Q1 2025 Allurion Technologies Inc Earnings Call

Hello, and welcome to the yellow young first quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session and if you'd like to ask a question. During this time. Please press star one on your telephone keypad.

Unknown Executive: Hello and welcome to the Allurion First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise.

Unknown Executive: After the speaker's remarks, there will be a question and answer session. And if you would like to ask a question during this time, please press star 1 on your telephone keypad.

Tara Brady: I would now like to turn the conference over to Tara Brady, you may begin. Good morning, and thank you for joining us. Earlier today, Allurion Technologies, Inc. issued a press release announcing financial results for the quarter ended March 31, 2025, and provided a business update. You can access a copy of the announcement on the company's website at investors.allurion.com.

Tara Brady: I would now like to turn the conference over to Tara Brady you may begin.

Speaker Change: Morning, and thank you for joining us earlier today, Larry on technologies issued a press release announcing financial results for the quarter ended March 31st 2025, and provided a business update.

Sean Ducor: You can access a copy of the announcement on the company's website at investors Dot alert you on Dot Com with me on the call today is Shawn to Nucor, founder and Chief Executive Officer.

Tara Brady: With me on the call today is Shantanu Gaur, Founder and Chief Executive Officer. Before we begin, I would like to inform you that the comments mentioned on today's call contain forward-looking statements within the meaning of federal securities laws. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties.

Sean Ducor: Before we begin I would like to inform you that the comments mentioned on today's call contain forward looking statements within the meaning of federal Securities laws.

Sean Ducor: Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our securities and Exchange Commission filings, including our annual report on Form 10-K filed on March 27th 2025.

Tara Brady: These risks and uncertainties are described in detail in our Securities and Exchange Commission filings, including our annual report on Form 10-K filed on March 27, 2025. Our SEC filings can be found through our company website at investors.allurion.com or the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements, and Allurion undertakes no obligation to publicly update or release any revisions to these forward-looking statements.

Sean Ducor: Our SEC filings can be found through our company website at investors, Oregon, Dot com or the Sec's website.

Sean Ducor: Investors are cautioned not to place undue reliance on such forward looking statements and l'oreal undertakes no obligation to publicly update or release any revisions to these forward looking statements.

Tara Brady: Please note that this conference call is being recorded and will be available for audio replay on our website under the events and presentation section on our investor relations page shortly after the conclusion of this call. In addition to the company's GAAP results, management will also provide supplementary results on a non-GAAP basis. Please refer to the press release issued today and the accompanying supplementary financial data tables for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the Investor Relations section of the company's website.

Sean Ducor: Please note that this conference call is being recorded and will be available for audio replay on our website under the events and presentations section on our Investor Relations page shortly after the conclusion of this call.

Sean Ducor: In addition to the company's GAAP results.

Sean Ducor: <unk> will also provide supplementary results on a non-GAAP basis. Please.

Sean Ducor: Please refer to the press release issued today and the accompanying supplementary financial data tables for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the Investor Relations section of the company's website.

Shantanu Gaur: And with that, I will turn it over to Shantanu. Good morning, everyone, and thank you for joining us as we kick off an exciting 2025 for Allurion, a year we expect to be rich in catalysts. We were pleased to deliver the first quarter in line with expectations, setting us up to deliver on the year ahead. First quarter revenue of $5.6 million was achieved on adjusted operating expenses of $10.1 million, a decrease in expense of 45% compared to the prior year. adjusted net operating loss of $5.9 million, narrowed by 48% compared to prior year, and gross margin expanded to 75% compared to 73% in the prior year and 45% in the previous quarter.

Sean Ducor: And with that I will turn it over to Shawn Seanor.

Speaker Change: Good morning, everyone and thank you for joining us as we kick off an exciting 2025 further beyond a year, we expect to be rich in catalysts. We were pleased to deliver the first quarter in line with expectations setting us up to deliver on the year ahead.

Speaker Change: First quarter revenue of $5 $6 million was achieved an adjusted operating expenses of $10 1 million a.

Speaker Change: The decrease in expense up 45% compared to the prior year.

Speaker Change: <unk> net operating loss of $5 $9 million narrowed by 48% compared to prior year and gross margin expanded to 75% compared to 73% in the prior year and 45% in the previous quarter.

Shantanu Gaur: Our financial results reflect increased efficiency as we move toward profitability with expenses continuing to reduce, gross margin expanding, and operating loss narrowing.

Speaker Change: Our financial results reflect increased efficiency as we move toward profitability with expenses continuing to reduce gross margin expanding and operating loss narrowing.

Speaker Change: As we have stated previously we have a new vision for the future of a leery of that vision begins with our plan for 2025, which is built around five pillars first our new commercial plan focused on key geographies with deeper penetration within these geographies.

Shantanu Gaur: As we have stated previously, we have a new vision for the future of Allurion. That vision begins with our plan for 2025, which is built around five pillars. First, a new commercial plan focused on key geographies with deeper penetration within these geographies and a business-to-business-to-consumer, or B2B2C, direct sales model versus a direct-to-consumer, or DTC, marketing model. Second, gaining FDA approval for the Allurion Balloon and preparing for U.S. launch. Third, achieving profitability for the ex-U.S. business by the end of 2025. Fourth, scaling our now proven AI product platform and leveraging a variety of new business models.

Speaker Change: Business to business to consumer or B to B to C direct sales model versus a direct to consumer or DTC marketing model.

Speaker Change: Second gaining FDA approval for the <unk> balloon and preparing for U S launch.

Speaker Change: Third achieving profitability for the ex U S business by the end of 2025.

Speaker Change: Scaling our now proven AI product platform and leveraging a variety of new business models and fifth resuming commercialization in France.

Shantanu Gaur: And fifth, resuming commercialization in France.

Shantanu Gaur: Thus far in 2025, I am extremely proud of our team for the significant progress we have made across all five. Regarding our new commercial plan, our first quarter results speak to the efficiency of our B2B2C model. We piloted several aspects of the B2B2C model in clinics in Europe in the first quarter and observed over 40% growth quarter over quarter and year over year, giving us confidence in the model as we expand its implementation globally. In the first quarter, we also filled several open positions in our direct markets and will continue to attract top talent in the second quarter.

Speaker Change: Thus far in 2025, I'm extremely proud of our team for the significant progress we have made across all five pillars.

Speaker Change: Regarding our new commercial plan, our first quarter results speak to the efficiency of our B to B to C model, we piloted several aspects of the <unk> model and clinics in Europe in the first quarter and observed over 40% growth quarter over quarter and year over year, giving us confidence in the model as we expand its implementation.

Speaker Change: Asian globally.

Speaker Change: In the first quarter, we also filled several open positions in our direct markets and we will continue to attract top talent in the second quarter.

Shantanu Gaur: We expect revenues to ramp as the year progresses, as the use of our B2B2C model expands and our enhanced sales team on board. As part of our new commercial plan, we are increasingly leaning in to the areas where Allurion products, either our entire program or just our AI-powered virtual care suite, intersect with GLP-1 therapy. In addition to the combination of the Allurion program with low doses of GLP-1s, which I will provide an update on later in the call, we are seeing a number of different approaches being taken by clinicians organically that combine Allurion with normal doses of GLP-1.

Speaker Change: We expect revenues to ramp as the year progresses as the use of our <unk> model expands and our enhanced sales team on board.

Speaker Change: As part of our new commercial plan, we are increasingly leaning in to the areas where leery on products either our entire program or just our AI powered virtual care suite intersect with <unk> one therapy.

In addition to the combination of the ovarian program with low doses of <unk>, which I will provide an update on later in the call. We are seeing a number of different approaches being taken by clinicians organically that combine <unk> with normal doses of <unk>.

Shantanu Gaur: As we announced yesterday, we presented two abstracts at the European Congress on Obesity that touch on this. In one study of 138 patients who were prescribed GLP-1s with normal dose escalation and used our VCS through which they received behavioral support and had changes in lean body mass tract, lean body mass increased by 6.1% and muscle mass increased by 6.4%, while fat mass decreased by 10.2%. In another study of 60 patients who were treated with the Allurion Balloon and Semaglutide with a normal dose escalation, the average reduction in total body weight was 21.2% with improvement in LDL cholesterol, triglycerides, and hemoglobin A1c after 10 months.

Speaker Change: As we announced yesterday, we presented two abstracts at the European Congress of obesity that touch on this.

Speaker Change: In one study of 138 patients who are prescribed <unk> with normal dose escalation and used our vcs through which they received behavioral support and that changes in lean body mass track lean body mass increased by six 1% and muscle mass increased by six 4% while <unk>.

Speaker Change: <unk> decreased by 10, 2%.

Speaker Change: In another study of 60 patients who were treated with the <unk> balloon and summit with high with a normal dose escalation. The average reduction in total body weight was 21, 2% with improvement in LDL cholesterol triglycerides and hemoglobin <unk> C. After 10 months.

Speaker Change: This approach led to outcomes similar to those achieved with very attract surgery without the risks inherent to surgery.

Shantanu Gaur: This approach led to outcomes similar to those achieved with bariatric surgery without the risks inherent to surgery. While we believe that the best option for most patients seeking higher weight loss is likely a combination of the Allurion program with a low dose of GLP1s, these studies speak to the versatility of Allurion's product portfolio. The first study supports our thesis that even at normal doses of GLP-1s, Allurion's virtual care suite can be useful in driving better weight loss outcomes and maintaining muscle compared to what patients can achieve using GLP-1s alone. The second study describes an option that may be attractive for patients with severe obesity who are seeking an alternative to bariatric surgery and may be more willing to tolerate the higher side effects observed with normal dose escalation.

While we believe that the best option for most patients seeking higher weight loss is likely a combination of the <unk> program with a low dose of <unk>. Once these studies speak to the versatility of our <unk> product portfolio.

Speaker Change: The first study supports our thesis that even at normal doses of <unk> <unk> virtual care suite can be useful in driving better weight loss outcomes and maintaining muscle compared to what patients can achieve using <unk> alone.

Speaker Change: The second study describes in options that may be attractive for patients with severe obesity, who are seeking an alternative to <unk> surgery and may be more willing to tolerate the higher side effects observed with normal dose escalation.

Shantanu Gaur: Commercially, we believe this versatility will open new doors for us that will ultimately drive higher balloon and software revenue.

Speaker Change: Commercially we believe this versatility will open new doors for us that will ultimately drive higher balloon and software revenues.

Shantanu Gaur: Regarding our path to FDA approval, we recently completed our pre-PMA meeting with FDA, where we presented our top-line results from Audacity. We were very pleased with FDA's openness to considering additional analyses that address the control group performance we observed in Audacity. We believe these analyses will further underscore the strength of our data and overall application. We were very encouraged by FDA's feedback, and we very much look forward to completing our PMA submission, which we expect will occur by the end of June, and working collaboratively with FDA toward an approval.

Speaker Change: Regarding our path to FDA approval, we recently completed our pre PMA meeting with FDA, where we presented our topline results from audacity.

Speaker Change: We're very pleased with Fda's openness to considering additional analyses that address the control group performance, we observed and audacity.

Speaker Change: We believe these analyses will further underscore the strength of our data and overall application.

Speaker Change: We were very encouraged by Fda's feedback and we very much look forward to completing our PMA submission, which we expect will occur by the end of June and working collaboratively with the FDA toward an approval.

Shantanu Gaur: Regarding our path to profitability, we believe our first quarter results demonstrate the increased efficiency of our business following the restructuring we implemented at the end of 2024. With the financings we conducted in the first quarter, along with our continued discipline in our cash use, we ended the first quarter with cash and cash equivalents of $20 million, which provides the company the runway we believe we need to achieve our FDA approval, profitability, and other milestones that could generate significant value for shareholders.

Speaker Change: Regarding our path to profitability, we believe our first quarter results demonstrate the increased efficiency of our business. Following the restructuring we implemented at the end of 2024.

Speaker Change: The financings we conducted in the first quarter along with our continued discipline in our cash use we ended the first quarter with cash and cash equivalents of $20 million, which.

Speaker Change: The company the runway, we believe we need to achieve our FDA approval profitability and other milestones that could generate significant value for shareholders.

Shantanu Gaur: Looking forward to the rest of the year, our direct exposure to tariffs is negligible. As many of you know, the Allurion balloon and almost all of its components are manufactured in the U.S. and we do not expect any impact on gross margin from tariffs for the balance of the year. We are maintaining our guidance of revenues of approximately $30 million with a reduction in operating expenses of approximately 50% compared to 2024.

Speaker Change: Looking forward to the rest of the year, our direct exposure to tariffs is negligible as many of you know Larry on balloon in almost all of its components are manufactured in the U S and we do not expect any impact on gross margin from tariffs for the balance of the year.

Speaker Change: We are maintaining our guidance of revenues of approximately $30 million with a reduction in operating expenses of approximately 50% compared to 2024.

Speaker Change: Turning now to our digital product with the shortages of compounded <unk> now officially over we have started to build out our l'oreal nets to offer brand name <unk>.

Shantanu Gaur: Turning now to our digital product, with the shortages of compounded GLP-1s now officially over, we have started to build out Allurion meds to offer brand-name GLP-1s. We have performed pilot work with pharmacy partners that offer these medications at low and high doses and are in discussions to perform a more complete integration later this year. We believe that having brand-name GLP-1s available through Allurion meds could be an attractive option for U.S. patients, especially at lower doses in combination with the Allurion balloon. With over 40% of adults in the U.S. with obesity and 9% with severe obesity, we believe the combination approach could become the standard of care when the Allurion balloon launches in the United States.

Speaker Change: We have performed pilot work with pharmacy partners that offer these medications at low and high doses and are in discussions to perform a more complete integration later this year.

Speaker Change: We believe that having brand named <unk> available through a very odd beds could be an attractive option for U S patients, especially at lower doses in combination with <unk> balloon.

Speaker Change: With over 40% of adults in the U S with obesity and 9% with severe obesity. We believe the combination approach could become the standard of care when you Laurie on balloon launches in the United States.

Speaker Change: Finally, we are making good progress in treating patients in France again, we have re engaged clinics retrain providers and are now in the final phases of updating our collateral to reactivate placements. We look forward to providing further updates on this in future calls.

Shantanu Gaur: Finally, we are making good progress in treating patients in France again. We have re-engaged clinics, re-trained providers, and are now in the final phases of updating our collateral to reactivate placements. We look forward to providing further updates on this in future calls.

Shantanu Gaur: Before I turn it over to Tara, I want to provide an update on our vision for the future of obesity care that I shared on our last call, and how we believe Allurion can bring this vision to reality and have a significant, positive impact for shareholders in 2025 and beyond. We believe that combining the Allurion program with low-dose GLP-1s could become a new standard of care for obesity. By combining the two approaches, our initial data indicate that patients can achieve sustained weight reduction of greater than 20% while maintaining muscle mass and increasing long-term adherence to GLP-1 therapy, driven in part by the fewer side effects experienced at lower doses.

Tara Brady: Before I turn it over to Tara I wanted to provide an update on our vision for the future of obesity care that I shared on our last call and how we believe <unk> can bring this vision to reality and have a significant positive impact for shareholders in 2025 and beyond.

Tara Brady: We believe that combining deal around program with low dose <unk> could become a new standard of care for obesity by combining the two approaches our initial data indicate that patients can achieve sustained weight reduction of greater than 20%, while maintaining muscle mass and increasing long term adherence to <unk> therapy, driven in part by the <unk>.

Tara Brady: Fewer side effects experienced at lower doses.

Shantanu Gaur: This trisecta, losing weight, keeping it off, and maintaining muscle is what we call metabolically healthy weight loss. The science behind our focus on muscle, use of low doses of GLP-1, and long-term engagement to enable behavior change is clear and continues to be elucidated at physiological, cellular, and psychological levels. First, from a physiological perspective, muscle mass is crucial for driving weight loss and weight maintenance. Compared to fat, muscle burns two to three times more energy per kilo at rest, and during exercise, increased muscle leads to increased energy expenditure. Muscle is also the primary site for glucose storage, removing it from the blood, leading to increased insulin sensitivity and less fat storage.

Tara Brady: Trifecta, losing weight, keeping it off and maintaining muscle is what we call metabolically healthy weight loss.

Tara Brady: The science behind our focus on muscle use of low doses of <unk>, one and long term engagement to enable behavior change is clear and continues to be elucidated.

Tara Brady: Illogical cellular and psychological levels.

Tara Brady: First from a physiological perspective muscle mass is crucial for driving weight loss and weight maintenance compared to fat muscle Burns two to three times more energy per kilo at rest and during exercise increase muscle leads to increased energy expenditure.

Tara Brady: <unk> was also the primary site for glucose storage, removing it from the blood leading to increased insulin sensitivity and less fat storage.

Shantanu Gaur: Muscle also releases myokines during exercise, which increase satiety, reduce appetite, and actually stimulate release of endogenous GLP-1. Second, from a cellular perspective, high doses of GLP-1 stimulate pathways that lead to protein degradation and inhibit pathways that lead to protein synthesis, leading to a breakdown of muscle and muscle waste. Using lower doses of GLP-1 in combination with the Allurion balloon mitigates these effects without impacting overall weight reduction. Further, as discussed on the previous call, the combination of the Allurion balloon with GLP-1s is highly synergistic, as the Allurion balloon primarily works by inducing satiety, and GLP-1s work by reducing hunger, two mechanisms of action that are distinct at the cellular and molecular level.

Tara Brady: So also releases myocardium during exercise, which increased the tidy reduced appetite and actually stimulate release of endogenous <unk> one.

Tara Brady: Second from a cellular perspective high doses of <unk>, one stimulate pathways that lead to protein degradation and inhibit pathways that lead to protein synthesis, leading to a breakdown of muscle and muscle wasting.

Tara Brady: Using lower doses of <unk> in combination with dealer on balloon mitigate these effects without impacting overall weight reduction.

Tara Brady: Further as discussed on the previous call the combination of the <unk> balloon with <unk> is highly synergistic.

Tara Brady: Larry on balloon, primarily works by inducing satiety and GOP ones work by reducing hunger two mechanisms of action that are distinct at the cellular and molecular level.

Shantanu Gaur: Third, from a psychological perspective, behavior change is key for weight maintenance and takes time. Adopting new eating behaviors typically takes two to three months, and it usually takes six months for these behaviors to become second nature.

Tara Brady: Third from a psychological perspective behavior changes key for weight maintenance and takes time.

Tara Brady: Adopting new eating behaviors typically takes two to three months and it usually takes six months for these behaviors to become second nature.

Shantanu Gaur: Data from the National Weight Control Registry, which studies individuals who have successfully maintained a weight loss of at least 30 pounds for at least a year, clearly indicates that maintaining weight loss for one year significantly improves the chances to sustain long-term behavior change.

Tara Brady: Data from the National weight control registry, which studies individuals who have successfully maintained a weight loss of at least 30 pounds for at least a year clearly indicates that maintaining weight loss for one year significantly improves the chances to sustain long term behavior change.

While we have already reported out retrospective data on the combination approach. We now intend to launch a prospective trial the details of which I am pleased to share today.

Shantanu Gaur: While we have already reported out retrospective data on the combination approach, we now intend to launch a prospective trial, the details of which I am pleased to share today. The trial will be conducted across three obesity centers of excellence in Europe and will enroll subjects with a BMI greater than 30. Subjects will receive the Allurion balloon and will start 0.25 mg semaglutide 30 days after a balloon placement. Semiglutide dose will increase over the subsequent 11 months to a maximum of 1.0 milligrams. For reference, standard dosing for semaglutide typically reaches between 1.7 and 2.4 mg. So the maximum dose that will be used in this study is approximately half.

Tara Brady: While we'll be conducted across three obesity centers of excellence in Europe, and will enroll subjects with a BMI greater than 30.

Tara Brady: Subjects will receive the Hilary on balloon and we will start 0.25 milligrams stomach tied 30 days after balloon placement.

Tara Brady: Tenet with Idose will increase over the subsequent 11 months to a maximum of 1.0 milligrams for.

Tara Brady: For reference standard dosing Crystal magnetite typically reaches between one seven and two four milligrams. So the maximum dose that will be used in this study is approximately half.

Shantanu Gaur: Body weight, muscle mass, and compliance with some of the TIDE will be evaluated throughout the study using the Allurion Scale and Allurion Virtual Care Suite. Subjects will receive lifestyle modification and behavior change counseling through the Allurion app.

Tara Brady: Body weight muscle mass in compliance with some of the tide will be evaluated throughout the study using the <unk> scale and Lori on virtual care suite.

Tara Brady: Subjects will receive lifestyle modification and behavior change counseling through the <unk> app.

Shantanu Gaur: With the site selected and protocol now drafted, we will begin the process to seek IRB approvals, to conduct the trial, and expect enrollment to start by the end of this year. We are extremely excited to begin this clinical program. We believe that if successful and validated in larger sample sizes, this combination protocol could become a new standard of care for the treatment of obesity.

Tara Brady: With the sites selected in protocol now drafted we will begin the process to seek IRB approvals to conduct the trial and expect enrollment to start by the end of this year.

Tara Brady: We are extremely excited to begin this clinical program, we believe that if successful and validated and larger sample sizes. This combination protocol could become a new standard of care for the treatment of obesity.

Tara Brady: I will now turn the call over to Tara Brady, our Interim Chief Financial Officer. Tara? Thank you, Shantanu. Our revenue for the first quarter of 2025 was $5.6 million, compared to $9.4 million for the same period in 2024. The year-over-year decrease in revenue was primarily due to the temporary suspension of sales in France, as well as lower investments in sales and marketing. Gross profit for the first quarter was $4.2 million, or 75% of revenue, compared to $6.9 million, or 73% of revenue for the same period in 2024, and 45% compared to the fourth quarter of 2024.

Speaker Change: I will now turn the call over to Tara Brady, our interim Chief Financial Officer Tara.

Thank you Shawn Seanor.

Speaker Change: Revenue for the first quarter 2025 was $5 $6 million compared to $9 4 million for the same period in 2024.

Speaker Change: The year over year decrease in revenue was primarily due to the temporary suspension of sales in France, as well as lower investments in sales and marketing.

Speaker Change: Gross profit for the first quarter, this $4 2 million or 75% of revenue.

Speaker Change: $6 9 million.

Speaker Change: 73% of revenue for the same period in 2024, and 45% compared to the fourth quarter of 2024.

Tara Brady: The increase in gross profit was driven by increased manufacturing efficiencies resulting from the restructuring initiatives implemented in the 4th quarter of 2024. Sales and marketing expenses for the first quarter were $3.6 million compared to $6.1 million for the same period in 2024. The reduction in expense is primarily driven by increased operating efficiency and the restructuring initiatives implemented during the fourth quarter of 2024, which refocused spend on more efficient channels. Research and development expenses for the first quarter were $2.6 million, compared to $5.7 million for the same period in 2024. The reduction was primarily driven by reduced costs related to the audacity trial and restructuring initiatives implemented during the fourth quarter of the year.

Speaker Change: The increase in gross profit was driven by increased manufacturing efficiencies, resulting from the restructuring initiatives implemented in the fourth quarter of 2024.

Speaker Change: Sales and marketing expenses for the first quarter were $3 6 million.

Speaker Change: Compared to $6 1 million for the same period in 2024.

Speaker Change: Reduction in expense is primarily driven by increased operating efficiency and the restructuring initiatives implemented during the fourth quarter of 2024, let's refocus spend on more efficient channels.

Speaker Change: Research and development expenses for the first quarter were $2 6 million.

Speaker Change: Compared to $5 $7 million for the same period in 2024.

Speaker Change: <unk> was primarily driven by reduced costs related to that just the D trial and restructuring initiatives implemented during the fourth quarter of the year.

Tara Brady: General and administrative expenses for the first quarter were $5.2 million, compared to $6.4 million for the same period in 2024. Adjusted general and administrative expenses were $3.8 million, excluding one-time financing costs of $1.4 million. The reduction year-over-year was primarily driven by the restructuring initiative implemented during the fourth quarter of 2024. Loss from operations for the first quarter was $7.3 million compared to $11.4 million for the same period in 2024. Adjusted loss from operations was $5.9 million, excluding one-time financing costs of $1.4 million. The reduction was driven by restructuring initiatives implemented during the fourth quarter and expansion and growth margin year-over-year.

Speaker Change: General and administrative expenses for the first quarter were $5 2 million.

Speaker Change: I'm here to $6 4 million for the same period in 2024.

Speaker Change: Adjusted General and administrative expenses were $3 $8 million, excluding onetime financing costs of $1 $4 million.

Speaker Change: The reduction in year over year was primarily driven by the restructuring initiatives implemented during the fourth quarter of 2024.

Speaker Change: Loss from operations for the first quarter was $7 3 million compared to $11 4 million.

Speaker Change: At the same period in 2024.

Speaker Change: Adjusted loss from operations was $5 $9 million, excluding onetime financing costs of $1 4 million.

Speaker Change: The reduction was driven by our restructuring initiatives implemented during the fourth quarter and expansion in gross margin year over year.

Tara Brady: As of March 31st, 2025, we had cash and cash equivalents of $20.4 million.

Speaker Change: As of March 31, 2025, we had cash and cash equivalents of $24 million.

Shantanu Gaur: I will now turn the call back over to Shantanu. Thanks, Tara. We are excited by the start to 2025, clearly demonstrating that we have restructured our business to run more efficiently, while still fulfilling a massive unmet medical need around the world. We are making solid progress against our five-point plan for 2025, and with our pre-PMA meeting now behind us, see a clear path to completing our PMA and advancing our application toward FDA approval. The prospective clinical data we intend to collect on the combination of Allurion with GLP-1 therapy could define a new standard of care in obesity management, and we are excited about its potential in our existing markets and, once approved, the U.S.

Santander: I will now turn the call back over to Santander.

Santander: Thanks, Tara we're excited by the start to 2025, clearly demonstrating that we have restructured our business to run more efficiently, while still fulfilling and massive unmet medical need around the world. We are making solid progress against our five point plan for 2025 and with our pre PMA meeting now behind us be a clear path to completing our <unk>.

Santander: And advancing our application toward FDA approval, the prospective clinical data, we intend to collect on the combination of <unk> with <unk> therapy could define a new standard of care and obesity management and we are excited about its potential in our existing markets and once approved the U S market.

Shantanu Gaur: market. With our sales team growing and new B2B2C strategy coming to life globally, we believe we are putting Allurion on a path to profitable, sustainable growth. We believe that if executed correctly, this strategy could lead to significant decretion of shareholder value with millions of patients entering the funnel and being treated with the Allurion program.

Santander: With our sales team growing and new B to B to C strategy coming to life globally. We believe we are putting <unk> on a path to profitable sustainable growth.

Santander: We believe that if executed correctly this strategy could lead to significant accretion of shareholder value with millions of patients entering the funnel and being treated with the <unk> program.

Unknown Executive: With that, Operator, please open up the call for questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Please ensure that your phone is not on mute when called upon. Thank you.

Speaker Change: With that operator, please open up the call for questions.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star. One again, please ensure that your phone is not on mute when called upon thank you.

Speaker Change: Your first question comes from Jason Wittes with Roth Capital Partners. Your line is open.

Jason Wittes: Your first question comes from Jason Wittes with Roth Capital Partners. Your line is open. Hi, thanks for taking the questions. Lots of positive things going on this quarter.

Jason Wittes: Hi, Thanks for taking the questions.

Speaker Change: Lots of other things going on this quarter maybe.

Shantanu Gaur: Maybe to start, can you give any indication in terms of what might, some of the trends that are going on regionally, whether that be Middle East or Europe, ex-France, of course, in terms of momentum, especially with the new change in marketing strategy? Yeah, thanks for the question, Jason. What we're seeing regionally is really following the expansion of our B2B2C marketing strategy, specifically in territories where there are two phenomena going on. One, mature markets from a GLP-1 perspective are creating some tailwinds for us with patients who have previously tried GLP-1s, now reentering the funnel looking for an alternative, but also with the launch of our focus on metabolically healthy weight loss and the combination of the balloon with a low dose of GLP-1s, we're starting to see that in markets where GLP-1s are available, that they are being combined organically with the Allurion balloon.

Jason Wittes: Maybe to start.

Jason Wittes: So can you give any indication in terms of what might.

Jason Wittes: Some of the trends that are going on regionally.

Jason Wittes: Whether that would be middle east or Europe ex France of course in terms of.

Jason Wittes: Momentum, especially with the new change in marketing strategy.

Jason Wittes: Yes. Thanks for thanks for the question, Jason what we are seeing regionally is really following the expansion of our b to B to C marketing strategy, specifically in territories, where there are two phenomenon going on one.

Jason Wittes: Mature markets from a <unk> perspective are creating some tailwind for us with patients who have previously tried DLP ones now re entering the funnel looking for an alternative but also with the launch of our focus on metabolically healthy weight loss and the combination of the balloon.

Jason Wittes: Low dose of <unk>, we're starting to see that in markets, where GL coupons are available.

Jason Wittes: Being combined organically with the <unk> balloon.

Shantanu Gaur: The second phenomena is really the expansion of our direct sales force. As we hire new sales reps, specifically in our direct markets in Europe, they will take some time to onboard. But as they do onboard, we start to see an acceleration in new account openings, and also going deeper into some of our existing accounts. So as the year progresses, we expect those two trends to continue.

The second phenomenon is really.

Jason Wittes: The expansion of our direct sales force as we hire.

Jason Wittes: New sales reps, specifically in our direct markets in Europe.

Jason Wittes: They will take some time to onboard but as they do on board, we start to see an acceleration in new account openings and also going deeper into some of our existing accounts. So as the year progresses, we expect those two trends to continue.

Shantanu Gaur: And that's why we expect revenues to steadily ramp as the year And can I ask also about the trial with GLP-1s? Did you state how long you think it might take, how many patients, and those type of things in terms of how we should be thinking about when we can see some data from that trial? Yeah, we expect enrollment in that study to begin this year, probably in the latter half of this year. And with a one year follow up, those patients will be going through the combination therapy. For most of 2026. We are still considering whether or not to build in some interim looks into the data, and also finalizing the size of the study.

Jason Wittes: And that's why we expect revenues to steadily ramp as the year goes on.

Jason Wittes: And and.

Speaker Change: And can I ask also about the trial with GOP ones.

Jason Wittes: Did you state.

Jason Wittes: How long you think it might take how many patients.

Jason Wittes: And those type of things in terms of how we should be thinking about when we can see some data from that trial.

Jason Wittes: Yes, we expect enrollment in that study to begin this year, probably in the latter half of this year.

Jason Wittes: And with a one year follow up those patients will be going through the combination therapy for most of 2026.

Jason Wittes: We are still considering whether or not to build in some.

Jason Wittes: Interim looks into the data and also finalizing.

Jason Wittes: The size of the study, but we're expecting the study to be at least 75 subjects across multiple sites in Europe, but we may increase the size, especially if the enrollment demand is there.

Shantanu Gaur: But we're expecting the 75 subjects across multiple sites in Europe, but we may increase the size, especially if Okay, that's helpful.

Speaker Change: Okay. That's helpful. And then maybe one last question relates to that.

Shantanu Gaur: And maybe one last question related to that. In terms of the arms, are you considering doing an arm with the AI suite alone and with the AI suite in combination of the balloon and GLP-1s? Or is there any thought about how that in terms of how you might design the arms for this trial? With this trial in particular, our goal is to validate what we have seen previously in our retrospective work with a prospective study with all of the data that is available now with diet and exercise controls and all the data that we have with patients who are just using the Allurion Virtual Care Suite with or without GLP-1s.

Speaker Change: In terms of the arms are you considering doing an arm with the AI suite alone.

Speaker Change: The combination of the balloon in GOP ones or.

Speaker Change: Is there any is there any thought about how that in terms of how you might design the orange for this trial.

Speaker Change: With this trial in particular, our goal is to validate what we have seen previously in our retrospective work with a prospective study.

Speaker Change: With all of the data that is available now with diet and exercise controls and all of the data that we have with patients who are just using deal around virtual care suite.

Speaker Change: With or without <unk> ones, we actually have a lot of data historical data to compare this prospective trial against and so for now we're moving forward with a single arm prospective trial design and we're going to use a lot of the historical data that we have at our fingertips as competitors that will do two things one it will accelerate.

Shantanu Gaur: We actually have a lot of data, historical data, to compare this prospective trial against. And so for now, we're moving forward with a single-arm prospective trial design, and we're going to use a lot of the historical data that we have at our fingertips as comparators. That will do two things. One, it will accelerate the execution of the study, but it will also make it much more efficient to run, which ties into one of our goals for this year is to accelerate our path to profitability. So we'll have plenty of data here to compare.

Speaker Change: Right the execution of the study, but it also make it much more efficient to run.

Speaker Change: It ties into one of our goals for this year is to accelerate our path to profitability. So.

Speaker Change: We'll have plenty of data here to compare our results against.

Shantanu Gaur: Okay, thank you. And one last small question, that's just the gross margin had a nice rebound here. Is this kind of the gross margin we should anticipate for the rest of the year? Or is there further improvements? Yeah, for the first quarter, we were very pleased with the margin expansion, it was driven by some of the restructuring and reorganization that we did in the second half of 2024. But also, part of this was driven by increased efficiency on the manufacturing floor as well, through some of the new initiatives that we launched during calendar year 2024.

Speaker Change: Okay. Thank you and one last small question Thats just the gross margin had a nice rebound here is this kind of the gross margin we should anticipate for the rest of the year or is there further improvements.

Speaker Change: Yes for the first quarter, we were very pleased with the margin expansion. It was driven by some of the restructuring and reorganization that we did in the second half of 2024, but also.

Speaker Change: Part of this was driven by increased efficiency on the manufacturing floor as well through some of the new initiatives that we launched during calendar year 2024.

Jason Wittes: As the year goes on, we expect, you know, margins to remain in that ballpark. We will obviously ramp revenues as the year goes on, which may also increase the margin profile, especially in the second half of the year. But, you know, for now, on a go forward basis, I would say what we did in the first quarter, we should be in that same ballpark. Got it. Thanks. I'll jump back in queue.

Speaker Change: As the year goes on we expect margins to remain in that ballpark.

Speaker Change: Will obviously ramp revenues as the year goes on which May also.

Speaker Change: Increase the margin profile, especially in the second half of the year, but for now on a go forward basis I would say what we did in the first quarter, we should be in that same ballpark for the remainder of the year.

Speaker Change: Got it thanks, I'll jump back in queue. Thank you very much.

Your next question comes from Josh Jennings with TD Cowen Your line is open.

Josh Jennings: Your next question comes from Josh Jennings with TD Cowan. Your line is open. Good morning. Thanks for taking the question. Shantanu, I was hoping to just get a better handle on the pre-PMA meeting and just the path from here. I think you called out that there will be some further analyses of the control group. Any more specifics you can share just in terms of last remaining steps before you submit that final module around mid-year? Yeah, thanks for the question, Josh. We were very pleased with that pre-PMA meeting with the FDA. And just to provide a little bit more color on some of the things that we discussed, we presented the preliminary data from Audacity to the FDA.

Speaker Change: Hi, good morning, Thanks for taking my question.

Speaker Change: I was hoping to just.

Speaker Change: Get a better handle on the pre PMA meeting and just the path from here I think you'd called out the debt.

Speaker Change: There will be some further analysis of the control group I mean, any more specifics you can share just in terms of.

Speaker Change: Our last remaining steps before you submit the final module around midyear.

Speaker Change: Yes. Thanks for the question, Josh we were very pleased with that pre PMA meeting with the FDA.

Speaker Change: Just to provide a little bit more color on some of the things that we discussed we presented the.

Speaker Change: Preliminary data from our <unk> to the FDA and as you may recall, one of the issues that we highlighted when we announced the topline results was the.

Shantanu Gaur: And as you may recall, one of the issues that we highlighted when we announced the top-line results was the performance of the control group. And as we've done more analysis on the data, and as we've shared some of that with FDA, it's becoming clear that part of the control group performance was really driven by the statistical methods that we were using in order to impute the missing data in the control subjects. And some of the methods that we had been using may introduce some bias into the results that doesn't necessarily need to be there. And so with our conversation with FDA, we were actually very pleased to see their receptivity to alternative methods that we can use to analyze that control group data that puts us in a much stronger position compared to our pre-specified.

Speaker Change: Performance of the control group and <unk>.

Speaker Change: As we've done more analysis on the data and as we've shared some of that analysis with FDA. It is becoming clear that pause.

Speaker Change: Part of the control group performance is really driven by the statistical methods that we were using in order to impute, the missing data and the control subjects.

Speaker Change: And some of the methods that we had been using may introduce some bias into the results that doesn't necessarily need to be there and so with our conversation with FDA, we were actually very pleased.

Speaker Change: See their receptivity to alternative methods that we can use to analyze that control group data.

Speaker Change: It's us in a much stronger position compared to our pre specified endpoints.

Shantanu Gaur: So that was, we were very encouraged by that conversation, and that really paves the way for us to complete our clinical study report in module number four on the timeline that we discussed in the call. So I think, you know, moving forward, we will have, I believe, a much more accurate representation of that control group performance, which vis-a-vis our Allurion balloon patients should reflect favorably on the overall data. And as a reminder, too, we were very pleased with the performance of our Allurion balloon subjects in the study, and through our further analysis, their performance has remained unchanged.

Speaker Change: So that was we were very encouraged by that conversation and not really paves the way for us to complete our clinical study report and module number four on the timeline that we discussed in the call. So I think moving forward. We will have I believe a much more accurate representation of that control group.

Speaker Change: <unk>, which vis vis <unk> balloon patients should reflect favorably on the overall data and as a reminder, too we were very pleased with the performance of <unk> and balloon subjects in the study and through our further analysis.

Speaker Change: Their performance has remained unchanged. So we are moving in the right direction I believe in terms of completion of the report and getting the PMA into FDA.

Shantanu Gaur: So we are moving in the right direction, I believe, in terms of completion of the report.

Shantanu Gaur: We appreciate those details. And just a follow-up question on that, I mean, is there, are there any analyses to be performed around higher levels of GLP-1 use in the control arm, or is that just not obtainable? Right now, there's a few variables that we've identified that could have been leading to that overperformance in the control group, GLP1s being one of them. But what's interesting about these analyses that we've performed is, really, no matter what was driving some of that control group overperformance, it really doesn't matter in terms of how the missing data is imputed. And so whatever was driving that final outcome for the control subjects, we can actually, through alternative statistical methods, potentially correct for all of that, which puts us much more in line with our pre-specified...

Speaker Change: I appreciate those details in just a few.

Speaker Change: Final question on that I mean is there.

Speaker Change: Are there any analysis to be performed around higher levels of GOP one used in the control arm or is that just.

Speaker Change: Not a payable.

Speaker Change: Right now there is.

Speaker Change: A few variables that we've identified that could have been leading to that over performance in the control group GOP ones being one of them.

Speaker Change: What's interesting about these analysis that we've performed is really no matter what was driving some of that control group over performance.

Speaker Change: It really doesn't matter in terms of how the missing data is imputed and so whatever it was driving that final outcome for the control subjects.

Speaker Change: Can actually through alternative statistical methods.

Potentially.

Speaker Change: Correct for all of that which puts us much more in line.

Speaker Change: Our pre specified endpoints. So we're very very pleased with how that analysis is going.

Shantanu Gaur: So, we're very pleased with how that analysis is going, and in addition to the solid safety profile that we had in the Audacity trial, we're feeling very good about this upcoming Excellent.

Speaker Change: And in addition to the solid safety profile that we had in the audacity trial.

Speaker Change: We're feeling very good about this upcoming submission to FDA.

Speaker Change: Excellent.

Josh Jennings: It's great to hear about the moving forward with the trial for the Allurion program and Lotus GOP1s. I was hoping to just hear from you about the current algorithm that your centers, adopters of the Allurion Balloon and VCS are following. Are you seeing centers adopt and realizing the synergies of the Allurion program plus low or normal dosing GOP1s already? And could that be a base of registry data that can also, that will also accrue to help support this combo therapy approach you're moving forward with? Yeah, it's a very good question, Josh. We're seeing this happen organically in the field.

That's great to hear about the moving forward with it.

Speaker Change: The trial for the <unk> program and <unk> Windows.

Hoping to just hear from you.

Speaker Change: <unk>.

Speaker Change: The current.

Speaker Change: Algorithm that you're seeing.

Speaker Change: <unk> adapters of the jewelry on balloon in BCS are.

Speaker Change: Alright.

Speaker Change: Following.

Speaker Change: Are you seeing.

Speaker Change: Centers adopt.

Speaker Change: And realizing the synergies of jewelry on program, plus low where normal dosing GOP ones are already in and could that be a base of registry data that can also that will also accrue to.

Speaker Change: To help support this combo therapy approach here Youre moving forward with.

Josh: Yes, it's a very good question, Josh we're seeing this happen organically.

Josh: In the field and in fact.

Shantanu Gaur: And in fact, the retrospective data that we presented a few months ago was a result of low-dose GLP-1s being used in combination with Allurion organically by one of our physician partners in Italy. I was actually on the phone yesterday with one of our physician partners in Mexico who told me that he is opening up a new branch to his clinic that is going to focus on prescribing GLP-1s. He feels like that's going to do two things. And he's a bariatric surgeon by training. He feels like that's going to bring more patients into the front door.

Josh: Retrospective data that we.

Josh: Presented a few months ago was a result of low dose <unk> is being used in combination with a very on organically by one of our physician partners in Italy, I was actually on the phone yesterday with.

Josh: One of our physician partners in Mexico, who told me that he is opening up a new branch to his clinic that is going to focus on prescribing <unk>. He feels like that's going to do two things and he is a very hatrick surgeon by training. He feels like that's going to bring more patients into the front door, but also he knows.

Shantanu Gaur: But also, he knows that as patients escalate their GLP-1 dose, their adherence drops, they have side effects, and they want to go back down to a low dose, which, of course, will impact their overall weight loss. And he's well-positioned to plug in the Allurion balloon into those patients as part of his treatment algorithm. So we're seeing it happen in markets where GLP-1s have matured. And that's what gives us confidence that this prospective trial that we are doing is going to speak to a lot of physicians around the world who are probably doing something very similar in their practice.

Josh: As patients escalate their GMP, one dose their adherence drops they have side effects and they want to go back down to a low dose which of course will impact their overall weight loss and he is well positioned to plug in delivery on balloon.

Josh: Those patients as part of his treatment algorithm. So were seeing it happen in markets, where <unk> ones have matured and Thats what gives us confidence that this prospective trial that we're doing is going to speak to a lot of physicians around the world who are probably doing something very similar.

Josh: In their practice on a go forward basis, even after this prospective trial has done one of the strengths of the virtual care suite is that.

Shantanu Gaur: On a go-forward basis, even after this prospective trial is done, one of the strengths of the virtual care suite is that physicians and their teams can input in the virtual care suite the treatment regimen that they are using. So for a patient who gets the Allurion balloon, if that patient starts on a low-dose GLP-1 with a check of a box, the physician and their team can put into our system that the patient has started semaglutide or trizepatide at a specific dose, which then allows us globally to track this performance. So I suspect that there's going to be a lot of this combination therapy happening in the field.

Josh: Physicians and their teams can input in the virtual care suite the treatment regimen that they are using so for a patient who gets the hilary on balloon if that patient starts on a low dose <unk> one with a check the box the physician and their team can put into our system that the patient has started summit was tied her tours appetite at a specific.

Josh: Dose, which then allows us globally to track. This performance. So I suspect that there's going to be a lot of this combination therapy happening in the field and we will have that data at our fingertips through the virtual care suite, but also through some of these more structured clinical studies and registries that we can launch and the <unk>.

Josh Jennings: And we will have that data at our fingertips through the virtual care suite, but also through some of these more structured clinical studies and registries that we can launch. understood.

Josh: Sure.

Josh: Understood and just one last one I think you've already addressed this but just to.

Shantanu Gaur: And just one last, I think you've already addressed this, but just to make sure we understand the layers of, I guess, sequential revenue performance to get you to the full year guidance. I mean, all the work you've done on the commercial reorganization and the commercial strategy on a go-forward basis seems sound, but maybe just help us think through the cadence of the improvement in sales over the next couple of quarters in 2025, and include just how you see the recovery in France going. Thanks so much. Thank you. Thank you, Josh. So when it comes to the rest of this year, we expect to see a steady increase in revenue as the year goes on.

Josh: Make sure we understand the layers of I guess sequential revenue performance to get you to the full year guidance.

Josh: And all the work you've done on the commercial reorganization.

Josh: Strategy commercial strategy on a go forward basis.

Josh: Sounds like maybe maybe just help us think through the cadence of.

Josh: The improvement in sales over the next couple of quarters in 2025 and include just how you see the recovery in Transco alright. Thanks, so much.

Josh: Thank you. Thank you Josh so when it comes to the rest of this year.

Josh: We expect to see a steady increase in revenue as the year goes on that's really being driven by.

Shantanu Gaur: That's really being driven by onboarding of new sales team members, much of which is happening this quarter and at the end of the previous quarter. And as those sales reps get up and running and onboard, we expect them for the specific. second half of this year. Also, you know, as I mentioned on the call, we've had good success with our pilot clinics, who are really focused and buying in to our strategy, as we get new sales reps onboarded, they are going to be able to roll out that same strategy that's showed success in our pilot clinics into their own territories.

Josh: Onboarding.

Josh: New sales team members much of which is happening.

Josh: This quarter and at the end of the previous quarter.

Josh: And as those sales reps get up and running and onboard we expect them to increase in productivity specifically in the second half of this year.

Josh: Also as I mentioned on the call. We've had good success with our pilot clinics, who are really focused and buying in to our <unk> strategy as we get new sales reps onboard it they are going to be able to rollout that same strategy that showed success in our.

Josh: Pilot clinics into their own territories.

Shantanu Gaur: So that's why there's a steady build throughout the year with an increase. second half of this. And when it comes to France, we're very pleased with the progress that we're making there. We have re-engaged with clinics, retrained these clinics, are updating our collateral so that we can start treating patients again. I think at least to a certain extent, we should be able to get patients treated in the second half of this year. But again, from a revenue perspective, it's really 2026 where France will be a more material place. Thanks for reviewing that.

So thats why theres, a steady build throughout the year.

Josh: And increase specifically in the second half.

Josh: This year.

Josh: And when it comes to France, we're very pleased with the progress that we're making there.

Josh: We have re engaged with clinics retrained. These clinics are updating our collateral so that we can start treating patients again.

Josh: At least to a certain extent, we should be able to get patients treated in the second half of this year, but again from a revenue perspective is really 2026, where France will be a more material contributor to overall revenue.

Josh: Thanks for repeating that.

Speaker Change: The next question comes from Kay Mackay with Chardan. Your line is open.

Keay Nakae: The next question comes from Keay Nakae with Chardon. Your line is open. Thank you. Good morning. A couple of questions about the prospective combo study. I guess the first question, any estimate of what you plan to spend for the study? Yeah, thanks for the question, Keay. You know, as I mentioned earlier, one of our goals is to... Accelerate Our Paths to Profitability, and one of the nice parts about this prospective study is that we can leverage our existing patient flow, commercial patient flow, leverage our existing clinics that are using GLP-1s in combination with the Allurion program, and also leverage the lower cost of GLP-1s overseas compared to the U.S.

Josh: Okay.

Josh: Yes.

Speaker Change: Thank you good morning, a couple of questions about the prospective combo study I guess the first question any estimate of what you plan to spend for this study.

Josh: Yes, thanks for the question Kay.

Speaker Change: As I mentioned earlier.

Josh: One of our goals is to.

Speaker Change: <unk> and accelerate our path to profitability.

Speaker Change: And one of the nice parts about this prospective study is that we can leverage our existing patient flow commercial patient flow.

Speaker Change: Leverage our existing clinics that are using <unk> in combination with the ovarian program and also leverage the lower cost of <unk> overseas compared to the U S. So we actually don't expect this prospective trial to have any material impact on our budget.

Shantanu Gaur: So we actually don't expect this prospective trial to have any material impact on our budget or overall expenses, and some of that expense will hit in 2025, and some of it will hit we will also be able to space out that expense over time.

Our overall expenses.

Speaker Change: Some of that expense will hit in 2025, and some of it will hit in 2026, so because the study is going to.

Speaker Change: Between enrollment and actual execution will take one to two years will also be able to space out that expense over time. So we're not providing a specific number at this point, but all I can say is we feel comfortable funding it with our existing budget.

Keay Nakae: So we're not providing a specific number at this point, but all I can say is we feel comfortable funding it with our... Okay, and from a regulatory perspective.

Speaker Change: Okay.

Speaker Change: A regulatory perspective.

Shantanu Gaur: As far as expanded label, is that part of the strategy or is it simply by doing a prospective study, having that data, it would support a marketing effort to utilize the combination with low-dose GLP as opposed to an end goal of an expanded label to that same effect? In the short term, Keay, I think it's more about the commercial implications of a study like this, and providing physicians additional comfort that this is a valid strategy. As I mentioned previously, a lot of this is already happening organically amongst physicians who are doing both Allurion and GLP.

Speaker Change: As far as.

Speaker Change: Expand that label is that part of the strategy or is it simply by doing a <unk>.

Speaker Change: Prospective study.

Speaker Change: Having that data.

Speaker Change: It would support a marketing effort.

Speaker Change: To utilize the combination with low dose G. L. P as opposed to the end goal of.

Speaker Change: The expanded label to about.

Speaker Change: San Jose.

In the short term K I think it's more about.

Speaker Change: The commercial implications of a study like this.

Speaker Change: Providing physicians additional comfort that this is a valid strategy as I mentioned previously a lot of this is already happening organically amongst physicians, who are doing both hilary on NGL coupons and this study will I think provide.

Shantanu Gaur: And this study will, I think, provide a bit of a cherry on top in terms of validating that approach. That being said, what we do believe that this study will also allow us is start the conversation with regulators and with payers about the merits of combination therapy, both from the perspective of increased clinical outcomes or improved clinical outcomes, longer-term weight loss, improved muscle mass. but also the health economic. of this type of approach. As you can imagine, GLP-1s at high doses cost a lot of money and are bleeding a lot of payers dry, whether they are commercial payers or even self-insured employers.

Speaker Change: Bit of a cherry on top in terms of validating that approach that being said what we do believe that this study will also allow us to do.

Speaker Change: Is start the conversation.

Speaker Change: With regulators and with payers about.

Speaker Change: The merits of combination therapy, both from the perspective of increased clinical outcomes are improved clinical outcomes longer term weight loss improved muscle mass maintenance, but also.

Speaker Change: The health economic implications of this type of approach as you can imagine <unk> ones at high doses.

Speaker Change: Cost a lot of money and are bleeding a lot of payers dry.

Speaker Change: Whether they are commercial payers or even self insured employers and so I believe that as we get closer to the U S market with some of this data in hand, it could provide a very compelling option for payers who are struggling.

Shantanu Gaur: And so I believe that as we get closer to the U.S. market with some of this data in hand, it could provide a very compelling option for payers who are struggling to cope with the high cost. and also regulators who are looking for additional options. So I do think in the long term, this data could be very useful for that.

Speaker Change: To cope with the high cost of <unk> one therapy.

Speaker Change: And also regulators who are looking for additional options for treating patients with obesity. So I do think in the long term. This data could be very useful for that but in the short term, we're really focused on the commercial and clinical impact at our existing centers.

Keay Nakae: But in the short term, we're really focused on the commercial and clinical impact at our Okay, thank you.

Speaker Change: Okay. Thanks.

Speaker Change: The next question comes from Mike <unk> with Jefferies. Your line is open.

Mike Toomey: The next question comes from Mike Toomey with Jeffreys. Your line is open. Hey guys, thanks for taking my question. I'm on for Matt Taylor. Could you talk about the procedure growth in the quarter? and maybe Procedure Growth, XFROMS, if you have that. I guess any trends you're seeing in Q2 on that procedure growth since all the tariff announcements? I know you said there's not material impact on costs, but are you seeing any impact on the procedures there? Thanks for the question. When it comes to procedure growth, now that inventory levels have really normalized globally, procedures and our top line revenue are moving in lockstep with one another.

Mike: Hey, guys. Thanks for taking my question I'm on for Tyler.

Speaker Change: Tyler.

Speaker Change: Could you talk about the procedure growth in the quarter.

Speaker Change: And maybe your procedure growth ex France, if you have that.

Speaker Change: And.

Speaker Change: I guess any trends youre seeing in Q2 on that procedure growth.

Speaker Change: So the tariff announcements I know you said there is no material impact on cost, but are you seeing any impact on the procedures.

Speaker Change: Thanks for the question when it comes to procedure growth now that inventory levels have really normalized globally.

Speaker Change: Procedures in our topline revenue are moving in lockstep with one another.

Shantanu Gaur: And so quarter over quarter, we see stability in procedure volume, ex-France in certain territories. some growth in procedure volume, and in other territories that were more dependent on that DTC marketing that we were doing in the early part of 2024, we're starting to see a recovery in procedure volume.

Speaker Change: And so quarter over quarter, we see stability in procedure volume.

Speaker Change: Ex France in certain territories, we're seeing.

Some growth in procedure volume and in other territories that were more dependent on that DTC marketing that we were doing in the early part of 2024, we're starting to see a recovery procedure volume, but on a go forward basis will really just be reporting out our topline revenue numbers, which will give you an indication of how procedure volume.

Shantanu Gaur: But on a go forward basis we'll really just be reporting out our top line.

Speaker Change: Is trending.

Speaker Change: And when it comes to France in particular.

Do expect that in.

Unknown Executive: Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: In the second half of the year, we'll start seeing some placements not nearly at the volume as they were in the second half of 2024, but they will add to our over overall global procedure volume.

Shantanu Gaur: for watching. When it comes to tariffs and their impact on our business, yes, as I mentioned, we don't expect any impact on our gross margin as a result of tariffs. And in Europe and elsewhere, we really haven't seen an impact of tariffs from a macro perspective. It's something that we're tracking very closely, obviously. But again, when it comes to the actual ground-level impact of these tariffs on consumers who are interested in weight loss, we see the... impact being fairly Okay.

Speaker Change: When it comes to tariffs and their impact on our business. So as I mentioned, we don't expect any impact on our gross margin as a result of tariffs.

Speaker Change: And in Europe.

Speaker Change: Elsewhere, we really haven't seen an impact of tariffs from a macro perspective.

Speaker Change: That we're tracking very closely obviously, but again.

Speaker Change: When it comes to the actual ground level impact of these tariffs on consumers who are interested in weight loss.

Speaker Change: See the.

Impact being fairly minimal here.

Okay, Alright, that's very clear thank you.

Shantanu Gaur: All right. That's very clear.

Shantanu Gaur: Thank you. And you mentioned the additional analysis for FDA. Was that due to any concerns that the balloon wouldn't be approved without the additional analysis, or is that just kind of normal in the process? No, it wasn't due to any additional concerns. It was actually just due to the further analysis that we did after seeing the top line data internally. And also, after presenting that data to FDA, they actually invited some of these additional analyses that frankly, work in our favor in terms of that second pre-specified endpoint. So we're very pleased that that door was opened and that we have that flexibility.

Speaker Change: You mentioned additional analysis to the FDA.

Was that due to any concern the blood wouldn't be approved without the additional analysis or is that just.

Speaker Change: Kind of normal in the process.

Speaker Change: No. It was it wasn't due to any additional concerns it was actually.

Due to the further analysis that we did after seeing the topline data internally.

Speaker Change: And also <unk>.

Speaker Change: After presenting that data to FDA.

Speaker Change: Actually invited.

Speaker Change: Some of these additional analyses that frankly.

Speaker Change: Work in our favor in terms of.

Speaker Change: That second pre specified endpoint. So we're very pleased that.

Speaker Change: That door was opened.

Speaker Change: And that we have that flexibility.

Shantanu Gaur: We were very pleased with the overall results of the trial to begin with from a safety perspective and also from a balloon performance perspective. And now that we have additional analyses that we can do when it comes to the control group, I think it just further strengthens and underscores the quality of the study and the quality of the data.

Speaker Change: We're very pleased with the overall results of the trial to begin with from a safety perspective, and also from a balloon performance perspective, and now that we have an additional analyses that we can do when it comes to the control group I think it just further strengthens and underscores the quality of the study and the quality of the data.

Shantanu Gaur: So we're feeling very good about the outcome there and what it means for the rest of the process.

Speaker Change: We're feeling very good about the outcome there.

Speaker Change: And what it means for the rest of the process with the FDA.

Speaker Change: Okay also.

Shantanu Gaur: Okay, awesome.

Shantanu Gaur: One final question just on the AI-powered virtual care suite. Impressive study results from yesterday where you combined with the GLP-1. Could you talk about when you'd expect those virtual care suite revenues to be material? Yeah, when you expect that to ramp up and be material to the top line? Yeah, I think it's a good question. The data that we presented at the European Congress on Obesity, I think really just underscores the versatility of the program, we were able to show that in combination with normal dose GLP-1s, our VCS can power higher weight loss results, it can also power better muscle mass maintenance.

Speaker Change: One final question is just on the <unk>.

Speaker Change: High powered virtual pathway.

Speaker Change: Impressive study results from from yesterday, when you combine the GOP could.

Speaker Change: Could you talk about when you would expect those virtual cash sweep revenues to be.

Speaker Change: Material.

Speaker Change: When do you expect that to ramp up pretty materially so the top line.

Speaker Change: Yes, it's a good.

Speaker Change: <unk> the <unk>.

Speaker Change: Data that we presented at the European Congress on obesity, I think really just underscores the versatility of the program we were able to show that in combination with normal dose <unk> ones.

Speaker Change: Our vcs power higher weight loss results that can also power better muscle mass maintenance and in fact muscle mass improvement as a percentage of body composition and then when you combine Larry on the BCS and balloon with high dose <unk> ones, you've got excellent weight loss, obviously in those patients they may actually experienced.

Shantanu Gaur: And in fact, muscle mass And then when you combine Allurion's VCS and Balloon with high dose GLP-1s, you get excellent weight loss. Obviously, in those patients, they may actually experience the side effects of high doses and may not be on that high dose therapy for very long. But in the short term, at least, you get two results for patients with severe obesity that are similar to what they could achieve with bariatric surgery without, as we mentioned, the risks of bariatric. What we really see from a software perspective is the U.S. most likely being the bigger contributor of our software revenue ramp.

Speaker Change: The side effects of high doses in may not beyond that high dose therapy for very long, but in the short term at least you get to results for patients with severe obesity that are similar to what they could achieve with very atrophy surgery without as we mentioned the risks are very <unk> surgery.

Speaker Change: What we really see from a software perspective is the U S. Most likely being the bigger contributor of our software revenue ramp.

Shantanu Gaur: We do have clinics overseas, large chains that are using the virtual care suite to manage all of their different weight loss patients, whether they're getting GLP-1s, our balloon, or bariatric surgery. But I really believe the bigger uptake is going to be in the U.S., especially when we combine the virtual care suite with our ability in the U.S. to prescribe GLP-1s through the Allurion MEDS platform.

Speaker Change: We do have clinics overseas large chains that are using the virtual care suite to manage all of their different weight loss patients whether they are getting <unk>, our balloon or bariatrics surgery, but I really believe the bigger uptake is going to be in the U S, especially when we combine the virtual care suite with our ability.

Speaker Change: In the U S to prescribed.

Speaker Change: <unk> through the <unk> platform.

Shantanu Gaur: So I don't expect there to be a material contribution to our revenue from software this year or early next year.

Speaker Change: I don't expect there to be a material contribution to our revenue from software this year.

Speaker Change: Or early next year, but as we start ramping in the U S. I do believe it can become a more meaningful part of our business.

Shantanu Gaur: But as we start ramping in the U.S., I do believe it can become a more meaningful part All right, great.

Speaker Change: Alright, great. Thanks for taking my questions.

Unknown Executive: Thanks for taking my question.

Speaker Change: This concludes the question and answer session I will turn the call to Antonio Guar for closing remarks.

Unknown Executive: This concludes the question and answer session.

Shantanu Gaur: I'll turn the call to Shantanu Gaur for closing remarks. Thank you very much, Operator. As we close our call today, I'd just like to extend my thanks and gratitude to everyone who's joining us today, particularly all my fellow Allurions who are on the call, who are building Allurion 2.0 side by side with me, and our loyal shareholders, of course, who have backed us for many years now. Your unwavering belief in our mission and our commitment to our company have really set us up for success. So we look forward to updating all of you on the progress that we make over the next several months.

Speaker Change: Thank you very much operator, as we close our call today I'd just like to extend my thanks, and gratitude to everyone who's joining us today, particularly all my favorable variance who are on the call who are building a very on two point or side by side with me and our loyal shareholders of course, who have backed us for many years now your unwavering belief in our mission.

Speaker Change: And our commitment to our company have really set us up for success. So we look forward to updating all of you on the progress that we make over the next several months. Thank you everyone for joining and have a great day.

Shantanu Gaur: Thank you, everyone, for joining, and have a great day.

Speaker Change: This concludes today's conference call. Thank you for joining you may now disconnect.

Unknown Executive: This concludes today's conference call. Thank you for joining.

Unknown Executive: You may now disconnect.

Speaker Change: [music].

Speaker Change: Yes.

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Speaker Change: Okay.

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