Mr. Arun Menawat reports

PROFOUND MEDICAL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS

Profound Medical Corp. has released its financial results for the fourth quarter and full year ended Dec. 31, 2023. Unless specified otherwise, all amounts in this press release are expressed in United States dollars and are presented in accordance with international financial reporting standards as issued by the International Accounting Standards Board.

Business highlights:

• Q4 2023 recurring revenue growth of 60 per cent over Q4 2022;
• Tulsa-Pro systems installed base now totals 50; Profound continues to expect to grow that to 75 Tulsa-Pro systems in 2024;
• To date, Tulsa-Pro has been installed at, or contracted with, 10 of the top 20 cancer hospitals in the United States as ranked by U.S. News and World Report;
• Profound continued to see a wide variety of prostate disease patients treated by its Tulsa-Pro customers in Q4-2023:
  • Approximately 67 per cent were treated for prostate cancer, 23 per cent were hybrid patients suffering from both prostate cancer and benign prostatic hyperplasia (BPH), 7 per cent were salvage, and 3 per cent were men with BPH only;
  • For cancer grade, approximately 13 per cent were GG1, 55 per cent were GG2, 22 per cent were GG3, and 10 per cent were GG4 and GG5;
  • In terms of ablation, approximately 53 per cent were whole gland; 23 per cent were subtotal but more than half the gland; 24 per cent were focal therapy;
  • For prostate size, approximately 3 per cent were less than 20 cc; 39 per cent were 20 to 40 cc; 32 per cent were 40 to 60 cc; 21 per cent were 60 to 100 cc; and 5 per cent were over 100 cc;
• The continuing Level 1 Captain trial comparing the Tulsa procedure to radical prostatectomy in men with localized prostate cancer remains on track to complete patient enrollment by the end of this year;
• Last week, Profound announced it had entered into non-exclusive collaboration with Siemens Healthineers designed to further expand physician and patient access to the Tulsa procedure.
• Today, the company announces the promotion of Mathieu Burtnyk, PhD, from senior vice-president, product leader, to chief operating officer.

"Our preparations continue for the permanent CPT Category 1 codes for Tulsa going into effect at the beginning of 2025, an anticipated inflection point for our business," said Arun Menawat, Profound's chief executive officer and chairman. "In addition, our next AI-based [artificial intelligence] module, called Contouring Assistant, that enables creation of suggested treatment design based upon the specific prostate anatomy of each patient, is now under U.S. Food and Drug Administration review. Based upon user feedback, we believe this upgrade will not only further increase urologists' confidence in treating more of their patients with Tulsa but it is also expected to reduce total Tulsa procedure times."

Summary fourth quarter 2023 results

For the quarter ended Dec. 31, 2023, the company recorded revenue of approximately $2-million, with the full amount coming from recurring revenue, which consists of the sale of Tulsa-Pro consumables, lease of medical devices, procedures and services associated with extended warranties. Fourth quarter 2023 revenue increased 60 per cent from approximately $1.3-million in the same three-month period a year ago.

Total operating expenses, which consist of research and development (R&D), general and administrative (G&A), and selling and distribution (S&D) expenses, were approximately $9.8-million in the fourth quarter of 2023, an increase of 5 per cent compared with approximately $9.4-million in the fourth quarter of 2022, which included the company's recognition of a non-cash impairment of approximately $2.5-million in the period.

Expenditures for R&D for the three months ended Dec. 31, 2023, were approximately $4-million, an increase of 28 per cent compared with approximately $3.1-million in the three months ended Dec. 31, 2022, primarily driven by improved enrolment for the Captain trial and recruitment efforts, additional consultants hired to assist with the clinical and regulatory affairs of the business, additional travel associated with system installation and testing, increased salaries and staff during the period, and increased software costs associated with thermal boost and artificial intelligence development. These were offset partially by a decrease to material costs.

G&A expenses for the 2023 fourth quarter increased by 41 per cent to approximately $3-million, compared with approximately $2.1-million in the same period in 2022. Salaries and benefits, consulting fees, rent expense, and expected credit loss allowance increased due to higher cost of living salary increases and bonuses awarded to management, increased legal and accounting fees associated with the establishment of the company's at-the-market equity program, and lower refund for utility and tax overpayment. Partially offsetting this was a decrease to share-based compensation due to fewer options awarded to employees.

Fourth quarter 2023 S&D expenses increased by 74 per cent to approximately $2.9-million, compared with $1.7-million in the fourth quarter of 2022. This was driven by increased salaries and benefits, consulting fees, share-based compensation and marketing, due to increased salesforce and commission payments, reimbursement and foreign consultants engaged to assist with sales efforts, additional awards granted for employees and increased in-person conferences, customer meetings, release of patient videos, and marketing materials. These were partially offset by a decrease in other expenses due to the reduced mobile MRI time as part of the company's U.S. sales initiative and lower general expenditures.

Net finance costs for the three months ended Dec. 31, 2023 were approximately $356,000, compared with approximately $499,000 in the three months ended Dec. 31, 2022.

Fourth quarter 2023 net loss was approximately $8.9-million, or 42 cents per common share, compared with approximately $9.5-million, or 46 cents per common share, in the three months ended Dec. 31, 2022.

Summary full year 2023 results

For the year ended Dec. 31, 2023, the company recorded revenue of approximately $7.2-million, with $6.8-million from recurring revenue and $393,000 from the one-time sale of capital equipment in international markets. This compares with revenue of approximately $6.7-million in the 12 months ended Dec. 31, 2022, with $4.7-million from recurring revenue and $2-million from the one-time sale of capital equipment.

Profound's full year 2023 total operating expenses were approximately $33-million, a 6-per-cent decrease compared with approximately $35.1-million in 2022.

Expenditures for R&D for the 12 months ended Dec. 31, 2023 were approximately $14.4-million, a decrease of 2 per cent compared with approximately $14.7-million in 2022. This was primarily driven by decreases in salaries and benefits, share-based compensation, and office supplies. Partially offsetting these was an increase in clinical trial costs, materials, consulting fees, rent and other expenditures.

G&A expenses for the year ended Dec. 31, 2023, decreased 3 per cent to approximately $9.2-million from $9.5-million for the year ended Dec. 31, 2022. This was due to a decrease in salaries and benefits, share-based compensation, software cost and other expense, offset partially by an increase in consulting fees, insurance costs and expected credit loss allowance.

Full year 2023 S&D expenses were approximately $9.5-million, an increase of 12 per cent from $8.5-million in 2022. Increases in salaries and benefits, consulting fees, marketing, travel and other expenses were partially offset by a decrease in share-based compensation due to fewer options awarded to employees.

Net finance expense for the year ended Dec. 31, 2023 was approximately $81,000, which compared with net finance income of approximately $3.7-million in 2022, which was primarily due to a foreign exchange in the year.

The company recorded a net loss for the year ended Dec. 31, 2023, of approximately $28.6-million, or $1.35 per common share, compared with approximately $28.7-million, or $1.38 per common share, for the year ended Dec. 31, 2023.

Liquidity and outstanding share capital

As at Dec. 31, 2023, Profound had cash of approximately $26.2-million. Subsequent to year-end, the company completed a public offering and a private placement of common shares, resulting it in having approximate cash of $45.4-million as at Jan. 31, 2024.

As at March 7, 2024, Profound had 24,428,899 common shares issued and outstanding.

Conference call details

Profound Medical is pleased to invite all interested parties to participate in a conference call today at 4:30 p.m. ET during which time the results will be discussed.

To participate in the conference call by telephone, please preregister on-line to receive the dial-in number and your unique PIN.

The call will also be broadcast live and archived on the company's website.

About Profound Medical Corp.

Profound is a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue. Profound is commercializing Tulsa-Pro, a technology that combines real-time MRI, robotically driven transurethral ultrasound and closed-loop temperature feedback control.

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