Medicare Non-Coverage Threatens Pacific Edge’s US Market and Revenue Stability

Medicare Coverage Reversal Shakes Pacific Edge

On 9 January 2025, Novitas, the Medicare Administrative Contractor overseeing Pacific Edge's US laboratory, finalized a Local Coverage Determination (LCD) that withdraws Medicare reimbursement for the company's flagship Cxbladder suite of bladder cancer diagnostic tests. This decision reverses a 2020 coverage determination and will take effect on 23 February 2025, marking a critical juncture for the New Zealand-based cancer diagnostics firm.

Pacific Edge expressed profound disappointment with the ruling, highlighting what it describes as Novitas' flawed interpretation of clinical evidence and misunderstanding of the standard of care in hematuria evaluation. The company points to recent peer-reviewed studies, including the pivotal STRATA randomized controlled trial published in July 2024, which demonstrated significant clinical utility by reducing invasive cystoscopies by 59% when clinicians used Cxbladder Triage results.

Clinical Evidence and Industry Support Under Scrutiny

Despite Pacific Edge’s submissions and endorsements from key opinion leaders, patient advocates, and professional bodies such as the American Urological Association (AUA), Novitas maintained its stance, citing concerns over the test’s positive predictive value and questioning the credibility of Pacific Edge-funded research. The finalized LCD also conflates hematuria evaluation with screening, a point Pacific Edge strongly disputes, emphasizing the biomarker’s role in risk stratification rather than broad screening.

Medicare and Medicare Advantage have been the largest payers for Cxbladder in the US, accounting for approximately 54% of commercial test volumes and nearly 59% of total operating revenue in the first half of fiscal 2025. The impending loss of this reimbursement stream poses a material financial challenge, though the company reports a healthy cash reserve of NZ$28.5 million as of December 2024, enabling it to weather the immediate impact.

Strategic Response and Future Outlook

Pacific Edge is activating contingency plans that include a potential legal challenge to the LCD on procedural fairness grounds and a formal reconsideration request to Novitas, leveraging the latest clinical data not previously reviewed. The company is also restructuring its operations to reduce cash burn and focusing on profitable territories and payer contracts outside Medicare, such as Kaiser Permanente and the US Veterans Administration, which continue to reimburse Cxbladder tests.

Looking ahead, Pacific Edge is banking on ongoing clinical evidence generation and the anticipated inclusion of Cxbladder in updated AUA microhematuria guidelines to support a reversal of the non-coverage decision. The company’s extensive evidence portfolio, spanning analytical validity, clinical validity, and clinical utility, underpins its strategy to regain Medicare coverage and expand global commercialization.

While the immediate outlook is challenging, Pacific Edge’s leadership remains committed to advancing patient care and shareholder value through rigorous science and strategic adaptability.