EDAP TMS(EDAP)

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EDAP TMS(EDAP) - 2023 Q4 - Annual Report
2024-03-28 20:31
[Report Overview](index=1&type=section&id=Report%20Overview) [Form 20-F Filing Information](index=1&type=section&id=Form%2020-F%20Filing%20Information) This 2023 Form 20-F annual report for EDAP TMS S.A., a French-registered accelerated filer with Nasdaq-traded ADS (EDAP), is prepared under U.S. GAAP - EDAP TMS S.A. filed its Form 20-F annual report for the fiscal year ended December 31, 2023, with the SEC on March 28, 2024[1](index=1&type=chunk) Company Registration Information | Metric | Detail | | :--- | :--- | | Registered Name | EDAP TMS S.A. | | Place of Registration | France | | Ticker Symbol | EDAP | | Trading Market | Nasdaq Global Market | | Financial Statement Standard | U.S. GAAP | | Filer Type | Accelerated Filer | | Shares Outstanding as of December 31, 2023 | 37,103,779 Common Shares | [Presentation of Financial and Other Information](index=5&type=section&id=Presentation%20of%20Financial%20and%20Other%20Information) This section defines company terminology, confirms U.S. GAAP consolidated financial statements in Euros and US Dollars, and lists registered trademarks - The company's consolidated financial statements are prepared in accordance with U.S. GAAP, with Euro and US Dollar conversions provided for convenience only[9](index=9&type=chunk) - The company's U.S. registered trademarks include EDAP®, Ablatherm®, Ablasonic®, Ablapak®, and Focal.One®[10](index=10&type=chunk) [Cautionary Statement on Forward-looking Information](index=5&type=section&id=Cautionary%20Statement%20on%20Forward-looking%20Information) This section outlines forward-looking statements, emphasizing inherent known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements involve inherent known and unknown risks and uncertainties that could cause actual events or results to differ materially from expectations[12](index=12&type=chunk) - Key risk factors include: * Global inflationary environment, economic, political, and financial uncertainties * Success and market acceptance of HIFU technology * Clinical and regulatory status and approval processes for devices in different regions * Impact of government regulations, healthcare systems, and medical device distribution * Intense market competition, potential product obsolescence or loss of competitiveness * Product liability risks, reliance on a single manufacturing site, and dependence on key suppliers * Foreign currency exchange rate fluctuation risks, particularly for the Euro against the US Dollar and Japanese Yen[13](index=13&type=chunk) [PART I](index=6&type=section&id=PART%20I) [Item 1. Identity of Directors, Senior Management and Advisors](index=6&type=section&id=Item%201.%20Identity%20of%20Directors,%20Senior%20Management%20and%20Advisors) This section states it is not applicable, providing no identity information for directors, senior management, or advisors [Item 2. Offer Statistics and Expected Timetable](index=6&type=section&id=Item%202.%20Offer%20Statistics%20and%20Expected%20Timetable) This section states it is not applicable, providing no offer statistics or expected timetable information [Item 3. Key Information](index=6&type=section&id=Item%203.%2E%20Key%20Information) This section details various key risk factors impacting the company's business operations, product development, regulatory environment, intellectual property, corporate governance, and securities ownership [Risk Factors](index=6&type=section&id=Risk%20Factors) The company faces multiple business risks, including global inflation, HIFU technology commercialization uncertainties, cash flow volatility from long sales cycles, and new product development and regulatory challenges - Key risk factors: * **Business, Financial Condition, and Capital Needs Risks:** Global inflationary environment, uncertainty of HIFU technology commercialization success, cash flow reliance on cyclical product demand, and long, seasonally fluctuating sales cycles * **Product Candidate and Industry Risks:** Optimization of sales and distribution channels, new device development, regulatory approvals, reimbursement eligibility, HIFU technology market acceptance, intense competition, product liability claims, reliance on a single manufacturing site, and key supplier dependence * **Organizational and Operational Risks:** Small company size, employee turnover, loss of executive team, difficulty recruiting high-tech talent, material weaknesses in internal controls at the U.S. subsidiary, cybersecurity threats, and reputational risks from social media and new technologies * **Intellectual Property Risks:** Intellectual property protection and enforcement, uncertainties in U.S. patent law, and risks associated with open-source software use * **Risks as a Foreign Private Issuer or French Company:** International operational costs and legal/regulatory risks, foreign currency exchange rate fluctuations, restrictions on acquisitions under French company law, differences in shareholder rights, dividend distribution limitations, potential loss of foreign private issuer status, and unenforceability of U.S. court judgments in France * **Risks of Common Stock and ADS Ownership:** Securities price volatility, limited rights for ADS holders, impact of analyst research, differences in disclosure standards, inability of U.S. investors to exercise preemptive rights * **General Risk Factors:** Economic changes, geopolitical developments (e.g., Russia-Ukraine conflict), climate change impacts, ESG rating downgrades, potential dilution from future securities offerings, risks of acquiring other companies or technologies, and securities class action litigation risks[22](index=22&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Item 4. Information on the Company](index=25&type=section&id=Item%204.%20Information%20on%20the%20Company) EDAP TMS S.A. develops, manufactures, and distributes minimally invasive ultrasound technology for urological conditions, with core products Focal One® robotic HIFU and ExactVu™ micro-ultrasound systems, driving significant HIFU growth in 2023 - EDAP TMS S.A. develops, manufactures, promotes, and distributes advanced minimally invasive ultrasound technology for the diagnosis and treatment of urological diseases, with core products including the Focal One® robotic HIFU system and ExactVu™ micro-ultrasound system[119](index=119&type=chunk) - The company elevated its commercial name Focal One® to a brand name in 2023 to support global sales and marketing activities and reflect its focus on the Focal One robotic HIFU system[120](index=120&type=chunk) - Company history and development highlights: * In January 2021, U.S. CPT code Category 1 reimbursement for HIFU became effective * In April 2021, the company successfully completed an ADS public offering, raising **$28.0125 million**, primarily for building U.S. clinical, sales, and marketing infrastructure * In June 2021, Ryan Rhodes was appointed CEO of the U.S. subsidiary, EDAP Technomed Inc * In September 2022, another ADS public offering raised **$23 million** to further expand U.S. Focal One growth initiatives * On May 1, 2023, Ryan Rhodes succeeded Marc Oczachowski as the company's Global CEO * On January 1, 2024, Ken Mobeck was appointed Global CFO, and François Dietsch was appointed Global Chief Accounting Officer[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - On November 1, 2023, the U.S. CMS released the 2024 Outpatient Prospective Payment System (OPPS) final reimbursement rule, maintaining the reimbursement level for Focal One robotic HIFU at APC 6, similar to surgery[127](index=127&type=chunk) - The company's business is divided into three segments: HIFU, ESWL, and Distribution, primarily developing, manufacturing, selling, and distributing minimally invasive medical systems for urological disease diagnosis and treatment[130](index=130&type=chunk) Net Sales by Business Segment (Million Euros) | Segment | 2023 (Million Euros) | 2022 (Million Euros) | 2021 (Million Euros) | | :--- | :--- | :--- | :--- | | HIFU | 20.6 | 15.6 | 9.9 | | ESWL | 9.9 | 11.6 | 11.0 | | Distribution | 29.9 | 27.9 | 23.1 | | **Total** | **60.4** | **55.1** | **44.0** | [HIFU Division](index=27&type=section&id=HIFU%20Division) The HIFU division develops, manufactures, and sells the Focal One robotic system for minimally invasive treatment of urological and other diseases, with 107 systems installed globally by year-end 2023, focusing on prostate cancer and new indications - The HIFU division contributed **20.6 million Euros** to consolidated net sales in fiscal year 2023, with business being cyclical and influenced by hospital purchasing decisions and investment processes[134](index=134&type=chunk) - As of December 31, 2023, the HIFU division had **107 Focal One systems**, with **52** located in the United States[135](index=135&type=chunk) - HIFU technology uses high-intensity focused ultrasound beams to generate heat, precisely destroying diseased tissue while preserving surrounding tissues and organs, requiring no incisions, blood transfusions, or overnight hospitalization, and minimizing complications[136](index=136&type=chunk) - HIFU division business strategy: * Provide minimally invasive solutions for localized prostate cancer, accelerating Focal One adoption in the U.S. and globally through direct sales networks and distributors * Enhance the clinical credibility of HIFU technology through patient and physician education and training programs * Expand HIFU applications to other medical conditions beyond prostate cancer, such as endometriosis, benign prostatic hyperplasia, and solid tumors of the liver and pancreas[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - As of December 31, 2023, the HIFU division held **33 granted patents**, including **7** in the U.S., **10** in the EU, **8** in Japan, and **8** in China, covering therapeutic ultrasound principles, systems, and related software[144](index=144&type=chunk) - HIFU system clinical and regulatory status: * **Europe:** Focal One received CE Mark in June 2013, extended to December 31, 2028, on March 15, 2023 * **United States:** Focal One received FDA 510(k) clearance in June 2018 for prostate tissue ablation * **Japan:** Discussions initiated with PMDA, requiring clinical trials for approval * **China:** Regulatory and market access strategies are under review * **Rest of the World:** Focal One systems have obtained distribution licenses in countries and regions including Brazil, Canada, the UK, Russia, Singapore, South Korea, Switzerland, and Taiwan[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Final 30-month results from the French HIFI study showed HIFU's survival advantage in prostate cancer treatment and superior functional outcomes (e.g., urinary continence and erectile function) compared to radical prostatectomy; the French National Health Authority (HAS) issued a positive opinion recommending HIFU for national reimbursement as a first-line treatment for intermediate-risk localized prostate cancer and salvage therapy after radiotherapy failure[154](index=154&type=chunk) - The Focal One platform received U.S. FDA Breakthrough Device Designation on March 4, 2024, for the treatment of deep infiltrating endometriosis (DIE)[342](index=342&type=chunk) - The American Cancer Society estimates approximately **299,010 new prostate cancer cases** will be diagnosed in 2024, with about **70%** being localized prostate cancer, and global incidence roughly double that of the U.S., indicating significant HIFU market potential[177](index=177&type=chunk) - U.S. CMS elevated hospital reimbursement for HIFU procedures from APC 5 to APC 6 in 2023, similar to surgery, with an average reimbursement of **$8,777 per procedure**, maintaining APC 6 in 2024; physician reimbursement for HIFU procedures averaged **$956** in 2024, higher than cryotherapy (**$748**), and narrowing the gap with robotic prostatectomy[181](index=181&type=chunk)[182](index=182&type=chunk) - HIFU systems compete with existing treatments for all localized tumors, including surgery, brachytherapy, radiation therapy, and cryotherapy, with the company believing HIFU is the most cost-effective treatment option for qualified patients seeking minimal side effects[185](index=185&type=chunk) [ESWL Division](index=34&type=section&id=ESWL%20Division) The ESWL division focuses on marketing and maintenance services for Sonolith lithotripters, contributing 9.9 million Euros to consolidated net sales in 2023, maintaining sales and service activities in a mature market primarily driven by equipment replacement - The ESWL division contributed **9.9 million Euros** to consolidated net sales in fiscal year 2023, primarily engaged in the production and sale of lithotripters for treating urinary tract stones[192](index=192&type=chunk)[193](index=193&type=chunk) - As of December 31, 2023, the ESWL division maintained or serviced **538 Sonolith lithotripters**[193](index=193&type=chunk) - The ESWL division's strategy is to leverage its expertise in ESWL and urology market position to sustain sales of Sonolith i-move and service activities for its existing lithotripter installed base[194](index=194&type=chunk) - The ESWL market is mature, primarily driven by equipment replacement and maintenance services, with the company generating recurring revenue through maintenance contracts, spare parts, and consumables[203](index=203&type=chunk) - The ESWL market is highly competitive, with major competitors including Wolf, Storz Medical, and Dornier Medtech, and average unit prices have declined in recent years[204](index=204&type=chunk) [Distribution Division](index=36&type=section&id=Distribution%20Division) The Distribution division markets, distributes, and maintains complementary third-party medical products like micro-ultrasound systems and lasers, contributing 29.9 million Euros to consolidated net sales in 2023, and plans to expand its product line in 2024 - The Distribution division contributed **29.9 million Euros** to consolidated net sales in fiscal year 2023, primarily marketing, distributing, and maintaining third-party medical products such as micro-ultrasound systems and lasers[208](index=208&type=chunk) - The Distribution division has an exclusive global distribution agreement with Exact Imaging Inc. for the ExactVu 29 MHz micro-ultrasound diagnostic system, complementing Focal One robotic HIFU technology to provide a complete prostate cancer management solution from diagnosis to treatment[211](index=211&type=chunk) - The Distribution division exclusively distributes Lumenis® holmium lasers in France and Quanta laser systems and Laborie Medical Technologies' urodynamics products in Japan[213](index=213&type=chunk)[214](index=214&type=chunk) [Manufacturing and Quality Control](index=37&type=section&id=Manufacturing%20and%20Quality%20Control) The company primarily conducts final assembly and quality control for medical products at its FDA-registered, ISO 13485:2016 and MDSAP-certified facility in Vaulx-en-Velin, France, relying on a few key suppliers and adhering to strict GMP regulations - The company primarily conducts final assembly and quality control for medical products at its Vaulx-en-Velin, France facility, which is FDA-registered and holds ISO 13485:2016 and MDSAP certifications[215](index=215&type=chunk)[218](index=218&type=chunk) - The company relies on a few key suppliers for critical components and has implemented measures such as safety stock and adjusted order management to mitigate supply chain disruption and cost increase risks[217](index=217&type=chunk) [Organizational Structure and Property](index=37&type=section&id=Organizational%20Structure%20and%20Property) EDAP TMS S.A. operates globally as a holding company through its wholly-owned subsidiaries, with its main facility in Vaulx-en-Velin, France, and leased offices and warehouses in other countries, having closed its Moscow representative office in early 2023 Wholly-Owned Subsidiaries List | Company Name | Place of Registration | Ownership Percentage | | :--- | :--- | :--- | | EDAP TMS France SAS | France | 100 % | | EDAP Technomed Inc. | United States | 100 % | | EDAP Technomed Co. Ltd | Japan | 100 % | | EDAP Technomed Sdn Bhd | Malaysia | 100 % | | EDAP TMS GmbH | Germany | 100 % | - The company's main facility is located in Vaulx-en-Velin, France, covering **4,150 square meters** with a lease term until 2025; it also leases office and warehouse facilities in Malaysia, Germany, the U.S., South Korea, and Japan, and closed its Moscow, Russia representative office in early 2023[220](index=220&type=chunk)[221](index=221&type=chunk) [Government Regulation](index=38&type=section&id=Government%20Regulation) The company's products are subject to stringent government regulations in major markets (U.S., EU, Japan) covering design, manufacturing, testing, certification, labeling, distribution, sales, marketing, and promotion - The company's products and operations are subject to strict government regulation in major markets (U.S., EU, and Japan), covering all aspects of product development, manufacturing, and marketing[222](index=222&type=chunk) - Major market regulatory overview: * **United States:** The FDA classifies (Class I, II, III) and regulates medical devices under the FDC Act; the company's HIFU and lithotripter products are Class II devices requiring 510(k) clearance; manufacturing operations must comply with QSR (Quality System Regulation) * **European Union:** The company undergoes annual ISO 13485:2016 and MDSAP certification audits; the new Medical Device Regulation (MDR) requires manufacturers to comply with stricter requirements by December 31, 2028, and implement a quality management system by May 26, 2024 * **Japan:** The Ministry of Health, Labour and Welfare (MHLW) is responsible for medical device import and sales permits and manages national health insurance reimbursement; the company's Japanese subsidiary has obtained "Marketing Authorization Holder" permits[223](index=223&type=chunk)[224](index=224&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) [Human Capital](index=39&type=section&id=Human%20Capital) As of December 31, 2023, the company employed 307 full-time staff, committed to attracting, retaining, and motivating talent through competitive compensation, equity incentive plans, and a positive corporate culture focused on training, health, safety, diversity, and inclusion Full-time Employees by Function in 2023 | Function | France | Germany | Japan | Malaysia | South Korea | USA | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales & Marketing | 25 | 6 | 21 | 2 | 2 | 36 | 92 | | Manufacturing | 35 | — | — | — | — | — | 35 | | Service | 24 | 3 | 23 | 3 | 5 | 17 | 75 | | R&D | 33 | — | — | — | — | — | 33 | | Regulatory Affairs | 11 | — | 3 | — | — | — | 14 | | Clinical Affairs | 15 | — | — | — | — | — | 15 | | Administration | 21 | 2 | 8 | 2 | 2 | 8 | 43 | | **Total** | **164** | **11** | **55** | **7** | **9** | **61** | **307** | - The company attracts, retains, motivates, and rewards employees through competitive compensation and benefits, equity and cash incentive plans, and non-executive incentive programs[234](index=234&type=chunk) - The company is committed to fostering a strong and collaborative corporate culture, providing internal training and development programs, and prioritizing employee health, safety, and well-being[235](index=235&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) [Item 4A. Unresolved Staff Comments](index=40&type=section&id=Item%204A.%20Unresolved%20Staff%20Comments) This section states it is not applicable, indicating no unresolved staff comments [Item 5. Operating and Financial Review and Prospects](index=40&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) The company's total revenue grew 9.6% to 60.4 million Euros in 2023, driven by strong HIFU growth, but gross margin declined and operating loss widened due to U.S. HIFU expansion and inflationary pressures, with negative operating cash flow and anticipated increased R&D and sales expenses - The company's total revenue grew **9.6%** to **60.4 million Euros** in 2023, primarily driven by increased HIFU equipment sales and treatment-related revenue[258](index=258&type=chunk) Operating Results Comparison 2023 vs 2022 (Million Euros) | Metric | 2023 (Million Euros) | 2022 (Million Euros) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 60.4 | 55.1 | 9.6% | | HIFU Net Sales | 20.6 | 15.6 | 31.7% | | ESWL Net Sales | 9.9 | 11.6 | -14.3% | | Distribution Net Sales | 29.9 | 27.9 | 7.2% | | Cost of Sales | (36.0) | (30.9) | 16.5% | | Gross Profit | 24.4 | 24.2 | 0.8% | | Gross Margin | 40.40% | 43.90% | -3.50pp | | Operating Expenses | (44.2) | (28.5) | 55.4% | | Operating (Loss) | (19.8) | (4.3) | -359.5% | | Net (Loss) | (21.2) | (2.9) | -631.0% | - Key financial changes in 2023: * **HIFU Segment Revenue:** Increased **31.7%** to **20.6 million Euros**, primarily due to growth in U.S. equipment sales and treatment-related revenue * **ESWL Segment Revenue:** Decreased **14.3%** to **9.9 million Euros**, mainly due to reduced equipment sales * **Distribution Segment Revenue:** Increased **7.2%** to **29.9 million Euros**, primarily driven by growth in consumables and maintenance revenue * **Cost of Sales:** Increased **16.5%** to **36.0 million Euros**, with gross margin decreasing from **43.9%** to **40.4%**, mainly impacted by product mix, inflationary pressures, and investments in U.S. service and clinical application organizations * **Operating Expenses:** Increased **55.4%** to **44.2 million Euros**, with sales and marketing expenses up **38.1%** to **22.6 million Euros**, R&D expenses up **41.5%** to **7.0 million Euros**, and general and administrative expenses up **104.6%** to **14.6 million Euros**, primarily due to U.S. HIFU expansion initiatives and non-recurring costs related to leadership succession * **Operating Loss:** Expanded from **4.3 million Euros** in 2022 to **19.8 million Euros** in 2023 * **Net Loss:** Expanded from **2.9 million Euros** in 2022 to **21.2 million Euros** in 2023[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[275](index=275&type=chunk) - The company anticipates its 2024 R&D budget to increase to **11.9% of total revenue** to support new clinical studies, regulatory approvals (especially in Japan), and HIFU product line expansion[253](index=253&type=chunk) - The company's cash flow is influenced by the cyclical demand for medical equipment, with a net cash outflow from operating activities of **14.7 million Euros**, net cash outflow from investing activities of **4.3 million Euros**, and net cash outflow from financing activities of **0.9 million Euros** in 2023, resulting in a **19.7 million Euro** decrease in cash and cash equivalents[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) Consolidated Statements of Cash Flows Summary (Thousand Euros) | Metric | 2023 (Thousand Euros) | 2022 (Thousand Euros) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | (14,678) | (3,024) | | Net Cash Flow from Investing Activities | (4,344) | (2,378) | | Net Cash Flow from Financing Activities | (911) | 21,741 | | Net Effect of Exchange Rate Changes | 268 | (388) | | Net Increase (Decrease) in Cash and Cash Equivalents | (19,665) | 15,952 | | Cash and Cash Equivalents at Year-End | 43,471 | 63,136 | [Critical Accounting Estimates](index=40&type=section&id=Critical%20Accounting%20Estimates) Management has not identified any critical accounting estimates involving significant estimation uncertainty that could materially impact financial condition or operating results - Management has not identified any critical accounting estimates involving significant estimation uncertainty that could materially impact financial condition or operating results[242](index=242&type=chunk) [Operating Results Overview](index=40&type=section&id=Operating%20Results%20Overview) Company revenue is categorized into product sales, RPP and lease sales, and spare parts and service sales, with a significant portion derived from Asia and the U.S., subject to foreign exchange rate fluctuations - Company revenue sources: * Product sales (medical devices and consumables) * Revenue per procedure (RPP) and leases (primarily from the HIFU division) * Spare parts and service sales (maintenance, upgrades, etc)[243](index=243&type=chunk)[244](index=244&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk) - In 2023, Asian operations accounted for **30%** of total consolidated net sales, and U.S. operations accounted for **28%**[249](index=249&type=chunk) - In 2023, **60%** of cost of sales and operating expenses were denominated in Euros, while **55%** of revenue was denominated in non-Euro currencies (primarily US Dollar and Japanese Yen), exposing the company to foreign exchange rate fluctuation risks[249](index=249&type=chunk) [Effect of Inflation](index=45&type=section&id=Effect%20of%20Inflation) Geopolitical instability and global inflation led to increased company costs in 2022 and 2023, which the company is mitigating through price adjustments, cost reductions, and countermeasures - Geopolitical instability and global inflation led to increased company costs in 2022 and 2023, which the company is mitigating through price adjustments, cost reductions, and countermeasures to lessen the impact on profit margins[276](index=276&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash flow is affected by cyclical demand for medical equipment, resulting in fluctuating working capital needs and operating cash flow, with a cash position of 43.5 million Euros as of December 31, 2023, and potential future financing needs - The company's cash flow is influenced by the cyclical demand for medical equipment, leading to fluctuating working capital needs and operating cash flow[277](index=277&type=chunk) Significant Contractual Obligations as of December 31, 2023 (Thousand Euros) | Obligation Type | Total (Thousand Euros) | Less than 1 Year (Thousand Euros) | 1-3 Years (Thousand Euros) | 4-5 Years (Thousand Euros) | More than 5 Years (Thousand Euros) | | :--- | :--- | :--- | :--- | :--- | :--- | | Short-Term Debt | 2,466 | 2,466 | — | — | — | | Long-Term Debt | 3,551 | 1,553 | 1,997 | — | — | | Finance Lease Obligations | 628 | 201 | 289 | 83 | 55 | | Operating Lease Obligations | 1,780 | 898 | 725 | 157 | — | - As of December 31, 2023, the company's cash position was **43.5 million Euros**, with cash and cash equivalents decreasing by **19.7 million Euros** in 2023[284](index=284&type=chunk) - The company anticipates future cash flow primarily from ongoing operations and may require additional financing to support product development and commercialization[282](index=282&type=chunk)[111](index=111&type=chunk) [Recent Accounting Pronouncements](index=47&type=section&id=Recent%20Accounting%20Pronouncements) The company is evaluating the impact of ASU 2023-07 (Segment Reporting: Improvements to Reportable Segment Disclosures) on its consolidated financial statements, which aims to enhance expense disclosures for public entities' reportable segments - The company is evaluating the impact of ASU 2023-07 (Segment Reporting: Improvements to Reportable Segment Disclosures) on its consolidated financial statements, which aims to improve expense disclosures for public entities' reportable segments[603](index=603&type=chunk) [Research and Development, Patents and Licenses](index=47&type=section&id=Research%20and%20Development,%20Patents%20and%20Licenses) R&D expenses include new product development, existing product enhancements, clinical trials, patent, and regulatory approval costs, with the French government providing R&D tax credits as an offset - R&D expenses include new product development, existing product enhancements, clinical trials, patent, and regulatory approval costs[251](index=251&type=chunk) - The French government provides R&D tax credits, which the company recognizes as an offset to R&D expenses[293](index=293&type=chunk) [Off-Balance Sheet Arrangements](index=47&type=section&id=Off-Balance%20Sheet%20Arrangements) As of December 31, 2023, the company had no off-balance sheet arrangements - As of December 31, 2023, the company had no off-balance sheet arrangements[294](index=294&type=chunk) [Item 6. Directors, Senior Management and Employees](index=47&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) The company's senior management includes CEO Ryan Rhodes and CFO Ken Mobeck, supported by a five-member board with three independent directors, and effective governance through compensation, audit, nomination, and strategy committees, with 307 employees as of December 31, 2023 - Ryan Rhodes was appointed CEO in May 2023, and Ken Mobeck was appointed CFO in January 2024[296](index=296&type=chunk) - The company's Board of Directors consists of **five members**, three of whom are independent, with Marc Oczachowski serving as Chairman[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk) - In fiscal year 2023, the total compensation paid to senior management and the Board of Directors was **2.772 million Euros**, including performance bonuses, in-kind benefits, and **1.389 million Euros** in severance payments[305](index=305&type=chunk) - The company has the following committees: * **Compensation Committee:** Composed of three independent members, responsible for recommending compensation plans to the Board and setting variable compensation targets * **Audit Committee:** Composed of three independent members, with Pierre Beysson as Chairman and financial expert, responsible for overseeing financial statements, compliance, internal controls, and independent auditors * **Nomination Committee:** Composed of three independent members, responsible for developing director candidate criteria, evaluating candidates, assisting in assessing director independence, and recommending Board size and composition * **Strategy Committee:** Composed of Marie Meynadier (Chairwoman) and Marc Oczachowski, responsible for developing and implementing the company's strategic plans and evaluating related risks[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[312](index=312&type=chunk) - As of December 31, 2023, the company had **307 full-time employees**, an increase from **264** in 2022[232](index=232&type=chunk)[314](index=314&type=chunk) - As of March 15, 2024, Board and senior management members collectively held **1,388,292 shares**, representing less than **4%** of the company's outstanding shares[316](index=316&type=chunk) Stock Option Activity Summary in 2023 | Metric | 2023 Options | Weighted Average Exercise Price (€) | | :--- | :--- | :--- | | Unexercised as of January 1 | 2,613,886 | 5.66 | | Granted | 686,000 | 8.53 | | Exercised | (55,973) | 4.66 | | Forfeited | (45,000) | 7.99 | | Unexercised as of December 31 | 3,198,913 | 6.26 | | Exercisable as of December 31 | 1,997,666 | 5.23 | [Item 7. Major Shareholders and Related Party Transactions](index=56&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) As of March 15, 2024, Soleus Capital Master Fund, L.P. and Morgan Stanley are the company's major shareholders, with related party transactions including personal guarantees and counter-guarantees for two loans involving Jean-François Bachelard, President and CEO of the Japanese subsidiary - Major shareholders (as of March 15, 2024): * Soleus Capital Master Fund, L.P.: Holds **7,226,341 ADS**, representing **19.5%** of outstanding ADS * Morgan Stanley: Holds **3,138,680 ADS**, representing **8.5%** of outstanding ADS[331](index=331&type=chunk) - The company has two related party transactions involving personal guarantees and counter-guarantees for loans totaling **130 million Japanese Yen** with Jean-François Bachelard, President and CEO of its Japanese subsidiary, maturing in August 2026 and April 2025, respectively[333](index=333&type=chunk)[334](index=334&type=chunk) [Item 8. Financial Information](index=56&type=section&id=Item%208.%20Financial%20Information) This section references the consolidated financial statements in Item 18, discloses 2023 export sales of 48.4 million Euros (80% of net sales), confirms no material legal proceedings or planned dividends, and highlights recent executive appointments and FDA Breakthrough Device Designation for Focal One - As of December 31, 2023, the company's total consolidated export net sales were **48.4 million Euros**, representing **80%** of total net sales[336](index=336&type=chunk) - The company currently has no material pending legal proceedings[338](index=338&type=chunk) - The company has not paid dividends in fiscal years 2018 through 2023 and does not intend to pay any dividends in the foreseeable future[340](index=340&type=chunk) - Significant changes as of March 15, 2024: * On January 2, 2024, Ken Mobeck was appointed Chief Financial Officer, and François Dietsch was appointed Chief Accounting Officer * On March 4, 2024, the Focal One platform received FDA Breakthrough Device Designation for the treatment of deep infiltrating endometriosis (DIE)[341](index=341&type=chunk)[342](index=342&type=chunk) [Item 9. The Offer and Listing](index=57&type=section&id=Item%209.%20The%20Offer%20and%20Listing) The company's securities trade as American Depositary Shares (ADS) on the Nasdaq Global Market, with each ADS representing one ordinary share, and The Bank of New York Mellon serving as the depositary - The company's securities trade as American Depositary Shares (ADS) on the Nasdaq Global Market under the ticker symbol "EDAP", with each ADS representing one ordinary share[343](index=343&type=chunk) [Item 10. Additional Information](index=57&type=section&id=Item%2010.%20Additional%20Information) This section provides detailed information on the company's articles of association, governance structure, French legal provisions for directors, enforceability of civil liabilities, securities listing, exchange controls, and French and U.S. tax considerations, noting the articles were updated in December 2023 - The company's articles of association were updated on December 6, 2023, to reflect an increase in share capital due to option exercises[347](index=347&type=chunk) - Company governance structure: * **Board of Directors:** Composed of five members, responsible for determining business direction and overseeing implementation; directors serve six-year terms, are renewable, and can be removed by the shareholders' meeting at any time * **Chairman:** Elected by the Board of Directors, responsible for organizing Board work and reporting to the shareholders' meeting * **Chief Executive Officer:** Elected by the Board of Directors, possesses broad powers to act on behalf of the company, and is accountable to third parties[348](index=348&type=chunk)[354](index=354&type=chunk)[357](index=357&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk) - French law requires certain agreements between directors and the company to be pre-authorized by the Board of Directors and submitted for approval at the shareholders' meeting[366](index=366&type=chunk)[368](index=368&type=chunk) - U.S. court judgments for civil liability may be difficult to enforce in France, requiring specific conditions under French law for recognition and enforcement of foreign judgments[371](index=371&type=chunk)[372](index=372&type=chunk) - The company's ADS are listed on the Nasdaq Global Market, with The Bank of New York Mellon serving as the transfer agent and registrar[376](index=376&type=chunk) - French exchange control regulations impose no limits on the amount of funds the company can remit to foreign residents but require all payments or transfers of funds to be processed through authorized intermediaries[378](index=378&type=chunk) - The company does not believe it was a PFIC (Passive Foreign Investment Company) for fiscal year 2023, nor does it anticipate becoming one in fiscal year 2024[404](index=404&type=chunk) - Under the U.S.-France tax treaty, eligible U.S. holders may benefit from a reduced dividend withholding tax rate (to **5% or 15%**) and can claim a refund for excess withheld taxes[397](index=397&type=chunk) [Item 11. Quantitative and Qualitative Disclosures about Market Risk](index=67&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks from foreign currency exchange rates and interest rate changes, with 60% of 2023 costs in Euros and 55% of net sales in non-Euro currencies, leading to significant exchange rate exposure, though no outstanding hedging instruments as of December 31, 2023 - The company faces market risks from foreign currency exchange rates and interest rate changes but does not hold or issue derivative or other financial instruments[422](index=422&type=chunk) - In 2023, **60%** of the company's cost of sales and operating expenses were denominated in Euros, while **55%** of net sales were denominated in non-Euro currencies (primarily US Dollar and Japanese Yen), exposing the company to significant exchange rate risks[423](index=423&type=chunk) - A **10% appreciation** of the Euro against the US Dollar and Japanese Yen would have decreased the 2023 pre-tax loss by approximately **1.118 million Euros**; a **10% depreciation** would have increased the pre-tax loss by approximately **1.23 million Euros**[424](index=424&type=chunk) - The company regularly assesses its foreign exchange risk exposure on accounts receivable and may use forward sales contracts for hedging, but had no outstanding hedging instruments as of December 31, 2023[425](index=425&type=chunk) [Item 12. Description of Securities Other than Equity Securities](index=67&type=section&id=Item%2012.%20Description%20of%20Securities%20Other%20than%20Equity%20Securities) This section states it is not applicable for debt securities, warrants, rights, and other securities, but discloses The Bank of New York Mellon as the ADS depositary, including fees charged to ADS holders and payments made to the company - The company's ADS depositary is The Bank of New York Mellon, which charges fees for ADS issuance, cancellation, cash distributions, and securities distributions[430](index=430&type=chunk)[432](index=432&type=chunk)[433](index=433&type=chunk) - In 2023, the depositary paid the company **$90,000** and **$14,540.88** for ADR program management and shareholder meeting-related expenses, respectively[435](index=435&type=chunk) [PART II](index=69&type=section&id=PART%20II) [Item 13. Defaults, Dividend Arrearages and Delinquencies](index=69&type=section&id=Item%2013.%20Defaults,%20Dividend%20Arrearages%20and%20Delinquencies) This section states it is not applicable, indicating no defaults, dividend arrearages, or delinquencies [Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds](index=69&type=section&id=Item%2014.%20Material%20Modifications%20to%20the%20Rights%20of%20Security%20Holders%20and%20Use%20of%20Proceeds) This section states it is not applicable, indicating no material modifications to security holder rights or use of proceeds [Item 15. Controls and Procedures](index=69&type=section&id=Item%2015.%20Controls%20and%20Procedures) As of December 31, 2023, management deemed disclosure controls and procedures ineffective due to a material weakness in internal controls at its U.S. subsidiary regarding third-party vendor invoice recording, though consolidated financial statements are fairly presented, and remediation efforts are underway - As of December 31, 2023, the company's management determined its disclosure controls and procedures were ineffective due to a material weakness in the design and implementation of internal controls at its U.S. subsidiary, Edap Technomed Inc., regarding third-party vendor invoice recording[439](index=439&type=chunk)[445](index=445&type=chunk)[446](index=446&type=chunk) - Despite the material weakness, management believes the 2023 consolidated financial statements are fairly presented in all material respects, and the weakness did not result in a material misstatement or require restatement[440](index=440&type=chunk)[451](index=451&type=chunk) - The company has initiated remediation efforts, including hiring new resources in 2023, planning to hire additional resources in 2024, and deploying new IT systems to address this material weakness[64](index=64&type=chunk)[452](index=452&type=chunk) - KPMG S.A. issued an adverse opinion on the effectiveness of the company's internal controls as of December 31, 2023, due to the aforementioned material weakness[455](index=455&type=chunk)[506](index=506&type=chunk)[508](index=508&type=chunk) [Item 16A. Audit Committee Financial Expert](index=71&type=section&id=Item%2016A.%20Audit%20Committee%20Financial%20Expert) The company's Board of Directors has identified Mr. Pierre Beysson, Chairman of the Audit Committee, as a qualified audit committee financial expert - The company's Board of Directors has identified Mr. Pierre Beysson, Chairman of the Audit Committee, as a qualified audit committee financial expert[456](index=456&type=chunk) [Item 16B. Code of Ethics](index=71&type=section&id=Item%2016B.%20Code%20of%20Ethics) The company has adopted and regularly reviews a code of ethics applicable to its CEO, CFO, principal accounting officer, and similar functionaries, which is available on its website - The company has adopted and regularly reviews a code of ethics applicable to its CEO, CFO, principal accounting officer, and similar functionaries[457](index=457&type=chunk) [Item 16C. Principal Accountant Fees and Services](index=72&type=section&id=Item%2016C.%20Principal%20Accountant%20Fees%20and%20Services) In 2023, the company paid KPMG S.A. 830 thousand Euros and Agili(3F) 30.5 thousand Euros for audit fees, with an Audit Committee policy requiring pre-approval for all external auditor services KPMG S.A. Audit and Other Service Fees (Thousand Euros) | Fee Type | 2023 (Thousand Euros) | 2022 (Thousand Euros) | | :--- | :--- | :--- | | Audit Fees | 830 | 592 | | Audit-Related Fees | — | 47.266 | | Tax Fees | — | — | | All Other Fees | — | — | | **Total** | **830** | **639.266** | Agili(3F) Audit and Other Service Fees (Thousand Euros) | Fee Type | 2023 (Thousand Euros) | 2022 (Thousand Euros) | | :--- | :--- | :--- | | Audit Fees | 30.5 | 29 | | Audit-Related Fees | — | — | | Tax Fees | — | — | | All Other Fees | — | — | | **Total** | **30.5** | **29** | - The Audit Committee has established an "Audit and Non-Audit Services Pre-Approval Policy" requiring all services provided by external auditors to be pre-approved[462](index=462&type=chunk) [Item 16D. Exemptions from the Listing Standards for Audit Committees](index=72&type=section&id=Item%2016D.%20Exemptions%20from%20the%20Listing%20Standards%20for%20Audit%20Committees) This section states the company has not received any exemptions from the listing standards for audit committees [Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=72&type=section&id=Item%2016E.%20Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) This section states it is not applicable, indicating no purchases of equity securities by the issuer or affiliated purchasers [Item 16F. Change in Registrant's Certifying Accountant](index=73&type=section&id=Item%2016F.%20Change%20in%20Registrant's%20Certifying%20Accountant) This section states it is not applicable, indicating no change in the registrant's certifying accountant [Item 16G. Corporate Governance Requirements](index=73&type=section&id=Item%2016G.%20Corporate%20Governance%20Requirements) As a Nasdaq-listed foreign private issuer, the company adheres to French corporate governance practices, which differ from some Nasdaq rules, including quorum requirements for shareholder meetings, the advisory nature of board committees, and equity issuance approval processes - As a Nasdaq-listed foreign private issuer, the company adheres to French corporate governance practices rather than certain Nasdaq rules[466](index=466&type=chunk) - Differences in corporate governance practices from Nasdaq rules: * **Shareholder Meeting Quorum:** French law requires a quorum of **20%** for ordinary shareholder meetings or special shareholder meetings deciding on capitalization, and **25%** for other special shareholder meetings, which is lower than Nasdaq's **33 1⁄3%** requirement * **Board Committees:** Under French law, Board committees are advisory only, with decision-making authority remaining with the Board of Directors * **Equity Issuance Approval:** Under French law, equity issuance requires shareholder meeting approval, typically through a resolution authorizing the Board to increase share capital[467](index=467&type=chunk)[468](index=468&type=chunk)[470](index=470&type=chunk) - The company's CEO and CFO annually submit certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act[471](index=471&type=chunk) [Item 16H. Mine Safety Disclosure](index=74&type=section&id=Item%2016H.%20Mine%20Safety%20Disclosure) This section states it is not applicable, indicating no mine safety disclosure matters [Item 16I. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=74&type=section&id=Item%2016I.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This section states it is not applicable, indicating no disclosure matters regarding foreign jurisdictions that prevent inspections [Item 16J. Insider Trading Policy](index=74&type=section&id=Item%2016J.%20Insider%20Trading%20Policy) This section states it is not applicable, indicating no disclosure of an insider trading policy [Item 16K. Cybersecurity](index=74&type=section&id=Item%2016K.%20Cybersecurity) The company has implemented a cybersecurity risk management program to protect sensitive information and operational integrity, encompassing governance, risk management, and compliance, with oversight by the Board through the Audit Committee - The company has developed and implemented a cybersecurity risk management program aimed at protecting sensitive information and operational integrity, covering governance, risk management, and compliance[476](index=476&type=chunk) - Cybersecurity risk management processes include: * Incident response plans to ensure detection, mitigation, and resolution of cybersecurity incidents * Risk management standards adapted to specific cybersecurity risks * Protocols to protect systems and data from unauthorized access or misuse * Continuous evaluation and upgrading of IT and related systems * Processes to ensure business continuity and ongoing operations in the event of a cyberattack * Use of specialized third-party companies for regular evaluations of cybersecurity policies and procedures * Leveraging third parties for cybersecurity defense measures such as firewalls, antivirus solutions, and system backups * Regular employee cybersecurity awareness campaigns and training[478](index=478&type=chunk) - The Board of Directors oversees the cybersecurity risk management program through the Audit Committee, and the internal audit organization regularly reports cybersecurity incidents to the senior management team, Audit Committee, and Board of Directors[480](index=480&type=chunk)[481](index=481&type=chunk) [PART III](index=75&type=section&id=PART%20III) [Item 17. Financial Statements](index=75&type=section&id=Item%2017.%20Financial%20Statements) This section references the financial statements provided in Item 18 [Item 18. Financial Statements](index=75&type=section&id=Item%2018.%20Financial%20Statements) This section states that the financial statements have been filed as part of this annual report [Item 19. Exhibits](index=75&type=section&id=Item%2019.%20Exhibits) This section lists the exhibits filed or incorporated by reference as part of the annual report, emphasizing that statements and warranties within exhibits are for the benefit of the agreement parties and may not reflect the company's actual condition as of the report date - The list of exhibits has been filed as part of this annual report or incorporated by reference[484](index=484&type=chunk) - Statements and warranties within the exhibits are solely for the benefit of the agreement parties and may not reflect the company's actual condition as of the report date[486](index=486&type=chunk) [Financial Statements and Notes](index=78&type=section&id=Financial%20Statements%20and%20Notes) [Report of Independent Registered Public Accounting Firm](index=79&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG S.A. issued an unqualified opinion on EDAP TMS S.A.'s consolidated financial statements for 2023 and the preceding two years, affirming fair presentation under U.S. GAAP, but an adverse opinion on internal control effectiveness as of December 31, 2023, due to a material weakness in its U.S. subsidiary's invoice recording - KPMG S.A. issued an unqualified opinion on the company's consolidated financial statements for the fiscal year ended December 31, 2023, and the preceding two years[494](index=494&type=chunk) - KPMG S.A. issued an adverse opinion on the effectiveness of the company's internal controls as of December 31, 2023, due to a material weakness in the U.S. subsidiary's internal controls regarding third-party vendor invoice recording[495](index=495&type=chunk)[506](index=506&type=chunk)[508](index=508&type=chunk) - Revenue recognition, specifically identifying distinct performance obligations in customer contracts, is a critical audit matter due to the specific nature of each contract and the challenging audit judgments required[499](index=499&type=chunk)[500](index=500&type=chunk) [Consolidated Financial Statements](index=83&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements, including the balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, reflect the financial position and operating results for the fiscal year ended December 31, 2023, and the preceding two years, showing an expanded net loss of 21.178 million Euros and reduced cash and cash equivalents of 43.471 million Euros in 2023 Consolidated Balance Sheet Summary (Thousand Euros) | Metric | December 31, 2023 (Thousand Euros) | December 31, 2022 (Thousand Euros) | | :--- | :--- | :--- | | Total Current Assets | 78,480 | 90,518 | | Total Non-Current Assets | 13,069 | 10,605 | | **Total Assets** | **91,548** | **101,123** | | Total Current Liabilities | 27,596 | 21,708 | | Total Non-Current Liabilities | 7,030 | 7,080 | | **Total Liabilities** | **34,626** | **29,492** | | Shareholders' Equity | 56,922 | 71,632 | | **Total Liabilities and Shareholders' Equity** | **91,548** | **101,123** | Consolidated Statements of Operations Summary (Thousand Euros) | Metric | 2023 (Thousand Euros) | 2022 (Thousand Euros) | 2021 (Thousand Euros) | | :--- | :--- | :--- | :--- | | Total Revenue | 60,423 | 55,108 | 44,065 | | Cost of Sales | (36,012) | (30,916) | (25,643) | | Gross Profit | 24,411 | 24,193 | 18,422 | | Research and Development Expenses | (6,963) | (4,920) | (3,402) | | Sales and Marketing Expenses | (22,626) | (16,379) | (10,732) | | General and Administrative Expenses | (14,634) | (7,152) | (5,900) | | Operating (Loss) | (19,813) | (4,257) | (1,612) | | Net (Loss) | (21,178) | (2,933) | 700 | | Basic Loss Per Share | (0.57) | (0.09) | 0.02 | | Diluted Loss Per Share | (0.57) | (0.09) | 0.02 | Consolidated Statements of Cash Flows Summary (Thousand Euros) | Metric | 2023 (Thousand Euros) | 2022 (Thousand Euros) | 2021 (Thousand Euros) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | (14,678) | (3,024) | 4,445 | | Net Cash Flow from Investing Activities | (4,344) | (2,378) | (1,638) | | Net Cash Flow from Financing Activities | (911) | 21,741 | 20,266 | | Net Increase (Decrease) in Cash and Cash Equivalents | (19,665) | 15,952 | 22,488 | | Cash and Cash Equivalents at Year-End | 43,471 | 63,136 | 47,183 | [Notes to Consolidated Financial Statements](index=88&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's significant accounting policies, including revenue recognition, inventory valuation, asset depreciation, goodwill and intangible asset impairment testing, and equity incentive plans, alongside specific financial data and analyses for cash, receivables, inventory, leases, debt, equity, and segment information, plus related party transactions and subsequent events [1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=88&type=section&id=1%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) [2— CASH EQUIVALENTS](index=96&type=section&id=2%E2%80%94%20CASH%20EQUIVALENTS) [3— TRADE ACCOUNTS AND NOTES RECEIVABLE, NET](index=96&type=section&id=3%E2%80%94%20TRADE%20ACCOUNTS%20AND%20NOTES%20RECEIVABLE,%20NET) [4— OTHER RECEIVABLES](index=97&type=section&id=4%E2%80%94%20OTHER%20RECEIVABLES) [5— INVENTORIES](index=97&type=section&id=5%E2%80%94%20INVENTORIES) [6— OTHER ASSETS](index=97&type=section&id=6%E2%80%94%20OTHER%20ASSETS) [7— PROPERTY AND EQUIPMENT, NET](index=97&type=section&id=7%E2%80%94%20PROPERTY%20AND%20EQUIPMENT,%20NET) [8— OPERATING LEASE RIGHT-OF-USE ASSETS](index=98&type=section&id=8%E2%80%94%20OPERATING%20LEASE%20RIGHT-OF-USE%20ASSETS) [9— GOODWILL AND INTANGIBLE ASSETS](index=98&type=section&id=9%E2%80%94%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) [10— TRADE ACCOUNTS AND NOTES PAYABLE](index=99&type=section&id=10%E2%80%94%20TRADE%20ACCOUNTS%20AND%20NOTES%20PAYABLE) [11— DEFERRED REVENUES](index=100&type=section&id=11%E2%80%94%20DEFERRED%20REVENUES) [12— OTHER ACCRUED LIABILITIES](index=101&type=section&id=12%E2%80%94%20OTHER%20ACCRUED%20LIABILITIES) [13— LEASE OBLIGATIONS](index=101&type=section&id=13%E2%80%94%20LEASE%20OBLIGATIONS) [14— SHORT-TERM BORROWINGS](index=103&type=section&id=14%E2%80%94%20SHORT-TERM%20BORROWINGS) [15— LONG TERM DEBT](index=103&type=section&id=15%E2%80%94%20LONG%20TERM%20DEBT) [16— OTHER LONG-TERM LIABILITIES](index=105&type=section&id=16%E2%80%94%20OTHER%20LONG-TERM%20LIABILITIES) [17— SHAREHOLDERS' EQUITY](index=107&type=section&id=17%E2%80%94%20SHAREHOLDERS'%20EQUITY) [18— TOTAL SALES](index=113&type=section&id=18%E2%80%94%20TOTAL%20SALES) [19— OTHER REVENUES](index=114&type=section&id=19%E2%80%94%20OTHER%20REVENUES) [20— COSTS OF SALES](index=114&type=section&id=20%E2%80%94%20COSTS%20OF%20SALES) [21— RESEARCH AND DEVELOPMENT EXPENSES](index=114&type=section&id=21%E2%80%94%20RESEARCH%20AND%20DEVELOPMENT%20EXPENSES) [22— FINANCIAL INCOME, NET](index=114&type=section&id=22%E2%80%94%20FINANCIAL%20INCOME,%20NET) [23— INCOME TAXES](index=115&type=section&id=23%E2%80%94%20INCOME%20TAXES) [24— EARNINGS (LOSS) PER SHARE](index=116&type=section&id=24%E2%80%94%20EARNINGS%20(LOSS)%20PER%20SHARE) [25— COMMITMENTS AND CONTINGENCIES](index=116&type=section&id=25%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) [26— FAIR VALUE OF FINANCIAL INSTRUMENTS](index=117&type=section&id=26%E2%80%94%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) [27— CONCENTRATION OF CREDIT RISK](index=117&type=section&id=27%E2%80%94%20CONCENTRATION%20OF%20CREDIT%20RISK) [28— FOREIGN CURRENCY TRANSACTIONS](index=117&type=section&id=28%E2%80%94%20FOREIGN%20CURRENCY%20TRANSACTIONS) [29— SEGMENT INFORMATION](index=117&type=section&id=29%E2%80%94%20SEGMENT%20INFORMATION) [30— VALUATION ACCOUNTS](index=119&type=section&id=30%E2%80%94%20VALUATION%20ACCOUNTS) [31— SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION](index=120&type=section&id=31%E2%80%94%20SUPPLEMENTAL%20DISCLOSURES%20OF%20CASH%20FLOW%20INFORMATION) [32— RELATED PARTY TRANSACTIONS](index=120&type=section&id=32%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) [33— SUBSEQUENT EVENTS](index=120&type=section&id=33%E2%80%94%20SUBSEQUENT%20EVENTS) - The company's revenue recognition follows ASC 606, identifying goods and services in contracts as distinct performance obligations and allocating revenue based on relative standalone selling prices[540](index=540&type=chunk)[541](index=541&type=chunk) - As of December 31, 2023, goodwill for the HIFU, ESWL, and Distribution segments was **645 thousand Euros**, **496 thousand Euros**, and **1.271 million Euros**, respectively, with no impairment identified during annual testing[623](index=623&type=chunk)[624](index=624&type=chunk) - As of December 31, 2023, the company had **3,198,913 unexercised stock options** with a weighted average exercise price of **6.26 Euros**, of which **1,997,666** were exercisable[322](index=322&type=chunk) - As of December 31, 2023, the company had **2.509 million Euros** in total unrecognized compensation cost for non-vested stock options, expected to be recognized over the next **2.9 years**[686](index=686&type=chunk) - As of December 31, 2023, the company had net operating loss carryforwards of **71.821 million Euros**, of which **71.594 million Euros** have no expiration date but are subject to annual limitations on taxable income utilization[702](index=702&type=chunk) - The company appointed a new Chief Financial Officer and Chief Accounting Officer on January 2, 2024, and received FDA Breakthrough Device Designation for the Focal One platform for deep infiltrating endometriosis on March 4, 2024[734](index=734&type=chunk)[735](index=735&type=chunk)
EDAP TMS(EDAP) - 2023 Q4 - Earnings Call Transcript
2024-03-27 15:32
EDAP TMS S.A. (NASDAQ:EDAP) Q4 2023 Earnings Conference Call March 27, 2024 8:30 AM ET Company Participants Ryan Rhodes - Chief Executive Officer Ken Mobeck - Chief Financial Officer John Fraunces - LifeSci Advisors Conference Call Participants Michael Sarcone - Jefferies Frank Takkinen - Lake Street Capital Swayampakula Ramakanth - HC Wainwright Operator Greetings and welcome to the EDAP TMS fourth quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer ...
EDAP Announces FDA Breakthrough Device Designation for Focal One® in the Treatment of Deep Infiltrating Rectal Endometriosis
Newsfilter· 2024-03-04 12:00
Focal One HIFU has potential to address large market impacting thousands of women each year LYON, France, March 4, 2024 - EDAP TMS SA (NASDAQ:EDAP), the global leader in robotic energy-based therapies, announced today that its Focal One platform has been granted Breakthrough Device designation by the US Food and Drug Administration (FDA) for the treatment of deep infiltrating endometriosis (DIE). In June 2018, the FDA cleared Focal One Robotic Focal HIFU for the ablation of prostatic tissue. "Receiving Bre ...
EDAP Announces Record Preliminary Fourth Quarter and Full-Year 2023 Revenues
Newsfilter· 2024-02-29 12:00
Record full-year 2023 preliminary unaudited revenue of EUR 60.4 million ($65.4 million USD), an increase of 9.6% over full-year 2022, driven by 31.7% HIFU growth Record Q4 2023 preliminary unaudited revenue of EUR 19.6 million ($21.3 million USD), an increase of 24.8% over for Q4 2022, driven by 38.8% HIFU growthStrong Q4 2023 U.S. Focal One® HIFU procedure growth of 136% year-over-year LYON, France, February 29, 2024 - EDAP TMS SA (NASDAQ:EDAP), a global leader in robotic energy-based therapies, today ann ...
EDAP Announces Completion of Enrollment in Phase 3 Study Evaluating Focal One HIFU Therapy for the Treatment of Deep Infiltrating Rectal Endometriosis
Newsfilter· 2024-02-01 13:00
60 Patients Completed Enrollment in Under 9 Months Study Results Expected in the Second Half of 2024 LYON, France, February 1, 2024 - EDAP TMS SA (NASDAQ:EDAP), the global leader in robotic energy-based therapies, announced today that it has completed enrollment in its Phase 3 study (Endo-HIFU-R2) evaluating Focal One High-Intensity Focused Ultrasound (HIFU) therapy for the treatment of deep infiltrating rectal endometriosis. The ongoing Phase 3 study (NCT05755958) is a comparative, randomized, double blin ...
EDAP TMS(EDAP) - 2023 Q3 - Earnings Call Transcript
2023-11-09 18:20
EDAP TMS S.A. (NASDAQ:EDAP) Q3 2023 Earnings Conference Call November 9, 2023 8:30 AM ET Company Participants John Fraunces - LifeSci Advisors Ryan Rhodes - CEO Ken Mobeck - CFO, US Subsidiary Conference Call Participants Michael Sarcone - Jefferies Frank Takkinen - Lake Street Capital Markets John Fraunces 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. Thank you, John, and good morning, everyone ...
EDAP TMS(EDAP) - 2023 Q2 - Earnings Call Transcript
2023-08-24 15:55
Financial Data and Key Metrics Changes - Total revenue for Q2 2023 was €14.3 million, a slight increase of almost 1% compared to €14.2 million in Q2 2022, marking a record level for a second quarter [80] - Gross profit for Q2 was €5.7 million, down from €6.2 million in the same period last year, with a gross profit margin of 39.6% compared to 43.8% year-over-year [83][84] - Net loss for Q2 was €4.7 million or €0.13 per diluted share, compared to a net income of €1.8 million or €0.05 per diluted share in the prior year [85] Business Line Data and Key Metrics Changes - HIFU business revenue for Q2 was €4.9 million, a 63.6% increase year-over-year, driven by the sale of four Focal One units compared to one unit sold in Q2 2022 [81] - LITHO business revenue decreased to €2.2 million from €3.6 million in Q2 2022, attributed to six fewer units sold and supply chain constraints [82] - Distribution business revenue was €7.2 million, down from €7.6 million in the same quarter last year, with nine ExactVu units sold compared to 15 units in Q2 2022 [83] Market Data and Key Metrics Changes - Focal One HIFU procedure volumes in the U.S. grew 85% year-over-year and 29% sequentially in Q2 2023, marking the third consecutive quarter of double-digit growth [8] - Reimbursement approval for High-Intensity Focused Ultrasound in Switzerland took effect on July 1, 2023, which is expected to enhance demand in the DACH region [9] Company Strategy and Development Direction - The company is focused on increasing awareness and adoption of Focal One HIFU as a treatment option for prostate cancer, with strategic investments in clinical sales and educational activities [2][10] - The company anticipates continued strong adoption of the Focal One technology platform, with expectations for notable sales in Q3 and Q4 2023 [33][79] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the remainder of 2023, citing strong underlying demand for Focal One technology and a growing active pipeline for new business [2][52] - The company does not foresee significant headwinds from macroeconomic factors, indicating that hospitals view Focal One as a strategic capital investment [39][40] Other Important Information - The company reported a total cash and cash equivalents of €51.3 million or US$56 million at the end of Q2, down from €58.3 million or US$63.4 million at the end of Q1 2023 [64][78] - The company is actively working on clinical development programs for Focal One HIFU, with positive results reported from ongoing studies [75][76] Q&A Session Summary Question: What are the expectations for system placements in the second half of the year? - Management expects to see notable sales in both Q3 and Q4, indicating a stronger second half of the year [33][34] Question: How is the utilization environment shaping up? - Increased utilization is being observed among both existing and new customers, with a focus on creating market awareness for non-invasive treatment options [21][35] Question: What is the outlook for average sales price (ASP) of disposables? - There is room for growth in ASP, with some price increases already implemented and ongoing monitoring of pricing strategies [37] Question: Are macroeconomic factors influencing hospital purchasing attitudes? - Management does not see significant headwinds from macroeconomic factors, although the purchasing process may take longer as hospitals conduct thorough evaluations [41][42] Question: How long will it take for Swiss reimbursement to reflect in sales? - The timeline for sales impact from Swiss reimbursement will depend on the onboarding process at individual hospitals [44][61] Question: What is the status of supply chain issues in the LITHO business? - Supply chain issues are primarily related to componentry needed for lithotripsy technologies, but are not expected to have long-term impacts on other business areas [62][67]
EDAP TMS(EDAP) - 2023 Q1 - Earnings Call Transcript
2023-05-17 17:35
Start Time: 08:30 January 1, 0000 9:10 AM ET EDAP TMS S.A. (NASDAQ:EDAP) Q1 2023 Earnings Conference Call May 17, 2023, 08:30 AM ET Company Participants Ryan Rhodes - CEO Ken Mobeck - CFO, U.S. Subsidiary Francois Dietsch - CFO John Fraunces - Managing Director of Life Advisors Conference Call Participants Joseph Downing - Piper Sandler Michael Sarcone - Jefferies Sean Lee - H.C. Wainwright Frank Takkinen - Lake Street Capital Markets Operator Greetings, and welcome to the EDAP TMS First Quarter 2023 Earnin ...
EDAP TMS(EDAP) - 2022 Q4 - Annual Report
2023-04-06 16:00
Table of Contents As filed with the Securities and Exchange Commission on April 7, 2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of the event requiring this shell company report_______________________ For the transition period from ________ to _________ 000-29374 (Commission ...
EDAP TMS(EDAP) - 2022 Q4 - Earnings Call Transcript
2023-03-30 16:46
EDAP TMS S.A. (NASDAQ:EDAP) Q4 2022 Results Conference Call March 30, 2023 8:30 AM ET Company Participants John Fraunces - Managing Director of Life Advisors Marc Oczachowski - Chief Executive Officer and Chairman of the Board Ryan Rhodes - Chief Executive Officer of EWS Francois Dietsch - CFO Conference Call Participants Michael Sarcone - Jefferies Frank Takkinen - Lake Street Capital Markets Swayampakula Ramakanth - H.C. Wainwright Operator Ladies and gentlemen, greetings, and welcome to the EDAP TMS Four ...