Exclusion big blow for Pacific Edge
Dunedin-based cancer diagnostic firm Pacific Edge has been dealt a severe financial blow after its key testing procedure was excluded from coverage by the United States Medicare federal health insurance scheme.
The firm has been battling for more than a year to overturn a draft decision by a regional manager of the Medicare scheme to cease paying for the bladder cancer tests.
However, the new coverage regime has now come into force and excluded Pacific Edge's test, which accounted for 60% of the company's income.
"We are obviously disappointed we have been unable to maintain coverage of our tests in the short term," chief executive Peter Meintjes said.
"This finalisation is a poor outcome for Medicare patients and urologists, as it removes coverage for guideline-recommended testing and followed a flawed process that failed to review the most current evidence."
An attempt for a judicial review of the decision was unsuccessful, with the judge last week saying the court had no jurisdiction, and lobbying of new political appointees to various health authorities had come to nothing.
The company's tests are still being used and paid for by private health insurance providers, and the United States Veterans Administration.
Mr Meintjes, who was unavailable for further comment yesterday, said the company had resubmitted one of its tests for reconsideration, which was likely to take months, but had planned for the possibility of not getting coverage.
"We will update shareholders as these plans are finalised, though our focus will remain on further evidence generation in parallel with the reconsideration pathway made available to all providers seeking Medicare coverage of their tests."
Pacific Edge has already restructured to cut staff and costs to limit its cash burn, and previously said it would also look to diversify markets.
In its quarterly update earlier this month, the company said total volumes for the year to the end of March 2025 (FY25) were down 11.5% to 28,894 tests from 32,633 in FY24, with the fall reflecting the reduction in the sales force compared to the prior financial year in response to the uncertainty over Medicare coverage of Cxbladder.
In a note yesterday, Forsyth Barr analysts said Medicare represented about 60%-70% of Pacific Edge's revenue before the recent slowdown and was its largest market and key growth driver.
A reconsideration request could reverse the decision but, if unsuccessful, Forsyth Barr expected ongoing clinical evidence generation investment "and a further operational battening down of the hatches".
With net cash of about $NZ23 million at FY25 on Forsyth Barr's estimates and cash burn of about $2m a month, timelines were tight.
— RNZ/APL
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