Hello, and welcome, everyone, joining today's EDAP TMS Third Quarter 2025 Earnings Conference Call. Please note this call is being recorded. It is now my pleasure to turn the meeting over to John Fraunces with LifeSci Advisors. Please go ahead.

Good morning. Thank you for joining us for the EDAP TMS Third Quarter 2025 Financial and Operating Results Conference Call. Joining me on today's call are Ryan Rhodes, Chief Executive Officer; Ken Mobeck, Chief Financial Officer; and Francois Dietsch, Chief Accounting Officer. Before we begin, I would like to remind everyone that management's remarks today may contain forward-looking statements, which include statements regarding the company's growth and expansion plans. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in such forward-looking statements. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. Now I'd like to turn the call over to EDAP's Chief Executive Officer, Ryan Rhodes. Ryan?

Thank you, John, and welcome, everyone. The third quarter of 2025 marked another strong quarter for EDAP as we continue to execute on our mission to make Focal One the standard of care for localized prostate cancer. With global revenues of USD 16.1 million, this is the second consecutive quarter with record overall quarterly revenue for the respective period. Additionally, this is also a record for HIFU revenue for the third quarter, which reflects consistent commercial execution, expanding clinical adoption, and growing recognition of the value Focal One Robotic HIFU brings to patients, physicians, and hospitals. During the quarter, our HIFU revenue reached USD 7.7 million, representing a 57% increase compared to the third quarter of last year. This is consistent with our previously announced strategy of focusing our investments in the company's core HIFU business. We recorded 8 Focal One placements, including 6 capital sales and 2 operating leases. This represents growth of 167% compared to the same period 1 year ago, reflecting the growing confidence hospitals have in adopting Focal One Robotic HIFU as an integral cornerstone of their prostate cancer program. With new placements this quarter at the University of Virginia and the University of Michigan, Focal One has now been integrated within 21 of the 35 Society of Urologic Oncology, or SUO approved fellowship programs, representing 60% of all such academic centers nationwide. Our growing presence across these leading urology centers is instrumental in training the next generation of urologists while accelerating clinical awareness and adoption of HIFU focal therapy as a mainstream treatment option for prostate cancer. Focal One procedures in the U.S. grew more than 15% year-over-year, making a return to double-digit growth. This acceleration reflects the growing clinical adoption of Focal One combined with the impact of our sustained investment in market access initiatives. We are seeing meaningful progress in reimbursement coverage with commercial payers, particularly among Medicare Advantage providers, which is driving broader patient access and stronger hospital economics. On the clinical front, an important peer-reviewed scientific study was recently published in the Journal of International Urology and Nephrology. This study concluded that HIFU delivered non-inferior 10-year oncological outcomes compared to external beam radiation therapy in patients with Stage II prostate cancer. Both the overall survival and cancer-specific survival rates were higher in the HIFU group, with a statistically significant overall survival benefit favoring HIFU in early-stage disease. This is an important addition to the growing body of evidence supporting HIFU in the treatment of prostate cancer. While both the HIFI and FARP studies are already showing strong midterm cancer control compared to surgery, this new publication further validates HIFU with favorable long-term follow-up data compared to radiation therapy. Together, these results continue to strengthen the clinical foundation for the Focal One platform and HIFU's role in the treatment of localized prostate cancer. On the reimbursement front, the latest hospital and physician payment rules released by the Center for Medicare and Medicaid Services, or CMS, continue to reinforce the important use case of HIFU, thus providing hospitals and physicians with a clear and predictable Medicare reimbursement pathway. In addition, several commercial payers, both local and national, have started to routinely approve individual claims around the country, particularly within Medicare Advantage plans, further reinforcing the positive economics driving adoption. I will now briefly touch on our development in focused areas to expand into new clinical indications. We are making meaningful progress in our benign prostatic hyperplasia, or BPH clinical development program, which represents another major growth opportunity for the company. While our combined Phase I/II multicenter study is progressing to plan in Europe, we are proud to report Institutional Review Board, or IRB approval for the U.S. BPH clinical study in partnership with the Icahn School of Medicine at Mount Sinai in New York City, a prestigious academic hospital and recognized leader in urology innovation. This study will evaluate the use of Focal One Robotic HIFU for the treatment of BPH, building further on our clinical experience in Europe. Our goal is to demonstrate that Focal One's precision and image-guided approach can offer an effective noninvasive tissue-sparing alternative to conventional treatment options. We expect the first patient to be enrolled in this study before the end of the year. I would now like to provide a brief update on our endometriosis clinical evidence and commercialization progress. Starting first with clinical evidence. On October 20th, Professor Dubernard, the principal investigator of the Phase III randomized controlled trial, previewed the latest clinical data in the plenary session on endometriosis at the Annual Meeting of the European Society for Gynecological Endoscopy, or ESGE. As previously announced, the double-blind Phase III RCT compared patients treated in the HIFU group with patients assigned to a sham treatment group. Patients treated in the HIFU group reported a significant improvement across their various symptom scores at 3 months. Such improvements were maintained at the 1-year follow-up. Over the same period, the majority of the patients in the sham group returned to baseline symptom levels, similar to when they were enrolled in the beginning of the study. After unblinding, over 85% of the patients from the sham group, when given the option, elected to undergo a Focal One HIFU procedure to treat their condition. As noted at 3 and 6 months post HIFU treatment, this group reported a significant improvement in their symptoms. These patients continue to be monitored as part of a long-term follow-up clinical study. On the commercial front, we are actively working with leading European centers in a limited launch phase. The goal is to establish a solid foundation to enable the expanded adoption of Focal One HIFU as a noninvasive treatment option for women suffering from deep infiltrating endometriosis. Finally, during the quarter, our teams maintained a strong visible presence across multiple global scientific urology meetings. These meetings allow us to showcase our latest Focal One Robotic HIFU platform as the leading focal therapy technology. Urologists were able to attend numerous compelling presentations from world-renowned academic users on both the positive clinical benefits and the supporting scientific outcomes. Of particular importance was the World Congress of Endourology and Uro-Technology, or WCET meeting held in Phoenix, Arizona. This meeting featured a Focal One master class led by expert users as well as a semi-live Focal One procedure. During this event, Focal One received the 2025 Industry Award for innovations in Endourological Instrumentation. This prestigious international award given by the Endourological Society acknowledges our innovation leadership in Robotic HIFU technology. Focal One is the first focal therapy technology to receive this distinguished award. I will now turn the call over to Ken to review our third-quarter results.

Thank you, Ryan, and good morning, everyone. For conversion purposes, our average euro-dollar exchange rate was $1.16 for the third quarter of 2025. As Ryan mentioned earlier, our record revenue for the third quarter was driven by significant strength in our core HIFU business, which grew 49% over the third quarter of 2024. Growth in our HIFU business was offset by an expected continued decline in our noncore distribution and ESWL businesses, which declined by 16% in Q3 2025 versus Q3 2024. Total revenue for the third quarter of 2025 was EUR 13.9 million, an increase of 6% compared to total revenue of EUR 13.1 million for the same period in 2024. Total HIFU revenue for the third quarter of 2025 was EUR 6.7 million compared to EUR 4.5 million for the third quarter of 2024. The 49% year-over-year increase in HIFU revenue was driven by 6 Focal One capital sales in the third quarter of 2025 versus 3 capital sales in the prior year, as well as a 26% year-over-year increase in Focal One treatment-driven revenue. As mentioned earlier, Focal One procedures in the U.S. grew 15% year-over-year. For the 9 months ending September 30, 2025, HIFU revenue was EUR 21.3 million, an increase of 42% over the same period in 2024. Total revenue for the 9 months ending September 30, 2025, was EUR 43.5 million compared to total revenue of EUR 43.8 million for the same period in 2024. Gross profit for the third quarter of 2025 was EUR 6 million compared to EUR 5.2 million for the same period a year ago. Gross margin was 43% in the third quarter of 2025 compared to 39.4% for the same period a year ago. The increase in gross margin year-over-year was primarily due to the strategic shift to our high-margin HIFU business segment. Gross profit for the 9 months ending September 30, 2025, was EUR 18.5 million compared to EUR 17.5 million for the same period in the prior year. Gross margin was 42.5% for the 9 months ending September 30, 2025, versus 39.9% for the same period in the prior year. Operating expenses were EUR 10.9 million for the third quarter of 2025 compared to EUR 11 million for the same period in 2024. Operating expenses were EUR 35.2 million for the 9 months ending September 30, 2025, compared to EUR 34.3 million for the same period in 2024. Operating loss for the third quarter of 2025 was EUR 4.9 million, approximately EUR 1 million lower than the operating loss of EUR 5.8 million in the third quarter of 2024. Operating loss for the 9 months ending September 30, 2025, was EUR 16.7 million compared to an operating loss of EUR 16.8 million for the 9 months ending September 30, 2024. Excluding the impact of noncash share-based compensation, operating loss for the third quarter would have been EUR 4.1 million compared to an operating loss of EUR 5 million in Q3 2024. Net loss for the third quarter of 2025 was EUR 5 million or EUR 0.13 per share, a EUR 1.4 million improvement compared to a net loss of EUR 6.4 million or EUR 0.17 per share in the same period a year ago. Net loss for the 9 months ending September 30, 2025, was EUR 17.7 million or EUR 0.47 per share compared to a net loss of EUR 17.1 million or EUR 0.46 per share for the 9 months ending September 30, 2024. Turning to the balance sheet. Inventory decreased to EUR 13.8 million in Q3 compared to EUR 15.5 million in the prior quarter. The sequential decrease in inventory was due to continued focus on just-in-time inventory management. Total cash and cash equivalents at the end of Q3 2025 were EUR 10.6 million compared to EUR 16.3 million in the prior quarter. The sequential decrease was driven primarily by the cash used in operating activities to support strategic investments in HIFU. As announced earlier, we closed the credit facility with the European Investment Bank, which further strengthens our balance sheet. We are pleased to report that the first tranche of EUR 11 million, approximately USD 13 million was received and will be reflected in our Q4 and full year 2025 financial statements. I will now provide a brief update on tariffs. Based on the latest information, we are still forecasting a 15% tariff impact for all goods transferred between France and the U.S. On a year-to-date basis, the tariff impact to our business has been approximately EUR 300,000, and we are currently estimating a full year impact of EUR 900,000. We continue to monitor the potential impact of U.S. tariff policies on a go-forward basis. In closing, during the quarter, we improved manufacturing efficiencies, optimized supply chain performance, and managed our operational spend. We are also making significant progress in our transition to a new supplier regarding our ultrasound imaging scanner and expect to see the cost reduction impact in the upcoming calendar year. These achievements lay the foundation for future growth.

Thank you, Ken. With respect to guidance, we are maintaining our financial guidance for 2025. Our core HIFU business revenue is expected to grow within the range of 26% to 34% year-over-year, and our combined noncore ESWL and distribution business revenue is expected to decline within the range of 25% to 30% year-over-year. As we progress through the fourth quarter, our priorities remain clear: first, accelerate adoption and utilization across our Focal One installed base; second, continue expanding market access and reimbursement coverage; and third, maintain a disciplined investment approach specific to market growth opportunities. With the return to double-digit U.S. procedure growth and expanding presence at top academic centers, as well as leading community hospitals and the recent recognition of our innovative Robotic HIFU technology, we drive forward in Q4 2025 with strong momentum and clear visibility for continued growth across our HIFU business. With that, I will now turn the call over to the operator for questions.

We'll take our first question from Charles Wallace with H.C. Wainwright.

This is Charles on for RK. So, I guess the first question I had was on the EIB deal. Could you maybe give a little bit more color on how these proceeds are going to be used and what was the kind of the main reason to do this? Was it just to provide more financial flexibility? And do you plan to use these funds strictly for the U.S. business or also in the international business?

Yes, great question. With EIB, we've been open about our investment strategy, both in various areas to include product development which is inclusive of R&D, but also in clinical development as we're working on expanding new indications. And so really, it's more in those operating areas. And some, obviously, in the commercial domain, we make appropriate investments where needed. But really, it's across those 3 areas: product development, inclusive of R&D; clinical development; and some additional focus in commercial growth. But it is centered around our HIFU core business.

And to follow up and to answer the second part of your question, why the EIB. We did a lot of research and analysis. And given where the stock has been trading over the last 180 days, we thought this was the most attractive financing option to really allow us to further invest in HIFU, as Ryan mentioned, with no short-term dilution to the stock.

Great. And then I guess you mentioned the double-digit increase in U.S. Focal One procedures. Can you comment on how many of these procedures were covered? And then also, as you work to expand coverage, do you expect the procedure volume to grow?

Yes. So again, we have a Category 1 CPT code. Some of these cases are obviously Medicare patients. Some are also noted in, as I referenced, Medicare Advantage plan patients and some are commercial patients. So it's a little bit of a mix. I think the one area that I commented on was the fact that we saw improvement across the payers that represent Medicare Advantage plans. And that was a positive sign and a positive trend we've been on. And again, we believe looking forward, we will continue to drive momentum and activity across Medicare Advantage plans.

Great. I have one more question if I can fit it in. Could you remind us what you expect in the fourth quarter, as the third quarter is usually seasonally soft?

As we approach the fourth quarter, we are reaffirming our guidance for the year as discussed by Ryan. Our forecast remains between $58 million and $62 million for calendar year 2025. Although we do not provide quarterly guidance, we are confident that our Q4 results will fall within that range, helping us achieve our year-end targets.

There are no further questions in the queue. I will now turn the call back over to Ryan Rhodes for any additional or closing remarks.

In closing, I want to thank everyone again for joining us on today's call, and we look forward to seeing you at the upcoming global investor conferences. These include the UBS Global Healthcare Conference being held next week in West Palm Beach, Florida; the Jefferies Global Healthcare Conference in London being held the week of November 17th, and the Piper Sandler 37th Annual Healthcare Conference being held the week of December 1st in New York City. Thank you.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.