All right. Good afternoon, everyone. Thanks for joining us today. I'm Jason Bednar. I cover med tech here at Piper. Next fireside chat is with EDAP TMS. Very happy to have with us here today EDAP CEO Ryan Rhodes. Thanks a lot for being here again. Always happy to have you. Thank you, Jason. Always love this meeting. So we'll just jump right into Q&A. Ryan, as you know, I usually like to start kind of big picture. The demand environment, broadly speaking, I think pretty fine. Trailing 12 months, trailing 24 months, I think that's probably how we should evaluate a capital equipment business like yours. We're seeing good evidence of uptake, system utilization, the procedure volumes that you're reporting on. But I know this is also a business, and you're a CEO. You're never satisfied, right? So what are the biggest challenges that you're seeing in closing sales? There's always going to be the sale that doesn't happen. Why is that happening when it does? Yeah. I guess from our perspective, one good thing is we don't really lose sales. I think our biggest challenge is really the sales cycle times being as long as they are. When you're selling a new clinically necessary, call it strategic revenue enhancing service line, because that's kind of what we're building here with Focal One, it's capital equipment intensive. You're paying for capital equipment north of $500,000. Hospitals today are going to go through their due diligence, and it's not just the machine itself, but it's the entire program, the value of the program. They're going to look at reimbursement. They're going to look at everything from IT, information security. They're going to look at, is there any cleaning sterilization component to this? What is the projected revenue over the next one, three, five years? So I think our biggest challenge is just these longer cycle times that we're seeing today in capital equipment. And it doesn't just affect us. I think it's any new technology, new innovation. Hospitals go through their typical buying process. And as an example, I'd say for us, when I started with the company over three years ago, I'd say it was a couple of quarters to get a sale done. Now I'd say it's four quarters, maybe even five quarters of activity that you must go through for them to ultimately purchase the equipment. And so that's probably our biggest challenge is the longer cycle times. Okay. I mean, it's hard to isolate, and I'm sure I know every situation is different. I mean, do you think that, let's call it 6- to 12-month, previously 6-month, now 12-month, is that change strictly macro driven, do you think, and interest rate related? Are there any competitive considerations that are driving that lengthening of the sales cycle? Yeah. I would definitely say the macro side of the equation has had an impact, higher interest rates, hospitals looking also at other models that they may have seen from other companies. As you know, pay per click, subscription, mobile, rental. They want to look at really all those options. And we lead with the cash sale. We believe that it is a program. You invest in the program, and the reimbursement is in place to support that investment. And again, we treat the number one cancer diagnosed in men, prostate cancer. So yeah. So I would say it may be more macro, but also seeing the evolution of how other models have played out in the capital equipment space, they always want to look at everything in that process. Okay. Maybe double clicking on the topic, when we look at the folks that do say yes, and a lot of them are saying yes, I guess you mentioned the sale process being 12 months. Where are these customers focusing a lot of their time? And I know you've referenced in the past that they're adding a new service line. But is it an ROI evaluation where they're spending their time? Is it a technology evaluation because this is a new service line? What's consuming a lot of that 12-month period? Yeah. Great question. So I think obviously it's a new type of treatment, focal therapy, arguably the fastest growing treatment category today in prostate cancer. But the fact they don't do it today is going to be something they're going to have to evaluate on some level. So they do look at the equipment, the technology. They want to buy best-in-class technology, typically, the cost of that equipment. They will do some pro forma analysis on reimbursement. How many expected patients would we treat our first three months versus first 12 months versus the first two years of ownership? And they'll look at their payer mix. They'll go back and look at reimbursement, whether it's heavy with Medicare patients or private insured patients. They'll commonly look at those things. So it's usually centered around product technology, the impact on the financials for the institution, and what their projected ROI and payback period would be. Got it. Okay. If we look at within that ROI discussion, I guess is there anything that you can do or that can be done, whether it's in your control or outside your control, to improve that economic argument? You can probably imagine where I'm going here, but I'll let you talk, and then I'll probably ask a follow-up. Yeah. So we typically look at the existing kind of number of patients they would treat on an annual basis for prostate cancer. And as we know, prostate cancer is a heterogeneous cancer. It's not one cancer. It's millions of cancers. And it's all about risk stratification. So today, questions we would ask is, how many patients may you have at any given time on an active surveillance protocol? How many patients are you treating annually with surgery? How many patients are you treating with primary radiation? We'll tend to look at all these things. We'll also look at their biopsy data, right? There's a correlation to treatments as it relates to biopsies they perform. And so we'll definitely go through all that in terms of a process. I think when we look at our situation, we have reimbursement through CMS is in place today. In fact, by the way, it's going up 5.4% January 1. So that's in a few weeks. That's good. Allows more access for patients. But yeah, typically they're going to go through this kind of typical pro forma analysis. We work with them. They'll look at the different data. They may want to understand, will surgery be going down? And one of the things that we've shown as of recent, if you look at Medicare data reported through CMS through calendar years 2022 and 2023, HIFU for prostate cancer is actually growing where surgery, radiation, and cryoablation, cryo being another type of focal therapy, are all in a state of decline. So we really do see the marketing starting to open up. It's a sliver, but it is opening up. We believe the market for focal therapy and for our technology mirrors the standalone markets for surgery and/or radiation as a category. It's a sizable market, 85,000, say, patients annually in the U.S. could be amenable to this kind of a treatment. All right. I'll give you a leading question here. But isn't commercial payer coverage pretty important to the ROI discussion here? If we get broad commercial payer coverage, does that help get your interested parties that are out there from the hospital side over the finish line and help even more than just having Medicare coverage? Medicare coverage is good, but then having broad coverage, Medicare plus commercial, that's better. Absolutely. You want commercial coverage, and I look at our business, obviously. We have commercial payers paying for this: United, Blue Cross Blue Shield, Aetna, Cigna. They've all showed that they'll pay for this. Though you'll see some regional activity based on where these payers are located, there is not a current primary treatment commercial payer policy written by any individual payer yet, and I say yet because we see we're on the right track for that happening. And the question is, why hasn't that happened? Well, the volume of treatments historically have been somewhat slow, but ramping. We're seeing those now dramatically increasing. But also the lack of peer-reviewed data out there, and we'll talk hopefully about the HIFI study. That coming out will be a landmark study comparing two treatment categories, surgery versus focal therapy, specifically surgery versus HIFU, and it was reflective of our technology. With over 3,200 patients, it was a prospective study that took seven years to complete at a cost of about EUR 20 million and was paid for by the French government to look at reimbursement specifically in France. That study showed that we met our primary and secondary endpoints. Primary was around oncologic control, that is salvage-free treatment survival rates comparing HIFU versus surgery, the gold standard. We showed equivalency. We're not inferior. That's how the study was powered. We also, though importantly, win all day on the functional equation, preservation of sexual function and urinary control. I think this study coming out and obviously more data coming out over the coming years will play more into the story, but it'll help, I think, get a commercial payer policy written. Now, I will tell you this. A lot of hospitals will do their pro forma analysis just using Medicare data to say, look, we're going to err to the conservative. And when they do those analysis, you can see the payback period. You don't need to do a lot of patients to generate an ROI. We've seen it in a range of as low as two to three patients a month. So there is an incentive, call it, or something that is not an obstacle to make the investment in building a world-class Focal One robotic HIFU program. Okay. Maybe coming back since you brought it up, the HIFI study, maybe just if this is a gating factor to securing better commercial coverage or broader commercial coverage, however we want to phrase it, give us the sequencing on maybe how you see this all playing out from a calendar perspective? Yeah. So the study itself has been presented at two major scientific meetings. Earlier in the year, it was presented at the European Association of Urology meeting. That was the end of April in Paris. And then it was presented in the May timeframe at the American Urological Association meeting. So probably arguably the two largest urology scientific meetings in the world. And where it is now, it's been accepted into a major high-impact peer-reviewed journal. We expect it to be published, we believe, in the coming days or weeks. That's what we've been told. It's been accepted. It's been through a full review process. And we'll be excited to share more of the details about that. But that gives us another opportunity to get in front of the commercial payers to talk about efficacy-based value. As mentioned, with prostate cancer, you have to always think about the Trifecta outcomes. Number one is cancer control. Number two is preservation of urinary continence. And number three is preservation of sexual function. It's not just what happens to the patient in terms of the treatment, but it's the side effect profile they live with post-treatment. Got it. Yep. Maybe coming back to the macro, we're all looking at rates that are starting to come down. Has that fueled stronger conversations with accounts, or is that not yet having an effect? Is it kind of more status quo, or how do you see just the shifting in the rate environment influencing some of your conversations? I mean, any movement in rates is a positive thing for us. I think where we've adapted is that today when you approach a hospital and you're talking about investing in a new service line, a new program, and there's a capital equipment component, you've got to be flexible in giving them some variations of offerings in terms of, say, leases. We have different flavors of leases, or a lease we may do on our books, a bridge to buy or bridge to budget. But I think today you have to be able to present some kind of flexible options to them. And I think we've learned it's forced us to be better. Like today, we do things, say, differently than we did a few years ago. And part of that was the adaptation to this higher interest market that we face today. And so I think any movement downward will be very good for us. But it's funny. We'll work through a buying process with a hospital, and then maybe last minute they'll say, you know, we just decided we're not going to lease it. We have money. We'll just buy it. They surprise us. Or it goes the other way. We're going to buy it. Oh, I think we're going to lease it, actually. So that's probably one of the key components of the longer sale cycle times, them kind of figuring out how they want to distribute their valuable and limited capital dollars and where they want to put it to use. The good news is we have a great story. It really does generate revenue for them. I think, again, with the onset of getting a future commercial payer policy written, that'll excite the market more, unlock more value. Sure. Okay. Maybe shifting to a topic I'm covering with just about every company I have here. It's hard not to talk about it. But incoming administration, you have some proposed policies out there, particularly around tariffs. Hard to predict where those are all going to land, but to what extent do we need to be thinking about the impact from tariffs or the proposed tariffs on your business, whether it be on sourcing product or also exporting product? Yeah. I would say right now, I mean, it's really too early to make a call. I think it'll be interesting to see what plays out. Maybe nothing. We don't know. Or something more serious. I think there you just got to be flexible in terms of how you think about supply chain management. And most companies today, they have multiple channels of suppliers, which is smart, right? Because if you have some component that ceased to exist with one supplier, you can move to another supplier, that kind of thing. And it doesn't hinder your ability to stay on your production timelines. So it's really hard to say right now. I get people talking about it, but we'll see what really happens in the near term, whether these tariffs really play out and what real impact they may have or may not have. Let me ask a slightly different question then, same topic, though. In a theoretical scenario where your business is impacted by tariffs, don't even need to quantify the tariffs, what kind of pricing power do you think you'd have to pass along some of that impact that you're feeling on maybe the component side or the cost-to-build side? I guess it would depend on the key components. We do some of our manufacturing in Europe, but we're also a subsidiary in the U.S. We actually would be in a unique position, I think, to be more flexible of where we can build things. It doesn't matter where we can build them. We can build them in the U.S. We can build them abroad. I think it will require any company out there to evaluate supply chain, as noted, and say, look, should we be courting other suppliers just to be on the safe side so we can think about distribution of price? I think in our world, the good news for us is our reimbursement is continuing to go up versus the other direction. I think with the onset of a commercial payer policy, which in typical hospitals pays 1.5 to maybe 2x or more, it doesn't take a lot of procedures, call it, to generate a positive ROI. Back to the discussion, I think any company out there should be thinking carefully and listen closely to any policy changes and be able to react quickly to those changes. Got it. Okay. Fair enough. Maybe I'm going to say dovetailing off of the international comment, but when you look out, we talked a lot about the U.S. on the commercial side. Maybe let's pivot over to your opportunities outside the U.S. because they're enormous, right? Kind of a lot of different avenues you could go down. You've launched in Switzerland. Can you remind us what other markets you're targeting? How do you balance some of the investments that are being made when you look at what you've got in front of you in the U.S., which is still a big market opportunity, but you also have international markets that you could also focus on? Yeah. So over the course of the last year, I personally went out and recruited some ex-colleagues of mine who work with me at Intuitive Surgical. So most of you may know I worked there for nearly 14 years. So I've got a strong leader running our team out of France and another leader running the DACH region, Germany, Austria, Switzerland. So I'm excited to have them on our team. They've already made a big impact in a short amount of time. But I think the reality that we see coming in terms of back to the HIFI study, the reason the HIFI study was done was really to look at efficacy-based outcomes to award reimbursement in the country of France. So we've been active in that market, but mostly in mobile. We have fixed placements, but we have a number of mobile placements. With the change in reimbursement, that would give us an opportunity to go back to our customer base and move from mobile to a fixed placement. And we're already looking at that. What hospitals would make sense? Would that make sense in? So that's obviously an area of growth. I think of the market in Europe. We've got, I think, 61 fixed placements throughout Europe, or I should say rest of the world, but more concentrated in Europe. We have tremendous upside there. And you think of the different regions, Western Europe, Eastern Europe, the Nordic region, the UK, just those markets. So we'll be conscious of how we invest in that. And I think leading into another discussion, I think our company, we've had a history in ESWL or lithotripsy. We're moving out of that business. We're moving away from more of a distribution model. We've been a distributor of other products to solely concentrate our focus on HIFU. We've treated over 50,000 patients with our technologies. We've got some brilliant engineers working on new innovations. And I think when we think outward, we concentrate our efforts there and then concentrate efforts in new expanded indications like endometriosis and BPH. So it'll be interesting to see what plays out because that can open up new market opportunity. We have a prostate cancer market to go after, but if you layer in endometriosis and BPH, that could be an even larger TAM or total addressable market for us to go after. And we want to capitalize on that, for sure. All right. I want to save time to come back to BPH for sure because that's an exciting opportunity, I know, in front of the company. Maybe zooming in near term here, feels like fourth quarter is a little reminiscent of how things played out last year, right? Where third quarter seasonally lighter, fourth quarter seasonally heavier. At least that's how kind of the commentary has come together. Do you think it's all seasonality, or is there an element here that we just have elongated sales cycles that are resulting in fourth quarter, for whatever reason, being the quarter where you got to make the year? There's always seasonality. I mean, I've seen it historically in Q3, right? People are on summer vacations, holidays. Patients are putting off surgery. You get into fourth quarter, you have deductibles and things like that, at least in the U.S. market. I think there is seasonality, and I do think that hospitals that are on the calendar year for their budget cycles will be looking at, we've got to close out the year. We've been working through this process. Let's get some of these purchases done, and I would say too, we're anchored in this prostate cancer space. That is a prevalent space. I mean, for a lot of hospitals, they're making this investment, not delaying it, so I think it's a little bit of both. I think you got a little, hey, it's the end of the year. We want to get this done. We've been working through this over a number of months, and then I think, obviously, we're motivated as a company to have a strong finish in Q4. We have a strong pipeline, as noted, and we continue to make notable wins. I mean, our install base is pretty impressive when you look at the quality of hospitals, some of the top cancer hospitals in the world have bought our technology, and they benchmarked it against other products. Got it. One more on the financial side. We haven't gotten guidance historically. At what point would you feel comfortable saying the business is now predictable enough where I can offer some level of revenue guidance? Great question. It was never if. It was always when. And so I think the when we would this year coming up, calendar year 2025, is a transformative year for the company, as I mentioned, moving away from distribution and our legacy ESWL business to be great at what we're really good at in HIFU and growing that. So I think that will open up an opportunity to revisit providing guidance. I would like to provide guidance, of course. And I think we're getting closer to that date to be able to do that. And we talk about it internally. So yeah, we hope to share that with you at a near future date, for sure. Great. More than I thought I was going to get on that question. Thank you. On BPH, we'll round it out here and kind of the last topic. Take us through. I don't want to give you the whole kind of preamble of where you're at. If you want to address kind of what you're doing here on the phase one, two, you can. But take us through the timelines of how you see the BPH indication, just how that's going to unfold, and then how this trial sets you up to eventually have a phase three and what that could ultimately look like. Yeah, so just real quickly, what we learned in treating prostate cancer patients, ablating prostate cancer tissue or ablating tissue in the prostate, the LUT scores of these patients improved, so we knew right away that, wow, we're ablating tissue. We're relaxing the pressure on the prostatic urethra. This makes sense. Fast forward now, we had completed a nine-patient feasibility study. Now we're at this combined phase one, two study. We're really looking at optimizing treatment parameters, and what does that mean? It means power levels. It means volume of treatment, location of treatment, really serving up the procedure in a reproducible way. We've got three centers that are operating now in Europe, and we have a number of centers that want to join this group here in the U.S. So we would expect to add more centers and then, as we're going through this process, start the conversations with the FDA. Remind the audience too that we have an indication on ablating prostate tissue, whether it's cancer or benign. So we don't have a labeling challenge there, but we do want to have a clear indication for BPH, and we will go through that pathway. And I think this coming year will be a critical year for us as we navigate back through the FDA on what they would need to see from us. Great. Yeah, definitely almost adding on to the trend, 2025 being a very transformative year for the company. So that's a good way to cap it off. Great discussion here with you, Ryan, as always. Thanks, everyone, for joining us today. Appreciate it. Thank you.