Profound Medical Corp.

Good day and thank you for standing by. Welcome to the Profound Medical fourth quarter and full year 2022 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during this session, you need to press star one one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Kilmore, Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of applicable securities laws in the United States and Canada. All forward-looking statements are based on profound current beliefs, assumptions, and expectations. and relate to, among other things, expectations regarding the efficacy of the company's treatment technologies, results of future clinical trials, the ability to obtain coding and or reimbursement from third-party payers, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance, and future commitments. Such statements involve known and unknown risks and surgeries and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law. For the benefit of those who are new to the Profound story, I would also like to take a moment to summarize our business. Profound develops and markets customizable and fission-free therapies for the ablation of diseased tissues. We are currently commercializing Tulsa Pro, a technology that combines real-time MRI, robotically driven transurethral ultrasound, and closed-loop temperature feedback control. The technology is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume, while actively protecting the urethra and rectum to help preserve the patient's natural functional abilities. Tulsa Pro is CMART, healthcare approved, and 510K cleared by the FDA. In the U.S., we employ a pure recurring revenue model for Tulsa Pro, whereby we charge customers on a per-procedure basis for Tulsa Pro consumables, leaves of medical devices, and services associated with extended warranties. Outside of the United States, we primarily deploy a capital and consumable sales and service model separately as the situation warrants that. We are also commercializing Sonalese, an innovative therapeutic platform that is the mark for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sondleaf is also being approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids and has recently obtained FDA approval under a humanitarian device extension for the treatment of osteoid osteoma. The business model for Sondleaf Systems is currently a one-time sale of capital equipment. On the call today representing the company are Dr. Arun Manawath, Profound's Chief Executive Officer and Chairman, and Rashed Zulan, the company's Chief Financial Officer. With that said, I'll now turn the call over to Rashed.

Good afternoon, everyone, and welcome to our fourth quarter 1-22 conference call. On behalf of the management team and everyone at Profound, I would like to thank you for your ongoing interest in our company. For those of you who are shareholders, we appreciate your continued interest and support. I will turn the call over to Arun in a few moments for an update on our commercial activities. However, before I do, I would like to provide a brief update on our fourth quarter 2022 financial results. To streamline things, all of the numbers we'll refer to have been rounded, so they are approximate. The three-month period ended December 31, 2022. The company recorded revenue of $1.3 million, with the full amount coming from recurring revenues. fourth quarter 2022 revenue increased 26% from $1 million from the same period in 2021, which also did not include any capital revenue. That said, our capital project pipeline in markets outside U.S. is strong, and we do expect to have capital revenue in the future period. As previously stated, we only sell capital in the OUS market. Gross margin for the three months and year ended December 31, 2022 were 44% and 45%, respectively, compared to 50% and 43% for the same period of 2021. While our gross margin is good at this early stage, as the recurring revenue increases, we expect the margin will improve from the current level. Long term, we expect our gross margin to be better than 75% as recurring revenue outpaces capital revenue. Total operating expenses in the 2022 fourth quarter, which consists of R&D, G&A, and selling and distribution expenses were $9.4 million, a decrease of 8% compared with $10.2 million in the fourth quarter of 2021, primarily due to decreased non-cash share-based compensation expenses. We expect our net cash barn related to operation to be in the $5 to $6 million range, same as financial year 2022. Breaking that down further, Expenditures for R&D decreased 34% on a year-over-year basis to $3.1 million. G&A expenses decreased by 35% to $2.1 million. And selling and distribution expenses decreased by 27% to $1.7 million, partially offsetting the decreases in R&D DNA and selling and distribution expenses, we recognize a non-cash impairment of approximately $2.5 million in the fourth quarter of 2022, representing all the goodwill associated with the Sonali business as the return to business in China continues to be delayed due to COVID-19. Net finance costs for the 2022 fourth quarter was half a million dollars consistent with the same three-month period of 2021. Overall, the company recorded a fourth quarter 2022 net loss of $9.5 million or 46 cents per common share compared with a net loss of $10.2 million or 49 cents per common share for the same three-month period in 2021. As at December 31, 2022, Profound had cash of $46.5 million. Based on the company's current bond rate, we believe that its current cash position is sufficient to fund its operations into Q1 2025. With that, I will now turn the call over to Aruv.