EDAP TMS S.A.

Greetings. Welcome to EDAP TMS third quarter 2021 earnings conference call. At this time, all participants are in listening mode. A brief question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to John Francis with LifeSci Advisors. John, you may now begin.

Thank you. Good morning. And thank you for joining us for the EDAP TMS's third quarter 2021 Financial and Operating Results Conference Call. On today's call, we will hear from Mark Oksakowski, Chief Executive Officer and Chairman of the Board, Ryan Rhodes, Chief Executive Officer of EDAP U.S., and Francois Adich, Chief Financial Officer. Before we begin... I would like to remind everyone that management's remarks today may contain forward-looking statements, which include statements regarding the company's growth and expansion plans. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in such forward-looking statements. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. I would now like to turn the call over to EDAP's Chairman and Chief Executive Officer, Mark Osakowski. Mark?

Thank you, John, and good morning, everyone. I will start by providing a brief operational update before turning the call over to Ryan Rhodes, our new EDAP U.S. Chief Executive Officer, for a deeper dive into the U.S. business and strategy. And then Francois Ditch, our CFO, will review our financial performance. I will start by recapping a few of the highlights Year-to-date revenue for the nine months ended September 30th was 30.1 million euros or $35.9 million, representing growth of 14.4% over the first nine months of 2020. We were able to achieve these year-to-date results, notwithstanding challenging headwinds created by the COVID pandemic. Total company revenue for the third quarter was €9.4 million, or $11.1 million, essentially flat with the year-ago period. It is worth noting that both revenue and gross margins were impacted by machine placement that, for logistical reasons, were delayed into the first few days of the fourth quarter. This has happened in both our HIFU and ESWL business and in different regions of the world, including the U.S. and the rest of the world. Had these deals closed during Q3 as anticipated, we would have shown year-over-year revenue growth in the third quarter. These delays resulted from COVID-related delays and restrictions and were largely outside of the company's control. The good news is that we started the very first days of Q4 by recognizing equipment sales in both our businesses, and we also added a strong pipeline of projects on which our sales teams will focus as the fourth quarter is the most crucial quarter of the fiscal year for EDAP. Let's talk about recent sales. Still, we are very pleased to announce a few notable FOGR1 placements since our last quarterly update, one of which occurred subsequent to the end of the third quarter. During the third quarter, we sold a FOGR1 device to the University of Washington, which is consistently ranked as the best healthcare institution in Washington State. More recently, in early Q4, we sold the device to the University of California at San Diego. This represents our third UC placement, following earlier sales at UCSF and UC Irvine. Later in the call, Ryan will elaborate on these placements, as well as the broader progress of our pipeline. Regarding treatment volumes, a clear highlight continues to be the growth in U.S. treatment volumes through the nine months treatment volumes are up 58% over the same period in 2020. This is important for two reasons. First, as we have said before, growth in U.S. treatment volumes is a leading indicator of growing adoption by urologists of 4.1 HIFU as a prostate cancer treatment alternative. Second, we believe the growth in U.S. treatment volumes reflects the positive impact of HIFU Category 1 CPP reimbursement code that went into effect on January 1st of this year. On the topic of reimbursement, CMS recently published the final Medicare Hospital Outpatient Prospective Payment System, or BPS, rule, which is set to go into effect on January 1, 2022. Despite the unanimous vote in favor of having HIFU reimbursement for malignant prostate tissue ablation upgraded to APC Level 6, we acknowledge that the agency has elected to keep HIFU reimbursement at Level 5 next year. It is worth noting that we have been operating at level 5 since 2019, and as such, we believe we can minimize the impact that decision will have on our sales of pipeline activities in 2022. At the same time, we have developed a comprehensive action plan to help demonstrate to CMS why high school technology has clear benefits to Medicare patients and is attracting interest among physicians. With this strategy in place, we remain confident that EDAP can secure increasing facility reimbursement to Level 6 starting in 2023. Regarding endometriosis, I will now provide a brief update on our endometriosis program. As a reminder, Phase 2 study has so far enrolled a total of 38 women across five major hospitals in France who will be assessed over a six-month follow-up period. We recently decided to increase total enrollment to 60 from 38 to strengthen the level of evidence brought by the study, as the initial enrollment tracked faster and smoother than what we anticipated. Investigators will evaluate the safety and efficacy of HIFU for this pathology. We were extremely pleased to have Professor Gilles Dubenard from University Hospital in Coahuas in Austin, Texas, this week for the AGL Congress. Dr. Di Bernard was invited by the Congress Scientific Committee this past Monday to present preliminary results from our endometriosis study. As a quick note, endometriosis was a major topic of focus during this year's conference due to its rising prevalence and impact on the health of so many women around the world. We believe the treatment of endometriosis could be greatly improved with application of late invasive procedures, and the use of HIFU technology could offer an important, minimally invasive treatment option for these patients. I will now turn the call over to Ryan, who will give us more details on our U.S. operation and strategy. Ryan?