Profound Medical (TSX:PRN) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more.
The full earnings call is available at https://edge.media-server.com/mmc/p/h55owrug/
Summary
Profound Medical reported Q2 2026 revenue of $2.5 million, with a notable delay affecting $3.1 million in TULSA product shipments, which will be recognized in Q3, indicating a potential revenue of $5.6 million and 153% year-over-year growth.
Gross margin increased to 78% from 73% year-over-year, while operating expenses decreased by 16% to $13 million. The net loss narrowed to $9.5 million from $15.7 million in the previous year.
The company reaffirmed its 2026 revenue guidance of approximately $25 million, representing a 56% growth and expects gross margins to remain above 70%.
Strategically, Profound Medical is focusing on expanding payer coverage and has seen a substantial increase in covered lives for the TULSA procedure, reaching nearly 30 million, not including Medicare.
Clinical updates highlighted the TULSA procedure’s superior quality of life outcomes, including statistically superior penile length preservation compared to robotic prostatectomy.
Operationally, the company is addressing logistics issues to prevent future shipment delays and plans to enhance its operations team.
The pipeline for TULSA-PRO and Sonalleve is valued at approximately $70 million, with a strong focus on top-line revenue and gross margin growth.
Management emphasized the growing acceptance of TULSA in the medical community and the potential for future growth driven by expanding reimbursement and clinical evidence.
Full Transcript
OPERATOR
Good day and thank you for standing by. Welcome to Profound Medical Second Quarter 2026 Financial Results Conference Call. At this time all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Steven Kilmer, Investor Relations.
Steven Kilmer, Investor Relations
Thank you. 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 and 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 statement, 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 Chief Executive Officer and Chairman; Dr. Matthew Burtnick, Profound’s President; and Tom Tamborino, our Chief Commercial Officer. Also filling in for our CFO due to a scheduling issue is our Corporate Controller, Matthew Sopcich. With that said, I’ll now turn the call over to Matthew.
Matthew Sopcich, Corporate Controller
Good afternoon everyone and welcome to the second quarter 2026 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 Matthew in a moment to provide clinical updates. However, before I do, I would like to provide a brief summary of our second quarter 2026 financial results.
All of the numbers I will refer to have been rounded so they are approximate. For the three-month period ended June 30, 2026, the company recorded revenue of 2.5 million, with 1.6 million from recurring revenue and 871,000 from capital equipment sales. Second quarter 2026 revenue was up 12% from 2.2 million for the same three-month period a year ago. As noted in today’s press release, this doesn’t fully reflect our sales performance in Q2 2026. Approximately 3.1 million of TULSA product shipments originally anticipated in the final weeks of June were completed in July, affecting the period of revenue recognition.
Excluding this shipment timing, second quarter revenue would have been approximately 5.6 million, representing 153% year-over-year growth. Gross margin in Q2 2026 was 78% compared to 73% in Q2 2025. We continue to have confidence that the gross margin for our business will remain above our stated goals of over 70% over the long haul. Total operating expenses in the 2026 second quarter were 13 million, down 16% from the 15.4 million in the second quarter of 2025.
Overall, the company recorded a second quarter 2026 net loss of 9.5 million, or $0.26 per common share, compared to a net loss of approximately 15.7 million, or $0.52 per common share, in the three months ended June 30, 2025. As of June 30, 2026, Profound had cash of 38.3 million. As Tom and Arun will discuss later in the call, despite the revenue recognition timing issue in the second quarter, based on record order activity, Profound continues to project total revenue for full year 2026 to be approximately $25 million, which represents 56% growth compared to its prior year revenue.
With that, I’ll now turn the call over to Matthew Burtnick for an update on clinical and development activities.
Dr. Matthew Burtnick, President
Thank you and good afternoon. On past calls, I’ve highlighted the growing body of clinical evidence supporting the TULSA procedure as a new platform for prostate disease management capable of delivering whole-gland treatment efficacy while preserving quality of life. The CAPTAIN trial has already proven that TULSA delivered statistically superior quality of life outcomes compared to robotic radical prostatectomy, achieving its primary safety endpoint with statistically higher preservation of the composite endpoint of urinary incontinence and erectile function at 6 months.
In addition, patients treated with TULSA experience superior perioperative outcomes including no blood loss, no overnight hospital stay, less pain and faster recovery, along with statistically significantly fewer serious complications and a faster return to normal activities and paid employment. Most recently at SRS, we presented positive incremental data from CAPTAIN demonstrating that whole-gland TULSA provided statistically superior penile length preservation compared to robotic prostatectomy.
At one month following the TULSA procedure, there was no median change in penile length after TULSA compared with a median 0.65 centimeter reduction in penile length after robotic prostatectomy. To some people, and please pardon the pun, that might not sound like a super big deal, but even modest amounts of penile shortening can contribute meaningfully to patients’ distress and reduced satisfaction following treatment. This new data points to the greater peace of mind that the TULSA procedure can deliver to patients by gently, safely and precisely ablating prostate tissue while actively protecting surrounding structures such as the prostatic urethra.
As we noted before, one of CAPTAIN’s primary objectives is to support broader payer coverage. Randomized controlled trials remain the gold standard for coverage decisions, and CAPTAIN continues to generate evidence demonstrating meaningful quality of life advantages that resonate with both patients and payers. In addition to ongoing CAPTAIN readouts and analyses, the clinical value of TULSA is continuing to become sharper as presentations focus more on what specifically makes TULSA most versatile.
Beyond demonstrating overall efficacy and quality of life benefits, ongoing clinical analyses are increasingly helping physicians understand where TULSA’s capabilities may be particularly valuable. Examples include patients with apical cancer where the enhanced visualization of the MR allows urologists to precisely carve out tumor from the boundary of the sphincter muscle that controls continence. These patients almost always end up with urinary incontinence following robotic RP, but whose continence can almost always be saved if treated with TULSA.
Secondly, patients with unilateral disease, or cancer on one side of the prostate, and whose nerves that maintain erectile function can be spared by not ablating the benign side of the prostate. Thirdly, patients where multiparametric MRI provides a clear hot zone that is suspicious of cancer within the prostate and thereby gives surgeons better guidance of what part of the prostate to kill, and patients with very large prostates where TULSA has demonstrated treatment flexibility without the increased side effect burden often associated with other modalities.
I’d like to conclude my remarks by reiterating that from gold standard treatment side effects findings to PECS durable five-year outcomes to CAPTAIN’s compelling Level 1 data, the clinical foundation supporting TULSA continues to strengthen. We believe this growing body of evidence increasingly positions TULSA as a differentiated platform capable of delivering whole-gland efficacy, superior quality of life outcomes and expanded reimbursement support.
I will now turn the call over to Tom.
Helen
Thank you. There’s no question that momentum in our business is continuing to build. As Matthew Sobczyk mentioned, we recorded a year-over-year increase of 12%, which would have been 153% absent the $3.1 million shift in Q2 orders that were shipped in July and will be recognized in the current quarter. Speaking of temporary interruptions, you may have also noticed that while same-store sequential quarter-over-quarter growth as measured by our new index 20 declined by 12%, it grew 39% in the first half of 2026 over the same period in 2025 and 22% year over year.
The sequential change was mainly attributable to five sites not realizing the expected growth due to short-term issues. For example, one of the sites converted from a placement to a capital model in Q2 and paused treatments during the transition. That site is now back online. Despite these one-time and/or temporary issues, Q2 2026 marked another true commercial inflection point and so far we have seen that momentum continue into Q3. We estimate that our qualified sales pipeline, defined as being within one of the verify, negotiate and contracting stages for TULSA-PRO and Sonalleve, is now approximately $70 million.
While we can’t predict the extent and/or timing which that qualified sales pipeline will translate into recognized revenue, it has been growing steadily, which certainly bodes well for the future. We had another monthly record for new orders in July, none of which included any of the shift or rollover from Q2, and SRS 2026 was the most productive medical meeting I have ever been a part of. To put that into perspective, our team’s work generated more than 160 qualified leads over the four days of the event, so around four or five new commercial opportunities per hour.
Again, it’s not possible to predict what number of those will translate into actual sales, but also again, boding well for the future. Three additional tailwinds helping drive our commercial momentum acceleration are higher and expanding reimbursement with respect to Medicare. A few weeks ago CMS released the current year 2027 Hospital Outpatient Prospective Payment System or OPPS and Ambulatory Surgical Center or ASC Proposed Rules. Under the OPPS proposal, TULSA furthers its favorable reimbursement level relative to other treatment modalities.
To summarize those proposed changes, TULSA remains at urology APC level 7 with OPPS payment increasing 14.9% to $15,494 per procedure. That compares to an 11.6% increase for HIFU and Aquablation to $10,797 and $12,300 for robotic RP. So, assuming the final rule doesn’t change these numbers, starting in January 2027, hospitals will be paid 44%, or $4,697, more per procedure for TULSA than HIFU and Aquablation, and 26%, or $3,194, more for TULSA than robotic RP.
Keeping in mind that hospitals can generally perform as many or more TULSA procedures versus those other modalities in a day, our premium there is clearly growing, making our relative profitability for hospitals higher as well. With respect to ASCs, the proposed rule would reduce TULSA to $6,866. However, we don’t currently have any active ASC sites and we believe there may be an opportunity for us to correct the hospital cost reporting that appears to have driven the reduction.
On the physician payment schedule side, TULSA is more than holding its ground as well when viewed on an apples-to-apples basis. Adjusting for the fact that TULSA is zero day while competitors are 90 day, physicians will be paid $880 for each TULSA procedure compared to $865 for HIFU, $1,064 for robotic RP, and $539 for Aquablation. Turning to other payers, coverage for the TULSA procedure expanded by approximately 18.3 million covered lives during the second quarter.
Most of the newly covered lives came through state Medicaid and managed Medicaid and Ambetter programs. This follows the addition of 8.5 million covered lives in the first quarter, which included 6.9 million covered lives with Humana. And just today we announced that the Johns Hopkins and the Prime Healthcare employee health plans, together covering more than 105,000 employees, medical staff and family members, have become the first ever employer-owned health plans to list the TULSA procedure as a covered service.
And we’re just getting started. Profound Medical will continue to work, collaborating with payers, providers and health systems to expand coverage and streamline patient access pathways for the TULSA procedure. Looking ahead, I’m confident in our ability to further accelerate. We’re well positioned to capitalize on the expanding interest in image-guided, incisionless and autonomous robotic surgery. We’re anticipating an extended reimbursement premium for TULSA hospitals and physicians, we’re growing an already formidable body of clinical evidence demonstrating the superiority of our technology, and we’re continuing to scale our commercial footprint both at home and abroad. Thank you for your time. I’ll turn the call over to Arun now.
Arun Menawat, CEO
Thanks, Helen, and good afternoon, everyone. As I discussed in our Q1 call, the dynamics in the prostate disease treatment space continue to change at a rapid pace. Full-gland robotic prostatectomy or radiation therapy are the standard of care for treating prostate cancer today, and for BPH, mainstream treatment with transurethral resection of the prostate, or TURP, has largely been unchanged over the past hundred years. It remains our belief that today’s standards have plateaued and that we can do better than the clinical outcomes from these standards.
Just a few days ago at SRS 2026, we saw firsthand that robotic surgeons are beginning to not only understand the potential of TULSA clinically, but also recognize that TULSA is the only prostate treatment system that is MRI-guided. TULSA is the only modality that offers the flexibility to treat the prostate gland regionally, meaning with whole or near-gland subtotal or focal ablation. The time for incisionless surgery has come. The most tangible evidence of this is that the new Society of Incisionless Surgery, or SIS, began its activities at SRS 2026 and Profound, HistoSonics and Insightec are among the most prominent founding members of the new society. And TULSA is the only modality that deploys supervised robotic autonomy, meaning it executes predetermined and/or AI-driven tasks independently. This compares to all competitive so-called master-slave robotic systems that rely entirely on direct, real-time human hand movement and control. Today, so-called autonomous robotics enables surgeons to deliver consistent, highly personalized treatment based on each patient’s unique anatomy and disease.
In the future it may also give us an even stronger competitive advantage as incisionless surgery advances to its next frontier, including potentially telesurgery. With respect to MRI guidance, I would like to directly address what many of our competitors have tried to use as a knock against TULSA. While it is true that as we first started commercialization, finding compatible MR available time and convincing urology and radiology to work together to adopt a TULSA program was a hurdle to climb, today TULSA is compatible with an installed base of about 5,000 MRIs in the United States and more worldwide, and that number continues to grow.
It is therefore a lot easier to find an MR and justify TULSA, particularly with the economic proposition as its facility fee is already higher than that of any other treatment modality, and based on the proposed rule for 2027, the TULSA premium is only going to get higher. Our relationship with MR companies also continues to expand as they see interventional MRIs as a growth opportunity for them too. And as we have talked about in the past, MRIs specifically designed for interventional procedures are now becoming commercially available.
These MRIs are significantly smaller, lighter and easier to use, to the point that even an MR tech is not necessary to operate them. They are also less costly to acquire and maintain and can be placed just about anywhere since they don’t need the same shielding as larger magnets. The Siemens Free.Max, which is a prime example of such an MRI. Cook Medical has created an iMRI division with the purpose of selling a turnkey interventional MR solution to hospitals that includes the smaller Siemens MR. The idea is that just as cath labs or robotic operating rooms were created in the past, the future is about creating interventional MR suites. We currently anticipate that, if all goes well, TULSA will get FDA clearance for integration with the Siemens Free.Max by early next year, and we believe that will meaningfully contribute to our growth in 2027. And we are not stopping image guidance at MRI. In May, Telix Pharmaceuticals announced a collaboration with us as well as with a competitor that focuses on focal therapy.
Telix makes a PSMA PET imaging agent that bonds preferentially to prostate cancer and provides a clear view of the geographic location of cancer within the prostate. Our team is exploring the potential to integrate these types of PSMA images into the TULSA-PRO treatment planning software. Approximately 85% of prostate cancer is multifocal, meaning that there are two or more distinct index lesions and/or satellite lesions present in different areas of the organ.
The other 15% is unifocal, meaning there is only one distinct index lesion. It follows that whole-gland and subtotal ablation is likely the most appropriate approach for the vast majority of prostate cancer that is multifocal, while focal ablation may be best for patients with unifocal disease. We are already seeing urologists use PSMA to complement MRI to better define treatment extent with appropriate margins extending to the prostate capsule. So for TULSA this isn’t about patient selection; it’s about empowering physicians to plan and deliver the best possible regional ablation from whole-gland to focal and everything in between. To summarize, Profound is pioneering iMRI procedures which enable precise incisionless therapies that improve clinical confidence, procedural control and patient outcomes. By leveraging real-time MRI guidance and autonomous robotics, Profound technologies are designed to replace uncertainty with consistency and clarity across treatment planning, delivery and confirmation in prostate cancer.
We believe we are now crossing the chasm by transitioning TULSA from early-adopter customers to the mainstream market by establishing the technology as a third distinct regional ablation category. That doesn’t make surgeons or their patients choose between whole-gland or focal treatments because TULSA can do both and anything in between. The TULSA-PRO install base was 84 at the end of Q2 2026. We estimate that the current aggregate total dollar value of our qualified sales pipeline for TULSA-PRO and Sonalleve is approximately $70 million.
We are reiterating our approximate $25 million total revenue outlook for full year 2026, which represents 56% growth compared to 2025. And we also continue to expect full-year gross margin to be 70% or higher. Based on CMS’s proposed move for 2027, the premium hospitals are reimbursed for TULSA over all competing technologies is expanding, and at the same time more and more lives are being covered by other payers, including employer-owned health plans.
We continue to believe that we are on a path to profitable growth. This ends our prepared remarks for today. With that, we’re happy to take any questions you might have. Operator.
OPERATOR
Thank you. At this time we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star-1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star-1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ben Hainer of Lake Street Capital Markets. Your line is now open.
Ben, Analyst
Good afternoon, gentlemen. Thanks for taking the questions.
First off, for me, just thinking about the $3.1 million that slipped from Q1 to Q2 or Q2 to Q3. Is that both capital and consumables? And then, just generally speaking, how soon after quarter-end did those units or product ship?
Arun Menawat, CEO
Good afternoon, Ben. Good question. So it was actually a consolidated shipment that went from Canada, and the only reason it was not recognized is because we did not get all of the delivered receipts within the quarter time frame. Some of them were in July, so pretty much everything has been sent. And I think it sort of begs the second question: how do we make sure this kind of stuff does not happen again? We have since that time increased our logistics and operating staff, and we are actually in the final stages of bringing in a very experienced vice president–level operations person.
This is part of our growing. As I said, it was a consolidated shipment; we didn’t get all the receipts, so we didn’t recognize it in Q2, but it most certainly will be recognized in Q3.
Ben, Analyst
The $7 million of new orders — maybe you can share what the previous record was. And then, you know, obviously you’ve had a great conference here recently with the 160 new qualified opportunities. Do you have a sense, based upon history, kind of how quickly some of those can shake out into actual orders?
Tom T., CCO
Ben, that’s a great question and I appreciate you asking it. As mentioned in the prepared remarks, very difficult to give a definitive answer. But what I can tell you anecdotally is some of those leads have already materialized into deals that were not in our pipeline, that are already well down the funnel and into the negotiating/contracting stage, which is extremely exciting. As is often said in the line of medical device sales, deals can take a year to develop and a day to dissolve, or they can take a day to develop and a year to complete.
So it completely runs the gamut. Time will tell, Ben.
Ben, Analyst
Fair enough. And then on the penile, I guess un-lengthening that you get with the robot, is there a plan to publish that data and maybe is it possible to characterize the range of outcomes there? I mean, I would think a lot of guys would care about the worst-case scenario rather than an average or median.
Mathieu Burtnyk, Chief Technology Officer
Hey Ben. Yeah, thanks. This is Matthew on the line. So to answer your question directly, we are preparing that data as part of the broader picture of perioperative outcomes that we have released in the past in Q1 and before that, and so to really package it together as a total sort of patient experience. On the surface, a difference of a few millimeters may not sound like a major outcome. However, for many men undergoing treatment for prostate cancer, literally every millimeter matters.
The reason is that penile shortening is not just a physical measurement; it can also serve as a constant reminder of both their cancer and the treatment that they underwent, which can affect their confidence, their emotional well-being, their intimate relationships, and overall satisfaction with treatment. So we do view this result in the broader context of the dataset. In and of itself, penile length preservation is not the reason a physician or a patient may choose a treatment.
However, when you combine this result with the previously reported superiority in preserving erectile function and urinary continence, as well as perioperative benefits of low blood loss, no overnight stay, faster recovery, and fewer major complications, it really paints a compelling picture of the overall patient experience. Together these outcomes highlight the potential for TULSA to deliver effective cancer treatment while preserving quality of life.
Ultimately, we believe the future of prostate cancer treatment will be driven not only by cancer control, but also by quality-of-life outcomes. And this penile length result is another example of how the TULSA procedure’s ability to precisely ablate the prostate tissue while protecting surrounding structures can translate into benefits that matter to patients. As more of these quality-of-life data emerge, we believe this will increase the influence of patient preference, physician recommendations, and overall demand for treatments that do preserve quality of life.
On the topic of the range, certainly there was a range. This is a nonconventional endpoint that we did include in the protocol, and the way that the measurement is made, the measurement has a median change and a range around that.
Ben, Analyst
Okay, got it. I have just a quick anecdote. There was actually a publication at the SRS where, effectively, its conclusion was that every millimeter counts for patients. Yeah, I mean it makes sense. I believe there was an Italian study out there that showed some even greater impact for the robot. But I’ll leave it there. And congrats on the progress. Thanks for taking the questions.
OPERATOR
Thank you. Our next question comes from the line of Michael Freeman of Raymond James. Your line is now open.
Michael Freeman, Analyst at Raymond James
Hi everyone. Matthew. Matthew, a few questions following up on Ben. So I’m curious: on the shipment timing challenge, we also saw that there was a shipment timing statement you guys made in the first quarter indicating that six TULSA systems were shipped but not installed by the first-quarter end. I noticed that the incremental increase in TULSA installs was four quarter to quarter. Could you tell us just what logistically or operationally is happening on these shipments — like what challenges or delays maybe you’re running into?
And I know you mentioned that you had hired on some extra staff to manage this. I wonder if you could just shed some light on this timing challenge.
Arun Menawat, CEO
Michael, I’m happy to do it. So these are actually two different issues. The one related to revenue recognition in the second quarter is more about shipping to fulfill orders that we have received, and given that we did not get all the receipts either, it didn’t get recognized and we’ll recognize in Q3. So it’s more of a logistics issue from the perspective of shipment and so on. And as I said, we’ve pretty much fixed it already, so that’s an issue of the past.
The other one that you’re asking is actually once the product is shipped, it is installed, the site gets trained, they schedule patients, and so on. So when we look at the installed base, we’re looking at sites actually treating patients. Normally there’s a gap of a minimum of 60 days to 120 days based upon the scheduling at the hospital, the training programs, and their ability to start educating their customer population. So that is actually a separate issue.
It is more about how they convert the TULSA system into a treatment program and confirm all of their reimbursement and so on. I hope that answers your question from the perspective of the installed base.
Michael Freeman, Analyst at Raymond James
Gotcha. Yep, that is helpful. Now maybe a question for Tom on the pipeline. Earlier you were quantifying the pipeline in terms of number of TULSA systems. Now we’re talking about dollars in aggregate value and also splitting that between TULSA and Sonalleve. Are you able to give a number of new TULSA systems in your pipeline and then also shed some light on what proportion of Sonalleve sales might make up that $70 million aggregate value?
Tom T., CCO
Michael, great questions and thank you for asking them. I’ll tackle the last question first and then work my way to the beginning of your commentary. What I can tell you is that, in terms of the $70 million that fall within the Verify, Negotiate, and Contract categories of the sales funnel, it’s roughly a 70%/30% split between the United States and international in terms of dollars forecasted within those respective categories. And then, as it relates to TULSA-PRO versus Sonalleve, it’s roughly a 90% TULSA-PRO / 10% Sonalleve split.
The reason that we have moved away from providing what I would consider to be units versus dollars is we want to stay focused on maximizing top-line revenue and gross margin, and growing TULSA programs and Sonalleve programs versus simply installing systems. That’s one of the major reasons we’ve introduced the Index 20 as well. We want to get to the point, as we’ve messaged before, where we have 200 TULSA-PRO systems installed and treating men across the world with an average of 50 men per year, and that would allow us to treat over 10,000 men per year.
I hope that answers the question you had, and I’m of course happy to answer any follow-up questions based on what I just responded with.
Michael Freeman, Analyst at Raymond James
Yeah, that is really helpful. And then you did — Arun shed some light on the decline in the TULSA utilization index. I wonder if you could just speak more about those sites that ran into temporary issues and then also the trends you’re seeing. You mentioned good numbers in July.
Arun Menawat, CEO
Yeah. Actually, Tom, since it was in your presentation, if you could just provide more color on that topic.
Tom T., CCO
Of course, Michael, thank you for bringing it up. Obviously there’s a lot being presented within Index 20 and we’re excited to share it. I just want to reiterate what I stated in the prepared remarks and then provide some more color on that. While we did see the decline by 12% in terms of sequential quarter-over-quarter growth, we did see an increase of 39% in the first six months of 2026 versus the first six months of 2025, and a 22% increase in Q2 2026 compared to Q2 2025.
In terms of the main drivers of that, there were five sites in particular that did not grow as we expected them to due to short-term issues. To give some color to the example that was called out in the prepared remarks: in different countries and different independent distribution networks or health systems, they have different policies. For instance, if we’re required to come in on a placement model, that placement model normally has a set period of time and a set number of metrics and milestones that need to be completed.
After that point in time, they literally stop the program until they complete the process of determining whether they’re going to acquire the technology. So in this instance, it’s actually a high-class problem. We were successful with the placement. The timeline associated with that agreement had come to a close, and there was a gap of a certain period of time between when that placement ended and when the capital acquisition actually took place.
With our modeling, it’s beneficial to the hospital to go to the capital ownership model because that lowers the cost per procedure as it relates to the TULSA-PRO kits. So all in all, it’s a net positive, but clearly not impactful as it relates to speaking to quarter-over-quarter sequential growth.
Michael Freeman, Analyst at Raymond James
Gotcha. All right, thank you very much for this color. I’ll pass it on now.
Tom T., CCO
Thank you, Michael.
OPERATOR
Thank you. Our next question comes from Scott McCauley with Paradigm Capital. Your line is open.
Scott McCauley, Analyst at Paradigm Capital
Thanks. Afternoon, everyone. Thanks for taking the questions. Maybe just to circle back on some of Michael’s questions — so the installed base versus units sold. Correct me if I have this wrong, but if you have 84 installed as of the end of Q2, and there were 80 installed by the end of Q1, that’s net four new in the quarter. But if from the end of Q1 there were six units that had been sold but not installed, does that mean there’s still two more from that Q1 period that haven’t been installed and up and running yet?
And then versus kind of net new sales in Q2 — I understand it can be kind of confusing — so just looking for a little more color on some of those numbers.
Arun Menawat, CEO
Yeah. Scott, I think the way you analyze it is exactly right that we shipped six systems in Q1. Four of them were installed in Q1. Two of them are still in the process. We’ve shipped about the same number in Q2 as I. You already heard the logistics thing, but, you know, we are continuing to install more sites. And so Q3, you will again see an increase in the install base. So that you have analyzed the numbers is exactly right.
Scott McCauley, Analyst at Paradigm Capital
Got it.
And in terms of that pipeline of getting from the sale to the installation, I think that’s 60 to 100 days you’d referenced the work on. I know it’s a lot out of your hands, but trying to accelerate that.
Arun Menawat, CEO
Yeah. And we are continuing to grow our teams in every key department. And I do think that over time those numbers will continue to drop. But that has been sort of— it used to be harder than that. It used to be kind of six months, but now it’s indeed less. And I also think that, as described, the momentum that we’re building at SRS, I think people are beginning to sort of see that, hey, this is the next thing. And that is automatically adding to a bit of a sense of urgency in multiple sites.
So I do think that over time that number will shrink far closer to 60 days than it is today. And I think to your point on number of sites and so on, and, you know, Tom described that we’re moving more towards a pipeline that is described in dollars. But I do sort of think that one of the early indicators that we are gaining confidence in our pipeline is the fact that Q2, from a number of purchase orders point of view in dollars, was actually the best quarter we’ve ever had.
And so I think that is tangible data that sort of says, hey, you know, this pipeline that we’re now dollarizing is very real.
Scott McCauley, Analyst at Paradigm Capital
Absolutely, that’s helpful. And maybe again, on circling back on that pipeline question, and I understand wanting to present it in dollars versus necessarily units, is there any way you can kind of quantify how that pipeline’s expanded or grown from that initial number of units versus dollar amount? Any other color there?
Arun Menawat, CEO
Yeah, yeah. You know, we— I don’t have an exact number for you, but, you know, again, as you heard from Tom at the SRS, we have 160 leads. Q1 also, in terms of new leads, was— I’m sorry, Q2 was also a very good quarter. So we are dollarizing. We are going to start qualifying and making sure that that earlier pipeline that we’ve just built is also added to this. But most certainly this number is probably 30, 40% higher than what we have been looking at before.
We, you know, we sort of feel like if you go and say 100 sites versus a dollar amount, we just think once you get beyond 100, it just becomes far less meaningful and a dollar number becomes more meaningful. That’s the only reason for using the dollars.
Scott McCauley, Analyst at Paradigm Capital
Yeah, definitely, that makes sense. And maybe lastly on the, you know, on the team and the, you know, operations side of things, I think it was mentioned in the press release that the operating costs actually went down relative— I may or may not have that right. But as you had highlighted, bringing on new operations people, potentially expanding the team to help get these installations in faster and obviously dealing with the expanded pipeline. Kind of any comments on how you see operating costs scale in the next few quarters, and obviously kind of move in lockstep with revenue growth, but kind of how you see that expense side of the income statement growing in the next few years?
Arun Menawat, CEO
Yeah, great, great question, Scott. You know, there are several things about this. First of all, I do think that it does speak to the leverageability of our product because, you know, good high dollar amount in revenue for the capital, very good dollar amount per patient on the utilization part, and a good high margin. So I do think that it is important to recognize that we are not just looking to be a growth company at any cost. We actually think that as the revenues come in that we are going to be heading more and more towards profitable growth.
And I think that’s a very important part of our strategy. The second thing is that your point is exactly right, is that we are adding resources as we go. We need to, because obviously we are very, very careful with expenses. But we need to. And I think that there will not always be complete sync in, you know, more people added and higher revenue in every quarter. So I agree with you that you will probably see a little bit of an up and down in a quarter here and there.
But again, I think as we see on the utilization side at this stage, if you begin to look at it as a, you know, half-year, half-yearly perspective, I think you will begin to see a trend that the costs will grow, you know, as close as possible to the growth of the revenue for us. So, you know, again, just to be clear, you’re exactly right that there will be some up and down. But I think on a bigger time interval you will begin to see a trend that will be on the growth and the potential profitability.
Scott McCauley, Analyst at Paradigm Capital
That’s great, Arun. I really appreciate the color, and that’s all for me for now.
Arun Menawat, CEO
Beautiful.
Thank you, Scott.
OPERATOR
Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our next question comes from the line of Kyle Bowser of Titan Partners. Your line is open.
Kyle Bowser, Analyst at Titan Partners
Great, thank you for taking my question. Maybe on the sales guidance, are you assuming a certain amount of additional payer coverage policies this year? And then also do you have a kind of a total number of covered lives to date? I know it was up 18.3 million in this last quarter and up 8.5 million in Q1. Just wondering if you have a total running number.
Arun Menawat, CEO
Yes. Good afternoon, Kyle. To answer your first question, the answer is yes. We are continuing to work with insurance companies on a routine basis. You know, almost every day we see that patients who apply for reimbursement, even with insurance companies that don’t have coverage policies, more and more are beginning to get. So I think based upon that, we certainly expect that the number of covered lives will continue to increase. Matthew, I don’t have the full number offhand.
Do you have the full number of the 18 plus what we reported in the first quarter?
Matthew Sopcich, Corporate Controller
Are you asking me, in the first quarter in terms of covered lives? I think it was in the 8.5 million.
Arun Menawat, CEO
So I think in whole numbers we’re close to 30 million, maybe 29 million, but we’re close to 30 million.
Kyle Bowser, Analyst at Titan Partners
Okay, including Medicare as well,
Arun Menawat, CEO
But no, that does not include Medicare. Medicare is on top of that.
Kyle Bowser, Analyst at Titan Partners
Yeah. Yep, got it. Okay, so just Medicare on top of the Q1 and Q2 numbers. That makes sense. Got it. Great. And then you’ve talked about, you know, extensively and during this call how compelling the data out there is, resonating with physicians, you know, particularly with the CAPTAIN result in the year, and, you know, showing TULSA’s clear benefit over robotic RP, you know, across ED, continence, and recovery. But I guess on the patient side, in your assessment, be curious to understand, you know, how involved the patients are when it comes to defining a treatment path.
I mean, it just would seem like TULSA would be kind of a no-brainer here given the superior quality of life outcomes. So just any color around this would be helpful.
Arun Menawat, CEO
Yeah. So let me just state a couple of things, and then, Tom, if you could please chime in also. So, you know, to your first point regarding the CAPTAIN trial and the conversations that we’re beginning to have with the urology community, I think the most interesting part to me has been the dialogue around the concept of trifecta. So what is trifecta? Trifecta is cancer outcome, erectile dysfunction, and incontinence. And the reality is that, in some ways, all three of these things are kind of connected.
If you remove more prostate, you probably have a little better clinical outcome, but you have higher likelihood of incontinence or erectile dysfunction. And I think the most interesting conversation that we’re beginning to have with the urology community, and we find them to be very receptive to this way of thinking about it, is that I think that what we’re beginning to see is if you evaluate it on a trifecta basis, you know, statistically, the population that is in the trifecta of the robotic surgery versus the population that is in the TULSA arm, we think they are absolutely separate, and there’s more flexibility.
And I think talking to urologists in the language that they already use— like, this is one of the things that we find very easily satisfying. I’ll turn it over to you from the perspective of the patient.
Tom T., CCO
Thank you, Arun, and excellent question, Kyle. Thank you for asking it. I wanted to glean off of what we experienced at the side of robotic surgery, Arun and Matthew, which was arguably the most successful medical conference I’ve attended, whether that was at LifeCell Corporation, NovaDaq Technologies, or here at Profound Medical. And we not only had the opportunity, of course, to meet with the 4,000 physicians from around the world who were in attendance, but as Arun mentioned, we got to meet with the founders of the Society of Incisionless Surgery, which we plan to be a big part of at their inaugural meeting in February of 2025.
But there were also men that we spoke with who were courageous enough to confide that they were prostate cancer patients or survivors and to share, with great vulnerability, the struggles that they’ve been through related to complications they’ve experienced from the treatments they’ve endured. And I think we’d be remiss not to mention the mental health impact that men who get diagnosed with prostate cancer are subjected to, not only with the diagnosis, but the stress and the anxiety and the unknown of what treatment to select, because it’s the first time they’ve gone through it, and hopefully the last time.
So part of what we have done here at Profound Medical is we’ve launched a global patient advocacy group called Let’s Huddle, and that’s led by Leonard Wheeler, who is a prostate cancer survivor and a TULSA-PRO patient. And that group is not meant to promote TULSA-PRO. It’s meant to promote awareness around men’s health, in particular prostate health and mental health. And so on a monthly basis, Leonard hosts a group of men who can join from all over the world and provides open space for peer-to-peer conversation.
And what I can tell you, from having the privilege to participate in that the last go-around in July — unfortunately I missed today’s session, which was here in August, this afternoon Eastern time — was that we had men on who were authors of books regarding facing prostate disease, men who have blogs with hundreds of thousands of followers, men who have consulting agencies that are literally built around educating other men how to take on their prostate disease journey.
So personally, I’m most excited about raising the awareness around men’s health — both prostate health and mental health — because they go hand in hand. And what really took place at SRS, in my opinion, is that the conversation that’s being done behind a consulting room door inside of an office is now happening on the podium, in the audience, amongst the men and women providing prostate disease treatment. And we’re forcing the dialogue the same way that women forced the dialogue around breast cancer diagnosis, treatment, and reconstruction.
Women were subjected to total mastectomies, radical mastectomies, where they had their breasts removed, they had their pec removed, and all they were left with was a flat chest wall. Well, now when women go through a breast reconstruction, depending on the stage of the cancer, the results of their reconstruction rival that of an augmentation for cosmetic reasons. And I truly believe all of us on the phone that are men and caregivers of men — we need to start the rallying cry, whether it’s Profound Medical or the other folks that offer interventions for men’s prostate disease — that men should be aware, they should have access, and they should be empowered to make the decision with their clinician based on their clinical presentation and what’s important to them as it relates to quality of life, sexual function, urinary incontinence, penile length, mental health. So I apologize for the emboldened response, but I truly believe we’re at an inflection point here in men’s health care, and we’ve got to get louder. So thank you for asking the question.
Kyle Bowser, Analyst at Titan Partners
Got it. Agreed. And very helpful. Thank you for that. And then maybe just one more question, if I may. We saw in the RP arm in the CAPTAN trial that about 33% of patients had positive surgical margins. Any more specific timing estimate for later this year around when we’ll see the TULSA procedure histology and imaging for the — I think — 12-month biopsy and MRI results to kind of quantify surgical margins?
Arun Menawat, CEO
We are still in the process of collecting all the final data. We have a vast majority of the location data in, but we’re not all the way there yet. We are still very comfortable that sometime in Q4 we should be able to get the whole TULSA arm information out, tolerant data. I would still like to point out that in the TULSA arm, you know, it’s biopsy, which is the gold standard of how we’re measuring, and it’s very detailed. And versus in the robotic arm, it is basically measuring positive margins, which is much simpler and far less comprehensive.
Most of the patients who underwent the robotic arm underwent what they call nerve-sparing prostatectomy. And so, again, coming to that point about the trifecta, you’re seeing 35% positive margins, and you’re actually seeing a little bit better than what you see in other studies on the erectile dysfunction. And so we do think that we’re in a pretty good position with respect to the — particularly the trifecta. But, Kyle, to give you the answer, I think most certainly you’re on track with getting the information out in Q4.
Kyle Bowser, Analyst at Titan Partners
Got it. Okay, great. Very helpful. And thank you for taking my questions.
Arun Menawat, CEO
Thank you, Kyle.
OPERATOR
Thank you. This concludes the question-and-answer session. I would now like to turn it back to Dr. Menawat for closing remarks.
Arun Menawat, CEO
Thank you so much, and thank you to all the analysts for their questions. Hopefully we’ve answered them comprehensively for you. Look forward to similar dialogue in Q3. Thank you.
OPERATOR
Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
Recent Comments