InspireMD, Inc. 2026 Q2 Earnings Call

Marvin, please go ahead. Thank you, operator, and good morning, everyone.

This second quarter was an important period for InspireMD. While our reported financial results reflect the accounting impact of the voluntary recall of our approved C-Guard Prime 135 cm carotid stent system, the quarter was defined by the actions we took to strengthen the business, sharpen our execution, and position our company for a successful return to the U.S. market. Over the last several months, we've remained focused on four priorities: optimizing our international business, advancing our key regulatory programs and milestones to U.S. market re-entry, implementing design enhancements to the C-Guard Prime delivery system, and aligning our organization and cost structure around these priorities. I believe we are making meaningful progress on each of these objectives. Notwithstanding our temporary absence from the U.S. market, our total revenue was essentially unchanged from the second quarter of last year.

It's important to note our international business continued to perform very well, growing approximately 21% year-over-year, reflecting continued physician adoption and strong demand for CGuard across our international markets. At the same time, our reported U.S. revenue reflects customer credits associated with the voluntary recall announced at the beginning of May. Those credits more than offset gross U.S. product sales during the quarter and therefore obscure the underlying performance of the business. Importantly, our confidence in the CGuard implant remains the foundation value driver of our business and will continue to be the asset that builds our market leadership regardless of which delivery method is chosen for each patient's need. The clinical outcomes and evidence we've developed over many years has set a new standard of care, translating to physician enthusiasm and utilization, which remains strong, giving us confidence as we anticipate our U.S. relaunch.

We continue to believe CGuard is the most differentiated technology available for carotid revascularization and stroke prevention. Turning now to our C-GUARDIANS II submission of approval of our C-Guard Prime 80 platform for TCAR. We recently announced an outstanding 30-day results from the trial, which we believe strengthen our pending submission. In fact, our latest discussions and feedback from FDA remain constructive and interactive, and all signals point to potential approval in the fourth quarter as we previously indicated. Once approved, the C-Guard Prime 80 platform would essentially double our addressable market by offering our implant for TCAR in addition to CAS procedures. We also enrolled the first patient in C-GUARDIANS III, our pivotal study evaluating next generation SwitchGuard neuroprotection system. Taken together, we're encouraged by the progress across our comprehensive TCAR programs.

Also, as previously noted, our submission of the original CGuard platform for CAS, clinically proven in over 75,000 global U.S. cases, continues, and based on the progress to date, we currently expect a decision from FDA in the fourth quarter of this year. Should these anticipated approvals be realized, we would have both TCAR and CAS platforms commercially available before the end of the year, giving us the opportunity to address the entirety of the approximately 75,000 annual stenting procedures in the U.S. When we spoke to you last quarter, we outlined a clear plan to address the improvements for the C-Guard Prime 135 CAS delivery system. Since then, we've identified the required design modifications, initiated validation and performance testing, and continue to work closely with the FDA as we advance these improvements with a completed early submission of our Pre-Submission dossier.

These modifications and testing have gone exceedingly well, and we're optimistic that the associated timelines of first half of 2027 for market re-entry of this platform has the potential for an earlier approval. While this has clearly been a challenging time for the company, I believe our ability to weather these setbacks has made us a stronger and more focused organization. The CGuard 135 delivery system modifications and remediation is well understood. The path forward is clearly defined, and our team remains fully focused on implementation. During the quarter, we also took decisive actions to better align our organization and cost structure with our near-term priorities. These decisions allow us to focus our resources on the regulatory and commercial milestones that we believe will have the ability to create the greatest long-term value for our shareholders.

We also believe we've created a leaner, more efficient, and focused organization that is better positioned to execute, not only to return C-Guard to the U.S. market, but to expand access for our physicians and patients they treat. Before turning the call over to Mike, I'd like to leave you with four key messages. First, the underlying fundamentals of our business remain strong, as demonstrated by continued international growth, physician anticipation for our C-Guard implant as what we believe is the best treatment for carotid disease, with clear line of sight for our U.S. market relaunch. Second, we believe the voluntary recall is proving to be a well-defined and manageable event. We understand the issue, we've identified the solution, and we're executing against a clear regulatory pathway to reestablish traction and growth.

Third, we continue to advance multiple regulatory catalysts, including C-Guard Prime 80 for TCAR, the redesigned C-Guard Prime 135 platform for CAS, the original C-Guard delivery system, as well as our next-generation SwitchGuard neuroprotection system. Finally, we've aligned our organization and cost structure to support these priorities while positioning InspireMD for long-term sustainable growth. While we still have important work ahead of us, I believe today we're a more focused and disciplined company, and ultimately have better positioned ourselves for success. With that, I'll turn the call over to Mike to review the financials.

Mike? Thank you. As Marvin described, the second quarter financial results need to be interpreted in the context of the voluntary recall that we announced at the beginning of May.

For the second quarter of 2026, total revenue was $1.8 million, which was essentially flat with the revenue for the second quarter of 2025. The recall action affected our reported revenue in two ways. First, we ceased commercial sales of C-Guard Prime late in April, so we generated less than one month of sales in the U.S. before the recall took effect. Second, we booked a $734,000 credit for the return of the C-Guard Prime 135 product that had not yet been consumed by our customers. International revenue was $2.1 million, representing growth of 21% versus the same quarter a year ago. This performance continues to reflect the growing global demand for our C-Guard stent platform.

The entirety of international growth was driven by continued demand, while changes in foreign exchange rates were immaterial. Gross profit for the second quarter of 2026 was a loss of $0.8 million, or -43.7% of revenue, compared to a gross profit of $0.3 million, or 17.6% of revenue for the second quarter of 2025. This decline in gross margin resulted primarily from the $734,000 credit to revenue that I described previously, and a $612,000 impairment charge for C-Guard Prime 135 inventory on our books that was no longer commercially viable as a result of the recall. On a non-GAAP basis, which excludes the impact of the recall-related customer credits and impairment charge, adjusted gross profit was $0.6 million. A reconciliation of adjusted gross profit to gross profit, the most directly comparable GAAP measure, is included in today's earnings release and posted in the investor relations section of our website.