Profound(PROF) - 2025 Q1 - Quarterly Report

PART I. Financial Information Item 1. Condensed Consolidated Financial Statements Q1 2025 unaudited financials show total assets at $60.9 million, revenue at $2.6 million, and a net loss of $10.7 million Condensed Consolidated Balance Sheets Total assets decreased to $60.9 million as of March 31, 2025, primarily due to a reduction in cash, while shareholders' equity declined to $50.8 million Condensed Consolidated Balance Sheet Highlights (USD in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $46,433 | $54,912 | | Total current assets | $59,912 | $69,065 | | Total assets | $60,864 | $70,234 | | Liabilities & Equity | | | | Total current liabilities | $5,295 | $6,565 | | Total liabilities | $10,074 | $9,812 | | Total shareholders' equity | $50,790 | $60,422 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2025 revenue grew 82% to $2.6 million, but operating expenses increased 49% to $13.0 million, leading to a net loss of $10.7 million Q1 2025 vs. Q1 2024 Performance (USD in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $2,621 | $1,439 | | Gross Profit | $1,853 | $866 | | Total Operating Expenses | $13,019 | $8,743 | | Operating Loss | ($11,166) | ($7,877) | | Net Loss | ($10,724) | ($6,585) | | Basic and Diluted Net Loss per Share | ($0.36) | ($0.27) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $8.3 million in Q1 2025, resulting in an $8.5 million decrease in cash, ending at $46.4 million Cash Flow Summary (USD in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($8,283) | ($4,529) | | Net cash provided by (used in) financing activities | ($290) | $20,456 | | Net increase (decrease) in cash | ($8,573) | $15,927 | | Cash, end of period | $46,433 | $41,180 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 revenue growth driven by product mix, increased operating expenses, and ongoing remediation of a material weakness in revenue recognition controls Overview Profound Medical is a medical device company specializing in MRI-guided therapeutic systems like TULSA-PRO for prostate ablation and Sonalleve for uterine fibroids - The company's lead product, TULSA-PRO, is approved by CE, Health Canada, and FDA for incision-free prostate tissue ablation[51][52] - The Sonalleve platform is commercialized for uterine fibroids and bone metastases, with approvals in Europe, China, and an FDA Humanitarian Device Exemption[53] - A hybrid recurring revenue model is employed in the U.S., while a capital sales model is used internationally in Europe and Asia[54][55] Results of Operations Q1 2025 revenue increased 82% to $2.6 million with improved gross margin, while R&D and SG&A expenses rose significantly due to headcount and commercialization efforts Q1 2025 vs Q1 2024 Operational Changes (USD in thousands) | Item | Q1 2025 | Q1 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,621 | $1,439 | $1,182 | 82% | | Gross Profit | $1,853 | $866 | $987 | 114% | | Gross Margin | 71% | 60% | - | - | | R&D Expenses | $4,808 | $3,945 | $863 | 22% | | SG&A Expenses | $8,211 | $4,798 | $3,413 | 71% | - The increase in R&D expenses was primarily due to increased headcount, higher enrollment for the CAPTAIN trial, and greater material expenditures[64] - SG&A increase was driven by higher sales force commissions, increased travel for conferences, and costs for the 'Pro-Talk Live' educational event[66] Liquidity and Capital Resources As of March 31, 2025, cash and equivalents totaled $46.4 million, deemed sufficient for 12 months, following a credit agreement amendment and partial use of public offering proceeds - Cash and cash equivalents totaled $46,433 thousand as of March 31, 2025, expected to fund operations for at least the next 12 months[69][70] - On March 3, 2025, the company amended its credit agreement with CIBC, converting the existing loan into a new revolving line of credit maturing in March 2027[31][74] Use of Proceeds from 2024 Public Offering (as of March 31, 2025, in thousands) | Use of Proceeds | Spending to Date | | :--- | :--- | | TULSA-PRO commercialization | $7,060 | | Sonalleve development and commercialization | $2,541 | | Working capital and general corporate purposes | $2,560 | | Total | $12,161 | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section on market risk disclosures is not applicable for the registrant - The company indicates that Quantitative and Qualitative Disclosures About Market Risk are not applicable[86] Item 4. Controls and Procedures Disclosure controls were effective as of March 31, 2025, but remediation continues for a material weakness in internal control over financial reporting related to revenue recognition - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[88] - A material weakness in internal control over financial reporting was identified as of December 31, 2024, concerning ineffective controls over revenue recognition contract terms[90][92] - Remediation efforts, including hiring CPAs and engaging consultants, began in Q1 2025 and are expected to conclude in 2025[93] PART II. Other Information Item 1. Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect - The company is not currently involved in any legal proceedings anticipated to have a material adverse impact[97] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - No material changes have occurred to the risk factors described in the 2024 Annual Report on Form 10-K[98] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None reported[99] Item 5. Other Information No directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading plans in Q1 2025 - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans in Q1 2025[102] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including certifications and Inline XBRL documents - The report includes a list of filed exhibits, such as certifications pursuant to the Sarbanes-Oxley Act and XBRL data files[103]