Greetings, and welcome to the EDAP TMS Fourth Quarter and Year-End 2025 Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the call over to Louisa Smith from Gilmartin Group. Thank you. You may begin.

Good morning. Thank you for joining us for the EDAP TMS Fourth Quarter and Full Year 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 within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those anticipated. We direct you to the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2025, to be filed with the Securities and Exchange Commission as well as our other filings with the SEC for a description of factors that may cause such differences. These statements speak only as of today's date, and we undertake no obligation to update or revise them, except as required by law. Additionally, this call is being recorded and constitutes a public disclosure under Regulation FD. I would now like to turn the call over to EDAP's Chief Executive Officer, Ryan Rhodes. Ryan?

Thank you, Louisa, and good morning, everyone. 2025 was a transformative year for our company, highlighted by 39% revenue growth in our core HIFU business and record commercial performance for Focal One. Importantly, much of this growth was driven by accelerated adoption in the U.S., where we delivered record system placements and strong procedure growth. As our installed base continues to expand, we are also seeing increased utilization across hospitals, emphasizing the positive recurring revenue opportunity created by each Focal One system placement. Today, we will begin with our fourth quarter results, then reflect on our achievements, including our financial performance, and we will close the call by outlining our strategic priorities for 2026. The fourth quarter was the strongest quarter in the company's history for HIFU revenue, representing an increase of 34% over the same period last year. This growth was led by capital sales and treatment-driven revenues, which continue to be the driving force of our ongoing commercial success. We achieved a record 15 Focal One placements worldwide, including 14 cash sales, representing our strongest quarter-to-date in both placements and cash sales. Performance was driven by the U.S. market, which delivered 10 cash sales, its highest quarterly total on record. Beyond the headline numbers, the profile of our customers continues to be led by the expanding adoption of Focal One amongst leading academic centers in major community hospitals. Notably, we achieved our first Focal One placement in the state of Wisconsin at Aurora St. Luke's Medical Center, part of Advocate Health, a major integrated health care delivery network spanning 18 hospitals across the states of Wisconsin and Illinois. In total, we achieved 4 new Focal One placements in the state of Pennsylvania during the quarter, further strengthening our presence in this region. The University of Pennsylvania, a member…

Thanks, Ryan, and good morning, everyone. Before I begin, I want to note that all 2025 figures are reported in euros, our functional and reporting currency. For conversion purposes, our average euro-dollar exchange rate was $1.16 for the fourth quarter 2025. Beginning with our Q1 2026 results, we will report in U.S. dollars, reflecting our transition to a domestic issuer. Turning to full year 2025 performance. EDAP set a calendar year record for HIFU revenue in 2025. HIFU revenue for the full year 2025 was EUR 33.1 million, an increase of 39% as compared to HIFU revenue of EUR 23.8 million for the full year 2024. The increase in HIFU segment revenue versus the prior year was due to a 59% increase in the number of Focal One system units sold and a 19% year-over-year increase in treatment-driven revenue. Total revenue for full year 2025 was EUR 62.4 million, a decrease of 3% compared to EUR 64.1 million for the full year 2024. The year-over-year decrease was driven by a 27% decline in our noncore distribution and ESWL businesses, which offset the 39% growth in core HIFU business, as I just outlined. This is consistent with our strategy of focusing resources on the higher-margin HIFU business while managing the legacy businesses through their natural decline. Now turning to the fourth quarter. Q4 2025 was a record quarter for HIFU revenue. HIFU revenue was EUR 11.7 million, a notable increase of 34% as compared to HIFU revenue of EUR 8.8 million for the same period in 2024. The increase in revenue was due to continued significant strength in our Focal One HIFU business driven by 14 Focal One capital sales in the quarter versus 11 capital sales in the prior year period as well as a 22% year-over-year increase in Focal…

Thanks, Ken. In closing, 2025 was a year of record performance, expanding clinical validation and technological advancement. As we enter 2026 with accelerating commercial momentum, we are executing with discipline against 3 high-impact priorities designed to drive durable growth and long-term shareholder value. First, commercial execution. We are expanding our penetration across leading academic centers, community hospitals and integrated delivery networks with significant runway ahead as we remain early in the adoption life cycle of this large underpenetrated market in prostate cancer. Second, clinical indication expansion. Beyond prostate cancer, we are unlocking incremental growth opportunities for Focal One across new indications. We are making meaningful progress on our BPH clinical and regulatory pathway and accelerating commercialization in endometriosis. Third, technology and innovation. We are advancing AI-driven treatment planning and next-generation imaging capabilities to strengthen Focal One's leadership as the most advanced robotic focal therapy platform in the market. The combination of these priorities, commercial execution, indication expansion and continued technology innovation and leadership underpins our confidence in our 2026 outlook and beyond. In closing, we are confident in our ability to deliver sustainable growth and create long-term shareholder value. With that, I will now turn the call back over to the operator for questions. Operator?

[Operator Instructions] We'll take our first question from Mike Sarcone with Jefferies.

I guess just to start, can you give us a little more color? I know you're reiterating the 2026 guidance, but particularly on the HIFU side, any color on kind of splitting out growth in procedures versus capital sales would be helpful.

Yes, Michael. So again, we see pipelines building and being strong both in the U.S., but importantly, also in the outside U.S. markets. We continue to execute around global regions. So as we've talked about in the past, pipeline development and a growing pipeline in the U.S., but equally in the outside U.S., and some of that was demonstrated certainly with our results here at the end of the year as -- and we're already into 2026. Procedure growth, again, we saw a notable increase Q4, 28% over prior year. We see double-digit growth from quarter-to-quarter if we measured ourselves Q4 versus Q3 of last year. And I think we're, again, seeing more and more centers actively looking to expand to a broader audience of patients. Again, each program ramps differently. But I think overall, we look outward and see a strong year for us, both in terms of capital sales as well as procedure growth.

And Michael, as we move forward to, as Ryan referenced, with 35 Focal One sales in 2025, that is going to lead down the road to procedure growth as well as service growth when those expire. With our installed base now at 165 units, that's also going to lead to disposable sales growth and service growth as well. Capital sales will lead the way again on a percentage basis, but we do see the procedure and service revenue volumes picking up as a total percentage of revenue for HIFU.

Great. That's all very helpful. And then maybe just my follow-up. What have you seen so far 1Q to date in terms of procedures in the U.S. and globally? And particularly in the U.S., have you seen any impact from some of the storms in the Northeast and along the East Coast?

No impact that I can point to. I would say, generally, we see a nice ramp developing. We came off of Q4, a strong quarter. But again, Q1 is ramping as planned. Nothing holding us back from growing appropriately per the guidance we've given in procedure growth and revenue.

We will move next to Joseph Downing with Piper Sandler.

Yes. So I guess the HIFU guide was reiterated here. And I'm just thinking how should investors be thinking about the first half, second half split within the HIFU guide given the seasonality with 4Q? And then specifically, what's a reasonable baseline for 1Q HIFU revenue given typical hospital CapEx sensitivity? And then just at a higher level, are you embedding any cushion for lumpiness throughout the year of the capital sales line? Do you think that should kind of flatten out a little bit over the course of this year? Or should we expect more of the similar from the previous few years there?

Yes. So thanks for the question. So when we look at this year's revenue 2026, we're going to see the following patterns, very consistent with prior years. We anticipate Q4 to be the highest growth quarter, revenue-wise and our biggest dollar-wise quarter. And the lowest quarter will be in Q3. That's very consistent with Q4 capital budgets spending and Q3 summer slowdowns. So we see a little less than 50% of the business in the first half of the year, and I'd say a little more on the second half.

Great. I appreciate that, Ken. And then just on the noncore wind-down trajectory, obviously, implies another step down from last year's figure in 2026. Curious if you could just break out how much of that is ESWL versus the distribution business? And then at what point does noncore revenue effectively reach a de minimis level? I guess, said a little differently, when does the revenue mix shift kind of become clean enough that investors should evaluate EDAP purely on HIFU metrics?

Yes. So when you look at the noncore, ESWL is roughly 20% to 25% of the noncore okay? And the way we're looking at the business going forward is as follows, okay? Our ESWL business now is service-only business, okay? So we're going to continue to serve that and look at ways to monetize that business. And the way to look at the distribution business going forward, it's just like I explained last year. When these agreements expire, our annual distribution agreements, we're taking a look at each agreement. Is it material to revenue and is it accretive to gross margin? And then we're making executive decisions on should we ramp that business going forward. So I would still see that business sticking around in the short term.

Our next question comes from Swayampakula Ramakanth.

This is RK from H.C. Wainwright. A couple of quick questions for me. The first one being on the margins, you cited a normalized margin of 46.9%. I understand some of that is being hit by the Section 232 tariff stuff. What percentage of your revenue gets impacted by that? And then what's the strategy going forward if this -- if there is stickiness to that 232 tariffs?

Yes. So RK, as you know, we manufacture our product in Lyon, France. So the pieces of the business that are impacted are when we ship the finished goods from Lyon, France to the United States. So it's basically our U.S. revenue that's an impact to those dollars today. We're monitoring the situation closely. We have budgeted about $2.5 million in tariffs in 2026 to be conservative, and we're just going to continually monitor what everything is happening from the government regarding those. The offset to the tariff is we do have our new ultrasound engine. As we anticipated and told you last year, we were transitioning to this engine. It's going to have better functionality and also lower cost. So that will help offset some of the tariff impact.

Okay. Then Ryan, just about a high-level thought here. I know for quite a bit of '24 and the early part of '25, you are concerned about cash sales. You closed out 2025 with 14 cash sales and 1 lease. So does that mean some of those concerns regarding cash sales have mitigated quite a bit. And so you're comfortable going into '26. And also, if there was any price increase taken in early part of 2026, just trying to understand what could be the potential levers or the full push on the revenue guidance that you just gave us?

Yes, RK. So again, as I tell people, we sell a clinically necessary strategic revenue-enhancing service line in the #1 diagnosed cancer in men. So it puts us in a position to be strategic in nature. And with that, hospitals need to invest in the technology, and that means purchase the technology. So we've been leading with the cash sale. We believe our platform is best-in-class in the market. It brings immediate tangible value when we launch our programs. So a cash sale makes total sense, plus the reimbursement that's in place today. So cash sales will be our lead theme going forward. In the past, we have offered some time-based operational leases or bridge to budget or bridge to purchase. We don't need to do that as much anymore. I think people realize that Focal One is a key anchor point to their overall focal therapy program. So we showed excellent sales and cash sales here in Q4. Our theme going forward will be leading with cash sales as notably. In terms of a price increase, we took a price increase last year with the launch of Focal One i. And as you heard in the past, we made notable advancements in this new platform, both hardware and software. And we're not done. We will continue to innovate on the platform. We've made improvements in a number of areas, and we're never satisfied. So we have a price increase that went in place last year. We haven't changed our pricing strategy at the beginning of this year, and we see our average selling prices tend to hold or even slightly increase. So I'm proud of the work our commercial teams are doing in the field.

And at this time, there are no further questions in queue. I will turn the meeting back to Ryan Rhodes for closing remarks.

I want to thank everyone again for joining us on today's call. We look forward to seeing you in Washington, D.C. at the upcoming Annual Meeting of the American Urological Association in May and our important Investor Day being held in New York City on June 1, along with the Jefferies Healthcare Conference also taking place in New York City at the beginning of June. Thank you, everyone.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.