Q3 2024 Profound Medical Corp Earnings Call
Operator: Good day, and thank you for standing by.
Good day, and thank you for standing by.
Operator: Welcome to the Profound Medical third quarter 2024 financial results conference call. At this time, all participants are in a 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.
Welcome to the profound medical third quarter 'twenty 'twenty four financial results conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
To ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advisor your hand is raised.
To withdraw your question. Please press star one again.
Please be advised that today's conference is being recorded.
Stephen Kilmer: I would now like to hand the conference over to your first speaker today, Stephen Kilmer, Investor Relations.
Speaker Change: Now I'd like to hand, the conference over to your first speaker today.
Speaker Change: Stephen Kilmer Investor Relations. Please go ahead.
Stephen Kilmer: Please go ahead. Thank you.
Okay.
Stephen Kilmer: 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, including the company's year 2024 financial outlook and related assumptions, the expectations regarding the efficacy of Profound's technology in the treatment of prostate cancer, BPH, uterine fibroids, piles of pain, and osteoids, osteoma, and its future revenues and financial results.
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.
Speaker Change: All forward looking statements are based on per pounds 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.
Speaker Change: The company does your 2024 financial outlook and related assumptions.
Speaker Change: Patients regarding the efficacy of <unk> technology in the treatment of prostate cancer BPH uterine fibroid thousands of pain in Australia to Austria and.
Speaker Change: That's future revenue and financial results.
Stephen Kilmer: Such statements involve known and unknown risks, 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 carried. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference.
Speaker Change: Statements involve known and unknown risks uncertainties and other factors that may cause actual results performance or achievements to be materially different but not as implied by such statements.
Speaker Change: No forward looking statement can be guaranteed.
Speaker Change: Listeners are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this conference call.
Stephen Kilmer: Profound undertakes no obligation to publicly publicly update or revise any forward looking Whether as a result of new information, future events, or otherwise, other than is required by law.
Speaker Change: Profound undertakes no obligation to publicly.
Speaker Change: Publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise other than as required by law.
Stephen Kilmer: Representing the company today are Dr. Arun Menawat, Profound's Chief Executive Officer, Rashed Dewan, the company's Chief Financial Officer, and Dr. Mathieu Burtnyk, Profound's President.
Speaker Change: Representing the company today are Dr. Arun <unk>, <unk>, Chief Executive Officer, Chris <unk>, The company's Chief Financial Officer, and Dr. Matthew Beck protons precedent.
Rashed Dewan: With that said, I'll now turn the call over to Rashed.
Speaker Change: I'll now turn the call over to Richard.
Rashed Dewan: Good afternoon, everyone, and welcome to our third quarter 2024 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 updates on Tulsa utilization trends. Captain, Clinical Trial, and Reimbursement.
Richard: Good afternoon, everyone and welcome to our third quarter 2024 conference call.
Richard: On behalf of the management team and everyone at profile.
Richard: I would like to thank you for your ongoing interest in our company.
Richard: For those of you who are shareholders. We appreciate your continued interest and support.
Richard: I will turn the call over to math here in a moment.
Speaker Change: Provide updates on Tulsa utilization trends.
Speaker Change: In clinical trial.
Rashed Dewan: However, Before I do, I would like to provide a brief summary of our third quarter 2024 financial results. to streamline. All of the numbers I will refer to have been downloaded. of the Art of Proxy For the three-month period ended September 30, 2024, the company recorded revenue of $2.83 million, with $2.65 million from recurring revenue. and 179,000 from one time sale of capital equipment. 3rd quarter 2024 revenue increased 64% from 1.73 million from the same period in 2023.
Speaker Change: And reimbursement.
Speaker Change: However.
Speaker Change: Before I do.
Speaker Change: I'd like to provide a brief summary of our third quarter 2024 financial results.
Speaker Change: To streamline things.
Speaker Change: All of the numbers I will refer to have been rounded.
Speaker Change: So they are approximate.
Speaker Change: For the three month period ended September 32024.
Speaker Change: Company recorded revenue of 2.83 million with 2.65 million from recurring revenue.
Speaker Change: And 179000 from one time sale of capital equipment.
Speaker Change: Third quarter 2024 revenue increased 64%.
Speaker Change: One <unk>.
$703 million from the same period in 2023.
Rashed Dewan: Looking forward. for the full year 2024. based on the company's current business planning. and Budgeting Activities. We continue to anticipate revenue to be in the range of $11 million to $12 million. Growth Margin in Q3 2024 was 64%. compared to 61% in Q3 2023. as we mentioned on previous calls. We expect growth margins to vary some quarter over But just as we delivered about 60% margin in full year 2023. We continue to expect to deliver that or better in 2025.
Speaker Change: Looking forward.
Speaker Change: For the full year 2024.
Speaker Change: Based on the company's current business planning.
Speaker Change: And budgeting activities.
Speaker Change: We continue to anticipate.
Speaker Change: Revenue to be in the range of 11.
Speaker Change: $12 million.
Speaker Change: Gross margin in Q3 2024.
Speaker Change: 64%.
Speaker Change: Compared to 61% in Q3 2023.
Speaker Change: As we mentioned on previous calls.
Speaker Change: We expect gross margin.
Speaker Change: Very strong quarter over quarter.
Speaker Change: But just as we delivered about 60% margin in full year 2023.
Speaker Change: We continue to expect to deliver that or better in 2024.
Rashed Dewan: Total Operating Expenses in 2024, 3rd Quarter, which consists of R&D, GNS, and Sales and Distribution Experts. were $10.8 million, an increase of 42%. compared with 7.6 million in the third quarter of 2023.
Speaker Change: Total operating expenses.
Speaker Change: In 2024.
Speaker Change: <unk> quarter, which consist of.
Speaker Change: R&D.
Speaker Change: G&A.
Speaker Change: And sales and distribution expenses.
Speaker Change: 10.8 million an increase of 42%.
Speaker Change: Compared with seven point.
Speaker Change: $60 million in the third quarter of 2023.
Rashed Dewan: Breaking that down further. Expenditures for R&D. 22% on a year over year. $4.2 million. GINA expenses increased by 84%. 3.7 million. and Sales and Distribution Expenses increased by 34%. 2.9 million.
Speaker Change: Breaking that down further.
Speaker Change: Expenditures for R&D increased two.
Speaker Change: 22%.
On a year over year basis to $4 $2 million.
Speaker Change: G&A expenses increased by 84% to $3.7 million.
Speaker Change: Our sales and distribution expenses increased by 34% to two point.
Speaker Change: $9 million.
Rashed Dewan: Med Finance Experts. for the 2024 start quarter was $199,000. compared to net finance income of $1 million for the same three-month period of 2022.
Speaker Change: Net finance expense.
Speaker Change: For the 2020 for third quarter.
Speaker Change: 199000.
Speaker Change: Compared to net finance income.
Speaker Change: $1 million.
Speaker Change: For the same three month.
Speaker Change: <unk> of 2023.
Rashed Dewan: Overall, the company recorded a third quarter 2024 net loss of $9.4 million or $0.38 per common share. compared to a net loss of 5.6 million, or 26 cents per common share for the same three-month period in 2023. As of September 30, 2024, Profound had cash of $27.1 million.
Speaker Change: Overall.
Speaker Change: Company recorded third quarter 2024, net loss of $9 4 million.
Speaker Change: 38 self park common share.
Speaker Change: Compared to a net loss of 5.6 million or <unk> 26 per common share for the same three month period in 2023.
Speaker Change: As of September 32020 for profound had cash of $27 1 million.
Rashed Dewan: With that, I will now turn the call over. Thank you, Rashed.
Speaker Change: With that I will now turn the call over to Matthew.
Matthew: Thank you.
Mathieu Burtnyk: In the third quarter, Profound held its ProTalk live event in Las Vegas, a peer-to-peer education platform for physicians by physicians. The event was sold out, with 70 physicians in attendance to hear from opinion-leading surgeons from the top hospitals in the United States. The message was clear, the TULSA procedure is uniquely positioned to become a mainstream treatment option for men with prostate disease. and the shift to an MRI-centric modern treatment pathway for prostate management is happening right now. Physicians describe the Tulsa Pro as the only device that can safely deliver whole-gland ablation for diffused disease and targeted ablation for discrete disease, with its ability to treat any region of the prostate, whether posterior or interior, at the apex, mid-gland, or base, all within any size, volume, and shape of prostate.
Matthew: In the third quarter profound held proton live events in Las Vegas, and peer to peer education platform for physician by physician.
Matthew: <unk> was sold out with 70 physicians in attendance to hear from opinion, leading surgeons from the top hospitals in the United States the message was clear.
Matthew: The procedure is uniquely positioned to become a mainstream treatment option for men with prostate disease and the shift to an MRI centric modern treatment pathway for project management is happening right now.
Matthew: Describe the Tulsa pro is the only device that can safely deliver a whole gland ablation for diffuse disease and targeted depletion for discrete disease with its ability to treat any region of the prostate whether posterior or interior at the apex mid <unk> or base, all within any size volume and shape of prostate.
Mathieu Burtnyk: Physicians even detailed their streamlined workflow and how to use the precision of intraoperative MRI, together with Tulsa AI Contouring Assistant to efficiently delineate the prostate, and then apply ThermoBoost dynamically during treatment to customize the dose delivered to specific areas of the prostate. And this is all with an inside out energy source, which gently heats the prostate tissue to kill temperature without boiling or charring or disrupting surrounding tissue with no risk of bleeding and as a result, no overnight stay in the hospital or clinic. Multiple physician presentations highlighted the flexibility of the TulsaPro in both prostate cancer and BPH.
Matthew: Even detailed there streamlined workflow and how to use the precision of intra operative MRI together with Tulsa AI countering assistant to efficiently delineate the prostate and then applies thermal dynamically during treatment to customize the dose delivered to specific areas of the prostate.
Matthew: And this is all within inside of energy source, which generally heats, the prostate tissue to kill temperature without boiling or targeting or disrupting surrounding tissue with no risk of bleeding and as a result, no overnight stay in the hospital or clinic.
Matthew: Multiple physician presentations highlighted the flexibility of the Tulsa pro in both prostate cancer and BPH.
Mathieu Burtnyk: Its applicability in broad patient groups was reviewed, for example, in intermediate risk prostate cancer regardless of tumor burden or prostate size, as well as for salvage treatment of recurrent prostate cancer. Presenters also discussed the advantages of the TULSA probe for more specific areas of prostate disease, like patients with tumors near the prostate apex who are likely to suffer from urinary incontinence using other modalities, or patients with low-risk prostate cancer that refuse active surveillance, are at a high likelihood of failing active surveillance, or those with concurrent symptomatic BPH requiring surgical intervention. One presentation dedicated to BPH described how TULSA has already proven effective prostate volume reduction within the TACT-PIVL trial, and that European Phase II studies and personal user experience have solidified the clinical value for patients with large and extra large prostate volumes, as well as those on anticoagulant therapy.
Matthew: The ability and broad patient groups was reviewed for example, and intermediate risk prostate cancer, regardless of tumor burden or project size as well as for salvage treatment of greater recurrent prostate cancer.
Matthew: Presenters also discuss the advantages of the Tulsa pro for more specific areas of prostate disease like patients with tumors near the prostate apex, who are likely to suffer from year on year in continents. Using other modalities are patients with low risk prostate cancer that refuse active surveillance or at a high likelihood of failing active surveillance or those with concurrent symptomatic BPH.
Matthew: Each requiring surgical intervention.
Matthew: One presentation dedicated to BPH described how Tulsa has already proven effective prostate volume production within the <unk> pivotal trial and that European Phase III studies and personal user experience have solidified the clinical value for patients with large and extra large prostate volumes as well as those on anti coagulant therapy.
Mathieu Burtnyk: The peer-to-peer educational event was fruitful, as we have already seen attending Tulsa surgeons adopt some of the learnings to their practice.
Matthew: The peer to peer educational event was fruitful as we have already seen attending Tulsa surgeons adopt some of the learnings to their practice.
Mathieu Burtnyk: I will briefly summarize two example cases performed since the event. The first is a 60-year-old patient with a history of prior urolith clits and eventual TURP procedure for relief of BPH symptoms. This patient was already on active surveillance, and a recent diagnostic MRI revealed a significant prostate cancer in the right placerolateral apex. A near whole gland but highly customized Tulsa treatment was planned for his 55 cc prostate. Taking into account the remaining year-oldness clips. Post-treatment imaging demonstrated an effective, non-perfused volume to which the treating physician expects will alleviate both the entire cancerous tumor and the patient's BP symptoms without impacting his vital function.
Matthew: I will briefly summarize two example cases performed since the event.
Matthew: The first is a 60 year old patient with a history of prior year lift clips and eventual TERP procedure for relief of BPH symptoms.
Matthew: This patient was already on active surveillance and a recent diagnostic MRI revealed a significant prostate cancer and the rate plus your lateral apex.
Matthew: And near whole gland, but highly customized Tulsa treatment was planned for its 55 cc prostate taking into account the remaining euro less clips.
Matthew: Post treatment imaging demonstrated an effective non perfused volume to which the treating physician expects will alleviate both the entire cancerous tumor and the patient's BPH symptoms without impacting his vital functions.
Mathieu Burtnyk: Except for Tulsa, there is no other function-preserving, viable treatment option for such patients. The second is a patient with a prostate volume of 283 cc who was catheterized for six weeks due to acute urinary retention caused by severe BPH. He was treated to relieve his symptoms while setting a record of the largest prostate we have ever treated so far. In the third quarter, real-world usage of TULSA mirrored the customizability and clinical flexibility emphasized at the ProToc Live at With respect to indications, approximately 64% were treated for primary prostate cancer. Increasing from the previous quarter, 28% were hybrid patients suffering from both cancer and BPH.
Matthew: Except for Tulsa, there is no other function preserving viable treatment option for such patients.
Matthew: The second is a patient with the prostate volume of 280 <unk> catheter.
Matthew: Catheterize for six weeks due to acute urinary retention caused by severe BPH. He was treated to relief of symptoms, while setting a record of the largest proxy we have ever treated so far.
Matthew: In the third quarter real world usage of Tulsa mirrored the customize the ability and clinical flexibility emphasize that the proton live event.
Matthew: With respect to indications approximately 64% were treated for primary prostate cancer.
Matthew: Increasing from the previous quarter, 28% were hybrid patient suffering from both cancer and BPH.
Mathieu Burtnyk: The remaining 6% were salvage treatments and 2% were men with BPH only. Commercial use of the TULSA procedure continues to grow. 82% of the patients treated had intermediate risk prostate cancer and about 11% of the patients treated were deemed to be high risk patients. The vast majority of Tulsa treatments remain whole-gland, but 22% of the patients were treated utilizing a focal therapy protocol, ablating less than half of the prostate bone.
Matthew: The remaining 6%, where salvage treatments and 2% for men with BPH only.
Matthew: Commercial use of the Tulsa procedure continues to grow 82% of the patients treated at intermediate risk prostate cancer and about 11% of the patients treated were deemed to be high risk patient.
Matthew: The vast majority of Tulsa treatments remain a whole gland with 22% of the patients were treated utilizing a focal therapy protocol bleeding less than half of the prostate volume.
Mathieu Burtnyk: One additional topic I would like to cover this afternoon relates to reimbursement for the Tulsa procedure. Late last week, Friday, CMS published its set of final rules, including the new CPT Category 1 codes for TULSA, coming into effect on January 1, 2025. I won't rehash the details of the press release, but I did want to emphasize two points. First, CMS has elevated the Tulsa facility payment to Urology APC Level 7, which is higher than any other proxy treatment procedure. In a hospital outpatient setting, the Medicare National Average Facility Payment will be $12,992, which is 25% higher than that for robotic radical prostatectomy, despite the requirement of an expensive robotic surgical suite, and at least one overnight stay in the hospital, if not longer.
Matthew: One additional topic I would like to cover this afternoon related to reimbursement for the Tulsa procedure.
Matthew: Late last week Friday, CMS published set of final rules, including the new CPT category, One code for Tulsa coming into effect on January one 2025.
Matthew: I won't rehash the details of the press release, but I did want to emphasize two points.
Matthew: First CMS has elevated the Tulsa facility payment to urology EPC level, seven which is higher than any other proxy treatment procedure.
Matthew: The hospital outpatient setting the Medicare National average facility payment will be $12992, which is 25% higher than that for robotic radical prostatectomy. Despite the requirement of an expensive robotic surgical suite and at least one overnight stay in the hospital if not longer.
Mathieu Burtnyk: In addition to the clinical value of the TULSA procedure compared to invasive surgery, we believe these reimbursement rates will motivate hospitals to shift some of the prostate cancer procedures away from the surgical suite, where physicians are often competing for block time, to their outpatient MRI suites where they will be able to capture larger revenue with interventions rather than diagnostics only. The second point is that we believe an even larger impact will be seen in the ASC setting. Note that robotic prostatectomy is not on the CMS ASC covered procedure list. So while a few ASCs may have the robot, they are only used to treat commercially covered patients, while all Medicare patients are funneled to hospital.
Matthew: In addition to the clinical value of the Tulsa procedure compared to invasive surgery. We believe these reimbursement rates will motivate hospitals to shift some of their prostate cancer procedures away from the surgical suite, where physicians are often competing for block time to their outpatient MRI suites will there will be able to capture larger revenue with interventions rather than diagnostics.
Matthew: Only.
Matthew: The second point is that we believe an even larger impact will be seen in the ASC setting.
Matthew: Note that robotic prostatectomy is not on the CMS ASC covered procedure list. So while a few ASC may have the robot. They are only used to treat commercially covered patients while all Medicare patients are funneled to hospitals.
Mathieu Burtnyk: With Tulsa, the Medicare National Average ASC Facility Payment of $10,728 is not only higher than any other prostate procedure performed in an ASC, but it is even higher than the hospital payment for robotic radical prostatectomy. Let me repeat that. An ASC will receive a higher facility payment for a TULSA procedure than a hospital will receive for robotic prosthetic. With large urology group practices owning their own ASCs, this creates a favorable opportunity to offer incision-free, blood-free, outpatient prostate treatment, which is good for the patient, all within the confines and economics of an ASC, which is good for the physician and physician group.
Matthew: With Tulsa, the Medicare National average ASC facility payment of $10728 is not only higher than any other proxy procedure performed in an ASC, but it is even higher than the hospital payment for robotic radical prostatectomy.
Matthew: Let me repeat that an ASC will receive a higher facility payment for Tulsa procedure.
Matthew: Hospital will receive for robotic prostatectomy.
Matthew: With large urology group practices owning their own ASD. This creates a favorable opportunity to offer incision free blood free outpatient prostate treatment, which is good for the patient all within the confines and economics of an ASC, which is good for the physician and physician group.
Mathieu Burtnyk: Even if surgeons may continue to operate with the robot in an ASC on their commercially covered patients, we anticipate a shift of their Medicare patients away from the hospital and into their ASCs.
Matthew: Even if surgeons may continue to operate with the robot in an ASC on their commercially covered patients we anticipate a shift of their Medicare patients away from the hospital and into their ESC.
Mathieu Burtnyk: Additionally, when we consider that the MRI-centric modern treatment pathway for prostate management is becoming more established, together with two leading global medical technology companies, Siemens and Cook, commercializing interventional MRI solutions, we believe this will catalyze adoption of MRI and TULSA by urology across multiple locations of service, but specifically in their physician-owned ASCs.
Matthew: Additionally, when we consider that the MRI centric modern treatment pathway for property management is becoming more established together with two leading global medical technology Company, Siemens and Cook commercializing Interventional MRI solutions. We believe this will catalyze adoption of MRI and Tulsa by urology across multiple locations of <unk>.
Matthew: Service, but specifically in their physician or the ASC.
Mathieu Burtnyk: Finally, the CAPTEN study is continuing to recruit at an increasing pace and remains on target with two sites joining the study in the third quarter, including the Cleveland. With strong facility and physician reimbursements coming into effect on January 1st, and the CAPTEN study starting to read out in the first half of next year, we believe Tulsa will be well positioned in 2025 to increase procedural adoption as well as the rate of new installations across all locations of service.
Matthew: Finally, the Captain study is continuing to recruit and an increasing pace and remains on target with two sites joining the study in the third quarter, including the Cleveland clinic.
Matthew: With strong facility and physician reimbursement coming into effect on January one and the captain study starting to read out in the first half of next year, we believe Tulsa will be well positioned in 2025 to increased procedural adoption as well as the rate of new installations across all locations of service.
Arun Menawat: I will now turn the call over to. Thanks, Mathieu, and good afternoon, everyone. As you heard from Mathieu, the first major Protop Live event was not only well attended, but also highlighted the capabilities of the TELSA procedure to enable the urologist to perform a wide variety of whole gland or partial gland treatment. Of the 70 physician attendees, about 40 were prospective users. Following up with them after the conference, they have now been successfully added to a continuously growing pipeline for adoption of TELSA in various types of institutions in the United States. As you can tell, We're also delighted to see that CMS recognized the value proposition of the TELUSA procedure and placed it in Urology APC Level 7.
Ilene: I will now turn the call over to Ilene.
Ilene: Thanks, Matthew and good afternoon, everyone.
Ilene: As you heard from Matthew.
Ilene: Major proton live event was not only well attended but also highlighted the capabilities of the Tulsa procedure to enable the urologist to perform.
Variety of whole gland or partial rent treatments.
Ilene: Of the 70 physician attendees about 40.
Ilene: Prospective users.
Ilene: Following up with them after the conference.
Ilene: They have now been successfully added to a continuously growing pipeline for adoption of Tulsa and various types of institutions in the United States.
Ilene: As you can tell.
Ilene: We're also delighted to see that CMS recognized the value proposition of the Tulsa procedure and placed it in urology APC level seven.
Arun Menawat: The codes will be applicable in the widest possible range of treatment settings, including hospitals and ASCs, imaging centers and office settings, such as large urology practices. In comparison, radical prostatectomy reimbursement codes can only be used in hospital. Some ASCs may have the robot, though they cannot build Medicare in that setting. In addition, we believe that the economic model of the TELSA procedure will be superior to that of any other prostate disease management procedure. After the publication of the final rule on reimbursement and listening to Tulsa urologists at the Protoc Live conference, We are now even more confident about driving the adoption of Tulsa to mainstream.
Ilene: The codes will be applicable.
Ilene: It is possible range of treatment settings, including hospitals and imaging centers and office settings, such as large urology practices.
Ilene: In comparison.
Ilene: Radical prostatectomy reimbursement codes can only be used in hospitals.
Ilene: Some afcs may have the robot.
<unk> they cannot bill Medicare in that setting.
Ilene: In addition, we believe that the.
Ilene: Economic model of the Tulsa procedure will be superior to that of any other prostate disease management procedure.
Ilene: After the publication of the final rule on reimbursement.
Ilene: And listening to Tulsa urologists.
Ilene: The pro talked lives conference.
Ilene: Now even more confident about driving the adoption of Tulsa to mainstream.
Arun Menawat: I would like to share with you a few strategies that we are planning to use to achieve that goal. Our introduction of TELSA AI module. have been well received. Thermal Boost is being used routinely in over 50% of Tulsa cases. And the automated contouring assistant has not only increased urologist confidence in treatment planning, but also reduced the procedure time by several minutes to enable them to do an extra procedure in a day. We are now using the same base technology. to develop a BPH-HALSA AI module that will allow for customized treatment that is comparable in terms of speed to other modalities like aqua blades.
Ilene: I would like to share with you a few strategies that.
Ilene: We are planning to use to achieve that goal.
Ilene: Forest.
Ilene: Our introduction of Tulsa, AI modules have been well received thermo.
Ilene: Thermo boost is being used routinely in over 50% of downside cases.
Ilene: And the automated on Turing assistant.
Ilene: Not only increased urologist confidence in treatment planning, but also reduced the procedure time by.
Ilene: By several minutes to enable them to do an extra procedure in a day.
Ilene: We are now using the same base technology.
Ilene: Develop a BPH pulsar AI module.
Ilene: That will allow for customized treatment.
Ilene: That is comparable in terms of speed to other modalities like cooperation.
Arun Menawat: Tulsa will thereby be the only technology that will enable urologists to effectively, safely, and efficiently treat the widest possible variety of prostate disease patients. We remain on track to complete product development of the module by this year end and plan to soft launch the TELSA module for BPH in the second half of 2025.
Ilene: Tulsa.
Ilene: Thereby the only technology.
Ilene: That will enable urologists.
Ilene: Secondly.
Ilene: Safety and efficiently treat the.
Ilene: The widest possible variety of prostate disease patients.
Ilene: We remain on track to complete product development of the module.
Ilene: By this year end and plan to soft launch the Tulsa module.
Ilene: For BPH in the second half of 2025.
Ilene: Second.
Arun Menawat: We plan to continue to support the first level one trial in prostate cancer. Captain, and as we have discussed before, we expect that perioperative data from the trial is very likely to become available by AUA 2021. We plan to use the results of this trial to support additional acceptance for reimbursement by private insurance companies and seek addition of the TELSA procedure as a treatment modality in cancer society guidelines.
Ilene: We plan to continue to support the first level one trial in prostate cancer Captain.
Ilene: And as we have discussed before we expect that Peri operative data.
Ilene: From the trial.
Ilene: Is very likely to become available by.
Ilene: A 2025.
Ilene: We plan to use the results of this trial to support additional acceptance for reimbursement.
Ilene: By private insurance companies.
Ilene: And seek edition of the Tulsa procedure as a treatment modality.
Ilene: Cancer Society guidelines.
Ilene: Great.
Arun Menawat: We're also pleased that Siemens and Cooke Medical presented at our ProTalk Live conference. Going forward, we continue to expand. to provide telehealth programs to urologists. where MRI already exists. but we will add Tulsa Plus programs, which stands for selling both Tulsa and Siemens Interventional MR, the Freemax, as a combined total prostate solution. Given the reimbursement ruling, the PlusUp Plus solution not only has the potential to provide flexible access to the technology, even in a doctor's office, but we believe will also provide a significant economic justification. It is our strategy to soft launch the Tulsa Plus solution within the next nine months.
Ilene: We're also pleased that Siemens and Cook medical presented at our Pro talk live conference.
Ilene: Going forward.
Ilene: We continue to expect.
Ilene: To provide tulsa programs to urologists.
Ilene: <unk> MRI already exists.
Ilene: But we will add.
Ilene: Wholesale plus programs, which stands for selling boats Tulsa.
Ilene: Siemens intervention Emaar, the feedbacks as a combined total prostate solution.
Ilene: Given the reimbursement boule.
The Tulsa plus solution.
Ilene: Not only has the potential to provide flexible access to the technology even.
Ilene: Even in a doctor's office.
Ilene: But we believe we will also provide a significant economic justification.
Ilene: It is our strategy to soft launch.
Ilene: <unk> plus solution within the next nine months.
Arun Menawat: Over. As we move from the patient pay business model. to the Reimbursement-Based Business Volume. We are also transitioning from a recurring revenue only model that we deployed historically to a more traditional medical device business model, which will comprise of selling the device. Upfront as a capital sale. Selling the Disposable. at a slightly lower price and adding service agreements to the. We anticipate that the upfront capital AST is likely to be in the range of $350,000. and the price of the disposable ASP will be in the range of $5,000 to $6,000. Nutmeg. This model will still deliver Profound with high margin, greater than 70% business, while at the same time, it will be economically attractive to Tulsa users.
Ilene: Okay.
Ilene: As removed from the patient pay business model.
Ilene: Two the reimbursement based business model.
Ilene: We are also transitioning.
Tom: Tom any recurring revenue only model.
Speaker Change: Let me just ploy historically.
Speaker Change: A more traditional medical device business model.
Speaker Change: Which will comprise of selling the device.
Speaker Change: Upfront as a capital sale.
Speaker Change: Selling the disposables.
Speaker Change: At a slightly lower price and adding service agreements to the SaaS.
Speaker Change: We anticipate that.
Speaker Change: The upfront capital ASP.
Speaker Change: It is likely to be in the range of $350000.
Speaker Change: And the price of the disposable asps.
Speaker Change: We will be in the range of five to $6000.
Speaker Change: Net net.
Speaker Change: This model will still deliver profound with high margin.
Speaker Change: Later than 70% business.
Speaker Change: At the same time.
Speaker Change: It will be economically attractive to Tulsa users.
Arun Menawat: Finally, as you know, Tom Tamburino has joined us now to manage the sales and marketing business. Tom is already recruiting to add to our team of sales professionals. but also. bolstering the sales management organization to prepare for the growth that we anticipate later this year and next. We also plan to continue to increase our patient education programs to further build awareness of the Tulsa procedure among men.
Speaker Change: Finally.
Speaker Change: As you know.
Speaker Change: Tom timber.
Speaker Change: Has joined US now to manage the sales and marketing business.
Speaker Change: Tom is already recruiting to add to our team of sales professionals.
Speaker Change: But also.
Speaker Change: Bolstering.
Speaker Change: Our sales management organization to prepare for the growth that we anticipate.
Speaker Change: Later, this year and next year.
We also plan to continue to increase our patient education programs.
Speaker Change: Further build awareness of the Tulsa procedure.
Speaker Change: Matt.
Arun Menawat: At the end of the day, it's all about the patients. And we already know from the feedback that we have received when provided with information about their options. Patients pick Tulsa every time as their first treatment.
Speaker Change: At the end of the day, it's all about the patients and we already know from the feedback that we have the seed.
Speaker Change: <unk> provided with information about their options patients pick Tulsa every time as their first treatment of choice.
Arun Menawat: To summarize. We continue to believe ulcer has the potential to become a mainstream treatment modality across the entire prostate disease spectrum. Patients enrolled in the Captain Post-Market Study Comparing Tulsa to Radical Prospectomy is progressing as planned. We are delighted to be transitioning. from the cash pay phase. to the reimbursement phase, and we're building a world-class sales team to grow the business. Starting in January, Tulsa will stand above all other covered prostate disease treatment modalities at urology level 7 reimbursement. And finally, I'm pleased that Tom Tamburino has joined Profound. to lead and build a world-class sales.
Speaker Change: To summarize.
Speaker Change: We continue to believe also has the potential to become a mainstream treatment modality across the entire prostate disease spectrum.
Speaker Change: Patients enrolled in the Captain post market study comparing Tulsa to radical prostatectomy.
Speaker Change: Progressing as planned.
Speaker Change: We are delighted to be transitioning.
Speaker Change: From the cash pay phase.
Speaker Change: Two the reimbursement phase and we are building a world class sales team to grow the business.
Speaker Change: Starting in January Tulsa.
Kevin: Tulsa will stand above all other covered prostate disease treatment modalities at urology levels, Kevin reimbursement.
Kevin: And finally.
Kevin: I'm pleased that Tom temporary has joined profound to lead and build a world class sales team.
Arun Menawat: This ends our prepared remarks for today.
Kevin: This ends our prepared remarks for today.
Operator: With that, we are happy to take any questions you might have.
Kevin: With that.
Kevin: Happy to take any questions you might have.
Operator: Operator. Thank you.
Kevin: Operator.
Operator: At this time, we will be conducting the question and answer session. As a reminder, You will need to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A.
Thank you.
Speaker Change: At this time, we'll be conducting a question and answer session.
Speaker Change: As a reminder.
Speaker Change: You will need to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: Withdraw your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Benjamin Haynor: Our first question comes from the line of Ben Haynor with Lake Street Capital Markets. Your line is now open. Good afternoon, gentlemen. Thanks for taking the questions.
Our first question comes from the line of Ben <unk> with Lake Street Capital markets. Your line is now open.
Speaker Change: Good afternoon, gentlemen, thanks for taking the questions I apologize if I missed this earlier looked at but just real quickly on the goal that you guys haven't given the 75 installs by year end any update on that goal.
Arun Menawat: I apologize if I missed this or overlooked it, but just real quickly on the goal that you guys have of getting to 75 installs by year end. Any update on that goal? Yeah, good afternoon, Ben. Yes. then we have reaffirmed the revenue guidance. for the Year on the basis that the pipeline is very strong. In the last quarter, we also began to transition from the cash pay model to the financial justification model, you know, all on the basis of reimbursement. So, that... did raise the question of, you know, waiting for the final rule publication at many of our sites.
Speaker Change: Yeah, Good afternoon Ben.
Speaker Change: Yes.
Speaker Change: Then we have reaffirmed our revenue guidance.
The year on the basis that the.
Speaker Change: Pipeline is very strong.
Speaker Change: In the last quarter.
Speaker Change: We also began to.
Speaker Change: We will transition from the cash pay model to the financial.
Speaker Change: Justification model.
Speaker Change: On the basis of reimburse.
Speaker Change: <unk>.
Speaker Change: No.
Speaker Change: That.
Speaker Change: Did raise the question of.
Speaker Change: Waiting for the final rule publication at many of our sites.
Arun Menawat: And now that the final rule is even better than the proposed rule, we actually don't see any issue with increasing the install base.
Speaker Change: Now that the final rule is even better than the proposed rule.
Speaker Change: We actually don't see any issue with <unk>.
Speaker Change: Increasing the installed base.
Arun Menawat: However, because of this sort of this gap in this time, I think getting to 75 is a little bit optimistic for the end of this year, but we will get there pretty soon, you know, after the year is over. So I don't see any issue getting to the 75, I just think that this is a transition year for us, and so there is a little bit of, you know, give and take that I sort of anticipated at the beginning of this year, and it's sort of playing out a little bit. But as I said in the prepared remarks, the pipeline is strong, the financial model is even stronger than we anticipated during the early phase or when the proposal came out.
Speaker Change: However, because of.
Speaker Change: This sort of this gap in this time.
Speaker Change: Getting to 75 is a little bit optimistic for the end of this year, but we will get there pretty.
Speaker Change: <unk>.
Speaker Change: After the year.
Speaker Change: Over so I don't.
Speaker Change: See any issue getting to the 75 existing debt.
Speaker Change: Is that transition year for us and so there is there's a little bit of.
Speaker Change: Given take that I sort of anticipated.
Speaker Change: At the beginning of this year and that sort of playing out a little bit, but as I said in the prepared remarks the pipeline.
Speaker Change: His strong financial model is even stronger than we anticipated.
Speaker Change: During the early stages.
Benjamin Haynor: And I think, you know, many of these hospitals are very engaged. Okay, that's fair enough, and that's helpful.
Speaker Change: Proposal came out.
Speaker Change: And I think.
Speaker Change: Many of these hospitals are.
Speaker Change: They're engaged with us.
Speaker Change: Okay. That's fair enough. That's helpful. And then just following up kind of on the pipeline the product lineup and obviously that quick.
Arun Menawat: And then just following up kind of on the pipeline, the ProTalk Live event, obviously that was quite the fabulous event. Just kind of following up with those folks after the event, you know, what was kind of the response? And then to the extent that you've been able to talk to some of those same folks, you know, in the past handful of days following getting bumped up to APC 7, how has that changed things?
Speaker Change: Quite the Fabulous event.
Speaker Change: Just kind of stalling up on the.
Speaker Change: With those folks after the event.
Speaker Change: What was kind of.
Speaker Change: The response and then.
Speaker Change: To the extent that.
Speaker Change: <unk> been able to talk to some of our sample.
Speaker Change: In the past handful of days on getting bumped up to APC seven how has that changed things.
Arun Menawat: And then I guess I'll leave it there, maybe have a follow-up. Yeah, um, Ben, I think that, you know, As you might expect, I think the reaction really was very strong from the conference because of the number of users who presented and the caliber of the users that presented. In fact, I personally had a chance to visit a couple of the people who came to the conference who were prospects and were moving forward with installs in a number of sites as a result of that. And I think during that time, most of the conversation was related to financial justification at APC level six.
Speaker Change: And then I guess I'll leave it there maybe I have a follow up.
Speaker Change: Yes.
Speaker Change: But I think that.
Speaker Change: Good.
Speaker Change: As you might expect I think the reaction really was very strong.
Conference.
Speaker Change: Because of the number of models.
Speaker Change: Users, who presented in the caliber of the users that presented.
Speaker Change: In fact, I personally had the chance to.
Speaker Change: To visit.
Speaker Change: A couple of.
Speaker Change: Yes.
Speaker Change: People, who came to the conference who were prospects and we're moving forward with the installs.
Speaker Change: In number of sites as a result of that.
Speaker Change: And I think the.
Speaker Change: During that time most of the conversation.
Speaker Change: Related to.
Speaker Change: Financial justification.
Arun Menawat: And even that looked pretty good. But I think now that we're at seven, we have actually sent out the updated models to a number of sites already within a week. And I think the best I can tell you so far is certainly the reaction is positive. I would say the key thing is that many, many are ready to talk about the fact that this, as you know, there have been a number of technologies that have come and gone. And they tend to be more in the focal therapy space or partial ablation space. But given that this is a whole-blend treatment with the option that they can also do focal, I think the general feedback that we're getting is certainly this is one of the few technologies that indeed has the opportunity to grow, to become mainstream.
Speaker Change: <unk> level.
Speaker Change: And even that looked pretty good but I think now that we have.
Speaker Change: Actually sent out the.
Speaker Change: Updated models to a number of sites already.
Speaker Change: Within a week.
Speaker Change: And I think the best I can tell you so far is certainly.
Speaker Change: The reaction is.
Speaker Change: As positive.
Speaker Change: The key thing is that many many are ready to talk about the fact that this.
Speaker Change: Well as you know there are a number of technologies that have kind of come and gone.
Speaker Change: And they tend to be more and more focal therapy space or partial ablation space, but given that this is a whole gland treatment would be option that they can also do <unk> I think the general feedback that we're getting it's certainly.
Speaker Change: Is.
Speaker Change: One of the few technology that indeed has opportunity to grow to become mainstream. So this is why I sort of laid out some of our plans because I think that is what we're shooting for at this point.
Arun Menawat: So this is why I sort of laid out some of our plans, because I think certainly that is what we're shooting for.
Arun Menawat: Okay, got it. Thanks for the call there, and I'll jump back in, too. Thank you, Ben. Thank you so much. One moment for our next question.
Speaker Change: Okay.
Speaker Change: Got it thanks for thanks for the color, there and I'll jump back in queue.
Dan: Thank you Dan.
Speaker Change: Thank you so much one moment for our next question.
Rick Wise: Our next question comes from the line of Rick Wise with Cycle. Your line is now open. Hi, everyone. This is John on direct today. Thanks for taking my question. Good afternoon, congratulations on the upgraded coding versus the initial expectation.
Speaker Change: Our next question comes from the line of Rick Wise with Stifel. Your line is now open.
Speaker Change: Irene This is Jon on for Rick today, Thanks for taking my question.
Speaker Change: Congratulations on good afternoon, congratulations on the upgraded coating versus the initial.
Arun Menawat: I just wanted to maybe put a finer point on your comments earlier, just in terms of the, the implication for physician uptake, revenue and procedure growth, you sort of set out 75 system goal, maybe we'll call it Early next year, you were saying, and you also talked about utilization goals. Growing Utilization, maybe in the mid-teens levels, once the install phase starts to ramp. With this higher reimbursement in place, does that impact any of those assumptions in a more positive way at all? And is there any way to sort of think about how it could... Impact, Commercial Influx.
Speaker Change: Expectation I just wanted to maybe put a finer point.
Speaker Change: On your comments earlier, just in terms of the implication for physician uptake revenue in procedure growth you sort of set out.
Speaker Change: 75 system goal, maybe we'll call it.
Speaker Change: Sort of early next year, you were saying.
Speaker Change: <unk> also talked about utilization goals in terms of sort of growing utilization maybe in the mid teens levels.
Speaker Change: Once the installed base starts to ramp with this higher reimbursement in place does that impact any of those assumptions.
Speaker Change: A more positive way at all and is there any way to sort of think about how it could.
Speaker Change: Impact commercial inflection.
Arun Menawat: I think so, John. Overall, I... I feel that the stars are sort of getting aligned for our technology, right? We have support from leading physicians. Our existing sites are happy users. We have amazing feedback from patients. We're really pleased with how CMS looked at the reimbursement picture. The clinical data continues to look good. And CAPM trial data will come out next year. So, you know, I do think that the stars are aligned. If you look at the recurring revenue in this last quarter, you can see it's the highest recurring revenue we've had so far. So you can see a precursor to what we think is likely to continue to grow.
John: I think so John the overall.
John: I feel that the stars are sort of getting aligned for our technology we.
John: We have <unk>.
Port from leading physicians.
John: Our existing sites are happy to users.
John: Amazing feedback from patients.
John: Really pleased with how CMS.
John: CMS looked at.
John: Investment picture.
John: The clinical data continues to look good at Captain trial data will come out next year. So I.
John: I do think that the stars are aligned.
John: If you look at the recurring revenue.
John: And this last quarter you can see at the highest recurring revenue we've had so far so you can see a precursor to what we think is likely to continue to grow.
Arun Menawat: So. As I said, I think that all the signals are in the right direction. We are very aggressively, as I said in the prepared remarks, looking to build a sales and marketing team now. And as I said, I'm delighted that Tom has joined us and we've worked together in our last company. So I'm thrilled with that. So yeah, I think that we should be able to grow at a pretty good pace in 2025. And I think I would say the other thing is, John. We reaffirmed our guidance for this year. And if you just add up the numbers, obviously Q4 has to be a very good quarter for us to reaffirm.
John: No.
John: As I said I think the.
John: All the signals are in the right direction.
John: We are very aggressively.
John: Settled in the prepared remarks.
John: And looking to build a sales and marketing team now and as I said I'm delighted that Tom has joined us.
John: We've worked together in my last company, so thrilled with that.
John: So, yes, I think that we should be able to grow.
At a pretty good pace.
John: In 2025, and I think.
John: I would say the other thing is John.
John: We reinforced we affirmed our guidance for this year.
Speaker Change: If you just add up the numbers, obviously Q4 has to be a very good quarter for us.
Arun Menawat: So I think even in the quarter that we're in, we are feeling bullish that these results will impact.
Speaker Change: So I think even in the quarter that we're in.
Speaker Change: Our feeling bullish that these results will impact.
Speaker Change: The top line.
Arun Menawat: That's interesting, Arun and maybe I'll follow up on that point you're making on reiterating the guide here, just in terms of recurring versus capital or an impact. Adopting the technology. How much of it, how much do you see in the fourth quarter in terms of mix? and Capital, and maybe talk a little about what you're expecting in terms of utilization I cited. 13% this quarter. How should we think about it now? Yeah, John, I do think that the utilization will continue to Now, I think that with respect to what is the between capital and recurring, that I think earlier in the year I kind of provided this high level thing that there is likely to be a higher percentage of capital in the early stage as the install base grows and we switch to this more of a standard medical device model.
Speaker Change: That's interesting or and then maybe I'll follow up on that.
Speaker Change: We have been making.
Speaker Change: Reiterating the guide here just in terms of recurring versus capital or an impact related to physicians.
Speaker Change: Adopting the technology.
Speaker Change: How much of how much do you see in the fourth quarter in terms of mix between recurring and capital and maybe talk a little about what you're expecting in terms of utilization I saw an increase of 13%.
Speaker Change: This quarter, how should we think about it now.
Speaker Change: Yes.
Speaker Change: John I do think that the utilization will continue to increase.
Speaker Change: No.
Speaker Change: Think that with respect to what is the mix between capital and recurring.
Speaker Change: That.
Speaker Change: I think earlier in the year kind of provided this high level thing that there is likely to be a higher percentage of capital in the early stage as the install base grows and we switch to be with more of a standard medical device model.
Arun Menawat: I can also tell you that a number of sites that already have Telsa that are using it in the current model of recurring revenue only have already expressed interest in converting it to that model so in fact some of the sites will flip to the new model and some of those systems that belong to our balance sheet today will flip over and some of the revenue will come from there. So I think that I mean, the way I look at it is this is all good, but we want to go into a more standard model.
Speaker Change: I can also tell you that a number of sites that already have <unk> debt.
Speaker Change: Are using it.
Speaker Change: Current model of recurring revenue only have already expressed interest in converting it to that model. So in fact, some of the sites will flip to flip to the the new model and some of those system belonged to on our on our balance sheet today.
Speaker Change: Flip over and some of that revenue will come from there so I think that.
I mean, the way I look at it. This is all good but we want to go into a more standard model.
Arun Menawat: We do have, there's very little doubt that the utilization is increasing and it has been consistently increasing and it will continue to increase. How it exactly is the ratio in the very near term for the next, I would say three, four quarters is a little bit harder to predict. But I do think that over the long haul, we're probably gonna be in the 30% capital and 70%. Nutrient. Thanks, Arun. That's helpful. And congratulations on the reimbursement. Thank you. Thank you so much.
Speaker Change: We do have.
Speaker Change: Railroad to hope that the utilization is increasing and it has been consistently increasing and it will continue to increase.
Speaker Change: How it exactly the ratio in the very near term for the next I would say three or four quarters is a little bit harder to predict but I do think that over the long haul, we're probably going to be in the 30% capital and 70%.
Speaker Change: Talk about the mix.
Speaker Change: Thanks, that's helpful and congratulations on.
Speaker Change: On the reimbursement.
Speaker Change: Thank you Tom.
Michael Freeman: One moment for our next question.
Speaker Change: Thank you so much.
Speaker Change: Our next question.
Michael Freeman: Our next question comes from the line of Michael Freeman with Raymond James.
Speaker Change: Our next question comes from the line of Michael Freedman with Raymond James Your line is now open.
Michael Freeman: Your line is now open. Hey Arun, Mathieu, and Rashed, congrats on some great news around reimbursement and congrats on solid revenue results this quarter. Thank you. My question, you're very welcome.
Michael Freedman: Hey, Matthew enriched add congrats on some great news around reimbursement.
Michael Freedman: Congrats on the solid revenue results this quarter.
Speaker Change: Thank you my question. Thank you you're very welcome.
Arun Menawat: I wonder if you could shed some light on sort of the sale and install dynamic that we might be seeing behind the scenes. Do you get the sense that prospects of yours for the Tulsa had been waiting to understand what the final rule would be and what the exact reimbursement rate would be before pulling the trigger to sign a contract and to go ahead with install? And I guess perhaps you could give us a bit of information on either your backlog or. Contract Pipeline, just so we can get a sense of like what. How we can understand the install pipeline better.
Speaker Change: I Wonder if you could shed some light on uncertainty.
Speaker Change: The sale and install a dynamic that we might be seeing behind the scenes like do you do you.
Speaker Change: The sense that.
Speaker Change: Prospects of yours.
Speaker Change: The Tulsa or had been waiting.
Speaker Change: To understand what the final rule.
Speaker Change: Would be and what the exact reimbursement rate would be before pulling the trigger.
Speaker Change: Two to sign a contract is it going to go ahead with install.
Speaker Change: And I guess, perhaps you could give us.
Speaker Change: Formation.
Either your backlog or your sort of your contract pipeline.
Speaker Change: We can get us get a sense of like flex.
Speaker Change: How we can understand the installing something better.
Arun Menawat: Yeah, it's a great question. And I think, first of all, there's no doubt that there was, and as I said, we sort of anticipated that at the beginning of the year that the dynamic will be unique and different. In the second half of this year, and it did happen because even quite frankly, some of the investors are saying, well, you know, we want to wait, wait till you get to the final rule. And, and quite frankly, internally, the data that CMS looks at, to the extent that that data was available to us, there was certainly some expectation that we will get upgraded.
Speaker Change: Yes.
Speaker Change: It's a great question.
Speaker Change: I think first of all there's no doubt that there was.
Speaker Change: And as I said.
Speaker Change: We sort of anticipated that at the beginning of the year that the dynamic will be.
Speaker Change: <unk> can different.
Speaker Change: In the second half of this year.
Speaker Change: And it didn't happen because even quite frankly some of the investors are saying well we want to wait till you get to the final rule.
Speaker Change: And and quite frankly internally.
Speaker Change: The data.
Speaker Change: That CMS looks at to the extent that that data.
Speaker Change: Was available to us.
Speaker Change: There was certainly some expectation that the.
Speaker Change: We will get upgraded.
Arun Menawat: So there's no question that in Q3, with respect to new sites, that was a very important dynamic. And coupled with that, we were changing the model and basically talking about capital. And you go back the first two quarters of this year, we did have some capital revenues already. And so that dynamic had started even prior. So to your first question, yeah, there's no question that we are in that inflection point. And there's some uncertainty. But at the same time, when Rashad and I and Mathieu and Tom and we reviewed our forecast for this year, we were fairly comfortable that we could reaffirm our revenue guidelines for this year.
Speaker Change: So there is no question that in Q3 with respect to new sites that was.
Speaker Change: Very important dynamic.
Speaker Change: Coupled with that.
Speaker Change: We were changing the bill.
Speaker Change: Model.
Speaker Change: Basically talking about.
Speaker Change: Capital and new.
Speaker Change: Go back.
Speaker Change: First two quarters of this year.
Speaker Change: We did have some capital revenues already so that dynamic started.
Speaker Change: Even prior to her.
Speaker Change: So.
Speaker Change: To your first question, Yes. There is no question that we are in that inflection point on there somewhat 17, but at the same time.
Speaker Change: Glen.
Speaker Change: And I am asking you and Tom and we review our forecast for this year, we were afraid of comfortable.
Speaker Change: We would.
Speaker Change: We could reaffirm our revenue guidelines for this year.
Arun Menawat: So hopefully, you can see that this is part of this dynamic that Q3 was going through this tentative period. But then now that it's finally redeveloped, that we think we will be able to close those deals in this year. And so that hopefully will give you a little bit more color of why we are confident about the year.
Speaker Change: So hopefully you can see that.
Speaker Change: This is part of this dynamic.
Speaker Change: Q3 is going through this.
Temporary period, but then now that its final rules.
Speaker Change: That we think we will be able to close those deals in this year.
Speaker Change: And so that hopefully that gives you a little bit more color on why.
Speaker Change: We are confident about the year.
Arun Menawat: And I think that with respect to your question on the pipeline. You know, we, we had a pretty good pipeline even going into the contract, the 4 o'clock And the number of people who came to the Pro Talk conference were people who were typically on the fence. They were curious enough about the technology that they wanted to learn more about it. But I think pretty much everyone basically, after the conference, began to get a sense of urgency on the fact that this is going to happen and they wanted to be in the early adopter line of doing this.
Speaker Change: <unk>.
And I think that with respect to your question on the pipeline.
Speaker Change: <unk>.
Speaker Change: We had a pretty good pipeline even going into the.
Speaker Change: The contracts to approach our conference.
Speaker Change: And.
Speaker Change: The number of people, who came to the proton contents, where.
Speaker Change: People, who are typically on the fence they were curious.
Speaker Change: About the technology that they wanted to learn more about it.
Speaker Change: But I think.
Speaker Change: Pretty much everyone basically.
Speaker Change: After the conference began to get a sense of urgency.
Speaker Change: The fact that this is going to happen and they wanted to be in.
Speaker Change: No.
Speaker Change: In the early adopter line of doing this so.
Arun Menawat: So I do think that the pipeline is very big. I think one of the limitations I have at the moment is that the sales team is not very big, which is why Tom is aggressively adding people. So I think that as the people get added, there's no doubt that we will be able to give them hot leads to go start, start chasing. It's kind of hard to kind of give you a specific number because it's it's a pipeline and but you know as you already know there were at least 40 people in that conference and that is just from the conference itself and we had a pretty good pipeline prior to that.
Speaker Change: I do think that the pipeline is.
Speaker Change: Very big.
Speaker Change: I think one of the limitations I have at the moment is that the sales team is not very big which is why Tom is aggressive.
Speaker Change: Adding people so.
Speaker Change: I think that.
Speaker Change: As the people get added there's no doubt that we will be able to give them hot leads to growth.
Speaker Change: Our chasing.
Speaker Change: It's kind of hard to kind of give you a specific number because it is the pipeline but.
Speaker Change: As you already know there are at least 40 people in that conference.
Speaker Change: That is just.
Speaker Change: From the conference itself and we had a pretty good pipeline of track to that.
Michael Freeman: Okay, all right. Thanks.
Speaker Change: Okay, alright, thanks very much.
Arun Menawat: This dovetails perfectly into my next question, which is on sales team, and wondering if you had done any any hiring of Unknown Speaker. of individual sales team members during the quarter? What your like, how many you anticipate hiring perhaps before the end of the year? And then ultimately, what is what's the size of the sales team you would like to have during the initial launch? initial launch during active reimbursement of the Yeah, so we are, we're taking a short term look and a strategic look at how we want to organize for growth. And what do we need immediately from that organization.
Speaker Change: Dovetails perfectly into my next question, which is.
Speaker Change: On the sales team.
Speaker Change: Wondering if you had done any any hiring.
Speaker Change: Yeah.
Speaker Change: Individual sales team members during the quarter.
Speaker Change: What your like how many you anticipate hiring perhaps before the end of the year and then ultimately what is what's the size of the sales team would like to have during the initial launch.
Speaker Change: Initial launch during active reimbursement of Tulsa.
Speaker Change: Yes so.
Speaker Change: We.
Speaker Change: We're taking a short term look and a strategic look.
Speaker Change: How we want to organize for growth.
Arun Menawat: And so the senior team has, you know, spent quite a bit of time to figure out what will the design look like, or design will look like and so on. To go forward, we have above 13 to 15 salespeople at the moment. We want to get to about 40 as soon as we can. Obviously, we want to hire the top quality team, so not a fast, not an easy process. But I would like to have at least at least five more this year, if possible. We can get that quickly. But we will continue to recruit until we get to at least four.
Speaker Change: And what do we need immediately from that organization and so.
Speaker Change: The senior team.
Speaker Change: Spent quite a bit of time to figure out what will the design look like.
Speaker Change:
Speaker Change: Org design will look like and so on to go forward we have.
Speaker Change: About <unk>.
Speaker Change: <unk> thousand 14 to 15 salespeople at the moment.
Speaker Change: We want to get to about 40.
Speaker Change: Soon as we can.
Speaker Change: Obviously, we want to hire the top quality team so not a fast not an easy process.
Speaker Change: But I would like to add at least.
Speaker Change: At least five more this year if possible we can get that quickly.
Speaker Change: Quickly.
Speaker Change: But we will continue to recruit.
Speaker Change: Until we get to at least 40.
Arun Menawat: In addition to the sales professionals, we are adding some sales management. And part of the reason for adding the sales management is to prepare for even longer term to be able to continue to add people as the company and the revenue grow. So A good bit of our effort is going into that at the moment.
Speaker Change: In addition to this.
Speaker Change: Sales professionals.
Speaker Change: We are adding some sales management also.
And part of the reason for adding the sales management.
Speaker Change: To prepare for even longer term to be able to continue to have people.
Speaker Change: Company revenue growth.
Speaker Change: A good bit of our effort is going into that.
Speaker Change: Yeah.
Scott McAuley: Okay. Thank you, Arun.
Scott McAuley: I'll pass it on. Thank you. Thank you so much.
Speaker Change: Okay. Thank you Erinn I'll pass it on.
Speaker Change: Thank you.
Operator: We'll move on to our next question.
Speaker Change: Thank you so much I remember for our next question.
Speaker Change: Okay.
Scott McAuley: Our next question comes from the line of Scott McAuley. with Paradigm Capital, your line is now open. Thanks, everyone. Congrats on the on the quarter. I think a lot of my questions had already been answered, but just wanted to get a little bit on the commercial model and kind of highlighting that you're seeing more interest in the more traditional model versus the paper use model, especially with the updated reimbursement. You know, the initial thinking being that the paper use, you know, you have the lower upfront cost, which is of interest to some places, because you don't need the upfront capital.
Speaker Change: Our next question comes from the line of Scott Ali.
Speaker Change: With paradigm capital your line is now open.
Speaker Change: Thanks, everyone. Congrats on the quarter I think.
Speaker Change: Lot of my questions have already been answered, but just wanted to get a little bit on the commercial model and kind of highlighting that you are seeing more interest in.
Speaker Change: In the more traditional model versus the pay per use model.
Speaker Change: Especially with the updated reimbursement.
Speaker Change: The initial thinking being that the pay per use you have the lower upfront cost which is of interest to some places.
Speaker Change: Because you don't need the upfront capital so.
Arun Menawat: So, like, in talking to potential users, you know, how, you know, what's driving this kind of your switch to focus more on the more traditional model going.
Speaker Change: And talking to potential users.
Speaker Change: How are you.
Speaker Change: Whats driving that kind of your switch to focus more on the more traditional model.
Speaker Change: Going forward.
Arun Menawat: Yeah, Scott, that's a very good question, actually. So You know, when we started. The technology was brand new and pretty much all the patients were cash-created. So for a site when they're looking at entirely new technology and cash pay, it's really hard for them to predict the utilization of the technology. And so that is why the recurring revenue-only model made the most sense. And because it's cash paid, they could charge and get whatever they needed to make on the procedure and we got what we needed to do and so on. So that model for that time has worked out well for us.
Speaker Change: Yes, Scott that's a very good question actually.
Yes.
Speaker Change: So.
Speaker Change: When we started.
Speaker Change: The technology was brand new.
Speaker Change: Pretty much all of the patients were cash pay patients.
Speaker Change: So for a site when they are looking at an entirely new technology and cash pay it's really hard for them to predict.
Speaker Change: Utilization of the technology.
Speaker Change: And so that is why.
Speaker Change: Recurring revenue only model made the most sense and because its cash paid they could charge and get whatever they needed to make on the procedure and we got what we needed to do and so on so that model for that time has worked out well for us.
Arun Menawat: And I do take some confidence with related related to the future potential that even at price points of, you know, some of the sites charging 30 to $35,000, that they were getting quite a few patients to be to pay that and still get the Tulsa procedure. So I think it worked. for Multiple Sclerosis. Now I mentioned to you that some of the sites that already have that recurring revenue model have already indicated that they would like to just go ahead and buy the system. And the reason being that they now have a far greater level of predictability of how many patients they will be able to treat.
Speaker Change: And I do take.
Speaker Change: Some confidence with the related related to the future potential of that even at price points of some of the sites charging 30 to $35000.
Speaker Change: But they were getting quite a few patients to be to pay that and still get the Tulsa procedure.
Speaker Change: I think it worked.
Speaker Change: For multiple purposes.
Speaker Change: Now I had mentioned to you that some of the sites that already have.
Speaker Change: That recurring revenue model have already indicated that they would like to just go ahead by the system and the reason being that the <unk>.
Speaker Change: I will have a far greater level of predictability of how many patients they will be able to treat.
Arun Menawat: And so for them to financially then justify is much easier, and particularly now with these numbers, that's a profile now we can present to them. And for a Eurology practice to be able to go to the CFOs office and say I've been using it this much. With this reimbursement I can add this much more to it and thereby it can be justified legally. That is the reason why I think we need to switch to the model, to the traditional model. And by doing so on a per patient basis their profitability can actually increase further which we think again even though as I was saying before all the stars are kind of getting aligned here but we are still at the earlier stage and so I think getting them to a place where they can easily justify it and they can make money on every procedure is an important goal.
Speaker Change: And so for them to financially then justify is much easier and particularly now with these numbers.
Speaker Change: Pro forma we can present to them and for us.
Speaker Change: Urology practice to be able to go to the.
Speaker Change: <unk>.
Speaker Change: The CFO office and <unk> been using it this much with this reimbursement I can add this is much more to it and thereby it can be justified easily.
Speaker Change: That's the reason why.
We need to switch to the bottle to the traditional model.
Speaker Change: And by doing so.
Speaker Change: On a per patient basis their profitability can actually.
Speaker Change: Increased further which we think again.
Speaker Change: Even though as I was saying before all the stars are kind of getting aligned here, but we're still at the earlier stage and so.
Speaker Change: Getting them to a place where they can easily justify it and they can make money on every procedure is an important goal for us.
Arun Menawat: So that's the reason why we are switching. Now... We are not saying to the sites that we will not do only sites with the current model. So if there are sites where they feel that, hey, we can budget for the capital later on, but we can start with a higher price per procedure, and they might make a little less money, but they'll probably still be able to be profitable with it, we're certainly going to do that too. because our goal is to grow the utilization and treat more and more patients. And this is why I think it is, as much as I'm, hopefully you can see, I'm giving as much information as I can so that you can model this.
Speaker Change: So that's the reason why we are switching now.
We are not.
Speaker Change: Not saying to the sites that we will not do only.
Speaker Change: Sites with the current model.
Speaker Change: So if they are sites, where they feel that hey, we can budget for the capital later on but we can start with a higher spread.
Speaker Change: Price per procedure and they might.
Speaker Change: Little less menino, they'll probably still be able to be profitable with it we're certainly willing to do that too.
Speaker Change: Because our goal is to grow the utilization and treat more and more patients ultimately.
Speaker Change: And this is why I think it is let's just hope.
Speaker Change: Hopefully, we can see I'm, giving as much information we can so that you can model. This.
Scott McAuley: But I think this is why sort of talking about how much will be capital and how much will be recurring is a little bit harder for the next few quarters. No, no, that's great. I appreciate that. And that definitely makes sense with the kind of utilization of the goal and wanting to give clinics the highest profit margins themselves.
Speaker Change: I think this is why.
Speaker Change: Ship sort of talking about how much will be capital and how much will be recurring is a little bit harder.
Speaker Change: So in the next few quarters.
Speaker Change: No that's great I appreciate that and that definitely makes sense with kind of utilization of the golar and wanting to give.
Speaker Change: Onyx.
Profit margins themselves.
Arun Menawat: And I guess just second, in terms of commercial reimbursement from commercial insurance plans, obviously, that the Medicare is very important and getting that as a milestone, how are you thinking, you know, going forward in terms of getting added to commercial plan lists and being able to tap into that market? Yeah, it's a very good priority for us. Obviously, the results of the CAPTAN trial will be very helpful, we will be the first level one study in this space, and we will be able to provide that information to them by, you know, within a few months now.
Speaker Change: Yes.
Speaker Change: Second.
Speaker Change: In terms of commercial.
Speaker Change: Reimbursement from commercial insurance plans, obviously, the Medicare is very important and getting that milestone.
Speaker Change: Are you thinking going forward in terms of getting added.
Speaker Change: Added to commercial.
Speaker Change: <unk> risks and being able to tap into that market as well.
Speaker Change: Yes.
Speaker Change: The priority for us.
Speaker Change: Obviously the results of the Captain trial will be very helpful will be the first.
Speaker Change: Level one study in this space.
Speaker Change: We do.
Speaker Change: We will be able to provide that information to them.
Speaker Change: Bye.
Speaker Change: A few months now.
Arun Menawat: And during this period, even though the model was cash pay, a number of our patients were able to take their cost data and apply for reimbursement from their own private insurance companies. And we have worked with many of them to make sure that the insurance companies have all of the data that they needed to make those decisions. So I think with respect to visibility, we're getting there. and we are, you know, cognizant of the fact that this is really important. And Part of the reason why we moved Mathieu to the president title is because I think that since he led the reimbursement work with the CMS and the work committees and so on, part of his role is going to now switch to accomplishing the same goal with the insurance.
Speaker Change: And we doing this period.
Speaker Change: Even though the model was cash pay.
Speaker Change: Number of our patients.
Speaker Change: We're able to take their cost data and apply for reimbursement from their own private insurance companies and we have worked with many of them to make sure that the insurance companies have all of the data that they needed to make those decisions. So I think that.
Speaker Change: With respect to visibility.
Speaker Change: We're getting there.
Speaker Change: And.
Speaker Change: We are.
Speaker Change: No.
Speaker Change: Cognizant of the fact that this is really important and.
Speaker Change: Part of the reason why.
Speaker Change: We move.
Speaker Change: To the President title is because I think that since he led the reimbursement.
Speaker Change: With the CMS and the committees and so on.
Speaker Change: As part of his role is going to now switch to accomplishing the same goal with the insurance companies.
Arun Menawat: Psych. So I think in summary I have two points. One is I think we have the clinical data, we have the cost data to get going with the insurance companies and Mathieu will take that bull by the horn as he did for the CMS process. And second, we have been working with insurance companies and other updated technologies have been reimbursed and so I do think that we're likely to have a better reception than something that they've never heard about before. That's great. Appreciate that, Arun. Thanks for taking the question. Thank you so much. Thank you.
Speaker Change: So.
Speaker Change: I think in summary, two points one is.
Speaker Change: I think we have the clinical data we had the cost data to get going with the insurance companies and Matthew will take that blow by the arm as he did for the CMS process.
Speaker Change: And second we have been working with insurance companies.
Speaker Change: And other ablative technologies.
Speaker Change: All have been reimbursed and so I do think that we're likely to have a better reception than something that they've never heard about before.
That's great I appreciate that thanks for taking my questions.
Speaker Change: Thank you so much Scott.
Speaker Change: Okay.
Speaker Change: Sure.
Operator: As a reminder, if you have a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment while we compile the Q&A.
Speaker Change: As a reminder.
Speaker Change: You will need to press star one one on your telephone and wait for your name to be announced.
Speaker Change: So let's draw your question. Please press star one again.
Speaker Change: One moment, while we compile the Q&A roster.
Benjamin Haynor: Our next question comes from the line of Ben Haynor with Lake Street Capital Markets. Your line is now open. Hey, guys. Thanks for taking the follow-up. I just wanted to touch on Tulsa Plus. Is that something that is kind of a straightaway pipeline expander, or is it something where some folks might want to wait to choose to go down that route, you know, once it becomes available, and I think you said nine months out? Actually, Brian, I think the way we're doing this is, you know, Tulsa is available to them for existing sites. today. So if there's a hospital that has a compatible MRI, we're putting tests out and we're going to get going with that.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Ben Hayner with Lake Street Capital markets. Your line is now open.
Speaker Change: Hey, guys. Thanks for taking the follow up.
Speaker Change: Just wanted to touch on wholesale plus.
Speaker Change: Something that is.
Speaker Change: As kind of a straight away pipeline expander.
Speaker Change: Or is it something where some folks might want to wait to choose.
Speaker Change: To go down that route.
Speaker Change: Once it becomes available.
Speaker Change: Nine months out.
Speaker Change: Okay.
Speaker Change: Actually Bryan.
Speaker Change: I think the way we're doing this.
Speaker Change: Tulsa is available to them for existing spike today. So if there is a hospital that has the compatible MRI.
Speaker Change: Putting tulsa.
Speaker Change: And we're going to get going with them.
Arun Menawat: What we are going to start doing starting next year is also giving them this Tulsa Plus option. And the way we're going to go to market is to say, you know, we'll put the Tulsa in your existing site so your people can get going and start treating patients. And when the MR gets installed, which might take, you know, six to nine months. We will take that close and put it on your new bar at that time. So it will take some time to get the Tulsa Plus model going, but I don't think it's gonna be a bottleneck to get the hospitals started with the way we have been doing business so far.
Speaker Change: What we are going to start doing starting next year is.
Speaker Change: Also giving members Tulsa plus option.
Speaker Change: And what the way we're going to go to market is to say, we will put the Tulsa and the existing site. So people can get going and start treating patients and one that the MLR gets installed which might take.
Speaker Change: Six months to nine months.
Speaker Change: We will take that Tulsa and put it on your new new homeowner at that time.
Speaker Change: So it will take some time to get the Tulsa plus model going but I don't think it's going to be a bottleneck.
Speaker Change: Two to get the hospitals started with the way we have been doing business. So far so that's the way we are planning to.
Arun Menawat: So that's the way we're planning the strategy. It's possible that there might be some side they'll say, you know, hey, we're just gonna go for the MR because the MR is already FDA cleared. There are a few sites in the U.S. that already have it and we're generally getting very good on the MR. So I think it's possible that some might say, you know, I'm just gonna get both and so on. But, you know, doing, I would say historically, we've done things like, you know, some of the sites have said to us, hey, I have a, you know, a Siemens MR available today, but for the long term, I want it on a GEMR and we've sort of provided it to them on a Siemens and then when they switched GMR, we've switched the software to make sure they could use it on that.
Speaker Change: The strategy.
Speaker Change: It's possible that there might be some cycle say.
Speaker Change: Hey, Wally this is going to go for the MRI because <unk> is already FDA cleared there are a few sites in the U S that already have it.
Speaker Change: And we're generally getting very good from there.
Speaker Change: So I think it's possible that some might say you know what I'm, just going to get both and so on.
Speaker Change: Doing I would say historically, we've done things like.
Speaker Change: Some of the sites have said to us Hey, I have.
Speaker Change: Siemens avail.
Speaker Change: Available today, but long term I wanted on GE, emaar and we've sort of provided.
Speaker Change: That money came in the amendment.
Speaker Change: They switched TMR research.
Speaker Change: The software to make sure they could use it on that so I think that flexibility exists and we plan to use it.
Arun Menawat: So I think that flexibility exists and we plan to use it.
Arun Menawat: Okay, got it. And then just from a, you know, kind of a Lugpa or ASC standpoint, do you see them under Tulsa Plus kind of ponying up of, you know, the million dollars plus that it costs to get one of these Magnethon Freedom Axes and your device? Or is that, is it going to be something where there's... You know, Siemens is going to provide financing or some third party is going to finance the capital equipment and they'll pay, you know, 20, 30, whatever grand a month. Yeah, that's exactly the way we're thinking. If you look at the website, Siemens, Freemax website, they are, in fact, the website says that they are prepared to lease it for about $14,000 a month, which is a very reasonable number.
Okay got it and then just from.
Speaker Change: Look part of our IFC standpoint, do you see them under cost plus kind of pony it up.
Speaker Change: The $1 billion plus that.
Speaker Change: It cost to get one of these.
Speaker Change: Without premium access in the ear device or is that going to be something where there is.
Speaker Change: Siemens is going to provide financing or some third party finance the capital equipment and not pay 2030, whatever grand a month.
Speaker Change: Yes, that's exactly the way we're thinking if you look at the website Siemens <unk> website. They are.
Speaker Change: In fact, the website says they are prepared to lease it for about $14000 a month, which is a very reasonable number.
Benjamin Haynor: And so many of these sites will, I mean, ultimately, this is going to come down to a fairly straightforward equation. They need to predict or figure out how many patients they can treat per month. They will be able to easily figure out how many procedures they need to do per month to break even and pay that monthly lease. Right. Okay. And third parties are willing to bundle it all together and convert it into So we're working through the details, but I think that is all in the realm of possibility. Okay, got it. Thanks again for taking the follow-ups and congrats on the leveling up with the APC7.
Speaker Change: So many of these sites.
Speaker Change: <unk>.
Speaker Change: Ultimately this is going to come down to a fairly straightforward equation.
Speaker Change: Amy.
Amy: I'll figure out how many patients they can treat per month.
Amy: That based upon their reimbursement.
The revenue they will know their costs they will know our costs.
Amy: And.
Amy: They will be able to youre going to figure out.
Amy: How many procedures they need to do per month to breakeven and paid that monthly fee.
Speaker Change: Right Okay.
Speaker Change: Third parties are willing to bundle that altogether and converted into lease payments.
Speaker Change: So we're working through the details, but I think that is all in the realm of possibilities.
Speaker Change: Okay got it. Thanks, Thanks again for taking the follow ups.
Speaker Change: Congrats on the.
Speaker Change: The leveling up with APC.
Benjamin Haynor: Thank you so much. Thank you.
Speaker Change: Thank you so much thank you so much.
Speaker Change: Okay.
Operator: I'm showing no further questions at this time.
Speaker Change: I am showing no further questions at this time.
Arun Menawat: I would now like to turn it back to Dr. Menawat for closing remarks. Thank you so much, and we look forward to communicating with you for the Q4 and year-end call in 2025. Thank Thank you for your participation in today's conference.
Speaker Change: Now I'd like to turn it back to the Doctor Miller for closing remarks.
Doctor Miller: Thank you so much and we look forward to communicate with you for the Q4 and year end call.
Speaker Change: And in 2025, thank you.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Operator: This does conclude the program.
Operator: You may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Sure.