EDAP TMS (NasdaqGM:EDAP) Q4 2025 Earnings call March 25, 2026 08:30 AM ET Company ParticipantsKen Mobeck - CFOLouisa Smith - PrincipalRyan Rhodes - CEOSwayampakula Ramakanth - Managing Director of Equity ResearchConference Call ParticipantsJoseph Downing - AnalystMichael Sarcone - AnalystOperatorGreetings, and welcome to the EDAP TMS fourth quarter and year-end 2025 conference call. As a reminder, this conference call is being recorded. I would now like to turn the call over to Louisa Smith from Gilmartin G ...

EDAP TMS (NasdaqGM:EDAP) Q4 2025 Earnings call March 25, 2026 08:30 AM ET Speaker4Greetings, and welcome to the EDAP TMS fourth quarter and year-end 2025 conference call. As a reminder, this conference call is being recorded. I would now like to turn the call over to Louisa Smith from Gilmartin Group. Thank you. You may begin.Speaker2Good morning. Thank you for joining us for the EDAP TMS fourth quarter and full year 2025 financial and operating results conference call. Joining me on today's call are Ryan R ...

Financial Data and Key Metrics Changes - Q4 revenues reached a record $1.048 billion, up 5.3% year-over-year and 5.2% sequentially, while full year 2025 revenues were $4 billion, up 1% year-over-year [5][33] - Non-GAAP gross margin for Q4 was 72%, up 1.6 points sequentially and 1.2 points year-over-year, while GAAP gross margin was 65.3%, up 1.1 points sequentially but down 4.8 points year-over-year [40][42] - Q4 operating income was $155.3 million, resulting in an operating margin of 14.8%, up approximately 5.2 points sequentially and 0.3 points year-over-year [46] Business Line Data and Key Metrics Changes - Systems and services revenues were $790 million, up 2.7% year-over-year, while clear aligner revenues for fiscal 2025 were $3.2 billion, up 0.5% year-over-year with record clear aligner volumes of 2.6 million cases [6][7] - Q4 clear aligner revenues were $838 million, up 5.5% year-over-year and 4% sequentially, with a record volume of 677,000 cases, up 7.7% year-over-year [7][8] - Q4 systems and services revenues were $209.4 million, up 10.3% sequentially and 4.2% year-over-year, driven by higher scanner system sales [37][38] Market Data and Key Metrics Changes - Clear aligner volume growth in Q4 was driven by strength in EMEA, Latin America, and APAC, with stability in North America [8][15] - In EMEA, DSO performance showed double-digit growth year-over-year, while in Latin America, clear aligner volumes grew double digits, achieving record quarterly shipments [14][15] - In APAC, clear aligner volumes also grew double digits year-over-year, with significant contributions from China, India, and Korea [19] Company Strategy and Development Direction - The company aims to expand international adoption, increase orthodontic utilization, and strengthen consumer demand conversion through localized marketing [63][68] - The focus on DSOs as a strategic growth channel is emphasized, with partnerships driving digital dentistry adoption [10][12] - Investments in innovation, including AI-driven treatment planning and direct fabrication capabilities, are prioritized to enhance margins and operational efficiency [66][68] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macro environment, highlighting the importance of disciplined execution across regions and channels [67] - The company expects Q1 2026 worldwide revenues to be in the range of $1.01 billion to $1.03 billion, reflecting a year-over-year growth of 3%-5% [58] - For fiscal 2026, the company anticipates revenue growth of 3%-4% year-over-year, with clear aligner volume growth expected to be in the mid-single digits [60] Other Important Information - Cash and cash equivalents as of December 31, 2025, were $1.0949 billion, with $831.2 million remaining available for stock repurchases under the program [53][55] - The company repurchased approximately 0.7 million shares in Q4 2025 at an average price of $142.87 [54] Q&A Session Summary Question: Can you parse apart the improved volume performance? - Management noted stability in markets and effective execution, particularly with DSOs driving growth [72] Question: What are the assumptions for 2026 guidance regarding end markets? - Management expects markets to behave consistently with recent trends, focusing on active conversion strategies [83] Question: Can you discuss the growth of DSOs and their adoption curve? - Management indicated that DSOs are expanding and that there are still growth opportunities in this segment [86] Question: What is driving the improvement in the adult business? - Factors include DSO growth, financial credit availability, and effective patient conversion strategies [92] Question: How do you view ASPs for 2026? - Management expects ASPs to decline by 1%-2% year-over-year due to country and product mix [101]

Financial Data and Key Metrics Changes - Q4 2025 revenues reached a record $1.048 billion, up 5.3% year-over-year and 5.2% sequentially [3][19] - Full year 2025 total revenues were $4 billion, up 1% year-over-year [3] - Non-GAAP operating margin for Q4 was 22.7%, the highest since 2021 [4] - Q4 overall gross margin was 65.3%, up 1.1 points sequentially but down 4.8 points year-over-year [23][24] Business Line Data and Key Metrics Changes - Systems and services revenues were $790 million, up 2.7% year-over-year [4] - Clear aligner revenues for Q4 were $838 million, up 5.5% year-over-year and up 4% sequentially [4][20] - Fiscal 2025 clear aligner revenues were $3.2 billion, up 0.5% year-over-year with record volumes of 2.6 million cases [4] Market Data and Key Metrics Changes - Q4 clear aligner volume was a record 677,000 cases, up 7.7% year-over-year [5] - Strong growth in EMEA, Latin America, and APAC, with stability in North America [5] - In North America, clear aligner volumes were up year-over-year, with double-digit growth in Latin America [9] Company Strategy and Development Direction - Focus on expanding international adoption and increasing orthodontic utilization, particularly among teens and kids [36][38] - Strengthening partnerships with dental service organizations (DSOs) to drive digital dentistry adoption [6][9] - Continued investment in innovation, including AI-driven treatment planning and direct fabrication capabilities [38] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, emphasizing the importance of disciplined execution across regions and channels [36][39] - The macro environment remains dynamic, but the company is encouraged by progress in key customer segments [36] - Management highlighted the need for sustained momentum in North America and improving conversion rates [38] Other Important Information - Cash and cash equivalents as of December 31, 2025, were $1.0949 billion, up $90.3 million sequentially [30] - The company repurchased approximately 0.7 million shares at an average price of $142.87 during Q4 2025 [31] Q&A Session Summary Question: Improved volume performance and its drivers - Management noted stability in markets and effective execution, particularly with DSOs driving growth [42][43] Question: Guidance assumptions for 2026 - Management expects markets to behave similarly to the second half of 2025, focusing on active conversion strategies [51][52] Question: DSO adoption curve and growth potential - Management indicated continued DSO penetration and growth opportunities, with many DSOs expanding globally [53][55] Question: Adult business performance and drivers - Management attributed improved adult business performance to DSOs, financial credit options, and effective patient conversion strategies [60][61] Question: North American retail business stability - Management reported improved stability in the North American retail business, aided by DSOs and a broader product portfolio [63][64] Question: ASP expectations for 2026 - Management anticipates ASPs to decline by 1%-2% year-over-year due to product and country mix [67][70] Question: Tax receipts and stimulus impact - Management did not plan around potential tax receipts but acknowledged them as possible upside [72]