Profound Medical Q4 2025 Earnings Call - CAPTAIN 6-Month Data Poised to Accelerate TULSA Adoption and Reimbursement

Operator: Good day, and thank you for standing by. Welcome to the Profound Medical fourth quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. 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.

Stephen Kilmer, Investor Relations, Profound Medical: 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’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. 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.

Rashed Dewan, Chief Financial Officer, Profound Medical: Good afternoon, everyone. 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 Matthew in a moment to provide commercial updates. 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-month period ended December 31, 2025, the company recorded revenue of $6 million, with $2.3 million from recurring revenue and $3.7 million from one-time sale of capital equipment.

Fourth quarter 2025 revenue was up 43% from CAD 4.2 million for the same three-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 consist of R&D and SG&A expenses, were CAD 11.4 million, compared with CAD 11.3 million in the fourth quarter of 2024. Overall, the company recorded a fourth quarter 2025 net loss of CAD 8.2 million or CAD 0.27 per common share, compared to a net loss of approximately CAD 4.9 million or CAD 0.20 per common share in the three 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.

Operator: Pardon me, Matthew, your line might be muted.

Rashed Dewan, Chief Financial Officer, Profound Medical: I’ll go ahead and cover Matthew’s part. I don’t hear Matthew’s voice. I know he was having some phone difficulty.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Again, I’m sorry. Let me cover Mathieu’s part here. Again, Rashed, 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 to tax 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 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 to 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. 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 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.

Dr. Mathieu Burtnyk, President, Profound Medical: Thanks, Harit, for taking over. I can jump back in if you want.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Okay, go ahead.

Dr. Mathieu Burtnyk, President, Profound Medical: Okay, I’ll go ahead. 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 are pleased that our data have been selected for inclusion in the late breaking and high impact session. The presentation will be delivered by Dr. Laurence Klotz on Friday, March 13th, between 1:00 P.M. and 3:00 P.M. Greenwich Mean Time, which is 8:00 A.M. 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. 6-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. Let me also take the time to outline the fundamental differences between CAPTAIN and other ongoing studies, namely WATER IV, FARP, and HIFI. 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 one year versus baseline. In practice, that means a patient who enters the study with grade group three, an unfavorable intermediate risk, clinically significant cancer, will be counted as a success even if the same grade group three disease remains after treatment.

That is not the same as eliminating cancer or even improving the cancer grade, and is not a randomized head-to-head efficacy readout. Frankly, this is not a level one 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 killing 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 the 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, HIFI, a large multi-site French comparison of HIFU versus prostatectomy, did not randomize patients and therefore is not considered a level one 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 endpoints 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.

Ben Haynor, Analyst, Lake Street Capital Markets0: 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 31st, 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 three 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 one CPT codes for the TULSA procedure.

TULSA reimbursement was confirmed again for 2026 at Urology level 7, which is appropriate as TULSA utilizes real-time MR, which is crucial to better clinical outcomes. Our team has also initiated engagement with private insurance carriers. 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. 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. As Arun will also highlight, there are a number of important catalysts coming in 2026 that will continue to drive our belief 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 would put us around $85 million in annual revenue. With 70%+ gross margin already retrieved, 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. There’s more exciting opportunities to come on the partnership front as 2026 progresses. Thank you for your time. I will now turn the call over to Arun.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Thank you, Tom. 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. 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 effects of focal gland treatment.

The fact that the TULSA procedure is a third category all by itself is an important message. 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, 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, 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 2D 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 1 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 radiologists 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 cancerous. 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.

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 the 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 prostates. With the clear benefit of MR imaging and guidance. 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 rates of complications such as bleeding, erectile dysfunction, loss of ejaculation, and the need to stay in the hospital overnight for one, two or more days. As demonstrated in the recently published study from the University of Turku, TULSA offers significant improvements in intentional prostate symptom scores, peak urine volume rates, and discontinuation of BPH medications. That said, while urologists have been treating LUTS using TULSA-PRO since we received 510(k) clearance in 2019, the technology is only one 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 overgrown region of the BPH. The software streamlines the workflow and reduces procedure times to 60-90 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.

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. 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. 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 3-5 biopsy procedure performed for each 1 prostate cancer treatment and whereas there are about 1 million prostate biopsies done every year, no 1 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 install base of 200 TULSA-PRO sites. At the same time, we are in the final stages of achieving compatibility with 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, an 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. Many commercial payers are also now covering the procedure on a case-by-case basis. 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. 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 one-time capital sale, uses same MR imaging and thermographic technology as TULSA-PRO and combines that with focused ultrasound from outside the body, delivered via a disc 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. 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’s 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, 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, 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. Adding the BPH module also enables physicians to create a full TULSA day during which both their prostate cancer and our BPH patients are treated. From the perspective of 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. Finally, we believe that on the basis of the many catalysts we see ahead, we can reach high double digits 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: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question will come from the line of Ben Haynor with Lake Street Capital Markets. Your line is open. Please go ahead.

Ben Haynor, Analyst, Lake Street Capital Markets: Good afternoon, gentlemen. Thanks for taking the questions. First off for me on the private payers, I appreciate the commentary on getting 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 had mentioned that commercial insurers were reimbursing roughly $25,000-$65,000 is the range you had seen. Any commentary on whether you’re being successful in getting any commercial rejections overturned, ultimately?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Good afternoon, Ben. Yes. 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 1.5 to 2.5x of Medicare. We’re pretty satisfied, and our sites are happy with the numbers. With respect to coverage and reversals from rejections, we’re tracking better than 90% at this point. Just recently I saw a very strategic reversal. You know, there are certain independent organizations in the US, like Maximus and so on. These companies actually make independent determinations that hospitals use as guides of whether or not a new technology is considered experimental or standard of care. They recently deemed it, our pulse as standard of care. We’re pretty optimistic actually.

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

Ben Haynor, Analyst, Lake Street Capital Markets: That’s very helpful. Great. I apologize if I missed this, but could you maybe comment here on the dynamics of the sequential decline you saw in non-capital revenue here?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Can I just do a little bit? Could you repeat the question?

Ben Haynor, Analyst, Lake Street Capital Markets: Yeah. I apologize if I missed this. Could you maybe comment on the dynamics that you saw in terms of utilization? It looks like there was a sequential decline in non-capital revenue here from Q3 to Q4.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: I’m sorry, I can hear you.

Ben Haynor, Analyst, Lake Street Capital Markets: Could you comment on the dynamics of utilization from Q3 to Q4 and whether the movement in non-capital revenue sequentially?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yeah. Yeah, got it. Okay. Yeah. No, I think the number of... You know, I think the trend that we’ve talked about is pretty much every site is slowly but surely increasing usage. You know, I think, last quarter, we had a specific number that quarter over quarter, we were up about 20%+. 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. We did give a couple of market introductory prices to a couple of sites in Q4, as Rashed mentioned. I think at the moment, you will see the ratio of capital versus recurring in our total product mix, is gonna become a little bit more capital heavy, because we are selling the devices now. 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.

In the next couple of years, as we build this, the install base, I think you’ll see that ratio to be closer to, you know. It’ll range, you know, between 40%-60% capital per quarter.

Ben Haynor, Analyst, Lake Street Capital Markets: Okay, got it. Then just talking about the installs for this year, looking net for, you know, 40 or so more units. That’s roughly a third of the pipeline that you have. Are there any bottlenecks on your 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?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: 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. 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. Yeah, 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.

Ben Haynor, Analyst, Lake Street Capital Markets: Got it. That’s it for me, gentlemen. Thanks for taking the questions here.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Thank you, Ben.

Operator: Thank you. One moment for our next question. Our next question comes from the line of John McCauley with Stifel. Your line is open. Please go ahead.

John McCauley, Analyst, Stifel: Hi, Arun. Thanks for taking the question. Wanna put a finer point on the recurring revenue question that’s been asked. 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 CAD 2.3 million, it implies that revenue per procedure declined significantly, something like more than 50% quarter-over-quarter. Just wanna understand, how much of this is driven by the more capital-focused mix? Was there some kind of one-time conversion or discounting in here? What should we expect go forward on a revenue per procedure basis?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yeah. John, first of all, the 20% was year-over-year, not quarter-over-quarter.

John McCauley, Analyst, Stifel: Oh.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yeah, year-over-year. We do look at, you know, inventory and so we do sort of manage it a little bit. I think when you see recurring revenue quarter-over-quarter, it does not necessarily reflect almost exactly to the usage of the product. We, we do kind of manage that a little bit. Generally, you know, actually they’ll buy in the third quarter to use it in the fourth quarter. You see that little bit of up and down like that. I’d, I would not directly correlate, but if you look at six months over six 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. The sites that do not own equipment is very few at this point, but in those cases, we do have, you know, higher number than $5,500. There’s absolutely no discounting on the disposable price.

John McCauley, Analyst, Stifel: Understood. That’s helpful. 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 number is closer to 100%. Where would you hope we end up in this range? I mean, if I try to read between the lines here, and I assume a range is 90%-110%, not the specific numbers, it seems like 100% might be a medium, but maybe you could just help us out on where you would hope estimates end up for the year ahead.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: We did not particularly provide official guidance on revenue at the moment. We certainly feel very confident in terms of the number of sites. I think if you, your analysis though, is in the right ballpark, in the sense that, you know, we’re looking to add at least 42 sites this year, which we have provided. 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.

John McCauley, Analyst, Stifel: Understood. That’s helpful. If I could just sneak in one more question.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yeah.

John McCauley, Analyst, Stifel: You talked about the dynamic of recurring versus capital mix in the future, and you still believe in that 70/30 longer term range. 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?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: I think so, John. I think that the, you know, the number of sites is gonna increase, and you can see if we’re adding 42 sites that, you know, half a million dollars, you can see the number is gonna be dominating. I would say, you know, at least, you know, on average, I would say at least for the first few years, 50/50 or 60/40 is probably reasonable. I want to sort of, don’t wanna lose the sight of the fact that we are primarily recurring revenue company. I think, you know, 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.

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. I think that long term, that 70/30 mix is a very reasonable thing to expect.

John McCauley, Analyst, Stifel: Thanks for taking the questions.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Thanks, John.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Michael Freeman with Raymond James. Your line is open. Please go ahead.

Michael Freeman, Analyst, Raymond James: Hey, good evening, everybody. Thanks for taking my question. I’m gonna ask a question on the CAPTAIN trial. It’s exciting that you’re 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, you know, does getting an early look at this trial compromise the trial at all? Does it remain a level one trial? Following up on, as a follow-up question, do you expect the early dissemination of this data to potentially accelerate reimbursement timelines for private payers?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yeah, thank you. Those, those are important questions actually. Let me answer your second question first. I do expect that the earlier data will certainly gives us more confidence in getting coverage decisions this year. To your first question, a little bit more technical. You know, 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. As we looked at this, and it just happened in the last couple of days, as we looked at all this, there is precedence 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.

We have, as Matthew described, there are sufficient data already out on the robotic prostatectomy with respect to margins. Which is a sort of indicator of the success of a treatment or not. We’re not presenting any data that will be considered out of the ordinary here. These are standard endpoints, and they’re measured in a way that are very credible. We are not going to compromise anything. We are running the company. You know, we certainly execute every day, but we are running the company with a very strategic mindset. We’re absolutely not gonna compromise anything. Having said that, I think you will see meaningful, standard data that will be credible.

Michael Freeman, Analyst, Raymond James: Okay. All right. Thank you very much for that, Arun. I wonder, there was some discussion in the remarks about about progress toward cash flow positivity. I wonder if you could provide a threshold, whether that’s scale or timeline to when you expect Profound to have reached cash flow positivity.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yeah. I can... You know, 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 analyze the data in the fourth quarter, you will see the cash burn is down to a little less than $6.5 million. 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’ll be, you know, in some quarters you’ll see a little bit up or down because we are adding people and they may be, they’re not gonna be completely synchronized. I think the reason we are comfortable and confident and presented it is because I think we can start to see the trend. I think if you project your numbers, what, as Tom mentioned, the endpoint is we think that we can be profitable in the range of, you know, $80 million-$85 million revenues. You can see where we are in about $24 million-$25 million revenues with the cash burn. You can see the $80 million-$85 million. I think with the, with the growth rates that you can probably predict from the install base, and it’s just expectation, I think you’ll be able to get pretty close.

Michael Freeman, Analyst, Raymond James: Okay. All right. Thanks, Arun. I’m gonna 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, you know, well progressed in it. Wondering if you could provide some commentary on, I guess, the pacing of those installations through the year and how first quarter’s proceeded.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: I’m sorry. I couldn’t hear everything you said. If you could please repeat it.

Michael Freeman, Analyst, Raymond James: 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.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Oh, I see what you mean. You’re looking for granularity quarter-over-quarter basis?

Michael Freeman, Analyst, Raymond James: That’s right.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: You know, we’re trying to get to a standardized way of announcing numbers, and we think more standardized is end of this quarter. Which is why we were at 78. We are higher than that today for sure than we were at the time. I would say, again, I think generally speaking, med tech companies grow, you know, are generally in the second half of the quarter. I would say if you’re modeling, I would model it, you know, sort of increasing quarter-over-quarter, and not, you know, linearly every quarter.

Scott McAuley, Analyst, Paradigm Capital: Okay. Thank you very much. I’m gonna pass it on.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Thank you.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. Our next question will come from the line of Scott McAuley with Paradigm Capital. Your line is open. Please go ahead.

Scott McAuley, Analyst, Paradigm Capital: Hi, everyone. Good evening. A lot of questions.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Good evening, Scott.

Scott McAuley, Analyst, Paradigm Capital: Hi, everybody. Already been covered. Maybe I could just ask on the BPH module. Any granularity on how many of the installations are currently using it?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: 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 mid-year, we will have at least 30, 40 sites using it.

Scott McAuley, Analyst, Paradigm Capital: That’s great. you know, there was a few announcements around international expansions and agreements. I think, in the margin discussions, there was a comment on some kinda introductory pricing, I believe maybe for international, but I may have misread that. Any kind of progress on the international front for TULSA?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yep, very good question, Scott. In the second half of last year, we also started to get quite a bit of attention in the international markets. You know, historically, we’ve always talked about, you know, U.S. being our really, really the only focus. U.S. most certainly is, you know, 90% of our focus today. We felt that it was important that, in fact, the healthcare world is far more global than it might look. Getting incoming calls and getting opinion leaders in international markets, not serving them did not make sense. 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.

There was no discounting in the U.S., and we don’t expect discounting in the future either, which is why Rashed was very confident that the 70%+ 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, you know, support people and high-level, senior people who will manage the distributors. We don’t plan to grow a direct sales team in the international market. That is only for the U.S. We’re seeing for sure very good interest in, number of. I think Europe is gonna be slow until there is reimbursement decisions in Europe.

I think the Asian markets are definitely very, very strong.

Scott McAuley, Analyst, Paradigm Capital: That’s great. Down the road, as that international kind of presence and impact grows, is that something you’re gonna separate out a bit more in terms of, you know, U.S. installations versus global installations and revenue relative to each of those areas?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yes. Over time, we will. Once they become material, we will.

Scott McAuley, Analyst, Paradigm Capital: That, that’s great, everyone. Really appreciate the questions. Thanks.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Thank you.

Rashed Dewan, Chief Financial Officer, Profound Medical: Just one clarification. We do break out the international revenue, so there is a segment reporting. That’s where we do break out the revenue source, where is it coming from?

Scott McAuley, Analyst, Paradigm Capital: Yeah. Yeah, definitely. I think it’s more the international revenue specific to TULSA. Yeah, as you said, as it becomes more meaningful, down the road, maybe be more specific around that.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Chris Potter with Northern Border Investments. Your line is open. Please go ahead.

Chris Potter, Analyst, Northern Border Investments: Good afternoon, everyone. Just on the utilization question. From your customer’s 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.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Sure.

Chris Potter, Analyst, Northern Border Investments: If I’m doing the math right, each of your sites is doing 20 or 25 procedures a year now, which doesn’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.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Yeah. At the moment, number of these sites are very new. The sites that we, you know, installed in Q4 virtually is not non-existent in terms of the utilization. I think just that math of taking the whole install base and that is probably, I would say, take 60% of the install 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, you know, acquired the system early on that we’re doing, you know, maybe 10 procedures per year. Now that there is reimbursement, they’re, you know, these are large hospitals that are slow-moving. They’re very slow-moving gears.

They are all looking to finally increase, and again, as reimbursement, particularly from private insurance companies kick in, they’re gonna start increasing as well. I think to answer your question, do we think that the ultimate number is gonna be better than 50? We do. At the moment, since we are below 50, we think 50 is a good average target to hit. 200 sites is not a very big number. We think we can achieve that also. I think over the long haul, I can certainly tell you if we hit average of 50, we’re not gonna be... we’re gonna be a bit disappointed.

I think particularly as I was talking about in the, with the prepared remarks, you know, I think as they start establishing Pulsed Radiofrequency days 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.

Chris Potter, Analyst, Northern Border Investments: Thanks, Arun. That’s helpful. Would you expect that the average utilization per site would increase materially in 2026?

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: I think in the second half of 2026, I do believe that, yes.

Chris Potter, Analyst, Northern Border Investments: Thank you.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: You know, one of the things that Tom has talked about is that as we update our sales design, and he described it a little bit for you, we are starting to put to go to a 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. You know, 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 start-up for these new sites and better utilization over time.

Chris Potter, Analyst, Northern Border Investments: Thanks, Arun.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Perfect. Thank you.

Operator: Thank you. 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.

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Thank you so much for spending the time with us. We really appreciate the attention. We are excited about where we’re going. We look forward to updating you at the end of Q1. Have a good evening.

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

Dr. Arun Menawat, Chief Executive Officer, Profound Medical: Thank you.