Photocure ASA

All right. Well, good afternoon. Good morning. I'm Dan Schneider, President and CEO of PhotoCure. Welcome to today's presentation of second quarter 2026 results. With me today is Priyam Shah, our Vice President of Investor Relations, and Dick Peters, our Vice President of Finance and IT. Just a reminder that the usual disclaimers are in effect for today's presentation. So the slide you've seen before, this is PhotoCure's corporate strategy. It's centered on three priorities that guide execution and capital allocation. First is strengthening the core, drive discipline growth in HEX, FIX, and SISU franchise by expanding blue light cystoscopy tower installations, upgrades, and the U.S. mobile BLC adoption while increasing penetration across key markets. The second is leading the standard. Establish BLC as a standard of care across non-Muslim invasive bladder cancer detection, surveillance, and treatment monitoring through next-generation high-def systems, expanded market access, and global flexible BLC adoption. And third, expand the platform. Build a broader uro-oncology and precision diagnostic platform through biomarkers, artificial intelligence, partnerships, and strategic M&A. Recent examples include the acquisition of Vesca Health and our partnership with Arterra AI. Together, these priorities are designed to drive near-term growth while strengthening our long-term competitive position in non-muscle invasive bladder cancer. So some highlights from Q2, product growth. Overall, we had 11% product revenue growth, XFX. In North America, we delivered 12% product revenue growth, minus foreign exchange, and 10% unit growth. And by the way, rigid growth was 13%. The installed base of Sapphira upgraded blue light equipment continued to increase with four new tower placements and two tower upgrades in the US. And for the second half of this year, Carl Storrs is running a promo on their systems. We expect some pickup. Fortech continues to favorably impact the growth with 24 towers in their national fleet of rentals, underscoring the growing demand for blue light cystoscopy across hospitals without the capital budget expenditures. The number of active accounts increased by 20% year over year to 436 accounts in the U.S., setting the stage for continued momentum into the future. In Europe, EU product revenue was up 10% and Uniswap for 8%. We continue to execute in the EU with strong growth across all key markets driven by continued execution focus and tower upgrades. The Olympus Viscera III BLC equipped system continues to gain momentum now with 87 Viscera III installs in the field and a Stryker BlueLight enabled equipment has also commercially launched in the EU as of Q2. Upgrades through the world have proven to increase the usage of BLC with Hexfix and Sysview, and encouraging accounts to upgrade them remains our top priority. Looking at adjusted EBITDA for the quarter, which is our core business, a blue light Sysoski with Sysview and Hexfix, was 27.2 million NOC, while the reported EBITDA was minus 2 million NOC. As a reminder, as of Q1, 2026, we now report adjusted EBITDA as our key profitability metric in line with conventional practice to better reflect the underlying operational performance and scalability of CISU and HEX-6 while investing in existing growth opportunities. Adjusted EBITDA margin in Q2 was 19%, relatively in line with 20% in Q2, 2025. Year-to-date, 2026 adjusted EBITDA was 15% in 2026 compared to 14% prior year. We continue forecasting improved operating leverage for 2026 while investing in growth opportunities. We had approximately 21.8 million NOC in business development expenses in Q2 on various strategic initiatives, including the acquisition of Vesca Health and the partnership with Arterra AI. At the end of Q2, we have currently 162.4 million NOC of cash. And lastly, and most importantly, we have no debt on the balance sheets. Additional highlights for Q2, the Vesica Health Acquisition June was completed following our minority investment, which we announced in Q1. Vesica's multi-omic urine-based biomarker test strengthens our leadership in bladder cancer diagnostic and advances our precision diagnostic strategy. The Arterra AI partnership, we entered into a joint collaboration with Arterra to evaluate its AI-powered digital pathology test using PhotoCure's blue light cystoscopy registry, monetizing this registry. The FDA reaffirmed plans to begin the proposed reclassification process for BLC equipment in the second half of this year. This will significantly expand U.S. addressable market and accelerate adoption over time. Stryker launched in Europe. Commercially launched its CE-marked blue light system in Europe in late second quarter. China Milestones, Richard Wolff Blue Light System received market approval in China for the use with Hexfix with commercialization by Osiris and Richard Wolff expected in the coming months. Survivor also completed its first commercial shipment with the first global prescription issued in Beijing. On the clinical evidence and scientific engagement front, the BRAVO study published in uro-oncology demonstrated that blue light cystoscopy achieves cost neutrality versus white light cystoscopy through lower recurrence rates and reduced downstream health costs. Said another way, better clinical outcomes, no additional costs. The Journal of Medical Economics publication showed blue light cystoscopy is cost-effective compared to narrowband imaging over a patient's lifetime. And finally, at the 2026 AUA Annual Meeting, two PhotoCure-supported abstracts highlighted the clinical and economic benefits of blue light cystoscopy, including improved detection of high-risk non-muscle invasive bladder cancer and a lower five-year recurrence-related costs. Moving to segment trends, we had strong unit sales in both regions. Both North America and Europe delivered continued growth. In North America, product revenue increased 12%, XFX, with in-market unit sales increasing 10%, with rigid growing at 13%. Six new Sapphire towers were installed, four new, two upgraded, adding to the active BLC account growth strategy of roughly 20% year-over-year. and the Fortech Mobile solution now covers over 200 accounts in over 350 different physicians who otherwise would not have had access to blue light cystoscopy. They are now trained in demonstrating the growing momentum and demand with 70% year-over-year unit growth and mobile now constitutes 17% of North American sales in Q2 2026 versus 11% last year this time. In Europe, Daniel Schneider, Priyam Shah, Tolv Hillestad 87 Olympus Viscera III installs through Q2 2026, and there are many more in the pipeline. 20 upgrades of other equipment year-to-date while Stryker ramps up its commercial efforts in Europe beginning in late Q2. Taking a look at active accounts, 20% growth in the active accounts in the U.S., which are accounts that have ordered in the last 12 months. Over the past six to eight quarters, we have consistently seen strong year-over-year growth in these accounts as an ongoing trend fueled by Fortec and increased interest and importance of BLC in a macro environment where precision diagnostics matter as precision medicines hit the market. The FORTEC program continues to exceed expectations and the reactivation accounts with BLC upgrades along with new accounts remains an important initiative as upgrades throughout the world provide double digit uplift in sales in those same accounts. We see continued momentum in the overall interest in adoption of BLC with SISU and HEXVIX in both the US and the world. Moving to growth initiatives. Despite the accelerating growth of SysView business, today PhotoCure serves less than 10% of the addressable market despite strong clinical evidence and demand for blue light cystoscopy. Three key catalysts have the potential to materially expand our serviceable market drastically. First, additional manufacturing capacity in the FDA's planned reclassification process along with alternative OEM pathways are expected to unlock substantially larger rigid BLC market. Second, expand flexible BLC access will extend use beyond the initial diagnosis into surveillance, driving broader adoption and recurring utilization. Richard Wolff's interim flexible system is now available in Europe with a global 4K solution expected in 2027. That is the system that we have co-developing with them. Together with reclassification, this will expand our addressable market by double digit, multiple versus today. And third, improved reimbursement supporting ongoing legislative engagement would reduce economic barriers and further accelerate adoption. As these catalysts come online, Photocure's commercial opportunity expands significantly. We have a clinically validated product, growing physician support in a highly under penetrated market that provides meaningful upside over the coming years. As a reminder, bladder cancer remains a major unmet need in the US and approximately 85,000 new cases, 730,000 patients living with the disease with more than 400,000 TRBT procedures per year, and at least 800,000 surveillance histoscopies performed annually. Flexible cystoscopy alone represents a global market opportunity exceeding $1.3 billion, positioning blue light cystoscopy to capture a meaningful share as market access continues to expand with a proprietary blue light flexible scope co-developed with Richard Wolff. but there's opportunities throughout the precision diagnostic pathway. Beyond HEXVISC and SysFu franchise, we continue to expand our precision diagnostic strategy through biomarkers, artificial intelligence, and strategic partnership. As bladder cancer care becomes increasingly personalized, we believe future patient management will rely on integrated precision pathway spanning detection, surveillance, and treatment. Today, PhotoCure primarily serves the diagnosis and treatment stage through blue light cystoscopy in the operating room. With Richard Wolff's flexible BLC platform, we will also expand in the office-based surveillance, much larger market space, two to three times the size. Artificial intelligence is another important growth pillar. Our partnerships with Claritas and Arterra leverage PhotoCure's unique clinical data to advance artificial intelligence, enabled imaging, and digital pathology, strengthening our long-term competitive position. Upstream, approximately 7 million U.S. patients present annually with hematuria, blood in the urine. creating a significant opportunity for non-invasive diagnostics. Our acquisition of Vesca Health as Assure MDX, a urine-based biomarker test designed to identify high-risk patients earlier, improve the referrals into cystoscopy, and increase the appropriate use of BLC cystoscopy. We expect AssureMDx to begin generating revenue in 2027 with reimbursement anticipated by CMS in mid-2028 and the potential for an earlier pathway still exists. Together, these initiatives expand PhotoCure's role across the Bladder Cancer Care Continuum and strengthen our long-term position in precision diagnostics. and moving to the OSIRIS program. Our partnership with OSIRIS continues to make progress. We have taken in over $26 million in milestones across both HEXVIX and survivor programs to date from OSIRIS with the potential for additional milestones and royalties in these programs as they advance through regulatory and commercial goalposts. The Richard Wolff blue light equipment received its approval in China in April. As a reminder, HEXVIX has already received marking authorization in China November 2024. Both Richard Wolff and Osiris will begin commercializing the drug-device combination China in the coming months. Sivara was approved by China by the NMPA in March, and the MAA was accepted by the EMA, or European authorities, for regulatory approval. Both events triggered milestone payments to photocure in the amounts 11 million and 2 million respectively. To date, we have received a partial payment for the Chinese approval at 6.6 million and the full amount for the EMA submission of 2 million. Photocure has since maintained constructive dialogue on pending payments with Osiris and remains in ongoing discussions. In parallel, we have initiated the legal steps as part of our effort to pursue I now turn it over to Dick Peters, our Vice President of Finance, to review the financials. Dick, over to you.

Thank you, Dan. Let's dive straight into the financials. Today, I will present to you the second quarter 2026 results. In the second quarter, we delivered 140 million kroner Hexfix-issue product revenue, which is an increase of 11% at constant currency. During the quarter, we also collected revenue for API sales to Aceris for the production of Zavira. and with that the total revenue came in at 142.5 million kroner for the quarter compared to 135.6 in Q2 2025. Gross profit ended up at 132.1 million kroner and the margin of Hexfix Issue remained stable at 93% of sales. Operating expenses were 134.1 million. That's an increase of 21% versus prior year or 29% excluding the favorable impact of FX. But please note, this includes business development expenses related to the Fessica Health transaction of 21.8 million kroner. We also had open positions during Q2 25, which are now filled, for example, in Canada and Spain and in our global marketing department. If we normalize for those items, operating expenses actually increased by about 5% versus last year. Reported EBITDA was 2 million negative, and adjusted EBITDA, which excludes milestones, business development expenses, and other certain ad hoc or non-cash expenses, came in at 27.2 million. That's at level with prior year. And on a year-to-date basis, it was 42.6 million, and that's a small margin improvement versus 2025. and we continue guiding on a further margin improvement versus last year. Further down the P&L, we report a financial gain of 7.7 million kroner, which is mainly driven by FX gains on intercompany loans and an FX gain on the deferred Vesica Health transaction liability. Those FX gains are partially offset by the Ibsen earn-out payments, which we will be paying through 27, 8, 29 and 30, but they will be lower from the end of next year. Tax expenses were 1 million and the resulting net earnings for the quarter were 0.7 negative. Next slide please, where we go into the segment performance. In the North American market, we grew revenues by 12% at constant currency, but we faced significant headwind from the weakening of the American dollar versus the Norwegian kroner. The revenue growth, including the impact of FX, is therefore 3%. Gross profit remained stable at 95% of revenue and came in at 56.4 million kroner. In North America, direct costs decreased by 4% versus prior year to a total of 43.8 million kroner. There was an increase driven by bonus accruals and other employee-related expenses, but those were more than offset by the tailwind of the FX impact on expenses. The resultant contribution margin in North America is 12.6 million kroner versus 9.2 in prior year. That's 21% of revenue, and last year it was 16%. EBITDA, which includes allocations of non-direct overhead expenses, ended at a negative 4.3 million. and remind you that those allocations may change over time as the weight of the sales for each business segment changes. And as the North American sales grow, we are allocating a larger portion of overhead expenses to the North American segment. In Europe, revenues were 80.7 million kroner in 2026. An increase by 4%, including FX impacts, but 10% at constant currency. Growth was mainly driven by in-market unit sales increases in the DAG region of 11% and 10% in high-priority growth markets. Direct costs in Europe increased by 4%, to a total of 33%. to a total of 29.9 million, and that's mainly due to merit and inflation, but again, partially offset by FX impacts. Contribution margin then ended at 44.6 million of 55% in revenue, pretty much in line with last year's 54%. Finally, EBITDA in Europe remains relatively constant at just above 25 million in both 25 and 26. And then we go to the last finance slide, where I'll walk you through the cash flow and balance sheet for the quarter. During Q2, the operating cash flow was 26.8 million kroner. This is mostly driven by FBDA adjusted for non-cash expenses and working capital changes. The large change in working capital is the result of the timing of the invoice of the milestones to Aceris during Q1 and the partial payment received in Q2. The cash flow from investments in the quarter was a negative 80.7 million and that was mainly driven by the payment for the acquisition of Essica Health. The cash flow from financing was a negative 12.3 million and that includes a payment to Ibsen of 10.8 million during the quarter. And with that, the total cash flow in Q2 was a negative 30.3 million and the cash balance for the quarter ended at 162.4 million kroner. Then when we go through the balance sheet, we can see that we have non-current assets of $531.6 million by the end of the quarter. That includes intangibles and goodwill, both for the Ipsum transaction and for the Vesica Health Inc. transaction. We also have inventory and receivables of $207.7 million, and that includes the invoice, but still outstanding $4.4 million in milestones from Asieris. and as mentioned already cash and cash deposits at the end of the quarter were 162.4 million. Finally, shareholder equity was 606.7 million or 67% of assets and total long-term liabilities which include a liability for the Ipsen earn out and the deferred vesica health earn outs were 193.3 million. Current liabilities were 101.4 million. at the end of the quarter. And that concludes the financial section of today's presentation. And we can go back to Dan.

Oh, I think you're going to take key performance metrics, Dick.