Profound Medical Corp. Q3 FY2024 earnings call

• Held PRO-TALK Live event in Las Vegas, a peer-to-peer education platform for physicians, with 70 physicians in attendance, highlighting TULSA's capabilities in prostate cancer and BPH treatment.
• Real-world usage of TULSA in Q3: ~64% for primary prostate cancer, 28% hybrid patients with cancer and BPH, 6% salvage treatments.
• CMS published final rules with TULSA in urology APC Level 7, higher reimbursement than robotic radical prostatectomy in hospital and ASC settings.
• CAPTAIN clinical trial continuing to recruit, with 2 sites joining in Q3, including Cleveland Clinic.
• Plan to develop BPH TULSA AI module, soft launch in second half of 2025.
• Transitioning from recurring revenue-only model to traditional medical device model with upfront capital sale, disposables, and service agreements.
• Tom Tamberrino joined to lead sales and marketing team, recruiting to build a world-class sales team.

For the 3-month period ended September 30, 2024, Profound Medical recorded revenue of $2.83 million, with $2.65 million from recurring revenue and $179,000 from onetime sale of capital equipment. Third quarter 2024 revenue increased 64% from $1.73 million in the same period of 2023. Gross margin in Q3 2024 was 64% compared to 61% in Q3 2023. Total operating expenses in 2024 third quarter were $10.8 million, an increase of 42% compared with $7.6 million in the third quarter of 2023. The company recorded a third quarter 2024 net loss of $9.4 million or $0.38 per common share, compared to a net loss of $5.6 million or $0.26 per common share in the same period of 2023. As of September 30, 2024, Profound had cash of $27.1 million.

• Full year 2024 revenue expected in the range of $11 million to $12 million.
• Originally targeted 75 installs by year-end, but now expects to reach it soon after year-end due to transition from cash pay to reimbursement model.
• Fourth quarter expected to be strong to maintain full year revenue guidance.
• Anticipate 30% capital and 70% recurring revenue mix over the long haul.

Q: Any update on the goal of getting to 75 installs by year-end?

A: Getting to 75 is a little optimistic for year-end due to transition from cash pay to reimbursement model, but pipeline is strong and will get there soon after year-end.

Q: With higher reimbursement in place, does it impact physician uptake, revenue, and procedure growth assumptions?

A: Stars are aligned for the technology with support from physicians, existing sites happy, good patient feedback, and CAPTAIN trial data coming, so expected to grow at a good pace in 2025.

Q: How much of the mix between recurring and capital in the fourth quarter?

A: Ratio hard to predict in near term, but over long haul likely 30% capital and 70% recurring revenue mix, with some sites already expressing interest in converting to new model.

Q: Any hiring of sales team members during the quarter and size of desired sales team?

A: Currently have 13-15 salespeople, want to get to ~40, and plan to hire at least five more this year, adding sales management too.

Q: On TULSA Plus, is it a pipeline expander?

A: TULSA is available now, TULSA Plus will be rolled out in 9 months, with flexibility in providing TULSA on different MR systems and working with leasing options for Siemens Interventional MR.