Pacific Edge annual loss widens to $21m as US push drives 62% boost in sales

Pacific Edge chief executive David Darling said there has been strong commercial progress in FY17
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Pacific Edge widened its annual loss as the cancer diagnostic company's focus on expanding its US footprint drove a 62 percent boost in sales.

The Dunedin-based company posted a net loss of $21 million, or 5.5 cents per share, in the 12 months ended March 31, widening from a loss of $15.7 million, or 4.3 cents a year earlier. Operating revenue climbed to $8.1 million from $5 million a year earlier, a slower increase than expected as Pacific Edge took longer to close deals with large US health administrators.

It now has both the Veterans Administration and TRICARE Health Plan Network under contract, which provide cover to 20 million US military personnel, is in commercial talks with Kaiser Permanente which are expected to close shortly, and is still chasing regulatory approval for patients to get reimbursed under the Centers for Medicare and Medicaid (CMS).

"We have made strong commercial progress in FY17, particularly with our targeted scale customers," chief executive David Darling said in a statement. "We are seeing increasing demand and uptake from both private and public healthcare providers and expect to see a ramp up in sales from new and existing customers in FY18."

Pacific Edge got a two-year extension to its Callaghan Innovation research grant to fund its suite of cancer detection products and raised $8.8 million earlier this year to help pay for the US drive and it expects to have all four Cxbladder products fully launched in the US by 2018.

The company's operating cash outflow rose 5 percent to $17.8 million in the year, as a jump in customer receipts largely covered the increased cost paying suppliers and staff, and it held $14.6 million of cash at the March 31 balance date, down from $24.2 million a year earlier.

Pacific Edge's operating costs rose 33 percent to $30.5 million as spending on research and development rose 11 percent to $4.9 million and sales and marketing costs almost doubled to $1.9 million. It also faced a $2.9 million bill to wind up an employee incentive scheme and a $2.6 million charge writing off bad debts.

Revenue from government grants and rebates for research from Callaghan and New Zealand Trade and Enterprise dropped to $1.1 million from $1.4 million a year earlier, with changes to Callaghan's scheme meaning international R&D couldn't be claimed anymore.

The shares fell 1.8 percent to 56 cents at the opening of the NZX, having slipped 3.4 percent so far this year.

(BusinessDesk)


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Believe the PR spin or not about transformational customers being just around the corner.
The numbers suggest a further cash issue to long suffering shareholders or another share placement before the end of the year.

• Operating cashflow deficit of $(17.8)m, at a similar level to the previous year (FY16: $(17.0)m).

• Cash and cash equivalents of $14.6m as at 31 March 2017.

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This is a disgusting result and heads should roll
David Darling has been dribbling on for years about the prospects for Pacific Edge and they are nowhere near the $100M projection they made 5 years ago

Time for shareholders to revolt and David Darling to ride off into the distance - he ahs failed badly

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Peering at the FY report, losses seem to have plateaued, but revenues are not increasing nearly fast enough, and at current burn rates the company has about 10 months of cash left on hand. The receivables account is a total shambles though, with PLENTY of VERY overdue bills!

At the current market cap for PEB the current story is a binary outcome - either the company has to sign on BIG users, and very soon, or more dilution is headed shareholders way, and at much lower prices.

The market was fed up with the spin quite a while ago - this company either needs to show us the money or face the current reality over promising and under delivering!

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$2.6m bad debts on $8m of revenue when dealing with large organisations something does not add up.

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by Crackity 6 months ago in reply to The Moose
Looking thru today's release this info also intrigued me Moosie.....

The financial statements have gross operating revenue (diagnostic test sales of all products ) for the 6 months of $2.99 million.

Receivables in the financial statements are $6.42 million.

This leads me to 2 possible conclusions - (a) they need a debt collector or (b) some of the diagnostic test sales are effectively free samples with successful collection of the cash dependent on the success of the relevant user trial.

If (b) is correct the accounting treatment is possibly misleading - maybe PEB would like to comment? I would say the sample tests should be a straight expense not a revenue and receivables item ...

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This is worse $2.6m bad debts and $0.6 as a provision. On $8m of revenue that is around 7 - 8% - that is very high. Around 10% of debtors.

Of the total debtors around 35% is over 180 old.

I would have thought this was material enough for the company to have to expalin what is going on.

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This is a good example of where we need disclosure of financials that is a lot more frequent. These days there is no real reason why we cannot have non-audited monthly results delivered to the market.

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Its 62% up off tiny
Penny dreadful stock that shouldn't be listed
Sadly no cred with anyone anymore

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Market cap of 223 million at current share price of 56 cents Warren.

Possibly overvalued....

Definitely undervalued if they get the much touted 100 million in annual sales.

Not a penny dreadful at the moment though....

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Can't believe the total lack of explanation on the write-off and leaves the impression that there will be more to come.

These write-offs and provisions are a very high proportion of receivables (that would have been previously reported sales) so lack of explanation only leaves the market and shareholders wondering what the real commercial progress is.

Shareholders are also owed some comment on likely need for a share placement. They are not stupid (some may say that they are!) so best that the company front-foots this rather than allow for uncontrolled and damaging speculation.

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How many years (and millions) has the Callaghan fund been supporting Mr Darling? About time to say they have had more than their fair share of corporate welfare?

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This is a perfect example of why Callaghan needs to cease existence

If Callaghan gives this publicly listed company anymore money, Vic Crone should also cease existence. Why can't they get a strong leader that will stand up to all of this nonsense and say enough is enough

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Another year of poor progress. The lack of sales growth for 3 consecutive years means they are about $80 million pa behind where they need to be. The share price should be below 10 cents at this time. Only savior is going to be some big American firm overpaying to take them over, or maybe they have already seen that they can wait for a couple years and buy it off the receivers for nicks.

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We are where we are, but Pacific Edge like Rex Bionics, Pacific Edge was premature for a stock listing. I am firmly against such early stage companies listing when they can save the listing costs and annual reporting and instead take in VC for the first few years and then use the listing for replacing private shareholders for public capital.The funds raised were too small in the first place as a listed company. Its naivety wishing on the goldilocks scenario, but the public markets are cruel places to do capital calls and valuations are highly volatile when management should be focusing on the business. I have two further points, this is a perfect candidate for a properly sized VC fund in NZ but that is yet to develop, secondly, Callaghan and NZTE can support companies with grants and loans but I would suggest not to a public company as what's the point and in this light, they should be lending the money in, not giving it to the company. The loans can have a lower discount rate, but why should public shareholders be subsidised by the Government.

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Callaghan will not stop donating money to public companies as Vic Crone is too busy having meetings about meetings. She has been there long enough now. She has done nothing. She seems to just be a glorified recruiter, which is the exact opposite of Callaghan needs

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