Perimeter Medical Imaging AI, Inc. ($PINK)

Good afternoon, ladies and gentlemen. Welcome to the Perimeter Medical Fourth Quarter 2025 Conference Call. [Operator Instructions] This call is being recorded on Tuesday, March 31, 2026. I would now like to turn the conference over to Stephen Kilmer, Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws. These may include statements regarding the future financial position, business strategy and strategic goals, commercial activities and timing, competitive conditions, research and development activities, projected costs and capital expenditures, research and clinical testing outcomes, the potential benefits of our products, including Perimeter S-Series OCT, and Claire OCT, formerly Perimeter B-Series OCT, Perimeter's ability to broaden its user base and system utilization, expectations regarding new products and the timing thereof and expectations regarding opportunities for market expansion. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our public filings and press releases, which are posted on sedarplus.ca. Our results may differ materially from those projected on today's call. No forward-looking statement can be guaranteed. Perimeter undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law. On the call representing the company are Adrian Mendes, Perimeter's Chief Executive Officer; Andrew Berkeley, Perimeter's Chief Innovation Officer and Co-Founder; and Sara Brien, the company's Chief Financial Officer. With that said, I'll now turn the call over to Sara.

Thanks, Steve. Good afternoon, everyone, and welcome to our fourth quarter and full year 2025 conference call. On behalf of the management team and everyone at Perimeter, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support. I'd like to provide a brief update on our preliminary unaudited financial results. But before I do, I want to highlight a defining milestone for Perimeter and the recent FDA PMA approval of our next-generation AI-enabled Claire OCT device. We believe that this achievement marks a true inflection point for the company, validates our AI-enabled technology and positions us at the beginning of a new phase of growth. Over the past several years, we have been deliberately building towards this moment by seeding the market with our S-Series platform, expanding our proprietary image library and developing critical clinical and commercial experience. But in many ways, we are only now just approaching that starting line. With Claire, we will be introducing a solution designed for broader adoption with the potential to significantly increase adoption, both in terms of installed base and existing system utilization. We believe this will position Perimeter to scale in a way that was not previously possible and to drive meaningful value creation in the periods ahead. Adrian will provide additional detail on the progress we've made, but I felt it was important to begin today's call by highlighting this exciting milestone for Perimeter and our shareholders. With that, let me turn to a brief review of our preliminary unaudited financial results for the quarter. To streamline things, all of the numbers I will refer to have been rounded, so they are approximate. And as a reminder, we also report in U.S. dollars. For the 3-month period ended December 31, 2025, the company recorded record quarterly revenue of $711,000, which consisted of recurring sales of S-Series consumables, system leases and the sale of ESP warranty programs. This represents a 143% increase over Q4 2024. Operating expenses for the fourth quarter of 2025 were $2.5 million. Additional savings from the company's cost control efforts implemented in June 2025 resulted in this 46% year-over-year improvement from $4.7 million in the same period in 2024. Fourth quarter 2025 net loss is $2 million or $0.02 per common share, a 42% improvement from $3.4 million or $0.06 per common share in the 3 months ended December 31, 2024. As of December 31, 2025, cash and cash equivalents were approximately $2.5 million. With that, I will now turn the call over to Adrian.

Thank you, Sara, and thanks again for everyone for your time and attention today. As you just heard from Sara, we delivered another strong quarter, including record revenue, reflecting continued execution across our expanding commercial strategy. I want to take just a quick moment here to focus on the rebranding of our new product from B-Series to Claire OCT. We named the platform Claire, not just because it sounds elegant, but because it captures exactly what we aim to deliver, Clarity. The name comes from the French word for clear and illuminating. It reflects our mission to help surgeons better visualize margins during breast-conserving surgery. It's also intentionally feminine, keeping our focus on the millions of women impacted by breast cancer and embedded within the name, Claire, Claire is a nod to the artificial intelligence that powers the additional insight we bring into the operating room. As Sara mentioned, our primary goal last year was to seed the market with S-Series OCT in order to create a strong foundation of early adopters and technology champions in preparation for a potential FDA approval and subsequent commercial rollout of Claire. We consistently executed toward achieving that objective since the start of 2025, and the fourth quarter is illustrative of that. Adoption of the S-Series device accelerated even as we and our current customers waited for the requisite go ahead from the FDA to introduce Claire to the market. To put that into perspective, we were excited to see total revenues from the S-Series more than double year-over-year in Q4, contrary to one might -- contrary to what one might expect with the pending FDA PMA approval of an AI-enabled, more user-friendly next-generation device. With respect to Claire, as Sara also mentioned, our PMA application was approved by the FDA in line with our timing expectations at the beginning of March 2026. There are several advantages of PMA approval for Claire over the previous 510(k) clearance for our first-generation S-Series device. The first is that PMA creates a higher barrier to entry for competitors. Secondly, the PMA pathway requires extensive clinical evidence to demonstrate safety and effectiveness of the device. In that regard, our PMA application was supported by the strong pivotal trial results for Claire, where the primary endpoint of a statistically significant reduction in patients with residual cancer during breast-conserving surgery was met with a p-value of 0.005 and super superiority compared to standard of care alone was achieved. And third, a PMA approval signals to hospitals and surgeons a high level of FDA scrutiny and review, helping to build credibility and confidence in the product safety and effectiveness. With all that being said, we've now added a third moat to our business. We believe our PMA approval establishes a high regulatory barrier to entry, while our patented OCT technology and proprietary imaging capabilities differentiate our platform at the point of care. In addition to both of those, the image library we've built over time serves as a critical foundation for our AI engine, creating a data advantage that we expect will continue to improve performance and clinical utility over time. We believe these 3 moats, regulatory, imaging system and multimillion image data library positions Perimeter to sustain leadership as adoption of intraoperative imaging and AI continues to grow. It's also important to note that Claire has also received FDA breakthrough device designation before our PMA application was submitted. That helped us while the FDA conducted its substantive review of the PMA application. And while I don't want to go into too much of its future potential implication at this stage, I will say that we believe it should help us with securing reimbursement for the technology as we move forward with our U.S. commercialization strategy. Perimeter is clearly at an important inflection point as we look to leverage the clinical and commercial adoption of the FDA 510(k) cleared first-generation Series-S OCT and prepare to soon begin bringing game-changing FDA PMA-approved AI innovation to operating rooms nationwide via the pending rollout of Claire. And so to summarize the incredible progress we're making, first, we delivered yet another quarter of positive commercial traction with our current S-Series product as demonstrated by our 143% revenue growth in the first quarter -- in the fourth quarter. Secondly, we were carefully managing our resources as we grow. And as a result of our cost control efforts, we were able to reduce operating expenses by 46% in the quarter. Third, we received FDA PMA approval for our next-generation AI-enabled Claire device in early March 2026. And finally, now that FDA approval for CLA has been achieved, we are making final preparations for a full and aggressive commercial launch, representing a major step in our go-to-market strategy for intraoperative cancer margin assessment with OCT and an opportunity to significantly broaden our customer base across the U.S. As we move forward through 2026, our commercialization strategy will be focused on leveraging our existing installed base and expanding within leading health care institutions while also targeting new accounts through a combination of clinical validation, surgeon education and direct sales efforts. We believe our early investments in building clinical champions and generating real-world data will enable a more efficient and scalable go-to-market approach for Claire. Based on the level of engagement we are seeing, we expect to close our first commercial sale or sales of Claire in the second quarter, making an important initial step in what we believe will be a broader adoption cycle over time. Importantly, our model is designed to scale as adoption increases with revenue driven not only by system placements, but also by growing consumable scan volumes. As we expand our installed base and drive deeper usage within our existing accounts, we expect to see increased system utilization, which in turn supports a higher-margin recurring revenue stream from the sale of per procedure consumables. Over time, we believe increased adoption of Claire will position Perimeter to deliver attractive revenue visibility and operating leverage. As excited as we are about the tremendous growth opportunity we see ahead in breast-conserving surgery, we also believe the introduction of Claire represents the beginning of an even broader platform opportunity. As we continue to advance our clinical data, AI capabilities and product road map, we do see the potential to expand Perimeter's AI-enabled OCT technology beyond breast-conserving surgery and into additional applications, further increasing our addressable market and reinforcing our long-term growth trajectory. As you can see, this is an exciting time for us, and we look forward to keeping you updated on our progress. And with that, I will now open up the call for your questions. Operator?

[Operator Instructions] Your first question comes from Michael Freeman of Raymond James.

Adrian and Sara, congratulations on winning this approval. This is a big deal for the company, for patients and I'm very happy for you. My first question for you is I wonder if you could describe how you're communicating with your current customer base about the Claire OCT, about its capabilities, about the -- what's written in the label, about how they might be able to adopt it and then some of the feedback you might have been already receiving from them.

Yes. Thanks, Michael. Thanks for the question. It's a great one. The nice thing about having been in market already with the S-Series is that we -- and having run this trial and having the product going through -- Claire going through FDA is that the surgeon community is well aware of what's coming down the line. They've been educated to some extent through different conferences and papers. So they have an idea of our existing customer base knows the benefits that the OCT portion of the technology can provide to them. And they understand what happens when you then add that AI assistant on top of that because they've seen it in conferences, they've seen the data from the trial, et cetera, et cetera. And so that makes the conversation very easy. It's not like we're coming at them with a whole brand-new concept. And it's very intuitive for them to see -- to sort of understand what it means to go from the product they're using today into the next-generation product. So from an education standpoint, from how it improves usability, how it improves outcomes, I think those conversations are very easy. We're not starting from scratch on that. So that's great. At this point in time, having gotten the approval just a few weeks ago. I think we're only up to like week 3 at this point. The conversations we've been having with all our customers is, okay, let's start to go through the contracting process, and we've already started to get the Claire product into those customers. One thing we're being very careful to do is to ensure that we are communicating the value of the AI of the Claire to customers and not "giving it away for free." So we're being quite disciplined in the way we're pricing the product. We're being quite disciplined in the way we're communicating those advantages to the purchasers, and we're working through that process now. So we expect over this quarter, this upcoming quarter, Q2, to be able to close on a handful of accounts, and we're looking forward to that.

Excellent. And this leads into my next question nicely. I wonder if you could describe the way that your revenue model might be evolving as you introduce Claire, if you could speak to pricing, speak to perhaps new revenue lines related to the AI and updates, perhaps subscription, that would be helpful.

Yes, sure. So just a baseline, the revenue model that we'll have for Claire will look similar plus additional as for the S-Series. So the S-Series, we've got 3 revenue streams. The primary one is from the consumable sales of the consumable used one per patient, the mobilizer. We also sell the imaging system itself, the carts in some cases. And in the case where we don't sell them, we have a volume -- a minimum volume guarantee that we that we ask our new customers to sign up for. And then we have service contracts, so -- which brings us in revenue on a regular basis. So those are our 3 current revenue streams. Two of them are recurring, the consumable revenue and the service contract recurring. And one of them is not recurring, which is the device sales when we sell the device. The way we're coming to market with the AI is to make that -- there's really 2 different models we're looking at right now. One is to have a model where we sell a version of the AI upfront, which allows the customer access to that initial version. But as we do major upgrades to that version, there will be an upgrade fee attached to that. So that's one model. The other model we're looking at and working with customers on is on a per procedure model. We're really there to -- so what's important for us is to make sure that we're able to monetize all of the advantages and value that the AI brings to the customer. And in terms of how we monetize it, we're fairly agnostic. And there's -- I mean, it's kind of just math, so we can make the math work in either of those 2 different models. But what's important to us is to be able to monetize that in some sort of continuous revenue model -- sorry, recurring revenue model. And as we continue to go through these negotiation process, we'll see which one ends up being more attractive to different customers.

That's great. That's great. And if I could just squeeze in a few modeling questions. Could you share if you're able -- the total number of OCT devices that you've installed, I guess, by year-end and if you're able to share up to today? And then if you could share your expectations for OpEx during 2026 relative to fourth quarter levels?

Yes. Maybe I'll hand that to Sara to take.

The installed base at the end of 2025 is 23 devices is there. With regards to OpEx, we're anticipating a similar level of OpEx in the next few quarters.

Okay. And then do you have expectations to scale for it to ramp up in the second half of 2026?

Yes, as we look to expand our commercial team and operations.

There are no further questions at this time. I would hand over the call to Adrian Mendes for closing comments. Please go ahead.

Okay. Thank you, and thanks to everyone for joining our call today. As you can see, Perimeter is stronger and more focused than we've ever been. We have optimized our commercial engine, and we've aligned our infrastructure with long-term scale. We ended the fourth quarter with a leaner and more efficient platform that's positioned to drive durable growth, and we expect that growth to start accelerating as a result of the launch of the next-gen AI-powered Claire OCT product. We believe there was a clear inflection in momentum in 2025, supported by higher utilization, stronger surgeon engagement and expanding clinical adoption. This bodes incredibly well for what we see as a potential breakout in 2026 and beyond as we deepen hospital penetration and scale procedure volumes via the commercial rollout of Claire. We're in very exciting times here at Perimeter, and we thank you for your interest and support.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.