Canaccord's 45th Annual Global Growth Conference. I'm John Young, one of the medical technology analysts here. Excited to have Pulmonx with us. With us is Steve Williamson, CEO, and Mehul Joshi, CFO. With that, let's give a bit of an overview of the business and then move to Q&A. Thanks, John. Appreciate you having us here. I'm Steve Williamson. As John said, we look forward to this conference every year. Thanks to Canaccord for having us. These are our forward-looking statements. If you would like to get more, you can go to our website and check out the 10-K. Our full investor deck is there. I'm going to take a couple of minutes to walk you through a high-level overview of Pulmonx and talk to you a little bit about some of the programs that we're working on and actually show you how the product works. I think it's kind of interesting if you guys get a look at what happens and what we're doing with the product. The investment highlights for you are already captured on this slide. We've got a $12 billion TAM. I'll walk through what that breakdown looks like. About $5 billion of that's in the United States, about $7 billion outside the United States. We believe we validated that TAM as well. I'll talk you through some of the programs that have done that. We're broadly reimbursed across the world. We've got great reimbursement across the U.S., Europe, and Australia. Accepted, we're in Grade A evidence in the GOLD COPD guidelines. We are the standard of care for patients with severe emphysema. We've got a strong pipeline and team. Our team has been here for we have centuries of experience. I've got people that have been pulmonary for their whole lives, their whole working lives at work for us. They've really worked their way up. We've got exceptional relationships with the key opinion leaders in this space. Clinical results, we have four randomized controlled trials and over 150 pieces of published data. If you look at a company that's at our stage, you typically won't see that much clinical data that's in place. These valves are proven. Because of those clinical results, that is why we're in the GOLD guidelines. It's a precision treatment. We've got a strong patent portfolio. It's minimally invasive. This is done through a bronchoscope. There's no incisions made, very minimally invasive and beneficial for the patients. Emphysema is a big burden. You know, you think when I came on board, when I was talking to the people at the company, it was like, these people have difficulty breathing. You think it's difficulty for them to inhale. Actually, what happens is they end up with hyperinflation of a lobe of their lungs. They have too much air that's trapped in their lungs. So liters of air, imagine a liter of Coke or a two-liter bottle of Coke trapped in your lungs. What that does is that air can't escape. It shuts down your thoracic cavity and makes it so that the healthy parts of your lung can't expand and bring new air in to perfuse and give you the energy that you need and oxygenate your blood. As you can't get a good deep breath, you get decreased activity. This starts a downward spiral for these patients. It gets worse and worse. As they do less activity, they have a negative progression. Their exercise capacity goes down. They end up with more breathlessness, less activity, and it keeps going and going and going. We had somebody at our national sales meeting come in. She said it took her three hours to put her pants on. It was that difficult. They can't walk out to the mailbox. They can't go to the kids' baseball game. They can't really do anything. It is a huge, huge negative progression here. COPD is the number four cause of death worldwide. I believe there are 1.5 million patients with severe emphysema in the U.S. Again, I'll talk about that in a couple of slides. Treatment for these patients is typically medical management. This is typically used through inhalers that treat inflammation. Patients will go through and exhaust medical management options. They'll also go through pulmonary rehabilitation to try to strengthen and stop this downward progression. That's on the left-hand side. Most of the patients that end up with Zephyr Valves have already exhausted what's on the left-hand side. It's not a long-term solution for them. If you imagine these airways have collapsed, and a pill is not going to be able to keep those airways open, you need a mechanical solution. That's what we provide. If you look on the right side, you've got lung volume reduction surgery where they'll go in and actually remove that lobe of the lung. What we're doing is shutting it down. They'll actually surgically remove it. It's a very invasive surgery. There are probably 400- 500 of these done a year. It is not done very often. Very, very highly invasive and also a big risk for these patients that are not very healthy. It is difficult for them to go through a major surgery like that. Lung transplant, again, 400- 500 patients in this space are treated with lung transplant. Many of them actually are bridge to lung transplant with Zephyr Valves. Zephyr Valves are in the middle, obviously minimally invasive. I'll walk you through a procedure here in a second, done through a bronchoscope. If you look at our market opportunity, I talked about $12 billion. We've got 3.8 million patients in the U.S. that are diagnosed with emphysema. As you break that down, 1.5 million have severe emphysema. From that, 1.2 million actually have hyperinflation, which is that expanded lobe of the lungs that we go in and we actually allow it to deflate and the rest of the lungs to expand. Of that 1.2 million, we believe there are 500,000 that are CV negative patients, which means they don't have any secondary collateral ventilation, which is what CV is. If they have collateral ventilation, that allows air to go between the lobes of the lungs. There are 500,000 patients out there that don't have this collateral ventilation, that don't have other exclusionary comorbidities. On average, for our calculation here, we assume about $10,000 per procedure. On average, there's about four valves placed in each patient. ASP on a valve is about $2,500. I'll walk you through how the procedure works. This is what the product looks like. It looks huge on the screen right now, but it's the size of about a pencil eraser. If we walk through, you'll see it's a silicone valve inside a structured set. Here, the patient's going to go, and we're going to actually treat this patient's right upper lobe. You'll see this large lobe in the top left of your screen. This patient has severe hyperinflation. They'll go through. He'll put in three valves into this patient, deploys the valve. What that does is it allows air to escape from the lobe, allows air to come out, but not air to go back in. It's a one-way valve that shuts down. You'll see as the valves get in place, they allow all the air to escape from that hyperinflated lobe. No more air can get into it. The air then goes into the other areas of the lung. You'll see that the other areas of the lung expand here, and that hyperinflated lobe shrinks down significantly. That's atelectasis. That's what they're looking for. This very diseased, disrupted part of the lung shuts down. All the red healthy tissue in the other areas of the lung expand. They can get oxygen. Now this patient can breathe. They can go out. They can move. As they move, you have a reversal of that progression. Now these patients can go out. They can walk. As they walk, they get better. They can walk further. They can go to events. They can do a number of different things. This is the way that the product works. As we come in, we look at three different ways to grow our market. If you look overall, you've got a product that really, as I walked you through, the clinical data support it. The GOLD guidelines support it. There's a good, strong economic and clinical value proposition for the product. What do we do to grow a market like this? How do we make this business bigger? We focus in three different areas. Our strategy is acquire, test, and treat. We want to acquire new patients. We do that through a number of different avenues. Direct-to-patient advertising is one. I'll talk a little bit more about that later. Direct-to-patient advertising where we go in and we do a lot of digital, but we also do connected TV. We'll also do more broader standard TV, but in targeted markets where we know that we have large treating centers. Peer-to-peer education, doctors talking to doctors, is always a great way to get product across. We do significant amounts of peer-to-peer education, or rubber chicken dinners, as they're known. LungTraX Detect is a product that we brought to market. This product actually goes into the PACS system of the hospital, looks at low-dose chest CTs, takes that CT scan, scans it with AI, and identifies patients that are in the existing PACS system that have severe radiographic emphysema. You've got patients that are already in that hospital system. We pull out of the PACS system. A lot of these patients come in for lung nodule screening, something that's very big in the pulmonary space right now. About 15% overlap where the patients that come in for lung nodules are actually identified with severe radiographic emphysema. LungTraX Detect is a new product that we brought out to market. We really launched it. We went through a pilot in the back half of last year, but really launched it to our sales force in the first quarter of this year. We're starting to see some pickup in Q2 and expect that to be a growth driver for us in the future. Therapy awareness specialists, we've identified a number of patients through our direct-to-patient advertising. This year, we'll have over 1 million people who will hit our website. 70,000 patients will come onto our website and take a quiz on their breathlessness, or they'll actually call and talk to a respiratory therapist that works for us. 70,000 patients will do that. What typically happens after that is a lot of time, they'll want to go talk to their referring physician. There are over 20,000 pulmonologists in the United States right now. Less than 30% of them know about valves and know to refer those patients. We have to educate that pulmonology community on valves. We do that through peer-to-peer education. We also brought on what we call Therapy Awareness Specialists. Their job is strictly to go out and educate these physicians, these pulmonologists, community pulmonologists, 20,000 of them, to go out and educate them on valve treatment and who local treaters are and where they should send their patients if they have these patients that are potential candidates. That's how we acquire patients. Once those patients are acquired and they make it to that treating center, there's a testing protocol that they have to go through. We're doing everything we can to make that testing protocol extremely efficient. There are ways that we can do that. We've partnered with virtual navigators who can actually manage the patient through that process. We have a product I talked about, LungTraX Detect, that actually goes into the PACS system. LungTraX Connect actually is just a workflow that comes back for that hospital to work up that patient as they're identified as a potential candidate here. Administration is something that we started selling to recently. We're starting to sell to the C-suite and leaders of different groups and talking about the importance of building a lung health program. Lung health partnership programs really are what are in our discussions now where you see a lot of these hospitals will create lung cancer screening. We go in and talk to them about, you've made investments in lung cancer. Why wouldn't you broaden that? Why wouldn't you go after a larger group and have a lung health screening program? You've already made the investment. Why not reap the benefits of treating a much bigger patient population that's in your market right now that does not have any options, that's literally suffocating in silence? Why wouldn't you want to treat those and actually get the benefits from that? The administrative sale is something that we've been really working on over the last couple of quarters. New account launches continue. We continue to bring on about 12 new accounts a quarter and we'll continue to see that as we go forward. Treating more patients, what can we do to treat more patients? We do that through geographic expansion right now. We've got both Japan and China. We have a post-approval study that's going on in Japan right now. It's 140 patients we have to do. Once we do that, we've already got approval. We just submit that to the government, and we can go and launch more broadly. China is a big growing market for us and continues to grow. We use a distributor there, and we've got a great relationship with them. They've done a lot to expand their commercial footprint. The overall TAM expansion, I talked about collateral ventilation. I didn't talk a lot about it. What that is, is when there's airflow between the lobes of the lung, 20%- 25% of the time when a patient comes in to get our procedure, 20%-2 5% of the time they wake up and they're told you can't have the procedure because you have collateral ventilation. When we have this AeriSeal product, which we expect to launch, we expect to complete our PMA trial in approximately the end of 2026. We'll have a six-month follow-up, and we launch six months after, hopefully six months after as we get FDA approval. That's really a way for us to expand this TAM here. We literally have 20%- 25% of the patients already on the table. They've already gone through everything on the left-hand side of this. Now we're just going to consent them to both when they go down. If you're collateral ventilation positive, you'll get AeriSeal. If you're collateral ventilation negative, you'll get valves. If you get AeriSeal, you come back a couple of quarters later, a couple of months later, and get valve treatment. That's a big long-term growth driver for us. We expect that to be approved in approximately the end of 2027. We would expect revenue in 2028 there. Then procedure optimization. We're doing a number of different things to optimize the procedure for our customers. As you look at our financials, these are our financials. Last year, we grew 22%. Right now, revenue in Q2 was $23.9 million. The U.S. is $14.7 million, and that OUS is $9.1 million. Our margins are 72% in the second quarter. Our guidance for gross margins for the year is 74%. Our margins were slightly depressed in the first two quarters as we had significant orders coming in from the distributor markets. Our cash position, we've got $84.2 million in cash, cash equivalents of marketable securities. That's the financial review. Thanks, Steve, for that overview. I think we'll start on guidance and the revision after Q2. I think that's in the U.S. business. I think that's really been the focus of most investors since the conference call. The company is now projecting revenue of $90 million to $92 million for this year, implying growth of 7%- 10%. Can we just talk about the U.S. market and the delay of initiatives? I say delay here because I think that that is the key word. You made a very clear unprepared remarks that you're starting to see the initiatives that you highlighted today starting to work, but they're just taking more time than anticipated. Maybe we could work through what is working, what is not working in the U.S. market, maybe starting with LungTraX Detect, and also maybe identifying any friction point that you're really seeing that you think you could overcome or had plans to overcome too. Yeah, great. If you look at the initiatives that we've talked about, they are working. They're taking a little bit longer, as you said, which I think were my words. Yeah, we're seeing they're taking a little bit longer. Let me just start with direct-to-patient advertising is probably the first place to go. We know that 30% of the patients that have been treated in the first half of the year actually originally hit us through a DTP engagement. We'll have, as I said, 70,000 patients will come through and actually take a quiz or talk to our respiratory therapist hotline. 30% of the patients that were actually treated had come through that channel. We know that that works, that we are reaching patients, that we're able to contact them. They're getting information, and they're making it through the pathway. I think as you look at, as we continue to grow that, we're going to continue to grow it in different ways. Just the fact that we see them going through is something that bodes well for the future there. I think as we look at the DTP patients, though, it takes them a little bit longer to get through our funnel than a patient that's identified at a pulmonologist's office directly. There's a couple of reasons for that. They have to go, and they got to talk to their pulmonologist. Sometimes they want to talk to a family member. There's just a longer cycle there. I think that takes probably three to four quarters for those patients to actually make it through the funnel. Again, it's taken a little bit longer than we originally expected it would take those patients to come through. If you look at LungTraX Detect, we did a pilot of this. In the first couple of sites that we went to, the first site made it through the legal review, made it through their security review, and had patients scheduled and treated within a short period of time, like a couple of months. When we were looking at LungTraX Detect, I thought, jeez, this is great. If we see this kind of adoption and this speed, then we should see rapid growth as we come out and we launch this. We launched it in late January, as I said, kind of trained the sales force up in February, started selling it in the second quarter. We've got a good, strong pipeline of customers that we're working on with this. The customers, it's bigger hospitals. Bigger hospitals take longer time to get through their legal, to get through their security reviews. We'll go in, the security review will come back. They'll give us a 12-page document that we have to answer. You know, and it's everything about your system. The good thing is that we use a gateway that most hospitals already have. We haven't had any problem getting through these. It's just the back and forth and the time it takes. Once those accounts come on board, typically it can take longer to see those patients come to fruition because now you're identifying patients. Maybe this person was in a car accident. You know, their pulmonologist doesn't even know that they had emphysema. That can take longer. However, that said, our largest account that came on board with this last month found five patients and have them in workup right away within the first month. They moved quickly through the process. It's a bit of a guessing game for us as to where it's exactly going to land. As we're seeing, it looks like it's another quarter or so delayed. That's why we changed the guidance. Got it. You guys have a fair bit of visibility through StratX, right? That's the initial part of the pipeline where patients have to get scanned to really kick off this whole cadence. What are you seeing today in StratX activity broadly in the business? Also, to relate to the therapy awareness specialists that you've hired, I know you highlighted a 19% bump in those regions. Maybe compare and contrast what you're seeing broadly today in the business, StratX activity, and then that 19% bump that you're seeing in those areas where you've installed those specialists. Yeah. Overall, we saw record StratX in June and July. StratX is basically the roadmap that we give the physician that tells them exactly how to treat these patients, that shows them, well, it doesn't tell them how to treat it. It shows them exactly where this patient would best benefit, where the destruction is, what they have for hyperinflation. It's a roadmap for that patient so that they can determine exactly where they want to put the valves, and the patient's going to have the best outcome. StratX is a leading indicator for us. Typically, if a StratX comes into us and a hospital or a doctor has sent it into us, and we give them this roadmap, we'll typically see a 50%-ish conversion rate on that. If we've got that, it's a leading indicator for us. In June and July, we saw record StratX. Part of that record was driven by LungTraX Detect. We had a number of StratX that came in from LungTraX Detect. We also saw an increase in these areas where we put the therapy awareness specialists. That's really their job, to go in there and talk to these community pulmonologists, educate them on Pulmonx, educate them on BLVR, and hopefully find these patients, help them find patients that are already in their practice that could benefit from this. We'll manage closely what the StratX relationship looks like. To your point, we saw a 19% increase in those territories. They were hired in May. It's early look. I don't want to get over my skis on that one. It bodes well. It's good for us to see from an initial standpoint. Traditionally, when you see those increases in June and July StratX activity, how long does that take to flow through to a revenue-generating case in general? Could we see a bump by Q4? I know you just talked about a quarter delay possibly. Do you think by Q4 we could see some of these U.S. initiatives at least materialize then? I would hope so. That's when we gave the guidance. That's what we were looking for. We want to give guidance that everything doesn't have to land jelly-side up for us to hit the numbers. If we can see the benefit and see these start paying off and the timing aligns now where we've got the direct-to-patient advertising, we've got the TASes, we've got LungTraX Detect, all these things start coming together and we see a little bit more benefit on that, then yeah, we would like to, we would hope to see that in the back half of the year. Between those three programs, my understanding is most of it's still very targeted, smaller efforts, more or less. Between the therapy awareness reps, I think you have eight, seven. The direct-to-patient, I also think it's pretty small and targeted today as well. Is there a point where you'd lean into any of these and really start accelerating adoption? By Q4, could you actually get enough data to make that decision? Yeah, we've already leaned into direct-to-patient just based on the number of patients that we see coming through. I think, as I said, it's validated the TAM, and so we've leaned into that. The next hurdle that we need to get is with the COPD physician. Now we put the TASes out there to get the COPD physician. What's next? Now we got to get them through the patient workup. We've got LungTraX Connect to get them through the workup. We've got a virtual navigator partnership to get them through the workup. Let's make sure that they have the time in the OR suite because we've talked to the administrators and shown them that this is a good program. Steve, I know your background is commercial and leading sales organizations. I want to ask you, what are you hearing from your sales force now, especially after the Q2 call and the focus in the U.S.? I'm just curious what you're hearing from the ground. The OUS sales force is fine. There's no, they're doing great. I was at their sales meeting, and everybody is really fired up. They've got a number of initiatives that they're working on. Those are the same initiatives that we're working on here. I think in the U.S., I think the U.S. sales force is good. I think there's some questions. You know, certain reps do certain things better than other reps. When you're a new company, you typically have people that will come out that are, I don't know if you want to call them mercenaries or these kind of early-stage startup guys. They come in and they can open up the big accounts for you. That's what they do. They go in, they open up big accounts, and they move on. They want to cover cases and move on. We need some people that can dig deep. I need to get same-store sales up, and that involves doing some things that those sales reps might not like to do. The ones that do like to do that are on board. They get the program and they're with it. Some of them might move on, and we'll replace them with people that are on board. Are you seeing any notable turnover today because of that? Notable, there's some turnover that we expected. As you know, we had 55 territory managers. We moved that to 45 as we tried to branch out and make sure that we were getting those COPD physicians. A lot of that kind of took care of itself, if you will, as we've had the changes there. I know we have a minute left. Mehul, I do want to ask you a question on just you're able to reduce the operating expense guidance along with the guidance revision for Q2. What cost efficiencies have you been able to implement? What to offset the change in revenue expectations? John, I'd say we have a number of programs in place, a bunch of programs around operational efficiencies that include things like automation. We've just upgraded our ERP, and that'll enable further scale as we grow. We are optimizing IT systems and efficiencies and tools, supply chain optimization, so supplier pricing and a lot of kind of inventory management aspects of it. We also practice what I would call lean practices. It's not just an operations capability, but also in SG&A where we try to eliminate waste and just drive efficiencies. There are some really spending initiatives, and one basic one is around zero-based budgeting, right? You don't just grow your expenses 10% on top of what you did last quarter or last year. We're really scrutinizing spend focused on driving revenue growth and clinical trials. I think we're unfortunately out of time. We can't dig in more. I appreciate you guys coming today, and thanks for the conference. Thanks for having us, John. Appreciate it.