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TEARAWAY biotech stock IM Medical has enjoyed an explosive run of late, as the company regaled the market with the blue-sky potential for its Cardanal diagnostic system.

The excitement surrounding Cardanal has somewhat distracted attention from IMM's core business of testing cardiovascular health of GP patients with its Intelliheart device.

Unfortunately, the bulk of IMM's income has come from Medicare rebates from the Intelliheart device, which the company and its doctors may not have been entitled to claim.

Chief executive Tommas Bonvino confirmed yesterday that the majority of the company's revenue had come from claims made under Medicare item number 11611. IMM was no longer making claims under 11611, he said, and was pursuing other avenues for growth.

"We did claim under 11611 in the past. It was the key medical officer (Dr Laurie Williams, former chairman and chief executive) claiming that number. When he left we made a lot of changes to the test. We are claiming under different numbers at the moment," said Bonvino, declining to reveal the Medicare item numbers due to commercial sensitivity.

Was there a Medicare investigation going on?

"We are not really prepared to talk about that," said Bonvino.

The stock, formerly advised by Peregrine Capital's colourful stock promoters Bryan Frost and Richard Revelins, has run up strongly in the past three months, from 1.5c to a high of 5.5c, despite a $3 million capital raising from Bell Potter in late July at 2.6c.