Financial Data and Key Metrics Changes - Total revenue for Q4 2025 was $76.4 million, representing a 12% year-over-year growth [12] - U.S. revenue for the quarter was $66.6 million, reflecting a 10% growth compared to the prior year [12] - Gross margin for Q4 2025 was 60.6%, down from 64% in Q4 2024, primarily due to lower-than-expected U.S. consumable revenue [15] - Net loss for Q4 2025 was $29.8 million, compared to a net loss of $18.9 million in Q4 2024 [16] - Adjusted EBITDA was a loss of $19 million in Q4 2025, compared to a loss of $10.3 million in the prior year [16] Business Line Data and Key Metrics Changes - Completed approximately 12,200 U.S. procedures in Q4 2025, representing approximately 69% year-over-year growth [12] - Handpieces sold totaled 9,400 units at an average selling price of approximately $3,340, reflecting a 5% price increase compared to Q3 2025 [12][10] - Total U.S. handpiece and other consumable revenue was $34 million in Q4 2025, representing 16% growth compared to Q4 2024 [12] - Sold 65 new HYDROS systems in Q4, with an installed base of 718 systems, a 42% increase compared to year-end 2024 [14] Market Data and Key Metrics Changes - International revenue in Q4 2025 was $9.8 million, representing year-over-year growth of 25% [14] - The company expects 2026 total U.S. procedures to be in the range of 60,000-64,000, representing growth of approximately 39%-48% [17] Company Strategy and Development Direction - The company is shifting operational focus towards increasing procedure volume, expanding margins, and achieving profitability [6] - A new integrated regional structure for the commercial team has been established to ensure better alignment and accountability [7] - A dedicated launch team has been formed to improve the consistency and effectiveness of new system placements [7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the financial performance in Q4 was lower than anticipated but emphasized that the changes made are critical for sustainable high growth and profitability [21] - The company is confident in its long-term growth trajectory despite short-term disruptions from the sales organization realignment [18] - Management expects to provide more detailed multi-year financial guidance at the upcoming Investor Day [11] Other Important Information - The company has eliminated the practice of providing discounts on bulk purchases, which is expected to improve pricing discipline and align handpiece sales with procedure volumes [9] - The average selling price for handpieces is expected to increase to $3,500 in 2026, reflecting a 9% improvement over 2025 [18] Q&A Session Summary Question: What unfolded in Q4 regarding handpiece sales? - Management indicated that customer purchasing behavior was influenced by previous bulk purchase discounts, leading to unexpected softness in handpiece sales [24] Question: Why is there confidence in the back half of 2026? - Management believes that the new sales organization structure will pay dividends as relationships with customers are rebuilt [28] Question: What gives confidence in a one-to-one ratio of handpiece sales to procedures in 2026? - Management noted that historical data showed handpiece sales were typically higher than procedure volumes, but recent changes have aligned these metrics more closely [34] Question: What was the impact of the field action on gross margin? - A one-time field action contributed approximately $1.5 million in costs, impacting gross margin by 240 basis points [38] Question: Is there any customer dissatisfaction due to the end of bulk purchase discounts? - Management has not observed any customer dissatisfaction and believes that the focus on procedure growth will mitigate any potential issues [42] Question: What is the stability of the sales force post-reorganization? - Management reported that the sales team remains stable with no significant attrition, although some adjustments are necessary as new relationships are established [44]

Financial Data and Key Metrics Changes - The second quarter revenue was $36.1 million, a decline of 10.9% year over year and 4.2% sequentially, with 70% of this quarter's revenue being recurring [10] - Gross profit for the second quarter was $11.6 million, down $2.7 million year over year, reflecting lower sales and an unfavorable mix primarily related to the decline in Aerospace volume [11] - The net loss was $1.2 million, or $0.16 per share, partially offset by a $0.5 million tax benefit, with adjusted EBITDA at $2.1 million, down $1.8 million compared to the prior year [13] Business Line Data and Key Metrics Changes - Product Identification segment revenue decreased by 8.9%, primarily due to a $2.6 million decline in recurring supplies, parts, and service from customer attrition [10] - Aerospace segment revenue declined by 15.1% year over year, attributed to a tough comparison against last year's second quarter, which included unusually large spare printer shipments [10][11] - Operating income for Product Identification declined by $0.4 million, or 18%, while Aerospace operating income was down $1.4 million, or 37% [12] Market Data and Key Metrics Changes - Orders for the second quarter were $35.9 million, relatively unchanged from the prior year but up $1 million sequentially, with aerospace orders increasing by $3.8 million [15] - Backlog for the quarter decreased by $4.6 million year over year to $25.3 million, representing about 30% of expected shipments for the second half of the year [15] Company Strategy and Development Direction - The company is restructuring its sales team to focus on customer acquisition and retention, aiming to regain lost customers while attracting new ones [5] - A new go-to-market strategy is being implemented, with expectations of improved results over the next several quarters [6] - The company is focused on improving cash generation through operational performance and is managing capital investments carefully, with CapEx expected to be less than half a million for the fiscal year [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges faced in the Product Identification segment and is working to validate product upgrades to meet customer needs [6] - The aerospace business is expected to benefit from increasing aircraft build rates and a potential profit margin improvement as certain royalties roll off in fiscal 2028 [17] - Management is optimistic about the potential of new printers and expects to see the full benefit of $3 million in annualized cost reductions in the second half of the fiscal year [17] Other Important Information - The company has paid down $5.1 million in debt through the first half of fiscal 2026 and has a total liquidity of $10.4 million [14] - The leverage ratio of funded debt to adjusted EBITDA was 3.5 times, with ongoing discussions regarding debt restructuring expected to be completed in the next 60 days [14] Q&A Session Summary - The Q&A session was conducted but no specific questions or answers were documented in the provided content [18]