Profound Medical Corp.

Comparison of Three and Nine Months Ended September 30, 2025 and 2024

The following selected financial information as at and for the three and nine months ended September 30, 2025 and 2024 have been derived from the unaudited consolidated financial statements and should be read in conjunction with those unaudited consolidated financial statements and related notes.

Key Components of Our Results of Operations

Revenue

We deploy a hybrid recurring revenue business model in the United States to market TULSA-PRO, i) charging a one-time payment that includes a supply of our one-time-use device, use of the system as well as our Genius services that support each TULSA center with clinical and patient recruitment and ii) a traditional model of charging for the system separately as capital and an additional per patient charge for the one-time-use devices and associated Genius services. The Sonalleve product is marketed primarily outside North America in European and Asian countries deploying a one-time capital sales model with limited recurring service revenue. Outside of North America, we generate most of our revenues from our system sales (both TULSA-PRO and Sonalleve) in Europe and Asia where we deploy a more traditional hybrid business model, charging for the system separately as capital and an additional per patient charge for the one-time-use devices and associated Genius services. Revenue is comprised of recurring – non-capital revenue, which consists of the sale of one-time-use devices, lease of medical devices, procedures and services associated with extended warranties and capital equipment, which is the one-time sale of capital equipment.

For the three months ended September 30, 2025, we recorded revenue totaling $5,289, consisting of $1,223 from the one-time sale of capital equipment and $4,066 from recurring – non-capital revenue. For the three months ended September 30, 2024, we recorded revenue totaling $2,832, consisting of $179 from the one-time sale of capital equipment and $2,653 from recurring – non-capital revenue. The increase of $2,457, or 87%, in revenue for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was mainly driven by an increase in capital sales and recurring revenue in the United States during the period.

For the nine months ended September 30, 2025, we recorded revenue totaling $10,121, consisting of $2,693 from the one-time sale of capital equipment and $7,428 from recurring – non-capital revenue. For the nine months ended September 30, 2024, we recorded revenue totaling $6,504, consisting of $952 from the one-time sale of capital equipment and $5,552 from recurring – non-capital revenue. The increase of $3,617, or 56%, in revenue for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was the result of higher capital sales and recurring revenue in the United States, partially offset by reductions in sales overseas.

Cost of Sales

Cost of sales primarily includes the cost of finished goods, depreciation of equipment under lease, inventory write-downs, royalties, warranty expenses, freight and direct overhead and labor expenses necessary to acquire or manufacture the finished goods.

For the three months ended September 30, 2025, we recorded a cost of sales of $1,358, which reflects a 74% gross profit. For the three months ended September 30, 2024, we recorded a cost of sales of $1,044, which reflects a 63% gross profit. The increase of $314, or 30%, in cost of sales for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was the result of existing customers purchasing capital equipment which have higher margins. The gross profit was higher in the three months ended September 30, 2025 by $2,143, or 120%, due to manufacturing operating at higher efficiency rates based on improvements that have been implemented.

For the nine months ended September 30, 2025, we recorded a cost of sales of $2,719, which reflects a 73% gross profit. For the nine months ended September 30, 2024, we recorded a cost of sales of $2,429, which reflects a 63% gross profit. The increase of $290, or 12%, in cost of sales for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was the result of different product combination whereby more capital equipment was sold which have higher margins. The gross profit was higher in the nine months ended September 30, 2025 by $3,327, or 82%, due to manufacturing operating at higher efficiency rates based on improvements that have been implemented and the growth in the number of capital systems sold.

Operating Expenses

Operating expenses consist of two components: research and development (“R&D”) and selling, general and administrative (“SG&A”).

R&D Expenses

R&D expenses are comprised of costs incurred in performing R&D activities, including new product development, continuous product improvement, investment in clinical trials and related clinical manufacturing costs, materials and supplies, salaries and benefits, consulting fees, patent procurement costs, and occupancy costs related to R&D activity.

For the three months ended September 30, 2025, R&D expenses increased by $1,252, or 30%, to $5,418 compared to $4,166 for the three months ended September 30, 2024. The increase in R&D expenses was largely due to increased headcount, increased costs associated with the CAPTAIN trial, higher travel costs due to patient treatments and increased share-based compensation expenses.

For the nine months ended September 30, 2025, R&D expenses increased by $4,008, or 33%, to $16,324 compared to $12,316 for the nine months ended September 30, 2024. The increase in R&D expenses was largely due to increased headcount, increased enrolment for the CAPTAIN trial and recruitment efforts, higher material expenditures due to spending on R&D initiatives to increase compatibility with MRI scanners, reduce design costs and improve efficiencies, higher travel costs due to patient treatments and increased share-based compensation expenses.

These expenses promote the ongoing development and improvement of the products while further strengthening the commitment to a reliable and customizable product. We continue to make substantial investments in our clinical trial initiatives through research and development and anticipate that the research will continue to support our reimbursement efforts.

SG&A expenses

Selling, general and administrative expenses are comprised of business development costs related to the market development activities and commercialization of our systems, including salaries and benefits, marketing support functions, occupancy costs, insurance, various management and administrative support functions and other miscellaneous marketing and management costs.

SG&A expenses for the three months ended September 30, 2025 increased by $806, or 12%, to $7,426 compared to $6,620 for the three months ended September 30, 2024. The increase in SG&A was driven by increased sales force, commission payments, increased share-based compensation expenses and infrastructure costs to support our growth.

SG&A expenses for the nine months ended September 30, 2025 increased by $8,487, or 52%, to $24,963 compared to $16,476 for the nine months ended September 30, 2024. The increase in SG&A was due to increased sales force, commission payments, increased travel and costs associated with hosting our educational event Pro-Talk Live, increased share-based compensation expenses and infrastructure costs to support our growth.

Net Finance (Income) Expense

Net finance (income) expense is primarily comprised of the following: (i) the CIBC Credit Agreement (as defined herein) accreting to the principal amount repayable and its related interest expense; (ii) interest income from cash; (iii) the lease liability interest expense; and (iv) the interest income on trade and other receivables.

Net finance income decreased by $98 to $122 during the three months ended September 30, 2025, compared to $220 during the three months ended September 30, 2024. The decrease in net finance income was due to a decrease in interest income from cash because of a lower prime rate and overall cash balance.

Net finance income decreased by $194 to $910 during the nine months ended September 30, 2025, compared to $1,104 during the nine months ended September 30, 2024. The decrease in net finance income was due to a decrease in interest income from cash because of a lower prime rate and overall cash balance.

Liquidity and Capital Resources

As of September 30, 2025, we had cash of $24,826 compared to $54,912 as of December 31, 2024. Historically, our primary source of cash has been financing activities, e.g., equity offerings as well as the CIBC Credit Agreement (as defined below).

Going Concern

We are subject to a number of risks, including the successful development and marketing of our products and the ability to raise additional financing to support these activities. We depend on various financing from investors or other sources of capital to fund our operations, achieve our business plan and the realization of our assets and liabilities in the normal course of operations.

We have historically experienced recurring losses from operations and have incurred an accumulated deficit of $279,566 through September 30, 2025. As of September 30, 2025, we had cash of $24,826 and a positive working capital balance of $31,586. For the nine months ended September 30, 2025, we incurred a net loss of $34,395 and net cash used in operating activities was $31,641.

Management believes that current cash balances as of September 30, 2025 will not be sufficient to finance all of our planned business operations over the next year. We intend to seek additional financing from investors or other sources of capital in order to fund our operations and activities over the next year. There can be no assurance that the steps management are taking will be successful. Considering the need for additional financing, there exists a material uncertainty that may raise substantial doubt about our ability to continue as a going concern.

These condensed consolidated financial statements have been prepared on a going concern basis, which asserts that we have the ability in the near term to continue to realize our assets and discharge our liabilities and commitments in a planned manner giving consideration to the above and expected possible outcomes. Conversely, if the going concern assumption is not appropriate, adjustments to the carrying amounts of our assets, liabilities, revenues, expenses and balance sheet classifications may be necessary, and these adjustments could be material.

Use of Proceeds

2024 Public Offering

We received net proceeds of $36,132 from our public offering completed on December 10, 2024 (the “2024 Public Offering”). We intend to use net proceeds from the 2024 Public Offering to fund the continued commercialization of the TULSA-PRO system in the United States, the continued development and commercialization of the TULSA-PRO system and the SONALLEVE system globally and for working capital and general corporate purposes. In addition, there have been no material adjustments to the cost or timing of the business objective previously disclosed in such prospectus supplement.

CIBC Loan

We entered into a credit agreement with Canadian Imperial Bank of Commerce (“CIBC”) on November 3, 2022 (the “Original CIBC Credit Agreement”), for gross proceeds of C$10,000, maturing on November 3, 2027, with an interest rate based on CIBC prime plus 2% (the “CIBC Loan”). We were required to make interest-only payments until October 31, 2023, and monthly repayments on the principal of C$208 plus accrued interest commenced on October 31, 2023. All of our obligations under the Original CIBC Credit Agreement are guaranteed by our current and future subsidiaries and include security of first priority interests in our and our subsidiaries’ assets. Initially, we had financial covenants in relation to the CIBC Loan where unrestricted cash is at all times greater than EBITDA for the most recent nine-month period, reported on a monthly basis and that revenue for any fiscal quarter must be 15% greater than revenue for the same fiscal quarter in the prior fiscal year, reported on a quarterly basis.

On March 3, 2025, we entered into an amended and restated credit agreement with CIBC (the “CIBC Credit Agreement”), which amended the terms of the CIBC Loan and the existing long-term debt provided under the Original CIBC Credit Agreement was repaid with proceeds from a new revolving line of credit provided by CIBC to us. The line of credit bears interest at the Wall Street Journal Prime Rate subject to a floor of 6.25%. The CIBC Credit Agreement contains certain financial covenants, and the obligations thereunder are secured by,inter alia, a general security agreement over our assets and the assets of our subsidiaries. The revolving line of credit matures on March 3, 2027, and provides an option to us to increase the amount of the revolving commitment by $5,000 within 18 months from March 3, 2025, subject to achieving a minimum trailing 12-month revenue exceeding $15,000. The exercise of the option would result in the size of the revolving commitment increasing from $10,000 to a maximum of $15,000. Additionally, the CIBC Credit Agreement provides that we may request a one-time increase in the principal amount of the revolving line of credit up to a maximum amount of $10,000, which is subject to the approval of CIBC in its sole discretion.

On September 30, 2025, an amendment to the CIBC Agreement resulted in a change to one of the financial covenants. The amended covenant is that unrestricted cash must at all times be greater of: (i) to the extent that EBITDA is a negative number or loss for the most recent six-month period, the amount of such loss, or (ii) $10,000, reported on a monthly basis.

As per management’s most recent forecasts, we project to be in violation of such financial covenant under the CIBC Credit Agreement by June 30, 2026, where unrestricted cash will no longer exceed the required liquidity amount for the most recent six-month period. As per the terms of the CIBC Credit Agreement, based on this projected breach, CIBC may exercise the right to declare the outstanding debt obligation as immediately due and payable. Accordingly, if we are unable to negotiate a covenant waiver or replace or refinance our existing debt on favorable terms or at all, such default could materially adversely impact our results of operations and financial results and may have a material adverse effect on the trading price of our Common Shares.

Cash Flows

The following table summarizes our cash flows for each of the periods presented (in thousands):

Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2025 was $31,641. The principal use of the operating cash flows during the period related to a net loss of $34,395 and a change in net operating assets and liabilities of $(1,836) and in non-cash charges of $4,590. The cash used in operating expenses was primarily due to the increased efforts supporting the commercialization and expansion of our products. This resulted in an increase in headcount, travel, clinical trial costs and marketing fees. Non-cash charges consisted primarily of share-based compensation, amortization and depreciation.

Net cash used in operating activities for the nine months ended September 30, 2024 was $17,574. The principal use of the operating cash flows during the period related to a net loss of $22,869 a change in net operating asset and liabilities of $2,263 and non-cash charges of $3,032. The cash used in operating expenses was primarily due to the increased sales and marketing efforts in the US and overall consulting and legal fees. Non-cash charges consisted primarily of share-based compensation, amortization and depreciation.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2025 was $290 from the repayments of long-term debt principal.

Net cash provided by financing activities for the nine months ended September 30, 2024 was $19,261 primarily from the proceeds from the issuance of common shares of $22,938 net of issuance costs, which were offset by repayments of long-term debt of $1,819, and financing costs of $1,859.

Foreign Exchange on Cash

Cash was impacted by the change in the foreign exchange rates for the Company’s foreign currency denominated cash (non-USD). The value of our currencies decreased, resulting in a decrease in our cash holdings.

Funding Requirements

Based on our current operating plans, we do not believe that our existing cash and sales of our products and services will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of the issuance of these unaudited consolidated financial statements. During that time, we expect that our expenses will increase, primarily due to the continued commercialization of TULSA-PRO and Sonalleve.

We manage liquidity risk by monitoring actual and projected cash flows. A cash flow forecast is performed regularly to ensure that we have sufficient cash to meet our operational needs while maintaining sufficient liquidity. Our cash requirements depend on numerous factors, including market acceptance of our products, the resources devoted to developing and supporting the products and other factors. We expect to continue to devote substantial resources to expand procedure adoption and acceptance of our products.

We may require additional capital to fund R&D activities and any significant expansion of operations. Potential sources of capital could include equity and/or debt financings, development agreements or marketing agreements, the collection of revenue resulting from future commercialization activities and/or new strategic partnership agreements to fund some or all costs of development. There can be no assurance that we will be able to obtain the capital sufficient to meet any or all of our needs. The availability of equity

or debt financing will be affected by, among other things, the results of R&D and Sales expansion, our ability to obtain regulatory approvals, the market acceptance of our products, the state of the capital markets generally, strategic alliance agreements and other relevant commercial considerations. In addition, if we raise additional funds by issuing equity securities, existing security holders will likely experience dilution, and any incurring of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict operations. Any failure on our part to raise additional funds on terms favorable to us or at all may require us to significantly change or curtail current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in us not being in a position to take advantage of business opportunities, in the termination or delay of clinical trials for our products, in curtailment of product development programs designed to identify new products, in the sale or assignment of rights to technologies, product and/or an inability to file market approval applications at all or in time to competitively market products.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies since December 31, 2024. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K dated March 7, 2025.

Recent Accounting Pronouncements

See Note 2 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.