Good day. I’d like to welcome everyone to EDAP TMS First Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-answer session. [Operator Instructions] Today's call is being recorded. I would now like to turn the call over to John Fraunces. Please go ahead.

Good morning. Thank you for joining us for the EDAP TMS first quarter 2025 financial and operating results conference call. Joining me on today's call are Ryan Rhodes, Chief Executive Officer; Ken Mobeck, Chief Financial Officer; and Francois Dietsch, Chief Accounting Officer. Before we begin, I would like to remind everyone that management's remarks today may contain forward-looking statements, which include statements regarding the company's growth and expansion plans. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in such forward-looking statements. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. I would now like to turn the call over to EDAP's Chief Executive Officer, Ryan Rhodes.

Thank you, John, and good morning everyone. Over the last several months, EDAP has made a series of important strategic decisions to further transform our company in becoming the global leader in HIFU focal therapy. In support of this strategy, we announced a series of important achievements which demonstrate the beginning of this transformation across multiple areas of our business. We placed nine Focal One systems in the first quarter of 2025, which is a record number of placements for any prior first quarter period. In March, we announced that Focal One received CE Mark approval for the treatment of posterior deep infiltrating endometriosis. And in April we launched the new Focal One Eye Robotic HIFU system at this year's 2025 AUA Meeting. As our Focal One business continues to achieve these important milestones, we are also seeing a growing body of clinical data in support of Robotic Focal therapy for the management of prostate cancer. Most notably, positive results from the FARP Randomized Controlled Trial were presented at this year’s 2025 AUA Meeting, which we will discuss in more detail later on this call. Finally, we announced that urologists from the Cleveland Clinic Ohio and the Cleveland Clinic Abu Dhabi conducted the world's first remote transatlantic Focal One Robotic HIFU procedure. A presentation discussing this ground breaking procedure was to be delivered at this year's AUA meeting and later on the call I will provide additional details about this ground breaking event. Collectively, these significant commercial, regulatory and clinical milestones reflect our continued strategic focus on growing our Core HIFU business and further validates the growing demand for Focal One from the global urology community. I will now discuss our system placement activity for the first quarter. As noted, Focal One continued along its positive growth trajectory in the…

Thank you Ryan, and good morning everyone. For conversion purposes, our average euro to dollar exchange rate was 1.05 for the first quarter of 2025. Total HIFU revenue for the first quarter of 2025 was €6.2 million, an increase of 6.8% as compared to €5.8 million for the first quarter of 2024. The increase in revenue was driven by six Focal One Systems sold in the first quarter of 2025 versus 5 systems sold in the first quarter of 2024 as well as increases in service related revenue. Total worldwide revenue for the first quarter of 2025 was €13.6 million, a decrease of 9.1% as compared to total revenue of €14.9 million for the same period in 2024. The decrease in revenue was due to declines of 23.8% and 17.5% in our non-core ESWL and distribution divisions respectively. As we discussed on our fourth quarter of 2024 conference call, we expect revenue declines in our non-core segments between 20% and 25% from 2024 levels as we focus on becoming a pure play market leader in therapeutic HIFU. Gross profit for the first quarter of 2025 was €5.7 million compared to €6.4 million for the same period in 2024. Gross profit margin was 42% in the first quarter of 2025 compared to 42.8% in the year ago period. The decrease in gross profit margin year-over-year was primarily due to mix changes within our product portfolio. Operating expenses were €11.7 million for the first quarter of 2025 and compared to €11.2 million for the same period in 2024. The increase in operating expenses was primarily due to focused investments in our HIFU business segment. Operating loss for the first quarter of 2025 was €6 million compared to an operating loss of €4.8 million in the first quarter of 2024. Including the impact…

Thanks, Ken. With respect to guidance, we are reiterating the 2025 revenue guidance which we first issued on our fourth quarter call in late March. We continue to expect HIFU revenue to grow between 16% and 25% on a year-over-year basis and the non-core ESWL and distribution businesses to decline between 20% and 25% on a year-over-year basis. In summary, we continue to focus on our strategic plan in becoming the global leader in focal therapy and our recent positive announcements demonstrate that we are making progress towards achieving these goals. Demand for our leading Focal One platform remains on a strong upward trajectory and we believe the introduction of the new Focal One i System will further strengthen EDAP’s technological leadership in focal therapy. As we continue to bring innovation and cutting edge technology to the Focal One platform, a growing body of clinical data provides additional evidence that supports the use of focal therapy for prostate cancer. We believe the positive results from the landmark HIFI study; coupled with the recent presentation of the FARP randomized clinical trial data at this year's AUA will accelerate the adoption of focal therapy across the global urology community. These studies reinforce the oncologic efficacy of Focal One and support the favorable quality of life functional outcomes patients are demanding as Focal One is a non-surgical, non-invasive procedure that requires no cutting, no blood loss and no use of radiation. Finally, when we step back and look at the number of Focal One placements since the beginning of 2022, we are clearly experiencing a steady upward trend in demand that we believe will continue to gain momentum. As noted, we placed a record number of Focal One systems in the first quarter and we are seeing growing interest in the Focal One platform from many of the large hospital networks. These are clearly positive signs of Focal One adoption and we expect this trend will continue in 2025 and beyond. With that, I will now turn the call back over to the operator for questions. Operator?

Thank you, sir. [Operator Instructions] We'll go for our first question for Michael Sarcone with Jefferies. Please go ahead.

Good morning and thanks for taking our questions. Just to start, Ryan, you commented on some maybe changing trends on the payer landscape, longer and more challenging reviews and procedure approvals, maybe can you just elaborate some more here? When exactly did you start seeing this? Is it only in the Medicare Advantage population or are you seeing that starting to broaden out? Just trying to get a better sense of what's going on here.

Yes. The comments and trends that I referenced are relevant to the Medicare Advantage plan patients. As noted, about approximately 54% of patients who are on a Medicare plan will opt for a Medicare Advantage plan or a Medicare Part C plan. We continue to work closely through this process. We are working with one of the largest and most capable consulting firms and reimbursement and market access has been a core competency for the company. And we continue to see significant progress and we continue to work through that process with individual payers and certainly with patients. So again, it's as referenced really in the area of Medicare Advantage that I made comment to.

Got it. I see. And so has that continued into 2Q and are you ultimately able to get the procedure approved? It just takes longer, or are you seeing any portion of these processes end up in denial?

Well, there's always the risk of some denials, but we show notable progress of appeals and working through that process with and we see more patients obviously winning on the appeal front. So again, we stay very active in the process. We work very closely with the individual institutions and we monitor it through use of our outside consulting partners. So again, as mentioned, we see obviously more appeals happening, but we win in the majority of these appeals.

Got it. That's helpful. Maybe last one for me, maybe for Ken. You've maintained your HIFU sales growth guidance, 16% to 25%. Would love to just get a sense for what's incorporated into those assumptions at the low end and the high end. And are you incorporating a meaningful acceleration in procedure growth? I think you said HIFU procedure growth, 4% are we assuming in the guide that these payer challenges recede and you get an acceleration in 2H?

Yes. So, great question. Thank you, Michael. So, as you know, capital equipment environment is lumpy. We're holding guidance right now. We do have procedure growth factored in our forecast right now. And where we see the business at this phase, we're still confident that we will achieve in that range between 16% to 25% HIFU revenue growth for the year.

Got it. Thank you, Ken.

We'll next go to Sean Lee with H.C. Wainwright.

Hey, good morning, guys, and thanks for taking my questions. I just have a couple on the endometriosis front. So, with the reception of the CE Mark approval, what are your next on marketing? Focal One for endometriosis in Europe and also maybe as a follow up on to that, what are your plans for endometriosis in the U.S? Thanks.

Yes, as referenced, we have embarked on a controlled market entry in CE Mark countries. So we are working with a small group of initial hospitals based on receiving CE Mark approval. And so again, our goal there is to continue to work with those thought leaders and really expand the clinical development efforts in preparation for a broader launch amongst CE Mark countries. So it's kind of a stepwise approach. We're in this first phase and then we'll move to a secondary phase. In terms of the U.S. again, what we're doing now is, remember, we're following up on the randomized control trial, the Phase 2 study, Phase 2 study and Phase 3 studies in order to continue to track that data set and monitor those patients. As we've communicated in the past, there was a high number of patients post the randomized control trial that opted to have Focal One ablation for their endometriosis. So we want to be able to use that data and carry that data set forward for future interactions with the FDA in the U.S. but in the interim, we're working in this controlled launch phase in Europe with our recent CE Mark approval.

That's very helpful. Thanks for that.

And at this time, we have no further questions. I'd like to turn the call back over to Ryan Rhodes for final and closing remarks.

I want to thank everyone for joining us on today's call. And we look forward to seeing you at the upcoming Jefferies Global Healthcare Conference on Thursday, June 5th in New York City. Thank you.

Thank you. And ladies and gentlemen, that does conclude today's program. We thank you for your participation. You may disconnect at any time.