New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>LCD finalisation confirmed by PEB: Refer our recent research for more detail here.</li><li>Materiality is high: PEB disclosed that CMS represented ~NZ$15.3m of revenue in FY23 (13,800 commercial tests) – this is consistent with our estimate of NZ$15.6m and represents ~66% of FY23 revenue excluding interest income and currency. </li><li>PEB will undertake cost-out initiatives: This is no surprise and consistent with our expectations. </li></ul>

LCD finalisation confirmed by PEB: Refer our recent research for more detail here.Materiality is high: PEB disclosed that CMS represented ~NZ$15.3m of revenue in FY23 (13,800 commercial tests) – this is consistent with our estimate of NZ$15.6m and represents ~66% of FY23 revenue excluding interest income and currency. PEB will undertake cost-out initiatives: This is no surprise and consistent with our expectations. 

Pacific Edge (PEB): Medicare Response − Bad News Confirmed

<ul><li>Novitas has issued its finalised Local Coverage Determination (LCD) which means Pacific Edge (PEB’s) Cxbladder tests at this stage will not be covered by CMS on the basis they are not “considered medically reasonable and necessary”.</li><li>Materiality is very high — we estimate CMS represented ~67% of revenue ex interest income/currency gains in FY23.</li><li>Going forward, our previously published estimates forecast CMS will represent ~70% of group revenue in FY24, ~60% in FY25, and ~50% thereafter.</li></ul>

Novitas has issued its finalised Local Coverage Determination (LCD) which means Pacific Edge (PEB’s) Cxbladder tests at this stage will not be covered by CMS on the basis they are not “considered medically reasonable and necessary”.Materiality is very high — we estimate CMS represented ~67% of revenue ex interest income/currency gains in FY23.Going forward, our previously published estimates forecast CMS will represent ~70% of group revenue in FY24, ~60% in FY25, and ~50% thereafter.

Pacific Edge: Final LCD Decision — Not Good News

<ul><li>Final LCD summary and changes: Final LCD issued in the past 24 hours − typically LCDs are issued nationally on Thursday US time but this was issued on Friday after market close.</li><li>Comments of relevance to PEB: The final LCD has listed “Limitations” – a list of 13 tests not considered “medically reasonable and necessary.”</li><li>Responses to PEB’s comments: Novitas has published 36 pages worth of comment responses based on feedback from the proposed LCD to support its final LCD – Novitas has segmented this into 37 comment segments.</li></ul>

Final LCD summary and changes: Final LCD issued in the past 24 hours − typically LCDs are issued nationally on Thursday US time but this was issued on Friday after market close.Comments of relevance to PEB: The final LCD has listed “Limitations” – a list of 13 tests not considered “medically reasonable and necessary.”Responses to PEB’s comments: Novitas has published 36 pages worth of comment responses based on feedback from the proposed LCD to support its final LCD – Novitas has segmented this into 37 comment segments.

Pacific Edge (PEB): LCD Finalisation – Not Good News

<ul><li>Pacific Edge (PEB) now understands that Novitas must either finalise or withdraw its proposed LCD before 9 June 2023 (NZT).</li><li>What has driven the change in dates? We understand the change in expected timing relates to language within the LCD of when PEB was added to the proposal (Cxbladder was added on 28 July 2022 versus the initial proposal of 9 June 2022). </li><li>What will happen on 9 June? PEB stated “we understand that there is no required announcement from Novitas upon passing the expiration date.”</li></ul>

Pacific Edge (PEB) now understands that Novitas must either finalise or withdraw its proposed LCD before 9 June 2023 (NZT).What has driven the change in dates? We understand the change in expected timing relates to language within the LCD of when PEB was added to the proposal (Cxbladder was added on 28 July 2022 versus the initial proposal of 9 June 2022). What will happen on 9 June? PEB stated “we understand that there is no required announcement from Novitas upon passing the expiration date.”

Pacific Edge (PEB): Updated LCD Decision Timing

<ul><li>There were few surprises in Pacific Edge's (PEB) FY23 result — both costs and revenue were in-line with our expectations.</li><li>Looking ahead, the revenue trajectory debate will continue for some time but the key deviation relative to our expectations was commentary on ongoing cost investment.</li><li>With tests per clinician in the US flat for the past 12 quarters, we are supportive of the investment strategy but now expect the timeline to breakeven to be longer than previously forecast.</li></ul>

There were few surprises in Pacific Edge's (PEB) FY23 result — both costs and revenue were in-line with our expectations.Looking ahead, the revenue trajectory debate will continue for some time but the key deviation relative to our expectations was commentary on ongoing cost investment.With tests per clinician in the US flat for the past 12 quarters, we are supportive of the investment strategy but now expect the timeline to breakeven to be longer than previously forecast.

Pacific Edge: FY23 Result — Stuck in the Waiting Room

New Zealand

Pacific Edge Ltd is a biomedical company specialising in the discovery and commercialisation of diagnostic and prognostic technology for the early detection and monitoring of cancer. The Company has completed successful trials in bladder cancer detection and colorectal cancer prognosis.

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Pacific Edge (PEB NZ)

Pacific Edge (PEB): Medicare Response − Bad News Confirmed

Pacific Edge (PEB) has confirmed the finalisation of Novitas' Local Coverage Determination (LCD); Its response to the market this morning dit not...

Forsyth Barr

Pacific Edge: Final LCD Decision — Not Good News

Novitas has issued its finalised Local Coverage Determination (LCD) which means Pacific Edge (PEB’s) Cxbladder tests at this stage will not be...

Forsyth Barr

Pacific Edge (PEB): LCD Finalisation – Not Good News

The much anticipated Local Coverage Determination (LCD) decision has been made in the past 24 hours; Consistent with the proposal, PEB’s Cxbladder...

Forsyth Barr

Pacific Edge (PEB): Updated LCD Decision Timing

Pacific Edge (PEB) now understands that Novitas must either finalise or withdraw its proposed LCD before 9 June 2023 (NZT); This updated timing is...

Forsyth Barr

Pacific Edge: FY23 Result — Stuck in the Waiting Room

PEB's operating result was in-line with our expectations; However, looking ahead, we previously expected the rate of incremental cost growth to...

Forsyth Barr

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