Good day, and thank you for standing by. Welcome to the Profound Medical Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] 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.

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 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 statements 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.

Good afternoon, everyone, and 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 Mathieu in a moment to provide commercial updates. However, 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 months period ended, December 31, 2025, the company recorded revenue of $6 million, with $2.3 million from recurring revenue and $3.7 million from onetime sales of capital equipment. Fourth quarter 2025 revenue was up 43% from $4.2 million for the same 3-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 consists of R&D and SG&A expenses were $11.4 million compared with $11.3 million in the fourth quarter of 2024. Overall, the company recorded fourth quarter 2025 net loss of $8.2 million or $0.27 per common share, compared to a net loss of approximately $4.9 million or $0.20 per common share in the 3 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. [Technical Difficulty]

Again, I'm sorry, let me cover Mathieu's part here. So again, Mersa, 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 through track 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 for world-leading -- I'm sorry, 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 2:1 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. And 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 preliminary -- 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.

Thank you, for taking over. I can jump back in if you want?

Okay. Go ahead.

I'll go ahead. So 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 were pleased that our data has been selected for inclusion in the late-breaking and the high-impact session. The presentation will be delivered by Dr. Laurence Klotz on Friday, March 13, between 1:00 and 3:00 p.m. Greenwich Mean Time, which is 8:00 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. Six-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. But let me also take the time to outline the fundamental differences between CAPTAIN and other ongoing studies, namely WATER IV, FARP and HIFU. 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…

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 31, 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 3 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 1 CPT codes for the TULSA procedure. TULSA reimbursement was confirmed again for 2026 at urology Level 7, which is appropriate as TULSA utilized real-time MR, which is crucial to better clinical outcomes. Our team has also initiated engagement with private insurance carriers, and 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 and 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…

Thank you, Tom, and 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. But 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 effect of focal gland treatment. The fact that the TULSA procedure is a third category all by itself is an important message. But 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, but 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. And 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…

[Operator Instructions] Our first question will come from the line of Ben Haynor with Lake Street Capital Markets.

First one for me on the private payers, I appreciate the commentary on giving 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 mentioned that commercial insurers were reimbursing roughly $25,000 to $65,000 is the range you had seen. And then any commentary on whether you're being successful in getting any commercial rejections overturned ultimately?

Ben, yes. So 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 1.5x to 2.5x of Medicare. So we're pretty satisfied and our sites are happy with the numbers. With respect to coverage and reversals from rejections were tracking better than 90% at this point. Just recently, I saw one very strategic reversal. There are certain independent organizations in the U.S. like Maximus and so on. These companies actually make independent determinations that hospitals use as guides or whether or not a new technology is considered experimental or standard of care, and they recently deemed our TULSA as standard of care. So we're pretty optimistic actually. We're very, very satisfied with the numbers that we're seeing, and we are very optimistic we'll start to see actually converting these reductions into coverage decisions in the second half this year.

That's very helpful. Great. And then I apologize if I missed this, but can you maybe comment here on the dynamics of the sequential decline you saw in noncapital revenue here?

We lost you a little bit. Could you repeat the question?

Yes. I was wonder -- I apologize if I missed this, but could you maybe comment on the dynamics that you saw in terms of utilization? It looks like there was a sequential decline in noncapital revenue here from Q3 to Q4.

[Technical Difficulty]

Could you comment on the dynamics of utilization from Q3 to Q4 and whether the movement in noncapital revenue sequentially?

Yes. Yes. Got it. Okay. Yes. No, I think the number of -- I think the trend that we have talked about is pretty much every site is slowly but surely increasing usage. And I think last quarter we had a specific number that quarter-over-quarter we were up about 20-plus percent. 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. And we did give a couple of market introductory prices to a couple of sites. In Q4, as Rashed mentioned, and I think at the moment, you will see the ratio of capital versus recurring in our total product mix is going to become a little bit more capital heavy, because we are selling the devices now. And 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. But in the next couple of years as we build the installed base, I think you'll see that ratio to be closer to -- it will range between 40% to 60% capital per quarter.

Okay. Got it. And then just talking about the installs for this year and looking at for 40-or-so more units, and that's roughly 1/3 of the pipeline that you have. Are there any bottlenecks on year-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?

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. And 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. But yes, 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.

Our next question comes from the line of John McAulay with Stifel.

I want to put a finer point on the recurring revenue question that's been asked. So 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, $2.3 million, it implies that revenue per procedure declined significantly, something like more than 50% quarter-over-quarter. So I just want to understand how much of this is driven by the more capital-focused mix? Was there some kind of onetime conversion or discounting in here? And what should we expect go-forward on a revenue per procedure basis?

Yes. So John, first of all, the 20% was year-over-year, not quarter-over-quarter. So when I say that -- yes, year-over-year. And we do look at inventory. And so we do sort of manage it a little bit. So I think when you see recurring revenue quarter-over-quarter, it does not necessarily reflect almost exactly through the usage of the product. And we do kind of manage that a little bit. Generally, actually, they will buy in the third quarter to use it in the fourth quarter. So you see that a little bit of up and down like that. So I would not directly correlate, but if you look at 6 months over 6 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. And the sites that do not own the equipment is very few at this point. But in those cases, we do have higher number than $5,500. So there is absolutely no discounting on the disposable price.

Understood. That's helpful. And 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 numbers closer to 100%. Where do you hope we end up in this range? I mean if I try to read between the lines here and I assume a range of 90% to 110%, not with specific numbers, it seems like 100% might be a median, but maybe you could just help us out on where you would hope estimates end up for the year ahead.

Yes. So when we did not particularly provide official guidance on revenue at the moment, we certainly feel very confident in terms of the number of sites. And I think if your analysis though is in the right ballpark, in the sense that we're looking at, at least 42 sites this year, which we have provided. And 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.

Understood. That's helpful. And I could just sneak in one more question. You talked about the dynamic of recurring versus capital mix in the future, and you still believe in that 70-30 longer-term range, but 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?

I think so. John, I think that the number of sites is going to increase, and you can see if we're adding 42 sites that $0.5 million, you can see the number is going to be dominating. So I would say, at least -- on average, I would say, at least for the first few years, 50-50 or 60-40 is probably reasonable. But I want to sort of -- don't want to lose sight for the fact that we are primarily a recurring revenue company. And I think 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. And so 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. And so I think that long term, that 70-30 mix is a very reasonable thing to expect.

Our next question will come from the line of Michael Freeman with Raymond James.

I'm going to ask a question on the CAPTAIN trial. It's exciting that you've 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 -- does getting an early look at this trial compromise the trial at all. Does it remain a Level 1 trial? And then following up on -- as a follow-up question, do you expect the early dissemination of this data to potentially accelerate reimbursement time lines for private payers?

So yes, thank you. That's -- those are important questions actually. So let me answer your second question first. I do expect that the earlier data will suddenly gives us more confidence in getting coverage decisions this year. But to your first question, a little bit more technical. 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. So as we looked at this, and it just happened in the last couple of days, as we looked at all this, those precedents 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. And we have, as Mathieu described, there is sufficient data already out on the robotic prostatectomy arm with respect to margins, so which is a sort of indicator of the success of early treatment or not. So there's we're not presenting any data that will be considered out of the ordinary here. These are standard endpoints, and they are measured in a way that are very credible. So we are not going to compromise anything. We are running the company. We certainly execute every day, but we are running the company with a very strategic mindset. So we're absolutely not going to compromise anything. But having said that, I think you will see meaningful standard data that will be credible.

Okay. All right. I wonder there was some discussion in the remarks about progress towards cash flow positivity. I wonder if you could provide a threshold, whether that's scale or time line to when you expect Profound to be -- to have reached cash flow positivity?

Yes. So I can -- 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 look at -- if you analyze the data in the fourth quarter, you will see the cash burn is down to around 6 -- a little bit above -- a little less than $6.5 million. So 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 will be -- in some quarters, you'll see a little bit up or down because we are adding people and maybe they're not going to be completely synchronized. But I think the reason we are comfortable and confident and presented it because I think we can start to see the trend. And I think if you project your numbers, what as Tom mentioned, the end point is we think that we can be profitable in the range of $80 million to $85 million revenues. So you can see where we are in about $24 million, $25 million revenues with the cash plan, you can see the $80 million, $85 million. And I think with the growth rates that you can probably predict from the installed base, and it's just expectation, I think you'll be able to get pretty close.

Okay. All right. I'm going to 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 well progressed. Wondering if you could provide some commentary on, I guess, the pacing of those installations through the year and how first quarter is proceeded.

I'm sorry, I couldn't hear everything you said. If you could please repeat it?

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.

Oh, I see. What you mean -- so you're looking for granularity quarter-over-quarter basis?

That's right.

So we're trying to get to a standardized way of announcing numbers, and we think more standardized is end of this quarter. So which is why we were at 78. We are higher than that today, for sure than we were at the time. But I would say, again, I think generally speaking, med tech companies growths are generally in the second half of the quarter. So I would say if you're modeling, I would model it sort of increasing quarter-over-quarter and not linearly every quarter.

[Operator Instructions] Our next question will come from the line of Scott McAuley with Paradigm Capital.

Already been covered, but maybe I could just ask on the BPH module. Any granularity on how many of the installations are currently using it?

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 midyear, we will have at least 30, 40 sites using it.

That's great. And there was a few announcements around international expansions and agreements. And I think in the margin discussion, there was a comment on some kind of introductory pricing, I believe, maybe for international, but I may have misread that. Any kind of progress on the international front for TULSA?

Yes. Very good question, Scott. So in the second half of last year, we also started to get quite a bit of attention in the international markets. And historically, we've always talked about U.S. being are really, really the only focus. And U.S., most certainly is 90% of our focus today. But we felt that it was important that, in fact, the healthcare world is far more global than it might look. So getting incoming calls and getting opinion leaders in international markets, not serving them did not make sense. And so 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. But there was no discounting in the U.S., and we don't expect discounting in the future, which is why Rashed was very confident that the 70-plus percent 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 support people and high-level senior people who will manage the distributors, but we don't plan to grow a direct sales team in the international market. That is only for the U.S. But we're seeing, for sure, very good interest in number of -- I think Europe is going to be slow until there is reimbursement decisions in Europe. But I think the Asian markets are definitely very strong.

That's great. And down the road, as that international kind of presence and impact grows, is that something you're going to separate out a bit more in terms of U.S. installations versus global installations and revenue relative to each of those areas.

Yes. Over time, we will. Once they become material, we will.

Just one clarification. We do break out the international revenue. So there is a segment reporting, that's where we do break out revenue source where is it coming from.

Yes, yes, definitely. I think it was more the international revenue specific to TULSA, but as it becomes more meaningful down the road, maybe be more specific around that.

Our next question comes from the line of Chris Potter with Northern Border Investments.

Just on the utilization question. From your customers' 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 if I'm doing the math right, each of your sites is doing 20 or 25 procedures a year now, which didn'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.

Yes. So at the moment, a number of these sites are very new. And so the sites that we installed in Q4 virtually is non-existent in terms of the utilization. So I think just that math of taking the whole installed base and that is probably, I would say, take 60% of the installed 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 acquired the system early on that we're doing maybe 10 procedures per year and now that there's reimbursement there. These are large hospitals that are slow moving, but they are very slow moving here. But they are all looking to finally increase. And again, as reimbursement, particularly from private insurance companies kick in, they're going to start increasing as well. So I think to answer your question, do we think that the ultimate number is going to be better than 50? We do. But at the moment, since we are below 50, we think 50 is a good average target to hit. And 200 sites is not a very big number. We think we can achieve that also. And so I think over the long haul, I can certainly tell you if we hit average of 50, we're not going to be -- we're going to be a bit disappointed. But I think, particularly, as I was talking about in the prepared remarks, I think as they start establishing TULSA day 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.

That's helpful. Would you expect that the average utilization per site would increase materially in 2026?

I think in the second half of '26, I do believe that, yes. One of the things that Tom has talked about is that as we update our sales design and we described it a little bit for you. We are starting to put -- to go to the 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. 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 startup for these new sites, and better utilization over time.

And 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.

Thank you so much for spending the time with us. We really appreciate the attention. We are excited about where we're going, and we look forward to updating you at the end of Q1. Have a good evening.

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