Pulmonx Corporation

Ladies and gentlemen, thank you for standing by. And welcome to Pullmonic's second quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Jeremy Pfeffer of LifeSci Advisors Investor Relations. Please go ahead.

Good afternoon, and thank you all for participating in today's call. Joining me from Pulmonix this afternoon are Steve Williamson, President and Chief Executive Officer, and Mehul Joshi, Chief Financial Officer. Earlier today, Pulmonix issued a press release announcing its financial results for the second quarter into June 30th, 2025. A copy of the press release is available on Pulmonix's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws. which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements including, without limitation, those relating to the company's operating trends, commercial strategies, and future financial performance, the timing and results of clinical trials, expense management, market opportunity, guidance for revenue, gross margin and operating expenses, commercial expansion and product demand, adoption and pipeline development are based on our current estimates and various assumptions. Forward-looking statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of Belmonix's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-Q, followed with the SEC on May 2, 2025. Also during this call, management will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on Pomonix's investor relations website. These non-GAAP measures are not intended to be a substitute for the company's GAAP results. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, July 30th, 2025. Pulmonix disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Now, I'll turn the call over to Steve.

Thank you, Jeremy. Good afternoon, everyone, and thank you for joining us today. We're pleased to report second quarter 2025 revenue of $23.9 million. Our international business excelled, delivering $9.1 million in revenue, well above expectations and a testament to the strength of our global footprint. Growth was robust across all key regions, reinforcing our conviction that the foundational investments we've made internationally, particularly in education, market development, and pathway creation, are scaling effectively. We continue to see momentum in these markets from repeatable initiatives such as peer-to-peer education, regional multidisciplinary emphysema boards, and targeted physician engagement. These are not isolated tactics. They are building blocks of long-term sustainable OUS growth, and the results are becoming increasingly evident. Shifting to the U.S., in the second quarter, U.S. revenue totaled $14.7 million, reflecting slower-than-expected growth in procedure volume. This trend has been driven by a combination of tough year-over-year comparisons, a decline in conventional stratix scans, and operational pressures at interventional pulmonology centers. We believe increasing attention on robotic bronchoscopy and lung cancer screening has, in many cases, temporarily constrained bronch suite availability and diverted IP focus. Now, it's important to note, we view these dynamics not as threats, but as future tailwinds. The rise of lung cancer screening is a good thing, It's surfacing more disease earlier, expanding imaging volume, and enabling timely intervention. In fact, we're intentionally aligning with these trends. We believe that the very same infrastructure being built for early cancer diagnosis, including the hiring of clinicians and support staff, will create capacity to find and treat more patients with severe emphysema. That said, our original 2025 guidance assumed a second-half rebound in U.S. performance, fueled by the ramp-up of our new commercial initiatives. Based on current conversion trends, we now believe that this inflection will take more time to materialize than initially anticipated. As a result, we are revising our full year 2025 revenue guidance from a range of $96 to $98 million to a range of $90 to $92 million. This is a recalibration based on timing, not a shift in strategic direction or a change in our confidence in the opportunity. Importantly, This revision to guidance gives us the opportunity to exceed expectations if our initiatives ramp faster than expected, while also providing flexibility if conversion timelines continue to vary across programs and geographies. We believe this is a prudent and transparent adjustment based on current visibility while preserving meaningful upside. So let me walk you through what happened, what we're doing about it, and why we remain confident in our path forward. The softness in Q2 procedure volume was primarily due to a decline in static scans in prior quarters, a leading indicator for Zephyr bronchoscopic lung volume reduction procedures. We expected some of this softness, driven by capacity constraints and evolving priorities within IP centers. We also expected that our new commercial initiatives, direct-to-patient outreach, referring physician engagement, and the rollout of LungTrax Detect, would help overcome that decline by opening up alternative pathways to the funnel These programs are gaining traction, but they're taking longer than traditional referral models to convert. These new pathways involve multiple stakeholders and more complex workflows, often requiring one or two additional quarters from identification to procedure. In response, we've taken deliberate, targeted steps to expand the funnel, improve conversion, accelerate adoption, and grow Stratix across the US market. First, our direct-to-patient campaigns continue to gain momentum. We expect to exceed 70,000 first-time patient engagements this year through a mix of digital quizzes, inbound calls, SMS-based support, and connected TV advertising. These efforts are driving measurable increases in website traffic and patient inquiries. Already, one-third of the patients treated in 2025 were engaged through these campaigns, a strong indicator that we're not just creating awareness but driving action. We've also launched the therapy awareness specialist, or TAS, role to bridge the gap between community pulmonologists and treating centers. Many referring physicians remain unclear on how to identify the right patient, where to send them, or whether the procedure is reimbursed. In territories where TAS has been deployed, we've seen patient workups increase by an average of 19% compared to the four-quarter average. That's the type of early signal we look for when we're launching a new commercial model. We also continue to invest in clinical training and enablement across our IP customer base. This includes onboarding new physicians, providing procedural best practices, and supporting multidisciplinary teams in building sustainable workflows. Finally, we're making steady progress with LungTrax Detect, our AI-powered screening tool that passively identifies emphysema patients from routine CT scans. Several hospitals are already live, and early site data is encouraging. At one hospital, a patient flagged by DETECT was originally undergoing follow-up for a lung nodule and was successfully treated with Zephyr valves. At another, five patients were identified and moved into the diagnostic workup phase within 30 days of installation. The adoption of LungTrax DETECT involves the engagement of a number of stakeholders, from identifying a clinical champion, to clearing IT and security reviews, to contracting, to integrating into clinical workflow. Each step takes time. but the payoff is clear. We continue to evolve our sales and implementation processes based on customer feedback, and we currently have a robust and growing pipeline of hospitals that are in line to adopt this technology. We've also expanded our capacity footprint. In Q2 alone, we opened 12 new screening centers and trained 26 new physicians. These actions don't just grow our network, they create new points of patient access and expand our capacity to treat. So why are we confident this strategy will work? First, Stratix referrals rebounded to record levels in June and July, which we view as a direct response to the initiatives we've deployed. Second, lung cancer screening is scaling rapidly, nearly tripling since 2020, and generating millions of CT scans annually. Based on published data and our internal experience to date, we estimate that 15% of these CT scans will show valve-eligible radiographic emphysema, and about 25% of those patients will be eligible for further Zephyr valve evaluation. That's a massive and growing opportunity that we are now better equipped than ever to capture. Third, health systems continue to prioritize high-value, minimally invasive interventions. Zephyr valves offer a strong clinical value proposition, a favorable reimbursement profile, and a scalable procedural workflow. We fit squarely within those strategic objectives. Fourth, Physician enthusiasm remains high, reimbursement remains stable, and an estimated 500,000 patients in the U.S. remain untreated despite being eligible. The unmet need is not in question. The challenge is matching the right patient with the right care, and that's exactly what our strategy is built to do. We're also continuing to invest in long-term value drivers. The CONVERT II trial evaluating aerosol and collateral ventilation positive patients is progressing well. This product was designed to unlock treatment for the 20% of patients who complete a Stratix workup only to be ruled out for valves due to collateral ventilation. Enrollment is expected to complete in the back half of 2026. In Japan, we continue to enroll patients in our post-approval study. This study is required before full commercialization and will unlock access to a market with an estimated 100,000 BLVR eligible patients. We remain on track to complete enrollment in approximately 2026. And finally, we've launched a new collaboration with Jaeger, a global leader in pulmonary function testing, to embed BLVR screening logic into their diagnostic platforms. Over 16 million PFTs are conducted in the U.S. annually. Based on published data, roughly 35 to 40 percent of those tested have COPD, and within that group, up to 30 percent may have emphysema severe enough for Zephyr consideration. This is what we mean when we say we're not just selling a product. We're building an ecosystem for long-term, sustainable 20% growth. We're also advancing our robust clinical evidence base. At the American Association of Bronchology and Interventional Pulmonology meeting in Austin this August, early results from Lung Trax Detect will be presented, showing how AI-enabled detection of emphysema from routine low-dose CT scans can shorten the time from diagnosis to treatment. In September, the European Respiratory Society Congress will feature multiple presentations, from new screening techniques to combination therapies, that continue to broaden clinical validation and support practical adoption of Zephyr valve treatment. So while we are revising our full-year outlook, our conviction in our long-term growth trajectory is stronger than ever. We're investing behind a clear, scalable strategy. We're seeing positive signals across all major initiatives, We will continue to improve and drive focused execution of our strategy, and we remain confident that the work we're doing today will translate into sustainable, durable future growth. Finally, we're committed to transparency with our shareholders, our customers, our employees, and most importantly, the patients we serve. That's why we've taken the time today to walk you through not just the what, but the why behind this guidance revision, and why we believe the underlying drivers are both sound and strengthening. Now, I'll turn the call over to Mehul to provide more detail on our financial performance.