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.

Oh, sorry. I'll take those as well, of course. So are we on the right slide?

Yeah, we're on adjusted EBITDA.

So just reflecting a little bit on the adjusted EBITDA trends, a newly introduced metric to show the underlying performance of our Hexvix SIFU business. We see that adjusted EBITDA has improved over time, both in absolute terms and as a percentage of HXX issue revenue. from a negative amount in 2022 to 13% of total revenue of HECS revenue by 2025. And if we look at the year-to-date numbers, we also see continued improvement and we are now at 15% of HECS revenue at the end of Q2 26. And as said, we expect a continued improvement versus 2025. And then if we go to the next slide, we have a recap of the adjusted EBITDA and the way we calculate it. As you note, in this quarter, we have included the biomarker segment expenses because they are not part of the HECS-XSU core business as we reported today. Going forward, and once the biomarker segment matures and commercializes, we will obviously not adjust for biomarker expenses going forward. Another minor change you may spot versus the prior quarter is that we've decided to not only normalize for non-Hexfix-issue revenues, but also for the related cost of goods sold. If not, we would have normalized 2.5 million kroner in Savira API for the quarter, but kept the COX in the adjusted EBITDA, which I don't think is a fair comparison. So just to note, a small correction there on the non-Hexfix-issue revenue and margin adjustment. And with that, the final section is really concluded.

Thank you, Dick. All right, we'll go to the summaries. In the interest of time, I'm going to move quickly because we want to get to the questions in this quarterly. You can see the quarter two 2026 results, which I have gone through in the prior presentation. I encourage you to read through it at your leisure. Moving to near-term milestones and corporate objectives, we are raising guidance 8% to 11% top-line growth through the adjusted EBITDA expansion as we realize further operating leverage on the commercial business. Continued increased HexFix SysView account utilization through upgrades, installs, and the mobile solution through 4Tech. We want to advance the development of the next-generation, state-of-the-art 4K HD Flex system, which is still on its developmental pathway. We expect to launch in 2027 and unlock the very large surveillance market, which is two to three times the size of the current markets we serve today in the operating rooms. Our strategic partnership with ICS Cloridus is developing a BLC AI, which will also become what we believe a game changer in bladder cancer precision diagnostics and the detection and surveillance of patients. We will continue data generation of novel precision pathways and health economics to help position BLC as a go-to precision diagnostic in bladder cancer. Increasing access to BLC in the US through FDA reclassification, which we anticipate in the second half of this year, and also supporting the manufacturers who are seeking out alternative pathways through the FDA currently. and we also will continue to support Osiris. The partnership still remains strong, although we have a disagreement in progressing usage of Hexix in China and Savira worldwide. And finally, longer term business outlook. And this was presented when we did the Besica acquisition back in June. I want to close on this for the longer term outlook because I think it's very important everyone's anchored into who we are, who we've been and who we're becoming. So looking beyond 2026, we believe Vesca adds a compelling second growth engine. Assuming Medicare reimbursement by mid-2028 and continued positive clinical data supporting commercialization, we expect initial AssureMDX revenues in 2027 and positive EBITDA contribution from the business by 2030. We also expect commercialization and market access investments to be funded through Photocare's existing cash generation. In the near term, Vesca is expected to generate only modest operating losses as we invest in market access and commercialization activities. As volumes scale, however, we believe the business has the potential to achieve EBITDA margins north of 30%, consistent with the attractive economics typically seen in successful molecular diagnostic businesses. The most important takeaway is impact on our long-term growth profile. On a standalone basis, Photocure was expected to grow in the mid to high-teen CAGR through 2030. With Vesca, we now expect the consolidated company to deliver revenue growth above 25% annually from 2026 through 2030, while maintaining strong profitability and targeting adjusted EBITDA margins above 25% by 2030. and importantly, we continue to see upside beyond the assumptions. Potential FDA down classification, additional scope manufacturers entering the US market and the reintroduction of the world's only proprietary blue light flexible system scope would further strengthen the growth outlook for core PhotoCure business. Overall, we believe this transaction positioned PhotoCure to accelerate growth meaningfully, expand into a large adjacent market, create a larger, more diversified and increasingly profitable bladder cancer company over the coming years. And so with that, I think we've left a lot of time for Q&A this time. So I will turn it over to Priyam and take it from there.

All right. Thank you, Dan. Thank you, Dick. And yes, we have quite a bit of time to take as many questions as possible. So I'll jump right in. Question number one. When does PhotoCure become a profitable company? When will the various investments in PhotoCure transfer into earnings? Maybe, Dan, you want to start with that one?

Yeah, I think there's three points here. Our strategy is profitable growth. The investments we have made are intended to create operating leverage over time. As revenue scales, particularly from our existing commercial infrastructure, we expect profitability to continue to improve. We believe we've materially strengthened the business through regulatory approvals, geographic expansions, strategic partnerships, and platform development. Our focus now is on converting those investments into financial performance. and quite frankly, when I came to the organization, we were a single product company relying on OEMs with all the challenges that we've all lived through over the last several years. Our strategy now is to build a leading bladder uro-oncology cancer diagnostic platform by growing our core business while adding complimentary high margin technologies near revenue or revenue generating that leverage our commercial organization, which is really a cornerstone of our success.

Great. Maybe a question on US S&M allocation. So to help shareholders evaluate the underlying scalability of the core SysView business, what proportion of the US S&M budget is strictly attributable to maintaining existing active accounts versus acquiring new accounts? Dick, maybe you want to take that one?

Sure. So I think one important thing to note is that Daniel Schneider, Anja Gossens-von der Heidt, and we are helping out with that as well. So both account types need maintenance from our reps and it's not that we can only focus on new accounts. We will lose the existing accounts if we lose focus on those as well. Now, having said that, I do not have a specific metric on time spent per account type.

Okay, thanks. Quite a few questions here on our new financial reporting in lieu of adjusted EBITDA. So as analysts increasingly focus on unadjusted operating cash flow, why does management view adjusted EBITDA as a representative metric for underlying performance, given that reported EBITDA was negative and the net cash flow after investments was also negative in the first half of 26? Dick, you can take that one as well.

Yeah, that's a great question. So from the strategy, we understand that photocure is going through a transformation phase. And what we want to achieve by presenting adjusted EBITDA is really to give shareholders an insight into the performance of existing HexExissue core business. And that's exactly what adjusted EBITDA is doing. And as our business matures and diversifies, we will adapt this metric to reflect the new state of business. but right now we believe that adjusted EBITDA as we present it is the best way to track performance of HexaccessView over time.

Next, why did you go into arbitration with Osiris? What is the status of this partnership? Dan?

Well, as we discussed, we initiated the arbitration in accordance with the terms of our agreement. We feel like we're in a very strong position. OSIRIS has an alternate view of the contract. It's now in a legal proceeding, so we can't really comment on the specifics of the case as part of our legal strategy. What I can say is that we believe the contractual terms do support our position and we are pursuing the appropriate process to protect the company's interests in accordance with the contract that we have with them. Importantly, this matter doesn't change our long-term strategy or commitment working with Osiris. In fact, our teams work very closely day in and day out supporting Subira launch in China or the Hexfix launch in China or even the submissions around the world. Our interests remain aligned. So we'll provide updates if and when there are material developments appropriate for disclosure. But again, now that we're into sort of official legal processing, I'd really rather not comment any specifically, but we're doing what's right for photocure.

Several questions here on Vesica. So let's start with the more broader one. Why was Vesica the right acquisition for photocure?

You know, number one, it was operating in the precision diagnostic ecosystem. It's upstream from blue light. Key to patients getting blue light cystoscopy is identifying them early and with some level of confidence. So we felt it was a great complementary asset that would help, you know, move patients quickly to a high yield blue light cystoscopy facility. It strengthens our visibility into emerging approaches that could be relevant to our long-term roadmap without changing our near-term operating focus. Vesca's multi-omic biomarker test uses epigenetics to identify early-stage bladder cancer. who present with blood in the urine. It is best of class in terms of sensitivity, specificity and negative predictive value and area under the curve. I mean, quite frankly, there are other assets out there. This is the best one by far, and we've looked at them all. This is also, you know, as we went through the negotiations and the process of acquiring them, there was a series of really good Daniel Schneider, Anja Healy, Priyam Shah, Tolv Hillestad It also expands our addressable market using our existing infrastructure that we have currently. It doesn't mean that that's all we'll need over time, but certainly the sales force we have today can launch. And the success depends on reimbursement, commercial execution, which we are very good at. and we'll continue to provide updates on any of the future milestones such as CMS reimbursement, Novitas decisions on recommended reimbursement, et cetera. and it's all, when you think, if you're thinking about the company and the fact that we've been developing Flex for two years and Flex will now find its way into the clinics, Assure MDX is a clinic play as well, our reps, the footprint that we have and we will need to expand by a little bit, those reps will be worth the value of two product calls instead of a single product call. So we saw it as a very complimentary, high yield acquisition on a FTE basis.

Great. And another question on Vesica specific to reimbursement. So understanding latest developments with ongoing Novitas LCD, when would you have confidence of reimbursement in 2027? And what is the path to revenue pre-reimbursement if expecting reimbursement in 2028, but revenue in 2027? I hope that was clear.

Yeah, we're working on Novitas. So the next major milestone will be a publication of the final LCD, which currently we expect in early 2027. They have until May of 2027. What's interesting about this is this whole Novitas piece of this LCD has picked up and things are moving at a much rapid pace than what you typically see. So we remain very optimistic about Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad and that would allow us to complete the enrollment, begin building, accelerate commercialization through meaningful revenue while Medicare reimbursement is coming. In the meantime, we can continue to build the business through early access program by generating utilization, the assets available, we can begin selling it, we can sell it to the commercial or patients who wanna pay on their own or early access. And we also retain the option to pursue the ADLT pathway through our current priority although our current priority remains working with Novitas. Assuming a positive LCD outcome, 2027 should be a strong launch year with more meaningful revenue growth expected in 28 and beyond as Medicare reimbursement becomes established and commercial payer coverage expands and codifies.

Several questions on various territories. So Dan and maybe Dick, you can also provide color. So can you provide additional Q2 color on Dutch, France, and the ramp up in Italy and the UK? Any constraints there in those regions?

The DOC region, Germany, Austria, Switzerland, had excellent growth in Q2 thanks to positive reimbursement uplift for blue light within the hybrid DRG system. There is an incremental advantage for blue light cytoscopy. The priority growth markets grew double digit with excellent growth in France, Italy, and the UK, mainly driven through new accounts and upgrades. I can see that this momentum continues throughout the year. Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad Blue light cystoscopy with HEXFIX is in a very favorable position and our sales force has done a fantastic job of helping physicians understand that and making sure blue light cystoscopy is accessible to bladder cancer patients.

Maybe some color on understanding Nordic weakness, especially in light of the Olympus Tower launch.

Yeah, for the Nordics, the main culprit is currently Sweden, where there are a number of specific account level challenges. The penetration is high. One account can control 10% of the total business. So if one account has an issue with equipment or a key user departs, it does have an impact on the business. Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad continues to precipitate. We don't have a direct sales force in Denmark, but as far as Sweden, Finland, Norway, Norway, we'll have a new rep beginning in August. So that will fill a vacancy that's been vacant for over a year. So we look forward to return growth there as well.

A couple questions on Spain. We launched in Spain in June 2025. How is it tracking? What are your initial learnings from the Spain operations? How do you plan to scale engagement from the BLC equipment partners there?

The initial discussions are developing according to plan. As we enter any country, and we've seen this in every country we've entered, it is a process. We're not a single product entering with no constraints. We have to work with OEMs. We've got to work with the KOLs. We've got to work with the hospital systems and their capital budgets. These are all variables that you're working with. But there is a lot of enthusiasm around blue light cystoscopy. The collaboration discussions with equipment manufacturers are ongoing. Reimbursement, fortunately, is for the most part in place. So there's been a focus on developing connections with KOLs in Spain, understanding where they see blue light in their practice. Today, very few centers have the equipment installed in Spain. But we have good signals that they're going to begin acquisition and acquiring them. We're confident we'll see progress as our customers work through the process and access the budgets and bring the new equipment in. So as we move through the second half of this year and into next year, I think we'll see Spain making some traction. Reminder, Spain is a very lucrative company. A couple questions here on FDA reclass. So what is the latest read on the potential FDA reclass?

and how could it change the competitive dynamics and market and how would it affect the market entry barriers?

Well, I think you got to keep in mind the whole purpose of reclass is bringing up additional OEMs into the US market. Now reclass is a very Daniel Schneider, Anja Healy, Priyam Shah, Tolv Hillestad FDA did review that document. So we expect them to begin that process. They'll make a formal recommendation. It'll go through public comment. That process could take anywhere from six to 24 months. The fact that they have... Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad may be on the quick side, but I think somewhere in that 12-month period is probably appropriate. But meanwhile, the most important thing is to get other OEMs into the market. And so we've encouraged them not to wait for the reclass. There are alternate pathways. We're working with them to help them find their way into the U.S. market. That could happen as early as early 2027 if they get their approvals. So Stay tuned. When the FDA makes its official announcement of the reclass, we will press release that if you don't find it yourselves out on the public airways.

Maybe a follow-on to that is if the U.S. reclass does in fact happen, how would you approach opening the non-Carl Storrs centers that are currently out of reach?

Yeah. I think one nice thing for us is that we have Europe as a good example of how you can work with OEMs successfully. Now they're adopting now their fourth one with Stryker entering that market and all play well together. So we'll continue to work with them the same way we work Carl Storrs. We'll work with other OEMs that, you know, enter into the market and expand access. We'll continue to penetrate new hostels, but it might take Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad Daniel Schneider, Anja Gossens-von der Heidt, Their reach, some of the accounts as we've gotten into June, June 30th was the end of many of the fiscal calendars for hospitals. They've gone through reviews and CFOs are seeing a line item for operating expense for blue light cystoscopy by Fortec. They're asking the question, which we hope they would ask, is why are we doing this? Why are we not buying the equipment? There's an advantage to owning your own equipment. That means that any patient on any day at any time can be treated versus trying to stack your cases on a Tuesday or a Thursday or whatever. We are seeing interest from hospitals who have been using Fortec to convert over to a acquired or purchased equipment by Carl Storrs currently or other OEMs maybe in the future. But that doesn't stop Fortec. The hunting grounds for Fortec are quite large. There are over 5,000 hospitals in the US. Let's say 2,000, 1,500 to 2,000 are key bladder cancer treatment centers and we're hitting around 400 of them. So there is a lot of room. Also remind you that what Fortec hits a lot of these accounts on may not have the same patient flow as USC or Southwest Texas or Hopkins or things like that, but they're still very key to the regions of which they serve. So the way we would go about this is we'll identify hospitals with the highest volume bladder cancer claims that don't offer blue light technology via Carl Storrs. Of those hospitals sorted by hospital outpatient PD, so their place of service, where most entrants would only offer rigid, which is done in the hospital outpatient setting. Depending on the new entrant, leverage the field knowledge. Are they Olympus Hospital? Are they a Stryker Hospital? Are they a Wolff Hospital, et cetera? And then work with the new centers to promote and establish BLC bladder cancer centers of excellence, as we have done with many of the Carl Storrs accounts. So in other words, as they bring on, whether it be Carl Storrs, Olympus, Wolff, Stryker, as they bring them on, helping that hospital advertise in their local area as a bladder cancer center of excellence. So that's been the blueprint we've used. It's been very successful. And the most exciting thing is that we would have multiple OEMs to work with should the hospital choose one over the other.

Great. So we are at time. We have a lot more questions, but I encourage everyone whose question was not addressed to please reach out to IR at PhotoCure and we'll make sure that your questions do get addressed. But Dan, maybe just to close out, any closing comments from you?

Yeah, thank everyone for joining. The organization has been in this evolution over the last couple of years. Realizing where we were seven years ago when I joined as a single product company, depending on external variables like OEMs and reimbursements and capital budget processes, et cetera. And also seeing the opportunity, the macro environment of bladder cancers suddenly come into the forefront of all cancers. and all the therapeutics coming in and developing the expensive precision therapeutics, there remains a massive opportunity for someone to consolidate this in a meaningful way for physicians. And PhotoCure has taken that ambition. And we believe by adding Beska Health partnerships with Arteria Convergent, AI, Blue Light Cystoscopy, Flexible Scope with Richard Wolff. We're well on our way as establishing ourselves as the company of choice and the products of choice for bladder cancer care and non-muscle invasive bladder care. So I'm looking forward to the second half of this year. Should be exciting. Thank you.