Profound Medical Corp. (PROF) November 12, 2026 Conference Transcript

Here we are for our next session. Rick Wise here, welcoming Management of Profound, and we've got the full compliment. Founder, CEO, resident guru, Arun Menawat, who sadly, happily, probably for you, has announced at a very tender age. Actually, I'm not going to say your age. A very tender age is going to be moving into the executive chairman role. Richard Fabian, who's been here for a while, is moving into, is it just chief executive officer as of January 14th, your birthday, everyone's birthday. And Matthew Sabacek here. I think you've been at the firm quite a while, but now will be Chief Financial Officer. Welcome to you all. Thank you for being here. Appreciate it. And take us away.

Thank you, Rick, and we appreciate the invitation to be at the Stiefel Conference and present our story. I won't go through it, but of course, here's our standard forward-looking statement. And, of course, Profound has two platforms that you may be aware of. One is our Tulsa Pro. That's our flagship. We also have our Sonaleve business, and we're going to focus over the next 20 minutes or so on the Tulsa Pro for this purpose. If you take a look at the market opportunity, we kind of... We have two buckets. One is PCA. The other is on the BPH side. If we take a look at the PCA side, what this research shows is about 85% of that is multifocal. As you can see, That very few, about 15%, is unifocal. And that's what the data says. Of course, that's what you can see when you come up with that study. So we all know that what you see is not always what's out there when it comes to prostate cancer. The addressable cases annually... Are about 200,000 for PCA, about 400,000 addressable cases for BPH. I wanted to mention that there are still roughly 3.5 million. million patients under active surveillance. So those are people that have been diagnosed with early-stage prostate cancer and not being treated. It's one of the few, I believe it's the only cancer, that has active surveillance. And once you have it, you don't necessarily treat it until it gets worse. However, if we take a look at our average procedure price of roughly $8,000, we're looking at, between PCA and BPH, roughly $5 billion addressable market in the U.S. alone. So quite a big market. Here's the procedure. You can see this is inbore in the MRI. And what's kind of remarkable about this procedure, as you take a look, We talk about incisionless surgery. Well, that's what this is. So this is also using the precision of an MRI. So what that allows you to do is leverage AI for planning, real-time MRI guidance, as well as thermometry, so you can see exactly the region where you're ablating real-time. Closed-loop control, robotic precision during this, and protects the critical structures outside of the region that you are trying to ablate. This is a really important slide if you take a look at the unique difference of where Tulsa fits in this continuum. You have either whole gland treatments over all the way to the left, robotic prostatectomy and radiation. To the right, you have focal therapies, which are really focused on spot treatment. And in the middle, you have Tulsa, which does everything from focal to whole gland and everything in between, I think, and you can see from the whole gland image all the way to partial gland, we are the only solution that can really flex between the entire spectrum of cancers. Energy matters. When you start to think about how gentle the energy source is and how specific the delivery is, it's absolutely incredible. So we use far less energy than HIFU or histography. You can see we heat to 57 degrees centigrade. That is the kill zone, so that's the specific temperature we heat to. If you start to think about energy being put into the body at a much higher level. And potentially impacting other areas outside of the targeted area and the damage that can be done, we can go directly up to the margins because of the targeted energy that we're using. It kills more gently in the targeted tissue, faster. You can see that we ablate at one to two. CCS per minute. HIFU is about a tenth of that per minute. So it's a much faster and gentler way to target the tissue. The other thing is that tolose ablation leads to tissue shrinkage and absolutely kills cell DNA. And you can see that in these images. And you can see it in the MRI as you follow up that the tissue has been killed and the body processes and disposes of that. I won't go through all the AI innovation, but the fact that Our primary users are urologists who, by definition, have not been trained on MR and MR surgery. The fact that we have leveraged AI to make life easier for the urologists, I think it's a perfect platform to do that. And you can see, I'll focus on number two, which is the contouring assistant. The manual contouring is very time consuming. And repetitive and operator dependent. We partnered with the top radiologists to create the AI using thousands and thousands of images. And what you'll see is that the contouring assistance, it's extremely fast, superior to urologists, as well as similar to the best experts in radiology. So that is something that as soon as the MRI is... Uh, it is done. The, uh, the urologist has the ability to review and either accept or change the margins that they, the AI is recommending for that. We have. Over 70 peer-reviewed publications and 200-plus clinical presentations. I think the interesting thing about the presentations, and I think you'll see the excitement about what we're doing, is the fact that, again, going back to everything from focal. To salvage, to whole gland, we've done the research. We've been partnering with the top clinical institutions to come up with peer-reviewed publications in this area. The other thing, if you notice on this graphic, is you can see the margins that have been outlined and how specific and... How well the Tulsa procedure allows you to target the area that you are intending to kill. This is a great graphic because if you take a look at this, you'll see to the left, how would you like to do a procedure? Sitting down, out of control. Panel. In this particular case, Dr. Klotz and Dr. Emerton are having a discussion as they're watching the Tulsa procedure. It looks like Dr. Klotz might be eating an apple and relaxing as the procedure is going on. Over to the right, as you're doing the robotic prostatectomy, you'll see The kind of hectic environment of that procedure with a lot of staff members around the patient. I think the interesting thing about this is also when you start taking a look at the future. And the desire for new concepts like telesurgery. This, you know, this is right outside in the control room of the MRI. But what stops somebody from thinking about having the MRI in a different location, either in the same city, a different location, in a different state, perhaps a different country, and being able to have the control panel where the physician is It is... Guiding a surgery wherever it is. So as we take a look at the future, there's huge potentials. The other thing is just the efficiency, scalability, and versatility of this system, being able to do a prostate cancer case, going right to a BPH case, and continuing to just do more and more cases as this scales. We use metrics. We're a metric-driven organization. I think in healthcare, you have to be. But what's really interesting about this, this is the most recent quarter, you'll see that the versatility that this 98% of patients underwent ablation of prostate tissue, and you'll see that we We really have tremendous breath in what we are doing, including the prostate size, the regional ablation, ablation of malignant prostate tissue, prostate condition. We really do it all. And the money slide. I think when you start taking a look at the reimbursements, they've been exceptional for the procedure. And, you know, a lot of times you think of the MRI, especially in a diagnostic setting, as being a... A cost center. The better utilization of the MRI for procedures is also something that's great for patient care, great for the hospitals, and also creates revenue for the MRI that are fixed assets at the hospital. And you can see the hospital payments that currently exist. ASC, we just got very favorable news from CMS on the reimbursement the other week, I think a week and a half ago on that. And you can see the physician payment to 90 days is... It is about the same as other procedures, and physician office payment is also quite strong. So across the board, reimbursements have been very, very strong for Tulsa procedures. Utilization is growing. I think this is exciting. A year ago, or two years ago, in 24, we had 59 placements. Last year, 70. The quarter that just ended, September 30th, we were up to 98 systems. We're in top-tier hospitals in the U.S., as well as on a global basis. Early adopters in independent centers are also very interested in growing as well. I think this also shows the utilization growing year-over-year. Two years ago, 2024, we were at 10 million going up last year, growing to 16, and our current guidance for the year is 25 or greater as we head into the final quarter of 2026. The margins... Have been improving. So if you take a look, traditionally in MedTech, 66% is pretty good. Last year was 70.8. This year we're on target for over 75%, including last quarter where margins were over 78%. We're really excited about the CAPTAIN trial. We released back in the summer the first 90 days at RSNA at the end of this month, early December. We are going to be launching our full year results on the CAPTAIN trial, and across the board, you'll see that this has been a tremendously successful Trial for us, comparing whole gland ablation versus robotic radical prostatectomy. This is, if you think about the MR space over the years, MR has, well, we saw tremendous growth of MR back in the day when it first came out. Of course, nobody wanted, was dying for an MR. It was the utility that it provided that created so much buzz and excitement and why you see MRs in every hospital. But over the years, MR became much more of a replacement market and not necessarily a growth market. We're starting to see that as we have care pathways around MRI, and we're seeing the growth of interventional MRIs, that there's a lot more excitement in this space. So if you take a look at the care pathway that is now growing. Around the MR space, it's everything from prostate screening. We're seeing more and more focus on using MR for biopsy and the accuracy that the biopsies provide. The MR provides for biopsy. We all know that if you do a biopsy and don't get the right region, it's useless, and there's a lot of, you know, potential for false negatives in that case. Or you just really hurt the patient by taking a lot of random. And hope for an accurate diagnosis. Of course, MR-guided treatment, and we believe that The Tulsa procedure is one of the most exciting in that space, and then, again, MR monitoring on an ongoing basis, and the utility is just incredible. We've partnered across this continuum of care, everything from our Let's Huddle program, creating an environment to have Open, honest conversations for men, something we don't always do well, talking about tough things and including men's health. So we have everything from that encouraging more screening, our recent Telex, I'm sorry, Telex partnership focused on diagnostics and imaging. Very excited about our recent Cook. This partnership that we released a couple weeks ago, that is proof that, as you know, Cook Medical is a leader in interventional across the board. They've partnered with us to As they approach the interventional MRI market, partnering with Profound, really excited about having our systems together, currently leveraging the Siemens' incredible systems as well. And then Tulsa for the MR-Guided Procedure and monitoring, continual monitoring. One platform, many treatments. We've talked about the importance of this. Everything from... Focal to whole gland procedures. And I will leave you with this thought and this is our vision and IMRI suite based besides every robotic surgery suite in the country. And before anybody rolls their eyes and thinks that's impossible. I remember years ago when intuitive came out and people thought it couldn't be done. And that that that was just a bridge too far their robotic systems are everywhere. And as we... We believe that the utility across the board for the interventional MRI as the tool, and then we see everything from Tulsa procedures to, you know, I mentioned in slide one, the sauna leave, other part of our business where we have, you know, potential or currently women's health care as well as Thank you.

It's a wonderful overview and great to be reminded of all the excellent things that are happening at Profound. I've got eight minutes and 25 questions, so I'm not going to get to ask them all, but I'll ask a couple of the key questions. I was going to ask you, Arun, why now, but I think maybe it's more important to hear, if you don't mind, because I can imagine why, and you're staying on anyway in the executive chairman role, but maybe I'll turn to Richard and say, what are your priorities as you step into the role? And when we're sitting here, standing here, I hope a year from now, and I'm saying, okay, so what'd you do in the last 12 months? What do we think over the next 12 months and the next five to 10 years, what's the Fabian agenda?

So I think that we've proved out the technology, and we've shown and we've got quite a few installs. We talked about, you know, being up at 98 installs. If I take a look at what's next, it's how do we scale. This business, and how do we turn this from installs to making this a true common procedure? So we're going to be focused on system, working closely with customers, improving and increasing utilization, helping customers navigate how to create if they're doing two patients a week, how do we get them doing four patients a week or eight patients? So we'll continue to focus on scaling the business as well as scaling our operations. We're moving kind of from that startup to a mid-sized company, and there's a lot of supply chain in making sure the operations can support the growth that we see.

It feels like you have a lot in hand. Do you have the right people, the right team, the right people and the right jobs to get this done?

Yeah, so we've got an incredible leadership team. I'm really excited about Arun with all the work that's been done, and we still have a ton of work ahead of us. As I take a look at where we're going to be scaling up, a lot of this is going to be on the commercial side, being in front of the incredible demand, converting our very high pipeline into orders, and then we are creating an entire team focused on improving, increasing utilization of the systems.

Thank you. The math on the screen says 43 million. That's a big jump. Do you have the pieces in place? To get there today, and I don't know whether you want some input as well. Here you go, everyone.

I'm sorry.

Thank you. Hi.

If we take a look, the rough mix is about 70-30 U.S. rest of the world, but as you can imagine, that can change greatly. We do have incredible teams both in the U.S. and abroad. And what was the 27?

So thinking about the backlog, and does that support current consensus numbers for, again, consensus, as you're familiar with, just on the screen facts that says this is what it is?

We take a look, and even going at the addressable market, there's roughly, on recurring revenue alone, $5 billion. So if we could get to a, you know, in a couple years, 20% of that, we're looking at roughly a billion in recurring revenue. Now, talking about next year, I think when you start taking a look, and we're going to continue to drive utilization so that we have a, you know, our recurring revenue is significantly more than where we are. But I do believe we have a continued pipeline. We feel very good about where consensus is and where our numbers are going to be next year. We're not ready to provide final guidance. I think the big challenge for a company where we are is knowing exactly, and we can't do it, we can't figure out exactly when we're going to start hitting that inflection point, and this will become more of a... You know, more broadly used than it is, but we know that's coming in the future. We just don't know exactly when that is.

All right. Did you want to chime in, Aro?

I think, you know, our focus is primarily in the U.S. at the moment, but what is going on is that outside of U.S., the leading institutions are frankly calling. And we decided that, you know, we're going to cater to it instead of waiting. And normally you wait until you get significant adoption in the U.S. But what we're finding is, you know, top institution in New Zealand, they called and they said, we want it now. We don't want to wait. And so that's why you see this mix of 30-70. But majority of our effort is still the U.S. And I think, as Rich said, our focus is going to be on driving this international MR business.

Yeah, no question. As you step into this role, I'm sure you have your operational priorities, but what do you think is the biggest single challenge facing you? Is it there's a lot of competing technology? Is it the price of the system? Is it the lack of available MRIs and centers? I absolutely believe you about the future and the necessity and the growth potential for MRI, but what's the biggest challenge that you've got to fight through to make Profound truly successful?

I think that the greatest challenge to date has been the intimidation of having to clear out an MRI for the use of the procedure and negotiate with interventional or radiology in general on how to get access to it. We've seen a lot of facilities do that extremely well. However, With the growth of the interventional MRI, the partnership of Cooke, the additional feet on the street, telling the story, we think that those barriers are being knocked down, and as we take a look forward, we think they're being knocked down very quickly.

How quickly can that Cooke partnership make a difference, do you think?

I think, you know, that's a great, great question. None of us know exactly, but as we take a look at this incredible partnership, telling the story, roughly in these sales, you're looking at six months. Thank you so much. So, as we launch this, I think we'll see some of the momentum start hitting us the second half of 2027, I think, in earnest in 2028.

So, I mean, that's exciting. I think you'll have a good sense by the second half of next year. I hope it works well. You've got great technology. Thank you for being here. Thank you each. And, Matthew, you see what a nightmare this is. We'll get you next time. I didn't want to pick on you today. Thank you all. Thank you.