Perimeter Medical Imaging AI, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Perimeter Medical Q3 2025 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press zero for the operator. This call is being recorded today. I would now like to turn the conference over to Stephen Kilmer. Please go ahead.

Thank you. Good afternoon, everyone. Let me start by pointing out that this conference call will include four linking statements within the meaning of applicable securities laws. These may include statements regarding the future financial position, business strategy, and strategic goals, commercial activities and timing, competitive conditions, research and development activities, projected costs and capital expenditures, research and clinical testing outcomes, the potential benefits of our products, including the perimeter S-series OCT, perimeter B series OCT, and perimeter image assist, perimeter's ability to broaden its user base and the expected approval of its proprietary AI, expectations regarding new products and the timing thereof, and expectations regarding opportunities for market expansion. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our public filings and press releases. which are posted on CDAR+, which are posted on CDAR+. Our results may differ materially from those projected on today's call. No forward-looking statement can be guaranteed. Permit Archer takes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than is required by law. For the benefit of those who are new to the permit or story, I would like to take a moment to summarize our business. We are a medical technology company working to transform cancer surgery with high-resolution, ultra-high-resolution, real-time advanced imaging tools to address areas of unmet medical need. We are currently commercializing our FDA-cleared perimeter S-series OTC system, which provides real-time cross-sectional visualization of excised tissues at the cellular level. Our breakthrough device-designated investigational perimeter B-series OCT system, which combines our proprietary image assist artificial intelligence technology with wide-field optical coherence tomography, represents our next-generation device. As we will discuss in more detail today, B-series OCT with image assist 2.0 has recently been evaluated in a pivotal clinical trial in breast-conserving cancer surgeries, or BCS, And our pre-market approval application for the device is currently under review by the U.S. Food and Drug Administration. On the call representing the company are Adrian Mendez, Perimeter's Chief Executive Officer, Andrew Berkley, Perimeter's Chief Financial Officer and Co-Founder, Paolo DiPasquale, our Vice President of Corporate Development, and Sarah Bryan, the company's Chief Financial Officer. With that said, I'll now turn the call over to Sarah.

Thanks, Steven. Good afternoon, everyone, and welcome to our third quarter 2025 conference call. On behalf of the management team and everyone at Perimeter, I'd 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 Adrienne in a moment. However, before I do, I'd like to provide a brief update on our financial results. To streamline things, all the numbers we will refer to have been rounded, so they are approximate. As a reminder, we also report in U.S. dollars. For the three-month period ending September 30, 2025, the company recorded revenue of $536,000, which consisted of recurring sales of S-series consumables and system leases, one-time sale of capital equipment, and sales of ESP warranty programs. This represents a 157 percent increase over Q3 2024. I think it's fair to highlight that one, this strong revenue growth was achieved in a historically lower quarter due to surgeons and patients taking summer holidays. And two, we made our second ever capital sale in this quarter. With respect to that, while the two current perimeter S series capital sales made so far this year obviously don't signal a trend, we do believe they signal a shift in customer buying behavior driven by our sales team ability to show product value and shift customer mindset. I believe this demonstrates a change in our customer perception as sites anticipate the B-series commercial launch in 2026 pending FDA approval. Operating expenses for the three months ending September 30th, 2025 were $3 million. Additional savings from company cost controlling efforts implemented in June 2025 resulted in this 34% year-over-year improvement from $4.5 million in the same period in 2024. The company was selective in the cost controlling measures, focusing on continued support of our PMA application for the B-Series and commercial growth of our S-Series technology. The reduction in operating expenses also reflects the ongoing transition from product development to commercial-focused organization. Third quarter 2025 net loss was $2.7 million, or 3 cents per common share, a 42% improvement from $4.7 million, or 7 cents per common share, in the three months ending September 30, 2024. As of September 30, 2025, cash and cash equivalents were approximately $1.7 million, I'll now turn the call over to Adrian.

Thanks, Sarah, and thanks again, everyone, for your time and attention today. As you just heard from Sarah, we delivered another strong quarter, and I'm pleased to report that positive momentum has continued into the current quarter. We remain cognizant of the need to continue to carefully manage our resources as we grow with our current S-Series device while, at the same time, laying the groundwork for what we expect to be an aggressive and successful rollout of our next-generation B-Series device, starting in the next few months pending FDA approval. As I've stated in past calls, our goal has been to seed the market with current S-Series OCT in order to create a strong network of early adopters and technology champions in preparation for a potential FDA clearance of our next-gen B-Series OCT with ImageAssist AI. We've consistently executed toward achieving that goal since the start of the year, and the third quarter is illustrative of that. Adoption of the S-Series device in terms of both new system placements and increased current device utilization has been accelerating while we wait for the requisite go-ahead from the FDA to introduce the A, I, or B series to the market. Okay, so to put that in perspective, revenue in the first nine months of 2025 alone was 88% higher than the total for all of 2024. We're also very excited to see utilization rates increase 95% year over year in Q3, despite their traditional summer seasonality that Sarah mentioned earlier. And of course, our confidence was further bolstered by another S-series capital sale in the quarter. These are all important indicators that our commercial engine is starting to deliver on the aspects that we need to drive revenue acceleration into next year and beyond. On that note, with respect to our upcoming B series, we filed our pre-market approval application for the device with the FDA in mid-March, and the application is currently going through a substantive review by the agency. The PMA process is a large and complex undertaking, but Perimeter now believes that we may now be close to getting to the finish line. The U.S. government shutdown has not impacted our approval timeline, and we continue to believe that FDA approval will come sometime in early 26. Perimeter is at an important inflection point, and we expect clinical adoption, and as we expand clinical adoption, and prepare to bring game-changing AI innovation to operating rooms nationwide. And so, to summarize the incredible progress we're making, we are seeing yet another quarter of positive commercial traction with our current S-Series product, as demonstrated by our 157% year-over-year revenue growth, 95% case volume growth, and yet another capital sale in the third quarter. At the same time, we're carefully managing our resources as we grow, and as a result of our cost control efforts, we were able to reduce operating expenses by 34% in the quarter. In November 2024, we announced that the pivotal trial of our NextGen AI-enabled B-Series system met its primary endpoint, achieving a statistically significant reduction in patients with residual cancer during surgery. These results demonstrated super superiority of the B-Series ability to aid surgeons in achieving clear surgical margins during surgery, potentially lowering the need for operation. Based upon the positive pivotal trial results, we filed the FDA PMA application for the B-Series OCT with ImageAssist 2.0 in mid-March 2025, and we've been working closely with the agency since that time as it conducts its substantive review of the PMA application. While the timing is partly outside of our control, we believe that we are now getting close to the finish line. And finally, when FDA clearance for Perimeter B series is obtained, it will allow for a full and aggressive commercial launch of our next-gen AI-enabled device, representing a major step in our go-to-market strategy and an opportunity to significantly broaden our OCT user base across the U.S. This is an extremely exciting time for us. as we look forward to keeping you updated on our progress each quarter. And with that, I will now open up the call for your questions.

Operator? Thank you very much.

If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. Our first question will come from Scott McCauley with Paradigm. You may now begin.

Thanks, everyone. Thanks for taking the questions. So first off, great to hear the second capital sale. So by my number, that's about 22 systems that are out there. Any comments on that?

We're actually 21, Scott. We've made that, yeah, 21 total.

Great. That's great. And, you know, any indications on the re-operation rates that the users are achieving?

Yeah, so we do track that internally, and we are pulling it together for publication. So we are seeing... We've had about 3,500 patients now with surgeons using our device to help them with their lumpectomies, mastectomies. And the re-operation rate for those we do track, we're tracking at around a 4% re-operation on average across all those 3,500 patients. And I think the important thing to note is that the national average for re-operation for these types of surgeries is up at the 20% range. So, you know, it's really nice to see the impact that our surgeons are able to have in the cancer surgeries actually having a direct impact, you know, ultimately. Absolutely.

And that's just with the S-series. So ideally, once B-series is released, there's opportunity for that to go down even more.

Yeah, the AI will do two things for us. One is it'll help reduce the load on the surgeon inside the operating room. And then it makes it easier to adopt the product because the training curve, you know, the learning curve is lower when you've got an AI assistant helping you read those images. So, and the nice thing about AI is the more data you train it with, the better it gets. So we, you know, the, the, what will happen is that we'll just see a continuous learning curve just on the pure AI itself that the surgeons can then use to help make their decisions that they ultimately will make for the patient.

Yeah, that makes sense. You had highlighted already that the interactions with the FDA are continuing well despite the government shutdown. So maybe just digging into that a little bit more, like, haven't seen any delays in any responses all the reviewers that you've been dealing with through the process continue to be there and as you say there's just confirming that you're seeing no indication that there's any delays or impacts to uh to your ongoing review yeah that's a true statement so you know even even as recently as a couple days ago we were exchanging emails

The team has exchanged emails with the reviewers and throughout the entire timeline. We're not really affected. You know, my understanding is the FDA applications in progress are continuing to pace, even despite the shutdown. And so it's really not affecting products like ours, especially because we've got breakthrough device designation.

Yeah, that makes sense. Maybe just kind of talking about on that potential approval, you kind of highlighted the plan for an aggressive launch around the B series. I don't know if you could dig into that a little more in terms of kind of plans for that. In terms of lining up potential sites that are interested, who kind of on day one you can go out and start calling on events or other things that you're planning to really kick off that commercial launch on day one instead of kind of waiting or needing to ramp up slowly over a period of time.

Yeah, you know, the really nice thing about the business we've got here is that we were able to, with our current device, with the S series device, we're able to see the market already, right? And then what happens once we bring the B series out, it adds that AI system on top of that. What that means is that the workflow for anyone who will use the B series but is currently using the S series is very, very similar. And what they will see is additional software, the AI assistant, that's able to highlight areas of interest that then reduces their workload in terms of, you know, having to search through all the images for suspicious areas. Okay, so what does that mean? That means those 21 devices we've got in the field right now, more than 21 surgeons we have on those devices, are all interested in using the B series because of what that will bring to them. So our launch plan will be from an actual product on the ground standpoint. We will do a small-ish rollout first with a select number of our existing customers and then convert them over to the B-series for a short amount of time, call it a small little alpha launch, and then quickly expand out to the rest. So those were the existing customer base. Now we have a very large and qualified list of new customers, potential customers that don't have our S series, but are extremely interested in getting the B series. So they will come after, right? So then we'll start to service those. So from a boots on the ground sales perspective, that's how we'll do that. Then from an overall market awareness and general launch perspective, Approval will come sometime, you know, in the first half of the year. The big breast surgeon conference called ASBRS, the American Breast Surgeon Conference Society, happens around the same time. So this will be the point in time, hopefully by that time we'll have an approval in hand where we can have a very large launch. If not, it'll be right around the same time. And then that sort of feeds into the breast surgeon community. And that timer works really nice for us because we can make a lot of noise. We can get out there, do a lot of social media plus other types of advertising and marketing around it with the clearances that we'll get from the FDA. So it all kind of lines up really nicely in the first half of the year for that really, really strong launch, not only from the existing customers and then also the existing pipeline that we've got, but then also all of the rest of the customers will be able to get through the marketing efforts on the back of some of those conferences.

That makes sense. And I guess maybe two more things. I'm not hogging the mic too much. Any thoughts on economics around change in economics around the B-series in terms of either charging more or is there a fee for upgrading the current users to the B-series? You know, some kind of pay-per-click fee on top of the consumable to use the software. Any kind of developments on your thinking around that?

Yeah, so for sure. I mean, the AI assistant provides a significant value to the user in terms of ability to adopt and then ability to help save time and have greater confidence inside the operating room. And so that value is something that's important to be recognized, especially because it was a lot of, you know, it took a lot of engineering efforts to put that together as well as a clinical trial. So we will have an additional fee for it. And like everything with our customers, we are, you know, we'll work with our customers on the best way to monetize it. But it will, the nice thing about it is it's a software, you know, fundamentally it'll be a software addition, which means the core cost structure on a per unit basis stays very similar to what we have right now. But the software, the additional ASP will layer on top of that at, you know, a software gross margin, so to speak. So we'll see ASPs go up as we get to be serious to market and we'll also see gross margin expansion go up as we start to charge for that for the AI. That's great.

And lastly, you know, now that you're over 20 systems out in the field in terms of kind of learning from the sales cycle perspective, like are you noticing that sales process and sales cycle starting to get a bit shorter as you're, again, kind of leaning into next year with that B-series launch and kind of things you can take from the initial S-series rollout to compress that sales cycle even more in the next few years?

Yeah, 100%. And this is actually an area I'm really excited about and an advantage, you know, going back to the fact we have our current product in market already, is the ability to sell a brand new product that there really is nothing else out there to help solve the problem. Into a brand new market takes a whole different way of selling and barriers that have never been faced before. And if this was the very first time we were bringing the product to market, we would have a huge learning cycle on how to sell. What are the objections? How do we do objection handling? What's the right price point? who are the early adopters, right? So that delay to revenue ramp would be much longer if this was the first time we were bringing a product like this to market. However, the advantage we've got is that we've been in market for a few years. So we've gone through a bunch of that learning, and we've learned on a bunch of different dimensions. For instance, where we are right now, we aren't – our sales process isn't only happening at the local hospital level. We've started to move that up to a system level and getting agreements in place at the system level of hospital groups, which once those are in place, which we have some in place already, it allows us to expand much more quickly through the dozens of hospitals that might fall in that company, in that firm. That's one example. We've also done a lot of learning on the types of salespeople and the types of clinical people we want to have in company out there interacting with the surgeons, interacting with the hospital administrators. And we've learned over time what that needs to look like, how they need to be trained, what is the screening process we need to bring them in, what sort of experiences they have to have before the joint perimeter. And so we've gone through multiple sites to learn it to get to the point where we are right now. We're starting to see some of that now in the results that we've announced today in terms of revenue traction and growth and procedure growth. But actually, just even where we are right now, even if we don't learn anything more, I think we've still got more room to move. And the nice thing about bringing B-Series in is that the reps in the gym, so to speak, the repetitions we're doing as we go to work out in the gym with our sales team is causing us to learn new stuff every week that we're building back into our hiring process, our training process, our rejection handling, and the conversation we have with our sales team. So For me, this has been a really exciting thing to get the company on that curve because, again, it just goes back into the speed at which we can start to monetize in revenue and ramp the revenue on the B-series as that hits market in the next few months.

Good stuff. Thanks for taking the questions and looking forward to next year.

Very exciting time. Thanks. You bet. Thanks for the questions, Scott.

Thank you. That appears to be our last question. I will now turn the conference back to Adrian Mendez, CEO, for any additional remarks.

Thank you. Okay, so thanks everyone for coming and listening to our call today. As you can maybe tell, we're very proud of what we've been able to do and excited about the future. As you can see, Perimeter is stronger and more focused than ever. I talked a little bit about in answer to some of Scott's questions, we've optimized our commercial engine And I believe we've aligned our infrastructure across departments with long-term commercial scale. We ended the third quarter with a leaner and more efficient platform that's positioned to drive durable growth. We expect unit growth to accelerate in the coming months as a result of the launch of the D-Series, which remains on track for our expected FDA clearance in the first half of next year. We believe we're seeing a clear inflection in momentum supported by higher utilization, stronger surgeon engagement, and expanding clinical adoption. And this sets the stage not only for a strong close to 2025 over the next couple months, but also for a breakout 26 as we scale procedure volumes, deepen hospital penetration, and prepare for the next gen of our technology. We're in very exciting times here at Perimeter. And again, we thank you for your time and your support.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.