• Revenue: $2.83 million in Q3 2024, a 64% increase from $1.70 million in Q3 2023.
• Recurring Revenue: $2.65 million in Q3 2024.
• One-Time Sale of Capital Equipment: $179,000 in Q3 2024.
• Gross Margin: 64% in Q3 2024, up from 61% in Q3 2023.
• Total Operating Expenses: $10.8 million in Q3 2024, a 42% increase from $7.6 million in Q3 2023.
• R&D Expenses: $4.2 million, a 22% increase year-over-year.
• G&A Expenses: $3.7 million, an 84% increase year-over-year.
• Sales and Distribution Expenses: $2.9 million, a 34% increase year-over-year.
• Net Finance Expense: $199,000 in Q3 2024, compared to net finance income of $1 million in Q3 2023.
• Net Loss: $9.4 million or 38 per share in Q3 2024, compared to $5.6 million or 26 per share in Q3 2023.
• Cash Position: $27.1 million as of September 30, 2024.

• Warning! GuruFocus has detected 2 Warning Signs with PROF.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Profound Medical Corp (NASDAQ:PROF) reported a 64% increase in third-quarter revenue compared to the same period in 2023, reaching $2.83 million.
• The company achieved a gross margin of 64% in Q3 2024, up from 61% in Q3 2023, indicating improved profitability.
• The Tulsa procedure is gaining traction as a mainstream treatment option for prostate disease, with strong endorsements from leading physicians.
• CMS has elevated the Tulsa procedure to urology APC level seven, offering higher reimbursement rates than other prostate treatments, which is expected to drive adoption.
• Profound Medical Corp (NASDAQ:PROF) is transitioning to a more traditional medical device business model, which is anticipated to deliver high margins and be economically attractive to users.

Negative Points

• Profound Medical Corp (NASDAQ:PROF) recorded a net loss of $9.4 million in Q3 2024, compared to a net loss of $5.6 million in the same period in 2023.
• Operating expenses increased by 42% year-over-year, driven by higher R&D, G&A, and sales and distribution costs.
• The company faces challenges in reaching its goal of 75 installed systems by year-end due to the transition from a cash pay model to a reimbursement-based model.
• There is uncertainty in the mix between capital and recurring revenue in the near term, making it difficult to predict financial outcomes.
• Profound Medical Corp (NASDAQ:PROF) needs to expand its sales team significantly to capitalize on the growing pipeline and demand for the Tulsa procedure.

Q & A Highlights

Q: Can you provide an update on the goal of having 75 systems installed by year-end? A: Arun Menawat, CEO: We have reaffirmed our revenue guidance based on a strong pipeline. However, due to the transition from a cash pay model to a reimbursement model, reaching 75 installations by year-end is optimistic. We expect to achieve this shortly after the year ends.

Q: How has the response been from the Pro Talk Live event and the recent upgrade to APC level 7? A: Arun Menawat, CEO: The response from the event was strong, with many attendees moving forward with installations. The upgrade to APC level 7 has been positively received, reinforcing the belief that our technology can become mainstream.

Q: With the upgraded coding, how do you see this impacting physician uptake and revenue growth? A: Arun Menawat, CEO: The alignment of support from physicians, positive patient feedback, and strong CMS reimbursement positions us well for growth. We expect to see increased utilization and are building a sales team to capitalize on this momentum.

Q: Can you discuss the shift from a pay-per-use model to a traditional capital sales model? A: Arun Menawat, CEO: Initially, the pay-per-use model was suitable due to the unpredictability of utilization. Now, with better predictability and strong reimbursement, sites are interested in purchasing systems outright, which aligns with our goal of increasing utilization and profitability.

Q: What are your plans for expanding the sales team in light of the reimbursement changes? A: Arun Menawat, CEO: We currently have 13 to 15 salespeople and aim to expand to 40. We plan to add at least five more this year and continue recruiting to support growth and capitalize on the reimbursement changes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.