Pulmonx Q2 Earnings Call Highlights

Key Points

• Pulmonx reported $22.8 million in Q2 revenue, down 5% year over year, but U.S. revenue rose 7% sequentially as the company rebuilt its sales force and added 12 treating centers. Management reiterated 2026 revenue guidance of $90 million to $92 million.
• Profitability trends improved as the net loss narrowed to $10.1 million from $15.2 million, adjusted EBITDA loss fell nearly 40%, and gross margin rose to 78%. Operating expenses declined 16%, while the company expects to use about $23 million in cash during 2026.
• Pulmonx renewed its Chinese registration and expects distributor shipments to resume by early 2027, although significant revenue is not expected until next year. Enrollment in the pivotal AeriSeal CONVERT II trial is progressing, with completion still expected in 2027.

Pulmonx NASDAQ: LUNG reported second-quarter revenue of $22.8 million and reiterated its full-year 2026 revenue outlook, while executives highlighted progress in rebuilding the U.S. sales organization, reducing operating expenses and preparing to resume shipments to China.

Revenue for the quarter ended June 30 declined 5% from a year earlier and 6% on a constant-currency basis. However, U.S. revenue increased 7% sequentially from the first quarter as the company continued to staff its commercial organization and add treating centers.

President and Chief Executive Officer Glen French said the company is pursuing three priorities: re-accelerating sales growth, generating near-term operating leverage and advancing clinical initiatives intended to broaden its addressable market.

Sales force rebuilding and U.S. commercial strategy

U.S. revenue was $14.2 million, down 4% from $14.7 million in the prior-year quarter. Pulmonx added 12 U.S. treating centers during the quarter. French said all sales leadership positions have been filled, while the company continues to fill open field positions as part of normal turnover.

French said turnover in the sales organization has returned to industry-normal levels after running at roughly two to three times normal levels last year. The company has also revised sales training and is using territory account managers as a bench for future territory manager roles.

“We’re starting to see visible impact from the team,” French said, citing the sequential increase in U.S. revenue and internal operating indicators. He said new sales representatives have historically required six to nine months to become fully productive, though the company’s updated training approach could potentially shorten that ramp period.

The company’s commercial efforts are centered on establishing efficient valve programs, educating physicians who treat COPD, directing patient outreach toward areas with treating-center capacity, and working with physician champions and hospital administrators to ensure programs have adequate resources.

French said Pulmonx expects contributions from improving sales-representative productivity, new treating centers and deeper utilization at established programs as it works toward stronger growth. Management said it expects to return to year-over-year global sales growth later in 2026 and to exit the year growing at or near double-digit rates.

China registration renewed; shipments expected early next year

International revenue was $8.6 million, down 6% year over year and down 9% on a constant-currency basis. Chief Operating Officer and Chief Financial Officer Derrick Sung said the entire international decline was attributable to the absence of sales to Pulmonx’s Chinese distributor.

Excluding China, international revenue increased 12% from the prior-year quarter, or 9% on a constant-currency basis. French said the company secured renewal of its Chinese registration certificate in mid-June, removing a key hurdle to restarting the business in the country.

Pulmonx plans to focus during the rest of 2026 on restarting commercial activity and re-engaging accounts in China. Management expects distributor shipments to resume by early 2027, though French said material revenue from the market is not anticipated until next year.

Sung said China sales carry a lower gross margin than other business, though they remain attractive from an operating-margin perspective. He said the company expects to remain “comfortably at or above 75%” gross margin over time, even after shipments to China resume.

Loss narrows as cost alignment initiatives take effect

Pulmonx reported a net loss of $10.1 million, or $0.24 per share, compared with a net loss of $15.2 million, or $0.38 per share, in the year-earlier period. Adjusted EBITDA loss narrowed nearly 40% to $5.1 million from $8.4 million.

Total operating expenses declined 16% to $26.8 million. Excluding stock-based compensation, operating expenses fell 11% year over year. Research and development expense was $5 million, down from $5.3 million, while selling, general and administrative expense decreased to $21.8 million from $26.7 million.

Gross margin improved to 78% from 72%, which Sung attributed to a lower mix of international distributor sales, increased overhead absorption and supply-chain cost efficiencies. The company now expects approximately 76% gross margin for the full year.

Cash and cash equivalents totaled $55.8 million at June 30, down $5.8 million from March 31. Sung said Pulmonx expects to use roughly $23 million of cash in 2026, nearly 30% less than its 2025 cash burn. The company recently restructured its credit facility, extending debt maturity to 2031 and providing potential access to an additional $20 million subject to certain revenue milestones.

Management expects its existing cash and available debt-facility capacity to support its path to cash-flow breakeven over the next several years.

AeriSeal trial enrollment continues

Pulmonx said enrollment is progressing in its CONVERT II pivotal trial evaluating AeriSeal and continues to expect completion of enrollment in 2027. French said AeriSeal could expand the company’s global addressable market by roughly 20% and serve as a future revenue contributor alongside its Zephyr valve business.

AeriSeal has CE mark authorization in Europe, but French said the company does not plan to commercialize the product in markets until enrollment of CONVERT II patients outside the U.S. is complete and the submitted CONVERT I publication is available. He said any launch would also require customary training and commercial preparations.

Pulmonx reiterated full-year revenue guidance of $90 million to $92 million and projected full-year operating expenses of $109 million to $111 million, including about $15 million of non-cash stock-based compensation. The company also noted that its business typically experiences a sequential sales decline in the third quarter compared with the second quarter.

About Pulmonx (NASDAQ:LUNG)

Pulmonx Corporation is a commercial-stage medical device company focused on bronchoscopic lung volume reduction for patients suffering from severe emphysema. The company's flagship therapy, the Zephyr® Endobronchial Valve System, employs one-way valves delivered via a minimally invasive bronchoscopic procedure to collapse diseased portions of the lung, reducing hyperinflation and improving respiratory function. Complementing this treatment, Pulmonx offers the Chartis® Pulmonary Assessment System, which provides clinicians with quantitative measurements of collateral ventilation to aid in patient selection and optimize clinical outcomes.

The Zephyr Valve received the CE mark in Europe in 2008 and FDA approval in the United States in 2018, and it has since been adopted by leading respiratory and thoracic centers across North America and Europe.

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