Compumedics’ Growth Hinges on Medicare Reimbursement and US Market Expansion

• Five-year contract with Philips Australia for Somfit device
• Contract supports approximately $3 million in SaaS revenues through 2028
• FY24 SaaS revenue surged to $4.2 million, up from $1.7 million in FY23
• USA Somfit sales growing from zero to $1 million USD in 12 months
• Pharmacy-based sleep testing is fastest growing segment in Australia

Compumedics and Philips Strengthen Partnership

Compumedics Limited (ASX: CMP) has announced a significant milestone with the signing of a new five-year contract with Philips Australia to supply the Somfit device for pharmacy-based sleep testing programs. This agreement not only secures Somfit’s position as the number one choice for pharmacy sleep diagnostics in Australia but also underpins approximately $3 million in SaaS revenues annually through to 2028.

The partnership with Philips, a global leader in healthcare technology, is a strategic move that leverages Philips’ distribution network and expertise in pharmacy-based models of care. Since August 2023, Compumedics has collaborated closely with Philips to expand the reach of Somfit devices and electrodes across Australian pharmacies, tapping into the fastest growing segment of the country’s sleep diagnostic market.

Pharmacy-Based Sleep Testing: A Growing Market

Pharmacy-based sleep testing operates on a patient-pay model, distinct from Medicare-funded services, where pharmacy staff identify patients at risk of obstructive sleep apnea (OSA) and facilitate sleep tests onsite. These tests, reported by Australian sleep physicians, require equipment that is simple, reliable, and user-friendly, criteria that Somfit meets effectively.

This segment’s rapid growth reflects increasing consumer awareness and demand for accessible sleep diagnostics. Compumedics’ Somfit device fits neatly into this evolving healthcare delivery model, positioning the company to capitalize on expanding market opportunities.

Robust SaaS Revenue Growth and International Expansion

Compumedics’ SaaS revenues from Somfit and Nexus 360 sales surged to $4.2 million in FY24, a substantial increase from $1.7 million in FY23. The company has already booked $2.9 million in SaaS revenues in the first half of FY25, signaling sustained momentum. The Philips contract is expected to provide a stable revenue foundation as Compumedics intensifies its focus on the USA and other key international markets.

In the USA, Somfit sales have grown impressively from zero to $1 million USD within a year. The company is actively engaging with large independent diagnostic testing facilities (IDTFs), with ongoing trials and demonstrations that could unlock a significant share of the estimated $150 million to $300 million USD home sleep apnea test market annually.

Looking Ahead: Medicare Reimbursement and Market Potential

Compumedics is also monitoring potential changes in Australian Medicare reimbursement policies for Level 3 and Level 4 sleep studies, which could further enhance the viability and uptake of pharmacy-based testing. Continued investment in product development and market expansion remains a priority as the company seeks to consolidate its leadership position.

With a strong foundation in Australia and growing traction in the USA, Compumedics is well-positioned to leverage its innovative diagnostic technologies across global markets, driving long-term growth and shareholder value.

Bottom Line?

This Philips contract not only secures steady revenue but also sets the stage for Compumedics’ global expansion ambitions in sleep diagnostics.

Questions in the middle?

• How will potential Medicare reimbursement changes impact pharmacy-based sleep testing adoption?
• What is the timeline and scale for Somfit’s penetration into the US home sleep apnea test market?
• How will Compumedics balance growth between its Australian base and international markets?