Pulmonx NASDAQ: LUNG reported third-quarter revenue growth and a narrower loss as the company cited progress in rebuilding its U.S. sales organization, tightening expenses and advancing clinical programs intended to expand its market.
Total worldwide revenue for the quarter ended Sept. 30 was $22.8 million, up 6% from $21.5 million a year earlier on both a reported and constant-currency basis. President and Chief Executive Officer Glen French said the result marked the company’s return to year-over-year revenue growth and supported its outlook for full-year revenue of $90 million to $92 million.
“Our continued progress, built on consistent execution, leaves us increasingly confident in our ability to achieve our previously communicated revenue guidance,” French said.
U.S. Sales Growth Returns
U.S. revenue rose 7% to $14.9 million from $14 million in the prior-year quarter. The company added eight U.S. treating centers during the period. French attributed the improvement to a more concentrated commercial strategy, including the development of efficient valve programs, physician education, direct-to-patient outreach in areas served by established treatment centers, and collaboration with hospital administrators to ensure programs have adequate resources.
French said Pulmonx has filled substantially all open U.S. sales positions after making rebuilding sales leadership and staffing territories a priority at the beginning of the year. The company has seen broader activity at accounts, including regular reviews of potential patients, the use of dedicated valve-program coordinators and systematic reviews of pulmonary-function tests to identify candidates for treatment.
The company also said its digital advertising efforts have reduced the cost per patient engagement and improved the rate at which those engagements lead to treatment.
However, French said the sales force remains relatively inexperienced following turnover and hiring. The mean tenure of the U.S. sales organization was about 1.8 years, while median tenure was about 1.2 years, compared with mean and median tenure of roughly three years about a year and a half ago. He said productivity has varied by representative, though some newer employees and internally promoted territory account managers have performed strongly.
Management expects modest increases in the number of sales territories over time, primarily where existing territories become too large in revenue, complexity or geography to manage effectively.
International Business and China
International revenue increased 5% to $7.9 million, or 6% on a constant-currency basis. Excluding China, international markets grew about 9% on both a reported and constant-currency basis, according to Chief Operating Officer and Chief Financial Officer Derrick Sung.
Pulmonx said it has renewed its China registration certificate and resumed commercial activity in the country. The company expects to restart shipments to its distributor by early 2027, although Sung said shipments could potentially begin in the fourth quarter and that timing variability is included in its 2026 guidance.
French sought to put the China opportunity in context, noting that the U.S. represents 64% of revenue, Europe represents 33%, and Asia-Pacific accounts for 3%. China is expected to account for about 2% of the company’s business once it returns, he said. Because China is a distributor market, French said it is less predictable and more variable than Pulmonx’s direct markets.
Margins, Costs and Cash
Third-quarter gross margin rose to 76% from 75% a year earlier, aided by a lower mix of international distributor sales and supply-chain cost efficiencies. The company now expects full-year gross margin of approximately 77%.
Total operating expenses declined 18% to $24.9 million from $30.4 million. Excluding $3.2 million of non-cash stock-based compensation, operating expenses fell 16% year over year. Research and development expense was $4.9 million, compared with $4.8 million a year earlier, while selling, general and administrative expense fell to $20 million from $25.6 million.
Net loss narrowed 40% to $8.4 million, or 19 cents per share, from $14 million, or 34 cents per share, in the prior-year quarter. Adjusted EBITDA loss narrowed to $3.5 million from $8.2 million.
Pulmonx expects full-year operating expenses of $108 million to $109 million, including about $14 million in stock-based compensation. Sung said the company is comfortable with its current cost structure and does not expect meaningful increases beyond modest inflation-related changes, while revenue growth should create operating leverage given gross margins above 75%.
The company ended the quarter with $52.7 million in cash and cash equivalents, down $3.2 million from June 30. Pulmonx expects roughly $22 million in cash burn for 2026, a 30% reduction from 2025. Sung said the company’s restructured credit facility, which matures in 2031 and includes access to an additional $20 million subject to revenue milestones, supports what management views as a path to cash-flow breakeven.
AeriSeal and Longer-Term Outlook
Pulmonx said enrollment continues in its CONVERT II investigational device exemption trial for AeriSeal and remains on track for completion in the second half of 2027. French said AeriSeal could expand the company’s global addressable market by roughly 20%.
The company expects to be commercial with AeriSeal in Europe during 2027 through a limited launch, with material European revenue more likely in 2028 than in 2027. Management did not provide 2027 financial guidance, but Sung said Pulmonx remains committed to sustaining double-digit growth over the long term without specifying when that target would be reached.
About Pulmonx (NASDAQ:LUNG)
Pulmonx Corporation is a medical device company focused on developing minimally invasive treatments for patients with severe emphysema, a form of chronic obstructive pulmonary disease (COPD). The company's technologies are designed to reduce hyperinflation in damaged portions of the lung and help improve breathing, exercise capacity and quality of life.
Pulmonx's primary product is the Zephyr Endobronchial Valve, a bronchoscopically implanted, one-way valve intended for certain patients with severe emphysema.
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