Profound Medical Corp.

Previous wording

As used in this Quarterly Report on Form 10-Q, the “Company”, the “Registrant”, “we” or “us” refer to Profound Medical Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes that appear elsewhere in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, assumptions and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in the Risk Factors section of the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, 2025, and elsewhere in this report under “Part II, Other Information—Item 1A, Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities, potential results of our development efforts or trials, and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s plans, estimates, assumptions and beliefs only as of the date of this report. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Unless stated otherwise, all references to “$” are to United States dollars in thousands and all references to “C$” are to Canadian dollars in thousands.

Current wording

As used in this Quarterly Report on Form 10-Q, the “Company”, the “Registrant”, “we” or “us” refer to Profound Medical Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes that appear elsewhere in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, assumptions and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in the Risk Factors section of the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, 2025 (the “2024 Annual Report”), and elsewhere in this report under “Part II, Other Information—Item 1A, Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities, potential results of our development efforts or trials, and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s plans, estimates, assumptions and beliefs only as of the date of this report. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Unless stated otherwise, all references to “$” are to United States dollars in thousands and all references to “C$” are to Canadian dollars in thousands.

Previous wording

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 capital sales model. Outside of North America, we generate most of our revenues from our system sales in Europe and Asia, where we deploy a more traditional hybrid business model, charging for the system separately as a capital sale and an additional per patient charge for the one-time-use devices and associated Genius services.

Current wording

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 capital sales model. Outside of North America, we generate most of our

Previous wording

Comparison of Three Months Ended March 31, 2025 and 2024

Current wording

Comparison of Three and Six Months Ended June 30, 2025 and 2024

Previous wording

The following selected financial information as at and for the three months ended March 31, 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.

Current wording

The following selected financial information as at and for the three and six months ended June 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.

Previous wording

For the three months ended March 31, 2025, we recorded revenue totaling $2,621, consisting of $820 from the one-time sale of capital equipment and $1,801 from recurring – non-capital revenue. For the three months ended March 31, 2024, we recorded revenue of $1,439, consisting entirely of recurring – non-capital revenue. The increase of $1,182, or 82%, in revenue for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was the result of higher recurring revenue in the United States and capital sales overseas during the first quarter of 2025.

Current wording

For the six months ended June 30, 2025, we recorded revenue totaling $4,832, consisting of $1,470 from the one-time sale of capital equipment and $3,362 from recurring – non-capital revenue. For the six months ended June 30, 2024, we recorded revenue totaling $3,672, consisting of $773 from the one-time sale of capital equipment and $2,899 from recurring – non-capital revenue. The increase of $1,160, or 32%, in revenue for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was the result of higher recurring revenue in the United States and capital sales overseas.

Previous wording

For the three months ended March 31, 2025, we recorded a cost of sales of $768, related to the sale of medical devices, capital and non-capital, which reflects a 71% gross profit. For the three months ended March 31, 2024, we recorded a cost of sales of $573, related to the sale of medical devices, which reflects a 60% gross profit. The increase of $195, or 34%, in cost of sales for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was the result of different product combination whereby more capital equipment was sold which contains a higher margin. The gross profit was higher in the three months ended March 31, 2025 by $987, or 114%, 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.

Current wording

For the six months ended June 30, 2025, we recorded a cost of sales of $1,361, which reflects a 72% gross profit. For the six months ended June 30, 2024, we recorded a cost of sales of $1,385, which reflects a 62% gross profit. The decrease of $24, or -2%, in cost of sales for the six months ended June 30, 2025 compared to the six months ended June 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 six months ended June 30, 2025 by $1,184, or 52%, 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.

Previous wording

For the three months ended March 31, 2025, R&D expenses increased by $863, or 22%, to $4,808 compared to $3,945 for the three months ended March 31, 2024. The increase in R&D expenses was largely due to increased headcount, increased enrolment for the CAPTAIN trial and recruitment efforts, and higher material expenditures due to spending on R&D initiatives to increase compatibility with MRI scanners, reduce design costs and improve efficiencies. These expenses promote the ongoing development and improvement of the products while further strengthening the commitment to a reliable and customizable product.

Current wording

For the six months ended June 30, 2025, R&D expenses increased by $2,756, or 34%, to $10,906 compared to $8,150 for the six months ended June 30, 2024. The increase in R&D expenses was largely due to increased headcount, increased enrolment for the CAPTAIN trial and recruitment efforts, and higher material expenditures due to spending on R&D initiatives to increase compatibility with MRI scanners, reduce design costs and improve efficiencies.

Previous wording

SG&A expenses for the three months ended March 31, 2025 increased by $3,413, or 71%, to $8,211 compared to $4,798 for the three months ended March 31, 2024. The increase in SG&A was due to increased sales force and commission payments, increased travel for conferences, and costs associated with hosting our educational event Pro-Talk Live in February 2025.

Current wording

SG&A expenses for the six months ended June 30, 2025 increased by $7,681, or 78%, to $17,537 compared to $9,856 for the six months ended June 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.

Previous wording

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 and cash equivalents; (iii) the lease liability interest expense; and (iv) the interest income on trade and other receivables.

Current wording

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.

Previous wording

Net finance (income) expense decreased $17 to ($445) during the three months ended March 31, 2025, compared to $(462) during the three months ended March 31, 2024. The decrease in net finance (income) expense was due to decrease in interest income from cash and cash equivalents.

Current wording

Net finance (income) expense decreased $79 to ($343) during the three months ended June 30, 2025, compared to $(422) during the three months ended June 30, 2024. The decrease in net finance (income) expense was due to decrease in interest income from cash.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $46,433 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).

Current wording

As of June 30, 2025, we had cash of $35,195 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).

Previous wording

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.

Current wording

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 condensed 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. The Company’s ability to accomplish all of its future strategic plans is dependent on obtaining additional financing or executing other strategic options by the third quarter of the year ending December 31, 2026; however, there is no assurance the Company will achieve these objectives.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2025 was $(8,283). The principal use of the operating cash flows during the period related to a net loss of $10,724 and an increase in net operating assets and liabilities of $1,250 and an increase in non-cash charges of $1,191. 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.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $(22,027). The principal use of the operating cash flows during the period related to a net loss of $26,419 and a change in net operating assets and liabilities of $1,616 and in non-cash charges of $2,776. 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.

Previous wording

Net cash provided by (used in) operating activities for the three months ended March 31, 2024 was $(4,529). The principal use of the operating cash flows during the period related to a net loss of $6,585 and an increase in net operating asset and liabilities of $949 and by non-cash charges of $1,107. 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.

Current wording

Net cash provided by (used in) operating activities for the six months ended June 30, 2024 was $(10,748). The principal use of the operating cash flows during the period related to a net loss of $13,504 a change in net operating asset and liabilities of $602 and non-cash charges of $2,154. 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.

Previous wording

Net cash provided by (used in) financing activities for the three months ended March 31, 2025 was $(290) primarily from the repayments of long-term debt principal.

Current wording

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

Previous wording

Net cash provided by (used in) financing activities for the three months ended March 31, 2024 was $20,456 primarily from the proceeds from the issuance of common shares of $21,079, net of issuance costs, which were offset by the $623 repayments of long-term debt.

Current wording

Net cash provided by (used in) financing activities for the six months ended June 30, 2024 was $19,853 primarily from the proceeds from the issuance of common shares of $21,079 net of issuance costs, which were offset by repayments of long-term debt of $1,227.

Previous wording

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.

Current wording

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.