Medicare Non-Coverage Casts Shadow Over Pacific Edge’s US Revenue and Cash Position

Resilient Performance Amid Medicare Coverage Loss

Pacific Edge Limited (ASX: PEB) has released its audited financial results for the year ended 31 March 2025, revealing a company navigating significant headwinds with measured resilience. Operating revenue declined 8.6% to NZ$21.8 million, reflecting the uncertainty and eventual cessation of Medicare coverage for its Cxbladder diagnostic tests in the United States. Total revenue fell 16% to NZ$24.6 million, while the net loss after tax widened marginally to NZ$29.9 million.

The loss of Medicare coverage, effective April 2025, is a material blow given that Medicare accounted for approximately 56% of Pacific Edge’s operating revenue. Laboratory throughput, a key usage metric, dropped 11.5% to 28,894 tests, with US volumes contracting sharply. However, the company’s operational efficiencies, improved cash collections, and growth in non-Medicare commercial payers partially offset this impact.

Strategic Response and Capital Raise

In response to the Medicare non-coverage, Pacific Edge is actively pursuing reconsideration requests and appeals with Novitas, the Medicare Administrative Contractor. These efforts are bolstered by the recent inclusion of Cxbladder Triage in the American Urological Association’s microhematuria guideline, which awarded the test a coveted Grade A evidence rating, a first for a urine-based biomarker test. This endorsement strengthens the company’s case for Medicare re-coverage and supports ongoing commercial momentum.

To underpin these strategic initiatives and support commercialization efforts, the Board has approved a NZ$20 million equity capital raise via placement and share purchase plan, subject to shareholder approval. This capital injection aims to sustain Pacific Edge’s clinical evidence generation, product innovation including the development of in vitro diagnostic (IVD) kits, and digitalization projects designed to enhance customer experience and operational scalability.

Operational Efficiencies and Market Diversification

Pacific Edge’s US commercial team has improved sales force efficiency, with tests per sales full-time equivalent rising 69% over two years. Non-Medicare revenues now represent 57% of US volumes, supported by contracts with major payers such as Kaiser Permanente and the Veterans Administration. The company also reported a modest increase in average sales price per test to US$594 in FY25, up from US$584 the prior year.

In the Asia-Pacific region, test volumes grew 18.5%, reflecting ongoing business development in Australia and Southeast Asia. Pacific Edge is also advancing its IVD strategy to decentralize testing closer to patients, which could reduce logistics-related emissions and improve access.

Financial Position and Going Concern Considerations

Cash, cash equivalents, and short-term deposits stood at NZ$22.6 million at year-end, down from NZ$50.3 million the previous year. Net operating cash outflows were NZ$24.7 million. The company’s auditor highlighted material uncertainty related to going concern, citing the Medicare coverage loss and cash position. The successful completion of the capital raise and prudent cost management are critical to sustaining operations.

Pacific Edge remains confident in its long-term growth prospects, supported by a robust clinical evidence program, regulatory endorsements, and a clear roadmap for Medicare re-coverage and product innovation. The company’s commitment to sustainability is also notable, with a target to reduce greenhouse gas emissions intensity per test throughput by 20% by 2029.