Stereotaxis, Inc.

Good afternoon. Thank you for joining us for Sarah Taxis' fourth quarter and full year 2025 earnings conference call. Certain statements during the conference call and question analysis period to follow may relate to future events, expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risk uncertainties and other factors which may cause the actual results, performance, or achievements of the company in the future to be materially different from the statements that the company's executives may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to your host, David Fishel, Chairman and CEO of StairTaxis. Thank you.

Thank you, Operator. Good afternoon, everyone. This has been a year of tremendous progress. I'm proud of the broad-based technological and commercial progress we've advanced despite operating as a small team in a complex environment with considerable challenges. During today's call, I'll discuss the key accomplishments of the past year, the primary challenges we're addressing, and our main goals and expectations for this year. This being our annual call, I want to start, though, by stepping back and providing context for our journey. Stereotaxis's overarching mission is to pioneer robotics within minimally invasive endovascular surgery. We are the clear robotic leader in this huge field of medicine where tens of millions of procedures are performed annually with essentially no robotic adoption. Unlike robots in other fields, an endovascular robot must control highly flexible devices navigated through tortuous, tiny, delicate blood vessels. This is particularly challenging and has led to a graveyard of failed attempts to address the field, with Stereotaxis standing as the battle-tested flag bearer for this mission. It's an important and attractive mission. There remains significant room to improve patient care with the precision, safety, and unique mechanistic and digital benefits of robotics. Stereotaxis' approach to the technical challenge of navigating in endovascular anatomy was science fiction when first proposed, using precise computer-controlled magnetic fields to control the tip of flexible devices deep within the body. Over the years, that concept was turned into reality. The technology was refined and it demonstrated its clinical relevance and value in robust real world use at over 100 hospitals that treated over 150,000 patients. While our technology was advanced and differentiated, we suffered from key structural and strategic limitations. We didn't develop or sell the catheters used with our robot, creating unhealthy dependency, limiting innovation, and a poor razor without the razor blade business model. Our robot remained highly difficult for hospitals to adopt, requiring significant construction, planning, time, and cost. We remained focused on only one specific clinical procedure, minimizing the platform potential for our technology to help patients with a variety of diseases. We spent the last several years advancing a comprehensive innovation strategy that addressed these structural issues. The strategy establishes a solid foundation for a healthy business with strategic independence and an attractive, scalable, profitable commercial model. Most importantly, for the patients and physicians that rely on us, the strategy provides significant innovations that improve and broaden our impact on medicine. The strategy rests on four primary pillars. First, making our robot widely available by innovating it such that it doesn't require construction and can be rapidly installed in the majority of labs. Second, building an ecosystem of catheters and integrations in our core EP ablation market so physicians have greater choice in technologies while we reduce our dependencies and build attractive recurring revenue. Third, Leveraging our core technology such that it becomes a platform for endovascular surgery more broadly, providing value in several new clinical indications. And fourth, establishing a digital backbone that introduces connectivity and intelligence to our robot and the broader operating room environment. This past year was a milestone year for stereotaxis in bringing this technology to reality. The highlight was achieving regulatory approvals in the United States and Europe for the Genesis X robot, magic ablation catheter, and magic sweep high-density mapping catheter. These are highly complex technologies that face the most demanding regulatory requirements. Achieving these regulatory milestones would be a coup for any company and is particularly rewarding for us given how efficiently it was achieved. These three devices, Genesis X, Magic, and Magic Sleep, serve as a core foundation on which to pioneer robotics within the EP field. The EP market has become one of the most attractive medical device markets, treating approximately 2 million patients a year and generating over $13 billion in device revenue annually, expected to grow to $20 billion by 2030. Robotics has long demonstrated its clinical value in this market, particularly by enabling complex procedures to be done effectively and safely. Our first commercial focus is on these complex procedures with higher risk patients and the most unmet medical need, congenital heart disease, pediatrics, and ventricular tachycardia. We view this as a $2 billion market opportunity that can be expanded and serves as an attractive beachhead for robotics more broadly in electrophysiology. The combination of these three technologies allows for adoption of robotics in the EP field with much greater ease, less complexity, and less cost for hospitals. For stereotaxis, it allows for a dramatically different commercial model than what we have experienced in the past. Access to robotics is shifting from the outright sale of a couple million dollar robot that must go through a construction process to a blend of sales, leases, and placements funded by disposable commitments. Our per procedure disposable revenue is starting to benefit from a portfolio of catheters, taking us from an average revenue per procedure of $1,000 to over $5,000. This is a structural shift in our commercial model and provides for a much more attractive foundation upon which to build a growing profitable business. The commercial contribution from these new products was modest in 2025. We sold one Genesis X system and Magic and Magic Sweep each contributed hundreds of thousands of dollars in revenue for the full year. The opportunity for just the catheters in our existing robotic procedure volume is over $20 million annually. There are several factors for this gradual commercial start, including the timing of regulatory approvals in the second half of the year, the importance of these devices being commercialized together as a synergistic portfolio, the administrative efforts post-approval to get on hospital contracts and work through regional registrations, and a challenge in ramping manufacturing. That last challenge, ramping high-quality manufacturing, has been a primary focus over the last months, so let me provide some additional color on that. Genesis X is manufactured by us in St. Louis, where we have significant experience manufacturing complex robotic systems. We completed the production of our first commercial Genesis X system in mid-2025 with many observations for how the assembly process could be improved. We've incorporated these observations into our instructions, refined processes, and worked with suppliers on modifications to components that support the efforts. We expect this year to manufacture approximately one GenesisX robot every two months, with the ability at our current facility to scale to several dozen robots a year. We have a similar experience with Genesis, and so the grind of improving manufacturing and what we are experiencing with GenesisX is something we are familiar and comfortable with. The magic catheter is manufactured by OSIPKA, a contract manufacturing partner in Germany. We initiated the development and regulatory process for Magic with OSIPCA long before our acquisition of APT, which brought us in-house catheter development and manufacturing expertise. Scaling manufacturing of Magic at OSIPCA has been challenged since repeat of receipt of CE mark last year, and so we saw only modest revenue throughout 2025 of hundreds of thousands of dollars. Catheter production has been in the dozens of catheters a month range when we needed to scale to hundreds of catheters a month just to meet interest from our current customers. The fourth quarter and early start of this year were particularly hit by catheter shortages as Asipka implemented a production change improving a specific process to address the largest drag on production yield. This change was successfully implemented earlier this quarter And this March, we expect to receive for the first time over 100 catheters. OSIPCA has a detailed production plan for this year that considers personnel, components, equipment, and space and projects growing manufacturing to approximately 500 catheters a month. Alongside working with OSIPCA on this plan, we are investing in additional ways to expand manufacturing capacity and redundancy. We are clear-eyed about these challenges, confident they will be overcome, and excited by the way things are coming together. As we look at this year, there are four key efforts we are focused on to create significant commercial and strategic value. The first is demonstrating the real-world value of Genesis X by establishing at least five active Genesis X programs. In this early phase of commercialization, we have focused our efforts on approaching some of the more influential and impactful physicians in the electrophysiology field, who have shown interest in our technology for years, but have now reengaged with us more enthusiastically when seeing our new innovations. We have several term sheets negotiated for a mix of sales, leases, and placements with significant disposable commitments. Our ambition for orders is greater than the number of Genesis X systems we expect to install, and orders this year may very well outpace our production. As we establish these first Genesis X programs, we will also be demonstrating the ability for Genesis X to be installed rapidly in existing labs while working compatible with non-modified x-rays for major x-ray manufacturers. This demonstration will be very beneficial in expanding adoption beyond the early adopters. Our second key focus is magic and magic sweep manufacturing and commercialization. As previously mentioned, we are investing significant effort in ramping magic manufacturing and expect to scale from 100 magic catheters this month to 500 catheters a month by year end. As manufacturing scales, we expect to transition our existing EP customers to our proprietary catheters. We're already advancing administrative efforts across our hospital customer base to ensure value assessment committee approvals and hospital contracts are in place in advance of manufacturing supply. In addition to these core efforts with our EP customers, we've made progress with the regulatory efforts to combine MAGIC with the pulse field ablation generator of CardioFocus. And we'll submit a regulatory dossier to our new EU notified body shortly and expect to launch MAGIC with PFA in Europe by year end. Our third key focus is tied to ensuring we become a platform robotic technology, not just in EP, but for a broad spectrum of endovascular procedures across interventional cardiology, interventional radiology, and neuro interventions. While we are very focused and excited by our opportunity in EP, we believe we have a credible path to pioneering robotics broadly across endovascular surgery. Until now, we've presented our efforts to expand into these markets with a relatively modest approach. The development of a guide catheter and guide wire that would allow physicians using Genesis X to safely and efficiently navigate through tortuous anatomy. That effort remains impactful and relevant. We submitted Imagine5F, our five French guide catheter for regulatory approval in both the US and Europe and are working through the regulatory process. We completed development of Imagine 014, our very small 0.014 inch diameter guide wire and expect to submit it for regulatory approvals this summer. These will address meaningful unmet medical needs and we are excited for their impact. But we also have known that this was a modest approach to entering the neurointerventional and interventional cardiology market. We are doing much more under the surface significant strategic efforts well underway that would allow us to make a much bigger splash with robotics. Over the next few months, we expect these opportunities to reach the point where we can share openly a comprehensive strategy for technological leadership in robotics across interventional cardiology and neurointerventions. Finally, our fourth key effort this year is demonstrating the initial value of our digital surgery suite technology. As a reminder, Synchrony and Sync are our digital solutions that modernize the interventional surgical suite with enhanced workflow, remote connectivity, and smart AI capabilities. We received CE mark for Synchrony in the fourth quarter and submitted the technology for US FDA clearance. We received questions from FDA earlier this year and responded to those questions last month. We expect FDA clearance for synchrony in the coming weeks and have already observed strong initial demand for the technology. We expect several U.S. hospitals to standardize their EP labs with synchrony and are currently projecting over $3 million in revenue from initial demand this year. In tandem with this regulatory and commercial effort we continue to advance the connectivity out sync that enables real time collaboration and communication with synchrony systems. and expect to complete the first Ai features that will be incorporated into synchrony and are related to the new video program we were accepted into last year. These will add additional layers of clinical value and a software as a service revenue model to synchrony.

We are in a particularly exciting period for stereotaxis.