a time pre-reimbursement. And so, we're seeing some of the benefit of a post-reimbursement world coming through in the pricing. Whilst I expect we'll continue to see that benefit through FY '25, we need to be conscious too, though, that at some point, we may not continue to get that 38%, but I think that's still some way down the track.

[Parmjot Bains, executive]

Yes, because there's contracts you come up, that will be higher value. But for the immediate time, we are targeting that 40% on all of these contracts, the pre-reimbursement contracts.

[Peter Gregory]

Yes. No, that's good to see you're getting -- monetizing the existing value that's great. I'm interested in the utilization of each device. To me, that's a measure of commitment at a point of patient interaction and significantly increases the positive word of mouth that you get amongst the practitioner cohort. It looks to me like there's been an increase in the number of units placed in the U.S. since the NCCN guidelines release of about 17%. But from my [Technical Difficulty] it looks like the usage per machine has gone up about 5%. Does that sound right? And is that in line with your expectations?

[Parmjot Bains, executive]

Yes. So, some of them, definitely because there are some devices that will be used more than others because if you put in a program model of care for some of these systems where there's now 9 devices, they will have different utilization based on where the patient is going. So, the [ brief ] might have more, and then the rehab side may have less because you're putting in a program model. So, it's a -- so that's probably what we expect but we do need to see. We are driving home and that we do look very rigorously at those numbers. Our CPS team that is now being tracked on device utilization to make sure that we're very clear that the Lymphedema program is being implemented and then what device utilization is happening and occurring. And so we now track that on a monthly basis and we work very closely with a change to drive it. So, we would want higher and our target clearly is to get more patients on this device. So, we are focused on that to set that one up higher.

[Peter Gregory]

I'm interested in the 200-odd machines that were part of the clinical -- the AstraZeneca clinical trial. What's happened with those machines? Are they still in use? Or have they come back to ImpediMed?

[McGregor Grant, executive]

Yes, they come back to ImpediMed. They are units that are available -- there's some refurbishment that needs to be required to use them and sell them as refurb units. So that's certainly an opportunity that we're exploring.

[Peter Gregory]

Okay. So that's some machines are available. Effectively, their cost is already paid for, isn't it? So, there'll be machines that go out without any cost.

[Parmjot Bains, executive]

Well, they need refurbing. So, we did refurbing...

[McGregor Grant, executive]

There's some cost to refurbing. Yes.

[Parmjot Bains, executive]

We do. And then there are kind of, costs that they're kind of interested in picking those up. So, that's part of -- yes, but we've been refurbing the machine now.

[Peter Gregory]

Okay. So, there haven't been any of those that have been retained by the hospitals that had them before?

[Parmjot Bains, executive]

No, no. A lot of it was in Europe, but they've come back and that trial was done. So, it was really run by[ Teracell ]. So they're pretty much effective on the device side [Technical Difficulty].

[Peter Gregory]

No, that's good. And just a final question on leads. I think at the last conference call, you indicated the leads were about 450 at that stage. And I think I saw in the deck, it's gone up by 130%, which means you'd have a pipeline there of probably around the 800. Is that right?

[Parmjot Bains, executive]

No. Opportunity. So, what we've done -- we're just going to [indiscernible] opportunities. It is significant. There is a significant pipeline there now that 168% gives us a very good base to go out and to validate and then sales team to go ahead and execute on. So, it is definitely a significantly healthier pipeline. And the team is incented and the whole team is centered around building that more. I would like it to be higher, which is why we've got BRX in there. And then now what we're also focusing on is getting those leads converted into sales. And so right now, it's a 6-month sales lead time. We track that very closely every month. Can we close it faster? We did see a big step last quarter, but we sort of watch it to see if it's real. But it is getting a significantly better leads pipeline. It's very, very encouraging and very positive. So, we're just focused on execution.

[Peter Gregory]

And Parmjot now that the -- I guess, the NCCN guidelines are pretty much out there and well understood. Are you seeing a speeding up at the time from lead to placement?

[Parmjot Bains, executive]

We did last quarter, but we're just seeing if it was a one-off or if we're tracking on a trend. Yes. So, watching it closely. They still have to go through budgeting and IP and customer implementation. So yes, we like the focus on, we've got a contracts person who now is turning these contracts around. So, for [ Adam ] what our product success is, we met weekly, everything that's in our control needs to be managed and back out to the customer so that we can [ content ] and really focus on getting that lead time down.

[Operator]

Your next question comes from Ian Hyde who is a Private Investor.

[Ian Hyde]

Congratulations on getting your appointments confirmed. So, well done for that. A few quick questions. With back to the number of devices in the U.S. on all contracts, just do you have a number around how many are actually still on the old contracts rates out of the 57?

[Parmjot Bains, executive]

Well, all they will vary, right? I think -- sorry, it's not like an old contract. I think the pricing over the years, as we looked at all this has varied a lot. So, they're just on previous contracts. And as I said, a third, roughly, we kind of model a third is up for renewals. So, I think really varied across the years. So, it's probably not an old contract, it is varying contracts.

[Ian Hyde]

But it'd be good if at some point, you get some more clarification is just about what the potential uplift in ARR could be around those when they complete some at some point. But other than that, just quickly, NCCN centers, has there been any progress made with finally getting all of those signed up or that's still work in progress?

[Parmjot Bains, executive]

We're still working on that with the NCCN centers. So, we've got now Lisa, VP of sales. We've also got the key account managers that are in each of those states where the NCCN centers are focusing on that. So Lisa, just with Tim coming on has just focused across over to these IDNs, and that's one of the key metrics is really getting out there, getting the NCCN centers. There's probably some bigger accounts that aren't NCCN that are higher priority, but they're on the list. We want to get some of the big ones, the discussions are underway and prioritize and then NCCN is one of the ones on the list.

[Ian Hyde]

But I can understand that there's likely a bigger fish to fry, shall we say then some of the NCCN [ centers ]. But on the other side of the fence, having the NCCN centers all locked up because I know previously in conversations with hospitals they were saying, well, not every NCCN institution has got it, so why should we have it. Now I know that was a while ago, but it's -- I guess it's more of like a qualitative issue at the moment, looking at shoring up that everyone needs to get here rather than what's been happening?

[Parmjot Bains, executive]

Yes. There's a couple of guidelines that are key really is, the NCCN from a survivor-ship, but the National Center for Breast Cancer NAPBC, they've also got guidelines around survivor-ship. So, there's a number of angles that these centers will look at. And so we're kind of working on just making sure we've got support from all of these and then targeting these centers that are looking at survivor-ship is really key. But you're right, it's totally on the list. And yes, that's our priority. Larger ones, prior to [indiscernible] accounts and then as well as 18 months.

[Ian Hyde]

McGregor, just some quick questions on numbers. So, with the cost reductions, is that primarily going forward going to be just around staff costs?

[McGregor Grant, executive]

That's the biggest component of it. We have looked at consultants and other discretionary spend and pulled some of that back. But the lion's share of the savings are around staff costs. And we've done a combination of reviewing salaries and roles and reducing positions. But we've also increased our focus and resources on the fronts of the business, selling end of the business. So, as Parmjot mentioned, we've got 11 dedicated sales supported by 7 clinical support people as well plus other people who are directly involved on the customer-facing side. So, we've refocused the team more towards the front-end of the business. But the number we're talking about there, that 10% saving is a net of all of those things. And the majority of that is staffing costs.

[Parmjot Bains, executive]

And I guess we're not going to cut ourselves to grow. We actually have to focus on growth and the marketing spend remains critical. Sales team focused, most critical. So, what we've done is, I think, just to clean up some of the cost base. McGregor and I have been running out of Australia is significantly cheaper than previous management. We talked some of the senior executive rolls out, brought the team up a level. So, just that had some significant savings. So, it's -- yes, a lot of it with salary, but really trying not to touch the marketing spend and the investment and generating these leads and anything that's customer-facing.

[Ian Hyde]

So just with actual numbers, so for this quarter, staff was 5.6, which included 0.6 severance. Do you have a number around what the staff costs for the current quarter could or would be as they're now running? So, we can get a handle on looking at the details of the 4C going forward?

[McGregor Grant, executive]

I think if you take the fourth quarter number adjusted for the severance piece of it, you've got a good starting point.

[Ian Hyde]

So, without getting you the forecast then, the -- sorry, the staff cost this quarter should come on the [indiscernible]?

[McGregor Grant, executive]

In that order, yes. We're not forecasting numbers Ian, but it's in that...

[Ian Hyde]

And you touched on it, but with the head count that you've got now, Parmjot, you're happy that everyone that you've got in the places they're in are enough to operate the business and expand for say, potentially 1 or 2 years without considerably change that? I mean I understand there might be some tweaks here or there [Technical Difficulty] what you've implemented with all your change management, et cetera, we're now set for some predetermined time to actually run and expand?

[Parmjot Bains, executive]

Yes, I think so. And I think the challenge, I think, will be if we've got like a lot of leasing we can't take them down, but it should be a positive thing. So, I think right now, it's -- we've got to go and each team is really driving sales and marketing and absolutely. We hired -- we've got the right balance of team, the right skill set of team, the focus and dedication and really comfortable now that we will drive some significant progress in this business.

[Ian Hyde]

Well, I mean, from my take, the seeds have already been sown. So, thank you very much for all the work that you guys have done. It's obvious looking at all the activity. And then hopefully, this quarter, we really start to see continued progress. But one -- sorry, one final question then on progress. We've just had Fiona appointed on the Board at some point, somebody else with expertise will be coming on or that's the plan?

[Parmjot Bains, executive]

Not at the moment. She's taking over Audit and Risk Committee. So, that's 3 Non-Independent -- so 3 [ MDs ] on the Board. Andrew will step out and go back on to the Board of executives. I think right now, from a finance and funding perspective, we don't envisage growing the Board. We've reviewed Board current salaries as well at the same time. Right now, I think we've got the Board that's kind of optimized around what we need to drive growth in the business.

[Operator]

Your next question comes from [ Grant Percy with Yanap Equities ].

[Unknown Analyst]

I've just got a question from the Q1 '23, ImpediMed announced that they had a master agreement signed with a large Michigan IDN had 20-plus hospitals and the pricing was at $2,500. Have we placed any units with the IDN?

[Parmjot Bains, executive]

Yes, Michigan. So yes, definitely, there is -- [indiscernible] 23 of the IDNs around the U.S. and so that's [ 26 ] IDNs. So, Michigan does have systems in with these IDNs and we're really looking at growing. Michigan, if you look at the landscape, about 75% of Michigan breast cancer patients are with a small group of IDNs that were highly concentrated. And so we are really right now to like focused with Jim is our sales rep and thereof targeting these IDNs. So, we do have them. And Michigan has been top of mind, and it actually has been one of our focus areas in this last quarter and looking Jim to kind of drive that sales in Michigan. We didn't get any last quarter, though, but we are -- for the next quarter we are -- it is a key area of focus.

[Unknown Analyst]

Okay. Previously, I think you said you had working on leads of 300. Is that the number that we should be using?

[Parmjot Bains, executive]

It's all the net account plus it's higher.

[Unknown Analyst]

Q2?

[Parmjot Bains, executive]

Yes. So, now we've got to higher lead pipelines. So, we've kind of validated leads down to opportunity. So, the ones that we're not presenting are ones we were very comfortable that there is an opportunity there. It's actually higher than that, it's 158% growth, pretty substantial pipeline out there now. We're not putting the number out, but it is [Technical Difficulty] number.

[Operator]

Your next question comes from [ Maims Jones with Beaches and Bays ].

[Unknown Analyst]

Just taking a look at your cash balance of $25 million in the current burn rate and the 2-year time frame to break even, it's clear that you're going to need to raise capital in the next 6 to 12 months. Can you just think through -- or can you just talk through how you're thinking about the timing quantum? And what are the evidence maybe available for your turnaround within the business from an operating perspective before you, I guess, pull or press the button on that, if that's possible?

[McGregor Grant, executive]

Yes, sure. I mean we don't want to really get into the specifics of that. But clearly, we're focused at the moment on demonstrating momentum and growth for the business. And I think this quarter is one that is showing that growth. And we would like to build on that is our goal before we take next steps. But I think that's something that the Board is considering very carefully. And obviously, the idea will be that we've got some really good growth and that what's in the pipeline converts and we can communicate that to the market and build confidence. And as Parmjot mentioned too, we'll have by September when Andrew finishes his work, we'll have greater clarity on our product road map. And all of these factors will feature in our thinking as to that subject.

[Unknown Analyst]

And I guess how much appetite do you have to kind of run down that cash balance to less than 6 months of available headroom or I guess just a trade-off between running the business and building this evidence set which you can then use to show that your initiatives are taking hold and you're generating the flow-through from the -- through the pipeline and to kind of converted sales versus the cash balance just getting lower and lower and lower and you run out of runway eventually? I guess it's just helpful to understand how much risk tolerance you have to having less than 1 year of runway, I guess.

[McGregor Grant, executive]

Sure. I mean that's a very important balancing act that we have to play, and it's something the Board is very conscious of. But it's not really something we want to speculate too much on this call, but we're certainly aware of the variables that go into the decision-making there.

[Parmjot Bains, executive]

Yes. I think that momentum is really a very positive. And I think our focus is just executing on that and demonstrating execution to the shareholders to our customers. And so that's really the key at the moment is that's why also shorten that sound lead time as key as there's a 6-month lead time, we've just got to try to ramp it up and accelerate it to try to bring this lead growth faster to the business. But really -- because it effectively, there's a lot and you're right, you need money for a launch, right, product launch. A year ago, there was no NCCN and there was no payer coverage. So, really in the launch phase of a product of the U.S. market that needs to kind of be invested and drive growth.

[Unknown Analyst]

But I guess it would be useful to know with you're still focusing on building the evidence yet of the improving operating performance of sales, whether you think that there's enough evidence already to kind of press the button on the capital raise? I guess maybe from taking the question in a different way, is how much risk is there in a kind of a 3-month window of you pressing the button on the capital raise versus getting another data point in terms of published results.

[Parmjot Bains, executive]

I mean we will have to define at the Board level. [indiscernible] to speculate now. It's clearly a topic of discussion and as a Board we look at the data and to make a call on this.

[Operator]

Thank you. There are no further questions at this time. I'll now hand back to Ms. Bains for closing remarks.

[Parmjot Bains, executive]

So, thank you. Yet again, thank you very much for your questions and continued support. And we're really looking forward to continuing our momentum. We are very confident. There's been a lot of work in the last 6 months. We really do believe we will accelerate the launch of the [ CCL ] education in the U.S. market. The Australian data was incredible. Just I don't know if you take kind of, patient testimonials really did show that early detection with this technology made a meaningful impact to a lot of women's lives. And really -- and we're starting to see that real dividends in the U.S. And that, I think all of this together will drive momentum and changes this does become that standard of care.

And so lots of very, very encouraging discussions underway with large payers in the U.S. where this is starting to get reflected. So, I think as we've kind of noted and you've all noted, we are really working on showing that momentum as fast as we can. And the whole team is really lined up and now the whole organization is really focused on those goals that you've seen were shared and are looking forward to connecting again soon.

[Operator]

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