Cancer diagnostics company Pacific Edge has posted a bigger-than-expected loss as it invested in expansion but suffered from problems with a medical insurer in the US.
Key numbers for the 6 months ended September, compared with a year ago:
Net loss $15.3m vs $10.6m
Revenue $16.6m vs $13.6m
Operating expenses $31.8m vs $24.2m
Cash reserve $62.2m vs $93.4m
The company has been battling the fallout from a decision by US Medicare provider Novitas that it would no longer cover the cost of the CXBladder tests, which accounted for about 70 percent of its revenue.
The decision has been contested by the company and US users and for the time being use of the Pacific Edge tests are still being covered.
It is also assessing a proposed rule change from the US Food and Drug Administration that would categorise lab-developed tests as medical devices, requiring it to show the safety and effectiveness of their tests.
Pacific Edge Chairman Chris Gallaher said the company has managed growth despite headwinds.
"Pacific Edge has continued to grow test volumes and revenue through the first half of the 2024 financial year amid the ongoing uncertainty over Medicare coverage of Cxbladder. "
"The company has adapted and will manage its capital reserves to weather a Medicare non-coverage decision, the most adverse outcome of the
range of alternatives now possible."
Revenue growth was ahead of last year but has slowed in recent months as uncertainty over Medicare coverage affected demand for the tests.
In response to the Medicare issue the company restructured operations cutting staff and controlling other costs, which chief executive Peter Meintjes said had yet to show through in its finances.
"The reorganization and other cost control measures have appropriately lowered our expense base, while continuing to focus on driving test throughput and revenue."
Meintjes said there was no indication when a Medicare decision would be made, although it could be no later than late-July next year.
He said the company had cash reserves of $62m that would see it through if the decision was negative.
"Under such a scenario Pacific Edge, supported by its strong balance sheet, would continue to work towards regaining coverage within four years, with attempts made for re-coverage with every piece of new clinical evidence. "