Pacific Edge shares plummet on risk of losing 'significant' revenue stream

Shares in Pacific Edge almost halved when its trading halt was lifted at market open. Photo / Supplied

Pacific Edge could have its cancer tests dropped by a major US health insurance company which is considering a new way to choose which tests are covered.

Medicare provider Novitas currently reimburses the use of Cxbladder but would not under a new process it has proposed.

Currently, the health insurer reviews clinical evidence for each individual product but has proposed relying on third-party lists instead.

Pacific Edge said if the proposal was adopted, Cxbladder would no longer receive reimbursement from Novitas, which makes up "a significant part" of current testing revenue.

Shares in the company almost halved when the trading halt was lifted at market open, falling 48 per cent to just 40 cents – their lowest price since 2020.

In a statement to the NZX, the company said it thinks the proposed changes are unlikely to survive an ongoing review process in their current form.

"The consensus view we received was that the proposed changes to the LCD [local coverage determinations] are contrary to US legal requirements and precedent," it said.

Medicare LCDs are formal decisions about whether a particular item or treatment is covered in that provider's jurisdiction. The proposed LCD specifically excludes Cxbladder.

Novitas has jurisdiction over Pacific Edge's laboratory in Pennsylvania, and it provides coverage in 11 states.

Since Cxbladder gained coverage in 2020, Pacific Edge has received reimbursement for over 10,000 tests.

The test has also been adopted by some of the US's largest integrated care networks and has been incorporated into their clinical treatment guidelines, it said.

Push back

Pacific Edge chief executive Peter Meintjes said the company will advocate for changes to the proposal to ensure cover of its non-intrusive cancer test continues.

"We commend the broader initiative to simplify and streamline the coverage process. However, given the explicit prior coverage and payment history for Cxbladder tests, we have presented our initial concerns to Novitas," he said.

The company is also encouraging clinicians who use the tests to support their argument. Novitas is consulting with the public on the proposals until September 6 and generally must confirm or withdraw a draft LCD within a year of the public comment period.

Pacific Edge chair Chris Gallaher said the company remained well capitalised and able to chase its long-term goals.

- BusinessDesk