EDAP TMS S.A. ($EDAP)

So welcome to the 2026 FocalTherics Investor Day. We got a great program this morning, and I'm excited to have you all as our guests. Today's agenda, I'm Ryan Rhodes, CEO. I'll be covering the following topics: our transformation as FocalTherics, our commercial leadership in robotic focal therapy, clinical expansion of our platform into new indications. And we'll have our physician speaker, Dr. [indiscernible], come up and speak to us followed by Steve Annen, our Executive Vice President, who will discuss innovation in Advanced Technologies; and then Ken Mobeck, our company's CFO, will talk about our financials and how we're well positioned for growth. Transformation, FocalTherics was announced on Friday. It's really a culmination of the words, focal therapy and therapeutics. Focal, meaning to target, therics or therapy to treat in heal. We are transforming into a high-growth, pure-play robotic focal therapy company with a leading position in both large and growing markets. If you look at our company revenue over the last several years, though there's been growth, it's been driven primarily by our HIFU business. Our noncore businesses, ESWL and distribution have shown a decline. And so as we looked outward and we look at our growth in the future, it's really about the great story we unlock with robotic HIFU. As noted here, our growth rate is strong, durable and exciting for the company and its future. FocalTherics, we're the global leader in therapeutic ultrasound and we accomplished this by redefining the treatment of cancer and benign disease through organ-sparing function preserving FocalOne therapy. Our 3 strategic pillars are as follows: scaling commercial execution in prostate cancer, expanding our market opportunity with added new indications on the same focal platform and by advancing technological innovation in HIFU and beyond. We offer a noninvasive procedure that requires no surgery no cutting, no use of needles and no radiation. By combining advanced imaging, proprietary high-intensity focused ultrasound and precise robotic energy delivery, we enable a very effective organ-sparing function preserving treatment for a large patient population. As such, we are defining, building and leading the category of robotic focal therapy. Turning our attention to addressable markets. starting with prostate cancer. We know prostate cancer is the most common cancer amongst men, nearly 1.4 million newly diagnosed cases globally each year. But that number is expected to double in the next 14 years, as shown on the right. By 2040, there'll be nearly 3 million newly diagnosed cases of prostate cancer around the world. When we turn our attention to the U.S., 330,000 newly diagnosed cases each year in the United States with 3.5 million men walking around and living with their disease. As we talk about prostate cancer, it's important to talk about radical treatments, starting with surgery. Surgery is a whole gland treatment. Whether it's performed open, laparoscopic or through robotics, it is still a radical prostatectomy. It's an incision into the body. It's cutting, it's burning. It's traction injury, it's reconstruction of the urine channel, and it has its own morbidity profile. Radiation, whether IMRT or SBRT, generates toxicity in the body, which can sometimes lead to secondary cancers, rectal cancer, bladder cancer. Radiation has a failure rate in the clinical literature anywhere from 15% to 30%. And many of the patients who are treated with radiation may suffer on the functional outcomes. With robotic focal HIFU ablation, we spare the organ and preserve its function. We can see where the cancer is. We can delineate around that cancer in its boundaries, and we can treat it effectively with targeted robotic HIFU. The prostate cancer patient always has a dilemma. At time of diagnosis, they're balancing in their mind their treatment option versus the outcomes. And we think of the treatment outcome, we're talking about treatments or a protocol in the case of active surveillance or radical treatments such as surgery or radiation. But as they're thinking about their treatment, they're also thinking about treatment effectiveness, complications and recovery, loss of urinary control, loss of sexual function. Another way to look at it is the patient value equation. On the x-axis on the blow is preserving quality of life, preserving sexual function and urinary and on the y-axis preserving or proving efficacy based on oncologic control. So if we look at the various treatments, starting with active surveillance, which is a monitoring protocol, it scores well on quality of life preservation because there is no treatment. But scores low on efficacy as a treatment. When we turn to the radical treatments such as surgery and radiation, they score high on efficacy, but many times and most times men are left with an altered quality of life outcome. What is ultimately the patient want? They want high quality of life preservation with an effective oncologic treatment. And that's what we offer with FocalOne robotic HIFU. An important story to understand is the transition from radical treatments to organ-sparing treatments. If you go back in time and look at breast cancer, in the early years, women had a radical mastectomy, the removal of the breast, the pectoral muscle and a very large debilitating axillary dissection under the arm pit that left them disfigured and with chronic lymphedema. It was modified to a modified procedure, modified radical mastectomy but it was still a big surgery. Today, we're in a new era where many women are offered to lumpectomy. In prostate cancer, similar, prostate cancer has been around surgery specifically for over 100 years. Whether it performed open or robotically it's still a radical prostatectomy. And as such, today, we can offer something as such, Focal One Robotic HIFU to a large majority of patients. It's important to understand the large gap between no treatment and radical treatment. Remember, prostate cancer is a heterogeneous cancer. It's not one cancer. It's millions, millions of cancers, stratified by risk at time of diagnosis from low-risk intermediate risk and high risk. Previously, there have been no options other than active surveillance or radical treatments to address intermediate risk patients. This is the problem we solve. Focal One Robotic HIFU bridges the gap. And we cross in and across low and intermediate risk disease with a significant opportunity of a $4 billion total addressable market. There's an emerging paradigm in the shift to treatment options, as stated the past considered surgery, radiation, active surveillance, we're now in this transition to a current market shift with the onset of focal therapy. But in the very near future, this market will be very large. It will be larger than either the stand-alone categories of surgery or radiation with a growth rate up to 40% of the total market. And what's exciting about this opportunity, the patients are already there today. They are there in front of us to be treated. If you look at Focal One transrectal HIFU, we offer superior access, precision and tissue preservation. From a transurethral approach, other technologies and transparent, it's important to understand the differences. Transurethral typically requires access to a costly, expensive MRI suite and commonly requires a second position. The energy in most cases, is non-focus. And there's bleeding and urethra and tissue damage. In a transperineal approach, punctures are made through the perineum, manual placement and positioning of these needles and bleeding from surrounding tissue damage. With Focal One Robotic HIFU, we can perform the operation as a single urologist. We can precisely focus the ultrasound and target the robotic energy delivery. We're in the closest proximity to the target tissue, especially in the region of the posterior area, the prostate where cancer is highly prevalent. We spare the urethra and there is no bleeding. This is Medicare data published over several years and through the recent year of 2025. And what it shows is HIFU is emerging as the fastest-growing focal therapy treatment amongst other treatments. It is now the #1 ablation technology for prostate cancer. We have strong emerging clinical evidence that supports and favors Focal One Robotic HIFU. There are several landmark studies that show positive clinical outcomes. Starting with the HIFI study, which was HIFU versus radical prostatectomy, a prospective comparative clinical trial, the HIFI-2 study, which was a prospective salvage clinical trial comparing HIFU in a salvage post radiation treatment subset of patients. And the CGD International Urology and Nephrology paper in clinical study that reflected HIFU versus radiation and show that HIFU patients demonstrated higher overall survival at 10 years versus radiation. There are some important other studies that have been completed, presented at scientific meetings and are in the process of being published. [ FAR ] focal ablation versus radical prostatectomy, which will be a level 1 evidence clinical study published. And then the [ HIFUSA ] clinical study, which is also a randomized study across 14 centers in Europe comparing HIFU to patients with active surveillance where HIFU demonstrated superior progression-free survival compared to active surveillance. It's important, though, to talk about this HIFI study. Why? Because it's the largest prospective comparative multicenter study ever completed in the treatment of prostate cancer. This study was funded at an amount of nearly $25 million, was not paid for by the company, but is exclusive to FocalTherics HIFU technologies. It involved treating 3,328 patients across 46 centers and involving 80 urologists. We met our primary endpoint, which was cancer control, patients free from salvage treatment at 30 months as shown here, but we also showed superiority across maintaining urinary continence and control as well as preserving patient erectile function. What this study doesn't show is the amount of complications attributed to surgery. And they're numerous. Turning our attention to FARP focal ablation versus radical prostatectomy. What's exciting is Level 1 evidence but a randomized controlled trial, looking at patients treated with HIFU or ablation technologies as compared to surgery. And what's interesting about this study is it first validates exactly what we've learned from HIFI that we can provide adequate equivalent oncologic control against the gold standard treatment surgery but the patients will do far better on the functional outcomes equation that is preserving sexual function and urinary control. I'm important to also note is 25% of the patients who were randomized for surgery refused surgery, refused surgery and chose focal ablation. We have growing adoption of Focal One Robotic HIFU. As shown on this map, more centers, both academic and community hospitals are adopting this technology. We're now in some of the most respected largest academic centers recognized around the world. Memorial Sloan Kettering Cancer Center, MD Anderson, Mayo Clinic, Cleveland Clinic. We're in every University of California teaching hospital. We're in [ Kaiser ] with multiple systems. We're in HCA. We're really just getting going with this exciting story. And our rankings are at the very top as the leading focal therapy. Seven out of the 10 U.S. News World Report ranked hospitals are running Focal One now. We're in 66% of the Society of Urologic Oncology fellowship programs and growing. And we're nearly 60% of the national cancer network participating in hospitals, the most respected hospitals that do research and advancing treatments for cancer. But what's even more exciting is our pipeline. We have a qualified pipeline we're activating around involving 300 hospitals around the U.S. 11 hospital systems now own more than one Focal One system technology. 11 hospitals invested in more than one Focal One system. When we turn our attention to Europe, it's equally exciting. As noted here in the dark blue dots, these are fixed systems placed throughout Europe. The light blue dots are mobile clinical sites. And now with the results of the HIFI study, reimbursement has been awarded in France and actually pays a little bit above surgery. We've already shown sales coming in from this last quarter from the conversion based on this new reimbursement. In closing, FocalTherics has the most established and growing, global commercial adoption of a focal therapy company with an installed base 175 and growing, and we're excited about our near-term opportunities to grow across both academic and community hospitals. Turning our attention to procedures. Across our 91 accounts today and growing, we've shown 53% year-over-year on a quarterly basis procedure growth. And we've accomplished this by, again, focusing expanding our installed base of leading academic centers, community hospitals and integrated delivery network hospitals growing physician adoption through education, training and clinical evidence and very importantly, driving patient demand because it's out there for a noninvasive, effective and function preserving rent option. In the outside U.S. markets, we're growing as well. We've had some recent success as shown here by our direct entry into some key markets the U.K., the Nordic region. We've established the reimbursement in France as mentioned. We're converting a legacy mobile system service model to capital sales and fixed placements. We've now entered into new markets, both in India, as a country, and other areas of Latin America, and we're in the early launch of endometriosis in [ CE mark ] countries. We are executing disciplined commercial growth in a scalable way across targeting, building and scaling. Less than 10% is the penetration currently today for our initial market with focal therapy. So there's tremendous upside in runway. Our goal in targeting, obviously, expanding the installed base through sales to greenfield high-volume centers, prioritizing accounts with multisystem and multi-urologist opportunities. When we shift over to a building 53% procedure growth, there's more capacity out there to do more procedures. We'll focus on driving increased utilization with physician training, education and clinical evidence and importantly, develop a robust and growing patient pipeline through dedicated hospital marketing and program support. And last, scaling our programs to independents. We build a program. We transition sites to clinically autonomous activities as a program, and we reduced the reliance on clinical staffing as procedures mature. 70% of the procedures performed year-to-date this year 2026, have required no clinical application support. A great example of our success in building programs is San Alfonso's Medical Center in Boise, Idaho, part of Trinity Health. As noted on the left, they rolled out a launch program in combination with our support. They've ramped aggressively their first 4 quarters and performed 100 procedures their first year. This is a small metropolitan statistical area, and we believe that this can be absolutely repeated in multiple areas around the country. Turning our attention to reimbursement. To remind everyone, we have a Category 1 CPT code payment at APC 6. We have favorable physician reimbursement and growing coverage. Looking at the facility payment. And again, this is a national average adjusted based on the wage labor index at point of care. So in many markets like here in New York, this number would be closer to $14,000. But there's robust reimbursement in place. And I might add, the last 3 years on a consecutive basis, each January, we've had an increase in this reimbursement. January 1 of this year, 2026, reimbursement went up 4.3%. When we look at the physician payment, it's a great story as well. work-related RVUs for a procedure that can be formed in any outpatient setting that has optimal choreography and workflor and noted, it's the highest paid focal therapy procedure for a urologist and only a couple of hundred dollars difference for urologists performing a big surgery such as radical prostatectomy. Turning our attention to commercial coverage. We're expanding patient access. As noted, Medicare coverage is automatic for all patients nationwide. And national local plans may provide individual payment according to their coverage policies and our local arrangements. We've shown payment from all the major payers is here. And we also believe existing and upcoming positive clinical evidence will provide broader and expanded coverage in the near future. Want to change and talk about the clinical expansion of our platform into new indications, starting with BPH. We know this is a large prevalent disease state that affects many men. Globally, 100-plus million men are living with BPH conditions on a global level. 13-plus million of newly diagnosed cases happen around the world each year. And within the U.S., 600,000 new cases are diagnosed on an annual basis. BPH as a treatment is a highly fragmented market. As noted, there is no commercial leader, company leader across these various treatments and gives us ample opportunity to enter this market, and we will be the only noninvasive nonsurgical focal therapy solution. Where are we? We've got to clinical studies underway, running in parallel. In the U.S., we've now treated through an IRB combined with the local team here at Mount Sinai Hospital, 14 patients in Latin America. We're enrolling under a hospital-sponsored IRB. Now patients to be treated here locally, but we're also running a Phase I/II study in the outside U.S. European market. We expect data to read out here toward the end of 2026, with the ability to be in a pivotal trial in the early part of 2027. Our solution will be noninvasive, involve no bleeding, no foreign body and no quality of life trade-offs. And of particular importance when we talk about bleeding is that there's a growing number of BPH patients, approximately 30% to 40% of men seeking BPH treatments are on some form of anticoagulant or antiplatelet medication, who are at risk of bleeding complications. We believe that subset of patients would be highly valuable to a Focal One BPH treatment. We're ideally suited to capture significant portion of the BPH market. It's the same Focal One platform, the same installed base that's growing, the same urology call point. And in many cases, the same positions in staff. We also come from a position of strength. We're already familiar with prostate cancer. We're treating those patients today. Moving to benign disease like BPH will be an easier pathway for us as compared to other technologies referenced here. And those technologies may include water in their treatments. We have freedom to operate today with a Category [ I ] CPT code in place today for transrectal HIFU food treatment, specifically for BPH. I've shown the regulatory pathway and we're excited for this new opportunity. Turning our attention to deep infiltrating endometriosis, women's health. There are 38 million women living with deep infiltrating endometriosis globally, of which 783,000 patients are diagnosed with this condition on a global basis. We have 225,000 patients diagnosed here alone in the U.S. market and women that have this condition don't have a lot of good options. Surgery usually involves a rectal resection, partial reception or even a [indiscernible] stripping procedure. They're required to have surgery. We can offer something better. And as noted here, current treatment options are lacking and/or limited to hormonal or surgical management offered to the choice. When offered the choice, 91% of women would prefer a nonsurgical option. So if you look at our indication expansion pipeline on the top here, in the outside U.S., we've completed 3 studies, and we're in a follow-up phase from our randomized controlled trial and our Phase II study. But while we're following up with those patients soon to be publishing data for these patient series, we have a [ CE Mark ] launch in [ CE Mark ] countries with a goal for a commercial rollout to come later in the months ahead. U.S. endometriosis will wait for the data to be presented from these pivotal studies, Phase II and Phase III studies and that will allow us to finalize the strategy for regulatory submission by the end of this year. Turning our attention to the accounts that we're working on now. I first want to add that this last quarter, 3 of our sales in CE Mark countries were due to the ability to treat patients not only for prostate cancer but for endometriosis on the same exact machine. We have 11 accounts in our training pathway as outlined here, some on the front end and some already through this training pathway. We're excited on the momentum building. We know there'll be high patient demand for this treatment, and we're also excited of the value it will bring for women that really don't have options out there to treat such a debilitating disease. In closing, we have a large growing TAM, starting with prostate cancer, 1.7 million procedures globally. When we add BPH, that number nearly doubles. And on top of that, with endometriosis combined, 4.3 million procedures to go after with our proprietary Focal One technology which would be an opportunity of $10 billion, possibly $10 billion in revenue. I will stop there, and I want to introduce our physicians speak. We're very proud to have Dr. Behfar Ehdaie from Memorial Sun Kettering Cancer Center. A little bit of background on Dr. Ehdaie. He is a trained urologic oncologist. He has a masters in public health from Harvard. He is a highly accomplished clinician, both in the areas of surgery and certainly in the areas of focal therapy as we will discuss today. And a great overall individual, and we're so happy to have him here. So I want to welcome up Dr. Ehdaie.

Thank you. [indiscernible]. Thank you for the opportunity to talk this morning and to meet everyone. I'll still go through a story, a little background about myself. As a disclosure, I'm a surgeon. That's what I do. 90% of my practice at Sloan Kettering, we're probably the highest volume radical prostectomy hospital in the world. And through my career, my focus has been patient quality of life, and that's been my research, and that's what drove me to doing research in focal therapy. And it's stories like this. This was a letter or an e-mail sent to me by one of my patients. This was a couple of years ago. says, "Hello, Dr. Ehdaie. Thank you for getting back to me. I say this every time I see you. Thank you. While I'm in line for the men's room and sporting events or theaters, I pee on command, quickly and efficiently like a teenager. I think my friends and husband are just listening to other guys, my age, gay and straight. I think I have a better sex than they do. I'm never short of amazed about how my quality of life, while different has remained so positive. But I fare so much better than other guys. You [indiscernible] man truly made my life better. No need to reply, you're a busy man, see you in a few months." And I think that's what we do in the research we do and the clinical care we provide is for these types of e-mails, these type of letters. And I think that's where the story of focal therapy begins. Where is prostate cancer? I think the word cancer is a call to action. Obviously, it concerns us. However, prostate cancer is on a different scale. This was a landmark study done in the U.K. In 2000, it started, it produced its first results in 2012 and it's 15-year outcomes and what it basically did took men who were part of a screening study in the U.K. for prostate cancer, then subsequently enrolled those men and randomized them who are diagnosed with prostate cancer to either surgery, radiation therapy and observation. And this is before the era of MRI imaging, before any sort of genomic testing for patients. And as since these patients were told, we will monitor you. And if you have bone pain come tell us your PSA really goes up, we'll let you know. And that was basically this study. And you would think this should just make surgery and radiation look so great. But these are the survival curves. And this shook our field. And in 2010, 2011, when I was finishing my training, it became clear to me that although prostate cancer in many forms is something that needs to be taken seriously treated in a way for curative intent, a very high number of patients would never benefit from radical treatments. And -- it was from that we launched the concept of active surveillance. Currently now, I probably have the largest clinic that I oversee at Memorial Sloan Kettering for active surveillance over 3,500 men over the past 15 years. But what's interesting about active surveillance. As we look at the probability of undergoing subsequent therapy when they start active surveillance in that cohort of patients in this prospective clinical trial was that within 5 years of monitoring, almost half of these men had to undergo treatment for various reasons, either the change in their grade of their cancer, how organized or disorganized the cells look under a microscope, rise in their [ PSA ] or other factors. And it became clear to me that the goal really should be not only to enrollment into active surveillance that don't need treatment but to try to push this curve out as far as we can. 15 years, 20 years because then you really have competing risk mortality. I want the chance of you dying from cardiac disease or other natural factors to be 20x higher than dying from prostate cancer, but without the side effects of treatment. Where are we with radical surgery? Well, this is our data from Sloan Kettering. Approximately 10,000 radical prostatectomies over the past 20 years. And if we look at this data, it's very clear that despite advancements in robotic surgery, better patient selection, better management of patients post surgery with regard to urinary function and sexual function. If we look specifically at sexual function, that 6 months and 12 months recovery of sexual function has not changed during that time period for our patients. This story is mirrored in urinary continence. Again, 6 and 12 months, these curves are relatively flat. And I think this really tells the story of why, especially surgeons in my generation, not only adopted active surveillance, but have sought better treatments for their patients from the regards to quality of life. So your question should be it seems like a no-brainer. We should be doing focal therapy in the past 40 years, 50 years. What took you guys so long? Well, the reality is over 90% of prostate cancer is multifocal. So this is a home out section of erratical prostectomy specimen cut and under pathology and reviewed. And we see the different grades, first of all, regions of interest where there was cancer detected, and we look at these areas under a microscope and look how organized or disorganize cells are to tell us the grade of the cancer and the grade of a cancer is associated with its risk. So you would look at a tumor like this 20 years ago, 30 years ago and said, "We can't do focal therapy here. What are you going to treat one side, then treat the other side and then treat up top, might well just treat the whole prostate." But what I told you about the study before in which Patients were randomized to just observation. The key insight was that patients with low-grade cancers, which we call Pattern 3 predominant cancers, have a nonmalignant natural history. These patients can be effectively monitored. And with that insight, it was clear that what we should be doing focusing on the era with the malignant potential, the area where the cancer can spread. And that unlock the potential of focal therapy. So in a world, we can think of treating that's either prostate or that [ corn ] of the prostate and monitoring on active surveillance this [indiscernible] of low-grade cancer. Another key insight was when you look at these home out sections of prostatectomy specimens, the highest [ Gleason ] score, so the area with the most unorganized cells really correlates well with the volume of that area. So if you have a higher volume area, most likely that's the area with the higher grade cancer. And why does that matter? Because in 2008, 2009, there was a wide adoption and expansion of using MRI in prostate cancer. We're the first center in which the first study started in about 2005, in which MRI was utilized at Sloan Kettering. We would go to meetings and people would say, it's crazy. You guys are a hospital for rich people. That's why you guys can do MRIs on all your patients. This is not the future. 2012, 2013, we realized over half of academic centers are using MRI. And by 2018 and 2020, MRI was incorporated in our guidelines. Now if you have a diagnosis of an elevation in your PSA, you better get an MRI before you do any biopsies. How are biopsies done before that? We randomly put needles in your prostate, 12, 14, 30. Imagine if I told you we diagnosed breast cancer by randomly putting needles into a breast and hopefully finding some cancer. I mean this concept now looking back seems preposterous, but that's what it was. And now we realize that we can see these tumors on MRI. And those areas now with software that fuses the MRI image of 3D ultrasound, we can target those areas, transforming our diagnostic pathway. So it's not too much of a leap to think, well, if we can see it and we can diagnose it, why not treat it? And when I told you before, that correlation with tumor volume, highest grade, MRI does a really good job of finding higher tumor volume, hired the highest volume disease. So if you see it on MRI most likely, that's your index lesion. That's a lesion that will provide the malignant phenotype. So the question is patient selection. Where are we today? And this is a little bit more technical slide, but I want to give you a perspective. Patients with medium risk cancers -- so we call them grade group 2 to 3. So these are 3 plus 4, 4 plus 3. So the patterns are 3 to 5, 3 being the most organized looking cells, 5 being the most disorganized, 4 being somewhere in the middle. We look at basically the proportion of these different cell types within the biopsy tissue to give us a grade. So grade group 2 or 3 is basically predominantly 4s and 3s. Those are our predominant best patients we select for prostate focal therapy. We believe that you can have grade group 1, low-grade cancers, anywhere else in prostate, totally fine. We'll watch those areas on active surveillance. Like we do today, even if you don't have any or higher-grade cancers. We have PSA, which is a blood test that we check in the blood. That correlates well with the size of the prostate and the aggressiveness of the cancer. And we say there should be no evidence of this cancer outside of the prostate, obviously, they're very aggressive cancers. In regards to HIFU, there's only 2 limitations across all focal therapy options. Nothing that's on the very top end of the prostate, which fortunately is only less than 5%, 10% of all prostate cancer diagnosed. And we don't want any sort of strange tumors that may stretch across the whole process from one side to the other. Again, rare but more likely those higher-risk cancers. So your question should be, give us a ballpark, what percentage of patients is that they are currently being diagnosed. Well, the U.K. provides that answer. They have been pioneers in screening studies for years, for decades. So because they can do screening, they can look at who and what type of patients are currently being diagnosed with prostate cancer. What's their phenotype? What's their imaging characteristics? What's their PSA? So this study was brilliant. They went through all their 3 large prospective clinical trials looking at things like PSA screening, looking at MRI as a screening tool. And they said, how many of these patients would have been suitable for focal therapy? And it turns out this number really lands about half to almost 70% of patients with the criteria that I just pointed to in the previous slide. Where are the key trends? Where are we going? Where is this [indiscernible] going? I think not only do we have a high proportion of patients that will be diagnosed with prostate cancer, who will be immediately candidates for focal therapy, but remember, I have 3,500 men that I've been watching for 15 years, 30% to 40% of those men may progress. Their cancers may change. We've argued that about 20% of these patients based on studies we've written will have higher grade cancer detected within 24 months. And like I showed you in the previous slide, it really coincides with the other day that said about 50% of 5 years. These are now the best candidates for focal. Their prostates have been mapped. We've watched them closely. We know where things are located. And these patients aren't jumping from active surveillance to take out my prostate, doctor. They want an intermediate step. This is the population that's really engaged. What I told you before is we're now using MRI in our diagnostic pathway. So before we would just do the random biopsies, find some cancer. We sell predominantly pattern 4 cells, we would be worried because, hey, we luckily found all these cancer cells. There must be more there. But that's not the case anymore. We're now detecting cancers so early and with such precision that we're actually confident about what we're finding. So that's led us to do research to transform the entire grading system, which I will predict will occur in the next 5 years. Our current grading system in prostate cancer dates back to 1969. No changes, no updates. Just these proportions of grades and cells. I argue that the volume of cancer is critical. We're showing that in study after study, and now we have a study of over 36 countries, 40,000 slides within which we're doing machine learning to allow quantification of the actual cancer as a prediction of prognostic significance. That's the future. And if MRI can target it, these proportions go away, our definitions of high risk lowers, medium risk go away, and we start targeting and doing treatments because of that. This is a really interesting area. Radiation patients. I told you approximately 15% to 30% of patients who get radiation have some level of recurrence. Some cancer cells are radio resistant. These are the hardest cases as surgeons. These patients upfront, we tell them 40% chance of urinary incontinence. Forget about your erections, these -- the tissue inside their pelvis doesn't heal well. These prostates are shrinking down. There's no planes of surgery. These patients oftentimes had very few options. And the way they were followed was just PSAs. Radiation oncologist do serial PSAs, the PSA keeps rising, they're worried. They send it to a urologist. We do the blind biopsies again. We find some cancer. We take out the prostate and the patients have portfolio life. With this, paradigm has shifted. We now do MRIs post radiation in addition to PSAs. We're detecting radiation-resistant cancers locally with MRI target. So what's the next step? Treat those patients? And in fact, radiation oncologists are now some of the biggest proponents of focal therapy options because they can tell their patients if they're cancer returns, we have options, where this discussion was more difficult years ago. So Ryan went through this slide, so I won't go into it just again to emphasize, within the treatment paradigm of prostate cancer, I think we understand where it can fit in, in the sort of the medium risk prostate cancer patients that we talked about. But I would highlight the fact that I think the growing trend will be the post-radiation setting. We know that 30% to 40% of patients upfront get radiation treatment for their prostate cancer. Now this has become a really multidisciplinary approach to treatment of prostate cancer in the recurrent setting. Where are we in focal therapy today? Inclusion in guidelines rapid increase in studies and publications and the introduction of this concept in our meetings, our national meetings. The most recent update of the guidelines in both the European guidelines have now basically said we can do focal therapy with HIFU cryotherapy for patients. So this has been adopted widely in Europe. The most recent update in 2026 has now included HIFU without any clinical trial registry. This is the amount of publications in focal therapy since 2000. I mean when you really want to look at any technology, any trend in medicine, just pub met it. You'll know where the intention is. And this is fascinating. This is a growth you don't see normally in our field. And this is the other area of interest. When a technology is introduced or concept introduced has to be initially adopted by our academic physicians has to be normalized in meetings and talk at courses. There's many gateways and medicine to get to this platform. There's key opinion leaders, there's people with biases, there's people with their own agendas that may try to prevent that from happening. But this is us. Now I can report 4 years straight running at our national meeting we run it, of course, on focal therapy, attendance exceeding 250 participants every single year. So what is my experience with the Focal One system? We introduced our program in 2023 and Memorial's Loan Kettering. I can tell you the advantages. I believe it's the leading technology among the competition in regards to efficiency, and that is defined by the treatment time per patient. I believe the robotic system allows really highly reproducible treatment planning and subsequent outcomes. Any system that requires hand motion by a physician, requires adjustments constantly during treatment that are manual, having taught both radical prostatectomy to fellows and residents and other physicians and subsequent targeted biopsy using MRI. These are trends in my career that I have been on the forefront of and taught. It's incredibly difficult. And you see learning curves that are quite variable. But taking away some of those variables in a system that can be standardized, I can't tell you how important that is in our field. Ease of workflow, you don't want a device where a urologist has to speak to his interventional radiologists beg for time in the MRI suite, go to his administrators across street beg for time in the MRI, say, "Hey, those brain MRIs and pediatric MRIs can go on hold, I have a 68-year-old guy with a very small focus of cancer, and I need your MRI suite for 4 hours." It doesn't work in hospital system, just doesn't. So having our own ORs, our own OR time to treat patients is the key. In the state of art, and we'll see it in a video coming up, I think it's real-time treatment and modification, not only adjusting our treatment plans, but watching the treatment happen in real time. And I think the incorporation of MRI with Fusion ultrasound in these systems now, we can now bring in MRIs, more recently, PET scans into these systems, and we can better target, again, simplifying the system, reducing learning curves and standardizing outcomes. So this is a video from the Focal One team. Just giving you an outline of what's happening. We obviously see the machine over there. This is now an ultrasound image. The probe is in the rectum, which is this dark area, there's rim on the bottom. That's your prostate. It's shadowing above. So you can see the area of the tumors on the left side, I'll show you right here. You basically outlined the tumor, your treatment area, you hit a button and watch and start burning the prostate. As it's treating, you'll see changes on ultrasound. As you can see as this is fast forwarded, you see what we call cavitation. This is now the cells breaking apart. We really an indication of treatment that's occurring to have a technology that gives us real-time feedback of what we're treating is critical for what we do. And as you can see, the treatment goes, it rejects itself moving away from the rectum again, you're going to see is a new technology, what physicians do is that they will start building up complications. So a system that initially has safety for first and foremost, is critical, not only to obtain adoption, but also move on and be able to incorporate in our health systems. Here's our initial data. This is unpublished. So I just asked for it to not be distributed on any of our social media platforms, but this will be published, hopefully within the next 3 months. In our first experience, we've now demonstrated that recurrence in the area we're treating is less than 10%. So 93% of patients have no cancer in the area we treated based on a biopsy MRI and a biopsy of that area, where we see a slight decrease in the whole prostate, you can imagine these multifocal settings when we do another biopsy, there may be another area that we just didn't see or biopsy appropriately as far as our selection of patients. As far as quality of life, I think this is no surprise, but it far exceeds anything we're doing with robotic prostatectomy. We now know that over 90% of patients maintain erectile function. These are functional erections. From our data at Sloan Kettering, that number after robotic prostatectomy is less than 40%. And no patients in our entire history of treating patients have any incontinence. That number in the best of hands 2% to 3% after robotic prostatectomy. So in conclusion, I think the data supports offering focal therapy as a viable treatment option for select and growing population of patients with prostate cancer. I do believe the rapid adoption in academic hospitals enables a pipeline of residents and medical students to be exposed to focal therapy. We're just seeing that tidal wave starting, inclusion of focal therapy in academic meetings, courses research sessions, panels will positively influence specialty and national guideline committees, which is critical for adoption and reimbursement. And I do believe focal therapy has reduced the burden of prostate cancer for our patients. It's why we do what we do, why we do the research we do, and I think it's made a tremendous impact on our field. Thank you very much.

I am Steve Annen, and I lead the innovation and product development teams at FocalTherics. As Ryan said earlier, we are defining and building and leading the category of robotic focal therapy. And what I'm going to do today is overview for you the investments we're making in innovation and advanced technologies. So we have the wonderful lecture of having Dr. Ehdaie here and hearing his voice and that's what we do as a practice at FocalTherics as we listen to our clinicians. And the voice of our clinician is very clear about why they chose Focal One and why they chose our company. Let me go through that for you. We know these surgeons look at different focal therapy platforms. And they've made a decision to adopt Focal One for certain technological reasons and work with us for certain reasons in terms of the decisions we make in terms of our product road map. So when it really boils it down, there's 3 things here. Number 1 is accurate treatment targeting. So we have the most compatible system that allows surgeons to bring in patient-specific imaging to drive accurate treatment plans to make the most personalized treatment possible. Number 2 is the recision HIFU energy ablation. That's using our fully robotic control in our electronic beam steering to allow surgeons to shape and conform the targeted ablation around the tumor boundaries of the cancer in 3 dimensions. The third is the easy-to-use workflow, which Dr. Ehdaie already showed us, and I'll show you some more with treatment versatility. This allows the surgeons to deliver a focal treatment a partial gland treatment or a whole gland treatment depending on the state of the disease and allows during the treatment for the surgeons to adjust and refine the treatment based on the size, the shape and the location of the disease, all being the most flexible platform in robotic focal therapy. And from another aspect that we hear directly from our clinicians, as they appreciate and they want to work with us because we've demonstrated an ongoing commitment to invest our development dollars into innovations and product development that they tell us are meaningful to them and meaningful to improve their experience and to impact patient outcomes. So we believe and we know that Focal One is purpose-built for precision focal therapy. What do I mean by that? We offer a natural orifice approach that provides direct access to targeted tissue. As Ryan pointed out, and Dr. Ehdaie pointed out, targeted tissue in the prostate lane. We are the closest technology to where the cancer lives, right? The -- we also -- the Focal One platform has a foundational design, a scalable design. It's a seamless integration of precision robotics, our proprietary dynamic focusing probe high-resolution imaging and a mature software-driven workflow. And this can't be understated. It's very important. We have a long history of a full workflow that guides the surgeon through the treatment. And this really allows surgeons to have to optimize their treatment efficiency. We look at Focal One as a really scalable platform. And what I'm going to show you today is and go through with you today, the investments we're making in certain areas in advanced imaging, an AI-driven treatment with artificial intelligence, with remote connectivity and with expanding our precision focused ultrasound, namely and specifically, adding nonthermal [ histo trips ] to the Focal One platform, and I'll get into that a little bit later. But we believe that we are ideally suited to build and build more capability on the standard platform. We've already demonstrated that today because on this single platform, not only are we treating prostate cancer, but we're treating endometriosis for women on a single platform with multiple indications. So first, let's talk about advanced imaging. So there's a long history of our company's ability to facilitate importing MRI into the Focal One system, as Dr. Ehdaie spoke about. That was from the very beginning, multi-parametric MRI. In the last few years, we've accelerated our investments. Several years ago, we now bring in -- we can -- our compatible with several fusion biopsy systems, [ Celis], MIM and Philips, the [ Dynacadurology ] for those surgeons that want to use that biopsy data to specifically target the tissue. A couple of years ago, based on clear surgeon feedback, we worked with some companies that have AI-driven algorithms, intelligent algorithms to look at the map of the cancer using AI algorithms, that's unfold AI and once prostate. And so now surgeons are continuing to use that intelligent mapping of the cancer to drive precision Focal One treatments. And last year, as part of the Focal One launch, we integrated the ability to bring in [ PSMA ] pet. And [ PSMA ] pet is really important, and it's different because it specifically targets where the cancer is. it locates the cancer and it lights it up in our system. And later on, we invite all of you to stay for a demonstration and Hugo will show you exactly how the PSMA PET is integrated into the Focal One and drives precision treatment for the patient. With that success of the [ PSA ] pet, we just recently signed a collaboration agreement with [ Telix ] Pharmaceutical. They're a major player and PSMA PET agents and tracers. And what this investment is in this collaboration is demonstrating our commitment to physician education and joint clinical research. We have many mutual customers. We're going to work with those mutual customers to look at best practices and treatment protocols to really bring to importance, the combination of our PSMA PET imaging and our robotic focal therapy. And what we're going to do is capture document and share those best practices and those standards to the whole Focal One surgical community, so it can be further impact and improve patient outcomes and patient treatments. So let's move on to artificial intelligence. We're taking a very deliberate approach to artificial intelligence. We've worked with clinicians. We've gotten their feedback over many meetings and they're encouraging us to prioritize in these 3 areas. Number one is continue to provide them with mapping of the cancer and mapping of critical structures so they can do what they can do with Focal One, and that shape the dose with delineate the cancer and the critical structures and provide a very precise ablation. Number two, there is so much data with the Focal One treatment. We capture all of this image data and all of this treatment data. And what we can do is use machine learning to really help surgeons monitor the anatomy during the treatment and see how the anatomy changes to give feedback to the surgeon along the way for the most effective treatment. And the third one is very exciting. We announced last year that we have our next-generation ultrasound. This next-generation ultrasound allows us to tap into the raw data. It allows us signals, ultra signals we haven't been able to look before. And this will allow us the ability to assess tissue ablation during the treatment to make sure the surgeon has delivered the most effective treatment is over. So it's a very exciting road map. We're investing in it now. We're making great progress. So we have a very bright -- let's talk about remote connectivity. Remote connectivity, I'm very excited to introduce and announce to all of you our initiative called Focal Connect, Focal Connect development initiative. Focal One is uniquely designed for a high fidelity focal therapy telecollaboration. Let me explain what that means. We have a completely integrated digital platform. There is a surgeon sitting at our system. You can see it right there. Once the probe is positioned, the entire experience is a full digital software interface experience for our -- for the surgeon, okay? That's very unlike some of the focal therapy alternatives that Dr. Ehdaie spoke about and that Ryan spoke about, where there's sort of continuous manual manipulation or adjustments throughout the case. Even some of these semi robotic systems during the case, you'll have to do manual adjustments. It's just impractically impossible for that kind of technology to be controlled remotely. With our platform with the Focal One platform, you can see everything remotely and you control everything remotely for really the highest fidelity experience. The other thing that we've proven, and I'll show you our story with Cleveland Clinic is we were able to perform this and have excellent results with leveraging existing hospital networks. Some of you may have seen robotic [ tellers ] events. What you maybe didn't know is there were dedicated infrastructure, dedicated networks that are costly for all that event to take place. We're establishing a capability that we can leverage hospital networks that don't add extra cost and infrastructure to be able to achieve that. And the bottom line is this, we believe that Focal Connect will broaden patient access to therapy and broaden patient access to expert care. So let me talk about the success we had last year. So working with Cleveland Clinic surgeons, we conducted the world's first transcontinental Focal one HIFU telecollaboration. It was very exciting. So we worked with Cleveland Clinic. This is Dr. [ Olivares ] in Cleveland in his office with the interface with the exact interface that we have in the operating room from Cleveland, 7,000 miles away was Dr. [ Howson ] in the operating room treating the patient with Focal One, okay? And so you can see here from the quote Dr. -- after it was -- the event happened, there was interviews, Dr. [ Oliver ] said, after a while, I forget was doing a remote surgery. And then Dr. [ Hosen ] added, Dr. [ Olivares ] was enabled to seamlessly perform the procedure from beginning to end without my intervention, a real major milestone and the ability to perform focal therapy at such a distance. And again, I will echo I worked personally with the IT teams and the cybersecurity teams from Cleveland Clinic at these centers. And they had thought maybe we needed special networks. We did this all in standard hospital network which really lays the foundation for this to scale really dramatically, I believe. So let's talk about what I see as a progression in our Focal Connect development initiative. Number one, let's go back to this. Some of you might recognize this as the [ Da Vinci ] dual console system. I spent many years in Intuit of launching exciting products, and this was one of them. The [ Da Vinci ] [indiscernible]. During that experience, we learned a really important lesson and that lesson was no matter if it was tele-collaboration or a teaching experience, high fidelity for both surgeon was absolutely to be able to visualize what was happening in the procedure and being able to control with the same high fidelity, okay? In essence, what we're doing is we now have the dual console for the Focal One system. As we look and we talk to our surgeon partners, there are -- we can go beyond the operating room. We're not sort of stuck to a dual console and one operator, and we can break through those walls. And so there are 2 scenarios I'll outline for you here that are real and happening right now. So in this scenario in the middle, you basically have a surgeon using Focal One in the operating room down in the lower right. Okay? And oftentimes surgeons would like to collaborate, they'll ask advice from another surgeon. Usually, it's a phone call or it's a face time or it's just not very high fidelity, okay? Today, and as we roll out Focal Connect, that surgeon who got the call is going to be able to just log in from their dual console from their office over the hospital network and immediately see exactly what the surgeon in the OR is seeing be able to take control if that's what they decide will happen, they can swap control. So it will be a much more efficient way to share best practices just on a hospital campus. The next scenario is very exciting. So we're working with the surgeon that [ Kaiser ] in Southern California. And they have created a center of excellence in their L.A. facility. And now is the time where once they create that center of excellence, now they're starting to add other Focal One systems at other hospitals in San Diego in other areas, [ Riverside ] and such. And so talking with the surgeon his vision is to be able to use capability like Focal Connect to not only train initially in person side-by-side and then as he goes back to his office, being able to connect with Focal Connect and be with those surgeons. If they want to call, they send a text. He can immediately from his office log in, look over their shoulder, talk about what they're seeing and make a decision collaboratively. So we really see a lot of promise. And again, it's based on that unlike other focal therapy modalities that have a lot of manual positioning, those would just not be practical to ever be able to control remotely. And with our fully digital software-driven platform, it's very straightforward with Focal Connect. So I want to go back to Cleveland Clinic. It's important after this event happened last year. Dr. [indiscernible]you, he's the enterprise chair of Urology at Cleveland Clinic. He said this about the event. This innovative approach with Focal One Robotic HIFU not only allows us to share expertise across Cleveland clinics, locations but also expands access to specialized care for patients no matter where they are. Cleveland Clinic has 5 Focal One programs across the world, 3 in the U.S., 2 outside the U.S. This one event was Cleveland Abu Dhabi. We are now working with clinicians throughout the Cleveland Clinic network to continue to refine and use focal connect, tele-collaboration to really make it more commonplace. So we have a study approved to move forward with Cleveland Clinic to further use tele-collaboration in Focal Connect. I want to move into the last section. And again, I already mentioned this. One of the values of the Focal One system is that it's a scalable platform. And what we can do is as we look at innovation in one area, precision focused ultrasound, we can leverage all of the mature capabilities of all of the others, the robotics, the mature workflow and the advanced imaging. So in this case, what we're doing here is we're investing in expanding our precision-focused ultrasound to include [indiscernible] a nonthermal way to destroy tissue, okay? And one of the things that's -- that we are uniquely qualified for and positioned for at FocalTherics is you might think of us as a long history in high-intensity focused ultrasound, multiple generations of high food technology, [indiscernible] to Focal One. But there is over 30 years of development in nonthermal [ lithotripsy ]. So let me explain that, right? Over 30 years over multiple generations of technology over 1,000 systems shipped in the world. So we have a strong background in this nonthermal approach. And what's key here is that [indiscernible] has a brother-sister relationship to [ lithotripsy ]. [ Lithotripsy ], [indiscernible] brother, sister. They both use short pulse, high-pressure sound wave, focused sound waves to destroy their targets. In the case of lithotripsy, it's stones, kidney stones in the case of [indiscernible], it's treating tissue and it's called tissue liquefaction, right, to basically just liquefy the tissue. So last year, we announced some great progress where we were able to deliver [indiscernible] through a Focal One HIFU transducer, part of our Focal One system. We continue to make great progress. As a reminder, on the left-hand side here, this is today's HIFU transducer with the imaging sensor in the middle and then we have these concentric grains. And this is the probe, the dynamic focusing probe with our electronic beam steering, right, that allows us to deposit HIFU energy at each of these focal points. So you'll see on the right-hand side that is today's HIFU transducer, creating very well-formed [ histotrypsy ] bubble clouds in water, again, at these different focal points. So we're, again, as I said, we're leveraging a lot of mature technology and then bringing in his to be able to incorporate it into the system. So let's take it a step further. As Dr. Ehdaie showed, he showed our -- the Focal One basically treatment workflow. This is -- now what we're doing here is we're leveraging our existing mature treatment workflow. And now we're treating -- we're -- we've done a plan, a treatment plan. And each of these green dots is where the surgeon has defined where they want the tissue to be treated and each time it's treated, it turns to red, okay? And so what we're showing you here now is this is -- everything is the same about Focal One. And we basically now are delivering [ histortrypsy ] to this tissue. What we're doing here is these -- the orange lines right there, that's the rectal wall detector. That's a very important aspect of the Focal One that Dr. Ehdaie spoke about. He talked about all these embedded safety feature that we rely on. This is where that orange line detects where the rectal wall. So each time there's a fire, it detects the rectal wall. It will adjust the system automatically to make sure that the transducer is at the right distance away from the -- to fire slice by slice. What you'll see here on the right as we were able to successfully have tissue liquefaction in our demonstration here. So let me talk a little bit about how we see this fitting into our portfolio. We believe that it's the combination of HIFU and [ histotrypsy ] together. We know today that with HIFU, we have a very proven and effective solution for treating prostate cancer and now endometriosis in Europe. But we believe that the combination can bring incremental value, especially when we're basically treating tissue that's right up against critical structures like the urethra, the rectal wall or neurovascular bundles, -- where we can then continue to look in improving outcomes and patient quality of life. So again, we see the future and our -- we're investing heavily to look at really the combination of HIFU and [indiscernible]. Again, leveraging our mature workflow, leveraging the entire scalable platform and adding both modalities. And as we do this, we are actively developing and filing novel intellectual property covering the unique combination of HIFU and [indiscernible] to strengthen our ever our strong IP portfolio. So again, I want to round it out and just talk about this is possible because we have a seamless integration of technology, it's a scalable platform and HIFU and [indiscernible] and our precision focused ultrasound category fits right in place. So all of this, we can do innovation simultaneously as we proceed with our investments. So as I close, I would like to go back to the voice of the clinician. And one of the things that we know is that clinicians have looked at different focal therapy modalities and they have either chosen Focal One or they've switched to Focal One from another modality. And they have certain reasons. And one of them is that, like Dr. Ehdaie said, they just didn't see the consistency. There's too much variability in any sort of system that required a lot of manual manipulation or manual adjustments. And they look to Focal One, for several reasons. Number one, being the most compatible system with advanced imaging to be able to bring in MRI imaging, now PSMA PET precise energy delivery through our precise delivery with robotic control. The easy -- it's a fully integrated system, that's the easiest to learn, use and teach with minimal OR staffing, a single urologist and a single anesthesiologist can basically the treatment and really providing the shortage treatment times and predictable treatment times. So these surgeons know exactly the time it will take for treatment. They can schedule a day, their block time for that day, and they can effectively manage their patients and manage their patients that are requesting Focal One treatment. And what the surgeons are also saying is that they really look to the promise of what we're developing. Our voice of clinician is very strong that they love to work with us because we have committed to expanding focal therapy. Again, we are demonstrating that with the advanced imaging with PSMA PET and the collaboration with [indiscernible], the training and telecollaboration that we're pioneering with Focal Connect and working with Cleveland Clinic and Kaiser, the voice that we're hearing and guiding us and prioritizing the artificial intelligence initiatives to bring in AI-assisted treatment and ablation assessment and finally, this ability to expand. We've demonstrated already going from one indication to a second indication but being able to add [ histo trips ] to HIFU and a powerful combination to extend that to prostate cancer, endometriosis and BPH. So with that, I'll say thank you, and I'll turn it over to Ken.

Thank you, Steve. The last 2 years have been a time of transition for our company, and now we're at an important inflection point. As Ryan mentioned earlier, our HIFU business has been growing at a very healthy rate the last couple of years. Historically, the HIFU was approximately 35% of our company's revenue. And as we look forward into 2026 based on the guidance range I gave, that will now be over 60% of the company's revenue. But when you look at our noncore business, that business has been shrinking over time and is currently now going to be approximately 35% of the company's revenue. So when you look at the net impact of that, we've had a business that's been growing at 7% a year. But when you strip out the noncore piece of the business, the ESW loan distribution business, you see a completely different picture. You see a company that historically has been growing at 32%, it grew in CY '25 by over 41%. And when you take the guidance range we gave going forward, it's going to grow at 40-plus percent. As a result of that, we recently announced our intent to classify our noncore business as part of discontinued operations. And we feel that's an important next step to really unlock the value on the P&L by putting our discontinued operations below the operating line, we're going to be able to clearly illustrate in our income statement the high growth that HIFU brings, the incremental gross margin dollars as well as the targeted operating expenses it's going to need to really drive this business going forward. And as a result, we are keeping our HIFU guidance range this year between $50 million and $54 million. We're keeping that constant. We're not changing it. So what happens now that we're propelling our HIFU revenue? What levers are going to really help grow this business forward. When you step back and think about it, it's really in the short term, be continued placements and strong procedure volumes, our primary catalysts. When you look in the U.S., we're going to continue to penetrate untapped markets. We've also made a lot of investment in our marketing to create customer awareness and patient awareness about our process as well as create doctor awareness and how valuable it is for him to create a program for his practice. We're going to see also, as a result, right, we talked about new indications. So in a couple of years, we're going to start seeing a boost in our procedure volumes given the impact of these new indications. So -- and finally, on the international front, we recently got reimbursement as France, as Ryan talked about. So we see penetration there. And the other nice thing about our OUS business is given our noncore legacy, we have sales channels already set up in those regions. So now all we need to do is introduce the HIFU product and we have a channel to help penetrate sales in a more efficient manner. So with this increased focus on HIFU revenue, we're also going to see an increase in our gross margin profile going forward. We're going to maintain good pricing discipline with the increase in our system sales, we're going to see production volumes increase in the factory. That's going to lead to good economies of scale purchasing and a better factory absorption, we're going to see good volumes increasing, both from a procedures. And historically, our procedure revenue has good incremental gross margin. And we're also going to see bill of material optimization, right? And we did see that, as you recall, in the first quarter, our gross margins in the first quarter were 51%. So we're already putting some of these practices into place. We had strong price -- we had a BOM cost reduction and our procedure volumes were very strong, which led to higher consumable revenue. And this, in turn, is going to create good operating leverage to invest in our business. The thing Steve talked about today, BPH, artificial intelligence, [ hystertripsy ] are good innovation things we need to grow demand for our business. We're also going to continue to invest in clinical studies, and we're going to continue to put the efforts and resources in place to help grow our global commercialization across the plan okay? And the nice impact you see here is our percentage of revenue. Our operating expenses of operating expenses as a percent of revenue are improving over time. Finally, so what does this mean to us as we move forward in 2028, right? We believe -- we have a good target range for our business model going forward with revenue growth of approximately 40% a year, targeted gross margins of 60% and that's going to really lead to a good operating model for us, where we can break even on operating income by the end of 2028 and also achieve positive EBITDA as we move forward in 2028. So with that, I'm going to hand it back over to Ryan for closing remarks, and then we'll take some Q&A.

Thanks, Ken. In quick summary, we address a large underserved growing market. We provided updates today on our differentiated technology, leading the category of focal therapy and specifically robotic focal therapy. We have expanding favorable reimbursement. We have robust clinical evidence, some today and even more coming. We have accelerated global commercial execution, both in sales and our procedure growth. And through growing revenue, we have a pathway to profitability. I'd like to now invite Ken and Steve up to join me for some Q&A.

[ Anthony Petrone ] for Mizuho. Great Analyst Meeting, and thanks for the presentation from Dr. Ehdaie as well as the guidance. Maybe to start with the percentage of low volume, high-risk prostate cases that Dr. Ehdaie highlighted, how many of those can actually transition into Focal One therapies when you think of leveraging MRI biopsy. And then you pointed to a next-generation ultrasound as well as leveraging AI models. So really looking at that active surveillance pool, specifically the high-risk, low-volume cases, how many you think are transitioning in today to Focal One treatments? And how many you think over the 3-year here will actually be Focal One cases over time? And I'll have a few follow-ups.

Yes. So we're clearly early in our adoption life cycle. Going back to the recent AUA meeting in Washington, D.C. in the breakout section of the focal therapy society amongst all technologies and thought leaders, they said the market was 4% adopted as a data point. But if you look at what was presented today and look at information even shared with Dr. Ehdaie, this intermediate risk category, including favorable intermediate risk and even down into lower risk is a large market segment for us. And as he said, per the studies in the U.K., 40% of men progress at 5 years off of active surveillance. So active surveillance has been a great story for many men. We've moved away from over treatment into this new era. And as active surveillance continues to grow, it plays well to our story directly. I also mentioned men who are on active surveillance, have anxiety-induced treatment decision-making. And what does that mean? It means I've got a cancer in my body. I'm scared of radical treatments. Is there something else you can do for me. So we're really well positioned to capitalize on that market, which is significant in terms of case volumes and potential revenue for the company. Now we're also, importantly, into the [ NCCN ] guidelines as a salvage treatment for failed primary radiation. And to provide more color on that, men and fail radiation, not only don't have a lot of good options, they're commonly put on hormone deprivation therapy. We chemically castrate them or turn off their testosterone to slow down the progression of cancer. We have a great solution. In fact, a lot of hospitals now are embracing use of HIFU as a salvage treatment.

If I can. So yes, this group of men really have very little options. And that was one of the motivations that our clinicians ask us to integrate PSMA PET into the Focal One because that PSMA pet can locate and light up the cancer in those men that have a recurrence. Those men typically don't have very many treatment options and if surgeons do not like to do a salvage prostatectomy. It's very difficult and the outcomes are very poor. So we heard that voice. We implemented the new technology and with the HIFI 2 study that came out, that's really supporting using salvage HIFU with the integration of PSMA Pet, we can bring sort of more tools and technology to these surgeons to treat those men.

Maybe the follow-up would just be on guidelines. You have salvage [ NCCN ] guidelines. But the data, for instance, versus radical prostatectomy looks pretty obvious here. You have the 95% cancer control 99% for surgery, but quality of life is like light years ahead of surgical prostatectomy. So when do you think you could see a guideline revisit? And what do you think it looks like for Focal One therapy over time. And I'll pass it on.

Well, that's a great question. I think we're seeing an evolution and change in the guidelines today. Now one thing I have to always remind people my time in tender at Intuitive Surgical, I was instrumental in getting the guideline change for the NCCN for robotic surgery. By the time the guidelines change, the market was 60% adopted. So guidelines tend to lag here in the U.S. They behave a little differently in Europe. I see progression happening. As we heard today, many of the academic centers now are embracing focal therapy and certainly embracing the use of our technology. So we'll see an evolution to change playing out, I think, over time. I think at the end of the day, these studies and specifically the HIFI study, which is a landmark study, put a lot of emphasis on the fact that the oncologic control is not inferior to a gold standard treatment that's been around for 10 years surgery. So we're very encouraged. We'll see guidelines evolving and changing. But nonetheless, they may lag in certain regional markets. But we're well positioned, I think, to see a looming change happen. We're in a new era of treatment and with all the things that Steve mentioned today, we're able to see cancer in a better way, and that opens up the opportunity to treat it differently and reduce the morbidity and overuse of radical treatments.

Mike?

Mike Sarcone from Jefferies. I guess just first one for me. You highlighted your account, [ St. Alphonsus ] and Boise, Idaho. And I think you said they reached 100 procedures in the first year. Can you just give us some context for how that compares with your average account? Is there anything special about them kind of typically or I guess, how reproducible is that to some of your other accounts?

Great question. Why that's a great example. It's not necessarily a large metropolitan markets such as here in New York. But when you launch it as a program, in fact, today, when we see a lot of our -- they already have a bolus of patients ready to treat in advance of even receiving their Focal One machine. So that's good news. There is a patient population already out there today, underserved that we can go after. So one question comes back is, can we reproduce this in other accounts? And the answer is yes, we can. And we've gotten better ourselves -- but I think also doctors are realizing that, look, I want to get ahead of this. And in some cases, hospitals say, we want to enjoy first-mover market advantage. We want to be out front. We know that the prostate cancer patient is very valuable to us. And in the course of that, we want to keep that patient under our care and be able to even attract the incremental patients out of our attachment market. So we'll see more of this activity coming. What I think is really powerful is the patient or consumer message is really strong. We're not cutting into the body. We're not prescribing radiation. We can do this operation in a total treatment time commonly and running machine time under an hour. It's an outpatient procedure, a single treatment, you go home and you're back to your quality of life.

Great. Thanks, Ryan. And then I guess just a follow-up on the [ histatrypsy ] section. Can you just give us any outline for regulatory time lines, commercial time lines? Like what do you need to be offering [ histotrypsy ] on the Focal One System?

Well, again, we're investing. I can't really go into time lines, but we're investing -- again, we feel like we have a real advantage because we can leverage the existing platform where basically the -- our transducer is closest to where the disease lives in the posterior part of the prostate land. But I think it's early to talk about time lines, but we'll continue to share our progress as we move forward.

Just a quick follow-up there. What you have to run a clinical trial for this and go to regulate?

Yes, we'll have to go through the product development, the preclinical labs, it's the classic preclinical labs and then the clinical labs. So -- but we think we have a big advantage because again, if you are bringing a new market -- a new product to market, the FDA, the [indiscernible] require lots of things about safety and cybersecurity and all of these things. We check all those boxes, okay? So we're just talking about how we actually treat the tissue. So that's why we feel our system with all of its components that are mature and just changing sort of one aspect of the technology will give us an advantage and we'll streamline that process.

[indiscernible].

Yes. So good questions. So when you look at new indications, right, those are in that target model we put together, those are very back-end loaded, and we're just basically factoring in procedure volumes in 2028. And based on the total procedure volumes, it will be a very small 10% to 15%. As we grow the business going forward, what I see is growth in OUS markets, but our premier growth driver will still be the U.S. as we go forward.

Great. And then I'll put into one question here. Kind of piggybacking on that, are there any assumptions you're making on the macro backdrop in order to hit your '28 targets that we should be considering?

Can you repeat the question?

Any assumptions on the macro you're making within your longer-term framework? And then one other one I'll just throw in now on the gross margin side. Just kind of what drives your confidence there expansion -- just given solid growth in HIFU revenue, but just some compression on that line.

Yes. So when you look at our gross margin and historically, our -- our HIFU gross margin when we had it embedded with -- all 3 segments has always been the highest. What I think is really going to propel gross margin are pretty much the things I mentioned earlier, right, procedure volumes, right? When you look at our gross margin profile for business. Our procedures are always accretive to that margin. And then we're just doing a lot of work, Steve and I and how we can streamline our cost structure, look at ways to things more efficient from a manufacturing perspective. And then factored in there, we still have to keep our eye on the tariff picture, right? But those tariffs right now for this year, as I've mentioned in the earnings calls, it's going to cost us about $2 million in gross margin. So as we move out in time to hopefully going to see those get reduced.

[ Jas Jane ] from TD Cowen. Appreciate you guys hosting the event, a very informative educational. I wanted to just ask about one of your slides, Ryan, where you talked about, I think, ablation being less than 10% of localized prostate cancer, interventions today going to 40% and it seems like most of the share gains are assumed between surgery and radiation. You've got the active surveillance opportunity as well as well as those cannibalizing those 2 categories. Maybe just talk about how you see kind of the ramp? Is it a blend between taking capturing surgical and radiation cases today and active surveillance is bigger than the other? I just have a follow-up on the active surveillance opportunity.

Yes, great question. I see certainly a reduction in the radical treatments, both surgery and radiation. So there is a share shift there. But I would also say that for men, it can't, in some cases, stay on active surveillance as we discussed, 40% progressive 5 years or they decide that they want to treat something in their body then that's a good audience of patients for us to obviously go after with HIFU. So I haven't thought about it in the actual percentages, but the market is there today, which is exciting, I think, for all of us men are being diagnosed somewhere today that are better prescribed with focal therapy than they would be prescribed a radical treatment. And we know the morbidity is real. It is real for these radical treatments and you live forever with those outcomes. So to offer these men something better that's efficacious, has good cancer control and maintains their quality of life. And when I think about it is a lot of these academic programs have large patients or a large subset of patients on active surveillance, which is really good for the story. And if I look at back in the era when I was at Intuitive Surgical, there was not very many active programs that really had good active surveillance protocols, we're in a new era today. And I think with AI coming in early testing, genomic testing, all these things are going to play really, really well into our story and the story for adoption of focal therapy and specifically HIFU.

Great. And I was going to add to that. I have experience on robotic surgery and radiation therapy and now Focal One Robotic focal therapy. And I think it's important to know that when a patient looks for different treatment alternatives, most of them in the United States when they talk to a radiation oncologist -- when they say, "I think I'm going to consider radiation therapy." It means 20 to 45 visits to a hospital every day, every business day, could be 9 weeks. It could be 6 weeks, okay? And so as more patients as more hospitals adopt Focal One and go out and do patient outreach and patient education as more patients understand. I think they're going to say, "Oh, this is different now. My alternatives are different." And they're going to look at the impact to their life, the impact to their family who has to sort of take care of them. And I think we're going to see more patients demanding this approach.

And one follow-up on this topic. Just wanted to punch and I should know this myself, but are there any mechanical or just I mean coverage issues with the active surveillance patient today? Or is it that they get offered a shared decision-making process, if they're inactive surveillance candidate, they could move forward with radiation surgery or Focal One today? Are there any coverage changes or decisions that need to be made to open up that patient opportunity more fully.

Yes. That's a great point, Josh. What's saddening is to think that there's men today with low-grade cancers, [indiscernible], who would be prescribed active surveillance but they have in their mindset that they want something to treat their disease. And what shocks me is how many men who have low-grade cancers would move and jump over to radical treatments, such as surgery or radiation. And if you go back to the U.S. preventative task force de recommendation in 2012, that de recommendation was to turn off the spicket, call it, of overtreatment. Now it was the wrong thing to do as they found out later because they were prescribing against PSA testing. And then because of that, we now patients went through an aero patients with more higher-risk cancers. But I think when we think about it in this context that we now have a solution for patients and a large audience of patients and if they ever needed a radical treatment down the road, you don't burn the bridge. That's what's so beautiful about focal therapy. It's a repeatable thing. In fact, with Focal One in HIFU, there's no toxicity. You can you want to repeat it, the treatment you can, 3 years out at 10 years out or something along that line or just by chance a small subset and then progress on to a more aggressive cancer, you can go surgically remove it. And by the way, a surgically removed prostate post HIFU is a very different type of surgery than a post radiation treatment, as Dr. Ehdaie mentioned.

One just last one on just that patient group that has concomitant BPH localized prostate cancer? Is that an opportunity for Focal One to take some share there. Are you seeing cases already being done? And with the prostate cancer indication? And how do you size that up and view your positioning there?

Yes, that's a very good point. So One of the reasons we're pursuing BPH is many of these thousands of patients we've treated for cancer, their urinary symptoms scores improved. They improved. And it would make sense. We're ablating inside the prostate gland in a safe prescribed manner, we're relaxing the pressure on the prostatic urethra and the urinary symptom scores improve. So that led us, obviously, down the path of let's go after this BPH indication. And by the way, it's an easier thing than what we do with cancer. And so I think here, we're really in a new opportune time to capitalize on this. Now with the code, there is a [ CPT 3 ] code for BPH. We have heard anecdotally, and I can't describe by name of a hospital being able to maybe potentially build for both. But our thinking is, look, we have a labeling of ablation of prostate tissue today. And with that opportunity in labeling, we can quickly get into this BPH market. Now we've got to do the studies and all that, but we want a labeling claim so we can market this. And our approach would be highly unique. There will be no bleeding. And as we talked about men on anticoagulant therapy, there's a real advantage there. But I think there'll be other advantages, too, with this type of treatment, as noted with Focal One.

Maybe just a couple of follow-ups on prostate, [ Anthony, Mizuho ]. You mentioned some data coming at the end of the year. I know you have the Phase I/II study that's ongoing. So how many patients from that study, are you going to show at the end of the year? Is that going to be a press release or will you present that data at a clinical meeting? And then maybe what are the bars there for sexual dysfunction for catheter utilization after BPH therapy bleed rates, how do you kind of level set just the bars on the BPH study?

Okay. So I want to make sure I'm clear. Were you talking about the study is a the presentation show BPH --

Okay. Yes. Yes.

So we've got 3 kind of studies going on concurrently. One group of patients being traded in Latin America, soon to be a group of patients here treated locally here in New York under an IRB protocol. And then we have a combined Phase I/II study Europe. So part of this is to get the data in front of us that we can submit and have a conversation with the FDA. So we set up the study design correctly for a pivotal study in early part of 2027. So that's kind of where we're at today. Now we've treated patients, and the early results have been very promising to the fact that our principal investigator is now openly said we're activating on our approved protocol, and we'll start the active recruitment now through the rest of this year. Now the great thing about it is, if there were more centers interested, we have a large growing installed base of Focal One customers, and I'm sure there would be no shortage of hospitals that would want to participate in a multicenter study. And because we're not going after a cancer indication, it's -- we believe we're coming from cancer going to BPH. We're in a more optimal position for an accelerated approach into this new indication. Yes, Michael.

Mike Sarcone from Jefferies again. Just one for you, Ken, talked about 1,200 basis points of gross expansion to 28. Any color on how you're thinking about the cadence? Would that be evenly distributed? Or what should we look for in that year?

So I think you're going to see it in a couple form. So when you look at our system gross margin, right, we're going to continue to see improvement there, okay? And then like I mentioned earlier, when you just run rate out volumes increasing over time. That margin is accretive to the gross margin of the HIFU business. So between those 2 levers, you're also going to see service margins increase a few basis points over the next couple of years as our quality improves with our product and reliability. And we're doing a lot of things behind the scenes and service to get our operating expenses more in order. We're looking to do some automation features, et cetera, remote diagnostics, as Steve talked about, all those levers will help to increase the margin. So it's pretty much across the board.

[ Lou Charles Wallace ] from [ H.C. Wainwright ] here for RK. So maybe a question for Ken. So now that you've reclassified the noncore business as discontinuing operations. Does this kind of accelerate the time line as you kind of ramp down that business?

So by putting it in discontinued operations, right, we're going to continue to look at ways to monetize that business. All right? There's a framework for going through it and classifying in discontinued operations. So as I said, we're just undergoing that process. But truth be told, we are looking to monetize that business, right? Whatever we to create revenue generation for the company. Our intent is not to write it off. Our intent is to monetize. So we're going to take our time. We have a year window and actually could go a little longer for certain but we are going to look to monetize that business.

All right. I don't see any other questions. We have a demonstration set up, up here, and I would highly invite all of you to participate and view the demonstration that Hugo will run. We've got set up some PSMA PET imaging, just showing the newer capabilities with the Focal One platform. So again, I want to thank everyone -- and for those who want to stay around or talk to us when or where, we're happy to answer questions as noted. Thank you.