Edap Tms Q2 2025 Earnings Report

Edap Tms EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.18
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Edap Tms Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $16.60 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Edap Tms Announcement Details

• Quarter: Q2 2025
• Date: 8/28/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 28, 2025
• Conference Call Time: 8:30AM ET

Edap Tms (NASDAQ:EDAP) SA is a holding company, which, through its subsidiary, engages in the development, production, and marketing of minimally invasive medical devices for urological diseases. It operates through the High Intensity Focused Ultrasound (HIFU) and Urology Devices and Services (UDS) segments. The HIFU segment develops, manufactures, and markets devices for the minimally invasive ablation of certain types of localized tumors using HIFU technology. The UDS segment focuses on the development, marketing, manufacturing, and servicing of medical devices for the minimally invasive diagnosis or treatment of urological disorders, mainly urinary stones, and other clinical indications. The company was founded on December 3, 1979 and is headquartered in Vaulx-en-Velin, France.

Edap Tms Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: EDAP reported global HIFU revenues of $9.7 million in Q2, up 89% year-over-year, driven by the placement of 12 Focal One systems, including nine capital sales.
• Positive Sentiment: CMS’s 2026 proposed rule increases the hospital payment for Focal One HIFU to $9,765 (a 5.6% bump) and assigns 26.43 RVUs ($888) for physicians, significantly above competing prostate ablation procedures.
• Positive Sentiment: EDAP secured CE marking for Focal One HIFU in treating rectal endometriosis, opening a major new indication and accelerating commercialization efforts in Europe.
• Positive Sentiment: The company signed a letter of intent for a €36 million strategic financing facility with the European Investment Bank to bolster its balance sheet and fund HIFU expansion and R&D.
• Positive Sentiment: Gross margin on HIFU rose to 42.5% in Q2 from 37.5% last year, and net loss narrowed to €5.6 million (€0.15 per share) versus €6.1 million (€0.16 per share) in Q2 2024.

Presentation

[Operator]

Good day, everyone, and welcome to today's EDAP Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session.

[Operator]

Please note this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to John Francis with LifeSci Advisors. Please go ahead.

[John Fraunces, Director - Corporate Communications at LifeSci Capital, LLC]

Good morning. Thank you for joining us for the EDAP TMS second quarter twenty twenty five financial and operating results conference call. Joining me on today's call are Ryan Rhodes, Chief Executive Officer Ken Mowicz, Chief Financial Officer and Francois Dietsch, Chief Accounting Officer. Before we begin, I would like to remind everyone that management's remarks today may contain forward looking statements, which include statements regarding the company's growth and expansion plans. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in such forward looking statements.

[John Fraunces, Director - Corporate Communications at LifeSci Capital, LLC]

Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. I would now like to turn the call over to EDAP's Chief Executive Officer, Ryan Rhodes. Ryan?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Thank you, John, and good morning, everyone. As we will review today, EDAP Focal One HIFU remains instrumental in driving execution of our defined growth strategy. In Q2, we experienced strong and accelerating demand for Focal One robotic HIFU. We reported global HIFU revenues of $9,700,000 up 89% on a year over year basis. This increase was driven by the net placement of 12 Focal One systems representing a year over year growth of 140% as compared to the second quarter of twenty twenty four.

[Ryan Rhodes, CEO & Director at EDAP TMS]

The 12 system placements comprised of nine capital sales, including one conversion of an operating lease to a capital sale at Kaiser Permanente as well as operating leases at four large hospital systems. We are encouraged to see hospital networks from our current installed base such as Hackensack Meridian Health, Baptist Health and New York Presbyterian Health purchased a second Focal One system to support the expansion of their focal therapy program across multiple locations. Additionally, we are also proud to report that we now have a total of four Focal One placements in Cleveland Clinic facilities worldwide. These include Cleveland Clinic Ohio, Cleveland Clinic Abu Dhabi in The United Arab Emirates, Cleveland Clinic London in The United Kingdom, and Cleveland Clinic Indian River in Eastern Florida. We believe our strong second quarter HIFU performance represents a significant inflection point of accelerating growth of Focal One and signals the potential of a broader adoption of focal therapy by community based urology practices.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Based on our most recent assessment of the market, we believe this accelerating growth is driven by three main factors. First and foremost, increased demand for FOLK-one is being driven by new rigorous scientific clinical data supporting HIFU and focal therapy in the treatment of prostate cancer. The groundbreaking Hi Fi study which was recently published in European urology coupled with Level one data from the randomized controlled FARP or FARP study presented at this year's American Urological Association Annual Meeting are both helping to build an increased awareness around Focal One robotic HIFU. Secondly, our reputation as the premier technology leader in focal therapy continues to grow. First introduced at this year's EAU and AUA meetings, the new Focal One Eye has been actively embraced by more and more urologists.

[Ryan Rhodes, CEO & Director at EDAP TMS]

The groundbreaking new features and design of the Focal One Eye are based directly on feedback from our customers as well as anticipating the future needs of physicians performing focal therapy. We've incorporated the latest diagnostic imaging modalities and intelligent algorithms enabling us to further personalize Focal One robotic HIFU procedures. In addition, we believe Focal One Eye's digital interface and fully robotic HIFU energy deliveries design is uniquely suited to enable remote proctoring and remote collaborative procedures as demonstrated by our recent collaborative activity across multiple Cleveland Clinic sites. As adoption of focal therapy continues to grow, we believe urologists are looking for the most advanced and capable technology to support their practice. The Focal One Eye provides clear and compelling strategic value not only within the urology suite, but also for hospitals that seek to offer the most advanced cancer treatment approaches to their patients.

[Ryan Rhodes, CEO & Director at EDAP TMS]

We are proud to announce that the first Vocal One Eye system has already been delivered in The U. S. During the second quarter and has successfully performed several procedures to date. Finally, we see an increasing number of patients becoming aware of the benefits of Focal One and are weighing their instrument or their treatment decisions accordingly with future which further drives urologists' interest in adopting our Focal One HIFU platform. It is clear that patients want to access a noninvasive treatment option that can safely target their cancer while also enabling them to maintain their sexual function and urinary incontinence as compared to whole gland radical treatment options such as surgery and radiation.

[Ryan Rhodes, CEO & Director at EDAP TMS]

During the second quarter, U. S. Procedures grew approximately 4.8% over the 2024. As noted on our first quarter call, our industry has been facing intermittent challenges across certain healthcare plan providers as it pertains to Medicare Advantage plans. This has impacted growth in certain markets and the adoption of HIFU.

[Ryan Rhodes, CEO & Director at EDAP TMS]

To mitigate this issue, we are working diligently with our market access partners to help accelerate pre authorizations for Focal One procedures. We are beginning to see ongoing improvements in individual procedure approvals and we believe the compelling clinical evidence generated from both the large Hi Fi and FARB studies will be instrumental in gathering expanded coverage while accelerating continued procedure growth. I will now provide a more detailed update on Focal One reimbursement in The U. S. In July, the Center for Medicare and Medicaid Services, CMS, announced its annual proposed rule for the hospital payment and physician fees for 2026.

[Ryan Rhodes, CEO & Director at EDAP TMS]

The proposed hospital payment for the Focal One HIFU procedure in 2026 is set at $9,765 which represents an increase of $518 or 5.6% compared to the current payment in 2025. We view this as positive for our Focal One business and more importantly allows increased patient access to Focal One robotic HIFU. With respect to the physician reimbursement, CMS has proposed 26.43 total relative value units or RVUs for 2026. This translates to a Medicare payment of $888 based on the current proposed conversion factor for qualifying alternative payment model participants. It is important to note that the new codes created in the prostate ablation space for irreversible electroporation, or IRE, and water jet resection received total proposed RVUs that were significantly lower than the one allocated for HIFU prostate ablation.

[Ryan Rhodes, CEO & Director at EDAP TMS]

With IRE coming in at 19.76 total RVUs or $664 and water jet resection at 16.14 total RVUs or $542 Looking across the landscape for new reimbursement rules for 2026, we remain very well positioned in targeted prostate ablation with HIFU physician fees that are valued measurably higher than those for other competitive procedures such as cryoablation, TULSA, or IRE. Additionally, a new CPT code category three has been established to report the treatment of benign prostatic hyperplasia, BPH, with the use of HIFU. This new code became effective on 07/01/2025, and CMS has assigned it to the urology APC level six with an established payment rate similar to the one defined for HIFU in the treatment of prostate cancer. While we do not expect any meaningful revenue for BPH in the short term, we are pleased to see positive reimbursement news for HIFU for the BPH indication, which represents an area of strong interest in our development pipeline. It is important to note that a CPT Category III code would enable facilities to be reimbursed for a Focal One procedure as it would be performed as part of an investigational study in BPH, which maps directly into our current procedure development plans.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Before turning the call over to Ken to review our financial results, I would like to provide an update on our corporate strategy. We are pleased to report meaningful progress in the development of our Focal One Endometriosis application. In March, we received CE marking for use of HIFU in the treatment of rectal endometriosis, an important regulatory milestone that validates the safety and performance of our technology in this new indication. In parallel, clinical evidence supporting this approach continues to grow, highlighted by the recent publication of the multicenter retrospective comparative trial by DuBernard and colleagues in the International Journal of Gynecology and Obstetrics. This study compared HIFU with surgery for rectal endometriosis.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Results showed that use of Focal One HIFU for the non invasive ablation of endometriosis nodules achieved similar pain relief and quality of life improvements as compared to surgery. However, Focal One importantly showed reduced rates of complications while avoiding the typical morbidity associated with major pelvic surgery. Additionally, patients treated with HIFU also experience shorter recovery times and a lower risk of functional side effects. With CE marking now in place, we have initiated the first steps of commercialization in Europe. Beyond the immediate clinical benefit, this represents a significant commercial milestone for EDAP, as it positions Focal One not only as a leading technology in focal therapy for prostate cancer, but as a true multi application robotic therapeutic ultrasound platform.

[Ryan Rhodes, CEO & Director at EDAP TMS]

By expanding into endometriosis, we opened the door to a new and very large patient population, which we believe has the potential to accelerate adoption and drive meaningful incremental sales growth for our installed base, including future placements. Now turning attention to development activities within our core therapeutic ultrasound technologies. Based on four decades of experience as a pioneer and market leader in the development and commercialization of extracorporeal shock wave lithotripsy, as well as our ongoing effort in high intensity focused ultrasound, we continue to invest in the research and development of ultrasound energy based technologies. As a reminder, in November 2024, EDAP announced the achievement of a technical milestone demonstrating the feasibility of nonthermal, noninvasive hystotripsy energy delivery using the Focal One robotic HIFU system to generate hystotripsy lesions in biological tissues ex vivo. As noted, these results were presented at the one hundred and eighty seventh Acoustical Society of America meeting in November 2024, marking an important step in the potential expansion of our ultrasound energy based therapy platform.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Building on this foundation, we continue to invest in future development and collaborations to advance the the safety, precision, and efficacy of acoustic based treatment modalities to include histotripsy. We look forward to providing additional updates as we continue to make progress on this front. As announced recently, we have entered into a letter of intent for a strategic financing facility with European Investment Bank for €36,000,000 for approximately $42,000,000 The capital raised through this financing is expected to enhance our balance sheet offering a substantial source of low interest funding that will support the continued expansion of Focal One robotic HIFU and focal therapy, while accelerating the development of new clinical indications. We also recently announced a transition from being a foreign private issuer to a U. S.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Domestic filer. Beginning on 01/01/2026, EDAP will begin complying to the U. S. Securities and Exchange Commission reporting rules, as well as NASDAQ listing requirements applicable to U. S.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Domestic filers. We believe this transition marks an important corporate milestone in our evolution as a public company and underscores our long term commitment to regulatory best practices, transparency, and expanding our presence within The U. S. Investor community. We believe this move will benefit our shareholders while positioning the company to attract new institutional investors.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Our intention to become a U. S. Domestic filer is also consistent with our long term strategic growth plan as we continue to position the company towards leveraging multiple high growth opportunities for focal therapy. I will now turn the call over to Ken, who will review our second quarter twenty twenty five results.

[Ken Mobeck, CFO at EDAP TMS]

Thank you, Ryan, and good morning, everyone.

[Ken Mobeck, CFO at EDAP TMS]

For conversion purposes, our average euro dollar exchange rate was 1.1489 for the 2025. Total revenue for the 2025 was €16,000,000 an increase of 1.6% as compared to total revenue of EUR 15,800,000.0 for the same period in 2024. The increase in revenue was driven by significant strength in our core HIFU business, which grew 76.8% over the 2024. Growth in our HIFU business was offset by expected continued decline in our non core distribution and ESWL businesses, which declined by 31.2% in Q2 twenty twenty five versus Q2 twenty twenty four. Total HIFU revenue for the 2025 was €8,500,000 as compared to EUR4.8 million for the 2024.

[Ken Mobeck, CFO at EDAP TMS]

The 76.8% year over year increase in HIFU revenue was driven by nine Focal One capital sales in the 2025 versus three capital sales in the prior year period, as well as a 16.1% year over year increase in Focal One treatment driven revenue. The second quarter worldwide HIFU disposable revenue was up 23.9% on a year over year basis. US procedures grew 4.8% year over year. For the 2025, HIFU revenue was €14,700,000 an increase of 38.5% compared to the six months ended 06/30/2024. Gross profit for the 2025 was EUR6.8 million compared to EUR5.9 million for the same period a year ago.

[Ken Mobeck, CFO at EDAP TMS]

Gross margin was 42.5% in the 2025 compared to 37.5% in the same period a year ago. The increase in gross margin year over year was primarily due to the strategic focus on our high margin HIFU business segment. Gross profit for the six months ended 06/30/2025 was EUR 12,500,000.0 compared to EUR 12,300,000.0 for the same period in the prior year. Gross margin was 42.3% for the six months ended 06/30/2025 versus 40.1% for the same period in the prior year. Operating expenses were EUR 12,600,000.0 for the 2025 compared to EUR 12,100,000.0 for the same period in 2024.

[Ken Mobeck, CFO at EDAP TMS]

The increase in operating expenses was primarily due to focused investments in our HIFU business. Operating expenses were EUR 24,300,000.0 for the six months ended 06/30/2025 compared to EUR 23,300,000.0 for the same period in 2024. Operating loss for the 2025 was €5,800,000 compared to an operating loss of €6,100,000 in the 2024. Operating loss for the six months ended 06/30/2025 was 11,800,000 compared to an operating loss of €11,000,000 for the six months ended 06/30/2024. Excluding the impact of non cash share based compensation, operating loss for the second quarter would have been EUR5.3 million compared to an operating loss of EUR5.3 million in Q2 twenty twenty four.

[Ken Mobeck, CFO at EDAP TMS]

Net loss for the 2025 was €5,600,000 or €0.15 per share as compared to a net loss of €6,100,000 or €0.16 per share in the same period a year ago. Net loss for the six months ended 06/30/2025 was €12,700,000 or €0.34 per share as compared to a net loss of €10,700,000 or €0.29 per share for the six months ended 06/30/2024. Inventory decreased to $15,500,000 in Q2 as compared to €18,000,000 at the end of Q1 twenty twenty five. The decrease in inventory was due to continued efforts in generating efficient just in time inventory management along with higher inventory turnover due to increased demand for Focal One. Total cash and cash equivalents at the end of Q2 twenty twenty five were EUR16.3 million as compared to EUR22.8 million at the end of Q1 twenty twenty five.

[Ken Mobeck, CFO at EDAP TMS]

The decrease was driven primarily by the cash used in operating activities to support our strategic investment in HIFU. As Ryan mentioned previously, we entered into a letter of intent for a strategic financing facility with the European Investment Bank, which upon closing is expected to strengthen our balance sheet as we continue to advance the future of HIFU. We are actively optimizing cash flow and working capital, positioning ourselves strategically while unlocking the full potential of our HIFU business. I will now provide a brief update on tariffs. Based on the latest updates on U.

[Ken Mobeck, CFO at EDAP TMS]

S. Tariff policy, we are forecasting a 15% tariff impact for all goods transferred between France and The U. S. We will continue to closely monitor the potential impact of U. S.

[Ken Mobeck, CFO at EDAP TMS]

Tariff policies on a go forward basis. I would like to now turn the call back to Ryan for closing comments.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Thanks, Ken. The company is updating its 2025 financial guidance. Core HIFU business revenue is now expected to grow within the range of 26% to 34% year over year, and our combined non core ESWL and distribution business revenue is expected to decline within the range of 25 to 30% year over year.

[Ryan Rhodes, CEO & Director at EDAP TMS]

This compares to our earlier guidance issued at the beginning of the calendar year, which had our core HIFU business growing between 1625%, and our combined non core ESWL and distribution business revenue declining between 2025% year over year. This quarter, we hit a major inflection point for Focal One adoption with record second quarter HIFU results signaling the start of accelerated growth. Adoption is being driven by three forces. Strong clinical data validating focal therapy with the use of Focal One. Focal One's best in class robotic HIFU platform with increased capabilities.

[Ryan Rhodes, CEO & Director at EDAP TMS]

And a growing awareness among patients and physicians. Notably, much of our growth from The U. S. Community hospitals in major metropolitan areas, and this is a clear sign that hospitals are responding to rising demand. With our leadership position, differentiated technology, and expanding footprint, we are poised to both define and lead the rapidly growing focal therapy market for early stage prostate cancer.

[Ryan Rhodes, CEO & Director at EDAP TMS]

With that, I will now turn the call over to the operator for questions. Operator?

[Operator]

We'll take our first question from Michael Sarkone with Jefferies. Your line is open. Please go ahead.

[Michael Sarcone, Analyst at Jefferies]

Good morning and thanks for taking our questions today. I guess just wanted to start and dig into some of the payer issues you mentioned, Ryan. I guess you said you're starting to see some improvement there given that you're working with the market access providers on prior auth. Can you just give us a little color on the efforts you're taking there to improve the reimbursement situation and maybe what you're baking into the revised growth guide for the year as it relates to some of that improvement?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Yes. So to answer your question, Michael, a couple of things. One is, obviously we showed solid growth maintained in our HIFU business year over year. We've stated some challenges tied to Medicare Advantage plans in select markets, but these are being actively addressed. We're proactive in our mitigation, meaning we have strong collaboration with our marketing access partners, helping to accelerate pre authorizations for Focal One procedures.

[Ryan Rhodes, CEO & Director at EDAP TMS]

And really early signs of improvement are emerging with more approvals coming through for individual procedures. We think also getting and disseminating out the landmark HiFi study, and of course the FARP study, or FARP studies, provide compelling clinical evidence, which again support broader coverage and bolster payer confidence. And equally, we're also seeing an increase in training new urologists seeking to learn how to use Focal One. So I think in context with your question, we've seen activity with Medicare Advantage. But it's been regional.

[Ryan Rhodes, CEO & Director at EDAP TMS]

And usually it's addressed right away. And we see, again, a lot of the what I would say some of the, a lot of the issues we've had kind of resolved, again using our outside market access partners, as well as working with hospitals, the physicians, and elevating the clinical data as suggested.

[Michael Sarcone, Analyst at Jefferies]

Okay. Very helpful. I guess just one follow-up there. If we look back to the end of last year, I think your HIFU procedure growth was growing at kind of 30% plus range, and and now we're in the mid single digits. Guess, you know, do you attribute that desal entirely to some of these regional Medicare Advantage issues?

[Michael Sarcone, Analyst at Jefferies]

Or is there anything else going on there? Just trying to get a sense for when you think we see higher growth. Can we get back to the 20% plus HIFU procedure growth?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Yeah, we're deeply focused on that. And again, as mentioned, where we've had issues with Medicare Advantage plans, which again, we've communicated in the past, we have resolved a lot of those issues. Some of those go on to ALJ rulings, and we've been able to elevate a lot more of the clinical evidence as referenced. I would say that we continue to be hyper focused on our procedure growth. And again, I think there's a couple contributing things is we've seen an increase of urologists at install accounts wanting to be trained on the technology.

[Ryan Rhodes, CEO & Director at EDAP TMS]

So we're activating on that. Again, I think we're heading in a positive direction with our procedure growth. We had quarter over quarter increase, though it communicated here. But we had a quarter over quarter increase, and certainly a year over year increase. So we're hyper focused on it.

[Ryan Rhodes, CEO & Director at EDAP TMS]

And I think looking at the activities in our pipeline, and pipeline of training new urologists, I think it bears well for future growth.

[Michael Sarcone, Analyst at Jefferies]

Great. Thanks a bunch, Ryan. Thank you.

[Operator]

And we'll take our next question C. Wainwright. Your line is open. Please go ahead.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Thank you. Good morning, folks. Congratulations on a strong quarter. I'm just trying to understand, a little bit more behind, you know, CMS trying to, I mean, increase in the reimbursement rates. So what do, the CMS take into account when they are giving you a higher reimbursement rate?

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Do they look into the evidence? Do they look into the procedure volume? Or what are the factors going to that calculation?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Well, one is they look at I think a number of things. Obviously they look at things across the board. Again, are average payments. So they look at cost of service in those relative markets. So there's a service to value, clinical value ratio that they use.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Additionally, they look at volume of procedures, and volume of treatments, and billing that comes in. Remember, in our business, we have a disposable, as noted, right, for every procedure we perform. With Focal One, we also sell a corresponding focal pack. So I would say that HIFU is growing categorically. We've seen that data.

[Ryan Rhodes, CEO & Director at EDAP TMS]

That is a driver. And there's some incidental things like in the market, they evaluate everything. The cost of malpractice insurance is factored into that RVU calculation, etcetera. So we've shown in our communication the proposed rule. The final rule comes out in October.

[Ryan Rhodes, CEO & Director at EDAP TMS]

We'll see what happens there. But it's encouraging that CMS really recognizes the value of the HIFU procedure. And I think that's an important sign for us. The value there, the clinical value, I think the data, all of it helps determine together what that payment rate may be or that increase. And and it and it's obviously placed into a category.

[Ryan Rhodes, CEO & Director at EDAP TMS]

In our case, it's category six or APC six. So all of that really goes into driving that that number and that that increase.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Yeah. No. I was just trying to understand, you know, if I can use that as a as a leading indicator for for volume growth and also for capital purchase growth. So that that's why I was just trying to ask that question, how how they calculate that. In terms of the multiunit purchases that you talked about, you know, whether it is in the Northeast here, in the New York, New Jersey area, or in the Cleveland Clinic, how much effort is your commercial team placing in such sales?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Well, there's a considerable effort obviously placed in every sale. I'd say what was such a good sign here is we've seen three distinct regional integrated hospital systems now acquire their second Focal One system in q two, as I referenced earlier. New York Presbyterian, Baptist Health, and Meridian Health as well in the Northeast. So again, I think it's a strong validation that the technology is bringing value to the institution. Because when they look at purchases, especially premium priced capital equipment, they're looking at the existing programs.

[Ryan Rhodes, CEO & Director at EDAP TMS]

And so we've done a very good job of kicking off the original program. And again, it's leading to second system sales within these integrated networks. So I think it's a very positive sign, and obviously speaks to the validity and clinical value demonstrated by Focal One.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

And then on the BPH, you said that CMS is I I think I understood. If I understood it wrong, please help me. I believe the CMS is giving, is providing reimbursement on on the BPH indication. So if you have that already, and doesn't your label allow for use in BPH as such? Or do you need to do some additional work to show the utility in BPH?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Yes. So our labeling allows for ablation of prostate tissue. That would be, as it's stated, that would be cancer and non cancer, using that terminology. I think here is that the reality is that we are working through a process internally. And I'll just, to bring you back up to speed, we've had an ongoing combined phase one, study in France with BPH.

[Ryan Rhodes, CEO & Director at EDAP TMS]

We are still recruiting patients in that study. But we're also, importantly in active discussions with prominent US academic partners and sites. And with our goal to be able to deliver on a US clinical study or kick a study off no later than the early part of next year, '26. We believe Focal One's precision, HIFU delivery, and a noninvasive approach really offer a differentiated treatment option for BPH. With that said, if we enter into a study, we'll obviously be enrolling these patients, corresponding our goal would be enrolling those patients so we would be able to access reimbursement.

[Ryan Rhodes, CEO & Director at EDAP TMS]

But right now there is, you know, we don't have, there's not a defined indication as it's stated for BPH. We have ablation of prostate tissue as mentioned, and this gives us an opportunity to further do procedure and clinical development in BPH with the intention of getting into The US market.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Okay. And then on the endometriosis trial, ongoing trial, can you provide us an update on that study?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Yeah. Great question. Our phase three double blinded study, if you remember, the patients who were part of the sham arm at time of unblinding were offered Focal One treatment if they wanted treatment per protocol. What's important to understand is over eighty percent of those sham arm patients chose to have the Focal One procedure once unblinded. These patients are now being tracked in a long term follow-up study.

[Ryan Rhodes, CEO & Director at EDAP TMS]

And then importantly in March, we announced CE Mark for endometriosis and CE Mark countries. And currently, we have a limited European launch underway with active patient recruitment and scheduling. And again, we feel again that our Focal platform, our new platform, was designed with new features tailored for endometriosis. So that's part of this CE Mark country limited launch. And so we continue to work through that process.

[Ryan Rhodes, CEO & Director at EDAP TMS]

We're excited, as I explained today on the call, an important study comparing Focal One HIFU ablation of endometrial nodules versus surgery. You can see that they're reading that paper, that there may be some very distinct advantages using targeted HIFU therapy versus something more radical such as surgery.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Okay, thank you. One last question. I know I've taken a lot of your time. The €36,000,000 that, you have signed the letter of intent, how much of that has you have already, you know, received? And is all of that pretty much earmarked for development in either in, histotripsy or endometriosis studies? Just trying to understand how you're marking those funds.

[Ken Mobeck, CFO at EDAP TMS]

Yeah, great question, RK. I'll take the first part of the question and I'll have Brian answer the second. So in our current financials, we've taken no dollars on our balance sheet. Okay? We are currently working with the EIB legal and our external counsel to document all the final agreed upon terms.

[Ken Mobeck, CFO at EDAP TMS]

So we'll disclose all the t's and c's once the final agreement is signed. But, just to emphasize, no cash from the EIB is currently on our balance sheet. Now with regards to the funding, I'll let Ryan answer that. Use of funds are really, you know, targeted for accelerated commercial, growth. Right?

[Ken Mobeck, CFO at EDAP TMS]

Growing our HIFU business. But also investing in some of the clinical indications as referenced, and also some of the new technologies within our HIFU ecosystem. And so anyway, it's a number of things in those kind of distinct areas. We want to grow faster in HIFU, and we want to invest properly. With that said, we also have some clinical development areas that we want to support indications and corresponding studies to support those indications.

[Ken Mobeck, CFO at EDAP TMS]

And then, of course, being a company that has market leadership in our HIFU technology, we want to continue to build on that, with new complementary technologies.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Perfect. Thank you. Thank you, gentlemen, for taking all my questions.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Thank you, RK.

[Operator]

We'll go next to Jason Bednar with Piper Sandler. Your line is open. Please go ahead.

[Jason Bednar, MD & Senior Research Analyst at Piper Sandler Companies]

Hey, guys. Can you hear me okay?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Hey, Jason. Yes.

[Jason Bednar, MD & Senior Research Analyst at Piper Sandler Companies]

Hey. Good morning. Good morning. Yeah. So in the interest of time here, ask a couple. Wanted to first start, you know, Ryan, you seem confident that you made a comment that your comp in the second quarter is an inflection point. If I could just pressure test this, do you have the visibility with respect to your Focal One backlog over the next three to six or six to nine months that 2Q isn't as truly an establishment of a trend. The demand sounds good, but we've also seen capital, go through fits and starts over the years, even for those that are disruptors or you have new service lines for hospitals. I guess just trying to get a sense of your confidence level that 2Q truly is sort of a trend and whether 3Q can be as good as what we saw here in 2Q.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Yes. I'd on a go forward basis, looking outward, we believe we've got a very, very strong pipeline. We build on that. We've added some headcount to our commercial teams. And Ken can comment on that.

[Ryan Rhodes, CEO & Director at EDAP TMS]

But our pipeline remains strong. We sell a clinically necessary strategic revenue enhancing service line in the number one cancer in men. And aside from the fact that there's other capital equipment out there, what we sell is clinically necessary. Focal therapy is growing as a category quickly. In prostate cancer it is growing.

[Ryan Rhodes, CEO & Director at EDAP TMS]

The numbers support that. We have a technology advantage with our platform. And with that said, we're talking about arguably the number one cancer diagnosed in men. This is with reimbursement behind it. So all this breathes into that story, but we sell strategic capital, unlike other companies out there that are selling capital equipment.

[Ryan Rhodes, CEO & Director at EDAP TMS]

We really believe that Focal One is the core to a focal therapy program in a hospital that treats prostate cancer patients. And so with that said, we believe our pipeline remains strong and growing. Ken can comment on investments we've made on our commercial teams. Ken?

[Ken Mobeck, CFO at EDAP TMS]

Yeah.

[Ken Mobeck, CFO at EDAP TMS]

So a couple of things, Jason. As Ryan mentioned, we have strengthened our our sales team, in The US. We recently brought in a new central leader. We've, you know, added key headcount in key regions where we believe, MSA growth is strong. Okay?

[Ken Mobeck, CFO at EDAP TMS]

So we are making the investments. Now I I did wanna highlight on your revenue question. So, you know, just as a reminder, right, q three with holidays in Europe tends to spike down, and then we always end the, fourth quarter strong. You know, we still see those trends, continuing here as we finish the year, but we do feel very confident, hence upping the HIFU revenue growth year over year from 16 to 25 to 26 to 35 for the year.

[Jason Bednar, MD & Senior Research Analyst at Piper Sandler Companies]

Alright. Thanks guys. Are you willing to talk about where your backlog sits today, even relative to where we were maybe to start the year or a year ago at this time?

[Ryan Rhodes, CEO & Director at EDAP TMS]

Mean, arguably, I would say it's certainly stronger. As Ken mentioned, we've added more commercial headcount in the right key areas, not only in The US, but even in the OUS markets. And we continue to leverage that. Our pipeline, I would say if you looked at a year in time, pipeline can be a very vague term, as you know Jason. When I look at a qualified active pipeline on a year over year basis, clearly our pipeline is stronger than it was last year.

[Ryan Rhodes, CEO & Director at EDAP TMS]

We have arguably more boots on the ground, but more importantly, we have a stronger level of engagement. And if you remember, we leveraged the HiFi study, which came out the very end of the year. So that has been helping make a notable impact. And our OUS pipeline has also been contributing more to our overall sales. So I'm excited for that.

[Ryan Rhodes, CEO & Director at EDAP TMS]

I hired and recruited two strong leaders, Domi and Desmond, who was at Intuitive Surgical for fifteen years, and Alex Schrom, who also was at Intuitive with me. And they're leading a lot of our key efforts throughout the whole European, Latin America, and Eastern Europe markets, to include The Middle East. So I've got a very, what I believe, a strong team in place to help us further drive those sales.

[Jason Bednar, MD & Senior Research Analyst at Piper Sandler Companies]

Okay. That makes sense. Last one for me. Just on The U. S.

[Jason Bednar, MD & Senior Research Analyst at Piper Sandler Companies]

Procedure volume number, we've touched on it already a bit. I guess I'm curious how patients and hospitals are electing to move forward when when some of these reviews get hung up. I mean, are patients electing alternative therapy options? And then are the are hospitals seeing any are you seeing any elongation of capital sales trends as a result of what you're seeing play out with these procedure hang ups?

[Ryan Rhodes, CEO & Director at EDAP TMS]

No. I don't see any impact on our capital sales. Again, when you do the pro form a analysis, which we commonly do working closely with our hospitals, hospital customers, we have strong reimbursement in place. And those who invest see this as strategic to their operating plan. We're talking about cancer, cancer in men, men's health, and all these kinds of things.

[Ryan Rhodes, CEO & Director at EDAP TMS]

But back to your question on denials and repeals and that process, the appeal process, We work through that, and we've gotten better. And again, it's regionally based. We have some hospitals that had a few incidents, and then they kind of sail through. And now payers are approving those procedures and approving the reimbursement. So it continues to evolve.

[Ryan Rhodes, CEO & Director at EDAP TMS]

I'd say a lot of our hospitals now are armed with new data, and they're using that data. All the dossiers that have been out there reflecting HIFU as a treatment for prostate cancer are up to date, especially with the Hi Fi study that's already out. And we will see ideally the FARC clinical trial data, the randomized controlled trial also published. So all this frees into the opportunity to work through any slowdown with the payers. And we get better too, arguably as a team, working with our market access team outside the company.

[Ryan Rhodes, CEO & Director at EDAP TMS]

So again, feel like we've got good momentum developing. We've got a lot of engagement. Remember, we have a very large, highly impressive academic install base, and many of these folks are activated too in this process. We're in some of the top cancer hospitals and academic centers in prostate cancer on a worldwide basis. So we have everybody involved, and again, we continue to see projected growth.

[Jason Bednar, MD & Senior Research Analyst at Piper Sandler Companies]

All right. Thank you.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Thank you.

[Operator]

This does conclude today's question and answer session. I will now turn the program back over to Ryan for any additional or closing remarks.

[Ryan Rhodes, CEO & Director at EDAP TMS]

As we close this call, I want to underscore the significance of the growing disease of prostate cancer, the number one diagnosed cancer in men. Each year September is recognized as Prostate Cancer Awareness Month, a time dedicated to educating, informing, and drawing greater attention to a disease that affects millions of men worldwide. According to projections published by the Lancet Commission on Prostate Cancer in April 2024, the number of diagnosed cases for prostate cancer is expected to double to two point nine million men by 02/1940, with the annual deaths rising to seven hundred thousand. These numbers are alarming and they demand our collective attention. Awareness is the first step toward action.

[Ryan Rhodes, CEO & Director at EDAP TMS]

I encourage each of you to share this knowledge, advocate for early screening, and support initiatives that promote education and research. Together we can make a meaningful difference in making available newer, effective, less invasive treatment options that both save lives and improve quality of patient care. In closing, I want to thank everyone again for joining us on today's call. And we look forward to seeing you at the upcoming H. C.

[Ryan Rhodes, CEO & Director at EDAP TMS]

Wainwright Annual Global Investment Conference on Tuesday, September 9 in New York City. Thank you.

[Operator]

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Participants

Analysts

• John Fraunces, Director - Corporate Communications at LifeSci Capital, LLC
• Ryan Rhodes, CEO & Director at EDAP TMS
• Ken Mobeck, CFO at EDAP TMS
• Michael Sarcone, Analyst at Jefferies
• Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.
• Jason Bednar, MD & Senior Research Analyst at Piper Sandler Companies