EDAP's 2025 Q2 Earnings Call: Reimbursement, Medicare Coverage, and HIFU Growth Contradictions Emerge

The above is the analysis of the conflicting points in this earnings call

Date of Call: August 28, 2025

Financials Results

• Revenue: €16.0M, up 1.6% YOY (vs €15.8M in Q2 2024)
• EPS: €-0.15 per share, improved from €-0.16 in the prior year
• Gross Margin: 42.5%, compared to 37.5% in the prior year
• Operating Margin: -36.3%, improving from -38.6% in Q2 2024

Guidance:

• 2025 core HIFU revenue growth now expected at 26%–34% YOY (prior 16%–25%).
• 2025 noncore ESWL & distribution revenue expected to decline 25%–30% YOY (prior 20%–25%).
• Management cites strong pipeline and added commercial headcount; expects typical seasonality (Q3 softer in Europe, strong Q4).
• CMS proposed 2026 hospital payment for HIFU at $9,765 (+5.6% vs 2025) and physician payment ~$888 (26.43 RVUs).
• Forecasting a 15% tariff impact on France–U.S. goods; monitoring policy changes.

Business Commentary:

* HIFU Revenue Growth and System Placements: - EDAP TMS S.A. reported global HIFU revenues of $9.7 million in Q2 2025, up 89% year-over-year. - This growth was driven by the net placement of 12 Focal One systems, representing a 140% increase in year-over-year system placements. - Factors contributing to this growth include new clinical data supporting HIFU and focal therapy, enhanced technology with Focal One i, and increased patient awareness of benefits.

• Hospital Network Expansion and System Sales:
• EDAP noted multiple hospital networks, including Hackensack Meridian Health and NewYork-Presbyterian Health, purchasing a second Focal One system to expand their focal therapy programs.
• This trend highlights the value and strategic importance of EDAP's Focal One robotic HIFU platform in cancer treatment.

• The expansion signifies confidence in the technology's capabilities and demand from community-based urology practices.

• U.S. Procedure Volume and Market Access Challenges:

• U.S. procedures grew 4.8% year-over-year, although this rate is lower than previous growth trends.
• Market access challenges, particularly with Medicare Advantage plans, impacted growth in certain markets.

• The company is working diligently to resolve these issues through collaboration with market access partners and elevating clinical data to gain broader coverage.

• Reimbursement and Market Positioning:

• The Centers for Medicare and Medicaid Services (CMS) proposed a 5.6% increase in the hospital payment for Focal One HIFU procedures for 2026.
• This increase, along with higher RVUs for HIFU compared to competitive procedures, positions EDAP favorably for patient access and market expansion.
• The favorable reimbursement dynamics are supported by strong clinical data and growing adoption of HIFU in prostate cancer treatment.

Sentiment Analysis:

• Management highlighted “record second quarter HIFU results,” with HIFU revenue up 76.8% YOY and 12 net system placements. Gross margin expanded to 42.5% (from 37.5%), and guidance for core HIFU growth was raised to 26%–34% YOY. U.S. payer issues are being mitigated, with “early signs of improvement” in approvals. CMS’s proposed 2026 payments increase hospital and physician rates for HIFU.

Q&A:

• Question from Michael Anthony Sarcone (Jefferies): What actions are you taking to address payer challenges and how is this reflected in the raised HIFU growth outlook?
  Response: They’re accelerating pre-authorizations via market access partners and leveraging HIFI/FARP clinical data; early approval improvements are assumed in the updated HIFU guidance.

• Question from Michael Anthony Sarcone (Jefferies): Why has HIFU procedure growth decelerated and when can it reaccelerate?
  Response: Deceleration is mainly from regional Medicare Advantage issues; many are being resolved, more urologists are being trained, and management expects a positive growth trajectory.

• Question from Swayampakula Ramakanth (H.C. Wainwright): What drives CMS’s higher reimbursement proposal for HIFU?
  Response: CMS considers cost/value, procedure volume, billing data, and malpractice inputs; proposed rates signal recognition of HIFU’s clinical value, with final rule in October.

• Question from Swayampakula Ramakanth (H.C. Wainwright): How significant are efforts behind multi-unit purchases at large systems?
  Response: Commercial effort is substantial; repeat purchases by systems like NewYork‑Presbyterian, Baptist, and Hackensack validate clinical value and program expansion.

• Question from Swayampakula Ramakanth (H.C. Wainwright): Clarify BPH pathway—labeling, reimbursement, and required work.
  Response: Label covers prostate tissue ablation; ongoing France Phase I/II and planning a U.S. study by early 2026; Category III code enables facility payment during investigational use.

• Question from Swayampakula Ramakanth (H.C. Wainwright): Update on endometriosis program and CE mark commercialization.
  Response: >80% of sham-arm patients opted for HIFU post-unblinding; CE mark obtained and a limited European launch is underway using Focal One i features tailored for endometriosis.

• Question from Swayampakula Ramakanth (H.C. Wainwright): Status and use of the €36M EIB facility?
  Response: No funds received yet; terms being finalized. Proceeds will accelerate HIFU commercial growth, clinical indications, and complementary HIFU technologies.

• Question from Jason M. Bednar (Piper Sandler): Is Q2 an inflection and can it sustain near term given capital cycles?
  Response: Backlog/pipeline are strong with added sales headcount; focal therapy is expanding; expect typical Q3 seasonality and strong Q4, underpinning raised HIFU guidance.

• Question from Jason M. Bednar (Piper Sandler): How does backlog compare to last year?
  Response: Backlog is stronger YOY; more commercial resources and broader OUS engagement, with HIFI data catalyzing interest.

• Question from Jason M. Bednar (Piper Sandler): Do payer delays affect capital decisions or push patients to alternatives?
  Response: No impact on capital seen; appeals are improving regionally, aided by new clinical data, and hospitals are increasingly securing approvals.