Good afternoon. Thank you for joining us for Sarah Taxis' fourth quarter and full-year 2025 earnings conference call. Certain statements during the conference call and question analysis period to follow may relate to future events, expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the company in the future to be materially different from the statements that the company's executives may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. we assume no duty to update these statements at this time all participants have been placed on a listen-only mode the floor will be open for questions and comments following the presentation as a reminder today's call is being recorded it is now my pleasure to turn the floor over to your host david official chairman and ceo of stair taxes thank you thank you operator good

Good afternoon everyone. This has been a year of tremendous progress. I'm proud of the broad-based technological and commercial progress we've advanced despite operating as a small team in a complex environment with considerable challenges. During today's call, I'll discuss the key accomplishments of the past year, the primary challenges we're addressing, and our main goals and expectations for this year. This being our annual call, I want to start though by stepping back and providing context for our journey. Stereotaxis's overarching mission is to pioneer robotics within minimally invasive endovascular surgery. We are the clear robotic leader in this huge field of medicine where tens of millions of procedures are performed annually with essentially no robotic adoption. Unlike robots in other fields, an endovascular robot must control highly flexible devices navigated through tortuous, tiny, delicate blood vessels. This is particularly challenging and has led to a graveyard of failed attempts to address the field, with Stereotaxis standing as the battle-tested flag bearer for this mission. It's an important and attractive mission. There remains significant room to improve patient care with the precision, safety, and unique mechanistic and digital benefits of robotics. Stereotaxis's approach to the technical challenge of navigating in endovascular anatomy was science fiction when first proposed, using precise computer-controlled magnetic fields to control the tip of flexible devices deep within the body. Over the years, that concept was turned into reality. The technology was refined, and it demonstrated its clinical relevance and value in robust real-world use at over 100 hospitals that treated over 150,000 patients. While our technology was advanced and differentiated, we suffered from key structural and strategic limitations. We didn't develop or sell the catheters used with our robot, creating unhealthy dependency, limiting innovation, and a poor razor without the razor blade business model. Our robot remained highly difficult for hospitals to adopt, requiring significant construction planning time and cost we remain focused on only one specific clinical procedure minimizing the platform potential for our technology to help patients with a variety of diseases we spent the last several years advancing a comprehensive innovation strategy that addressed these structural issues the strategy establishes a solid foundation for a healthy business with strategic independence and an attractive, scalable, profitable commercial model. Most importantly, for the patients and physicians that rely on us, the strategy provides significant innovations that improve and broaden our impact on medicine. The strategy rests on four primary pillars. First, making our robot widely available by innovating it such that it doesn't require construction and can be rapidly installed in the majority of labs. Second, building an ecosystem of catheters and integrations in our core EP ablation market so physicians have greater choice and technologies while we reduce our dependencies and build attractive recurring revenue. Third, leveraging our core technology such that it becomes a platform for endovascular surgery more broadly, providing value in several new clinical indications. And fourth, establishing a digital backbone that introduces connectivity and intelligence to our robot and the broader operating room environment. This past year was a milestone year for stereotaxis in bringing this technology to reality. The highlight was achieving regulatory approvals in the United States and Europe for the Genesis X robot, magic ablation catheter, and magic sweep high-density mapping catheter. These are highly complex technologies that face the most demanding regulatory requirements. Achieving these regulatory milestones would be a coup for any company and is particularly rewarding for us given how efficiently it was achieved. These three devices, Genesis X, Magic, and MagicSweep, serve as a core foundation on which to pioneer robotics within the EP field. The EP market has become one of the most attractive medical device markets, treating approximately 2 million patients a year and generating over 13 billion dollars in device revenue annually, expected to grow to 20 billion dollars by 2030. Robotics has long demonstrated its clinical value in this market, particularly by enabling complex procedures to be done effectively and safely. Our first commercial focus is on these complex procedures with higher risk patients and the most unmet medical need, congenital heart disease, pediatrics, and ventricular tachycardia. We view this as a $2 billion market opportunity that can be expanded and serves as an attractive beachhead for robotics more broadly in electrophysiology. The combination of these three technologies allows for adoption of robotics in the EP field with much greater ease, less complexity, and less cost for hospitals. For stereotaxis, it allows for a dramatically different commercial model than what we have experienced in the past. Access to robotics is shifting from the outright sale of a couple million dollar robot that must go through a construction process to a blend of sales, leases, and placements funded by disposable commitments. Our per-procedure disposable revenue is starting to benefit from a portfolio of catheters, taking us from an average revenue per procedure of $1,000 to over $5,000. This is a structural shift in our commercial model and provides for a much more attractive foundation upon which to build a growing profitable business. The commercial contribution from these new products was modest in 2025. We sold one Genesis X system and Magic and Magic Sweep each contributed hundreds of thousands of dollars in revenue for the full year. The opportunity for just the catheters in our existing robotic procedure volume is over 20 million dollars annually. There are several factors for this gradual commercial start, including the timing of regulatory approvals in the second half of the year, the importance of these devices being commercialized together as a synergistic portfolio, the administrative efforts post-approval to get on hospital contracts and work through regional registrations, and a challenge in ramping manufacturing. That last challenge, ramping high-quality manufacturing, has been a primary focus over the last months, so let me provide some additional color on that. Genesis X is manufactured by us in St. Louis, where we have significant experience manufacturing complex robotic systems. We completed the production of our first commercial Genesis X system in mid-2025 with many observations for how the assembly process could be improved. We've incorporated these observations into our instructions, refined processes, and worked with suppliers on modifications to components that support the effort. We expect this year to manufacture approximately one Genesis X robot every two months, with the ability at our current facility to scale to several dozen robots a year. We have a similar experience with Genesis, and so the grind of improving manufacturing and what we are experiencing with Genesis X is something we are familiar and comfortable with. The MAGIC catheter is manufactured by OSIPCA, a contract manufacturing partner in Germany. We initiated the development and regulatory process for MAGIC with OSIPCA long before our acquisition of APT, which brought us in-house catheter development and manufacturing expertise. Scaling manufacturing of MAGIC at OSIPCA has been challenged since repeat of CE, receipt of CE Mark last year. and so we saw only modest revenue throughout 2025 of hundreds of thousands of dollars. Catheter production has been in the dozens of catheters a month range when we needed to scale to hundreds of catheters a month just to meet interest from our current customers. The fourth quarter and early start of this year were particularly hit by catheter shortages as OSIPCA implemented a production change, improving a specific process to address the largest drag on production yield. This change was successfully implemented earlier this quarter, and this March we expect to receive for the first time over 100 catheters. OSIPCA has a detailed production plan for this year that considers personnel, components, equipment, and space and projects growing manufacturing to approximately 500 catheters a month. Alongside working with OSIPCA on this plan, we are investing in additional ways to expand manufacturing capacity and redundancy. We are clear-eyed about these challenges, confident they will be overcome, and excited by the way things are coming together. As we look at this year, there are four key efforts we are focused on to create significant commercial and strategic value. The first is demonstrating the real-world value of Genesis X by establishing at least five active Genesis X programs. In this early phase of commercialization, we have focused our efforts on approaching some of the more influential and impactful physicians in the electrophysiology field, who have shown interest in our technology for years, but have now re-engaged with us more enthusiastically when seeing our new innovations. We have several term sheets negotiated for a mix of sales, leases, and placements with significant disposable commitments. Our ambition for orders is greater than the number of Genesis X systems we expect to install, and orders this year may very well outpace our production. As we establish these first Genesis X programs, we will also be demonstrating the ability for Genesis X to be installed rapidly in existing labs while working compatible with non-modified X-rays from major X-ray manufacturers. This demonstration will be very beneficial in expanding adoption beyond the early adopters. Our second key focus is magic and magic sweep manufacturing and commercialization. As previously mentioned, we are investing significant effort in ramping magic manufacturing and expect to scale from 100 magic catheters this month to 500 catheters a month by year end. As manufacturing scales, we expect to transition our existing EP customers to our proprietary catheters. We're already advancing administrative efforts across our hospital customer base to ensure value assessment committee approvals and hospital contracts are in place in advance of manufacturing supply. In addition to these core efforts with our EP customers, we have made progress with the regulatory efforts to combine MAGIC with the pulse field ablation generator of CardioFocus. And we'll submit a regulatory dossier to our EU-notified body shortly and expect to launch MAGIC with PFA in Europe by year-end. Our third key focus is tied to ensuring we become a platform robotic technology, not just in EP, but for a broad spectrum of endovascular procedures across interventional cardiology, interventional radiology, and neurointerventions. While we are very focused and excited by our opportunity in EP, we believe we have a credible path to pioneering robotics broadly across endovascular surgery. Until now, we've presented our efforts to expand into these markets with a relatively modest approach. The development of a guide catheter and guide wire that would allow physicians using Genesis X to safely and efficiently navigate through tortuous anatomy. That effort remains impactful and relevant. We submitted Imagine 5F, our five French guide catheter for regulatory approval in both the U.S. and Europe, and are working through the regulatory process. We completed development of Imagine 014, our very small 0.014 inch diameter guide wire, and expect to submit it for regulatory approvals this summer. These will address meaningful unmet medical needs, and we are excited for their impact. But we also have known that this was a modest approach to entering the neurointerventional and interventional cardiology market. We are doing much more under the surface and have two significant strategic efforts well underway that would allow us to make a much bigger splash with robotics. Over the next few months, we expect these opportunities to reach the point where we can share openly a comprehensive strategy for technological leadership in robotics across interventional cardiology and neurointerventions. Finally, our fourth key effort this year is demonstrating the initial value of our digital surgery suite technology. As a reminder, Synchrony and Sync are our digital solutions that modernize the interventional surgical suite with enhanced workflow, remote connectivity, and smart AI capabilities. We received CE mark for Synchrony in the fourth quarter and submitted the technology for U.S. FDA clearance. We received questions from FDA earlier this year and responded to those questions last month. We expect FDA clearance for Synchrony in the coming weeks and have already observed strong initial demand for the technology. We expect several U.S. hospitals to standardize their EP labs with Synchrony and are currently projecting over $3 million in revenue from initial demand this year. In tandem with this regulatory and commercial effort, we continue to advance the connectivity app Sync that enables real-time collaboration and communication with Synchrony systems and expect to complete the first AI features that will be incorporated into Synchrony and are related to the NVIDIA program we were accepted into last year. These will add additional layers of clinical value and a software-as-a-service revenue model to Synchrony. We are in a particularly exciting period for Stereotaxis. There's much work to be done and we are grinding through many key efforts in parallel, but we are also starting to see very positive fruits of our strategy materialize. This will be an important year during which we establish manufacturing and commercial capabilities that support substantial revenue growth over a sustained multi-year period, while simultaneously advancing a robust pipeline of innovations to key development, regulatory, and commercial milestones. Kim will now provide additional commentary on our financial results, and I'll make a few financial comments as well before

we leave a call to Q&A. Kim? Thank you, David, and good afternoon, everyone. Revenue for the fourth quarter of 2025 totaled $8.6 million, a 36% increase compared to $6.3 million in the prior year fourth quarter. System revenue for the quarter of $3.3 million compared to $1.4 million in the prior year quarter and reflected partial revenue recognition on two Genesis systems and ancillary devices. Recurring revenue for the quarter of $5.3 million compared to $9.4 million in the prior year quarter, benefiting from initial sales of Stereo Texas' Magic Sweep Catheter in the U.S. and Magic Catheter in Europe. Revenue for the full year 2025 totaled $32.4 million compared to $26.9 million in the 2024. Full-year system revenue was $10.2 million compared to $8.6 million in the prior year. Full-year recurring revenue of $22.2 million compared to $18.3 million in the prior year, with growth driven by increased catheter revenue. Gross margin for the fourth quarter and full year 2025 was approximately 50% and 53% of For the full year, recurring revenue gross margin was 67% and system gross margin was 21%. Full year recurring gross margins were impacted by acquisition-related accounting that temporarily reduced disposable margin and by lower initial margins on newly launched devices. System gross margins remain impacted by fixed overhead allocated over low production levels. Anticipated increases in production volume of existing devices within the next three years are expected to support recurring revenue margins of over 75% and system margins of over 50%. Operating expenses in the fourth quarter of $10 million included $3 million in non-cash charges for stock compensation expense, mark-to-market adjustment for acquisition-related contingent earn-out consideration, and amortization of acquired and tangible assets. Excluding these non-cash charges, adjusted operating expenses in the quarter were $7 million. Adjusted operating expenses for the full year 2025 were $26.3 million, compared with $27 million in the prior year, primarily driven by lower general and administrative expenses, as well as the receipt of an employee retention tax credit, reducing current year operating expenses. Operating loss and net loss in the fourth quarter of 2025 were $5.6 million and $5.5 million, compared with $7.6 million and $7.5 million in the previous year. Adjusted operating loss and adjusted net loss for the quarter, excluding non-cash charges, were $2.6 million and $2.5 million, compared with $3.8 million and $3.6 million in the previous year. For the full year 2025, adjusted operating loss of $9.3 million and adjusted net loss of $8.8 million compared to an adjusted operating loss of 12.4 million and an adjusted net loss of 11.7 million in the prior year. Negative free cash flow for the full year was 13.8 million compared to 8.5 million for the full year 2024 with the increase driven by use of 5.6 million for working capital in 2025. In the fourth quarter, stereo taxes generated $4 million from the second closing of the registered direct financing announced in July and $3.1 million through its at-the-market offering at an average stock price of $3.17. On December 31st, stereo taxes had cash and cash equivalents of $13.4 million and no debt. I will now hand the call back to David.

Thank you, Kim. We're pleased that we were able to deliver double-digit revenue growth in 2025 while focusing attention on driving significant development and regulatory progress, working through challenging manufacturing ramps, and starting the shift away from an older product ecosystem. We expect to again deliver double-digit revenue growth this year with both system and recurring revenue increasing over the course of the year in line with manufacturing ramps for Genesis X and Magic. We expect quarterly revenue to be below $10 million per quarter in the first two quarters of the year, and then to ramp above $10 million per quarter in the following two quarters, with annual revenue surpassing $40 million. Accomplishing our four key milestones for this year will set us up for accelerated growth in future years. These development, regulatory, manufacturing, and commercial efforts are being advanced while maintaining fairly stable operating expenses. We benefit from the reduction in certain expenses as programs reach key milestones and then reinvest those savings in the key programs important for the next drivers of growth. We continue to invest meaningfully in efforts critical for near-term results as well as in programs that provide long-term strategic value. We expect growing recurring revenue and stable operating expenses this year to support reduced cash use in 2026 compared to 2025. We also expect a working capital benefit to cash flow this year after a significant investment of near $6 million in working capital last year. We feel comfortable with our balance sheet, allowing us to advance our innovation strategy to market, fund a commercial ramp, and achieve profitability. We'll now take your questions. Operator, can you please open the

into Q&A. Thank you. Quick reminder before we start the Q&A, if you'd like to ask a question, please press star and the number one on your telephone keypad to raise your hand and answer the Q. And if you'd like to enjoy your question or your question has been answered, please press star one again. Thank you. And we will take our first question from the line of Danny Strouder

from Citizens. Please go ahead. Yeah, great. Thanks for the questions. I guess just my first one would be on the goal of five genesis x programs that you talked about is this in addition to the so in addition to that do you still expect to sell the previous genesis system because i believe you had commented before that would still be the expectation and just trying to get better understanding of what the mix between segments could look like for the full year thanks hi hi

danny good afternoon sir so yes as as we discussed on the last call we expect genesis sales orders and sales to continue at kind of a similar pace that they've been in for the last several years. We've generally been selling approximately mid-single-digit numbers of Genesis systems each year that have kind of added up to near $10 million or so in revenue from those systems each year. And we expect kind of the Genesis commercial kind of levels to stay relatively similar for at least the next couple years or so while we're still ramping Genesis X. And so the effort right now with Genesis X is predominantly going to some of these KOL accounts, both in Europe and the U.S., demonstrating that with new technology, we can install it in existing cath labs that don't require special construction, that we can work alongside existing X-rays, and that there are KOLs in this field who are respected by their peers, who have watched us for long periods of time, and that they recognize that our innovations do make a change to kind of the trajectory of robotics in EP, and they want to be a part of that change.

Great. I appreciate it. And then just one follow-up on Synchrony. Great that you're expecting FDA approval in the coming weeks, but on that $3-plus million revenue goal in 2026, just curious what's assumed in that number. Is that a certain number of target accounts, or does it assume a certain amount of time being able to be sold during the year? Just trying to understand what the room for upside is there, and any more color would be great. Thanks.

Sure. So Synchrony is sold as a capital equipment up front. As described in the prepared remarks, we do have recurring revenue streamed through that, predominantly service contracts and the premium software subscription to SYNC, which would create a software-as-a-service business model. As we have more AI features implemented into Synchrony as well, we'll also create kind of a software-as-a-service model for those special features. But the guidance for this year is really just focused on the capital sales of Synchrony systems. We have several hospitals that we expect to standardize their EP labs on Synchrony, and so So those are multi-system deals that we believe will materialize with oftentimes, you know, in a handful or even sometimes more numbers of systems in an individual hospital. And then there are other hospitals that would like kind of to try individual synchrony systems. And so as we are kind of getting closer to regulatory approval, we've been having those discussions and we feel fairly confident that we will have a decent number of systems sold in the current year. I think we've given rough indications in the past that pricing of Synchrony would be in the $150,000 to $200,000 or so range from a capital equipment perspective. There are differences between the systems depending on how many third-party equipments you want to kind of loop into Synchrony. But so generally looking at that type of a price range would get you to the number of systems that we're talking about.

Perfect. Thanks so much for the questions.

Thank you. Our next question comes from the line of Josh Jennings from TD Callum. Please go ahead.

Hi, good afternoon. Thanks for the thorough download of the go-forward strategic plan. Also, a couple questions on magic. It sounds like feedback from early users continues to be strong. I was just hoping to get a better understanding of what the capacity, manufacturing capacity constraints as they're ramping. How are you allocating catheters to specific accounts and new accounts? And I'm assuming that the access to Thermacool RMN is still in play. I'd love to just get our arms around that dynamic a little bit better.

Josh, good afternoon. Thanks for the question. So that is obviously a challenge. where magic is a great medical device it's a great catheter we've had um kind of its performance uh as a as a catheter is is overall great um and so we're very pleased with the way we designed it the process of ramping manufacturing has obviously been a challenge and so that has been a big part of our focus over the last several months and it is challenging as you as you try to launch a device You have to work through all the administrative efforts, but then you also have to manage the psychology of all of your users. And we have many more users that would want magic catheter supply than what we've been able to manage. And so it's a process with the commercial team, with the physicians. They understand the process that we're going through. And generally, they've been very patient with us and accommodating of the ramp that we're working through. So we'll kind of continue doing that. And obviously now that we're in the U.S., we're working through all the administrative items at hospitals so that as catheter supply does ramp, we are already addressing all of the administrative efforts. And so we're just kind of working in parallel on these multiple items so that ultimately magic can ramp to the significant revenue contributor that is expected. And so I think kind of over the course of this year, you'll see that as the manufacturing ramp, there essentially will be demand already in place for the types of volumes that I commented on in the prepared remarks.

well thanks for that and then just with the path to launching magic with pulse field ablation with that collaboration with cardio focus um this year in europe maybe just help us understand the uh what what you need to show eu regulators uh just from a compatibility with the centauri generator and any inhuman data that is required, or will you run some first inhuman data after approval? Let me just lay out the milestones and the timing you expect for EU approval. Thanks a lot for taking the questions.

Sure. So the general scope of the argument of the regulators is that CardioFocus's Centauri PFA generator has been approved in Europe for several years, is working compatible in a regulatory approved fashion with three point-by-point RF ablation catheters that kind of are available in Europe and with three of the very large companies in our field. There's significant clinical experience there. And when you look at the compatibility testing that has been done between the magic catheter and the centauri generator and both bench testing fairly robust and high quality animal testing the catheter the magic catheter is very similar in tip design and ablation characteristics to those three existing catheters and the compatibility testing results when you look at it you know across the range of test is also very similar results and the risk profile is no higher perhaps probably less actually and so there's a fairly strong argument for why adding compatibility you have an approved device approved catheter in europe and approved pfa generator in europe and so adding a fourth catheter to that compatibility matrix is a not a significant uh risk given all the data that has been accumulated to support that and so we've kind of compiled a dossier together in collaboration the two companies, and that is going to be going in for review by the EU-notified body in the short term.

Thanks again. Thanks, Josh.

Our next question comes from the line of Kyle Bowser from Roth Capital. Please go ahead.

Thanks for taking my questions, and congrats on all the updates. So, David, you talked a bit about the guidance for the full year and the quarterly revenue level to be kind of below the $10 million level in the first half and above in the second half. Can you talk a little bit more about product mix? I know across systems and disposables, you're expecting growth, but just kind of trying to understand kind of the mix in terms of percentage of that over $40 million, you know, coming from systems versus disposables.

Sure. So I would look at system revenue. You essentially have a baseline level similar to last year with a growth on top of that in terms of the Genesis X launches. The five Genesis X systems that we are guiding for this year, those will be a mix of sales and leases and disposable commitments. And so the actual revenue number from that is a little bit hard to estimate right now, at least the revenue recognition, the accounting for that is a little bit hard to estimate as it will be a mix of those. But overall, that will provide, there will be some capital revenue from that. And so there will be kind of a step up in terms of capital revenue versus last year with the contribution of Genesix kind of going above the baseline Genesix level. Most of the revenue growth will come from the disposable side. And that will really happen in tandem with the manufacturing ramp of magic. And so we see both magic and magic sweep as being the primary drivers of revenue growth in this coming year, with, you know, kind of mainly that playing out as the manufacturing ramps from 100 catheters to 500 catheters. We've talked in the past somewhat about average selling prices for ablation catheters. Generally in the U.S. you see ablation catheters in the $3,000 to $4,000 range, and in Europe, it's in the $2,000 to $3,000 range. And so kind of that should give you a general feeling for the types of monthly revenue we would expect from Magic as we progress through the year. And one, sorry, I forgot one comment on the capital side is obviously the synchrony revenue, the $3 million of synchrony revenue, that would be capital revenue.

Got it. I appreciate that. And then maybe just as a follow-up to that around magic ablation catheter, realizing it's early, you just got approval in the U.S., and you're working through building up supply and streamlining manufacturing. But any sort of initial feedback on how the transition has been going related to kind of switching out the third-party catheter for magic or kind of any early provider feedback around that? Thank you.

Sure. So, I mean, we have obviously had great procedures with MAGIC across multiple hospitals. We are, the transition from the old ecosystem has not been an easy one. Our previous partner has not made that an easy transition. That's one of those challenges that we've always known we would have to grind through. But from the customer perspective, we have many, many customers who have a lot of positive view of robotics in this field. We've had long-term relationships with these customers. They've been waiting for an improved catheter for many, many years. They've seen the ability of magic to do things that previously were not possible in terms of the navigation capability, the more stable forces, irrespective of how you approach the tissue, the reduced irrigation and kind of some of the tip lesion characteristics. And so overall, we have very kind of a very good customer base that is excited to use MAGIC. And as we work through this transition and as we ran manufacturing, we're excited by what MAGIC will bring to these customers and how it will ultimately transform us. And so this is really this working through this transition is one of the biggest efforts and challenges that we've been working through. But we're delighted that we got the regulatory approval by FDA at the beginning of this year. And we're glad that the effort with OSIPC is overall moving in the right direction. And we should be able to see a significant ramp in manufacturing this year. And that should set us up in a very, very good place. As we exit this year, we should have a very strong foundation then for many years going forward, both of continued innovation and obviously a very attractive revenue model.

Okay. Sounds great. That makes sense. Thanks for taking my question.

Thank you. Thank you.

All right. Next question comes from the line of Frank Tokkinen from Lake Street Capital Markets. Please go ahead.

Great. Great. Thank you for taking the questions. I was hoping to ask a little bit more about Q4. David, I obviously heard the questions about the manufacturing challenges. But maybe just parse out what the reason is for that being a little bit lower. I think there was a guy out there for $6 million versus the $5.3 million reported. Was that all manufacturing, and you would have been at kind of that $6 million mark if it wasn't for that? Or was there maybe some procedural softness or anything else going on with the Q4 numbers?

So I think the two primary factors in the fourth quarter was magic manufacturing was actually lower than in some previous quarters. I think I mentioned in the prepared remarks that during the process of ramping manufacturing, we and the SIPCA team identified one specific process which was leading to the biggest cause of scrap at the end, kind of during the final testing before you can kind of confirm that catheter is ready to ship out to customers. There was one process that was leading to a very high scrap rate of the catheters. During the fourth quarter and then earlier into the first quarter, that process was being adjusted. Catheters were being manufactured with that new process, but those catheters were going into testing, which was kind of necessary to confirm the process and to make it something official within the SIPCA system. And so that kind of was a drag on catheters in the fourth quarter. We're also working through the transition of J&J's catheter. And so there was some kind of a slowdown in volume in fourth quarter from that transition. But magic catheter manufacturing was the primary driver of that.

Okay, that's helpful. And then maybe just for my second one, can you just talk a little bit more about the different economic models for Genesis X? I heard your comments in the previous question related to the assumption that maybe a few of the five Genesis X placements this year might be an alternative placement model. What might that look like? And then if you were to take a longer-term view at it, how do you think that mix of kind of upfront sale versus alternative model might look for Genesis X over the next few years?

Sure. So there's really three core models that can be utilized, and it can be a mix of these three models in any specific deal. But the three models are an outright capital sale, monthly, quarterly, annual lease, and then a placement of a system with significant commitments to purchase disposable kits. So let's say if they're buying Magic and Magic Sweep and a KUKAS and some of the MAPIC catheters and you put that together in a kit and they commit to buy X numbers of those kits each quarter. So those are kind of the three basic models. None of those are highly innovative. There's obviously other companies that have built very significant businesses off of a similar range of models. And so those are the three models that we're kind of working with. And there can be kind of individual situations where it's a mix of those three being used in the same exact deal. Historically, we didn't have the disposable revenue and we didn't have a system that could be installed and deinstalled easily. And so really you were limited to exclusively the capital sales model. It's the innovation in both our disposable devices and having a whole portfolio of disposables now available that provides significant revenue per procedure that allow you to fund a capital. And it is the innovation in Genesis X and its ease of accessibility that makes those alternative models available. I overall am agnostic to the three models and we are pricing things in a fashion where we are agnostic to the three models. From a working capital perspective, it's obviously nice to get cash up front in a capital sale, but from an overall economic value, we're pricing things such that we're agnostic to the three models. And even from a working capital perspective, the amount of recurring revenue that can be driven by a placement model is very significant. And this is high margin revenue. And so essentially, within less than a year, the variable cost invested in a capital system can be paid off. And kind of we see that as an attractive way. If that ultimately accelerates adoption, that's a great model to use. I believe Intuitive Surgical, over 50% of their systems are either placed or, you know, on a leasing basis or on a disposable commitment basis. And so I assume that as we grow, that will become the majority of our capital will be done through that as well.

Got it. That's helpful. Thank you.

Thank you. Thank you. Our last question comes from the line of Adam Mater from Piper Sandler.

Please go ahead.

Hi, this is Kyle Windborn on for Adam. Thanks for taking our questions. I guess first one for me, just on OPEX plans for 2026, I think I heard you say you expect it to kind of be stable. Am I understanding that correctly as stable year over year, so it's kind of the same level as 2025? And then just kind of hoping for any qualitative color you can give on that. You know, you discussed some investments that you're looking at with some of the manufacturing issues. And then, you know, also as you're thinking about kind of scaling the commercial team here for the U.S. launch, just any kind of color you can give there for OPEC spend this year.

Sure. And so, so, sure. So our expectation is that operating expenses will overall be flat. As a reminder, our operating expenses include significant kind of what I call accounting expenses and not kind of actual cash outlays, but things related to amortization of intangibles and kind of non-cash compensation related to stock plans that still haven't created any dilution at all for shareholders. And so there's some of those accounting things. If you kind of take those out and look at our adjusted operating expenses, we've been running that at under $30 million a year now for several years, kind of in the high 20s, a million dollars a year. And we expect it to stay kind of at that level also this year. And we benefit from, there have been significant projects, obviously, that we've been advancing over the last several years in terms of PMA, ablation catheter, a complete new robotic system, the synchrony system, other catheter projects. And so while we still have a fairly full pipeline of innovation efforts going on internally, those were big projects that demanded huge amounts overall of investment. And so as that kind of reaches regulatory approvals, you have natural reductions in OPEX accordingly. And so that kind of frees us up to make certain investments in other areas, like manufacturing ramp, where we're putting more effort, like the commercial activities. We have a direct sales team in U.S., Europe, and even a smaller one in Asia. That team is very good. They know our space. They know our products. They know all of our existing customers. and overall, they have the capacity to go through all of the administrative efforts with Magic and Magic Sweep across all our hospitals. They have the capacity to do the initial launches of the technology at all our customers. We've described and we've kind of started the model as we ramp catheter revenue in any specific account. We're excited about the ability to hire individual reps who can become focused on that account, but that's not in the scale of our existing installed base. And as we ramp magic this year, that isn't to the level where it would make major differences, that'd be in the low millions of dollars of investment and overall. And so in the scheme of kind of the overall operating expenses, we believe we can hold operating expenses more or less flat and kind of while doing so. And as we get over the manufacturing ramp this year, We have kind of already demonstrated Genesis X working across multiple hospitals. I think 2027 shapes up to be the year where you make more significant investments in the commercial team, both on the capital side and the disposable side.

Super helpful. Thank you for all that color. And then maybe just for my second question, I was curious maybe on the opportunity in China for this year. So could you kind of just remind us what you expect the portfolio there to look like for this year and kind of how you're thinking about the macro outlook? Thank you.

Sure. So we did receive with our partner, Microport Everpace, we received approval for the Genesis system, the system prior to Genesis X in China a year ago. We also, they received approval for a robotic ablation and high-density mapping catheter, which works only with their mapping system. And so that kind of ecosystem became available around a year ago, and they've been also working over the past year on refining the manufacturing and ramping the manufacturing of their own catheters in China and placing their mapping system with the robotic accounts in China to demonstrate the value of that technology. We receive economics on that, and so while it isn't our own catheter, we receive economics on the adoption of that catheter and the shift from the old ecosystem to this new ecosystem. This year, we do expect the first Genesis systems to be sold in China. It has been a difficult environment from a macro perspective for capital, and so it has been slow advancing those deals, but there are a few in the pipeline that seem to be more promising. And so MicroPort expects to have several, roughly a handful of systems sold in China this year. Obviously, nothing is guaranteed until we get the purchase order, but that's overall their projections. And we do see them continue to invest in activity for capital sales. And so really kind of the story this year, we'll be getting the first Genesis systems there, going through the Genesis X regulatory submission and going through the MAGIC regulatory submission, and then also having kind of the shift from the older Johnson & Johnson catheter in China to Microport's existing catheter and the royalties that we'll receive with that shift.

Super helpful. Thanks, David. Thank you.

Thank you. There are no further questions on the queue.

That concludes our question and answer session. That also concludes our call for today. Thank you all for joining, and you may now disconnect. Thank you very much.