Earnings call transcript: Paxman Q2 2025 sees strong revenue growth

Paxman AB (PAX), with a market capitalization of $2.08 billion, reported a strong second quarter for 2025, with a 17% increase in total revenue, marking its highest sales level to date. The company’s stock price rose by 1.08% following the announcement, reflecting investor optimism. According to InvestingPro analysis, the company’s impressive 26.52% revenue growth over the last twelve months demonstrates sustained momentum, while maintaining a healthy gross profit margin of 62.06%. The integration of Dignitana contributed significantly to revenue growth, while the ongoing development of innovative products like the CIPN device positions Paxman for future expansion.

Key Takeaways

• Paxman achieved 17% revenue growth, reaching its highest sales level ever.
• The Dignitana acquisition added 6.9 million SEK to revenues.
• Strong performance in the US market with a 21% sales increase from the previous quarter.
• The stock price increased by 1.08% post-earnings announcement.
• Continued focus on product innovation and market expansion.

Company Performance

Paxman’s performance in Q2 2025 was marked by substantial revenue growth, driven by both organic expansion and strategic acquisitions. The company reported a 17% increase in total revenue, with significant contributions from the Dignitana acquisition. The UK entity saw a 9% growth in sales, while the US market experienced a robust 21% increase from the previous quarter. This performance underscores Paxman’s strong market presence and strategic positioning in the scalp cooling and peripheral neuropathy treatment sectors.

Financial Highlights

• Revenue: 17% growth, reaching highest sales level to date
• Organic growth: 4.4 million SEK
• Dignitana acquisition: 6.9 million SEK in additional revenues
• UK sales: £3,600,000, a 9% growth
• US sales: 21% growth from the previous quarter

- Strong gross profit margins maintained at 62.06%

• EBITDA of $218.13M

• P/E ratio of 24.82, reflecting market confidence

Want deeper insights? InvestingPro offers 12 additional investment tips for Paxman, including detailed analysis of its valuation metrics and growth potential.

Outlook & Guidance

Paxman remains optimistic about its future, with plans to complete the full integration of Dignitana by the end of the year. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, presenting a potential opportunity for investors. The company’s overall Financial Health Score of "GOOD" (2.9/5) supports its strong market position and growth strategy. The company is also focusing on the launch of its CIPN device, expected to significantly transform its business. Additionally, Paxman is working on expanding its insurance-based billing model and commercial payer coverage, which are anticipated to enhance reimbursement strategies and utilization rates.

Executive Commentary

Richard Paxman, CEO, emphasized the company’s commitment to innovation and market expansion, stating, "Our vision is that all patients, no matter where you are in the world, have access to our scalp cooling treatment." He also highlighted the transformative potential of the CIPN device, saying, "The CIPN device launch will transform the business."

Risks and Challenges

• Integration Costs: The ongoing integration of Dignitana presents potential challenges and costs.
• Market Competition: Increasing competition in the scalp cooling market may impact market share.
• Regulatory Approvals: Delays in FDA clearance for new products could affect launch timelines.
• Reimbursement Strategies: Transitioning to new billing models may encounter hurdles.

- Economic Conditions: Macroeconomic pressures could impact consumer spending and investment. However, InvestingPro data shows the company holds more cash than debt on its balance sheet, with sufficient cash flows to cover interest payments, indicating strong financial resilience.

For comprehensive analysis of Paxman’s financial health and growth prospects, access the detailed Pro Research Report, available exclusively on InvestingPro, covering over 1,400 top US stocks.

Q&A

During the earnings call, analysts inquired about the one-time integration costs associated with Dignitana and the "Simple Switch" reimbursement model. The company addressed these concerns, emphasizing its strategic focus on commercial payer engagement and tariff impacts.

Full transcript - Paxman AB (PAX) Q2 2025:

Maria, Healthcare Analyst, D and B Carnegie: Hello, everyone, and welcome to D and B Carnegie. My name is Maria, and I’m a Healthcare Analyst here at the bank. Today, I’m very pleased to be joined by Richard Paxman, CEO of Paxman, and the topic will be, of course, the second quarter. And thanks for the opportunity to discuss this with you, Richard, and welcome.

Richard Paxman, CEO, Paxman: Great to be here and hope everyone’s had a great summer so far.

Maria, Healthcare Analyst, D and B Carnegie: Yes. So the plan is that I’ll hand the word over to you, Richard. So you’ll talk about take us through the highlights of the quarter, and then we’ll continue on with some Q and A. And you also have the live chat that I encourage you to ask questions if you’d like to ask questions, our viewers. So please take it it away, Richard.

Richard Paxman, CEO, Paxman: Brill, thank you. And I want to start, I think, by just talking a little bit about what’s going on. So this slide deck is reasonably heavy for a highlight highlight session because it’s been a a big quarter with commercialization activities, with further investments and work in the reinvestment space with with The USA as well as, of course, the the mergers. So there’s a lot going on, and I think that’s probably shown in the report. So we’ll try and dissect it a little bit, and then we’ll have a good q and a to sort of answer any questions that you might have.

But the underlying trend for me is very positive, and I’m really pleased with where we’re at both from a scalp cooling and growth perspective of Paxman, but also a Dignitana integration. We’re moving closer and closer to our vision and let’s not forget that what we want is that all patients, no matter where you are in the world, to have access to our scalp cooling treatment and hopefully soon our peripheral neuropathy treatment as well. That’s really important, and I think, again, together we can achieve this. So looking at the numbers of people in our organization, of course, adding Dignity Tarder on and then some headcount into The US business, We’re up at about a 140 employees now, so substantially more than q one. A fair amount of those, over 20 of those, are from Dignitada.

And we’ll talk a little bit more about the restructure and what that looks like going forward as we enter into a new era. But overall, functioning very well, senior leadership team strong, and really we’re in a good position to take the business forward as we enter into, 2026. So deep dive into the results or not too deep, I guess. We’ve not got all day, but I think what we’ve got to look at first of all is trying to understand the sort of split between Dignitana and Paxman, but then also some of the forex situations as well. So we did see 17% growth, including the Dignitana acquisition, and that is our highest level of sales today.

You’ve got to remember we’re only including one month of Dignitana sales, so I’m really excited to see what the consolidated picture looks like in in q three. If you look at that sales growth, only 4,400,000.0 SEK of that comes from, organic growth or Paxman’s growth alone. And then we’ve acquired revenues of about 6,900,000.0 SEK from Dignitana. So over 10% of that growth comes from Dignitana. What is important to understand though as we deep dive into the entities, we’ve actually seen better growth than that.

So the forex translation effect from selling in US dollars or selling in pounds, so we go US dollars convert to you, British pounds convert to to sec. That’s actually been affected. So looking at The UK entity sales, we had our strong some of our, I think, our strongest quarters yet with £3,600,000 of sales. That’s 9% growth on prior year and an increase of over a £180,000 from rest of world sales from the previous quarter. So we had a really strong international sales quarter.

And then in addition to that, we saw 21% growth on the prior quarter fee for US alone and an increase of £300,000 from q one or $300,000, should I say. So decent growth. Of course oh, well, our gross profit margins have have have remained strong and actually very strong for the quarter. We’ll continue to try and work on that. But our operating expenses were absolutely, higher than normal.

Couple of reasons, we’re starting to see now commercialization of CIPN device. So we spent about a million sec in our p and l on those commercialization activities. We did some have some higher costs overall in Paxman based on being a very heavy quarter with large exhibitions globally as well as investments into reimbursement and activity there with our consultants. And then you’ve got to look at the, addition of Dignitana. So we’ve got a month of extra costs anyway as expected, plus restructuring costs of over 4,000,000 SEK as well.

So with all this said, I actually think we performed very strongly, and I’m pleased. Longer term, yes, we will drive up revenues. Longer term, we will drive up EBITDA margins without question and therefore profitability, and we’re confident in achieving that with the the restructuring and the investments that we’re making. So cash flow, of course, has been affected by the acquisition and restructuring. So we’ve got a small but positive operating cash flow.

I always find the cash flow a a a strange, presentation and how it’s built up, but I always feel as a good sort of holder of finance and seeing what’s happening is the cash in the bank is always a good signaler of of how we’re doing, the level of creditors, etcetera. And actually, overall, we’re in a a really strong position. Yes. We’ve seen some cash outflow, again, with the 4,700,000.0 SEK of investments we’ve made, which may we made up of 1,700,000.0 SEK of CIPN, remembering not everything hits the p and l, as well as continued installs into The US. But, again, we’re performing very well, and we’ve got a large amount of cash in the bank with still over a 149,000,000 sec.

And that gives us that confidence in taking the business forward and continuing to make those investments. Just looking here at the dignity dignity dignity acquired assets and liabilities, as seen as it’s hard to see that in the re the report. So looking at cash that we’ve taken onboard, looking at some of the tangible assets, so the equipment that’s out in the field, accounts receivable, overall fairly good. I think what’s probably most interesting for everyone is looking at the sort of accounts payable and other liabilities and credit institution liabilities. The good thing is we’re not taking on anything that we didn’t know.

So, yes, it’s early days, but we actually are fully aware of the full financial situation of Dignitana, which is excellent. As I mentioned previously, this doesn’t include Dignitana, but we had a really strong quarter, for overseas sales, especially with our Australian market. And we’ve got a 124 systems on order, a little bit weaker than the q one, but we expect that to continue to grow, sometimes this time of year can be like that. But our investment into our international team feels like it’s paying off now. There’s a real hive of activity based on having different people in geographic locations and looking after territories across the world.

ADTR is is is great here. Think let’s ignore Dignitana for the moment, and you will actually see a 20% increase or nearly a 21% increase on ADTR from the same period last year. And it’s great this because you look at it without forex movement. But then if you look at it with Dignitana, and again, only one month, 43% increase. So excited for seeing that grow over the period.

And as we increase utilization across the board with iBBM, that figure will only get better. So to the merger. We really took control on the eighth of of June. So I think, you know, we’re only really, in reality, a couple of months into this, but we’re making some really positive strides. So just as a reminder, looking at the Dignitana the Dignitana AB, you’ve got the Swedish entity with some trade and some international activity, then you’ve got the main company and and and really what we’ve acquired, which is the Dignitana Inc.

Business, The US business with over 270 customers in The US driving significant revenues on a monthly basis. And then Dignitana, Italy, we’ll call it, with a number of agents. And again, we’re reviewing what that looks like going forward and how we how we utilise that business and understand if it has value for us. But the key focus is Dignitana Inc and then some of the international activity as we explore and understand their distribution network. Looking at Dignitana alone and looking at their quarterly figures, we saw 21,000,000 SEK of sales achieved for the quarter.

That’s actually down a million SEK from the prior quarter. But again, looking at translation effects, if you look at The US income, it’s actually up a $125,000 from q one. So we’re starting to see it driving growth there as well, and we’re pleased actually with overall performance. And as we’ve delved into the numbers, good margins, and a really interesting business. June sales, as I’ve said before, Paxman’s included 6,900,000.0 SEK of dignity target income.

In terms of where we’re at from your restructuring costs at the moment, we’re about 4,400,000.0 SEK of costs, and that includes some termination costs and other other costs that can’t be put on the balance sheet, and then a cash impact of a little bit less as we’ve not paid out all restructuring costs as yet, but we’re making good headway. We’ve got a very clear plan. Of course, we’re now in this post day one integration period, which will last in in reality for us probably just before the end of the year, November time. We’re looking to make sure that most things are in place maybe December, and most changes have now taken effect. Just high level, but we’ve obviously delisted the company.

We’ve removed the Dignitana board. We’ve unfortunately had to let the CEO go, which was always the plan in reality, and the CFO is is currently with us, but contract has been terminated. We’ve reviewed the Swedish personnel, and we’re bringing a lot of the functions back into The UK. And I have to say, and I’ve said it in the report, the people at Dignitas now, even the ones that we’ve let go that are continuing to work with us in the transition period, have been amazing. So open, welcoming, supportive, and I can’t be as yeah.

Incredibly grateful, for their for their commitment. And we’ve just been through a couple of audits as well, and they’ve performed brilliantly. So hats off to hats off to them all. So, yeah, we’re gonna keep two people in Sweden, So that would be five people leave from that office there as well as the c suite. And then we’ve reviewed The US personnel and functions there, and we’ve made two redundancies in the sales and business development area.

The rest are in the field and and really add value to the business and allow us to start to look at how we operate geographically with both scalp cooling and then CIPN in the future. I’m out in Lund this week. I’m not in Lund now, but tonight I’ll be in Lund. We’re gonna do some more work on how to start to close down the operations there and review what we need to do. That is ongoing, but we’ve been out in Dallas as well and made some changes and and really starting to work closely with that ops team, to see if we can support them and become more efficient and effective in what they’re doing.

We’ve, of course, reviewed the officers, the insurance reviews where we can start to see some synergies. We’re doing a full technology review and and and looking at service provision, seeing what IP is useful to us and not, and then a supplier review. And I think the biggest question for everyone is will we continue with their supply of equipment? So we’ve signed a new agreement with Thermatec, which looks very different than it does today with a real focus on single patient use cooling caps and consumables as opposed to equipment itself. We’re just deciding how how long that contract might look like from an equipment manufacturer perspective, where there is still some demand, we have to consider that.

But to be in a very, very positive situation and and and hopefully drive some better margins in the future as well. And we’re working with regulatory now to see how we can support that transition as well and having a global partner review. So there’s been a lot going on in this last probably six weeks, but we’re making really positive traction. We expect these post merger integration principles, as I’ve said earlier, to come to fruition, by the end of the year that we start to see those synergies, economies of scale, and rationalization cost savings. Reimbursement.

So I think, again, you’ve got to think about forex, but let’s deep dive very quickly. And we’ve got if you take a look at our insurance based billing model, we were a bit concerned at q one. If you recall, the numbers were lower than q four. What we’ve seen now is a bounce back, so achieving $1,160,000 compared to $823,000 twelve months ago. And it was a modest improvement from from the prior quarter, but an improvement.

I do really think we’ll start to see traction at the end of the year. As sites now are starting to get excited about the, the the the ruling and the proposed rules. So increases in caps sold and a positive momentum, but still not fast enough for me and I’m sure for you too. Positive coverage continues to be great, and we do expect this to improve as we get to higher levels of, CPT coding and better levels of of coverage. So we’ve talked about this before, working on coding, working on coverage, working on payment.

Key for us recently has been working on payment, and we’re gonna talk about that later. But just remember, as we transition to insurance based billing model, we see improved utilization overall. We have low levels of utilization today, and what we need to do is get it reimbursement and drive that better utilization, which drives revenue significantly. So two proposed rules came out, the first being for PFS. This relates to the community based practices, the office based practices.

And actual actually, overall, we were reasonably happy with this. And I think that’s important to understand. This is a really strong breakthrough for both both rules and a big step in the right direction. For the first time, we have three codes in in the community setting and all three codes being paid for. Now what we aren’t happy with is the levels of payment.

Albeit okay, we believe that these can be stronger, and I’ll talk about that later. I was slightly disappointed with the OPPS ruling, and that’s partly due to doing with claims data. So what they’ve done is they’ve looked at the claims data again as where we’ve previously been. And because we’ve now gone over a 100 claims, what happens is it kicks in a different ruling, and it actually chooses the lowest of the three means that they look at. Historically, they’ve chosen the highest.

If they’d have chosen the highest, we’d have been over $2,000. What they’ve also done is packaged the other two codes so they’re not paying for them separately, similar to what they did with 0663T. And that’s not correct, that’s not accurate. So more work to be done there. Still what we’ve got to remember is we’ve been here before, we’ve changed it, but what we’ve also got to remember is that only fifteen percent of our patients are Medicare patients.

Typically commercial insurers will pay 30 to 40% more than Medicare and make their own decisions as well around payment as they are doing with CPT three codes. But this is a baseline and we’ll continue to work and figure this out. We’ve held two meetings now with division of outpatient care and physician services to try and move this forward. What we’re trying to do is articulate the patient journey, show the very distinct differences between each of those codes and the work and the supplies or practice expense that’s involved with them. We’ve carried out extensive time and motion studies to really look at the work involved and the minutes involved of each particular process and presented that to CMS in detail.

And as well as that, we’ve then been meeting with these groups and really articulating what we need. So about unpackaging the codes, about putting a better value to the other codes. So we put these requests in formally, so unpackaging, and we’re trying to push for that second code, which would be bundled with the third code, about a $450 per treatment situation. How confident am I in achieving this? I’m unsure at the moment, but this is a starting point.

And we’re gonna work closely with CMS and all our customers to provide comment and make sure that we can move to a better and more fair calculation for those cancer centers. The same with MPFS. So again, we’re concerned that there was not the right education from the RUC, to CMS in articulating what practice expense involved, what does the typical patient look like. So we’ve educated CMS on this and again we’ll be providing further comment letters to support this. This is a very busy slide, but again what we’re trying to do is slowly creep up that pricing point to fairly reflect the amount of work that’s involved by the nurses and the hospitals offering this or the cancer centers offering this.

We continue to push the coverage strategy with MAC. Again, I’m not going to go into this, but we’re still making progress with First Coast, Novitas, and NGS. And we hope by the end of the year, we’ll have better news to share with you. And then now it’s about commercial payer outreach. First, we’re working on a payer dossier along with other engagement strategies to start improving commercial payer coverage.

A key focus is our simple switch. So it’s about pushing those customers to switch to this new business model. And we’ve just launched our new branding and our new messaging to support that switch, which really encourages, hospitals to start to look at this now or at least prepare for the CPT one coding. Looking at our directed issue, we all know why we raised the the the money, and we’ve now started to spend that. Not in huge amounts, but about a million sec on commercialization that’s hitting our p and l, and then a cash impact of, just under 3,000,000 sec.

So where we’ve capitalized certain, development costs and research costs. New product timeline. So we’re on track. We’ve not moved away from this as yet. Slight delays with some of our, completion of, testing documentation, but we’re still expecting FDA clearances early in the new year, potentially second quarter if things get delayed.

Unfortunately, we’ve had some setbacks with the breakthrough devices program. The issue was that our device is not what we considered life saving. So now we’re looking at what we call a step program, so safer technologies program. Albeit this is not quite as exciting as the breakthrough devices program because of reimbursement focuses more on approvals and speed of approvals, it still is a positive step forward. I’m not going go into all the clinical data because I’m talking longer than I planned, but there’s so much to talk about.

But CIPN, again, huge unmet need. We know that affects a large number of people. It’s sort of thirty percent, with grade two CIPN. We’ve got two ongoing studies. Just recently, we’ve presented our phase two study at MaaSC.

Some really strong results. I think if you look at the number of patients who have had grade two CIPN, we’re seeing about four percent compared to that thirty percent and more that we see in other trials. So really, really promising results and excited to see more data being presented later this year. The study in The US continues to progress well, and we’ve got, I think, well over 350, probably close to 400 patients recruited now. We’ve just about to kick off our clinical trial in The US with Dana Farber, again looking very positive.

So I’m sure Maria is saying why is it taking so long to get through that. Apologies. But as I said, lots to get through. Hopefully, some clarity around the MPFS and OPPS.

Maria, Healthcare Analyst, D and B Carnegie: No worries. Thank you, Richard. This was great And indeed, a very a lot happened in the quarter. It was good that you took your time. I have, of course, the first question is on the one offs related to the Dignitana.

And the question is, if you could elaborate more on this. Was it mainly just related to personnel? Or was it something else in there? You’ve mentioned it briefly in the presentation, but can you just wrap it up? What were the one offs?

Richard Paxman, CEO, Paxman: Yeah. There was a large chunk of that from a a personnel perspective. So we I hate the word terminated, but it’s the reality. So there’s costs in The US for severance packages. There is costs for severance severance packages for the CEO, and then some additional costs that can’t be considered as the acquisition, but one off one off costs.

So may merely severance in reality and and some transactional costs for but overall, those will be the big the big chunks.

Maria, Healthcare Analyst, D and B Carnegie: Yeah. And, of course, this is a people’s business, difficult decisions and everything. But when do you think when do you expect these changes to you’re expecting the integration work to end by end of year, but when can we expect more positive notes in the numbers?

Richard Paxman, CEO, Paxman: Okay. So I think you’d probably start to see that coming through in December. So although that you won’t see December sit alone, we’ll have we’ll be running we’ll be running with more headcount until roughly November, potentially partly December. So yes, but you’ll start to see the reducing OpEx.

Maria, Healthcare Analyst, D and B Carnegie: Good to know for us analysts always.

Richard Paxman, CEO, Paxman: Yes.

Maria, Healthcare Analyst, D and B Carnegie: If we zoom in back to The U. S. Market, which is obviously very important and now with the Dignitana and so on, I was wondering about how many clinics have you do you now have that are connected to the program? Did you do you disclose that number?

Richard Paxman, CEO, Paxman: So we do, but I was looking at possibly disclosing it this time. But what we’re doing, I’m going to try and report some different numbers next time and look at where we are utilisation wise, so number of systems versus number of patients versus number of locations, and trying to start to share some different indicators that are being being honest. It was a tough quarter for further analysis than numbers, so we left it and thought let’s not complicate it more. But Dignity Town had about two seventy locations. We’ve got about six forty locations, I think.

So, yeah, we’re we’re we’re not far off a thousand sort of thousand locations across The US, which is brilliant, really. It’s a strong foothold.

Maria, Healthcare Analyst, D and B Carnegie: Yeah. And to not complicate things further, the simple switch. How does it actually work, like practically when the clinics decide to go on to that model? What happens? How do you support and what do you do?

Richard Paxman, CEO, Paxman: Yeah, so we call it the simple switch to entice people. I’m not sure how simple it is. It’s quite a multidisciplinary approach. So first of all, we’re trying to engage with the different stakeholders involved in making a decision like that and actually it varies from cancer centre to cancer centre. We’ll then present, share the benefits and the pitfalls of the new model and the sort of challenges that we see under a CPT three code versus CPT one code.

We share the data and then in reality they do it every single day of their lives. They buy products from the suppliers, from the manufacturers, they give them the patient and they bill insurance. That is why we call it the simple switch because in reality it’s simple. But they need to build in some new workflows, they need to get procurement involved, legal involved, risk revenue cycle management, so they need to set up the relevant coding in their systems, the appropriate notations, and and and supporting documentation to prove that they’ve done those codes. But when they’re when they’re up and running, it it it works.

Procurement sometimes can be a bit funny depending on contracts and where they’re buying them from, if they’ve got a contract with McKesson, etcetera. But it’s it’s not rocket science.

Maria, Healthcare Analyst, D and B Carnegie: Yeah. But a very enticing name indeed. I have a question here about a bit of a different topic on gross margins. With higher volumes increasing going forward, what are your expectations of the gross margin dynamics going forward?

Richard Paxman, CEO, Paxman: Okay. So as I’m not really allowed to talk about forward looking statements too much, but we do want to drive improved gross margins, of course. I think I’ve talked about this before, but as we switch from self pay to insurance based billing, we should see improved gross margins because we’re getting a better price per patient in in reality. We’ve also got some other projects that are looking at purchasing of our cooling caps and single patient cooling caps and reducing some of the costs there. We’ve done some work with Dignitana on reducing some of the the supply cost there as well.

So longer term, we think we’ll continue to drive improved gross margins. Service for us in in terms of Paxman is a big cost, but as we grow, that will as we grow more systems in the field and we review our service offering in terms of service and medicines, we think we can drive some cost out of that too.

Maria, Healthcare Analyst, D and B Carnegie: A short follow-up on that. What’s included in the COGS? Very short question.

Richard Paxman, CEO, Paxman: What’s included in the COGS? Okay. So so all the cost of manufacture, of course. So excluding the capital deployed, so where it’s our own asset it isn’t, but you’ve got the sale the cost of sale selling equipment. You’ve got the cooling caps themselves on a single patient use basis.

You’ve got the transactional costs, and I call them transactional costs meaning shipping of the devices, shipping or shipping of the cooling caps, storage of the cooling caps, 3PL services. You’ve got then well, if you’re an insurance based billing model, you’ve got the cost of an enrollment, cost of a BI, so our other costs in reality and then service and maintenance.

Maria, Healthcare Analyst, D and B Carnegie: Yes. Thank you. And here jumping yet again, I’m sorry for jumping to another topic again, but on utilization rate, how would you want to see change going forward in the coming quarters? Are you planning to introduce maybe some new KPIs for reporting next quarter or the following year or so, so that we could keep track of that maybe?

Richard Paxman, CEO, Paxman: Yes. So I think I alluded to that a couple of moments ago. So and I would have liked to have tried to do it this quarter, but I think too much going on. So yes, I think by the end of the year or it might be at the end of the year when we look at q four and do a full summary of the year, but start to compare even utilization between self pay versus IBBM and then track that as a KPI and see if it improves then over time with CPT one codes. It can be complex to look at, and it can give strange messaging, but I we are gonna start providing more more information, especially as we get closer to building momentum with reimbursement or building more momentum with reimbursement.

Maria, Healthcare Analyst, D and B Carnegie: Thank you. Let’s see now there are more questions incoming here. When do you expect the ICE COMRESSED study to complete recruitment?

Richard Paxman, CEO, Paxman: The ICE compressed study will be a little bit longer, so I’d expect probably a twelve month period, if not potentially longer. There’s the recruitment will finish, but then there’s a longer term follow-up as well.

Maria, Healthcare Analyst, D and B Carnegie: And another one here from the chat is, you say that the sites are excited about the new CPT codes. And do you expect to see an impact on them at the end of the year? What will the preparations on the sites look like with the introduction of new CPT codes, I imagine?

Richard Paxman, CEO, Paxman: Okay. So those sites that are already using our insurance based billing model, what they need to do is work with their payers and their contract contracting sorry. That work with payers on contracting to start saying, look. The CPT one codes are coming. We need to start having a discussion about making sure these are covered and paid for.

What they’ll need to do from a a sort of IT perspective is build those codes in, to their systems. I’d love to say on day one, January 1, everything will be ta da. There we go. They’re up and running. There is a bit of a lag by all accounts.

So it doesn’t happen immediately. It takes time for the codes to filter and get used. But what what’s important for the work that we’re doing is start working with those cancer centres, make sure that they’re having those conversations with their payers and understanding the payer mix to say look, know, these CPT one codes are coming, you’re covering the CPT three codes, We need to be prepared for day one because the CPT three codes eventually disappear and these kick in.

Maria, Healthcare Analyst, D and B Carnegie: And the next question is, it’s I think it’s one of your favorites. I know that you there are two topics we really like to talk about, and it’s always ForEx and Trump and tariffs. So this question is on tariffs. How are the new tariffs affecting the company? If you just say briefly, because I think you talked a lot about it in the previous quarter.

Richard Paxman, CEO, Paxman: Yes. So we’ve got the 10% tariffs, limited effect on the capital deployed. We capitalize that depreciate over the five years. It is a cash cost, of course. And but then on the consumables, it’s about $30 per cooling cap that impacts us.

What we haven’t done yet so we’re seeing the impact of the cost. We’re not quite there with our inflated pricing because of that So you’ll see some inflated pricing in the quarter, but it’s not really taken effect only because contracting to change pricing is not as simple as what we’d like. But we hope to see mitigation of of tariffs by q three.

Maria, Healthcare Analyst, D and B Carnegie: All right. Enough with the tariffs then maybe. How are your dialogues going with private insurance providers? Or is it something out of your scope?

Richard Paxman, CEO, Paxman: Not out of our scope. Definitely not. So what we wanted to do is be quite phased in our approach, and and it’s been very much coding to start with. And then coverage from Medicare, so max. And then what we wanted to do is get these proposed rules out so then we had a bit more clarity around what things looked like when we started to speak with the commercial payers.

So there was a slide which I went through relatively quickly where we’ve developed what we call a commercial payer dossier. So in essence, it’s like a scalp cooling brochure which highlights all the benefits and the clinical data about scalp cooling, where it’s being used, how it’s being used, and then it’ll talk about the existing landscape of CPT three codes and then the new landscape of CPT one codes. What we’ll do then is have some commercial payer engagement. So we’ll say, do you think about this? How shall we present this to people?

And then once we’ve done that, got that feedback, we’ll start to make them more aggressive. I mean, I’m the least aggressive person you’ve ever met, but a more a more intense process of of reaching out to payers, understanding coverage, and looking at our key payer mix as well will be important, where do we go first.

Maria, Healthcare Analyst, D and B Carnegie: Yes. Thank you. Okay, next one. Your organic growth in second quarter was below the levels we’ve seen in previous years. How do you view the slowdown?

And what is your take on why the core business might not be growing at the same pace organically as it used to?

Richard Paxman, CEO, Paxman: Yes, think that’s a good question. So I think please take a look below the set numbers to the to the actual UK and US currency numbers. So the growth was okay, not as strong as, let’s say, 2324. But I think it’s also important our end is getting bigger. So, you know, yes, we might not be growing at 40%, but when you’re turning over £5,000,000 as opposed to £20,000,000, it’s a different scenario.

We also have been less aggressive in installations of our scalp cooling equipment and trying to focus on utilization. But I’m I’m I’m not concerned. I think I think this year, we’re seeing a year of building on building on where we’ve been and building on what the future looks like, and I’m very confident that we’ve got a long runway of growth ahead of us without question.

Maria, Healthcare Analyst, D and B Carnegie: And time flies when you’re having fun. Maybe if we could wrap this session up and if you could tell us what are you looking forward to in the coming twelve months? What is going to happen to Paxman? What do you want to happen?

Richard Paxman, CEO, Paxman: Okay. So we’ll have a full integration by the end of the year and that will make us look a very different business with both companies. We’ll have that start to have that scale, which will be exciting. Coming into the new year, not January 1, I might add, but coming to the new year, seeing the benefit of those CPT one codes and seeing our customers becoming more readily switched than they have been over this last probably, I’d say twelve months, it’s been a bit sluggish. So when that starts to happen, I think we’ll really start to see that improved utilization.

And then I think the number one exciting piece in the next twelve months is the launch of CIPN. So again, I mean, that that will transform the business, again, so that real step up. And I think we can be aggressive with that approach based on the money we raised earlier this year. So a lot going on, but a really exciting twelve months ahead.

Maria, Healthcare Analyst, D and B Carnegie: Yes, indeed. And we look very much forward to following your progress on all of the above mentioned projects and plans. Thanks a lot, Richard, for joining us, and thanks for walking us through the report.

Richard Paxman, CEO, Paxman: My pleasure. Great to see you.

Maria, Healthcare Analyst, D and B Carnegie: And thank you all for watching.

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