FocalTherics Q3 Earnings Call Highlights

Key Points

• Third-quarter revenue rose 26% to $9.8 million, with seven Focal One system sales. Three expected sales slipped to Q4 amid slower hospital approvals, prompting FocalTherics to lower its 2026 revenue outlook to $50 million–$52 million from $50 million–$54 million.
• U.S. procedure volume increased 32% year over year and treatment-driven revenue grew 24%; gross margin improved to 51.4%. Operating expenses rose and the operating loss widened, though net loss narrowed to $4.5 million, while quarter-end cash reached $56.3 million after an equity offering.
• Several major insurers have issued coverage policies for HIFU salvage treatment, and the company is exploring additional uses including BPH and endometriosis. Results from the HIFUSA phase III trial are expected early next year.

FocalTherics NASDAQ: FOCL reported 26% growth in third-quarter 2026 revenue from its high-intensity focused ultrasound business, but lowered the top end of its full-year forecast after three anticipated system sales slipped into the fourth quarter.

Revenue was $9.8 million, up from $7.8 million a year earlier, as the company sold seven Focal One capital systems globally, compared with six in the prior-year period. Chief Executive Officer Ryan Rhodes said the revenue shortfall was entirely attributable to the timing of the three delayed sales, rather than weaker demand or competition.

FocalTherics narrowed its 2026 revenue guidance to $50 million to $52 million from $50 million to $54 million. The revised range represents growth of 34% to 39% over 2025, according to Chief Financial Officer Ken Mobeck.

Hospital purchasing delays

Rhodes said hospital committee approvals took longer than expected during the summer purchasing season. During the question-and-answer session, he said one of the delayed sales had already closed and the company had signed two purchase orders. Mobeck added that one transaction had been held up at a bank financing the customer’s purchase.

Mobeck said the three systems previously anticipated in the third quarter were forecast to generate revenue in the fourth quarter. Asked why the company reduced the top of its annual guidance range, he said FocalTherics wanted to be prudent given its fourth-quarter outlook, while maintaining confidence in its pipeline.

The company ended the quarter with 192 Focal One systems installed worldwide, including 98 in the United States and 94 internationally. The quarterly total reflected seven capital sales and one net operating lease placement.

Rhodes highlighted a second system sold to Baylor Scott & White Health, in Temple, Texas, and a sale to MaineHealth Pen Bay Hospital, marking the company’s entry into Maine. He said 16 U.S. hospital networks now have two or more Focal One systems. Kaiser Permanente also expanded its program with operating leases in Sacramento and San Francisco, bringing its total to four systems.

Procedure growth and financial results

U.S. Focal One procedure volume rose 32% year over year, while treatment-driven revenue increased 24%. Rhodes said the volume growth reflected contributions from both established and newer programs and was in line with the company’s expectations for the seasonally slower quarter.

Gross margin improved to 51.4% from 46.6% a year earlier. Mobeck attributed the improvement primarily to lower standard costs for the Focal One system and higher average selling prices for systems and Focalpaks.

Operating expenses increased to $12.8 million from $10.3 million, driven by additional compensation costs and sales and marketing spending. The operating loss widened to $7.8 million from $6.7 million. Net loss narrowed to $4.5 million, or $0.10 per share, from $5.9 million, or $0.16 per share, helped by a favorable noncash change in the fair value of European Investment Bank warrants and foreign exchange gains.

Cash and cash equivalents totaled $56.3 million at quarter-end, compared with $21.5 million at the end of the second quarter, reflecting net proceeds from an August equity offering. Mobeck said the HIFU business is now presented as continuing operations, while the ESWL and distribution businesses are reported as discontinued operations; prior-period figures have been recast.

Coverage and clinical programs

Rhodes said several commercial insurers, including Aetna, Cigna, Humana and United, have issued HIFU coverage policies for salvage treatment after primary radiation therapy fails. He cited an upgraded National Comprehensive Cancer Network recommendation and the HIFI-2 study published in April as supporting broader coverage.

The company is also studying Focal One for benign prostatic hyperplasia, or BPH, in Chile. Rhodes described early results as encouraging. For deep infiltrating endometriosis, he said three European centers—two in France and one in Hungary—are treating commercial patients as part of a limited launch.

Rhodes said data from the HIFUSA phase III trial comparing Focal One with active surveillance is expected to be published early next year. The study enrolled 108 patients across 14 centers, with follow-up for the last patient expected to finish in the first quarter of 2027. He cautioned that preliminary benefits had not been verified.

Looking to 2027, Rhodes said he expects procedure growth to remain consistent as the installed base expands and existing accounts increase utilization. Mobeck cautioned that newly installed systems take time to generate procedures because hospital teams must be trained.

About FocalTherics (NASDAQ:FOCL)

EDAP TMS SA, together with its subsidiaries, develops, produces, markets, distributes, and maintains a portfolio of minimally invasive medical devices for the treatment of urological diseases in Asia, France, the United States, and internationally. It operates in three segments: High Intensity Focused Ultrasound (HIFU), Extracorporeal ShockWave Lithotripsy (ESWL), and Distribution Services (DIST). The HIFU segment develops, manufactures, and markets medical devices based on HIFU technology for the minimally invasive treatment of urological and other clinical indications.

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