Profound Medical Corp. Common Stock 2026 Q2 Earnings Call

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 U.S. and Canada. All forward-looking statements are based on Profound's current beliefs, assumptions, and expectations and relate to, among other things, any express 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 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 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 Sawchuk. With that said, I'll now turn the call over to Matthew.

Good afternoon, everyone. 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 Matthew in a moment to provide clinical updates. 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 30th, 2026, the company recorded revenue of CAD 2.5 million, with CAD 1.6 million from recurring revenue and CAD 871,000 from capital equipment sales.

Second quarter 2026 revenue was up 12% from CAD 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 CAD 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 CAD 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.

Overall, the company recorded a second quarter 2026 net loss of CAD 9.5 million or CAD 0.26 per common share, compared to a net loss of approximately CAD 15.7 million or CAD 0.52 per common share in the three months ended June 30th, 2025. As of June 30th, 2026, Profound had cash of CAD 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 CAD 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. 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 reduce 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 prostatic 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 analyses, 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 to TUX durable five-year outcomes to CAPTAIN's compelling level one 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's 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 CAD 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 one-time and/or temporary issues, Q2 2026 marked another true commercial inflection point. So far, we have seen that momentum continue into Q3. We estimate that our qualified sales pipeline, defined as being within one of the verified, negotiate, and contracting stages for TULSA-PRO and Sonalleve, is now approximately CAD 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. 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 OPPS, and ambulatory surgical center, or ASC, proposed rules. Under the OPPS 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.