Profound Medical Corp Stock

Good day, and thank you for standing by. Welcome to Profound Medical's Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Stephen Kilmer, Investor Relations.

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws in the United States and Canada.

All forward-looking statements are based on Profound's current beliefs, assumptions and expectations and relate to, among other things, any expressed or implied statements or guidance regarding current or future financial performance and position and expectations regarding the efficacy of Profound's technology. Such statements involve known and unknown risks and uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements.

No forward-looking statement can be guaranteed. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.

Representing the company today are Dr. Arun Menawat, Profound's Chief Executive Officer and Chairman; Dr. Mathieu Burtnyk, Profound's President; and Tom Tamberrino, our Chief Commercial Officer. Also filling in for our CFO due to a scheduling issue is our Corporate Controller, Matthew Sobczyk. With that said, I'll now turn the call over to Matthew.

Good afternoon, everyone, and welcome to the second quarter 2026 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support. I will turn the call over to Mathieu in a moment to provide clinical updates.

However, before I do, I would like to provide a brief summary of our second quarter 2026 financial results. All of the numbers I will refer to have been rounded, so they are approximate. For the three-month period ended June 30, 2026, the company recorded revenue of $2.5 million with $1.6 million from recurring revenue and $871,000 from capital equipment sales. Second quarter 2026 revenue was up 12% from $2.2 million for the same three month period a year ago.

As noted in today's press release, this doesn't fully reflect our sales performance in Q2 2026. Approximately $3.1 million of TULSA product shipments originally anticipated in the final weeks of June were completed in July, affecting the period of revenue recognition. Excluding the shipment timing, second quarter revenue would have been approximately $5.6 million, representing 153% year-over-year growth.

Gross margin in Q2 2026 was 78% compared to 73% in Q2 2025. We continue to have confidence that the gross margin for our business will remain above our stated goals of over 70% over the long haul.

Total operating expenses in the 2026 second quarter were $13 million, down 16% from the $15.4 million in the second quarter of 2025. Overall, the company recorded a second quarter 2026 net loss of $9.5 million or $0.26 per common share compared to a net loss of approximately $15.7 million or $0.52 per common share in the three months ended June 30, 2025.

As of June 30, 2026, Profound had cash of $38.3 million. As Tom and Arun will discuss later in the call, despite the revenue recognition timing issue in the second quarter, based on record order activity, Profound continues to project total revenue for full year 2026 to be approximately $25 million, which represents 56% growth compared to its prior year revenue.

With that, I'll now turn the call over to Mathieu Burtnyk for an update on clinical and development activities.

Thank you, and good afternoon. On past calls, I've highlighted the growing body of clinical evidence supporting the TULSA procedure as a new platform for prostate disease management capable of delivering whole-gland treatment efficacy while preserving quality of life. The CAPTAIN trial has already proven that TULSA delivered statistically superior quality of life outcomes compared to robotic radical prostatectomy, achieving its primary safety endpoint with statistically higher preservation of the composite endpoint of urinary incontinence and erectile function at six months.

In addition, patients treated with TULSA experienced superior perioperative outcomes, including no blood loss, no overnight hospital stay, less pain and faster recovery, along with statistically significantly fewer serious complications and a faster return to normal activities and paid employment.

Most recently, at SRS, we presented positive incremental data from CAPTAIN demonstrating that whole-gland TULSA provided statistically superior penile length preservation compared to robotic prostatectomy. At one month following the TULSA procedure, there was no median change in penile length after TULSA compared with a median 0.65 centimeter reduction in penile length after robotic prostatectomy.

To some people, and please pardon the pun, that might not sound like a super big deal, but even modest amounts of penile shortening can contribute meaningfully to patient distress and reduced satisfaction following treatment. This new data points to the greater peace of mind that the TULSA procedure can deliver to patients by gently, safely and precisely ablating prostate tissue while actively protecting surrounding structures such as the prosthetic urethra.

As we noted before, one of CAPTAIN's primary objectives is to support broader payer coverage. Randomized controlled trials remain the gold standard for coverage decisions and CAPTAIN continues to generate evidence demonstrating meaningful quality of life advantages that resonate with both patients and payers. In addition to ongoing CAPTAIN readouts and analysis, the clinical value of TULSA is continuing to become sharper as presentations focus more on what specifically make TULSA most versatile.

Beyond demonstrating overall efficacy and quality of life benefits, ongoing clinical analyses are increasingly helping physicians understand where TULSA's capabilities may be particularly valuable. Examples include patients with apical cancer where the enhanced visualization of the MR allows urologists to precisely carve out tumor from the boundary of the sphincter muscle that controls continence. These patients almost always end up with urinary incontinence following robotic RP, but whose continence can almost always be saved if treated with TULSA.

Secondly, patients with unilateral disease or cancer on one side of the prostate and whose nerves that maintain erectile function can be spared by not ablating the benign side of the prostate. Thirdly, patients where multiparametric MRI provides a clear hot zone that is suspicious of cancer within the prostate and thereby giving surgeons better guidance of what part of the prostate to kill. And patients with very large prostates, where TULSA has demonstrated treatment flexibility without the increased side effect burden often associated with other modalities.

I'd like to conclude my remarks by reiterating that from gold standard treatment effect findings, the TACT's durable five year outcomes to CAPTAIN's compelling Level 1 data, the clinical foundation supporting TULSA continues to strengthen. We believe this growing body of evidence increasingly positions TULSA as a differentiated platform capable of delivering whole-gland efficacy, superior quality of life outcomes and expanded reimbursement support. I will now turn the call over to Tom.

Thank you. There is no question that momentum in our business is continuing to build. As Matthew Sobczyk mentioned, we recorded a year-over-year increase of 12%, which would have been 153% absent the $3.1 million shift in Q2 orders that were shipped in July and will be recognized in the current quarter.

Speaking of temporary interruptions, you may have also noticed that while same-store sequential quarter-over-quarter growth as measured by our new Index 20 declined by 12%, it grew 39% in the first half of 2026 over the same period in 2025 and 22% year-over-year. The sequential change was mainly attributable to five sites not realizing the expected growth due to short-term issues. For example, one of the sites converted from a placement to a capital model in Q2 and paused treatments during the transition. That site is now back online.

Despite these onetime and/or temporary issues, Q2 2026 marked another true commercial inflection point. And so far, we have seen that momentum continue into Q3. We estimate that our qualified sales pipeline, defined as being within one of the verify, negotiate and contracting stages for TULSA-PRO and Sonalleve is now approximately $70 million. While we can't predict the extent and/or timing which that qualified sales pipeline will translate into recognized revenue, it has been growing steadily, which certainly bodes well for the future.

We had another monthly record for new orders in July, none of which included any of the shift or rollover from Q2. And SRS 2026 was the most productive medical meeting I have ever been a part of. To put that into perspective, our team's work generated more than 160 qualified leads over the four days of the event. So around four or five new commercial opportunities per hour. Again, it's not possible to predict what number of those will translate into actual sales, but also, again, boding well for the future.

Three additional tailwinds helping drive our commercial momentum acceleration are higher and expanding reimbursement. With respect to Medicare, a few weeks ago, CMS released the current year 2027 Hospital Outpatient Prospective Payment System, or OPPPS, and Ambulatory Surgical Center, or ASC proposed rules. Under the OPPPS proposal, TULSA furthers its favorable reimbursement level relative to other treatment modalities.

To summarize those proposed changes, TULSA remains at urology APC Level 7 with OPPS payment increasing 14.9% to $15,494 per procedure. That compares to an 11.6% increase for HIFU and Aquablation to $10,797 and $12,300 for robotic RP. So assuming the final rule doesn't change these numbers, starting in January 2027, hospitals will be paid 44% or $4,697 more per procedure for TULSA than HIFU and Aquablation and 26% or $3,194 more per TULSA than robotic RP. Keeping in mind that hospitals can generally perform as many or more TULSA procedures versus those other modalities in a day, our premium there is clearly growing, making our relative profitability for hospitals higher as well.

With respect to ASCs, the proposed rule would reduce TULSA to $6,866. However, we don't currently have any active ASC sites, and we believe there may be an opportunity for us to correct the hospital cost reporting that appears to have drove the reduction. On the physician payment schedule side, TULSA is more than holding its ground as well when viewed on an apples-to-apples basis. Adjusting for the fact that TULSA is 0 day, while competitors are 90-day, physicians will be paid $880 for each TULSA procedure compared to $865 for HIFU, $1,064 for robotic RP and $539 for Aquablation.

Turning to other payers. Coverage for the TULSA procedure expanded by approximately 18.3 million covered lives during the second quarter. Most of the newly covered lives came through state Medicaid and managed Medicaid and better programs. This follows the addition of 8.5 million covered lives in the first quarter, which included 6.9 million covered lives with Humana. And just today, we announced that the Johns Hopkins and the Prime Healthcare employee health plans together covering more than 105,000 employees, medical staff and family members have become the first ever employer-owned health plans to list the TULSA procedure as a covered service, and we're just getting started. Profound will continue to work collaborative with payers, providers and health systems to expand coverage and streamline patient access pathways for the TULSA procedure.

Looking ahead, I'm confident in our ability to further accelerate. We're well positioned to capitalize on the expanding interest in image-guided, incisionless and autonomous robotic surgery. We're anticipating an extended reimbursement premium for TULSA hospitals and physicians. We're growing an already formal body of clinical evidence demonstrating the superiority of our technology, and we're continuing to scale our commercial footprint, both at home and abroad.

Thank you for your time. I'll turn the call over to Arun now.

Thanks, Tom, and good afternoon, everyone. As I discussed in our Q1 call, the dynamics in the prostate disease treatment space continue to change at a rapid pace. Whole-gland robotic prostatectomy or radiation therapy are the standard of care for treating prostate cancer today. And for BPH, mainstream treatment with transurethral resection of the prostate or TURP has largely been unchanged over the past 100 years. It remains our belief that today's standards have plateaued and that we can do better than the clinical outcomes from these standards.

Just a few days ago, at SRS 2026, we saw firsthand that robotic surgeons are beginning to not only understand the potential of TULSA clinically, but also recognize that TULSA is the only prostate treatment system that is MRI guided. TULSA is the only modality that offers the flexibility to treat the prostate gland regionally, meaning with whole or near gland, subtotal, AMI or focal ablation.

The time for incision less surgery has come. The most tangible evidence of this is that the new Society of Incision Less Surgery, or SIS, began its activities at SRS 2026 and Profound, HistoSonics and Insightec are among the most prominent founding members of the new society. And TULSA is the only modality that deploys super wide robotic autonomy, meaning it executes predetermined and/or AI-driven tasks independently. This compares to all competitive so-called master/slave robotic systems that rely entirely on direct real-time human hand movement and control.

Today, TULSA's autonomous robotics enables surgeons to deliver consistent, highly personalized treatment based on each patient's unique anatomy and disease. In the future, it may also give us an even stronger competitive advantage in incision less surgery advances to its next frontier, including potentially telesurgery.

With respect to MRI guidance, I would like to directly address what many of our competitors have tried to use as a mark against TULSA. While it is true that as we first started commercialization, finding compatible MR available time and convincing urology and radiology to work together to adopt a TULSA program was a hurdle to client. But today, TULSA is compatible with an installed base of about 5,000 MRs in the United States and more worldwide, and that number continues to grow. It is, therefore, a lot easier to find an MR and justify TULSA, particularly with the economic proposition as its facility fee is already higher than that of any other treatment modality. And based on the proposed rule for 2027, the TULSA premium is only going to get higher.

Our relationship with MR companies also continues to expand as they see interventional MRs as a growth opportunity for them, too. And as we have talked about on the past calls, MRs specifically designed for interventional procedures are now becoming commercially available. These MRs are significantly smaller, lighter and easier to use to the point that even an MR tech is not necessary to operate them. They are also less costly to acquire and maintain and can be placed just about anywhere since they don't need the same shielding as larger magnets.

The Siemens Free series, which is a prime example of such an MR, Cook Medical has created an iMRI division with the purpose of selling a turnkey interventional MR solution to hospitals that includes the smaller Siemens MR. The idea is that just as cath labs or robotic operating rooms were created in the past, the future is about creating interventional MR suites.

We currently anticipate that if all goes well, TULSA will get FDA clearance for integration with the Siemens Free.Max by early next year, and we believe that we will meaningfully contribute to our growth in 2027. And we are stopping TULSA image guidance at MRI. In May, Telix Pharmaceuticals announced a collaboration with us as well as with a competitor that focuses on focal therapy. Telix makes a PSMA PET imaging agent that bonds preferentially to prostate cancer and provides a clear view of the geographic location of cancer within the prostate. Our team is exploring the potential to integrate these types of PSMA images into the TULSA-PRO treatment planning software.

Approximately 85% of prostate cancer is multifocal, meaning that there are two or more distinct index lesions and/or satellite lesions present in different areas of the organ. The other 15% is unifocal, meaning there is only one distinct index lesion. It follows that whole-gland and subtotal ablation is likely the most appropriate approach for the vast majority of prostate cancer that is multifocal, while focal ablation may be best for patients with unifocal disease. We are already seeing urologists use TSMA to complement MRI to better define treatment extent with appropriate margins extending to the prostate capsule. So for TULSA, this isn't about patient selection. It's about empowering physicians to plan and deliver the best possible renal ablation from whole-gland to focal and everything in between.

To summarize, Profound is pioneering iMRI procedures, which enable precise incision-less therapies that improve clinical confidence, procedural control and patient outcome. By leveraging real-time MRI guidance and autonomous robotics, Profound's technologies are designed to replace uncertainty with consistency and clarity across treatment planning, delivery and confirmation.

In prostate cancer, we believe we are now crossing the chasm by transitioning TULSA from early adopter customers to the mainstream market by establishing the technology as a third distinct regional ablation category that doesn't make surgeons or their patients choose between whole-gland or focal treatments because TULSA can do both and anything in between.

The TULSA-PRO installed base was 84 at the end of Q2 2026. We estimate that the current aggregate total dollar value of our qualified sales pipeline for TULSA-PRO and Sonalleve is approximately $70 million. We are reiterating our approximate $25 million total revenue outlook for full year 2026, which represents 56% growth compared to 2025, and we also continue to expect full year gross margin to be 70% or higher.

Based on CMS proposed rules for 2027, the premium hospitals are reimbursed for TULSA over all competing technologies is expanding. And at the same time, more and more lives are being covered by other payers, including employer-owned health plans. We continue to believe that we are on a path to profitable growth. This ends our prepared remarks for today. With that, we're happy to take any questions you might have. Operator?

[Operator Instructions] Our first question comes from the line of Ben Haynor of Lake Street Capital Markets.

First off for me, just thinking about the $3.1 million that slipped from Q1 to -- Q2 to Q3, is that both capital and consumables? And then just generally speaking, how soon after quarter end did that -- did those units or product shift?

Good question. So it was actually a consolidated shipment that went from Canada. And the only reason it was not recognized is because we did not get all of the delivered receipts within the quarter time frame. So some of them, they were in July. So pretty much everything has been sent.

And I think it's sort of back to the second question is like, okay, how do we make sure this kind of stuff does not happen again. And I think that I can certainly provide a little bit of color on that in the sense that we have, since that time, increased our logistics and operating staff. And we are actually in the final stages of bringing a very experienced Vice President level operations person. And so this is part of our growing. And it was -- as I said, it was a consolidated shipment. We didn't get all the receipts. So we didn't recognize it in Q3, but it is most likely will be recognized in Q3.

The $7 million of new orders, maybe you can share what the previous record was. And then obviously, you've had a great conference here recently with the 160 new qualified opportunities. Do you have a sense based upon history kind of how quickly some of those can shake out into actual orders?

Ben, that's a great question, and I appreciate you asking it. As mentioned in the prepared remarks, very difficult to give a definitive answer. But what I can tell you anecdotally is some of those leads have already materialized into deals that were not in our pipeline but are already well down the funnel and into the negotiating and contracting stage, which is extremely exciting.

As is often said in the line of medical device sales, deals can take a year to develop and a day to dissolve or they can take a day to develop and a year to complete. So it completely runs the gamut. So it really just time will tell, Ben.

Okay. Fair enough. And then on the penile, I guess unlengthening that you get with the robot, is there a plan to publish that data? And maybe is it possible to characterize the range of outcomes there? I mean, I would think a lot of guys would care about the worst-case scenario rather than an average or median.

Ben, thanks. This is Mathieu on the line. So to answer your question directly, the -- we are preparing that data as part of the broader picture of perioperative outcomes that we have released in the past in Q1 and before that. And so to really package it together as a total sort of patient experience.

On the surface, a difference of a few millimeters may not sound like a major outcome. However, for many men undergoing treatment for prostate cancer, literally every millimeter matters. The reason that penile shortening is not just a physical measurement. It can also serve as a constant reminder of both their cancer and the treatment that they underwent, which can affect their confidence, their emotional well-being, their intimate relationships and overall satisfaction with treatment.

So we do view this result in the broader context of the CAPTAIN dataset. In and of itself, penile length preservation is not the reason a physician or a patient may choose a treatment. However, when you combine this result with the previously reported superiority in preserving erectile function, urinary incontinence as well as perioperative benefits of the no blood loss, no overnight stay, faster recovery, fewer major complications, it really paints a compelling picture of the overall patient experience.

And really together, these outcomes highlight the potential for TULSA to deliver an effective cancer treatment while preserving quality of life. So ultimately, we believe the future prostate cancer treatment will be driven not only by cancer control, but also by quality of life outcomes. And this penile length result is another example of how the TULSA procedure's ability to precisely ablate the prostate tissue while protecting surrounding structures can translate into benefits that matter to patients.

And as more of these quality of life data emerge, we do believe that this will increase the influence of patient preference, physician recommendations and overall demand for treatments that do preserve the quality of life.

On the topic of sort of the range, I mean, certainly, there was a range. This is a nonconventional endpoint that we did include in the protocol. And so the way that they measure -- made the measurement has a median change and a range around that.

I have just a quick -- I think just a quick anecdote. There was actually a publication at the SRS where effectively, the conclusion was that every millimeter counts for patients.

Yes. I mean it makes sense. I believe there was an Italian study out there that showed some even greater impact for the robot. But I'll leave it that and congrats on the progress.

Our next question comes from the line of Michael Freeman of Raymond James.

A few questions following up on Ben. So I'm curious on the shipment timing challenge, we also saw that there was a shipment timing statement that you guys made in the first quarter, indicating that six Tulsa systems were shipped but not installed by the first quarter end. I noticed that the incremental increase in Tulsa installs was four quarter-to-quarter.

Could you tell us just, I guess, what logistically or operationally is happening on these shipments? Like what challenges or delays maybe you're running into? And I know you mentioned that you had hired on some extra staff to manage this. So I wonder if you could just shed some light on this timing challenge.

Michael, I'm happy to do it. So these are actually two different issues. The one related to rep rec in the second quarter is more about shipping the -- to fulfill orders that we have received. And given that we did not get all the receipts, these have been recognized or we're recognizing in Q3. So it's more of a logistics issue from the perspective of shipment and so on. And as I said, we're pretty much fixed it already. So that's sort of an issue of the past.

The other one that you're asking is actually once the product is shipped, it is installed, the site gets trained, they schedule patients and so on. So then when we look at the installed base, we're looking at sites actually treating patients. And normally, there's a gap of a minimum of 60 days to 120 days based upon the scheduling at the hospital, the training programs and their ability to start educating the customer population, so on. So that is actually a separate issue. It is more about how do they actually convert the health system into treatment program and confirm all of their reimbursement and so on. So I hope that answers your question from the perspective of the installed base.

Got you. Yes, that is helpful. Now on the -- and maybe a question for Tom. On the pipeline, we have -- earlier, you were quantifying the pipeline in terms of number of TULSA systems. Now we're talking about dollars in aggregate value and also splitting that between TULSA-PRO and Sonalleve. Are you able to give a number of new TULSA systems in your pipeline? And then I guess also shed some light on what proportion of Sonalleve sales might make up that $70 million aggregate value.

Michael, great questions, and thank you for asking them. I'll tackle the last question first and then work my way to the beginning of your commentary. What I can tell you is that in terms of the $70 million that fall within the verify, negotiate and contract categories of the sales funnel, it's roughly a 70%, 30% split between the United States and international in terms of dollars forecasted within those respective categories. And then as it relates to TULSA-PRO versus Sonalleve, it's roughly a 90% TULSA-PRO, 10% Sonalleve split.

And the reason that we have moved away from providing what I would consider to be units versus dollars is we want to stay focused on maximizing top line revenue and gross margin and growing TULSA programs and Sonalleve programs versus simply installing systems. And that's one of the major reasons we've obviously introduced Index 20 as well is that we want to get to the point, as we've messaged before, where we have 200 TULSA-PRO systems installed and treating men across the world with an average of 50 men per year, and that would allow us to treat over 10,000 men per year. So I hope that answers the question that you had. And I'm, of course, happy to answer any follow-up questions based on what I just responded with.

Yes. Yes, that is really helpful. Let's see. And then you did, Arun, shed some light on the decline in the utilization index. I wonder if you could just speak more about those sites that ran into temporary issues and then also the trends you're seeing, you mentioned good numbers in July.

Yeah. Tom, since it was in your presentation, if you could just provide more color on that topic.

Of course, Michael, thank you for bringing it up. Obviously, there's a lot being presented within the Index 20, and we're excited to share it. And I just want to reiterate what I stated in the prepared remarks and then provide some more color on that. So while we did see the decline by 12% in terms of sequential quarter-over-quarter growth, we did see an increase of 39% in the first six months of 2026 versus the first six months of 2025 and a 22% increase in Q2 2026 compared to Q2 2025.

In terms of the main drivers of that, there were five sites in particular, that did not grow as we expected them to do due to short-term issues. To give some color to the example that was called out in the prepared remarks, in different countries and different independent distribution networks or health systems, they have different policies. For instance, if we're required to come in on a placement model, that placement model normally has a set period of time and a set number of metrics and milestones that need to be completed. And after that point in time, they literally stopped the program until they complete the process of determining whether they're going to acquire the technology.

So in this instance, it's actually a high-class problem. We were successful with the placement. The timeline associated with that agreement had come to close, and there was a gap of a certain period of time between when that placement ended and when the capital acquisition actually took place. And with our modeling, it's beneficial to the hospital to go to the capital ownership model because that lowers the cost per procedure as it relates to the TULSA-PRO kits. So all in all, it's a net positive, but clearly not impactful as it relates to speaking to quarter-over-quarter sequential growth.

Our next question comes from Scott McAuley with Paradigm Capital.

Maybe just to circle back on some of Michael's questions. So the installed base versus units sold, so correct me if I have this wrong, but if you have 84 installed as of the end of Q2, there's 80 installed by the end of Q1. So that's net four new in the quarter. But from the end of Q1, there were six units that have been sold but not installed. So does that mean there's still two more from that Q1 period that haven't been kind of installed and up and running yet? And then versus kind of net new sales in Q2, I understand it can be kind of confusing. So just looking for a little more color on some of those numbers.

Yes. Scott, I think the way you've analyzed it is exactly right that we shipped six systems in Q1, four of them were installed in Q1, two of them are still in the process. We've shipped about the same number in Q2 as you've already heard the logistics thing. But we are continuing to install more sites. And so Q3, you will again see an increase in the installed base so that you have analyzed the numbers is exactly right.

Got it. And in terms of that pipeline of getting the -- from the sale to the install, I think that's 60 to 100 days you have referenced the - your work on. I know it's a lot of out of your hands, but trying to accelerate that.

Yes. And we are continuing to grow our teams in every key department. And I do think that over time, those numbers will continue to drop. But that has been sort of -- it used to be higher than that used to be kind of six months, but now it's indeed less. And I also think that as Tom described the momentum that we're building in -- at SRS, I think people are beginning to sort of see that, hey, this is the next thing. And that is automatically adding to a bit of a sense of urgency in multiple sites. So I do think that over time, that number will shrink far closer to 60 days than it is today.

And I think to your point on number of sites and so on, and Tom described that we're moving more towards a pipeline that is described in dollars. But I do sort of think that one of the early indicators that we are gaining confidence in our pipeline is the fact that Q2 from a number of purchase orders point of view in dollars was actually the best quarter we've ever had. And so I think that is a tangible data that sort of says, hey, this is this pipeline that we're not dollarizing is very real.

Absolutely. That's helpful. And maybe again on circling back on that pipeline question, and I understand wanting to present it in dollars versus necessarily units. Is there any way you can kind of quantify how that pipeline has expanded or grown from that initial number of units versus dollar amount? Any other color there?

Yes. We -- I don't have an exact number for you. But again, as you heard from Tom, at the SRS we have 160 leads. Q1 also in terms of new leads was -- I'm sorry, Q2 was also a very good quarter. So we are dollarizing. We are going to start qualifying and making sure that, that earlier pipeline that we just built is also added to this. But most certainly, this number is probably 30%, 40% higher than what we have been looking at before. We sort of feel like if you go and say 100 sites versus a dollar amount, we just think once you get beyond 100, it just becomes far less meaningful and a dollar number becomes more meaningful. That's the only reason for using the dollars.

Yes, definitely. That makes sense. And maybe lastly, on the team and the operations side of things. I think you mentioned in the press release that the operating costs actually went down relative -- I may or may not have that right. But as you had highlighted, bringing on new operations people, potentially expanding the team to help get these installations in faster and obviously dealing with the expanded pipeline. Kind of any comments on how you see operating costs scale in the next few quarters and obviously, kind of move in lockstep with revenue growth, but kind of how you see that expense side of the income statement growing in the next year?

Great question, Scott. There are several things about this. First of all, I do think that it does speak to the leverage ability of our product because good high dollar amount in revenue for the capital, very good dollar amount per patient on the utilization part and a good high margin. So I do think that it is important to recognize that we are not just looking to be a growth company at any cost. We actually think that as the revenues come in that we are going to be heading more and more towards profitable growth. And I think that's a very important part of our strategy.

The second thing is that your point is exactly right, is that we are adding resources as we go. We need to because, obviously, we are very, very careful with the expenses, but we need to. And I think that there will not always be complete sync in more people added and higher revenue in every quarter. So I agree with you that you will probably see a little bit of an up and down in a quarter here and there. But again, I think as we see in the utilization side at this stage, if you begin to look at it as a half yearly perspective, I think you will begin to see a trend as the cost -- the cost will grow as close as possible to the growth of the revenue for us.

So again, just to be clear, you're exactly right that there will be some up and down. But I think on a bigger time interval, you will begin to see a trend that will be on the growth and the potential profitability.

[Operator Instructions] Our next question comes -- our next question comes from the line of Kyle Bauser of Titan Partners.

Maybe on the sales guidance, are you assuming a certain amount of additional payer coverage policies this year? And then also, do you have kind of a total number of covered lives to date? I know it was up $18.3 million in this last quarter and up $8.5 million in Q1. Just wondering if you have kind of a total running number.

Yes. To answer your first question, the answer is yes. We are continuing to work with insurance companies on a routine basis, almost every day, we see that patients who apply for reimbursement even with insurance companies that don't have coverage policies and more and more are beginning to get reimbursed. So I think based upon that, we certainly expect that the number of covered lives will continue to increase. Mathieu, I don't have the full number off hand. Do you have the full number of the 18 plus what we reported in the first quarter?

Are you asking me in the first quarter in terms of covered lives?

Yeah.

I think it was in the $8.5 million.

So I think in whole numbers, we're close to $30 million, maybe $29 million or close to $30 million.

Okay. including Medicare as well?

But no, that does not include Medicare. Medicare is on top of that. Yes.

Yes. Got it. Okay. So just Medicare on top of the Q1 and Q2 numbers. That makes sense. Got it. Great. And then you've talked about extensively and during this call, how compelling the data out there is resonating with physicians, particularly with the CAPTAIN results earlier this year and showing TULSA's clear benefit over robotic RP across ED, continence and recovery.

But I guess on the patient side, in your assessment, be curious to understand how involved the patients are when it comes to defining the treatment path. I mean it just would seem like TULSA would be kind of a no-brainer here given the superior quality of life outcomes. So just any color around this would be helpful.

Yes. So let me just say a couple of things, and then Tom, if you could please chime in also. So to your first point regarding the CAPTAIN trial and the conversations that we're beginning to have with urology community, I think the most interesting part to me has been the dialogue around the concept of trifecta.

So what is trifecta? Trifecta is cancer outcome, erectile dysfunction and incontinence. And the reality is that in some ways, all three of these things are kind of connected. If you remove more prostate, you probably have a little better clinical outcome, but you have a higher likelihood of incontinence or erectile destruction. And I think the most interesting conversation that we're beginning to have with the urology community, and we find them to be very receptive to this way of thinking about it is that I think that what we're beginning to see that if you evaluate it on a trifecta basis, statistically, the population that is in the trifecta of the robotic surgery versus the population that is in the TULSA arm we think they are absolutely separate and there's more flexibility.

And I think talking to urologists in the language that they already use like this is one of the things that we find very, very satisfying. I'll turn it over to you from the perspective of the patient.

Thank you, Arun, and excellent question, Kyle. Thank you for asking it. I wanted to clean off of what we experienced in society of robotic surgery, Arun and Mathieu, which was arguably the most successful medical conference I've attended, whether that was at LifeCell Corporation, Novadaq Technologies or here Profound. And we not only had the opportunity, of course, to meet with the 4,000-plus physicians from around the world who are in attendance. But as Arun mentioned, we got to meet with the founders of the Society of Incisionless Surgery, which we plan to be a big part of at their inaugural meeting in February of 2025.

But there were also men that we spoke with who were courageous enough to confide that they were prostate cancer patients or survivors and to share with great vulnerability, the struggles that they've been through related to complications they've experienced from the treatments they've endured.

And I think we'd be remiss not to mention the mental health impact that men who get diagnosed with prostate cancer are subjected to, not only with the diagnosis, but the stress and the anxiety and the unknown of what treatment to select because it's the first time they've gone through it and hopefully the last time.

So part of what we have done here at Profound is we've launched a global patient advocacy group called Let's Huddle, and that's led by Leonard Wheeler, who is a prostate cancer survivor and a TULSA-PRO patient. And that group is not meant to promote TULSA-PRO. It's meant to promote awareness around men's health, in particular, prostate health and mental health. And so on a monthly basis, Leonard posts a group of men who can join from all over the world and provides open space for peer-to-peer conversation.

And what I can tell you from having the privilege to participate in that, the last go around in July, unfortunately missed today's session, which was here in August, this afternoon Eastern Time was that we had men on who were authors of books regarding facing prostate disease, men who have blogs with hundreds of thousands of followers, men who have consulting agencies that are literally built around educating other men how to take on their prostate disease journey.

So personally, I'm most excited about raising the awareness around men's health, both prostate health and mental health because they go hand in hand. And what really took place at SRS, in my opinion, is that the conversation that's being done behind a consulting room door inside of an office is now happening on the podium in the audience amongst the men and women providing prostate disease treatment. And we're forcing the dialogue the same way that women forced the dialogue around breast cancer diagnosis, treatment and reconstruction. Women were subjected to total mastectomies, radical mastectomies where they had their breast removed, they had their pec removed and all they were left with was a flat chest wall. Well, now when women go through a breast reconstruction depending on the stage of the cancer, the results of their reconstruction rival that of an augmentation for cosmetic reasons.

And I truly believe all of us on the phone that are men and caregivers of men, we need to start the rallying cry, whether it's Profound or the other folks that offer interventions for men's prostate disease that men should be aware, they should have access and they should be empowered to make the decision with their clinician based on their clinical presentation and what's important to them as it relates to quality of life, sexual function, urinary continence, penile length, mental health.

So I apologize for the emboldened response, but I truly believe we're at an inflection point here in men's health care, and we've got to get louder. So thank you for asking the question.

Got it. No, agreed and very helpful. And then maybe just one more question, if I may. We saw in the RP arm in the CAPTAIN trial that about 33% of patients had positive surgical margins. Any more specific timing estimate for later this year around when we'll see the TULSA procedure histology and imaging for the, I think, 12-month biopsy MRI results to kind of quantify surgical margins?

We are still in the process of collecting all the final data. We are in the -- we have a vast majority of the patient data in, but we're not all the way there yet. We are still very comfortable that sometime in Q4, we should be able to get the whole TULSA arm information out, 12-month data. I would still like to point out that in the TULSA arm, it's biopsy, which is the gold standard of how we're measuring and it's very detailed versus in the robotic arm, it is basically measuring positive margins, which is very much simpler and far less comprehensive.

And most of the patients who underwent the robotic arm underwent what they call nerve-sparing prostatectomy. And so again, coming to that point about the trifecta, you're seeing 35% positive margins. And you're actually seeing a little bit better than what you see in other studies on the erectile dysfunction. And so we do think that we're in a pretty good position with respect to the -- particularly the trifecta. But Kyle to give you the answer, I think most certainly, we're on track with getting the information out in Q4.

This concludes the question-and-answer session. I would now like to turn it back to Dr. Menawat for closing remarks.

Thank you so much, and thank you for -- all the analysts for their questions. Hopefully, we've answered them comprehensively for you. I look forward to similar dialogue in Q3. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good morning, everyone, and thank you for standing by. My name is Gill, and I will be your operator for today. At this time, I would like to welcome each and every one of you to the Profound Medical 2026 Annual General Meeting Conference Call.

[Operator Instructions]. I will now turn the call over to Dr. Arun Menawat, Chairman and CEO of Profound Medical, Inc. Please go ahead.

Thank you. Good morning, everyone. It's great to see everyone. I feel like I know everybody here. It is now 10:00 a.m., and I would like to ask that this meeting come to order. My name is Arun Menawat. I have the amazing honor of being the CEO of Profound Medical, and I will act as the Chair for today's meeting.

On behalf of Profound Medical, I'm pleased to welcome you to this meeting of shareholders. Before we proceed with the formal business of today's meeting, I would like to introduce the nominees of the Board of Directors of Profound Medical, who are present in person or via conference call today.

Brian Ellacott, Cynthia Lavoie, Murielle Lortie, Frank Baylis, Tom Wellner, Vafa Jamali and Arthur Rosenthal. Great to have most of you here. Some members of our management team are also present today, and I would like to introduce them as well.

Rashed Dewan, our CFO; Mathieu Burtnyk, our Company's President; and Tom Tamberrino, our Chief Commercial Officer. For those shareholders listening to this broadcast by way of webcast or conference call, you need not take any action during the formal part of today's meeting, and we wish to thank you for submitting your proxies in advance of today's meeting.

Your votes will be recorded as you have instructed. And again, you need not take any action during the formal part of the meeting. I'm pleased to advise that Profound Medical received proxies representing 70% of our outstanding shares. Shareholders listening to this broadcast will not be able to participate during the formal part of today's meeting.

However, you will be able to ask questions after the formal part concludes. That said, to facilitate the timing -- to facilitate the timely completion of the formal business, arrangements have been made with those management shareholders physically present today to move and second the resolutions to be considered.

I will call on such shareholders at the appropriate time. In accordance with the bylaws of Profound Medical, Rashed Dewan, Chief Financial Officer, will act as the Secretary for today's meeting, and I appoint Rosa Garofalo of the TSX Trust Company to act as the scrutineer.

The notice calling this meeting, the information circular and the form proxy were mailed to all registered shareholders on record as of April 2, 2026. The declaration of mailing is available for inspection by any shareholder, and I ask that the secretary file copies of each with the minutes of the meeting. I've been advised by the secretary that quorum has been met for the meeting.

The scrutineer's report is available for inspection by any shareholder, and I ask that the secretary file a copy of the report with the minutes of the meeting. With that said, I declare this meeting regularly called and properly constituted for the transaction of business today.

All votes today will be conducted by way of show of hands, except for the vote regarding the approval of the corporation's unallocated restricted share units and deferred share units, which will be conducted by way of ballot. I remind those shareholders listening to this broadcast, you need not take any action during the formal part of the meeting.

I will now proceed with the formal business of the meeting. The first item of business in the presentation of the 2025 -- sorry, the first item of business is the presentation of the 2025 audited financial statements of Profound Medical and the auditor's report thereon.

The financial statements are available on our website at SEDAR+. No action needs to be taken by shareholders with respect to such statements. The next item of business is appointment of auditors of Profound Medical. May I have a motion for such business, please?

Mr. Chair, I move that PricewaterhouseCoopers LLP be appointed as the auditor of Profound Medical to hold office until the close of the next annual meeting or until its successor is duly appointed at such remuneration as may be determined by the Board of Directors.

Thank you, Mr. Tinaz. Is there a seconder?

Mr. Chair, I second the motion.

Thank you, Ms. Stratton. Any discussion, please? All those in favor of this resolution, please signify by raising your hand. I declare this motion carried. The next item of business is the election of directors of Profound Medical. Profound Medical has nominated 8 directors for election and did not receive any other nominees for shareholders in accordance with our bylaws. Accordingly, Mr. Tinaz, would you please nominate Profound Medical's director nominations?

Mr. Chair, I nominate the following: Arun Menawat, Brian Ellacott, Cynthia Lavoie, Murielle Lortie, Frank Baylis, Tom Wellner, Vafa Jamali and Arthur Rosenthal.

Thank you, Mr. Tinaz. May I have a motion to elect those nominated?

Mr. Chair, I move that the corporation's director nominees be elected as directors of Profound Medical to hold office until the close of the next annual meeting or until their successors are elected or appointed.

Thank you, Mr. tinaz. Is there a seconder, please?

Mr. Chair, I second the motion.

Thank you, Mr. Stratton. I have been advised by the Secretary that based on the proxies received in advance of this meeting, each director nominee has received at least 85% of the total votes in favor of their election.

Accordingly, for purposes of today's meeting, we will forgo individual director voting and proceed with a vote on all director nominees. Is there any discussion, please? All those in favor of this resolution, please signify by raising your hand. Any contrary?

I declare this motion carried. The last item of business is the approval of all unallocated restricted share units and deferred share units under the corporation's long-term incentive plan. May I please have a motion for such business?

Mr. Chair, I move that the resolution on Page 9 of the information circular be approved, approving the unallocated restricted share units and deferred share units issuable pursuant to the company's long-term incentive plan.

Thank you. Is there a seconder, please?

Mr. Chair, I second the motion.

Thank you, Mr. Stratton. Is there any discussion, please? As stated, we will proceed to vote by ballot. The scrutineer will deliver ballots forms to all registered shareholders and proxy holders. Would all persons entitled to vote in their own right or by proxy, please identify themselves to the scrutineer. The motion is the approval of all unallocated restricted share units and deferred share units under the corporation's long-term incentive plan.

Please vote to make an x opposite for or against and complete your ballot. The scrutineer collect the ballots. The Secretary has received the scrutineer's report and has reported that the motion has been carried by the necessary majority of 63.988%. I declare the motion carried.

That now concludes the formal business of this meeting. I declare the formal part of the meeting terminated, and thank you all for the meeting. Last year, at the end of this formal meeting, we requested one of our physician users to present to you their perspective on the TULSA technology. This year, I would like to ask Tom Tamberrino, our Chief Commercial Officer, to present our patient perspective. What do we hear from the patient? Tom?

Thank you, Arun, and good morning, everyone, and thank you for joining us today. At the center of every conversation about innovation, growth, reimbursement and clinical adoption is one person who matters most, the patient. For men facing prostate disease, the journey is often filled with fear, uncertainty and difficult trade-offs.

They are not only asking, will this treatment work, they are also asking, will I still be myself afterward? Will I maintain my quality of life? Will I still be able to go to work, to exercise, to travel and to be present for my family.

Historically, many prostate treatments force patients to choose between effective disease management and preserving quality of life. That is precisely why TULSA-PRO matters. TULSA-PRO represents a different philosophy of care, one centered on precision, personalization and preservation. For patients, the experience is not just about treating tissue. It is about maintaining dignity, confidence and control over their future. Using real-time MRI guidance and predictable thermal ablation, physicians can tailor treatment to the individual anatomy and disease characteristics of the patient. That level of precision is meaningful because every millimeter matters when preserving urinary and functional outcomes. What we continue to hear from patients is powerful. They talk about returning to normal life faster.

They talk about having options, they talk about hope. And perhaps most importantly, they talk about feeling heard. That commitment to listening to patients is also reflected in our new Let's Huddle initiative, a growing community designed to encourage more open conversations around prostate health, early detection, treatment choices and quality of life after treatment.

Too many men still delay seeking care because of stigma, fear or lack of awareness. Let's Huddle is intended to change that by creating a place where patients, families, physicians and advocates can come together to share experiences, learn from one another and better understand the full range of treatment options available today. We encourage everyone to learn more at letshuddle.org. In today's health care environment, patients are increasingly informed and engaged in their treatment decisions. They want therapies that align not only with clinical outcomes, but with lifestyle outcomes.

TULSA-PRO is well positioned within that evolution of medicine. As we look ahead, our mission remains clear, to expand access, strengthen clinical evidence, support our physician partners and continue building awareness among patients seeking minimally invasive treatment alternatives. The opportunity before us is significant, but our purpose is even greater.

Every new TULSA program, every physician trained, every patient treated represents another individual who may avoid more invasive procedures and preserve quality of life in ways that truly matter. To our shareholders, thank you for your continued confidence and support. to our physicians and health care partners, thank you for advancing patient care through innovation.

And to the patients who place their trust in the TULSA-PRO technology, thank you for reminding us why this work is so important. We remain committed to delivering meaningful innovation that improves lives. Thank you.

Thank you, Tom. That's beautiful. Okay. If there are any questions among the audience, this is a good time. All right. If there are no other questions, this concludes today's meeting, and thank you for participation. Thank you all.

And that concludes today's call. Thank you all for joining. You may now all disconnect. Have a nice day ahead.

Good afternoon, ladies and gentlemen, and welcome to the Profound Medical Q1 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Thursday, May 7, 2026.

I would now like to turn the conference over to Stephen Kilmer, Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws in the United States and Canada. All forward-looking statements are based on Profound's current beliefs, assumptions and expectations and relate to, among other things, any expressed or implied statements or guidance regarding current or future financial performance and position and expectations regarding the efficacy of Profound's technology. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.

Representing the company today are Dr. Arun Menawat, Profound's Chief Executive Officer; Rashed Dewan, the company's Chief Financial Officer; Dr. Mathieu Burtnyk, Profound's President; and Tom Tamberrino, our Chief Commercial Officer.

With that said, I'll now turn the call over to Rashed.

Good afternoon, everyone, and welcome to our first quarter 2026 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company.

For those of you who are shareholders, we appreciate your continued interest and support. I will turn the call over to Mathieu in a moment to provide clinical updates. However, before I do, I would like to provide a brief summary of our first quarter 2026 financial results.

All of the numbers I will refer to have been rounded, so they are approximate. For the 3-month period ended March 31, 2026, the company recorded revenue of $5.3 million, with $2.5 million from recurring revenue and $2.9 million from onetime sale of capital equipment.

First quarter 2026 revenue was up 104% from $2.6 million for the same 3-month period a year ago. Gross margin in Q1 2026 was 72%, compared to 71% in Q1 2025. The increase in first quarter 2026 gross margin was primarily due to product mix, whereby more capital equipment was sold, which contains a higher margin.

Total operating expenses in the 2026 first quarter were $11.8 million, down 9% from $13 million in the first quarter of 2025. Overall, the company recorded a first quarter 2026 net loss of $7 million or $0.19 per common share, compared to a net loss of approximately $10.7 million or $0.36 per common share in the 3 months ended March 31, 2025.

As of March 31, 2026, Profound had cash of $50.3 million. As Arun will discuss later in the call, we believe that we continue to be on a path to profitable growth. In keeping with that, we expect our cash burn to decline and eventually turn cash flow positive as our revenue continue to grow and our margin remains high. We continue to expect full year 2026 gross margin to be 70% or better, as indicated before.

With that, I will now turn the call over to Mathieu for an update on the clinical and development activities.

Thank you, Rashed, and good afternoon. Just a few weeks ago, we were joined by Dr. Laurence Klotz, on a conference call to discuss the first clinical outcomes from the Level 1 post-market CAPTAIN trial, comparing the safety and efficacy of the TULSA procedure with robotic radical prostatectomy in men with localized prostate cancer. Rather than going over all that information again, I invite you to see our press release dated March 13 and listen to the associated conference call replay, which is available in the IR calendar posted to our website.

The CAPTAIN trial demonstrated that TULSA delivered statistically superior quality of life outcomes compared to radical prostatectomy, achieving its primary safety endpoint with statistically higher preservation of the composite endpoint of urinary continence and erectile function at 6 months. In addition, patients treated with TULSA experienced superior perioperative outcomes, including no blood loss, no overnight hospital stay, less pain and faster recovery, along with statistically significantly fewer serious complications and a faster return to normal activities and paid employment.

These positive outcomes from CAPTAIN sit on top of an already solid clinical foundation. TULSA is supported by more than 70 peer-reviewed publications and over 200 scientific conference presentations. Importantly, this body of evidence wasn't built in a single way or for a single use case. Rather, we've supported both sponsored and investigator-initiated trials to demonstrate that TULSA is not only effective but flexible and customizable across whole gland treatment, partial gland treatment, large prostates, salvage settings, combinations of cancer and BPH and patients with BPH alone. Our open international care registry captures the spectrum as any patient treated with TULSA regardless of disease state is eligible to be included.

The takeaway is clear. TULSA is not a niche solution. It's a platform that can be applied in many different ways while delivering consistent, predictable and durable outcomes. CAPTAIN completes the final foundational pillar of clinical evidence validating TULSA as a new platform for prostate disease management. From gold standard treatment effect data to TACT durable 5-year outcomes, CAPTAIN now positions us to demonstrate with statistical rigor, TULSA's superior quality of life profile while delivering whole gland treatment efficacy. As Arun will review next, TULSA is solving the debate between focal and whole gland treatment for prostate cancer.

I will now turn the call over to Arun.

Thank you, Mathieu, and good afternoon, everyone. While Tom is here to participate in the Q&A as usual, to help streamline things, I will personally cover the business section today.

As I discussed in our Q4 call, the dynamics in the prostate disease treatment space continues to change at a decent pace. Whole gland robotic prostatectomy or radiation therapy are the standard of care for treating prostate cancer today. And for BPH, mainstream treatment with transurethral resection of the prostate or TURP has largely been unchanged over the past 100 years.

It is our belief that today's standards have plateaued and that we can do better than the clinical outcomes of these standards. The initial CAPTAIN data that Mathieu just talked about is a clear example of the potential of our TULSA technology. As you know, many alternative technologies are competing to try to unseat today's standards. And while we believe it is great to see such innovation, it is also important to present to you how TULSA stands in its capabilities as compared to today's standards as well as multiple focal therapies.

I would like to share with you a few of the key unique aspects of the TULSA technology. We publish every quarter the types of patients that are being treated using the TULSA procedure. Starting this quarter, that information has been tabularized for easier review, comparison and follow-up.

The commercial data clearly shows that about 91% of TULSA patient prostates are treated either as whole gland or more than 50% of prostate ablations. The remaining 9% are focal therapy cases. We have been publishing this information for the last several quarters, but it is more relevant today than ever before. The point is that TULSA is the most versatile and flexible technology that empowers the urologists to personalize the treatment to fit each patient's situation. This turns the previous paradigm, with urologists having to match the right subset of patients that are the most suitable candidates for a particular treatment modality on its head. We believe that this is a major advantage to drive adoption of TULSA.

Another uniqueness of TULSA is what I described in the recent presentation at the Bloom Burton Conference, where I showed a picture of a leading urologist, Dr. Klotz, treating a patient comfortably leaving in his chair with a half-eaten apple in one hand and the TULSA computer mouse in the other. That, frankly, is the future of surgery. Based upon the feedback we are getting, the TULSA procedure is the least stressful procedure of any that a urologist performs today.

Another topic that has been discussed in more detail lately relates to the energy source that is deployed by the various alternatives. Since we capture the real-time tissue temperature using the MR, the TULSA technology is tuned to heat the tissue only to 57 degrees centigrade at which point the tissue dies instantly. This is, therefore, a minimal energy deployed for maximum impact.

Any other technology in comparison is either heating the tissue to the point of boiling or charring, which has its own side effects or cold cutting the tissue, in which case, the tissue DNA is not dead. The science correlates the TULSA technology to improve safety and clinical outcomes data of the TULSA procedure, based upon evaluation in over 70 publications on a variety of prostates.

We believe strongly in the 10% theory that says that we will achieve an inflection point as we convert at least 10% of the patient population. We are growing at a faster pace than the growth rate of prostate cancer. And accordingly, we're clearly advancing towards the 10%. And although we are not there yet, we believe it is only a matter of time.

As far as the comparison to alternatives, we believe that while each will find their own sweet spot in time, only TULSA has the true potential of becoming a mainstream treatment modality. One of the pillars of our growth strategy is to continue to demonstrate the flexibility and capability of TULSA. To demonstrate consistent progress of TULSA adoption, you will see 2 tables in our quarterly press releases.

The one I just mentioned in the variety of patients where TULSA treatment applies, which is a good indicator of total TAM, and the second one, a new TULSA index table, which will be a good indicator of the growth of same-store sales.

We have picked 20 sites to make up the index that has been using TULSA for at least a year and represent what we believe is the appropriate mix of different types of customers, including large hospitals, smaller hospitals and private practice users and which will likely be most reflective of the future installation mix. These are not necessarily the most active sites today. By showing you 5 running quarters, the idea is to show the rate of growth of same-store sales. We will also continue to publish the installed base, which we believe will function as an indicator of future utilization growth.

The next point that I would like to talk about is the use of the MR by TULSA as there is a bit of confusion about that. It is true that as we started commercialization, finding compatible MR available time, and convincing urology and radiology to work together to start a TULSA program has been a major hurdle to climb. However, today, TULSA is compatible with an installed base of about 4,000 MRs in the United States and more worldwide, and that number continues to grow. It is, therefore, a lot easier to find an MR and justify TULSA, particularly with the economic proposition as its facility fee is higher than that of any other treatment modality.

Our relationship with the MR companies also continues to expand as they see interventional MRs as a growth opportunity for them, too, and we are delighted to be working with these large companies as partners with aligned goals. As we have talked about in the past calls, MRs specifically designed for interventional procedures are now becoming commercially available. These MRs are significantly smaller, lighter and easier to use to the point that even an MR tech is not necessary to operate them. They are also less costly to acquire and maintain and can be placed just about anywhere, since they don't need the same shielding as large magnets.

The Siemens Free series, which is a prime example of such an MR is now available and COOK Medical is partnering with them to provide a turnkey iMRI solution to hospitals. We believe that TULSA is the natural king app for the interventional MR as it makes the economic justification of the iMRI suite very compelling.

At this point, we anticipate that if all goes well, TULSA will get FDA clearance for integration with the new interventional MR by year-end, and we believe that this will meaningfully contribute to our growth in 2027. Considering all of this, we believe our goal of achieving 200 TULSA sites performing an average of at least 50 cases per year to achieve profitability remains achievable, and we remain committed to this strategy.

Finally, we would like to invite you to come visit us at the upcoming American Urological Society meeting that starts on Friday, May 15, in Washington D.C. For the first time, there will be a real Siemens Free Series MR in our booth, and you will be able to see the future firsthand.

To summarize, Profound is pioneering iMRI procedures, which enable precise incision-free therapies that improve clinical confidence, procedure control and patient outcomes. By leveraging real-time MRI guidance, Profound's technologies are designed to replace uncertainty with clarity across treatment planning, delivery and confirmation. The TULSA-PRO installed base was 80 at the end of Q1 2026, and we shipped an additional 6 systems during the first quarter that have yet to be installed.

In prostate disease, we believe we're now crossing the chasm by transitioning TULSA from early adopter customers to the mainstream market by establishing the technology as a third distinct category that doesn't make surgeons or their patients choose between whole gland or focal therapies because TULSA can do both and anything in between.

As we said in today's press release, we are currently projecting total revenue for full year 2026 to be approximately $25 million, which represents 56% growth compared to last year, together with 2026 gross margin of 70% or higher. We continue to believe that we are on the path to profitable growth. This ends our prepared remarks for today.

With that, we're happy to take any questions you might have. Operator?

[Operator Instructions] Your first question comes from Ben Haynor with Lake Street Capital Markets.

First off for me, congrats on getting Humana to begin paying for this. Can you share maybe any color on that? Is it the CAPTAIN data that tipped them over? Is there anything specific that led to their coverage decision? And then where do you see kind of some of the other commercial payers in this whole progression?

Ben, thank you very much for the question. This is Tom Tamberrino. So first, thank you for recognizing the tremendous announcement specific to Humana, and there are several others that we were able to gain coverage with here in Q1 of 2026 via the efforts of our health economics and market access team led by Kelly Pertucci and Tracy Davis. They did a phenomenal job.

What I can tell you, Ben, is that it is the combination of all of the publications, now 70-plus that are allowing us to get an audience with the medical directors of private insurers here in the United States, and then leverage that data to have a discussion much like the positioning that Arun just stated as to where TULSA-PRO fits in, in the continuum of care for prostate disease. So it's not one specific thing, it's a compilation of all of the work that's been done over the years to put us in the position we are in today. And we're very excited as the rate that we're seeing is roughly 1.5x to 2.5x Medicare as it relates to private insurers, based on the geographically appropriated GPCI rates, which is in line with what most industry standards would be.

Excellent. Then I guess following up a little bit on that. Do the folks that haven't announced, I guess, formal coverage policies, are you still seeing the same sort of general coverage that you have been seeing really up until now?

So obviously, if we go back to January 1, 2025, when Medicare provided coverage for TULSA-PRO, and that has allowed us to begin to have these discussions with the medical directors of the private insurers here in the United States. In combination to that, which should be no surprise, we also have a patient access team led by Stephanie Slater, and we do hand-to-hand combat with the private insurers on a case-by-case basis.

We've been very successful winning approximately 80% of the cases that we're involved with. My understanding of industry standard is somewhere between 50% to 60%. Again, I think that speaks to the talent of Stephanie, but also the growing body of evidence that TULSA-PRO is another tool in the armamentarium of physicians to treat prostate disease in between where focal therapy ends and prostatectomy and radiation begins is really where our sweet spot is starting to take hold.

That's great. Lastly for me, just kind of housekeeping on the 6 shipments that were shipped but not installed. Are those -- do we expect those to hit revenue in the current quarter? Or was that something that would have been included in Q1 or half and half? How does that shape out?

Yes. Ben, on that particular point, we're trying to sort of be a bit more granular than we have been. And I just want to clarify exactly what we're doing. So the total number of systems that we sold is 8. So 8 systems were sold. 2 of them were installed. So we increased the installed base to 80. And then 6 of them were shipped, but they're not installed yet, right? And we do recognize revenue when we ship them, but we also realize that they won't be treating patients right away. And that's the reason why we made that distinction.

Your next question comes from Michael Freeman with Raymond James.

Congratulations on the quarter. I wonder if we could talk about the guidance, we appreciate that you did set formal guidance here. I wonder what the -- if you could describe what informed this outlook. I recognize that this seems conservative relative to Street expectations. I wonder if you could just give us a bit more color on how you came to this number.

Yes. Very, very happy to talk about this. So first of all, we are very bullish on our business. And in fact, we've never been more bullish. And Tom can describe more about the pipeline as well. But to me, it is now about discipline. And we're putting a stake in the ground for the first time as proper guidance, right? We have provided targets before, but this is the first time we're putting a proper number at the table.

We will continue to work hard as we always do. And if we can drive it faster, we absolutely will. And if that happens, we will most certainly come back and hopefully increase the provided guidance. But I think, as I said, it really is the business is gelling and we feel that we need to provide appropriate discipline and that this -- so look at this as more of a starting point, and we will adjust as we go.

Well, my next question was going to be on the status of the pipeline. So I would appreciate some commentary on your funnel.

Yes. Tom can absolutely describe that.

My pleasure. Thank you. And Michael, thank you for the question. So happy to report that our pipeline remains strong. It's north of triple digits across our verify, negotiate and contracting stages of our sales process. And these pipeline accounts are representative of similar attributes to our Index 20 that we've shared here today, and we'll continue to share in the quarters that follow.

Maybe the last one. I wonder if you could dig into the index a little bit. Maybe describe -- I see that you provide averages of the index for utilization. How would you describe maybe the range on annualized procedures that we see in the index? And how do you plan to maintain this index? And will it be a rebalancing should there be outliers in the future? Any commentary would be helpful.

Sure. So again, we are -- things are cloudy. So we are trying to become as transparent as possible. This is our first shot at it. So let me -- I provide a little bit more context. So what we really did was we said, okay, what are the -- when the company matures and we have a bigger installed base, what are the types of hospitals, large, small, private practice and so on, what would that mix look like? And then we sort of looked at the current installed base, and we segregated the sites that had 1-year experience.

So the 20 sites that we have picked are really designed to reflect what we think the future installed base will look like. So if we can demonstrate that the same-store sales in these 20s are increasing quarter-over-quarter, and what we will do is we'll provide this rolling 5 quarters, so you will be able to see the change over -- basically the trend. And then as time goes on, we will go from an index of 20 to index of 30 to 50, to hopefully 200. So that's the idea. This is what we've just started, and it will allow you to sort of see that progress and hopefully, it will mirror the future. Is that helpful?

[Operator Instructions] Your next question comes from Scott McAuley with Paradigm Capital.

I just wanted to check in on the kind of capital sale model, whether or not -- I know you've spoken in the past that, that's kind of the preferred model going forward. Is that still the case you're finding your potential customers interested in acquiring the capital versus more placement or lease model for the system?

Scott, thank you very much for the question. This is Tom answering. So our capital model is very much in line with what I believe the industry standard from my experience is that roughly $100 of capital equals $10 of service, equals $1 of consumables. So when we're speaking with hospital administrators, C-suite, CFO specifically, they totally get the way that we have the capital model situated, and that has been the large majority of the systems that we sold in Q1.

We did sell 8 systems, as Arun mentioned, 2 were installed and 6 were shipped that were not installed. Out of those, only one was on the placement model that we spoke about with the bulk purchase. I believe we spoke about it in either Q3 or Q4's earnings call from 2025, and that represents roughly 10% of the recurring revenue for the quarter of Q1.

That's great. I know now you're talking about the guidance, the $25 million in revenue. I know in the past, there have been reference to a target of approximately 120 installations, I believe, for the end of 2026. Is that 120 still representative of the target, and it help informs that $25 million revenue guidance for this year?

Yes. So Scott, there is no change of any sort. We are still shooting for that $120 million. We -- as I said before, we are working hard to be much more disciplined and start to provide quantifiable information in every place we can. And so there's no change in our pipeline. There's no change in our target installed. There's no change in the potential of our company. If anything, as I said, we remain really, really bullish. The number that I provided is just a stake in the ground that we've put in, so that we can anchor it some place and adjust as we go. So hopefully, that addresses your key question.

Yes. Lastly, circling back to the reimbursement. Again, great to see the private payers starting to come in. Any comments on the reimbursement rate that you're getting, if you're happy with that, kind of relative to what Medicare is paying? And if you see kind of the Humana rate as the target going forward as other private payers come online?

Yes. So Scott, as Tom mentioned already, what we are seeing is generally between 1.5 and 2.5 of what Medicare is paying. We are very happy with that range. The typical range is from -- again, from benchmark that we see is closer to 1.5, but we're pretty happy to see that in our case, some of them are actually even paying more than 2.5. So I think over the long haul, that range is a pretty good place to model.

Just to provide a little more color on this, Humana is one of the top 5 payers. And so the way this process works, to some extent, as Tom already described, you're working hard to make sure any patient who has been rejected that the appeal process goes on, and we see an 80% success rate in reversing those decisions. And now we have the first major payer that has put the coverage decision.

So overall, frankly, we are bullish about other insurance companies that will now start to follow suit from this as well. So I think, generally speaking, it's the hardest to get the first big one. And I think Tom and his team did a great job to get there. And I do think that other insurance companies will follow.

That's great. And if I may squeeze in one last one, I apologize. Just in terms of the guidelines. So I know being included in AUA or other society guidelines is an important driver. I believe there have been some commentary around that being a kind of late '26, early '27 kind of goal or at least seeing momentum there. Any update on that process?

Yes. Thank you for the question. This is Mathieu speaking. So on the guideline front, it's a continuous process, and we described in one of our previous calls that the TULSA procedure is now being named in the NCCN guidelines, which is probably the premier set of guidelines in the space. And so that's already a step in the right direction where TULSA is being named by hand. They're recognizing the value of the TULSA procedure under clinical trial or registry.

We do have an international care registry where we invite all of our friends to participate in. So we do see a lot of positive momentum from that. Together with, as Tom and Arun were describing on the Humana side, it does relate to the totality of evidence. It's not just CAPTAIN, it's a totality of evidence. And with the 70 peer-reviewed publications, when insurance companies come to the table and do their literature searches, they do see that those publications come up and help them with their decision-making.

So with Humana coming in, we do expect to see other insurance companies coming in based off of that. And as we continue to publish CAPTAIN data, we do anticipate that whether it's the NCCN guidelines, the AUA guidelines, the EU guidelines, they'll start to also recognize TULSA by name and then start to recognize -- start to recommend it for certain population subsets. And over time, we'll anticipate that to grow into larger population subsets as well. So I'm not sure if that answers your question, but that's where we sort of see the progression of the guidelines.

There are no further questions at this time. I will now turn the call over to Dr. Menawat for closing remarks. Please continue.

Thank you. And again, for those of you who can visit us at the American Urological Association Meeting in Washington next week, please do join us, and we will have demos. We'll have the Siemens MR in the booth. We'll be describing how all of this will work together in an integrated fashion. Thank you again, and look forward to seeing you soon.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, everyone. I'm delighted that you have joined us today. Friday, March 13, is a wonderful day. As you know, TULSA is a treatment modality for prostate disease. And although it is a device, it is important to develop the clinical data to demonstrate the clinical value of the technology for adoption. So while we are a medical device company, we behave more like a biotech company in that regard. And we invested about $20 million to sponsor the most comprehensive Level 1 trial that has ever been done in the prostate cancer space. The results of the trial are beginning to be published and will read out for the next 10 years. Today, I'm delighted that Dr. Klotz is with us to present the first six months of the outcomes data.

Before I turn it over to him, here's our standard forward-looking statement.

Dr. Klotz, one of the most renowned urologists in the world, take it away, please.

Thanks, Arun. Give me just a moment. Let's see now advance screen. Okay. Thanks. Good morning, everyone. I'm here in London, the U.K. at the Annual Meeting of the European Urology Association. This is now the largest annual urology meeting in the world, I think about 15,000 attendees. And I just actually presented this data this afternoon in the late-breaking abstract session, which is a very high-profile session. So it's definitely the importance and uniqueness of this trial has been recognized now quite widely. The need for change.

The TULSA is directed at patients with intermediate-risk prostate cancer. That's also called grade group 2 to 3 out of 5. This is very common, probably about half of newly diagnosed patients fall into this group. And there is an unmet need for a treatment for these patients that is oncologically effective at eradicating the cancer, but also preserves quality of life. And existing definitive therapies, primarily surgery and radiation, both carry with them significant risks. And for patients with higher-grade cancer, those risks are worthwhile. But intermediate risk patients tend to have a fairly slow-growing disease. untreated, many of these patients are not destined to die of the disease. So there is a very significant unmet need for an effective treatment that will reduce the risk of metastasis and not interfere with voiding with continence, with erectile function.

The unique thing about TULSA is the precision and the precision is a function of MR thermometry. MR can provide a real-time thermal map of tissue. In a normal person, that would be very uninteresting because everything would be 37.5 degrees Celsius. But if you're using thermal energy to treat tissue with the goal of eradicating cancer or inducing reduction in volume of the tissue, the temperature that you achieve becomes critically important. And existing ablation methods of which there are several that are trying to achieve the same goal of quality of life preservation and effective treatment of the cancer lack the precision that characterizes TULSA. If it's a treatment called HIFU, it's very relatively inaccurate. And the result is that you have to deliver a lot more energy than is actually required and that results in further side effects.

We live in the era of evidence-based medicine. We have very good Phase II data, noncomparative data for the both effectiveness and safety of TULSA called the TACT trial. I'll show a little bit of data about that. But to change practice, you really need comparative randomized trials to make new technologies part of the standard of care. And this, I think, audacious trial, the CAPTAIN trial, which I'm going to show you in a moment, is an attempt to do that. There's been many, many people have tried to do randomized trials comparing radical prostatectomy, which is quite a major operation to a less invasive treatment. And almost always, these trials have failed because patients were just unwilling to undergo that kind of randomization. So this trial, which now has accrued successfully is a really a major historic achievement, I would say.

So this is just a brief summary of TULSA. I'm not going to go into detail, but it's -- the full name is MRI-guided transurethral ultrasound ablation of the prostate. It's ultrasound energy that is converted to heat in tissue. The device goes into the urethra. It's the size of a typical male sound that urologists use all the time, goes quite easily. And it has these 10 5-millimeter transducers along the more distal part of it that sits in the prostate. Each one of these is individually controlled. corresponds to a 5-millimeter MRI slice. And previous studies, including animal studies, treat and resect studies where we treated the patient with TULSA and then went to the operating room and took out the prostate showed that this -- that the precision of this technology is within about 1 to 1.3 millimeters. It's safe. Unlike HIFU, for example, no energy is going through the rectum, and therefore, the rectum is not at risk of injury, which can be a real potential problem.

Some of the other features are thermal boost, which allows you to drive the heating a little bit beyond the normal boundary, which is about 3 centimeters from the urethra, the radius of that distance there, contouring assistance, which incorporates artificial intelligence to enhance the accuracy and the speed and efficiency of outlining the target. So that's essentially the background.

Just a minute or two about the journey to get here. This goes back almost 20 years, beginning with in-silico and gels and then a several year period of experiments, mainly canine models, dogs, where the treatment was administered to the dog and then the prostate removed. And this essentially showed, as I mentioned, correlation between the area that was targeted and the area that actually was treated of 1.3 millimeters, which is pretty remarkable. And then this led to treat and resect studies in humans, same idea. This was done by me, where we administered TULSA. In those days, it took around five hours on average. It's much more -- much quicker now and then took the patient up to the operating room and remove the prostate. The first few cases, frankly, I wasn't sure if this was going to be like resecting Jell-O, what was the consistency of the prostate going to be, but it had cooled off and it was fairly normal type of operation from my perspective. And it again showed this accuracy.

So this led to this large-scale trial called the TACT trial, 115 patients, the so-called pivotal registration trial. And what this showed, first of all, the safety that the patients had almost no rate of incontinence that was durable, that erectile function recovered to around 90% of baseline by six months after the procedure and that the procedure was effective. So 80% of patients at five years had their disease controlled by TULSA alone.

And I should also emphasize that this was early days. So there was a real learning curve phenomenon, not only in terms of the individual sites becoming more comfortable with the technology, but even more so, all practitioners learning from that experience which patients did not do well with TULSA. So we're much better now at patient selection, and I'll go into some details about that in a moment. So this was tremendously encouraging, an effective therapy preserves quality of life. 80% success is very comparable to just about every other treatment, including radiation and surgery in terms of the likelihood of patients requiring subsequent therapy. Five years with prostate cancer is too soon to see mortality endpoints. It takes longer than that for localized disease to become lethal. So disease control is really how one evaluates effectiveness. So, again, this is a presentation from the EAU, which was just given by me about 1.5 hours ago. I'm on an advisory board, a consultant received research funding from Profound, but I have no equity in the company.

So this graphic kind of shows the 10 slices, the patient in the MR core under general anesthesia, the urethral applicator, which is a relatively small rigid device that any urologist can put easily into the urethra with the 10 5-millimeter slices sitting along the prostate. So the maximum length is 5 centimeters. That is greater than the length of about 97% of patients' prostates. And as I mentioned, you can treat out to a little over 3 centimeters from the urethra, which also encompasses all but the very largest prostates, and there are ways to drive the energy out even further.

So here's the trial design. Pardon me. This was 211 patients that were randomized 2:1 to TULSA versus radical prostatectomy. In other words, of every three patients, two got TULSA, got surgery. There were several reasons for this 2:1 randomization, but the main one was to make the trial more appealing to patients. This was primarily offered to patients who were heading towards surgery. And when you give them an option of a nonsurgical treatment, they grasp at it like a drowning man grasping at a straw. Patients are not eager to have radical prostatectomy these days. Why that is, is another story.

But I will just say that it was quite rapid accrual and a very low proportion of patients who actually got randomized to surgery and then bailed out. That was a concern. In fact, it was quite a small number. There were almost no patients randomized to TULSA who elected to cross over and have surgery. The eligibility criteria, as I mentioned, was intermediate risk, so-called grade 2 or 3, PSA less than 20 -- sorry. They had to be good TULSA candidates. The main exclusion criteria were if the distance to the lateral aspect of the cancer was more than 3 centimeters or if they had a large calcification. Calcifications scatter the ultrasound energy. You can't get good heating beyond that point. And so if there's a cancer there, that's a that's potentially a deal breaker.

There were two co-primary endpoints, safety and the oncologic endpoint. The safety endpoint is going to be assessed at one year. So the data I'm presenting here is earlier than that. And the oncologic endpoint is going to be assessed formally at three years, and these are kind of typical oncology endpoints, PSA, MRI findings, biopsy, everyone in the TULSA arm got biopsy, obviously, once the prostate is taken out, usually, there's nothing to biopsy and the need for secondary treatment, and there's a whole slew of other secondary outcomes.

So the data, and this was a major undertaking, there were 15 sites from four different countries, 22 investigators. Most of these investigators are well-known names in the prostate cancer field. And also importantly, these are sites with acknowledged expertise in radical prostatectomy. So, and in fact, we have a number of metrics showing that the quality of the radical prostatectomy was very high.

Randomization is done to reduce bias and imbalance due to known and unknown confounders and that, in fact, worked very well in this study. So you can see these are risk factors that if there was an imbalance could influence the outcome, and there was no imbalance in any of them, PSA, prostate volume, whether they were grade 2 or 3, the clinical T stage. This has to do with whether there's a palpable lesion or not and baseline erectile function and continence, essentially no significant difference in any of them.

And this is an example of one of these cases. So you see here, this is subtotal ablation, treating about 75% of the prostate. It was a posterior lesion at the back part of the prostate, you can see that the right side anteriorly is not being treated. That, in fact, is a place where prostate cancer is normally not identified. And in the absence of any imaging or biopsy showing a lesion there, it's considered quite safe to leave that. But since this was being compared to radical prostatectomy, which is whole gland, most of the patients, about 2/3 got the whole prostate treated, about 1/3 was this type of sub-total-ablation. And the surgery, almost all patients had a nerve-sparing operation, completely appropriate. You're looking at preservation of erectile function and about 3/4 had a pelvic lymph node dissection done concurrently. So again, this is consistent with the standard of care.

What you see here in these three sets of images are the initial targeting that's done now with artificial intelligence assistance makes it a lot quicker and more accurate. The actual treatment. And then the bottom is the post-treatment contrast study and all you're seeing basically where the prostate was is a big black area. There's no perfusion at all. It's been destroyed.

So here are the results. This is first perioperative result. You can see, not surprising, essentially no blood loss with TULSA. You're putting this applicator in through a normal orifice. It doesn't bleed. On average, with the surgery, only 150 ccs of blood loss. That's extremely good as an average and suggests that it's a quality assurance measure that the guys doing this operation knew what they were doing. Length of stay, TULSA is an outpatient procedure. One or two patients stayed overnight. But by and large, they go home the same day. With surgery, again, quite favorable average 1.1 days in hospital, but -- which is pretty good, but still longer than with TULSA. And over on the right, you see the pain score. And again, no surprise, the patients have very little pain after TULSA. My experience is patients wake up afterwards and say, when are you starting the procedure? They're not even aware they had it. With surgery for a week or 10 days, you get fair a bit of pain. So this is a modest but real advantage of TULSA that there's considerably less pain in the first 1.5 weeks or so.

This is overall health out to day 30. So this is basically asking the patient how are and trying to rate it on a visual scale. And no surprise, surgery, even robotic surgery causes a decrease in overall health, which lasts -- gradually improves out to about a month, sometimes longer. It's interesting with TULSA that there's a slight drop. But by about three weeks afterwards, the patient's quality of life actually was above baseline. And I think the best explanation is relief that they were diagnosed with cancer. Now it's gone that improves their overall -- their sense of their overall health. But it certainly returned to baseline quicker than with surgery and even at a higher level.

Now we're getting down to really some of the nuts and bolts of this, days off work. The average was 10 with TULSA. It was 19, almost twice as long with surgery with a much greater intra-quartile range, some patients off as long as six weeks. Again, this is consistent with clinical practice. About 6% of patients had to be rehospitalized after surgery. There was only a single patient hospitalized after TULSA. I believe it was a urinary tract infection. Patient made a rapid recovery. And a couple of patients after surgery got really sick and required ICU admission, none of them after TULSA. So fewer admissions to hospital, fewer serious complications, less time off work.

And this, I would say, is the most important data from the trial that we have so far. This is recovery of continence. So around 80% are continent by six months afterwards. We expect that's going to improve further. The data from the earlier TACT trial was about 90-plus percent by a year with radical prostatectomy still at half of patients roughly with incontinence at six months. And this is consistent with patient-reported outcomes from other radical prostatectomy trials. There's controversy in the field about how common incontinence is after surgery. I think most surgeons who are honest about this acknowledge that a relatively high proportion of patients have persistent and prolonged incontinence, mild in most cases, but still it's there. As far as erectile function, again, more rapid recovery with TULSA than surgery. And this is the composite endpoint, the likelihood that the patient has both continence and erectile function, and it was twice as high with TULSA compared to surgery at six months.

This will evolve. It's going to look probably better by a year, but still TULSA certainly outperformed surgery in terms of recovery -- functional recovery at six months. This is the only actual oncologic or cancer-related outcome we have at this point, which is the surgical pathology. And you can see that about 1/3 of patients had extra capsular extension. pT3a means microscopic extension. pT3b means gross extensive resection outside the capsule through or outside the capsule. And more importantly, 1/3 of the patients had positive surgical margins. Now that is consistent with other results for a patient cohort like this intermediate risk. It's certainly not low. It does have significance in terms of the likelihood of PSA recurrence. Not all these patients are going to recur. Some patients with negative margins can have a PSA recurrence. So time will tell. Again, we're going to have that -- some of that data in another six months. But I think it's partly a quality assurance issue that these results are consistent with many other series of radical prostatectomies.

So that's the data. This is a historic trial. It's really the first time that you had a large-scale multicenter trial comparing surgery to an energy-based intervention that accrued successfully. Contamination rate, meaning the number of patients who switched treatments from what they were allocated to was quite small. in the range of what was anticipated. At this point, TULSA outperformed surgery in terms of safety and functional recovery. And all these secondary endpoints, blood loss, length of stay, return to work, et cetera, TULSA looked better. Now of course, the $64,000 question is cancer efficacy. We don't have that yet. It's coming. We'll have the first signal in about six months, which will be the PSA recurrence rate after surgery and the biopsy results. All patients in the TULSA arm had a mandated MRI and biopsy at one year. So that data will be of huge interest. Stay tuned. Thank you very much. I'll stop here. There we go.

Okay. Thank you, Dr. Klotz, for that impactful presentation and for walking us through the CAPTAIN six-month outcomes.

What I'd like to do now is step back for a few minutes and place CAPTAIN in the context of the total body of evidence supporting TULSA and explain how this positions us for continued progress towards inclusion in prostate cancer professional society guidelines.

While Dr. Klotz focused on the CAPTAIN results, those outcomes sit on top of a solid clinical foundation. To date, TULSA is supported by more than 70 peer-reviewed publications and over 200 scientific conference presentations. This evidence spans the full clinical spectrum from gold standard treatment resect studies that establish precision through to the TACT FDA registration trial and into extensive real-world experience across multiple disease states and treatment strategies.

Importantly, this body of evidence wasn't built in a single way or for a single use case. We've supported both sponsored and investigator-initiated trials to demonstrate that TULSA is not only effective but flexible and customizable across whole gland treatment, partial gland treatment, large prostates, salvage settings, combinations of cancer and BPH and patients with BPH alone. Our open international care registry captures this spectrum as any patient treated with TULSA regardless of disease state is eligible to be included. The takeaway is simple. TULSA isn't a niche solution. It's a platform that can be applied in many different ways while delivering consistent, predictable and durable outcomes.

One of the most important things the community looks for is consistency, and that's exactly what we see here, consistency across multiple studies, which supports predictable and durable outcomes. The graphs on the left show long-term functional recovery from the TACT FDA registration study tracked out to five years. The graph on the top left is preservation of urinary incontinence and the graph on the bottom left is preservation of erectile function. At six months, pad-free urinary incontinence was 86% and erectile function sufficient for penetration was 56%. What's important is what happens next. Both measures continue to improve beyond six months and remain durable over time, with continence rising to about 92% to 97% and erectile function continuing to recovery through 12 months and beyond to 76% to 87%.

On the right, I'm showing the same graph Dr. Klotz presented with the 6-month CAPTAIN outcomes, TULSA in dark blue and robotic prostatectomy in orange. What I've added is the light blue, and that's the corresponding six-month data from the TACT study. You can see visually how well the TULSA data sets from CAPTAIN match those from TACT at the same time point. The message here isn't about a single number. It's about predictability. When outcomes repeat across independent studies, different sites and different patient populations, not only does that speak to the technology itself, but that also gives us confidence that what we're seeing in CAPTAIN will continue to track positively over time.

These favorable outcomes are not accidental. They're a direct result of how TULSA works. As Dr. Klotz described with the various sets of images, here, we're showing a representative case of whole gland ablation of a patient with intermediate risk bilateral prostate cancer with a prostate volume of 44 ccs ablated completely in 38 minutes. The top row images shows what the surgeon sees during treatment planning. Using high-resolution in-bore MRI, the prostate is defined precisely. And today, AI-based contouring, which was demonstrated to be equivalent to those from expert radiologists automatically appears on the screen and helps the surgeon makes faster planning, more consistent and highly accurate.

Also of note is the fact that these treatment plans are based on live inboard MRI, meaning that surgeons are not using old diagnostic MR images that they have to register to a live ultrasound image. Anecdotally, we are hearing from our users that in about 30% of cases, they are defining a different treatment plan than they would have if using older MRI registered to ultrasound. That means that the live inboard image is showing cancer extent more precisely and confidently than older images layered with nontrivial registration errors.

During treatment, the surgeon sees live MRI thermometry shown in the second row of images. This is critical. It allows closed-loop real-time control of the ultrasound energy, heating tissue pixel by pixel and degree by degree, while allowing the surgeon to visualize exactly what is being treated and what is being spared.

Here, we see gentle ablation to 57 degrees Celsius, which kills the tissue but doesn't boil or chart it. TULSA achieves this treatment effect using less energy than other ablated devices, which is a key factor in why TULSA patients recover quickly and experience such a positive perioperative result and functional integrity. Then immediately after treatment, the bottom row of images shows contrast enhanced MRI, which confirms the non-enhancing nonviable dead tissue. That confirmation step gives surgeons confidence that the intended treatment was delivered exactly as planned. This combination of precision, flexibility and real-time feedback is what underpins the quality and durability of TULSA outcomes.

TULSA surgeons -- TULSA gives surgeons an extraordinary level of flexibility. They can design truly customized treatments based on individual anatomy and pathology, whether that means preserving urinary continence, erectile function or even so precisely that they can carve out the ejaculatory ducts, all the while still fully treating the cancer. In the real world, surgeons can use this flexibility, which is not always the case in more strict clinical trial settings. This level of customization applies across prostate sizes and disease indications from focal lesions to bilateral disease and to very large prostate glands. TULSA allows surgeons to tailor treatment in ways that simply aren't possible with other modalities. This provides TULSA a large addressable market and provides surgeons a tool they can use efficiently across their practice.

One finding from the TACT study surprised even us. At 12 months, an independent central radiology lab measured a 92% reduction in prostate volume following TULSA. That tells us two important things. First, it demonstrates durability. If the prostate tissue is gone, there's nothing left to harbor cancer or support regrowth. Second, we ended up measuring that this degree of volume reduction translates into meaningful symptom relief for men with lower urinary tract symptoms or lots due to BPH. I'll leave that thread intentionally open because Arun will speak next about how we started in cancer and are now expanding into the BPH space.

This slide summarizes how we built the TULSA evidence base deliberately and correctly to support adoption and guideline inclusion. We started with treat resect studies, which are foundational gold standard science. They prove beyond doubt the precision of the technology.

Next came TACT, a Level 2b pivotal trial used for FDA clearance, providing durable 5-year safety, quality of life and oncologic control data. In prostate cancer, five-year durability is essential to be taken seriously. We then added real-world studies, also Level 2b, which show how TULSA performs in everyday clinical practice with customized treatment plans. These studies best reflect the outcomes patients can realistically expect. For example, some of our real-world studies demonstrate 100% preservation of urinary incontinence and 84% preservation of erectile function. We followed that with high-quality systematic reviews, Level 2a evidence, which supported our achievement of CPT Category I codes that took effect in 2025.

Now with CAPTAIN, we have Level 1 evidence. This is critically important because CAPTAIN enables direct head-to-head comparative analysis. That allows definitive conclusions, the kind required for recommendation statements and professional society and clinical practice guidelines. One important distinction, absolute patient outcomes are best understood through real-world data, while CAPTAIN validates comparative performance. Together, they complete the picture.

This is my last slide, but I wanted to take a couple of minutes to explain what the CAPTAIN data release really means, especially in the context of clinical guidelines and why this is best understood as a process rather than a binary outcome. There's often an assumption that a Level 1 trial either gets you into guidelines or it doesn't. That's not how professional society guidelines actually work. Organizations like NCCN, AUA and EAU are deliberately conservative. They move based on the totality of evidence that builds over time, not on any single study. In practice, new technologies tend to follow a predictable path. They start out as experimental, then the modality is recognized conceptually but not named. Over time, the technology is explicitly mentioned often with restrictions like use in a clinical trial or registry. From there, it becomes recommended for a defined subset of patients and eventually reaches full guideline inclusion. That's how innovation gets absorbed into clinical practice.

You can see this clearly with TULSA in the NCCN prostate cancer guidelines. For years, NCCN discussed ablation without naming specific technologies. In the 2025 update, TULSA was mentioned by name for the first time, and the guidelines clearly distinguish focal and whole gland prostate ablation. That's a meaningful step forward. At the same time, it's still classified as experimental with the recommendation that treatment be done under a clinical trial or registry. That aligns directly with how we operate today through our international CARE registry. Care isn't just about data collection. It's structured to fit within current guideline language. Because of that, we've already seen insurance companies approve coverage when patients are treated under care. So guidelines are not blocking access, they're evolving alongside the evidence.

This is where CAPTAIN matters. CAPTAIN is a Level 1 trial that materially strengthens the evidence across safety, oncologic outcomes, functional results and consistency. It doesn't flip a switch overnight, but it moves TULSA along the guideline continuum towards defined recommendations for appropriate patient subsets. The key point is that this no longer is about whether TULSA belongs in guidelines. The modality is recognized, the technology is named, registry-based use is guideline consistent, payers are engaging. From here, it's a matter of time and evidence maturation. And this matters commercially because our biggest challenge today is awareness. Many patients are never told that TULSA exists as an option. Once the therapy is embedded in guidelines, physicians are obligated to present it as an option, whether or not their hospital even offers it. That change fundamentally alters awareness and adoption.

So, CAPTAIN isn't the beginning or the end of the story. It's a critical inflection point and a well-understood guideline evolution, and we're moving along that path with momentum.

With that context, I'll now hand it over to Arun Menawat, our CEO, to discuss what this growing body of evidence, including the CAPTAIN results, means for our business and future growth.

Thank you, Mathieu. All good. So the #1 thing that we hear from patients is that TULSA was never actually offered as an option to them. And as Mathieu mentioned, that once the -- once this clinical data is published and with all the oncological outcomes as well, that it will become effectively based upon guidance from the hospitals themselves, that will become nearly a requirement to be able to present this as an option TULSA as an option. And so we're pretty excited that this is being presented, having difficulty with the screen here, give me second. And so one -- so that's the first thing that I think, as Mathieu has already talked about.

The second thing is that when we talk to physicians, the #1 thing that they talk about is that they are looking for a modality that can be used in a wide variety of patients. And I think that based upon the data that Dr. Klotz presented and the data that Mathieu presented, I think TULSA is one of those modalities that allows us to be able to create what we call TULSA days, and this allows the flexibility in scheduling the patients as we go forward as well. And the idea being that they can schedule a full day of TULSA patients. They're able to provide -- use it on a whole gland treatment. They can use it on a focal gland treatment. They can also use now in patients who have symptoms of BPH because we have just introduced a new software, which is also AI-based that allows the same technology to be able to provide partial ablations that are targeted for the -- what causes the BPH to be able to treat in a competitive time frame. And that's the most important thing. It can treat in the most competitive time frame. And so the idea is that technologies get adopted that are used in a wide variety, but also have the phenomenal clinical evidence that we have developed.

And the last thing that I wanted to mention is that in the last analyst call, I explicitly talked about the value that MRI brings to TULSA. And as Dr. Klotz mentioned, it's about the precision, it's about the ability to visualize all the vital organs anatomy to be able to avoid killing the parts that need to keep and the parts that have cancer is generally visible and are able to incorporate that sections. So, so far, we've been using MRs in existing hospitals with existing MRs. And that is coming along. But over time, over the last few years, in parallel, MR companies have also recognized the future of MR in the interventional space. And as a result, as you already know that we have talked about, Siemens already has an MR, an interventional MR that is now beginning to get marketed for interventional purposes only. And so to us, this is about the future of surgery. It is MR image-guided. It is TULSA-type technologies for a variety of disease. And the first showcase of this new future of surgery will be presented at the Society of Interventional Radiology, happens to be in Toronto this year. starts on April 11. The exhibits are from April 11 to April 15. So for those of you who are interested, we -- I invite you to really come visit the conference at the booth, and you will hopefully be able to see the future of surgery.

So with that, I would -- these are all the prepared remarks. I would invite you to -- if you have any questions to raise your digital hands. Steve Kilmer will be able to see your hands and write your comments, and he will be able to then ask the questions and the whole senior team is here, and we're very happy to address your questions.

Arun, there's a few questions in the chat, which I can address.

Yes, Dr. Klotz, I'm just going to read those out loud and we get to those, and then you can address them if that's okay. Because the rest of the group can -- the participants can't see those questions, only we.

Yes, okay.

Thank you. The first question is actually coming from Michael Freeman, an analyst for Raymond James.

Do you want me to read it?

No, Michael, it's your line should be open.

Can you hear me?

We can.

Okay. Well, first of all, congratulations on these positive data and just getting the CAPTAIN trial done. This is a big feat. My first question, I'm just going to dig into the data a little bit. Looking at the rates of erectile function, they appear relatively close to robotic surgery at six months. Would you have expected greater separation here? And if so, what would you attribute these relatively close outcomes to?

So, actually, there was another question about positive margin rate being high, and I think they're related. When you do studies like this, multicenter trial, every surgeon has his own approach. And there's also in nerve sparing radical prostatectomy, you're walking a tight rope between functional preservation and the risk of positive margins. The neurovascular bundles are immediately adjacent to the prostate. You kind of have to shave them off. There's huge nuances in terms of getting into the right plane, different degrees of neurovascular bundle preservation. So, in general, the wider you go, the lower the chance of a positive margin. And on the other hand, the greater risk of erectile dysfunction as a consequence.

And I mean, the best answer I can give as to the relatively high rate of erectile function preservation with surgery. It's all good is that there's this phenomenon on the Hawthorne effect. Clinical trials influence behavior. And my interpretation of the data is that the surgeons knowing that the functional outcome was going to be scrutinized, erred to some degree on the side of neurovascular bundle preservation at the cost of a relatively high rate of positive margins.

Now both of these results are very consistent with many published series. They're not outlier results at all. You've got pretty good erectile function preservation. You've got a somewhat higher rate of positive margins, but they're both really kind of under the midpart of the bell-shaped curve of outcome. And yes, that's really the best explanation that I can give. And I would also say that the one-year data will be somewhat more definitive in this regard. And it's very plausible that certainly, I'd expect an improvement in the TULSA data at a year. That's what we saw in the TACT study that from six months to a year, there was improvement in erectile function. And you may see the same thing with surgery or you may not. So time will tell.

Okay. I wonder if I could ask a follow-up. I wonder if you could help us avoid some improper comparisons between the TACT trial and the CAPTAIN trial. These are different in structure and probably several other parameters. Could you maybe highlight a few aspects of the TACT trial and the CAPTAIN trial that may not be directly comparable.

Yes. Well, so the TACT trial, which had good results, but was very much a learning curve trial. So this was early days. We have five-year -- the trial was planned probably close to a decade ago. And at that time, there was a lot about patient selection and treatment boundary the treatment boundaries that we know now and didn't know then. So for example, the importance of calcifications greater than 3 millimeters as an exclusion, if the calcifications are anywhere near the cancers, the limitations in terms of volume. So the 80% figure with TACT to me is a lower bound. I fully expect partly based on my own clinical experience with TULSA over the last five years or so outside of any clinical trial that the oncologic outcome is going to be significantly better. Now that's a prediction.

But we know who the failures were intact. periurethral cancer because the urethral is cooled. So if you have a cancer that is within a couple of millimeters of the urethral, which can happen, that's a recipe for failure. We exclude those patients from TULSA. They should have something else. They're not a lot of them, but they are overrepresented in the failure. So the first thing is patient selection. I predict that we're going to see better than 80%, probably closer to 90% success rate.

The second relates probably to outcome vis-a-vis functional outcome because the -- first of all, the AI margin assist has meant more accurate delineation of the prostate margin, probably more accurate preservation of neurovascular bundle. So kind of the same thing applies. So it's a question of kind of a learning curve study versus a study where the practitioners are more experienced, and you would expect to see better results.

Thank you, Dr. Klotz. I actually have a couple of questions submitted online by Dr. Rajiv Chopra. So I'll read those out loud. Dr. Klotz as a pioneer of active surveillance, how do you feel TULSA will impact the practice of AS and prostate cancer patients?

Yes. So the active surveillance is -- means basically conservative management with intervention for patients whose risk profile changes over time. And we are not talking here. You noticed there was no grade group 1 cancer in patients in this study for good reason. We did have some in the earlier TACT trial. The reason is because most patients, 90% with grade group 1 prostate cancer don't require treatment. So no one is proposing that this be a routine treatment for those patients. There are a few who do warrant treatment and it would be appropriate.

But where it's going to have an impact is because as you follow these patients, somewhere around 20% to 30%, depending on the series are eventually recategorized as higher risk and have treatment indicated. In some studies, it's more than 50%. That reflects mostly the pre-MRI era.

So what happens in these patients, they are reimaged. Their MRI now shows progression of a solitary lesion. And in most cases, when you rebiopsy those patients, it's grade group 2. In other words, it's not a rapidly lethal cancer. It's just progress to a cancer that we take more seriously.

What do you do with those patients? A treatment like TULSA is perfect for them because, again, you want to preserve quality of life. In most cases, the disease is not that aggressive. So I see TULSA positioned as very much a treatment of choice for patients who have been on surveillance and now are recategorized or reclassified with higher-grade cancer and need some treatment. Now a few of them are going to have very high-grade cancers. That's roughly 5% or less of a typical active surveillance cohort, and they may be better off having surgery or radiation.

Although time will tell, I mean, at the moment, the TULSA procedure is really geared towards intermediate risk, but there is no reason to think that it also can't be effective for higher-risk patients once its efficacy is really confirmed for intermediate risk.

Thank you, Dr. Klotz. The second question is also directed to you from Dr. Chopra. Often in RD patients, strategies are implemented post recovery to encourage and facilitate erectile function recovery. For example, some patients begin taking Viagra before surgery to help with blood flow and recovery. In CAPTAIN are both arms of the trial, TULSA and RP receiving equivalent interventions to control for these types of interventions.

Yes. So the term we use for this is penile rehabilitation. I will say that the evidence supporting the use of penile rehabilitation in terms of actually improving the long-term outcome is not very good. We don't know if it has any durable impact, but it certainly facilitates earlier recovery of erectile function in the patients who use it.

We did not specify in the trial the use or not use of penile rehab. I'm afraid we don't have -- my guess is that most patients, whether they have surgery or TULSA, if they are interested in recovery of erectile function will be at least put on a PDE5 inhibitor like Viagra or Cialis. We will have that data in terms of concomitant medication, but we don't have it as a kind of formal outcome measure. So I can't answer your question with actual data.

Thank you, Dr. Klotz. And now our next question comes live from Ben Haynor at Lake Street Capital Markets.

First off for me, just curious on what typically happens with cancer control outcomes when patients do have positive margins undergoing radical prostatectomy.

Yes. So it's variable is the short answer. The rate of what is called biochemical progression, meaning the PSA goes down to zero and then starts to rise over time, usually takes about three years before you see that rise. The time to the rise gives you a clue as to whether it's a local recurrence or distant disease. Remember, some of these patients may have a call metastasis that the natural history of which is not going to be affected very much by treating the local prostate because the horses fled from the bar. So that's another piece of this.

So, overall, about half -- and it also depends on how extensive the positive margin is on the grade of the cancer at the site of the positive margin, whether it's low grade or high grade, there's a lot of variables. Overall, about half of those patients will eventually have a recurrence. Positive margin also goes along with an increased risk of metastatic disease. It's a risk stratifier for a more aggressive type of cancer.

So it's not a straightforward thing in terms of its significance. And beyond the positive margins, patients with negative margins have a rate both of local recurrence and metastatic disease. It's lower, but it's not that much lower. So, by and large, the positive margins is significant in terms of an increased risk of recurrence, either local or distance, but it's not a black and white issue.

Fair enough. So if it's half wind up with the sort of recurrent outcomes, and you're saying that -- or speculating, I guess, I should say that you could see a 90% success rate with TULSA in terms of the cancer control. Is it conceivable that you could see superiority even though the trial isn't designed to show it for TULSA versus the surgery?

Well, I'll put my words carefully. It's certainly conceivable. I think that would be a phenomenal outcome from the perspective of TULSA. I mean, if you do the math and my estimates are correct, then you're going to see about a 20% or 25% rate of biochemical recurrence after surgery, which is very typical. Those patients get radiated and the majority of those patients who are radiated then have a biochemical response and essentially are cured. Of course, there's long-term effects from the radiation and so on. So it's -- there's trade-offs.

But it is certainly plausible to me that if you -- that the rate of biochemical recurrence, if you're just looking at that endpoint may be higher with surgery than the rate of positive MRI being positive for recurrence confirmed by positive biopsy with TULSA, very much so.

Okay. Got it. And then regarding everyone's favorite endpoint, what do you expect to see with the penile shortening endpoint?

Yes. The penile gets shorter after surgery. Many people have observed this. No one is really sure why because you're not really -- you're not kind of retracting the peanut into the pelvis when you do this operation. You're bringing the bladder down to the urethra. But -- so it's probably a combination of decreased blood flow because the penile volume does reflect the blood flow, increased blood flow, you get an erection. And it may also reflect some anatomic features. You are not going to see that with TULSA. I would be very surprised. So my prediction that, that is one of the secondary endpoints is that you're going to see more penile shortening after surgery than you do with TULSA.

Got it. And lastly for me, and I don't know if this is more for Mathieu or Arun. But how do payers kind of look at incontinence, ED overall health? Presumably, this leads patients to kind of have less will to take care of themselves? And how much does that kind of get factored in coverage decisions, if at all?

So my -- it's a whole different ball game there. I'll hand that over to Mathieu or Arun.

Yes. Thank you, Dr. Klotz. Ben, with respect to insurance companies, they have a process. And typically, they look for Level 1 data for comparison purposes. And as long as they can see that this trial meets its endpoint, I think that is how they make their decisions. So based upon these results, I think it's pretty favorable. I think we definitely think that even in the near term, you will begin to see coverage decisions from insurance companies based upon these results in the later half, certainly by Q4 this year.

Congrats on the outcome here.

Dr. Klotz, we're going to give you another short break here, at least one. So this question is for Mathieu from Brian Gagnon, an investor. Mathieu, based on what you know now, the oncologic information coming later this year, when do you believe is the earliest that TULSA may be included in the guidelines?

Yes. Thanks, Brian. That's a great question. As discussed in the presentation, inclusion in guidelines really is a process, and it doesn't kind of go from not included to included sort of overnight. We did mention that TULSA is named already in the 2025 version of the NCCN prostate cancer guidelines, which was really interesting because it was the first time that the TULSA procedure was named by name. And it was also the first time that the NCCN prostate cancer treatment guidelines within the ablation world really distinguish between whole gland ablation, which is, of course, what TULSA does very, very well to focal ablation, which is a bit more of a crowded space when you look at new technologies.

So I think those -- even the 2025 guidelines were a really positive step forward to sort of establish what the TULSA procedure is and the fact that it can be applicable to homeland ablation, which really opens up to market to patients with bilateral disease and so on and so forth.

To Arun's point, I mean, professional societies and guidelines really do look for that Level 1 data to have that conclusive comparative analysis, which allows professional societies to make statements like we recommend this or we recommend that. So having that published is going to be critical.

Is the six-month kind of quality of life outcomes going to be enough to get there? Probably not. We're going to wait until the end of this year when we have the first set of oncological endpoints as we had discussed with the positive surgical margins, the TULSA biopsy data, MRI data, PSA follow-up. So we'll start to put that together at the end of this year, get that published. And I think that will be the sort of next step forward in order to get those positive recommendations for a subset of patients.

And then, of course, our primary safety outcome, which is scheduled for 2028, I think will be really sort of the nail in the coffin, if you will, in terms of demonstrating without a doubt that TULSA is non-inferior from an efficacy, oncological efficacy perspective and really superior from a safety and quality of life perspective.

And even the perioperative outcomes like the no overnight stay in the hospital, I mean, these are important metrics for not only patients, but to physicians. They don't have to necessarily do the rounds the next day and so forth. And then to payers, a night in the hospital is quite expensive. And so from a hospital efficiency perspective, I think those outcomes will also really make a difference.

Thank you, Mathieu. I don't see any more questions right now. So I think we'll turn it back to Arun for any closing remarks.

Thank you so much, everyone. So, in summary, better clinical outcomes, flexibility to schedule TULSA days. faster patient recovery. And we didn't talk about it today, but it's in our corporate presentation, better economics for the hospital. Those are the four primary value proposition of TULSA. Again, better clinical outcomes, flexibility to treat all day, faster patient recovery and better economics for hospitals.

With that, thank you so much for joining us today. We look forward to briefing you at the Q1 call. Thank you.

Good day, and thank you for standing by. Welcome to the Profound Medical Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Stephen Kilmer, Investor Relations. Sir, please go ahead.

Thank you, and good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws in the United States and Canada. All forward-looking statements are based on Profound's current beliefs, assumptions and expectations and relate to, among other things, any expressed or implied statements or guidance regarding current or future financial performance and position, and expectations regarding the efficacy of Profound technology. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed.

Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise, other than as required by law.

Representing the company today are Dr. Arun Menawat, Profound's Chief Executive Officer; Rashed Dewan, the company's Chief Financial Officer; Dr. Mathieu Burtnyk, Profound's President; and Tom Tamberrino, our Chief Commercial Officer.

Please note that our prepared remarks today will be a little longer than normal as we present to you the dynamics of the market and our strategies to create a profitable growth company.

With that said, I'll now turn the call over to Rashed.

Good afternoon, everyone, and welcome to our Fourth Quarter and Full Year 2025 Conference Call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support. I will turn the call over to Mathieu in a moment to provide commercial updates. However, before I do, I would like to provide a brief summary of our fourth quarter 2025 financial results. To streamline things, all of the numbers I will refer to have been rounded. So they are approximate.

For the 3 months period ended, December 31, 2025, the company recorded revenue of $6 million, with $2.3 million from recurring revenue and $3.7 million from onetime sales of capital equipment. Fourth quarter 2025 revenue was up 43% from $4.2 million for the same 3-month period a year ago. Gross margin in Q4 2025 was 67% compared to 71% in Q4 2024. The lower than usual fourth quarter 2025 gross margin was primarily due to product mix and new market introductory prices with international distributors in Saudi Arabia and Australia.

Total operating expenses in the 2025 fourth quarter, which consists of R&D and SG&A expenses were $11.4 million compared with $11.3 million in the fourth quarter of 2024. Overall, the company recorded fourth quarter 2025 net loss of $8.2 million or $0.27 per common share, compared to a net loss of approximately $4.9 million or $0.20 per common share in the 3 months ended December 31, 2024. As of December 31, 2025, Profound had cash of $59.7 million.

As Arun will discuss later in the call, we believe that we are now on a path to profitable growth. In keeping with that, we expect our cash burn to decline and eventually turn cash flow positive as our revenues continue to grow and our margin remains high.

With that, I will now turn the call over to Mathieu for an update on clinical and development activities.

[Technical Difficulty]

Again, I'm sorry, let me cover Mathieu's part here. So again, Mersa, thank you. Last year, we completed recruitment in CAPTAIN, the first multicenter, randomized, controlled trial directly comparing a new technology to robotic radical prostatectomy for men with localized prostate cancer. CAPTAIN completes the foundational pillars of clinical evidence, validating TULSA as the new platform for prostate disease management.

From gold-standard treatment, treat and resect data through track durable 5-year outcomes, CAPTAIN now positions us to demonstrate with statistical rigor, TULSA's superior quality of life profile while delivering whole-gland treatment efficacy. CAPTAIN was designed for world-leading -- I'm sorry, CAPTAIN was designed by world-leading experts in prostate cancer clinical trials. They built a practical study that ensured successful enrollment and more importantly, a scientifically robust protocol with endpoints that matter to patients, clinicians and payers.

Let me repeat that point. CAPTAIN's endpoints are those that matter to the patients, the clinicians and the payers. Patients were randomized 2:1 using an intelligent stratification algorithm, resulting in highly balanced arms, a cornerstone of credible randomized trials, balanced arms allow us to make definitive comparative conclusions about safety and efficacy. And critically, CAPTAIN measures efficacy in a meaningful way, determining whether clinical significant cancer remains after treatment. Patients and their oncologists want to know whether cancer has been killed and eliminated not merely whether it had progressed.

As discussed last quarter, completing treatments in CAPTAIN locks in the timeline for data readouts, including the imminent release of preliminary -- imminent release of primary safety and quality of life endpoints. Last year, we shared initial perioperative outcomes showing faster recoveries after TULSA than robotic prostatectomy with 0 blood loss or overnight hospitalization, reduced pain, and earlier return to daily function and overall health. These advantages echo the same drivers that fueled early adoption of robotic surgery.

Thank you, for taking over. I can jump back in if you want?

Okay. Go ahead.

I'll go ahead. So ahead of schedule, we will present the first clinical outcomes from CAPTAIN next week at the meeting of the European Association of Urology in London, U.K. EAU is the premier academic urology meeting, and we were pleased that our data has been selected for inclusion in the late-breaking and the high-impact session. The presentation will be delivered by Dr. Laurence Klotz on Friday, March 13, between 1:00 and 3:00 p.m. Greenwich Mean Time, which is 8:00 to 10:00 a.m. Eastern time. These data include complete 90-day perioperative results and the 6-month primary safety and quality of life endpoints.

Six-month quality of life outcomes are an increasingly important and modern endpoint. They reflect meaningful patient recovery and provide a more relevant early indicator of functional preservation. At EAU, we will report 6-month urinary incontinence rates, the single most important quality of life outcome for patients, along with 90-day hospital readmissions and time to return to work. At EAU, we will also report positive surgical margin rates in the prostatectomy arm, which we will later compare against TULSA biopsy outcomes in late Q4. CAPTAIN provides the first true apples-to-apples comparison of safety, quality of life and efficacy, the information required to support a new treatment paradigm. CAPTAIN is the most comprehensive truly Level 1 trial.

But let me also take the time to outline the fundamental differences between CAPTAIN and other ongoing studies, namely WATER IV, FARP and HIFU. First, WATER IV. WATER IV is a multicenter randomized trial comparing Aquablation to radical prostatectomy in men with low- and intermediate-risk localized prostate cancer. The inclusion of low-risk patients is a critical distinction because these men harbor minimal disease and are unlikely to progress within the study's follow-up period, limiting any meaningful assessment of cancer control. Equally important is what the trial measures.

WATER IV's primary endpoints are quality-of-life only. That means that the study is not designed or powered to demonstrate comparative oncologic efficacy. This is particularly notable considering there are no other peer-reviewed data using the Aquablation procedure to eliminate cancer in prostate cancer patients. The trial includes a single cancer-related secondary endpoint assessed only in the Aquablation arm, which is the stable or improved grade group at 1 year versus baseline. In practice, that means a patient who entered the study with grade Group 3, an unfavorable intermediate risk clinically significant cancer will be counted as a success even if the same grade Group 3 disease remains after treatment. That is not the same as a limiting cancer or even improving the cancer grade, and is not a randomized head-to-head efficacy readout. Frankly, this is not a Level 1 cancer trial.

Next FARP. The focal ablation versus radical prostatectomy study. FARP is a single center European trial, which inherently limits generalizability to broad clinical practice, particularly to high-volume U.S. surgeons. Its population like WATER IV includes low and intermediate risk patients with disease localized to one side of the prostate. While FARP does include a comparative efficacy measure, the bar is not oncologic eradication.

The focal therapy arm is deemed effective if patients avoid upgrading to grade Group 4. In other words, men who start with grade Group 1, 2 or 3 are considered successfully treated as long as they do not progress to grade Group 4. This is a very different endpoint than [ curing ] and eliminating clinically significant cancer. Even though TULSA was part of the study and to the best of our knowledge, the TULSA arm did better than any other arm, including HIFU, the reason we think is that not the most credible study is the endpoint itself. Avoiding upgrade is not the same as proving cancer has been cleared. Patients want to know plainly whether they still have cancer or not.

Lastly, HIFU, a large multisite French comparison of HIFU versus prostatectomy did not randomize patients and therefore, is not considered a Level 1 trial. The result is significant selection bias and unbalanced arms. For example, HIFU patients were on average roughly a decade older than surgery patients. Age differences directly confound the study's primary endpoint of salvage treatment-free survival and erectile function. Older patients are less likely to undergo salvage treatment. Older patients have lower baseline erectile function, which means they have less function to lose after treatment. Without balanced randomization, you cannot make definitive comparative conclusions.

Let me conclude. TULSA is solving the debate between focal and whole-gland treatment for prostate cancer. CAPTAIN measures efficacy to the same standard as robotic surgery, an essential requirement to establish a new standard of care. TULSA is the only technology capable of whole-gland, focal and customized treatment. Patients often choose focal therapy to preserve quality of life. With TULSA, patients achieve the benefit of focal side effects with the efficacy of whole-gland treatment.

I will now turn the call over to Tom.

Thank you, Mathieu. As Rashed mentioned, we achieved a year-over-year revenue increase of 43%. We had 78 TULSA-PRO sites as of December 31, 2025. The company's TULSA-PRO qualified sales pipeline is also growing and currently stands at 110 new systems being classified within one of the verify, negotiate and contracting stages, which are the final 3 phases of our sales process.

Q3 2025 was a true commercial inflection point, and we saw the momentum continue in Q4. We're continuing to see broader adoption of TULSA-PRO across both academic and community hospitals. That's largely due to increased awareness of the system's clinical benefits and the establishment of a reimbursement pathway made possible by the Category 1 CPT codes for the TULSA procedure. TULSA reimbursement was confirmed again for 2026 at urology Level 7, which is appropriate as TULSA utilized real-time MR, which is crucial to better clinical outcomes. Our team has also initiated engagement with private insurance carriers, and we expect coverage decision from carriers in the second half of 2026.

Our global commercial leadership team has never been stronger than it is today. This includes sales, marketing, business development, health economics, market access, patient education, patient access, clinical service and strategic initiatives. We have a world-class team of professionals here in the U.S. and around the world. It is noteworthy that we have launched a strategic TULSA program team, which will use our organizational leverage to ensure successful TULSA program launches and this team will grow procedural volume thereafter. Our team remains focused on targeting high-volume urology centers and supporting physician training. We're leveraging positive clinical outcomes and patient testimonials to drive engagement and deepen relationships with our customers.

Looking ahead, I'm confident in our ability to further accelerate this growth. We're well positioned to capitalize on the expanding interest in image-guided interventions and we continue to scale our commercial footprint while validating our technology in the prostate care market. And as Arun will also highlight, there are a number of important catalysts coming in 2026, that continue to drive our relief that we will reach high double-digit to low triple-digit revenue growth.

Importantly, we believe we are now on a path to not just growth but profitable growth with this selling approach. The math to achieve this target is simple, with just 200 TULSA programs cases using existing MR installed base, assuming a conservative 50 TULSA procedures per site per year and a $5,500 recurring revenue to Profound per procedure, we would be at $55 million in procedural revenue. Add on to this $10 million in annual service revenue, and another $20 million in new capital sale revenue based on an estimate of 40 new TULSA-PRO systems sold per year at an average sales price of $500,000 per system. Altogether, this will put us around $85 million in annual revenue.

With 70% plus gross margin already achieved, we would be profitable. We're also building strategic partnerships on a global basis. Recent distribution agreements with Al Faisaliah Medical Systems in Saudi Arabia and Getz Healthcare in Australia and New Zealand have already started to bear fruit with multiple systems sold in Q4 2025. Our partnerships with OEMs such as Siemens, are also progressing well, and there's more exciting opportunity to come on the partnership front as 2026 progresses.

Thank you for your time. I will now turn the call over to Arun.

Thank you, Tom, and good afternoon, again. Prostate cancer treatment has been a bipolar world up till now. Whole-gland robotic prostatectomy or radiation therapy are the primary tools for treating prostate cancer today. Trying to take some share away from these mainstream whole-gland modalities are focal therapy alternatives such as HIFU, cryoablation and IRE that treat typically less than 35% of the gland by focusing only on the visible cancer within the prostate.

But TULSA is establishing itself as a third distinct category. TULSA-PRO can treat the whole-gland, a small portion of the gland and everything in between. At the same time, the TULSA procedure provides the best of both worlds. The same good clinical outcomes of whole-gland prostate cancer treatment but with lower side effect of focal gland treatment. The fact that the TULSA procedure is a third category all by itself is an important message. But it can be difficult for urologists and hospitals to understand the differences as they're getting bombarded by the focal messages from multiple companies. Difficult, but not impossible.

Virtually, all surgeons who have used both TULSA-PRO and other technologies have ended up favoring TULSA by far because of its expanded capability to treat the full spectrum of prostate disease while minimizing quality-of-life side effects like urinary incontinence and erectile dysfunction. Today, we believe that whole-gland robotic prostatectomy and radiation therapy have run their course. And alternative focal prostate therapies are not enough. The TULSA-PRO system stands apart in its proven ability to treat the full spectrum of prostate disease as well as providing better economics to providers and more value to payers.

TULSA uses real-time MR imaging that has several significant clinical and economic advantages. First, the real-time MR thermometry enables continuous visualization and autonomous temperature adjustment throughout the procedure. This level of precision allows the physicians to tailor therapy to each patient while minimizing side effects typically associated with robotic surgery or radiation.

Second, MR produces standardized to the cross-sectional images enabling AI analysis unlike what may be possible using other imaging modalities, such as ultrasound. Using this capability, TULSA-PRO incorporates an AI-based treatment plan. Upon one click, the AI software segments the prostate and shows the surgeon a treatment design while keeping the nerve bundle and the sphincter muscle region safely outside the boundaries. Using a digital pen, the surgeon can either accept the AI-generated plan or quickly modify it, if necessary, making overall treatment planning fast and reliable. The TULSA-AI contouring assistant is based upon treatment designs by the best-known radiologist and is proven to be superior to surgeon designs.

Third, MR enables real-time temperature monitoring. Using this capability and directional ultrasound from a catheter placed in the urethra, TULSA-PRO, gently heats tissue only to kill temperature between 55 to 57 degrees centigrade without boiling or charring the tissue. The net effect is that the whole-gland or any surgeon prescribed region can be treated effectively and the dead tissue is reabsorbed by the body.

In the FDA registered TACT clinical trial, post-treatment prostate size was measured over time. The data showed that the median reduction in prostate size was 91% by effectively shrinking the prostate around the urinary channel, which is proactively protected during the procedure.

Fourth, TULSA-AI enables cleaner margins. During TULSA procedure, real-time MR enables the treating surgeons to see abundance of cancer in the prostate. If necessary, the surgeon can engage another TULSA-AI module, Thermal Boost to apply additional heat to the region and ensure [ kill ] temperatures to the outer margin of the prostate or even slightly beyond the margin.

Fifth, not to confuse things, we believe even TULSA partial gland or focal procedures are superior to other focal modalities, which all rely on ultrasound imaging. TULSA procedures are based upon real-time MR diffusion and T2 images. These images combined together visualize the abnormal cell regions of the prostate, which may be cancers. This real-time visualization allows surgeons to define the treatment region to completely include the suspicious zones, thereby increasing the likelihood of a more durable focal/partial gland treatment while maintaining minimal side effects.

And finally, advanced real-time MR imaging provides confirmation and precision of cell kill at the end of the procedure, no matter what the intent to kill it in turn improves predictability of outcomes.

To summarize, TULSA-PRO solves a debate about whether prostate cancer treatment should be whole-gland or focal without compromise. TULSA-PRO can be used to treat the whole-gland, a small portion of the gland or anything in between in large prostates, small prostates or even radio recurrent prostate, and with the clear benefit of MR imaging and guidance. And it is being used successfully to treat low, medium or high-risk cancers as well as salvage cases.

Switching briefly to BPH. Mainstream treatment with transurethral resection of the prostate or TURP is largely unchanged over the past 100 years. Many alternative treatment methods have emerged that aim to improve the patient experience and reduce the rate of complications such as bleeding, erectile dysfunction, loss of ejaculation, and the need to stay in the hospital overnight for 1, 2 or more days. As demonstrated in the recently published study from the University of Turku, TULSA offers significant improvements in International Prostate Symptom Score, peak urine volume rates and discontinuation of BPH medications.

That said, while urologists have been treating lots using TULSA-PRO since we received 510(k) clearance in 2019, and the technology is only 1 capable of treating hybrid patients suffering from both prostate cancer and BPH. Our BPH patient volumes have been low to date due to the relatively larger treatment duration compared to other modalities.

The latest TULSA-AI module volume reduction is changing the BPH treatment paradigm. TULSA-AI volume reduction is designed to maintain all of the many proven advantages of treating cancer with TULSA, while leveling the playing field on the time it takes for a urologist to plan and complete the procedure by quickly identifying the overgrowing region of the BPH. The software streamlines the workflow and reduces procedure times to 60 to 90 minutes.

Adoption of TULSA-PRO is also making more and more business sense. The economic proposition of an interventional MR has become stronger as of January 2026. CMS has studied reimbursement for prostate biopsy and made the determination that reimbursement for real-time MR in-bore biopsy should be separated from the method, which is prevalent today, which uses real-time ultrasound with prior diagnostic MR image registered to it. This allows the surgeon to visualize the cancerous region through the registered MR image, but have the convenience of ultrasound to perform the biopsy.

While this technique is better than one where MR images are not used, clinical data shows that registration of MR images still create an error of about 20%. For that reason, CMS has now provided separate reimbursement for real-time in-bore MR biopsy as it is more accurate but more costly to perform. The reimbursement for a standard MR registered ultrasound image biopsy is about $3,500, whereas reimbursement for the real-time MR biopsy has been set at about $5,500, which is 57% higher. This is a huge change, and the implication is just beginning to get attention.

And comparing Medicare national average payments hospital reimbursement for the TULSA procedure in 2026 is $13,479 compared to $10,860 for robotic surgery and $9,672 for focal therapies like HIFU and cryoablation. So now at the start of 2026, there is superior reimbursement for both in-bore MR prostate biopsy and the TULSA Procedure.

Putting all this together, our thesis that the future of prostate disease care will be MR centered is coming true. This sufficient clinical evidence -- there is sufficient clinical evidence that if prostate cancer is visible on an MR, it should be treated immediately, making iMRI, in-bore biopsy and diagnostic modality of choice. Typically, there are 3 to 5 biopsy procedure performed for each one prostate cancer treatment and whereas there are about 1 million prostate biopsies done every year. No one single prostate cancer treatment modality is currently used for more than 100,000 patients per year.

Doing the math, there is currently a clear disconnect between the preferred MR-guided diagnostic approach and mainstream treatment modalities. We believe only TULSA is suited to bridge that gap as we move forward. Our strategy in the near term is to focus on existing MRs and achieve the installed base of 200 TULSA-PRO sites. At the same time, we are in the final stages of achieving compatibility for the new Siemens Interventional MR, the Free.Max. We believe that as early as later in 2026, TULSA plus sites with the Free.Max plus TULSA-PRO will be operational, opening the door to the future and interventional MR suite with TULSA. These sites will further streamline the patient and staffing workflow, making it easier to further drive adoption.

We continue to get confirmation that hospitals that are being paid for all qualified Medicare patients and that they are satisfied with the amount received. In addition, many commercial payers are also now covering the procedure on a case-by-case basis. And we are excited by the recent upgrading of our AI-powered software to include simpler patient workflow for patients who suffer from BPH symptoms. Having the flexibility to safely, effectively and efficiently treat a variety of patients with prostate cancer and now with BPH, gives our sites the flexibility to stack cases, creating a full TULSA Procedure day, which leads to efficiency and easier scheduling for the hospital staff. It also significantly expands our TAM. And the economics associated with real-time iMRI procedures, in prostate cancer, like MR in-bore biopsy and TULSA are becoming increasingly compelling.

Before my closing remarks, I would like to take a few minutes to talk about our second large opportunity, Sonalleve. This technology, which is currently offered primarily as a onetime capital sale uses same MR imaging and thermographic technology, as TULSA-PRO and combines that with focused ultrasound from outside the body delivers -- delivered via a disk to treat disease. There are currently 10 Sonalleve devices operational in parts of Europe, China and Southeast Asia, where over 4,000 women have already been treated with the technology for adenomyosis and uterine fibroid diseases of the uterus that can cause chronic pain and heavy and/or prolonged menstruation.

Treatment with Sonalleve has demonstrated pain and symptom relief without affecting the ovarian reserve and with reports of women preserving their fertility. Sonalleve is also now being used in research and clinical trials in Europe for the ablation of pancreatic cancer tissue and other oncological disease. We are working on an FDA regulatory strategy for the technology and a potential new recurring revenue opportunity on top of the initial capital sale for the device. And we'll provide more details on our progress later this year.

To summarize, Profound is pioneering iMRI procedures, which enable precise incision-free therapies that improve clinical confidence, procedural control, and patient outcomes. By leveraging real-time MR guidance, Profound technology -- the technologies are designed to replace uncertainty with clarity across treatment planning, delivery and confirmation. We're the only company that has the technology to kill tissue from the inside of the body, via a catheter that is placed via a natural orifice, which is our TULSA technology, or from the outside via a disc, which is the Sonalleve technology. In either product configuration, MR is used to image and measure temperature in real time and enable cell kill with a minimum energy requirement.

Our sales team is clearly delivering, and the pipeline as we define is now growing over 110 as compared to 97 at the end of 2025. TULSA-PRO install base was at 78 at year-end, and we expect that to reach approximately 120 by end of 2026.

The new AI volume reduction module to treat patients with BPH symptoms is significantly reducing the procedure time, making it very competitive with other BPH treatment technologies. This application has the potential to add 400,000 patients to our annual TAM essentially tripling our previous TAM. Having the BPH module also enables physicians to create a full TULSA day during which both their prostate cancer and/or BPH patients are treated. From the perspective of the ease of scheduling and creating a vibrant TULSA program, this ability is particularly important.

Our second technology platform, Sonalleve is poised to start becoming a more core part of our story in the coming months and quarter, both internationally and in the United States. And finally, we believe that on the basis of the many catalysts we see ahead, we can reach high double-digit to low triple-digit revenue growth.

This ends our prepared remarks for today. With that, we're happy to take any questions you might have. Operator?

[Operator Instructions] Our first question will come from the line of Ben Haynor with Lake Street Capital Markets.

First one for me on the private payers, I appreciate the commentary on giving commercial insurers to pay for it, you think in the second half of the year. I was wondering if you can give us any sense of what your customers are seeing now. I know I think on the Q3 call, you mentioned that commercial insurers were reimbursing roughly $25,000 to $65,000 is the range you had seen. And then any commentary on whether you're being successful in getting any commercial rejections overturned ultimately?

Ben, yes. So the number of patients who are going through the private is increasing. The typical payments are between -- I would say, most of them are between 1.5x to 2.5x of Medicare. So we're pretty satisfied and our sites are happy with the numbers. With respect to coverage and reversals from rejections were tracking better than 90% at this point.

Just recently, I saw one very strategic reversal. There are certain independent organizations in the U.S. like Maximus and so on. These companies actually make independent determinations that hospitals use as guides or whether or not a new technology is considered experimental or standard of care, and they recently deemed our TULSA as standard of care.

So we're pretty optimistic actually. We're very, very satisfied with the numbers that we're seeing, and we are very optimistic we'll start to see actually converting these reductions into coverage decisions in the second half this year.

That's very helpful. Great. And then I apologize if I missed this, but can you maybe comment here on the dynamics of the sequential decline you saw in noncapital revenue here?

We lost you a little bit. Could you repeat the question?

Yes. I was wonder -- I apologize if I missed this, but could you maybe comment on the dynamics that you saw in terms of utilization? It looks like there was a sequential decline in noncapital revenue here from Q3 to Q4.

[Technical Difficulty]

Could you comment on the dynamics of utilization from Q3 to Q4 and whether the movement in noncapital revenue sequentially?

Yes. Yes. Got it. Okay. Yes. No, I think the number of -- I think the trend that we have talked about is pretty much every site is slowly but surely increasing usage. And I think last quarter we had a specific number that quarter-over-quarter we were up about 20-plus percent. I think that trend continues in terms of procedures.

I think as Tom talked about also a little bit in his presentation that I think this year, with the new catalysts, I think the CAPTAIN data coming out next Friday, the BPH module now being distributed to our customers, I think that certainly we expect that the rate of usage will increase at a faster pace in 2026.

With respect to your question, if you're asking about the dynamics on the capital. I think, we are still in the early innings and capital is harder to predict than recurring revenue is for sure. And we did give a couple of market introductory prices to a couple of sites.

In Q4, as Rashed mentioned, and I think at the moment, you will see the ratio of capital versus recurring in our total product mix is going to become a little bit more capital heavy, because we are selling the devices now. And as Tom mentioned, the pipeline is pretty strong. But over the long haul, I think that, we remain primarily a recurring revenue company. Over 70% of our revenue ultimately will come from recurring revenue. But in the next couple of years as we build the installed base, I think you'll see that ratio to be closer to -- it will range between 40% to 60% capital per quarter.

Okay. Got it. And then just talking about the installs for this year and looking at for 40-or-so more units, and that's roughly 1/3 of the pipeline that you have. Are there any bottlenecks on year-end that need to be taken care of in terms of the capacity to install new units? Is there anything that you can improve on your side of things?

Ben, we are a growing company. So most certainly, Q4 was a very dynamic quarter. And because we shipped for the first time systems in double digits. And yes, we are increasing our logistics and operations side, we're actually looking to put a warehouse in the U.S. that would allow us to streamline some of the shipments. We are also putting all the ERP systems to make sure all the scheduling and building of the devices are taking place. Nothing that is anything out of the ordinary that we would not do at this time in our company. But yes, there is a lot of dynamics along the lines of making sure that, as Tom and his team starts to build the top line that we are able to deliver appropriately.

Our next question comes from the line of John McAulay with Stifel.

I want to put a finer point on the recurring revenue question that's been asked. So just as I do the back of the envelope math here, if procedures grew roughly 20% quarter-over-quarter, as you said, total recurring revenue, $2.3 million, it implies that revenue per procedure declined significantly, something like more than 50% quarter-over-quarter. So I just want to understand how much of this is driven by the more capital-focused mix? Was there some kind of onetime conversion or discounting in here? And what should we expect go-forward on a revenue per procedure basis?

Yes. So John, first of all, the 20% was year-over-year, not quarter-over-quarter. So when I say that -- yes, year-over-year. And we do look at inventory. And so we do sort of manage it a little bit. So I think when you see recurring revenue quarter-over-quarter, it does not necessarily reflect almost exactly through the usage of the product. And we do kind of manage that a little bit. Generally, actually, they will buy in the third quarter to use it in the fourth quarter. So you see that a little bit of up and down like that. So I would not directly correlate, but if you look at 6 months over 6 months, I think it will be relevant instead of quarter -- each quarter. There was no discounting at all. Our price for disposables is $5,500 fixed. And the sites that do not own the equipment is very few at this point. But in those cases, we do have higher number than $5,500. So there is absolutely no discounting on the disposable price.

Understood. That's helpful. And switching gears to 2026, you talked about high double-digit, low triple digit growth. Consensus is currently, I think it's something like 120%. Our numbers closer to 100%. Where do you hope we end up in this range? I mean if I try to read between the lines here and I assume a range of 90% to 110%, not with specific numbers, it seems like 100% might be a median, but maybe you could just help us out on where you would hope estimates end up for the year ahead.

Yes. So when we did not particularly provide official guidance on revenue at the moment, we certainly feel very confident in terms of the number of sites. And I think if your analysis though is in the right ballpark, in the sense that we're looking at, at least 42 sites this year, which we have provided. And if you look at the math that Tom provided in his presentation, I think you add up all of those, you're sort of going to end up with the range that you just described.

Understood. That's helpful. And I could just sneak in one more question. You talked about the dynamic of recurring versus capital mix in the future, and you still believe in that 70-30 longer-term range, but in this year ahead, I mean I'm just looking at the fourth quarter results, I mean, the mix was something closer to 40% recurring, 60% capital, roughly. I mean is that the sort of mix we should be thinking about for 2026?

I think so. John, I think that the number of sites is going to increase, and you can see if we're adding 42 sites that $0.5 million, you can see the number is going to be dominating. So I would say, at least -- on average, I would say, at least for the first few years, 50-50 or 60-40 is probably reasonable. But I want to sort of -- don't want to lose sight for the fact that we are primarily a recurring revenue company. And I think we went through a lot of detail today on purpose because it helps you see how TULSA is positioned against everybody. And you can hopefully see how confident we are about our positioning.

And so part of the reason for that confidence is that when we see TULSA being placed, our devices are being used and the use is definitely increasing. And so I think that long term, that 70-30 mix is a very reasonable thing to expect.

Our next question will come from the line of Michael Freeman with Raymond James.

I'm going to ask a question on the CAPTAIN trial. It's exciting that you've decided to disseminate information on the trial next week. Can you go over the -- I guess, the decision-making process for releasing this data early. Was -- does getting an early look at this trial compromise the trial at all. Does it remain a Level 1 trial? And then following up on -- as a follow-up question, do you expect the early dissemination of this data to potentially accelerate reimbursement time lines for private payers?

So yes, thank you. That's -- those are important questions actually. So let me answer your second question first. I do expect that the earlier data will suddenly gives us more confidence in getting coverage decisions this year.

But to your first question, a little bit more technical. We are very careful, as you know, on making sure that our data when we present that our trials are pristine, and then with proper analysis and guidance from leading physicians. So as we looked at this, and it just happened in the last couple of days, as we looked at all this, those precedents and typically used and the reality is that 6-month data actually is a very important milestone data set. In fact, particularly for urinary incontinence, and it's used routinely in BPH trial, for example.

And we have, as Mathieu described, there is sufficient data already out on the robotic prostatectomy arm with respect to margins, so which is a sort of indicator of the success of early treatment or not. So there's we're not presenting any data that will be considered out of the ordinary here. These are standard endpoints, and they are measured in a way that are very credible.

So we are not going to compromise anything. We are running the company. We certainly execute every day, but we are running the company with a very strategic mindset. So we're absolutely not going to compromise anything. But having said that, I think you will see meaningful standard data that will be credible.

Okay. All right. I wonder there was some discussion in the remarks about progress towards cash flow positivity. I wonder if you could provide a threshold, whether that's scale or time line to when you expect Profound to be -- to have reached cash flow positivity?

Yes. So I can -- if you look at the data that we have been publishing and if you look at, for example, the first half of this year, our cash burn was just over $10 million, each quarter. If you look at third quarter, our cash burn was about $8 million. If you look at -- if you analyze the data in the fourth quarter, you will see the cash burn is down to around 6 -- a little bit above -- a little less than $6.5 million. So I think you can start to see the trend already and it is matching with the increase in the revenue. And again, they won't be perfect. It will be -- in some quarters, you'll see a little bit up or down because we are adding people and maybe they're not going to be completely synchronized.

But I think the reason we are comfortable and confident and presented it because I think we can start to see the trend. And I think if you project your numbers, what as Tom mentioned, the end point is we think that we can be profitable in the range of $80 million to $85 million revenues. So you can see where we are in about $24 million, $25 million revenues with the cash plan, you can see the $80 million, $85 million. And I think with the growth rates that you can probably predict from the installed base, and it's just expectation, I think you'll be able to get pretty close.

Okay. All right. I'm going to squeeze a quick one in. You provided good guardrails on TULSA install expectations for the year. I guess, more granularly looking at the first quarter as we're well progressed. Wondering if you could provide some commentary on, I guess, the pacing of those installations through the year and how first quarter is proceeded.

I'm sorry, I couldn't hear everything you said. If you could please repeat it?

Sure. I was looking for some color on TULSA installation progress during the first quarter. And also how we might expect pacing of those procedures through the year, given your expectations that you provided earlier in the call.

Oh, I see. What you mean -- so you're looking for granularity quarter-over-quarter basis?

That's right.

So we're trying to get to a standardized way of announcing numbers, and we think more standardized is end of this quarter. So which is why we were at 78. We are higher than that today, for sure than we were at the time. But I would say, again, I think generally speaking, med tech companies growths are generally in the second half of the quarter. So I would say if you're modeling, I would model it sort of increasing quarter-over-quarter and not linearly every quarter.

[Operator Instructions] Our next question will come from the line of Scott McAuley with Paradigm Capital.

Already been covered, but maybe I could just ask on the BPH module. Any granularity on how many of the installations are currently using it?

Good question, actually. I would say there are at least 10 sites that have already started using it. In terms of the forecast, I think the numbers are increasing pretty rapidly, I would say, by midyear, we will have at least 30, 40 sites using it.

That's great. And there was a few announcements around international expansions and agreements. And I think in the margin discussion, there was a comment on some kind of introductory pricing, I believe, maybe for international, but I may have misread that. Any kind of progress on the international front for TULSA?

Yes. Very good question, Scott. So in the second half of last year, we also started to get quite a bit of attention in the international markets. And historically, we've always talked about U.S. being are really, really the only focus. And U.S., most certainly is 90% of our focus today. But we felt that it was important that, in fact, the healthcare world is far more global than it might look. So getting incoming calls and getting opinion leaders in international markets, not serving them did not make sense.

And so what Tom and the team have done is we've signed up with a number of distributors, the couple that he mentioned. And the discounts were only to those new distributors to get them going. But there was no discounting in the U.S., and we don't expect discounting in the future, which is why Rashed was very confident that the 70-plus percent margin that we've maintained for the year and for most of other quarters that, that is very much intact.

So our strategy in the international market is still very careful, but it is through distributors. And we will have support people and high-level senior people who will manage the distributors, but we don't plan to grow a direct sales team in the international market. That is only for the U.S. But we're seeing, for sure, very good interest in number of -- I think Europe is going to be slow until there is reimbursement decisions in Europe. But I think the Asian markets are definitely very strong.

That's great. And down the road, as that international kind of presence and impact grows, is that something you're going to separate out a bit more in terms of U.S. installations versus global installations and revenue relative to each of those areas.

Yes. Over time, we will. Once they become material, we will.

Just one clarification. We do break out the international revenue. So there is a segment reporting, that's where we do break out revenue source where is it coming from.

Yes, yes, definitely. I think it was more the international revenue specific to TULSA, but as it becomes more meaningful down the road, maybe be more specific around that.

Our next question comes from the line of Chris Potter with Northern Border Investments.

Just on the utilization question. From your customers' perspective, can you just talk about how many procedures per site they're looking for in terms of it making economic sense for them. In other words, I think if I'm doing the math right, each of your sites is doing 20 or 25 procedures a year now, which didn't sound like a whole lot. You gave the example of having 200 systems doing 50 procedures a year, is 50 procedures a year kind of the ideal for your typical customer? Or is it higher than that? I would think it would be higher than that.

Yes. So at the moment, a number of these sites are very new. And so the sites that we installed in Q4 virtually is non-existent in terms of the utilization. So I think just that math of taking the whole installed base and that is probably, I would say, take 60% of the installed base and use that would give you a better number.

Having said that, I think your key question, we think 50 is a very reasonable number. We have sites today that are doing well over 100. We do have some research sites that acquired the system early on that we're doing maybe 10 procedures per year and now that there's reimbursement there. These are large hospitals that are slow moving, but they are very slow moving here. But they are all looking to finally increase. And again, as reimbursement, particularly from private insurance companies kick in, they're going to start increasing as well.

So I think to answer your question, do we think that the ultimate number is going to be better than 50? We do. But at the moment, since we are below 50, we think 50 is a good average target to hit. And 200 sites is not a very big number. We think we can achieve that also. And so I think over the long haul, I can certainly tell you if we hit average of 50, we're not going to be -- we're going to be a bit disappointed.

But I think, particularly, as I was talking about in the prepared remarks, I think as they start establishing TULSA day with the ability to then treat whole-gland and partial-gland and BPH altogether, there's enough patient volume now with this model that I think 50 is a very achievable number.

That's helpful. Would you expect that the average utilization per site would increase materially in 2026?

I think in the second half of '26, I do believe that, yes.

One of the things that Tom has talked about is that as we update our sales design and we described it a little bit for you. We are starting to put -- to go to the much more of a hunter/farmer model where the farmers are -- is a team that we're building that will pay attention to utilization more than before. Historically, because we've not had reimbursement, it's not been a big thing, but we've moved our genius team in the commercial organization. We're building a sales team that is a farmer-based team. I think that team together will drive better startup for these new sites, and better utilization over time.

And I'm showing no further questions at this time. And I would like to hand the conference back over to Dr. Menawat for closing remarks.

Thank you so much for spending the time with us. We really appreciate the attention. We are excited about where we're going, and we look forward to updating you at the end of Q1. Have a good evening.

This concludes today's conference call. Thank you for participating, and you may all disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the Profound Medical Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Stephen Kilmer, Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws in the United States and Canada.

All forward-looking statements are based on Profound's current beliefs, assumptions, and expectations, and relate to, among other things, any expressed or implied statements regarding future financial performance and position and expectations regarding the efficacy of Profound's technologies in the treatment of prostate cancer, benign prostate hyperplasia or BPH, uterine fibroids, adenomyosis, pain palliation of bone metastases, desmoid tumors, osteoid osteoma and the potential treatment of abdominal cancers and hypothermia for cancer therapy.

Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed.

Listeners are cautioned not to place any undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.

Representing the company today are Dr. Arun Menawat, Profound's Chief Executive Officer; Rashed Dewan, the company's Chief Financial Officer; Dr. Mathieu Burtnyk, Profound's President; and Tom Tamberrino, our Chief Commercial Officer.

With that said, I'll now turn the call over to Rashed.

Good afternoon, everyone, and welcome to our third quarter 2025 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support.

I will turn the call over to Mathieu in a moment to provide commercial updates. However, before I do, I would like to provide a brief summary of our third quarter 2025 financial results. To streamline things, all of the numbers I will refer to have been rounded, so they are approximate.

For the 3-month period ended September 30, 2025, the company recorded revenue of $5.3 million, with $4.1 million from recurring revenue and $1.2 million from onetime sale of capital equipment. Third quarter 2025 revenue was up 87% from $2.8 million for the same 3-month period a year ago.

Gross margin in Q3 2025 was 74.3% compared to 63.1% in Q3 2024. Total operating expenses in the 2025 third quarter, which consists of R&D and SG&A expenses, were $12.8 million compared with $10.8 million in the third quarter of 2024.

Overall, the company recorded the third quarter 2025 net loss of $8 million or $0.26 per common share, down from a net loss of $9.4 million or $0.38 per common share for the same 3-month period in 2024. As of September 30, 2025, Profound had cash of $24.8 million. As Arun will discuss later in the call, we believe that we are now on a path to profitable growth.

In keeping with that, we expect our cash burn to decline and eventually turn cash flow positive with -- as our revenue continues to grow and our margins remain high. That said, we have recently received some inquiries about potential future financing plans, and if we have a shelf registration statement filed in the U.S.

With respect to our thoughts on future financing. While we have not made any current plans, we'd like to assure investors that we will continue to be opportunistic with the goal of limiting shareholder dilution as much as is practicable. And with respect to a shelf, we do not currently have one in place, but plan to file an S-3 later this evening as a matter of good corporate housekeeping to keep our options open as we move forward with our financial growth.

With that, I will now turn the call over to Mathieu for an update on clinical and development activities.

Thank you, Rashed, and good afternoon. Last quarter, we initiated the pilot release of our new TULSA-AI Volume Reduction software, which is specifically designed to shrink benign and large prostates primarily caused by the condition known as BPH. I am delighted to announce today that the full product release will be launched at this year's annual meeting of the Radiological Society of North America, or RSNA, which is taking place in Chicago at the end of this month.

The new volume reduction software leverages AI-powered planning and accelerated ablation together with the same TULSA hardware, the same regulatory indication for use and the same reimbursement codes to provide fast and efficient workflows, which are on par with mainstream BPH treatment options.

The pilot release has 2 primary objectives. The first was to demonstrate total procedure time of 60 to 90 minutes and the second was to obtain early user feedback to incorporate into the complete feature set included in the full product release. Both of these objectives have been resolutely met.

To date, early surgeon feedback has exceeded our expectations. With the precision of real-time MRI guidance and the flexibility of transurethral ultrasound ablation, surgeons have described that they can create treatment designs that mimic any other BPH procedure, whether it's coring the apple like Rezum and Aquablation or a more complete resection like HoLEP. In other words, no matter the prostate shape or size and the needs of the patient for a small or large ablation, TULSA with volume reduction can do it.

TULSA also goes beyond with the ability to precisely carve out the ejaculatory ducts, visualize and target cancer lesions, or even prophylactically ablate regions suspicious for cancer, such as PI-RADS 3 lesions or in patients with high PSA or that have a known genetic risk.

Surgeons have also described how they can use the efficiency benefits of the new software features for patients with prostate cancer. With the improved workflows and flexibility to customize each treatment to the individual patient, surgeons will have the ability to create what they call TULSA days, where they stack multiple cases in 1 day with predictable and efficient outcomes, whether with prostate cancer, BPH or patients with both cancer and BPH. And that is all with no overnight stay, no blood loss, no fulguration, no grade 4 adverse events, and no need for patients to discontinue their anticoagulant therapy.

The pilot launch of the volume reduction software has motivated incremental increase in BPH procedures from Q2 to Q3 and into the first half of Q4. With the full product launch at RSNA later in November, we believe we are well positioned to demonstrate increased utilization in BPH with double-digit percentages of our total procedures in 2026.

Speaking of RSNA, we're just 2 short weeks away from the meeting in Chicago, where the TULSA-PRO will be featured prominently. Our booth will feature the full product launch of our new TULSA-AI Volume Reduction software and the final perioperative outcomes from the CAPTAIN trial will be presented by Dr. Peji Ghanouni from Stanford.

In addition, the Innovation Theater will host a special session titled Discover TULSA-PRO, AI-powered, MRI-guided precision prostate ablation, which will be presented by both Dr. Joseph Busch from the Busch Center as well as Dr. Daniel Costa from the MD Anderson Cancer Center. In a separate session, Dr. Busch will deliver an oral presentation describing his TULSA outcomes from a cohort of 160 patients.

And finally, the TULSA procedure will be the subject of 3 different educational exhibits from each, the University of Texas Southwestern, the NIH or the National Institute of Health, as well as from the Sapporo Hokuyu Hospital in Japan. We certainly look forward to an impactful event.

I would like to take a moment to provide an update on our CAPTAIN trial. During our last earnings call, we announced that the CAPTAIN trial was fully recruited and all patient treatments were complete, making it the first randomized controlled trial ever comparing a new technology to the standard of care of robotic radical prostatectomy to successfully recruit to target.

We believe one of the reasons for the success is the capability of TULSA to perform safe and effective whole gland ablations, making it a true incision-free prostatectomy as opposed to other ablative procedures that can only target small unifocal disease.

Completion of all patient treatment marks a significant milestone as it cements the timing of data readout, including the primary 1-year safety and 3-year efficacy outcomes. The trial, however, is already collecting important secondary endpoints. The final perioperative outcomes will be presented at RSNA as well as at the Society of Urological Oncology, or SUO, in early December.

The data will prove TULSA's superiority to robotic surgery and blood loss, hospital stay, post-op pain, and time of recovery. This will be followed closely by its peer-reviewed publication, which we expect to be submitted to a scientific journal before the end of this year, which we believe will be the beginnings of a key driver towards gaining favorable recommendation from the relevant professional society treatment guidelines and positive reimbursement coverage from private payers.

Since RSNA starts in just a few days and CAPTAIN side effect data would have been needed to have been submitted prior to any presentation, it won't be part of what's presented there this year. However, we are considering appropriate ways to unveil it relatively soon without risking breaking any embargoes ahead of AUA in May. So please, stay tuned on that front.

And with that, I'll turn the call over to Tom.

Thank you, Mathieu. In Q3 2025, we continue to build on the commercial momentum we established earlier this year. We saw strong traction with our TULSA-PRO platform. As Rashed mentioned earlier, we achieved a year-over-year revenue increase of 87%, up from $2.8 million in Q3 2024.

Our gross margin also improved significantly, reaching 74% compared to 64% last year. This reflects the growing efficiency and scale of our commercial operations. As of now, we have 70 TULSA-PRO sites. And the company's TULSA-PRO qualified sales pipeline is also growing and currently stands at 93 new systems being classified within one of the Verify, Negotiate and Contracting stages, which are the final 3 phases of our sales process.

Q3 was a true commercial inflection point. We're seeing broader adoption of TULSA-PRO across both academic and community hospitals. That's largely due to increased awareness of the system's clinical benefits and the streamlined reimbursement pathway made possible by the Category 1 CPT code. Our team remains focused on targeting high-volume urology centers and supporting physician training. We're leveraging positive clinical outcomes and patient testimonials to drive engagement and deepen relationships with our customers.

Looking ahead, I'm confident in our ability to sustain this growth. We are well positioned to capitalize on the expanding interest in image-guided interventions, and we're continuing to scale our commercial footprint while validating our technology in the prostate care market.

We have established flexible business models to drive adoption. With our 25 for 200 program, hospitals performed 25 cases in year 1 for roughly $200,000 with a path to capital conversion. This model allows hospitals to break even on a per procedure basis, typically by the 12th case, while providing Profound with committed revenue. Our standing pricing model includes a capital system priced around $500,000 and disposables averaging $5,500 per procedure.

We're seeing success at our model sites. In Texas, the Prime hospital system is demonstrating Medicare profitability. And in the near future, we are confident that our TULSA Plus sites will prove that integration with [ iMRI ] can deliver a payback in under 2 years.

Rather than competing with HIFU, IRE or cryo physicians, we're collaborating with them. These clinicians already prefer alternatives to radical prostatectomy or radiation, but their current options limit patient volume. TULSA's versatility enhances their offerings and over time, many of them gravitate toward adopting our technology.

We're also building strategic partnerships on a global basis, whether that be through distribution agreements with the likes of Al Faisaliah Medical Systems in Saudi Arabia, Getz Healthcare in Australia and New Zealand or partnerships with OEMs such as Siemens. There's more to come on the partnership front, and I'm excited about the opportunities ahead.

Thank you for your time. I will now turn the call over to Arun.

Thank you, Tom, and good afternoon, everyone. As you just heard from Tom, after experimentation and refinement, both his team and their messaging to potential customers, we now know how to sell TULSA programs.

As I have presented earlier this week at the Stifel conference, we believe we are now on a path to not just grow, but profitably grow. The math to achieve this target is simple. With this 200 TULSA programs using existing MR installed base, assuming 50 TULSA procedures per site per year and 5,500 in recurring revenue to Profound procedure, we would be at $55 million in procedure revenue, about $10 million in annual service revenue and selling 40 TULSA-PRO systems per year at $500,000, $20 million in new capital revenue. That will put us around $85 million annual revenue. With 70-plus percent gross margin already achieved, we would be profitable well before that.

Putting this together, with what Mathieu has already discussed, the trifecta is finally here. The MR is here and high MRI is coming rapidly. In the very near term, our strategy is to focus on existing MRs and achieve an installed base of 200 TULSA-PRO sites. That is where our sales team is focused right now.

Simultaneously, we are in the final stages of achieving comparative -- compatibility with the new Siemens Interventional MR, the Free.Max. We believe that as early as next year, TULSA Plus sites with Free.Max plus TULSA-PRO will be operational, opening the door to the future, the interventional MR suite with TULSA. These sites will further streamline the patient and staffing workflow, making it easier to further drive adoption.

Second, we are now beginning to get confirmation from multiple hospitals that they are being paid to all -- for all qualified Medicare patients and that they are satisfied with the amount received. In addition, many commercial payers are also now covering the procedure on a case-by-case basis. In some cases, that's based on pre-approvals. In some cases, they are being submitted after the procedure and being paid. And in others, there are initial denials, but we are getting reversals through appeal.

So while that is still a bit of a mixed bag at this stage, as we have said earlier, we're tracking appropriately at this stage and remain confident that we will begin to secure national or regional coverage decisions from the commercial payers starting middle of next year as there is an ample clinical data to support our applications.

Third, we are excited to be upgrading our AI-powered software to include simpler patient workflow for patients who suffer from BPH symptoms. Having the flexibility to treat a variety of patients with prostate cancer and now with BPH gives our sites the flexibility to create a treatment day which leads to efficiency and easier scheduling for the hospital staff.

We believe that altogether, this trifecta gives us a good chance to not only grow in high double-digits, but with high margins, we believe we can achieve profitability and continue to grow profitably.

Before my closing remarks, I would like to take a few moments to talk about our second large opportunity, Sonalleve. We're getting more and more incoming calls from both TULSA users and non-TULSA sites that are interested in interventional MRI and the ability to also treat diseases in the body cavity such as diseases of the uterine adenomyosis and fibroids and cancers such as liver and pancreatic cancers.

In fact, FMS, who we announced an exclusive distribution agreement with, for Saudi Arabia, earlier this week originally called us about Sonalleve. Once they were introduced to TULSA-PRO as well, they quickly wanted to discuss both and not only for Saudi Arabia, but also potentially other countries they're active in, such as other Gulf region countries and Brazil, where they own multiple hospitals.

Sonalleve, which is offered primarily as a onetime capital sale, uses the same MR imaging and thermography technology as TULSA-PRO and combines that with focused ultrasound from outside the body to treat disease. There are currently 10 Sonalleve devices operational in parts of Europe, China and Southeast Asia, where over 4,000 women have already been treated with the technology for adenomyosis and uterine fibroids, diseases of the uterus that can cause chronic pain and heavy and/or prolonged menstruations.

Treatment with Sonalleve has demonstrated pain and symptom relief without affecting the ovarian reserve and with reports of women preserving their fertility. Sonalleve is also now being used in research and clinical trials in Europe for the ablation of pancreatic cancer, tissue and other oncological diseases.

To summarize, Profound is the only company that combines the real-time imaging and thermography capabilities of MR and AI-driven treatment designs to allow physicians to precisely and gently address disease tissue without any incision, associated tissue boiling or charring, blood loss, severe or prolonged pain, or need for overnight hospital stay

The sales team is clearly delivering and the pipeline, as we define it, now over 50 as compared to 80 in mid-August. TULSA-PRO installed base now sits at 70, and we expect to reach at least 75 installs by the end of the year.

The new TULSA-AI Volume Reduction module to treat patients with BPH symptoms in significantly reducing the procedure time, making it very competitive with other BPH treatment technologies. This application has the potential to add 400,000 patients to our annual TAM, essentially tripling our previous TAM.

Adding the BPH module also enables physicians to create a full TULSA day during which both their prostate cancer patients and BPH patients are treated. From the perspective of ease of scheduling and creating a TULSA program, this ability is important.

The second technology platform, Sonalleve, is poised to start becoming a more core part of our story in the coming months and quarters, both internationally and in the United States.

And finally, as user interest in Profound's technologies continues to build, we're deploying our own direct sales team in North America while partnering with select strategic distribution partners to support the business potential and the customer base in other parts of the world for both TULSA-PRO and Sonalleve.

This ends our prepared remarks for today. With that, we're happy to take any questions you might have. Operator?

[Operator Instructions] Our first question comes from Ben Haynor of Lake Street Capital Markets.

First off for me, just very encouraging to see the utilization jump up in Q3 after kind of a frustrating first half of the year. And it does sound, based upon your [ commentary ] in the press release that, that trend continues into Q4 thus far. Could you provide a little bit more color and maybe characterize how that's tracking?

Yes. Ben, I'm going to let Tom answer that because [ he's ] a fantastic pipeline. So Tom, if you could please go ahead.

Yes, happy to, Ben. Thank you for the question. So to make sure I'm hearing it correctly, specifically, you're calling out the improvement in utilization, right, treatments that have been completed here in Q3 and whether we have experienced that trend continuing to date through the beginning part of Q4. Is that correct?

Yes. Basically, are you seeing that acceleration continue as we close out the year?

So the answer is yes. And what I can tell you is that the tailwinds that are coming online are the fact that the CPT1 coding that we've referred to and the reimbursement associated with that through Medicare is coming through exactly as we thought it would. So, there's tremendous validity in terms of the ability to provide treatment to men who are Medicare eligible. Added to which indignity, our market access and patient access team are doing a tremendous job of working with individual patients on obtaining private insurance coverage on a one-to-one basis in the absence of any payer policies, right? We don't have any negative payer policies or positive payer policies at this time.

And we have a corporate strategy to address that with the private payers as well. So what's happening is we've got the tailwind of Medicare patients coming online, right, moving away from a cash pay-only market. We've got individual wins with private insurance companies. And added to that, we've got a growing body of evidence, as has been stated through not only the Busch press release that came out, but also several others that there's an appetite for this technology across the globe.

And I'm not sure if you've met urologists, but they're a competitive bunch. So, one country wants to get started before another country. And that also comes back to the U.S. as well where if you've trained with another physician during your days in fellowship or residency and they're using it in a country that is not this country, there's competitive juices flowing. So there's a multiple factors that are going into driving that adoption.

And let's not forget the most important reason why, is that patients are seeking TULSA-PRO out based on their own research and identification of the results of other men who have faced prostate disease. That is our greatest referral base.

Excellent. That's very helpful. And then on the folks that have gotten commercial payers to pay and typically, you see commercial rates roughly double Medicare rates. Is that about what you've seen? Is -- Do you have sufficient experience there to make any comments?

Yes. Ben -- Mathieu, I know you have some numbers too, but we are starting to get a number of sites that are willing to share the numbers and the Medicare numbers are definitely where they are supposed to be, but the numbers from private payers are significantly higher. And Mathieu, if you have some numbers, please, go ahead and talk about that.

Yes, absolutely. So we are -- to Arun's point, we are starting to get some information from some of our sites as we're working with them on ensuring all of their charges are set up properly and so on. And the volume of Medicare patients is higher than the commercial ones that are getting approved. But even from a Medicare perspective, there's a site that's kind of call it national average. They have confirmed that they are receiving about $13,000 for Medicare as well as Medicare Advantage patients, which is right along the CMS rule.

And for commercial payers, I was actually surprised to see it. I mean, this is a one particular site. I don't know if it's necessarily applicable to all sites around the country, but they're seeing payments like payment dollars from like $25,000 all the way up to $65,000 per patient. And -- so when you look at sort of the contribution margin from those, again, even on the Medicare and Medicare Advantage, they're actually making sort of $3,000 to $4,000 per patient in a contribution margin perspective. And then, of course, those that are -- the payers that are paying in that $25,000 to $65,000 range, then it's much more significant there.

So seeing very, very positive numbers from those sites that are willing to share that information with us, and that's an initiative that we're going to continue to go through in Q4 of this year as well as into 2026.

That's great. And then lastly for me and then I'll jump back in queue. You got 93 folks -- 93 sites that are in the engage stage. How many of those do you expect to kind of fall out and ultimately become customers? And any -- over what time period sort of information that you could share there would be fantastic.

Thank you, Ben, I know you would do the same for me if I maybe misstated. So I want to make sure we clarify, these are in the Verify, Negotiate and Contracting phases, which is the tail end of our pipeline that then leads into closing, right? The engage portion is further up the pipeline. So this is a much different subset of accounts that we're referring to.

Okay. So [indiscernible] how do you [indiscernible] to kind of fall out?

Arun?

Yes. I mean I think, Ben, the way to think about this, this is a real pipeline, which is why, as Tom described, we are making it available because I realize everyone is wondering how real the future look like, and it's kind of highly vetted pipeline. I think 2 things. One is that it does give us good confidence for the Q4 growth. And I think the -- for the 2026, I don't think they're all going to close in 1 quarter, obviously. But I think the way to think about this is 2025 Q4, the pipeline [indiscernible] will close. And then 2026, we're starting with a really good pipeline to be able to continue to grow.

And our next question is coming from John McAulay of Stifel.

I wanted to start off today just on setting expectations for the fourth quarter. Again, apologies if I missed it, but in the past, you've talked about 70% to 75% growth for the year. And now with the strong 3Q report, the -- there's a smaller implied step-up to get to that range. Just wanted to hear your general thoughts as we head into the fourth quarter and expectations in terms of the revenue and whether that 70%, 75% guidance still stands?

Yes. John, that's a great question. I think that based on the information we have provided, Tom and the team have already closed 3 sites, which is why our installed base is now at 70. Hopefully, that gives you some confidence. And then the pipeline information hopefully gives you confidence as well. And so, where we are, we remain comfortable with that 70% growth target. We have delivered the first quarter with growth. We think we can deliver the second quarter with growth and then continued growth. So I think bottom line, John, we're comfortable with that 70% growth target.

Got it. That's helpful. And as a follow-up, gross margins stepped up again, now a little over 74% here. Can you just talk about the capital versus consumable dynamic? What's driving the acceleration? And what's a reasonable long-term target here?

I think we are more likely than not probably at the right place on gross margin. The reality is that the margin is about the same on both the recurring revenue as well as the capital. And so, John, I would say, using a number between 70% to 75%. We always thought we would get above 70%. We are kind of feeling like this is about where we would like to be running the business in the low 70% range.

Just if I could sneak in one more. It's a follow-up on Ben's question at the beginning.

Yes, please.

In the 3 stages of the negotiation or in the contracting that you're talking about, these 3 latter stages, just want to put a finer point on -- I mean, what's the fallout rate here from stage to stage? So for the one that's in the final [indiscernible], what sort of percent closing rate are you seeing? Before that, what's the percent chance that it reaches that final stage of the pipeline and so on and so forth? You see what I'm getting at?

So -- yes, I do. I understand that very well. So I would say given that we are -- the pipeline is new and so on, our ability to really predict a specific is not as high because we have less data. But from our history, from our prior company and so on, I would say that for the next couple of quarters, we think that, that sort of pipeline in the 50-plus percent range is -- will ultimately close. We think, as our sales team gets more experience, that number will more than likely increase to 65%. So, this is where -- we don't put things into that tail end until we have at least a 50% confidence that they will close.

[Operator Instructions] Our next question will be coming from Michael Freeman of Raymond James.

Congratulations on these big results. Just detail, I'm curious, you mentioned 70 total units installed. With your pre-announcement, you mentioned 67. Is the 70 units total installed, is that as of today's date? Or was -- did this happen in Q3?

That's right, Michael. The team really has been working pretty hard. So the first 3 deals of this quarter already closed. And so that's why we decided we would share with you what it is as of now as the end of the quarter.

Perfect. Okay. That's helpful. More data, the better. Now, Mathieu went over a bunch of data -- upcoming data reveals. I wonder if you could just review for us what you think would be -- are going to be the highest impact data reveals that will happen over the next few months? What do you think would be dial moving in terms of things like commercial reimbursement and general uptake?

Yes. It's a very good question because more and more our physicians are pretty convinced that the TULSA technology is clinically efficacious and from side effects significantly better because many of them have done their own publications and research. And as Tom and Mathieu have talked about, many of our sites have now done 100, 200-plus cases. So clinical outcomes is -- people are beginning to get there.

But I think where it will have the most impact is going to be ultimately in getting to the guidelines and to getting the reimbursement coverage from all insurance companies. So I'm not -- I think from that perspective, I know everybody is looking for [indiscernible] too, but I think the impact is going to be on the high level. And I think it will ultimately impact serious growth for our company. But at the moment, it may not necessarily be the most important data that people are looking for.

I think the other set of data that I think people are looking for is the one that actually Mathieu talked about on the BPH side when we can start to show that the patients who have BPH can be treated with our technology in an hour or less or that to be able to see that a number of these patients also had a comorbidity, which might be early-stage cancer, might be some prostatitis or other [ disease ] that they could treat those patients for those diseases at the same time. I think that is going to really impact the BPH part of our market. So that, I would say, is the #1 -- from a clinical perspective, what I think they're looking for.

From the reimbursement perspective, I think we're starting to get the data. The more data we get, I think the easier it will be to start driving adoption of the technology.

Okay. All right. And just last for me. What -- I do notice that there's more discussion of the Sonalleve recently. I wonder if you could describe the motivation for this renewed focus on the Sonalleve?

Yes, Michael, I'm happy to. So I think what happened is that, from our end, we have limited resources. We have stayed focused on TULSA. And all of our resources have really been spent on TULSA. And in the site, we have about 10 sites running. And to be honest, we've supported them with very limited resources, if any. But they have continued to do and the results are amazing.

And the change that took place this summer is when HistoSonics got acquired for $2.25 billion, everybody started looking and say, well, how come we're not paying attention to this other technology. And then when we started talking with physicians who -- we were getting incoming calls and we said, well, we have an MR based. And I think if anything, we got to -- we're getting more excitement about the fact that we are MR-based because we can see the diseases better. And when you look at uterine diseases, you can see the adenomyosis, the abnormal tissue, fibroids, abnormal tissues, so it can be targeted and maintain the fertility. And then the trials for pancreatic cancer and other body cavity disease cancers were actually sponsored by research organizations that are now starting to say, hey, these results actually look pretty impressive.

So, I think it's a combination of the business side having a benchmark and then the fact that MRI -- iMRI is coming and the fact that these results are now looking pretty impressive. It's a combination of all of this. And it's pretty exciting for us, to be honest. And -- well, I don't use the word exciting frequently. It's because I think that we're actually the only company that can create an ecosystem in the end. And that ecosystem can be treating these high-volume prostate cancer diseases, the BPH and then go into the body cavity and go after uterine diseases and then solid organ tumors. So, we are -- we think that there is a real opportunity here, and we're going to stay very disciplined as you know how we are, but I do think it's time to start exploring the Sonalleve asset more closely.

And I'm showing no further questions. I would now like to turn the call back to Arun for closing remarks.

Thank you. We appreciate your time. And as I said at the Stifel Conference this week, and we have talked about already today, we do believe that it is happening. The pipeline is amazing. The sales team is out there. And so we are really looking forward to updating you on the Q4 and year-end results next year. Thank you so much.

And this concludes today's conference call. Thank you for participating. You may now disconnect.