Good afternoon and welcome to the PROSEP BiRobotics fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session toward the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to Matt Basco, Vice President of Investor Relations, for a few introductory comments. Please go ahead.

Good afternoon, and thank you for joining ProCEP Biorobotics' fourth quarter 2025 earnings conference call. Presenting on today's call are Larry Wood, Chief Executive Officer, and Kevin Waters, Chief Financial Officer. Before we begin, I'd like to remind listeners that statements made on this conference call that relate to future plans, events, or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. While these forward-looking statements are based on management's current expectations and beliefs, these statements are subject to several risks, uncertainties, assumptions, and other factors that could cause results to differ materially from the expectations expressed on this conference call. These risks and uncertainties are disclosed in more detail in ProCEP Biorobotics filings with the Securities Exchange Commission, all of which are available online at www.sec.gov. Listeners are cautioned not to place under reliance on these forward-looking statements, which speak only as of today's date, February 24, 2026. Except as required by law, ProCEP Biorobotics undertakes no obligation to update or revise any forward-looking statements to reflect new information, circumstances, or unanticipated events that may arise. During the call, we will also reference certain financial measures that are not prepared in accordance with GAAP. More information about how we use these non-GAAP financial measures as well as reconciliations of these measures to their nearest GAAP equivalent are included in our earnings release. With that, I would like to turn the call over to Larry.

Before discussing our fourth quarter results, I want to share context on progress since joining the company as CEO. When I joined ProCEP, I outlined an immediate near-term plan for the organization that I believe was critical to positioning the company for its next chapter. It was essential to move with a clear vision, a strong sense of urgency, and a culture grounded in discipline and accountability. Historically, ProCEP executed effectively in its first chapter of growth. That work created the foundation the company benefits from today however as the company evolves so do the requirements for success the next stage of process development requires shifting the operational focus towards increasing procedure volume expanding margins and achieving profitability and gaining market share at the same time we must deliberately build an organization that supports both near-term performance and long-term sustainable growth we recently made two changes to our commercial organization that we believe are strategically important for long-term performance. First, we have realigned our commercial team into an integrated regional structure where our clinical and sales functions now report to a common regional leader. The new structure creates a single point of accountability at the regional level to ensure clinical and commercial activities are coordinated around customer success and procedure growth. Second, we formed a dedicated launch team by reassigning a small number of our top performers to focus specifically on new system placements. The intent is to drive more consistent launches, reduce variability and activation, and accelerate time to value for customers because we see launches as a key lever to improving downstream utilization and performance. In the near term, the sales realignment and formulation of the launch team creates some short-term disruption. Certain account coverage has changed and temporarily we have fewer tenured resources in the field as we stand up the launch team. We view this as a normal transition period as teams ramp, establish account relationships, and standardize new operating processes. Importantly, we believe these changes better position us for sustained high growth through clearer leadership, better alignment, and more repeatable launches. We will continue to manage through this transition thoughtfully, and we expect the benefits to build as the organization settles into the new model. Now, turning to fourth quarter results, in the fourth quarter, we completed 12,200 procedures, reflecting approximately 69% annual growth. On the third quarter earnings call, we reduced our previously issued Q4 guidance by 1,000 handpiece units as we reestablished customer inventory targets that we felt were appropriate based on usage volume. Separate from establishing inventory targets, it became clear as the quarter progressed that accounts had become accustomed to purchasing large quantities of handpieces and receiving bulk discounts in the final weeks of the quarter. I've always believed pricing discipline is foundational to long-term success. At ProCEP, I've been focused on implementation of handpiece price discipline, and as part of that, we eliminated the historical practice of providing discounts on bulk purchases, particularly at the end of the quarter. Despite customer requests, we remained discipline and did not allow bulk purchases at a discount. As a result, handpiece unit sales were approximately 80% of procedures in the fourth quarter, and for the first time, procedures exceeded handpieces sold. While this resulted in lower than expected revenue, it delivered a significant improvement in handpiece selling price. Average fourth quarter selling price was $3,340 or up 140 or approximately 5% sequentially from the third quarter. Historically, handpiece unit sales exceeded procedure volumes by approximately 8% to 16%. Based on the last several months, we now expect handpiece unit sales and procedure volumes to be in close alignment on a go-forward basis with sustained improvement in handpiece average selling prices. These business practice changes resulted in a reduction of our projected 2026 handpiece revenue. The revenue impact is meaningfully offset by the increase in handpiece average selling prices. Based on the combination of these factors with the short-term disruption associated with the sales force realignment, we are now resetting 2026 guidance to $390 to $410 million, representing annual growth of 27 to 33%. Before I turn it over to Kevin to walk through the financials, I want to close by previewing what to expect at our investor day tomorrow morning. For the first time since the IPO nearly five years ago, we will provide a more detailed multi-year look at our financial guidance, including more details on 26 and 27, our path to profitability, and an update on the WATER4 prostate cancer trial, as well as a vision for our future. I hope to see everyone there. With that, I'll hand it over to Kevin to walk through the financials for the quarter.

Thanks, Larry. Total revenue for the fourth quarter of 2025 was $76.4 million, representing 12% year-over-year U.S. revenue for the quarter was $66.6 million, reflecting 10% growth compared to the prior year period. Turning to U.S. procedures. As noted by Larry, we completed approximately 12,200 U.S. procedures in the fourth quarter of 2025, representing approximately 69% year-over-year growth. Handpieces sold totaled 9,400 units at an average selling price of approximately $3,340 during the quarter, reflecting a 5% price increase compared to the third quarter of 2025. Other consumable revenue totaled $2.3 million in the fourth quarter. As a result, total U.S. handpiece and other consumable revenue was $34 million in the fourth quarter of 2025, representing 16% growth compared to the fourth quarter of 2024. Turning to U.S. robot placements. In the fourth quarter, we sold 65 new hydro systems. At the end of 2025, we had an installed base of 718 systems, representing a 42% increase compared to year-end 2024. Total U.S. system revenue was $27.6 million in the fourth quarter, comparable to the prior year period, with systems sold at an average selling price of approximately $425,000. International revenue in the fourth quarter of 2025 was $9.8 million, representing year-over-year growth of 25%. Moving down the income statement, gross margin for the fourth quarter of 2025 was 60.6% compared to 64% in the fourth quarter of 2024. The approximate 450 basis point shortfall compared to fourth quarter guidance was driven primarily by lower than expected U.S. consumable revenue, as well as a one-time voluntary field action that contributed approximately 240 basis points of pressure. On a full year basis, 2025 gross margin was 63.7% compared to 61.1% in 2024. Total operating expenses for the fourth quarter of 2025 were $77.4 million compared to $63.4 million in the prior year period. The increase reflects continued investment to support commercial expansion, continued innovation across our BPH platform technology, and increased funding for our Water 4 prostate cancer trial, positioning us to drive long-term growth and expand our clinical and technology Net loss for the fourth quarter of 2025 was $29.8 million compared to a net loss of $18.9 million in the fourth quarter of 2024. Adjusted EBITDA was a loss of $19 million in the fourth quarter of 2025 compared to a loss of $10.3 million in the prior year period. Cash, cash equivalents, and restricted cash totaled $285 million as of December 31, 2025, providing a strong balance sheet to support our strategic priorities. Moving to our 2026 financial guidance, we now expect full-year 2026 total revenue to be in the range of approximately $390 to $410 million, representing growth of approximately 27% to 33% compared to 2025. This guidance range assumes international revenue to be in the range of 50 to 51 million dollars. Additionally, we now expect 2026 total U.S. procedures to be in the range of 60,000 to 64,000, representing growth of approximately 39 to 48 percent. As Larry noted, the adjustment to our 2026 revenue guidance is driven by a few factors. As a result of our business practice changes, we now expect handpiece unit sales to be closely aligned with procedure volumes, which results in a reduction in 2026 handpiece revenue. This revenue reduction is meaningfully offset by the increase in U.S. handpiece average selling prices, which we now estimate to be $3,500 in 2026. Our updated guidance incorporates both factors above, in addition to the short-term disruption of our sales organization, as discussed by Larry. Importantly, our 2026 outlook does not change our confidence in the company's long-term growth and profitability trajectory through 2026 and 2027. Turning to gross margins, we expect full-year 2026 gross margin to be approximately 65%, which includes $5 to $6 million of tariff expense, compared to $1.3 million in fiscal 2025, which is an approximate 100 basis point headwind to 2026. Turning to operating expenses, we expect full-year 2026 operating expenses to total $350 $50 million, representing a 17% increase compared to 2025. After considering all relevant factors, we expect full-year 2026 adjusted EBITDA loss to be in the range of $30 to $17 million. Our revised revenue guidance reflects positive EBITDA in the fourth quarter of 2026 at both the low and high ends of the revenue range. For the first quarter, we expect total U.S. procedures to be in the range of $12,000 to $12,800, representing growth of 29 to 37 percent. This anticipates the implementation of multiple commercial initiatives designed to drive more durable and sustainable procedure growth. As these initiatives take hold, we expect procedures to accelerate, reaching growth of over 50% in the second half of the year compared to fiscal 2025. We expect total revenues for the first quarter of 2026 of $79 to $82 million, representing growth of 14 to 19%. Included in our total first quarter revenue guidance is U.S. system revenue of approximately $20 million and $10 million of international revenue. I would now like to pass back to Larry for closing comments.

Thanks, Kevin. While financial performance in the fourth quarter was lower than anticipated, the changes we have made are critical to driving sustainable high growth and paving a clear path to profitability. We are very excited to share more details on 2026 and beyond at our investor conference tomorrow morning at 8 a.m. Eastern. With that, we are happy to take questions. Operator?

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Please stand by while we compile the Q&A roster. Our first question comes from Matthew O'Brien with Piper Sandler.

The floor is yours.

Afternoon. Thanks for taking my questions. I think we can too. But the first one up front here is, you know, just I think, Larry, everybody knew that the quarter was going to be soft on the handpiece side, but the level of softness here just wasn't anticipated. So maybe just talk a little bit more about what unfolded in Q4. And specifically, did you flush, just looking at some of the math, did you flush about 4,000 handpieces in Q4 on the inventory side? And then I do have a follow-up.

Yeah, I think there should be some destalking, but that was really about establishing par levels for accounts based on their usage. And I think directionally that the thing that came to light following bulk purchases and when it just didn't make it made sense for us, without that incentive, customers no longer, the big thing is it had two ASP. We saw our ASP. It's going to improve our docking patterns or bulk purchases. And so a procedure volume. But I think the big thing about a one-to-one ratio.

Okay, appreciate that. and then as far as the guide goes for 26 it's obviously back and loaded you know i've been looking at the q1 commentary it it's just it's still you know it's the toughest your toughest count for the years for our 10 pieces go but but you know it's pretty modest so it just seemed like the impact from the commercial reorg is still going to be influencing q1 i guess why such confidence that that you're going to see this benefit towards the back half of the year um you You know, because I just don't – I'm just hoping we don't have to cut the expectation for the full year again. Thanks so much.

Yeah, no, thanks, Matt. And we put up a range in, you know, trying to give guidance on where – another thing, though, is we did just – you know, we have people covering different accounts. We just wanted to signal that there's – you know, that's going to take a little bit of time for it to mature. But we do think these are going to be people that are just dedicated solely on procedure growth in their territories, crafted by launches, and then having dedicated launch teams, we do feel that that's going to pay half of the year rather than the front half of the year. And your early procedure volumes, we focused on handpiece revenue. But tomorrow, we're going to walk through all of that in detail and I think give you all the components about how confident you could be in our plan.

And I just want to follow on to Larry here about this. This is Kevin. And we're going to go through this, as Larry mentioned, tomorrow to give a full cohort analysis into your concern or question around the low end of the range. We're going to provide everybody with comfort that at the low end of the range, we are only expecting very modest utilization growth in our legacy install base. We're actually going to show you that tomorrow to directly answer your concern that you just brought up.

Okay. Thanks so much.

Thank you for your question.

Our next question comes from the line of Chris Pasquale from Nephron Research. The floor is yours.

Thanks. It looks like handpiece sales exceeded procedure volumes by a little over 10,000 units over the past three years, including this quarter's drawdown. So, what gives you confidence that the ratio is going to be one-to-one in 26?

Why shouldn't the rest of that gap need to be closed? yeah thanks thanks for you know when we look at the history here empty sales you know have been about 180 volume and now we're modeling that at one to one empty sales and 100 of procedures like we historically had then that would have been worth a little over 20 million dollars probably 20 22 million dollars but again i think the long-term health of our business is going to be focusing on procedure growth and having steady stable procedures pretty much and i think that's gives us confidence that that's that the one-to-one ratio is going to be okay and then uh kevin you talked about the gross margin impact of a field action in the quarter could you just give us some details around what that was and is that impact contained to the fourth quarter yeah all action and here's what it was it was a one time there were no patient safety issues there were no concerns between the hand piece and what we did was we were just made the appropriate change it was approximately a million and a half dollars but as larry said one time and it will not impact

Thank you for your question.

Our next question comes from Josh Jennings of TD Cowan. The floor is yours.

Hi. Thank you for taking the questions. I was hoping to just get a better understanding of the fourth quarter dynamics and the go-forward outlook just on ending the bulk end-of-quarter bulk purchase deals that were offered previously. Are you seeing any customer dissatisfaction, and do you anticipate that some high-volume or medium-volume or even low-volume centers will decrease their utilization, at least in the short term, until these higher handpiece prices are digested?

Yeah. Thanks, Josh. We don't anticipate that, and we haven't seen that. I think we're waiting us out to see if we bring back these incentives before the end of the quarter and we didn't, but we've seen the ordering patterns and, you know, survey in Q1 and even though, again, we're, the idea of bulk discount or anything else.

Understood. And you took, you made some comments, Larry, just on the, some disruption just in the commercial org or the commercial restructuring. Just wanted to hear about just the stability of the Salesforce and some of your all-star are clinical specialists and reps on the capital side as well. I mean, is it relatively stable? Are you seeing any attrition? Are you planning on adding to the team as you move forward in 2026 and beyond? Thanks for taking the questions.

Yeah, thanks, Josh. Yeah, no, I think our team's been stable. We haven't seen any higher attrition. When I talk about the disruption, it's not about losing people. And, you know, I'll just put on what we did to create the launch teams is we took some of our most tenured people, some of our most seasoned people, and we moved them over to the launch team because we really want launches to go well, and where we thought they should So we really want to focus on these launches and make sure they go well, make sure teams have all the support and they deliver spectacular outcomes for their patients, especially in those first early procedures. In creating those launch teams, though, we took some of our best people out of the utilization team, the procedure support team, and in doing that, we backfill those positions, we have people in place on those, but they have to rebuild relationships with those customers. You don't have somebody that maybe has a longstanding relationship. And we also realign territories that we think allow us to better service our customers and drive the growth. But whenever you do that, you know, people have to reestablish relationships and do all those things, and that's just what we're going through now. But, you know, this isn't anything that's unique to us. When I was at Edwards and we used to split territories and hire new reps, you had new people calling on unestablished accounts, and it takes time for them to build those relationships. So I see this as being very transient, being very normal. We just did a lot more of it all in one fell swoop rather than the normal course.

I appreciate the extra detail.

Thank you.

Thank you for your question.

Our next question comes from the line of Richard Newwitter of Truist Securities.

The floor is yours.

Hi, thanks for taking the question. I have two. The first one, just on systems, I think you had said a $425,000 ASP or blended ASP. You did 65 systems. So can you just tell us what the kind of the greenfields were? Were there any operating leases in there and trade-ins, et cetera? And then for 2026 on systems, I don't think you gave an explicit placement number. I think the street's at around 220-something for the year. Doing the math, it would suggest you're basically kind of – or I think that's what you're backing into. Can you confirm that and then have a follow-up?

Yeah, I'll start with the pricing. You know, our capital, compared to what we saw, I think we're modeling green fields to be very – walk through roughly flat systems.

Okay. And then, you know, Larry, just starting from the first quarter or fourth quarter of last year, even, I know this predates you, you know, there were some seemingly transient or as explained to us was transient externalities, things like the hurricane, the impact on solution, et cetera. And then there were some one-time factors as we moved through the year. And then you, on your last call, obviously prepared us for the stocking component and trying to get that right. Now, it seems like there was some discounting. I guess, you know, with respect to kind of where we are today and what you see in the business going forward, what can you tell us about the health of the actual underlying demand for procedures? Is there anything with the reimbursement changes, doctor usage patterns, you know, is it all in fact self-inflicted type items that are leading to the drawdown here or the lower consumable forecasting? You know, I think there's just been a lot of consecutive kind of noise around procedures, and now we're entering a period where there's some internal self-help factors. So, you know, how can you get people confident in your visibility, the ability to execute on this new, you know, seemingly reset level, and that there's nothing underlying on demand side of the penetration curve that's just, you know, you're bumping up against the wall?

Yeah. Yeah, thanks for the question. And I want to handpiece revenue. The revenue shortfall wasn't really driven on the procedure side. It really was about the customer ordering behavior. and these discounts of people stocking up at the end of a quarter and then depleting, going into the next quarter, which was leading to very lumpy sales. And, you know, again, I reviewed that practice with the team, and we just looked at it hard and said, I don't think this makes any sense for us. And if you look at the ASB that we're modeling for next year, I think that's where we're going to get the benefits from. And to some degree, you know, I traded off, you know, continues this ordering cycling at discounts for having more ASB and a study. I just think these are foundational, fundamental things that needed to happen. But I feel very strongly that these things are behind us. We've talked about the Salesforce reorganization that I expect to improve our execution around procedure growth. And we're going to talk tomorrow about what our value proposition is for occupation in the clinical community and make the investor conference tomorrow or watch online. Price is just something that's always a key area of focus.

Thank you for your question. Our next question comes from Brandon Vasquez from William Blair.

The floor is yours.

Hey, everyone. Thanks for taking the question. Larry, you know, in a story like this, I mean, ideally, we're trying to put this behind us and, you know, use the analogy of ripping the Band-Aid off in one quarter. I think what investors often try to grapple with here is that meaningful changes to the commercial side or big inventory changes like this typically aren't a one-quarter, one-and-done, but it feels like you guys have some of the confidence that, in fact, you're going to just continue growing through the year despite some of the noise going on and even some of the externalities that Rich was talking about that have been impacting the business for a little bit. Maybe you could spend another couple minutes on, you said it's been a couple of weeks that you guys have been doing some of these new initiatives. Any metrics you can give us on what's already being done in the early days that's kind of giving you the confidence that this is done, that there's not going to be another thing that we need to change on a go forward basis?

Thanks for the question. Increase our installed base, which is why I said there's probably a little more upside than downside. But again, I think our focus, we can get the team moving forward and drive the organization the way that we need to drive it with a multi-year plan and some of these things. And that's what we've done. And it's a big organization change. It's happened into our 2020.

Okay. And switching gears a little bit, but just because this will probably start to come up a lot in investor conversations going into the quarter, of course, I'm sure you guys have heard that a lot of noise around PAE, given the reimbursement there, and a lot of experts doing, or a lot of urologists doing more PAE cases these days. You gave the procedure numbers, which is super helpful, but maybe talk to us a little bit what you're seeing in the field and help us bridge, like, you know, you call 10 urologists and nine out of 10 of them are doing more PAE, yet your procedures are still growing. Kind of give us the lay of the land of how you're seeing aquablation and PAE playing out in the field. Thanks.

Yeah, no, thank you. You know, we're going to provide more detail on procedure trends at the investor. We're still very active with more than $400,000. As a result, we don't see it changing the long-term competitive dynamic for patients.

Thank you for your question. Our next question comes from Siraj Khalia from Oppenheimer & Co. The flow is yours.

Hi, Larry. Can you hear me all right? So, Larry, I want to follow up on Chris's question. Obviously, the math is the math in terms of inventory in the field. I guess if I could come at it from a different angle, Larry, look, the board signed off. The audit committee had to sign off on the previous sales process right now a completely new process has been instituted my question larry would be why now why couldn't this be staged and what specific thing has triggered you know the audit committee everyone to say okay we bless this this is the path to go and And now is the time to do this.

Well, you know, look, one of the things that we've talked about, and we'll show more detail on it tomorrow, is if we look over the last four or five years, the handpiece, it wasn't until we watched these incentives were really driving the customer stocking behavior. And I think the hard thing to do, to be at a 30 plus, it's going to pay dividends as we think about our path to profitability and improving our margins. And so, you know, the idea that you would try to, like, whittle these things down and bleed this thing off over many quarters, it was just going to be a headwind that we, you know, frankly would have to keep talking about and just gradually do it. And I think we would not have seen the ASP. We just made the decision. The impact that it has to ASP next year is so significant. To me, again, building these foundational pieces for the long term, I think we also wanted to recondition our customers that these practices are behind us. And then we're not going to be doing these things anymore. And so they can just order based on their procedural usage rather than ordering on other things. And none of the changes we've made impact are future growth trajectory, attempting to try to bleed this stuff over time. But then I think you just continue to fuse your... And we just wanted to put that...

And Larry, my second question. So you mentioned customer behavior a couple of times in your remarks. Presumably that is referring to wanting end of quarter discounts and whatnot so these customers have been their their behavior has been primed bike by pro steps you know sales practices and it has it is over multiple years right have you all done a sensitivity analysis based on your existing customer base where you know the switch that you're turning on or off it's going to now change the end customer behavior once again and almost instantaneously thank you for taking my question yeah thanks you know we've had multiple weeks of this um where we've been dealing with it again we did this in december of last year we made these changes so i think we've had a decent

run now where we've been able to divide i think you know the you know you know we're a party to that to that as well you know we were we were offering incentives we were offering discounts customers were taking advantage of those of this change but i think it benefits us over the long Thank you for your question.

Our next question comes from the line of Michael Sarkone from Jefferies.

The floor is yours.

Hey, good afternoon, and thanks for taking the question. Here's the first one from me. You know, I know you're going to give more detail at the Investor Day tomorrow, but you carved out this team that's focused on the launch process. Can you maybe just help crystallize that, give us one or two examples of what you're attempting to change in the launch process now that will kind of position you for success?

And in addition to supporting the installed base, they wanted to be trained how they wanted to be trained. So they were sort of in, and, you know, when you think about it this way, you, you know, you have a capital team that's trying to move capital. You have the procedure team, you know, which is made up of salespeople and clinical people that they reported up into different leaders and sort of had their own incentives and their own missions that need to be trained, what that process is going to be. And then we took some of our most tenured people and put them on the team because we want to make sure for every new system that's placed that they get them to is, you know, time for PO, the time that they complete, like, their first 10 cases. It's not just getting one case under their belt. So we're really trying to drive that repeating, which we didn't really have historically. You know, you have different people doing it differently. And, again, they were being pulled from trying to support existing accounts and also trying to launch systems. And in some cases, you know, maybe you're having junior-level people do some of these activities. Now we have our best people in place to do those things. The impact of that is we have to rebuild those positions on the procedure team and rebuild those relationships and do those things. But, again, we think that's going to pay dividends for us. We ran a pilot in Q4, and when we ran that pilot, we saw about a 50% reduction in time to first-hand cases when we did it under the launch team model, which I think is going to have a lot of impact for us on a go-forward. And, again, we'll talk more about this tomorrow and go into more detail on it. But these are the foundational pieces that I think we have to get in place. And our goal, you know, is by the end of the year that everybody's wanting.

Very helpful, Larry. Thanks for the color there. And I guess the second one for me is, you know, I'll echo the sentiment from other folks here. 70% procedure mode is pretty impressive. I mean, can you give us any color on, you know, how that's split out between maybe older cohorts of existing customers versus newer cohorts?

Yeah, that's why we made some of these changes, because we want to drive and accelerate that. In terms of where the growth comes from, I will tell you the easy one answer. It's not to say that every customer changes we've made, why we believe they're going to benefit us and our strategy and our long-term health.

Got it. Thank you. Thank you for your question. Our next question comes from the line of Mason Torrico from Stevens, Inc. The floor is yours.

Hi. Good afternoon. This has been on for Mason. Are you, in light of some of the recent changes that you've discussed today, could you update us on maybe your IDN level strategy? Are you planning to lean more heavily into these negotiations in 2026? And is there any opportunity for maybe some bulk system placements in the 2026 guide?

You know, I don't know that anything really change next year. But we're going to talk broadly and try to say that.

And then you've previously noted that maybe aqua ablation improved outcome story, the aqua ablation improved outcome story may not be as widely understood by patients today. Are there any patient activation initiatives you plan to launch in 2026 to maybe help drive this messaging?

Just in that, then you're about getting people off the sidelines. But this, you know, for the BPH, You go beyond that, there's a whole, I think, you know, certainly the patient education and the physician education is going to be a key component of that. I think the other thing that people hear a lot of times is when they hear patient activation, they think Super Bowl commercials and, you know, not going to be of that scale. And men with BPH is wide in that to be able to target the people with BPH. And so we can do much more targeting.

Perfect. Thanks for taking the questions.

Thanks for your question. Our next question comes from Stephanie Piazzola from Bank of America.

The floor is yours.

Hi, thanks for taking the question. I'm sure we'll get more detail tomorrow, but if there's anything you could share now on how to think about that step up to 62,000 U.S. procedures in 2026 versus the Q4 run rate was a little under 50,000. And then also just wanted to clarify on the ASP uplift that you expect this year. Is that just a result of the change in the customer ordering practices or something else, too?

Yeah, thanks. I'll take your second question first. Yeah, the ASP pickup is just by not for end of the quarter. The procedure walk, we are going to go into detail on that tomorrow, but it's going to be a combination. are going to be, you know, the new systems that we're adding, the benefits of the launch team, the growth that we're going to get from that. We don't have a detailed walk tomorrow to walk through kind of the foot.

Got it. Thank you. And then just on the Salesforce realignment and some of the potential disruption there, you know, how do we think about where you are in that process and how much is left to go? And, you know, how do we think about the disruption turning to a benefit and when that happens?

Yeah, thanks. All of the changes structurally in the organization have been made. So those are all the made into these roles, learning their new accounts, doing things they need to do. And just, again, I don't want to overstate things. It's not like every single customer got a new rep. A lot of things did hold over a launch team, but it wasn't like. But I do believe that the organization ensures having a team of people that's going to pay dividends for us and ensuring that there's streamlined incentives between the commercial team, you know, that region.

Thank you for your question.

Our next question comes from the line of Daniela and Taffy from UBS. The floor is yours.

Hey, good afternoon, guys. Thanks so much for taking the question. I imagine we are going to get this more for this tomorrow. But, Larry, I'm just curious, in the six months or so that you've been there, you know, how much of a heavy lift do you think the market development component is here? I appreciate you've talked a lot about the Salesforce realignment and adjustments there. But just from a pure market education perspective, what's the plan? And, I mean, as much as you feel like saying on this call versus tomorrow, and how much of that is going to be part of this procedure volume bridge and the long-term plan?

Yeah, thanks, Danielle. You know, here's what I will say. The company historically wants to make sure that they, you know, I think the team did a great job in marketing programs and in terms of awareness and in terms of those things, the value, you know, So if you, on BPH therapy, I couldn't even find awkward ways you would normally do for search. Doing these things and getting our WebMD and getting in social media and doing the comparisons and durability, I think we're going to spend doing the investor conference, and I hope you're there, because I think when you see the work that we're doing, you see the value proposition we have.

Okay, that's helpful. And, again, don't want to front run tomorrow, but one thing we heard in our diligence and speaking to docs with some level of appetite to have the ability to do this in the ASC. I know you guys aren't ready for that yet, but just from a capacity perspective, is that something that could be a part of the long-term plan? Anything you can say about that? Thank you so much.

Yeah, thanks, Danielle. Certainly that's going to be something that's going to be so much of a near-term thing for us. We have on that as well on how we think these things evolve over time.

Thank you.

Thank you for your question. Our next question comes from Mike Kratke from LearLink Partners.

Hey, everyone. Thanks for taking my questions. I wanted to follow up on Chris's question again earlier. I mean, if handpieces sold have consistently been above procedure volumes every single quarter for the last three years outside of the fourth quarter, I mean, wouldn't your customers still have a pretty substantial buildup of handpieces that they have available that they need to work through? So, you know, when you talk about this one-to-one ratio, can you just help us understand why that is, you know, you have confidence that that's going to be the case, and was there anything in the voluntary field action that might have impacted that?

Yeah, well, I'll start with the second part. There was nothing in the field action that had any impact on this one way or the other, completely separate event. In terms of the hand basis, what I can tell you is customers still need to maintain inventory So, you know, nobody's sitting there, so they need to continue to carry inventory levels. I think what was happening with the, you know, and take advantage of these incentives. Accounts are just carrying the inventory levels that they feel are appropriate. We've modeled next year in practice changes, I guess, and so that's what gives us confidence on a go forward. But the other thing is, again, we're going to install a couple hundred systems next year, and they're all going to have to take stocking orders, and they're all going to have to, you know.

Got it. And then maybe just the last one on my side, but can you provide any additional color on the cadence of OpEx and your Salesforce expansion or SG&A throughout the year?

Yeah, but on the cadence of OpEx, maybe I'll just point what our EBITDA guidance implies. So we had said about the low and the high end of guidance will be EBITDA positive in the fourth quarter. We're forecasting an EBITDA loss in Q1 of somewhere in the $20 million range, which which would put OPEX somewhere between $85 million to $88 million in the first quarter, and then you just build from there.

And, again, we're going to go through kind of that walk tomorrow as well.

Understood. Thanks, Kevin.

Thank you for your question. Our last question comes from Nathan Trabeck from Wells Fargo.

The floor is yours.

Great. Thanks for taking the question. So it sounds like empty sales have exceeded procedure volumes by wide margin for a long time. And, I guess, can you talk about what this implies for actual utilization levels at your accounts? And, I guess, how would you put that into context, you know, the monthly utilization numbers that, you know, the company gave in the past for other BPH surgical procedures?

Procedure growth, probably about $11,000.

And so, on your capital funnel, I think last time you mentioned there might have been more scrutiny of budgets. It sounds like you're expecting flattish system placements in 26. I guess, talk about the level of price sensitivity you're seeing in, you know, the accounts that you're pursuing now, and I guess the willingness to place an occupation system, you know, with just a BPH indication. Thanks.

Yeah, well, we actually had a very strong capital quarter in Q4. We had 65. I think that supports, you know, that we continue to see demand now. Just the natural nature of capital detail on that. And so, you know, we continue to see the capital market. You know, I don't want to say it's ever easy, but I don't think there's anything structurally that's changing from what it had to our ability to exit.

Thank you for that question.

At this time, that does conclude the question and answer session. I would now like to turn it back to Matt Besko, CEO, for closing remarks.

Thanks, Operator. I appreciate everyone's time today going through Q&A and listening to the Q4 call. I just want to remind everybody that we are posting our analyst day tomorrow in New York at 8 a.m. Eastern, and please promptly at 8 a.m. Hope to see you there.

Thank you for your participation in today's conference.

This does conclude the program.

You may now disconnect.