Profound's Origins and Evolution
Profound Medical Corp. was incorporated under the laws of Ontario, Canada on June 13, 2008, initially as Profound Medical Inc. (Old PMI). The company's primary focus from its inception has been on developing and commercializing customizable, incision-free therapeutic systems for the ablation of diseased tissue utilizing its platform technologies.
In June 2015, Profound underwent a significant corporate restructuring through a three-cornered amalgamation with Mira, a capital pool company listed on the TSX Venture Exchange. This transaction resulted in the acquisition of Old PMI and marked Profound's debut on the TSX Venture Exchange. The company continued to grow and expand its market presence, leading to its graduation from the TSX Venture Exchange to the Toronto Stock Exchange (TSX) in July 2018, where it began trading under the symbol PRN.
A major milestone in Profound's corporate history came in October 2019 when the company commenced trading on the Nasdaq Capital Market under the symbol PROF. This transition to a U.S. public listing was strategically important for Profound as it sought to expand its commercial footprint, particularly in the United States market.
Throughout its history, Profound has faced and overcome several challenges. In its early stages, the company grappled with a limited operating history and a track record of operating losses, necessitating significant capital investment to advance its product development and commercialization efforts. Navigating the complex regulatory landscape to obtain necessary approvals for its products, including the crucial 510(k) clearance from the FDA for the TULSA-PRO system in 2019, was another major hurdle.
Despite these challenges, Profound has achieved several key milestones in its journey. In 2016, the company received CE marking in the European Union for its TULSA-PRO system, opening up a significant market opportunity. This was followed by regulatory approvals in Canada in 2019 and China in 2018 for its Sonalleve system, further expanding the company's global reach. Profound has also made significant strides in building its commercial capabilities, particularly in the United States, to drive adoption of its technologies.
Profound's Growth and Operational Highlights
Profound's financial performance has shown steady improvement in recent years, with the company reporting total revenue of $10.68 million in 2024, up from $7.20 million in 2023. This growth was driven by a strong performance in the company's recurring revenue segment, which includes the sale of one-time-use devices and services associated with extended warranties, as well as an increase in capital equipment sales.
Gross margin has also been on an upward trajectory, reaching 66% in 2024 compared to 60% in the previous year. This improvement can be attributed to Profound's manufacturing initiatives and economies of scale as the company has increased its commercial footprint.
Despite continued investment in research and development, as well as selling, general, and administrative expenses to support the company's growth, Profound has made meaningful progress in reducing its net loss. In 2024, the company reported a net loss of $27.82 million, a 2% improvement from the $28.32 million net loss recorded in 2023.
Financials
Profound's financial performance has been steadily improving over the years. The company's total revenue for 2024 was $10.68 million, representing a significant increase from $7.20 million in 2023. This growth was primarily driven by strong performance in the recurring revenue segment and increased capital equipment sales.
For the fourth quarter of 2024, Profound reported revenue of $4.2 million, a substantial 108% increase compared to $2 million in Q4 2023. This impressive growth was fueled by $2.7 million in recurring revenue and $1.5 million from one-time sales of capital equipment.
The company's gross margin has also shown improvement, reaching 66% in 2024 compared to 60% in the previous year. In Q4 2024, the gross margin was even higher at 71%, up from 52% in Q4 2023. It's worth noting that gross margins can fluctuate quarter-to-quarter due to product mix.
Despite ongoing investments in research and development and selling, general, and administrative expenses, Profound has managed to reduce its net loss. In 2024, the company reported a net loss of $27.82 million, a 2% improvement from the $28.32 million net loss in 2023. For Q4 2024, the net loss was $4.9 million or $0.20 per common share, a significant 45% improvement compared to a net loss of $8.9 million or $0.42 per common share in Q4 2023.
Operating expenses for 2024 totaled $40.10 million, including $16.96 million in R&D and $23.13 million in selling, general, and administrative costs. The company's operating cash flow and free cash flow for 2024 were both negative $23.45 million.
In terms of geographic performance, approximately 78% of Profound's revenues in 2024 were generated in the United States, 8% in the European Union, and 14% in Asia.
Liquidity
Profound's cash position remains strong, with $54.91 million in cash and cash equivalents as of December 31, 2024. This robust liquidity provides the company with financial flexibility to execute its commercial strategy and explore new market opportunities.
The company's strong cash position is crucial for supporting ongoing operations, funding research and development initiatives, and expanding its commercial footprint. It also provides a buffer against potential market uncertainties and allows Profound to capitalize on growth opportunities as they arise.
Profound's financial health is further demonstrated by its solid liquidity ratios. As of December 31, 2024, the company reported a current ratio of 10.52 and a quick ratio of 9.64, indicating a strong ability to meet short-term obligations. The debt-to-equity ratio stood at a low 0.085, suggesting a conservative approach to leverage.
In November 2022, Profound entered into a credit agreement with CIBC, securing $10 million in gross proceeds. The company also has access to a $10 million revolving credit facility with CIBC, providing additional financial flexibility if needed.
Competitive Landscape and Differentiating Factors
The prostate disease treatment market is populated by a variety of treatment modalities, including watchful waiting, surgery, radiation therapy, and other minimally invasive approaches. However, Profound's TULSA-PRO system stands out due to its unique combination of precision, flexibility, and patient-centric outcomes.
Unlike many competing technologies that are limited to specific prostate disease types or sizes, the TULSA-PRO system is designed to treat a wide range of prostate conditions, from localized cancer to benign prostatic hyperplasia (BPH). Its transurethral approach and closed-loop temperature control also allow for a high degree of precision, minimizing the risk of damage to surrounding healthy tissues and reducing potential side effects.
Profound has also made significant strides in securing favorable reimbursement for the TULSA procedure. In 2025, the Centers for Medicare and Medicaid Services (CMS) established a new Category 1 CPT code for the TULSA procedure, with reimbursement rates that place it above competing prostate treatment modalities. This development is expected to drive increased adoption of the TULSA-PRO system among healthcare providers and improve patient access to Profound's technology.
Recent Developments and Future Outlook
In addition to its commercial success, Profound has continued to invest in research and development to expand the capabilities of the TULSA-PRO system. The company recently unveiled the BPH TULSA-AI module, which leverages artificial intelligence to streamline the treatment of benign prostatic hyperplasia. This module, combined with the existing capabilities of the TULSA-PRO system, positions Profound to address a significantly larger patient population in the prostate disease treatment market. The company plans to introduce the BPH TULSA AI module at the AUA meeting in April 2025, which will allow for customized BPH treatment and expand the total addressable market from 200,000 prostate cancer patients to 600,000 prostate disease patients per year.
Furthermore, Profound's partnership with Siemens Healthineers to develop a complete solution for MRI-guided prostate therapy, known as TULSA Plus, is expected to simplify the workflow for healthcare providers and further drive adoption of the company's technology. The company plans to introduce the "TULSA Plus" solution, which combines the TULSA-PRO device with a Siemens interventional MRI, to streamline the workflow in 2025.
Looking ahead, Profound's management has provided guidance for high double-digit revenue growth in 2025, with the potential for triple-digit growth starting in late 2025 or early 2026. This optimistic outlook is underpinned by the company's strong competitive position, favorable reimbursement landscape, and continued investments in product innovation and commercial capabilities.
Profound also expects the perioperative data from the CAPTAIN trial to be available at the AUA meeting in April 2025, which they plan to use to support additional reimbursement and inclusion in cancer society guidelines.
Risks and Considerations
As with any emerging medical technology company, Profound faces a number of risks and challenges that investors should be aware of. These include the ability to maintain and expand its manufacturing capacity to meet growing demand, the potential for regulatory changes or delays, and the ongoing need to secure reimbursement coverage from private and public payers.
Additionally, the highly competitive nature of the prostate disease treatment market means that Profound must continually innovate and differentiate its offerings to maintain its leadership position. The company's reliance on the successful commercialization of the TULSA-PRO system also exposes it to risks associated with market acceptance and adoption by healthcare providers and patients.
Product Portfolio
Profound Medical Corp. focuses on two main product lines: the TULSA-PRO system and the Sonalleve system.
The TULSA-PRO system is Profound's lead product, combining real-time MRI, robotically-driven transurethral ultrasound, and closed-loop temperature feedback control to ablate whole gland or physician-defined regions of the prostate. In August 2019, the TULSA-PRO system received FDA clearance as a Class II device in the United States for thermal ablation of prescribed prostate tissue. It is also CE Marked in the EU for ablation of targeted prostate tissue, benign or malignant, and received approval from Health Canada in November 2019.
The Sonalleve system is CE Marked in the EU for ablation of uterine fibroids and adenomyotic tissue, palliative relief of pain associated with bone metastases, treatment of osteoid osteoma, and management of benign desmoid tumors. It is also approved in China and South Korea for non-invasive treatment of uterine fibroids. In November 2020, the Sonalleve system received HDE approval from the FDA for treatment of osteoid osteoma in the extremities.
Conclusion
Profound Medical Corp has established itself as a pioneer in the field of minimally invasive prostate treatments, with its flagship TULSA-PRO system offering a unique combination of precision, flexibility, and patient-centric outcomes. The company's continued focus on innovation, favorable reimbursement landscape, and strong financial position position it for sustained growth in the years ahead. As Profound continues to expand its commercial footprint and explore new market opportunities, it remains a compelling investment opportunity for those seeking exposure to the rapidly evolving prostate disease treatment market.