Profound Medical Corp.

Comparison of Three and Nine Months Ended September 30, 2026 and 2025

The following selected financial information as of and for the three and nine months ended September 30, 2026 and 2025 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 revenue business model in the United States to market TULSA-PRO by charging for the system separately as capital and an additional charge for the one-time-use devices. The Sonalleve product is marketed primarily outside North America 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 hybrid business model, charging for the system separately as capital and an additional charge for the one-time-use devices. Revenue is comprised of (a) recurring – non-capital revenue, which consists of the sale of one-time-use devices and services associated with maintenance contracts and (b) capital equipment, which is the one-time sale of capital equipment and the lease of capital equipment.

For the three months ended September 30, 2026, we recorded revenue totaling $9,830, consisting of $5,724 from the one-time sale of capital equipment and $4,106 from recurring – non-capital revenue. For the three months ended September 30, 2025, we recorded revenue of $5,289, consisting of $1,223 from the one-time sale of capital equipment and $4,066 from recurring – non-capital revenue. The increase of $4,541, or 86%, in revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was the result of higher capital sales overseas and within the United States during the third quarter of 2026.

For the nine months ended September 30, 2026, we recorded revenue totaling $17,650, consisting of $9,458 from the one-time sale of capital equipment and $8,192 from recurring – non-capital revenue. For the nine months ended September 30, 2025, we recorded revenue of $10,121, consisting of $2,693 from the one-time sale of capital equipment and $7,428, from recurring – non-capital revenue. The increase of $7,529, or 74%, in revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was driven by higher capital sales as well as recurring revenue.

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, 2026, we recorded a cost of sales of $2,150, related to the sale of medical devices, capital and non-capital, which reflects 78% gross margin. For the three months ended September 30, 2025, we recorded a cost of sales of $1,358, which reflects a 74% gross margin. The increase of $792, or 58%, in cost of sales for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was the result of increase in volume of sale of capital systems, which contains a higher margin and continued strong price discipline. The gross profit was higher in the three months ended September 30, 2026 by $3,749, or 95%, due to growth in the number of capital systems sold.

For the nine months ended September 30, 2026, we recorded a cost of sales of $4,191, related to the sale of medical devices, capital and non-capital, which reflects a 76% gross margin. For the nine months ended September 30, 2025, we recorded a cost of sales of $2,719, which reflects a 73% gross margin. The increase of $1,472, or 54%, in cost of sales for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was the result of a different product combination whereby more capital equipment was sold which contains a higher margin and continued strong price discipline. The gross profit was higher in the nine months ended September 30, 2026 by $6,057, or 82%, due to 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 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, 2026, R&D expenses increased by $388, or 7%, to $5,806 compared to $5,418 for the three months ended September 30, 2025. The increase in R&D expenses was largely due to increased personnel-related expenses, including higher headcount, travel expenditures and higher consulting and material expenditures due to R&D initiatives to reduce product costs and improve efficiencies and predictability of our products and supply chain.

For the nine months ended September 30, 2026, R&D expenses increased by $398, or 2%, to $16,722 compared to $16,324 for the nine months ended September 30, 2025. The increase in R&D expenses was largely due to increased personnel-related expenses, including higher headcount, travel expenditures and higher consulting and material expenditures due to R&D initiatives to reduce product costs and improve efficiencies and predictability of our products and supply chain. Offsetting these costs were a reduction in clinical trial costs due to CAPTAIN trial enrollment completion.

These expenses emphasize our commitment to the ongoing development and improvement of the products while further demonstrating the commitment to a reliable and customizable product.

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, 2026 increased by $2,269, or 31%, to $9,695 compared to $7,426 for the three months ended September 30, 2025. The increase in SG&A was primarily due to increased commission expenses driven by our revenue growth, consulting fees for recruitment, severance expense, as well as an increase in promotion and marketing expenses to support our revenue.

SG&A expenses for the nine months ended September 30, 2026 decreased by $1,318, or 5%, to $23,645 compared to $24,963 for the nine months ended September 30, 2025. The decrease in SG&A was primarily due to decreased personnel-related expenses, including share based compensation and lower wages, and an overall discount in our insurance premiums for the same coverage from the prior year. Offsetting these expenses was an increase in consulting fees for recruitment as well as an increase in promotion and marketing expenses.

Net finance income

Net finance income 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; and (ii) interest income from cash.

Net finance income increased by $74 to ($196) during the three months ended September 30, 2026, compared to ($122) during the three months ended September 30, 2025. The increase in net finance income was primarily due to an increase in interest income from cash.

Net finance income decreased by $1 to ($909) during the nine months ended September 30, 2026, compared to ($910) during the nine months ended September 30, 2025. Net finance income remained substantially consistent with the prior-year period.

Net foreign exchange (gain) loss

Net foreign exchange (gain) loss is primarily comprised of the change in the foreign exchange rates for the Company’s foreign currency denominated cash, trade receivables and accounts payable.

Net foreign exchange (gain) loss increased by $1,036 to $101 during the three months ended September 30, 2026, compared to ($935) during the three months ended September 30, 2025. The increase in net foreign exchange (gain) loss was primarily due to exposure changes and a decrease in the EUR and CAD currency rates.

Net foreign exchange (gain) loss decreased by $2,954 to ($1,760) during the nine months ended September 30, 2026, compared to $1,194 during the nine months ended September 30, 2025. The decrease in net foreign exchange (gain) loss was primarily due to an increase in the EUR and CAD currency rates.

Liquidity and Capital Resources

As of September 30, 2026, we had cash of $33,343 compared to $59,723 as of December 31, 2025. Historically, our primary source of cash has been financing activities, e.g., equity offerings as well as the CIBC Loan (as defined below).

Based on our current operating plans, we expect 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 have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Use of Proceeds

2025 Offering and non-brokered private placement

We received net proceeds of $40,801 from the public offering and the private placement (together, the “2025 Offering”) completed in December 2025. We intend to use net proceeds from the 2025 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

On March 3, 2025, we entered into an amended and restated credit agreement (the “CIBC Credit Agreement”) with Canadian Imperial Bank of Commerce (“CIBC”), which amended the terms of the loan with CIBC (the “CIBC Loan”) and the existing long-term debt provided under the original credit agreement with CIBC 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%. Following an amendment to the CIBC Credit Agreement on September 30, 2025, the amended financial covenants are that unrestricted cash is at all times the 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 and that revenue for the 12 month period must be 15% greater than revenue for the same period in the prior fiscal year, reported on a quarterly basis. We are in compliance with these financial covenants as of September 30, 2026. Future compliance with the financial covenants included in the CIBC Credit Agreement is dependent upon achieving certain revenue, EBITDA, and anticipated unrestricted cash levels.

The obligations 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 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.

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, 2026 was $(24,927), primarily attributable to a net loss of $24,315 and $3,319 in net operating assets and liabilities, partially offset by $2,707 of non-cash charges. The cash used in operating activities was primarily due to the increased efforts supporting the commercialization and expansion of our products which resulted in an increase in marketing and promotion 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, 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.

Financing Activities

Net cash provided by (used in) financing activities for the nine months ended September 30, 2026 was $36 from the exercise of share options.

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

Foreign Exchange on Cash

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

Funding Requirements

Based on our current operating plans, we expect 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, 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, 2025. 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 5, 2026.

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, which is incorporated herein by reference.