NNCSF (NNCSF) Q4 2026 Earnings Report, Transcript and Summary

Hello, and welcome, everyone, to the Nanosonics FY '26 Full Year Results Investor Briefing. My name is Catherine Strong, and I'm Head of Investor Relations at Nanosonics. Today's presentation will be led by Michael Kavanagh, Chief Executive Officer and President; and Jason Burriss, Chief Financial Officer. Management will speak to a selection of slides that were lodged earlier this morning with the ASX. The briefing will be followed by a question-and-answer session. [Operator Instructions] I would now like to hand the call over to Michael Kavanagh. Please go ahead, Mike.

Thank you very much, Catherine, and good morning, everybody, and thank you all for joining us today. By now, many of you will have seen the FY '26 results. And there's a lot of information contained in the materials that were lodged this morning. But before we get into some of that detail, there are a number of key takeaway messages I would like to highlight. The first, I think, is on a constant currency basis, which, of course, provides a clearer view of the business' performance, the FY '26 results demonstrate a solid outcome with constant currency revenue up 6% for the year and EBIT up 21% that's supported by, I think we will have seen disciplined cost control whilst, of course, we continue to invest in our future growth. The second point is the trophon-only business. It delivered its strongest placement performance in 3 years with over 4,200 units placed during the year, and that involved expanding the cumulative installed base to more than 39,000 devices out there today and also achieving record upgrade activity in North America. And also, we successfully launched our next-generation technologies, the trophon3 and the trophon2 Plus Importantly, the trophon-only business EBIT for the year on a reported basis delivered $50.6 million in EBIT or in constant currency was up 16% to $56.5 million. And that continues to demonstrate the strong profitability, cash generation and operating leverage that we are getting from the trophon business. The third and importantly is CORIS continues on plan with key regulatory approvals achieved, control market release activity advanced across our launch markets. And you'll be pleased to know that the commercial launch is now planned for this half in FY '27. And I would say with that, with the upcoming launch of CORIS, the company is now certainly entering what we consider a defining period of new growth as we now move from a single platform to becoming a multi-platform infection prevention company. And we definitely enter FY '27 from a position of strength with trophon continuing to generate strong profits and cash. We've got a debt-free balance sheet and the flexibility to invest in CORIS, whilst, of course, you would have seen this morning the announcement that we're returning further capital to shareholders with a $40 million buyback. So turning then to some of the details. Well, reported revenue was just under $204 million, $203.9 million, and that was up 3% on PCP. However, at constant currency, revenue was $211.5 million, and that represented 6% growth. Of note, probably a point to call out here was in Q3 of the year, we did experience a bit of softness in consumables, and that happened to coincide with the severe weather events that took place in the Northeast of the United States that many of you would have seen the reports on. It was all over the news globally at the time. We saw that result in lower traffic to the hospitals. And we actually also saw that in terms of our shipments to that whole region, our shipments of consumables were down. But importantly, it's not structural that the consumable volumes did come back up in Q4. Also in that third quarter, we did expect a bit more trophon3 versus trophon2. You remember in the first half, the balance was towards trophon2, which is a lower price than trophon3. And whilst the trophon3 did grow in the third quarter, there was still a decent percentage of trophon2, which moderated the ASP a bit. But again, importantly, in Q4, Trophon3 became the dominant device, and we're seeing that going into this year as well. So ASP did come up. So that did impact a little bit. So it was more some transitionary impacts that we experienced during Q3 rather than anything structural. The gross profit margin for the year was 76.9%. And the 1.3 points moderation from FY '25, that reflected the product mix because we had those record capital unit placements and the capital unit gross margin is lower than consumables. But also, we had the currency movements. But on a constant currency basis, the gross margin is still a very healthy 77.6%. Operating expenses for the year, very well controlled without compromising our growth investments, and they just increased 2% on a reported basis and 4% at constant currency. So together, all of those delivers a reported EBIT of $16 million for the year or $21.6 million, if you look at it on constant currency, which was up 21% on prior year. So operationally, a good performance. It is worth calling out, I think, the strength of the trophon-only business, and it is a continuing feature of the Nanosonics result. The trophon franchise, and Jason will cover this a little bit later, it continues to generate strong profitability and cash flow. And the reported EBIT for the year for the trophon-only business was just under $51 million or just under $57 million in constant currency, which was up 16% on prior corresponding period. So in short, the trophon definitely remains a highly profitable engine that gives us the flexibility to fund CORIS, maintain a debt-free balance sheet and continue investing for the long term. FY '26, it was also a year of important operational delivery across the whole business. I've mentioned some of the highlights already, but it's worth touching on a couple of them on the overall progress. So across the trophon franchise, we launched trophon3 and trophon2 Plus that was launched halfway through the first half, and we saw adoption of these new innovations increase in the second half and particularly in the fourth quarter. The overall global cumulative installed base, that grew 6% to 39,230 units. And importantly, that represents the protection of approximately 31 million patients on an annual basis from the risk of cross-contamination. Upgrades, they continue to perform very well, up 20% for the year. And importantly, upgrades were up 32% in North America. And there are still over 8,000 older first-generation trophon EPR devices remaining in North America to upgrade. So still a significant opportunity moving forward. For CORIS, we made important regulatory and commercial progress during the year, including clearances across the U.K., Europe, Australia and the first FDA 510(k) clearance for the first round of expanded scope indications. And that second 510(k) is currently in with the FDA and undergoing the review process. And as mentioned earlier, we move into commercial launch this first half. We also then to support a lot of this, we continue to strengthen our operations throughout the year. And in addition to establishing a dedicated CORIS device manufacturing line in Australia, we did expand our U.S. Indianapolis facility and have now started the manufacturing and distribution of trophon's core consumables from our local manufacturing facility in Indianapolis. And the CORIS QUANTUM consumable line, that's now in place also in Indianapolis and ready to go. I should also mention that in Q3 this year, we will be moving our corporate headquarters, manufacturing and laboratories to a new facility, quite close to where we already are in Macquarie Park, and that's all to support our next phase of growth. And during this year of FY '26, we did have that site registered, all the regulatory approvals for manufacturing were achieved. All the capital works now are currently underway readying for that Q3 move. So quickly just briefly back to the trophon business. As I mentioned, the total trophon unit placements were 4,230 units. So that's up 9% on the prior year. And that does represent the strongest annual placements that we've delivered in 3 years. And of the total placements, the cumulative installed base increased 6% to 39,230 devices, and there were 2,230 new installed base units added during the year. I mentioned already the upgrade, a record year. 2,000 units, but the majority of those, in fact, 1,980 of them in North America, and that was up 32%, and we expect ongoing growth over there. So overall, a very strong year for total unit volumes. Before I hand over to Jason to go into some of the financials in a bit more detail, I do think it's worth noting that with the imminent commercial launch now of CORIS, we believe that Nanosonics is now entering an exciting new phase. With CORIS, we have the opportunity to apply the proven commercial foundations we've built through trophon. That includes our customer relationships, our sales and service capability, regulatory clinical expertise that we've developed, our manufacturing capability and of course, the proven recurring revenue model to a second highly significant infection prevention opportunity. So while the CORIS is a new platform, I believe we are launching it from a position of strength, and we certainly do believe it has the potential to become our second transformational growth platform, an important driver for long-term value for Nanosonics. But more on this a little bit later. So I'll now hand over to Jason to take you through the -- some of more of the details around the financials. Jason?

Thanks, Michael. As you said, I'll take you through the more details of the FY '26 results. For Nanosonics, FY '26 was a year of solid earnings growth at constant currency and a disciplined operating expense performance. EBIT grew 21% at constant currency, supported by revenue growth and disciplined operating expense control. We also continue to see operational leverage in the trophon-only business. At the same time, we invested in CORIS, which we believe will become a second growth engine for our business. And we also returned $20 million to shareholders through the buyback with a further buyback announced today of up to $40 million. Turning to the P&L. Our revenue was $203.9 million, up 3% on a reported basis and 6% on a constant currency basis to $211.5 million. Gross profit margin was 76.9%, moderating by 1.3 points. This reflected product mix and the impact of the stronger Australian dollar against the U.S. dollar. At constant currency, gross profit margin was 77.6%, which is only 0.6 points lower than last year. And as Michael said earlier, is primarily associated with increased capital unit sales, which is obviously a positive thing for the long-term benefit of the business. We recovered $2.5 million in U.S. tariffs paid under the International Emergency Economic Powers Act up to February 2026. These are included in our FY '26 financials. Our residual FY '26 tariffs, i.e., the ones that affected the P&L were $0.6 million, making them comparable to FY '25 when we paid $0.5 million. Operating expenses were $141.4 million, up 2% on a reported basis and at 4% at constant currency, reflecting disciplined cost management. And of course, within the OpEx, trophon costs were $106.8 million, down 1%, while the investment went into CORIS, which increased the OpEx spend by around 13% to $34.6 million as we continued to prepare for launch. The OpEx, of course, included R&D, which continued to ease as a percentage of sales from 17% in FY '25 to 16% in FY '26 as the new trophon technology arrived in the market. EBIT was $16 million on a reported basis or $21.6 million in constant currency, a 21% increase in constant currency terms. Looking specifically at capital revenue, we report growth of 4% to $54.7 million or 8% in constant currency terms. The result was primarily driven by higher volumes with North America remaining the key growth driver and delivering record placements, including record upgrades. Pleasingly, average selling price strengthened through the second half of the year as trophon3 became a larger proportion of sales. We also saw trophon2 Plus software upgrades contributing more strongly in Q4, and we expect this momentum to continue into FY '27. Moving to annuity revenue. On this slide, we share the growth in annuity revenue. To refresh you, annuity revenue is recurring revenue less spare parts, which has become a suitable metric for Nanosonics because it provides a clearer view of the underlying quality, resilience and growth of the recurring revenue base. Annuity revenue grew 4% on a reported basis to $141.8 million or 8% growth at constant currency. Core consumables, which are the trophon disinfectant and chemical indicators used in every cycle, were up 4% at constant currency. Ecosystem revenue grew 6% at constant currency, and the ecosystem products include the wider range of trophon workflow products, including probe covers, cleaning wipes and other consumables. Service revenue grew 19% at constant currency, growing strongly as more customers adopt the service offerings associated with both Trophon2 and Trophon3. Service includes preventative maintenance, support contracts along with our pay-as-you-go customers. Spare parts moderated as expected as customers upgraded to newer trophon systems and the record result of upgrades in North America. Looking at our regional performance. North America had record total placements and upgrades in FY '26. We placed a record 3,880 devices this year, up 13%. The growth driver was upgrades with 1,980 units, up 32% on the prior year, while new installed base continued to grow, adding 1,900 units. Upgrades will continue to represent a significant opportunity for Nanosonics in North America. As Michael said earlier on, there are approximately 8,000 original EPR devices remaining for potential conversion. The new installed base additions lift our cumulative installed base in North America to 34,210 devices, up 6%. And of course, every device is a multiyear stream of consumables, ecosystem and service revenue. So a larger base directly expands the annuity foundation. Reported revenue for North America was $186.4 million, up 3% or 8% at constant currency, showing the underlying demand remains strong in that region. Reported annuity revenue reached $126.8 million, up 4% or 9% at constant currency. With annuity revenue within core consumables grew 5%, the service business growing 19%. Both of these are constant currency numbers. Reported capital revenue was $52.3 million, up 6% or 10% at constant currency, driven by the record placement activity we've just discussed and as already mentioned, the improved capital pricing in the second half as trophon3 became a larger proportion of sales and increasing the uptake of trophon2 Plus upgrades in the fourth quarter. Spare parts, which are not part of annuity revenue, was $7.3 million, down 21% or 19% at constant currency, and we expect that to continue to moderate as customers upgrade to newer trophon systems. Overall, North America continued to be a strong performing region for us. In EMEA and APAC, we continue to grow the cumulative installed base. Turning to EMEA. Our cumulative installed base grew 8% on the prior year to 2,630 units with the addition of 200 new units, consistent on last year. In this region, the majority of the original trophon EPR fleet has already been upgraded. Reported annuity revenue rose 7%, while total revenue grew 1% to $12.3 million, driven by a moderation in capital revenue. Capital revenue was softer because we saw a greater proportion of managed equipment service model versus capital purchase model in the U.K. compared to last year. As a reminder, units purchased under the MES model have no upfront capital revenue, so the capital value is built into a higher price for the consumables. Turning to APAC. New installed base devices grew by 130 units, up 44% on the prior year with a good contribution coming from Japan. This increased the cumulative installed base to 2,390 units, reflecting 6% growth. Total units placed of 150 included 20 upgrade devices in a region where the majority of EPR units have already been upgraded. Reported revenue in APAC was $5.1 million, down 14% on the prior year. Annuity revenue was $4.2 million, also down 14%, while capital revenue was $0.9 million, down 18%. The capital softness was driven by placement mix, particularly in Japan, where the majority of units were placed under a rental model. Annuity revenue also softened. However, we believe our next-generation trophon offering is compelling and further strong momentum in device sales will help support annuity revenue going forward. Nanosonics remains in a strong financial position. We ended FY '26 with $155.2 million in cash and cash equivalents. Business cash flow, which excludes the funds spent on the share buyback, was $13.6 million, reflecting strong cash generation from trophon, while at the same time, funding CORIS commercialization and increase in inventory to support trophon growth and the CORIS launch. We also completed a $20 million share buyback in FY '26 to return capital to our shareholders. And as Michael mentioned, we announced a further buyback of up to $40 million in fiscal year '27. This, we believe, is an attractive and efficient way to return capital to shareholders while preserving the capacity to invest for long-term growth. Before I hand back to Michael, I think it's important to highlight the strength of the trophon-only business. central to our growth strategy due to its earnings power and strong cash generation. The trophon-only business EBIT of $50.6 million was up 5% or $56.5 million in constant currency terms, up 16%. The strong financial profile of the trophon business is what enables us to invest in CORIS, continue innovation and maintain the balance sheet flexibility that we have. This covers the financials. Michael, I'll hand back to you to talk more about trophon and CORIS and our guidance for fiscal year '27.

Thanks very much, Jason. A few comments, first of all, on our expectations for the trophon business for FY '27. We do expect to see continued strong growth within the trophon franchise. Trophon remains a market-leading growth platform with multiple capital and recurring revenue levers that's shown on this slide that we believe can continue to expand revenue, earnings and of course, customer value. On the capital side of things, we do expect the installed base to continue to grow across all regions. We continue to expand the new installed base in North America, and we expect trophon3 to continue to do that. In EMEA, the trophon3, it does strengthen our customer proposition and potentially supports even further country-level opportunities as adoption fundamentals improve. In Japan, we are definitely making progress on the building blocks for broader adoption, including local guideline development and regulatory clearance is expected for trophon3 in this half as well. And as Jason mentioned, Japan did contribute nicely in units in FY '26 to the APAC region. Still on the capital side, upgrades also remain a significant opportunity. We saw excellent growth in FY '26. And these upgrades, they not only modernize the fleet, but unlock, in many cases, new service opportunities and workflow value as well because as a reminder, many of those old EPRs were under service contracts with GE Healthcare historically. And as we sell the upgrades, Nanosonics captures the new service contracts. In addition, the trophon2 Plus software upgrades, they provide a way to extend value across the existing trophon2 installed base, of which there's well over 25,000. And we saw the trophon2 Plus software upgrades begin to accelerate in Q4. So we do expect them to be a meaningful contribution in FY '27. So overall, we expect upgrades to be a continuing growth driver as well moving forward. On the annuity revenue side, I think the core consumables, they grow with procedure utilization. And as I said earlier, whilst we saw a bit of softness in Q3, that reversed going into Q4 and in the early stages now of FY '27. So the consumables, they grow with procedure utilization and our ecosystem consumables, they provide an opportunity to broaden our share of the full workflow. Service, as I mentioned, it also continues to be an important and meaningful growth opportunity, did really well in FY '26. And when we have those service contracts out there, it certainly provides customer value, but also great retention opportunities. And finally, connectivity. Over time, we think connectivity subscriptions, especially now with our new DICOM and the capabilities in trophon3 will become more meaningful as we move forward. So taken together, the trophon remains a high-quality, strong growth platform, multiple levers to drive ongoing durable revenue growth, earnings and cash generation, and all of that is seen in our guidance. So with trophon continuing to provide strong growth in earnings, I want to turn to CORIS briefly because we believe this represents the next major step expanding Nanosonics beyond just ultrasound reprocessing. And CORIS is now moving to commercial launch in the first half. And this is a major milestone for Nanosonics and our shareholders, no doubt, and represents a transition from years of technology development, regulatory progress, controlled market release execution into the beginning of commercial adoption. And the CORIS opportunity is substantial with around 60 million endoscope procedures each year across our target markets. Importantly, CORIS is solving a real and significant problem in endoscope reprocessing. Today, the cleaning of flexible endoscope channels remains one of the most challenging. It's manual, as many variable steps in the whole reprocessing workflow. It's difficult to standardize, difficult to verify, difficult to perform consistently across complex, narrow and in many cases, branch channels. And that's what we witnessed during our controlled market release, and that is the problem CORIS is designed to address. For customers, CORIS delivers, I believe, a clear value proposition. It delivers automation, superior efficacy, consistency of outcome. It verifies all the key cycle parameters, which gives better traceability. It provides workflow support for the people who have to do this and ultimately, confidence that, that critical step has been performed effectively. And all of those value propositions are practical, credible reasons for hospitals to adopt because they speak directly to patient safety, quality assurance, compliance and operational efficiency. All of those dimensions critically important for the adoption of a new technology. The slide that's on front of you and in the investor deck shows why we believe CORIS can become a very, very attractive business over time. And I guess today, the best reference point investors have is trophon. And with trophon, every installed device creates a long-term revenue stream through consumable service and broader workflow products. And that installed base model has delivered high-quality annuity revenue, strong gross margins, operating leverage and significant cash generation as we've outlined today. Now CORIS is built on the same core principles. However, the capital equipment is expected to be three to fivefold the current trophon price. Each unit is expected to run approximately 10 cycles per day on average, which is, again, 3 to 4x that of trophon. Price per cycle is expected to be 4 to 6x that of trophon and service adoption for this type of equipment is also expected to be higher than trophon, which today is in the order of 55% to 60%, whereas technologies like these can be between 80% and 100%. So the investment case is clear. CORIS definitely gives Nanosonics a second platform with trophon-like annuity characteristics. It's targeted at a large unmet need and supported by commercial capabilities we've already proven. That's why we believe CORIS definitely has the potential to become a major long-term value driver for Nanosonics. And moving to our launch, well, we will start this half in the U.K., Ireland and Australia, and that will be followed by the U.S. this year as well. And the launch year will focus on establishing broad market awareness now, build pipeline as we get into the customer budget cycles and of course, initial customer and reference site adoptions as preparation, all of that is preparation for acceleration in FY '28. And this year, we do expect revenue coming through from CORIS, but we expect that as many of the analysts have predicted to be in the low single-digit millions, as I say, as many of the analysts have forecasted for a launch year. As you expect, with the launch, we are making a deliberate increase in investment in CORIS FY '27. The investment is focused on expanding the dedicated CORIS launch capability, and that will include increasing endoscope reprocessing sales specialists, and they'll support our existing sales team, clinical and application support, field service and installation support. And we today believe that this is the best use of our capital considering the size of the opportunity that CORIS represents. I should note that we do expect the trophon business to continue to deliver operating leverage and cash generation, strong cash generation in FY '27 that gives us the capacity to invest behind CORIS. So the majority of the OpEx increase that you're seeing for FY '27 is directly attributed to the CORIS commercial launch. Trophon, we expect to continue to deliver operating leverage and cash generation. So with that, moving to our outlook and our guidance for FY '27. As I've said, we entered the year with momentum in trophon, a strong balance sheet and now a clear path to invest in the CORIS launch whilst maintaining disciplined capital allocation. At constant currency, we expect FY '27 revenue of between $220 million and $228 million for the year, and that represents growth of 8% to 12% on FY '26 and as already mentioned, CORIS is expected to contribute initial revenues in the low single-digit million. So most of that associated with continued trophon growth. Our gross profit margin is expected to between 74%, 76%, and that reflects the higher tariffs that Jason has already mentioned, which is at 12.5%, but also freight impacts because of the higher volumes that we are shipping as well as increased pricing on freight due to the geopolitical situations. Operating expenses expected to be between $156 million and $163 million. And as mentioned, the absolute majority of that OpEx growth relates to CORIS, including the step-up in investments for the CORIS launch I mentioned. So for trophon, again, we're targeting further operating leverage improvements as that business continues to perform. And finally, just you will have seen this morning as well, and we have already mentioned, we are launching a share buyback of up to $40 million, and this follows the $20 million we completed in FY '26. And the decision to initiate a further on-market buyback, I think that reflects the strength of our balance sheet, the cash generation of the business and also the confidence that we have in the outlook ahead while continuing to invest in our long-term growth strategies. So with that, I will now hand back to the operator and open the call for questions.

[Operator Instructions] And today's first question comes from Shane Storey at Canaccord Genuity.

Maybe just if I could start with just where we left off there, Michael, with the additional OpEx in the CORIS business. Could you just give us maybe some more specific details about what that delta in investment is going to fund this year? And then am I right to think of that new OpEx base for CORIS then hopefully being maybe a little bit stable, say, as we go into '28 and '29. Just at the moment, you can appreciate it's quite difficult to sort of forecast when, in fact, that part of the business sort of breaks even.

Yes. Great question. Thanks, Shane. We're going into the launch here now, the absolute majority of that incremental OpEx goes out into the regions, not necessarily here at headquarters out in the regions where we'll be adding more headcount to support the CORIS franchise. We'll obviously be leveraging the existing infrastructure that we have. But as we said all along, once we launch, we will add supplementary specialist support for the CORIS franchise. So there will be specialist salespeople that will come in, not to the effect of the size of the trophon sales team, but specialist sales team that will come in. We'll require people now from supporting the project management and installation cost unlike trophon where if you ship it and it can be a plug and play with CORIS and you deal with the facilities department of hospitals and project managing to make sure all the necessary infrastructure, all the water lines, et cetera, are ready for the installation. So it's traditionally for this type of equipment, you have people there that project manage that with the hospitals. So there's increased resources on that as well as some specialist resources for our clinical applications and education. On top of that, of course, we're now launching, so there will be increased marketing spend. And -- but what I would say is that going into FY '28, '27 then forms the baseline and you shouldn't be seeing step-up changes of -- even in CORIS at that stage. The majority of the major incremental investment will be made this year.

That's terrific. My second question is really back to the consumables piece. I heard what you said about the ultrasound procedural volumes sort of shifting around a bit. But maybe if you could help us by just putting some numbers around that perhaps by -- if we were to look at the differential between the third quarter and the fourth quarter in percentage terms, what would that be? And perhaps how did fourth quarter, say, compare across what you saw in the first half?

Yes. I think if we see that softness in Q3, and I do want to reiterate, we didn't see that softness continue into Q4. It reversed. And when we went back and looked at it, we could actually see changes in our shipments, especially to all that customer base across the whole Northeast of the U.S. You probably would have added another $2 million in consumables to the business in Q3. So it did impact, but that's why we feel confident as we enter into FY '27 on the consumables front.

Last one for me. Did you see -- I mean, when I reconcile my -- even when I reconcile my EMEA model, sort of noticed a little bit lower utilization. Anything to sort of call out there in terms of utilization patterns you're seeing across that region, just cognizant that there's some different sort of effects playing through that and might be [indiscernible].

So within the NHS, and this is publicized, there is extreme pressure in sonography. Compared to the demand, the number of sonographers that exist is a lot lower. They're actually considering this to be a significant issue over there. So you're probably right. Whilst we saw some growth, you're probably right that procedural volume was impacted. We think it would have been impacted a lot by what was happening in the NHS. We would have liked to have seen more come out of Europe without a doubt during the year. We think now on the back of the trophon3 launch and going into this year, certainly, our forecast going into this year are higher.

[Operator Instructions] Our next question comes from Josh Kannourakis with Barrenjoey.

Just first question on CORIS on some of the economics there that you've given, which is helpful. Just on the consumables, can you remind us sort of as we're looking for a base around price per cycle, just in the current environment, maybe in U.S. dollar terms, where you think that's currently sitting for the trophon business even if it's broad sort of terms?

I think what we've said all along, the cost today to clean a device is anywhere between the -- anywhere from USD 10 up to USD 30 depending on how the level of details. So when you think of the trophon price, the expected price of the core consumable is down towards the lower end, not the absolute low end of that, but down towards the lower end of that.

Sorry, CORIS price, you mean?

CORIS.

CORIS. Yes. Okay, down to the lower end of that. Okay. No, got it. And then...

[indiscernible] which is still a significant increase.

Yes. To be clear, the range, USD 10 to USD 37, which we've talked about previous. So towards the lower end of that range.

Yes. Got it. Okay. So 4 to 6x on the price per cycle. And I think you said on utilization, 10 cycles per device per day. Yes. Okay. That's really helpful. And just in terms of just clarifying on Shane's question from before on the OpEx step-up from CORIS. So as you're saying, you've got quite a bit in terms of the installation-related teams, like as you ramp up and how we should -- obviously, into the U.S., the bigger market. So you're saying only into '28 and other years, you should only see more incremental cost sort of growth coming through in terms of -- from there on out. There's no sort of major step-up, just clarifying that.

Yes, we're not expecting double-digit step-up increases in OpEx and CORIS beyond this year. This year is the big -- the launch year is, as you would expect, the big investment year from a commercialization perspective.

Got it. That's really helpful. And then just also just in relation to the trophon, you mentioned on the call, and apologies if you sort of clarified this, but the ASP pricing and some of those issues you also saw sort of improved sounds towards the end of the year. Can you give us a feeling, is that sort of back to the levels that we should be expecting? And on a go forward, is it mostly sort of T3s that should be the incremental new installed base sales?

Yes. Michael, maybe I'll take that one. Yes, the second half pricing was encouraging. It was back towards previous year's levels. And that was really on the back of the transition towards T3. And as Michael mentioned, because of the long pipeline or the long sales cycle on some of the larger deals, we still did sell more T2 in the second half than we expected certainly when we released the results of the first half. So as that mix has moved towards trophon3 and our customers see the additional value, we have seen the pricing improve. And as the mix improves in '27, I'd expect we'll see further improvement.

Okay. No, that's really helpful. And final one, guys, just in terms of go-to-market on CORIS. So obviously, there's a number of sort of different models you could adopt in terms of the sales model, but you've got a very strong balance sheet and lots of cash. Apologies if you sort of run through this, but how should we sort of think about as you do scale up into market in the first few years, how either you fund it will still be capital, could potentially you look at more of the MES models, like maybe just to run us through what some of the initial feedback has been from some of your trial clients and what you feel like the market is more powerful and is more likely to support growth?

Yes. What you're going to see, Josh, is really going to be a mix. So the great thing about the strength of the balance sheet that we have today, it provides us that flexibility. And the most important thing here is getting units in. This is all about consumables because the sort of gross margin levels you're talking of consumables for CORIS will be similar to what you have been used to with the trophon. So there will be a mix where some will be capital sale. That's just the market, that's what they want to do. There will be a mix of rentals, we can lease, we can place and like MES and put it on our balance sheet. And we might see more MES type in U.K. and more capital in the U.S.

And our next question today comes from Davinthra Thillainathan with Goldman Sachs.

I just want to touch on the consumables for FY '26. Just thinking about the first half, second half dynamics, and I understand you've called out some utilization headwinds in the U.S. market. But was there any sort of stocking up activity in the first half that perhaps diluted the growth in the second half, considering you did put up prices in relation to U.S. tariffs, do you feel?

Yes. Thanks for the question, Davin. I don't think there was any particular restocking or anything associated with pricing. And the reason for that is the bounce back that we saw in the fourth quarter and volumes improved, which made us -- gave us comfort as we enter FY '27 for some of those growth numbers and guidance that we've given. So the data that we have and see in some of the large U.S. hospital results is foot traffic in the third quarter was slower, and we're associating it with that.

Yes. No worries. And sorry to hop on it because I think it is a key focus for the market, just considering some of the questions that have been posed with regard to the changes in the competitive dynamic on this point. So I just wanted to also clarify, do you feel the discontinuation of trophon EPR, do you think that could have been an impact on your consumables business? Or again, is the fourth quarter and the year-to-date trading in '27 suggests most of those units are getting upgraded and no one's really holding off and using your consumables?

Yes. Look, a good question. And certainly, over in the United States, now we -- it's a more competitive market, but we've had our record placements in the last 3 years over there. So we're not seeing any significant indications of major attrition to competition in the United States. When we go in -- we certainly have been in situations, especially in some of our larger deals that we've done, where they will have evaluated competition. And there's not a single large deal like that where we were evaluated against competition that we lost. And I think there are many reasons to that with respect to the value propositions and the data we have on trophon. So I think most of the consumables that we're seeing was really on the traffic side of things. There may be some -- I would be naive to think that we'll retain 100% market share. And there may be some units because we do see it's there publicly, you've got the Tristel growing in the United States. But for the trophon customers there, I think if they're low-volume users, there may be a few like that, that have used Tristel. But we've also seen some Tristel customers go back to trophon. So overall, I think it's just really the traffic that Jason was talking about. But it's something that we've got to keep actively our eyes on.

Yes. And last one for me. Just the CORIS pricing strategy, 3 to 5x on the capital side of things. I understand there's different sales models that you're looking to employ. But just the conviction underpinning that level of, I guess, increase? And then somewhat related to that is in the initial contribution coming in for FY '27, can you give us a sense of what the weighting for that would look like? Is it largely upfront capital sales? Or do you feel it's more weighted to the consumable side of things?

On the capital price, I think in our conviction on that sort of price is behind some pricing research that we have done. When you put the value proposition in front of customers, the sophistication of the technology, some comparable type you compare it to what they pay for AERs, it's still a lot less than that, but yet does as important a job and in some cases, more sophisticated from a technological perspective. So we feel okay about the capital pricing. In terms of the mix between the consumable and capital in the -- for this year, it's a little bit early to say. But on the capital side, as I mentioned, we are going to see a variety of models. It could be -- could end up being 50-50 or capital placement or capital rental, but we'll see how that goes.

Thank you. There are no further questions at this time. I'll hand the conference back to Mr. Kavanagh for any closing remarks.

Thank you very much. Well, again, thank you all for joining. I know it's a very busy day and very, very busy season. But I'd like to reiterate what I said at the start, we believe on a constant currency basis, a solid result for the business financially, operationally, a lot of key things have been achieved in the last 12 months. Excitingly, moving to CORIS launch phase now that we're all very excited for. And we certainly enter this new year with strong momentum. So again, thank you for all attending, and I look forward to catching up with many of you over the coming days.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.