Q3 2025 Call: Contradictions Emerge on System Design, Outsourcing, and Financial Strategy

Date of Call: November 12, 2025

Financials Results

• EPS: GAAP net loss $1.86 per share, compared to GAAP net loss of $2.90 per share in Q3 2024; non-GAAP adjusted net loss $1.91 per share versus $2.87 in Q3 2024.

Guidance:

• Targeting production-equivalent design freeze by year-end 2026.
• Full-year 2025 cash burn expected to be approximately $50M; ended Q3 with ~$13.4M cash and Q3 burn of ~$10.5M; added ~$5.2M net proceeds post-quarter.
• Engaged PA Consulting to scope outsourcing; consulting deliverable due end-November; RFPs and outsourcing decisions targeted by end of Q1 2026.
• Taking cost actions (including ~15% headcount reduction and targeted outsourcing) to materially reduce cash burn for 2026 and beyond.

Business Commentary:

• Operational Cost Reduction:
• Vicarious Surgical reported a 35% reduction in total operating expenses for Q3 2025, with research and development expenses dropping from $10.8 million to $8 million compared to Q3 2024.

• This reduction was driven by a focus on burn reduction, strategic restructuring, and outsourcing of certain components to improve capital efficiency.

• Financial Performance Improvements:

• The company's GAAP net loss for Q3 2025 was $11.1 million or $1.86 per share, a significant improvement from the net loss of $17.1 million or $2.90 per share in Q3 2024.

• This performance improvement was due to decreased operating expenses and strategic financial management.

• Outsourcing and Resource Allocation:
• Vicarious Surgical is engaging PA Consulting for a gap analysis and recommendations for outsourcing opportunities, aiming to complete the process by the end of November.

• The goal is to reduce burn while preserving engineering progress, focusing resources on core technologies like robotic arms, camera systems, and software.

• Product Development and Design Freeze:

• The company maintains a target for design freeze of the production-equivalent system by year-end 2026, aiming for completion of all features and specifications required for commercialization.

• This milestone is critical for clinical entry and eventual commercialization, driving decision-making and resource allocation across the organization.

• Strategic Communication and Transparency:

• Vicarious Surgical plans to launch a new communication effort, providing frequent updates regarding product development progress and challenges on its LinkedIn page and investor relations website.
• The initiative aims to enhance transparency, investor engagement, and understanding of the process behind building a surgical robot.

Sentiment Analysis:

Overall Tone: Neutral

• Management emphasized cost reduction and design-freeze focus: “reduce burn,” engagement of PA Consulting to evaluate outsourcing, and a target to complete design freeze by year-end 2026. They reported Q3 cash of ~$13.4M, Q3 burn ~$10.5M, and a full-year 2025 burn forecast of ~$50M, while noting a recent ~15% headcount reduction and $5.2M net proceeds added post-quarter.

Q&A:

• Question from Joshua Jennings (TD Cowen): I wanted to confirm or correct that the timeline for system build to the standard for regulatory testing and clinical use is still mid-'26 and just the progress that's been made in terms of the first control build and then the faster build over the summer — how is that timeline impacted by this outsourcing initiative?
  Response: Design freeze remains targeted toward year-end 2026; outsourcing may cause some disruption but management expects to mitigate impacts and will communicate any disruptions promptly (PA Consulting evaluating options, deliverable by month-end).

• Question from Joshua Jennings (TD Cowen): Should we assume the current construct/design/technology (PDV builds) will largely hold and that outsourcing is about manufacturability/cost rather than restarting development?
  Response: The existing engineering progress will be preserved and iteratively upgraded (pre-DV1 → pre-DV2); outsourcing aims to improve manufacturability and cost, not restart core development.

• Question from Benjamin Haynor (Lake Street Capital Markets): Can you provide color on development builds — cadaver labs or internal testing where surgeons have hands on intermediate builds, and how have those gone?
  Response: Frequent surgeon testing (internal OR, weekly labs) including recent cadaver work has gone well; observed improved system stability and a dramatic reduction in suturing time (from ~40 to ~14 minutes).

• Question from Benjamin Haynor (Lake Street Capital Markets): Any other examples like the camera regression fix to share prior to the timely communication plan?
  Response: The key example reiterated is the suturing improvement (40→14 minutes), demonstrating stability and reliability gains as builds are iteratively improved.

• Question from Ryan Zimmerman (BTIG): How long do you anticipate the consulting engagement to take and what is the cost? What are you doing to preserve cash while reaching design freeze at year-end 2026?
  Response: PA Consulting engagement is short and expected to complete by month-end at a fixed but undisclosed fee; company is pursuing outsourcing, issuing RFPs (target end-Q1), and has implemented a ~15% headcount reduction to materially lower 2026 (and 2027) burn.

• Question from Ryan Zimmerman (BTIG): Where do you stand with your hospital and health system partners through all of this?
  Response: Relationships remain strong; hospitals and surgeons remain engaged and enthusiastic, regularly visiting the facility to test the system and provide feedback.

Contradiction Point 1

System Design and Outsourcing Impact

It involves the impact of outsourcing on the system design and development timeline, which is crucial for regulatory testing and commercialization.

Can you confirm the timeline for system build to meet regulatory and clinical standards and how the outsourcing initiative is affecting the timeline? - Joshua Jennings (TD Cowen, Research Division)

20251113-2025 Q3: The outsourcing initiative is not a restart but rather an effort to improve manufacturability and reduce costs while maintaining the technology's innovation. The company is moving towards a pre-DV2 system, which will include all features and specifications for commercialization. - Stephen From(CEO)

Is the timeline for system build to meet regulatory and clinical standards still mid-2026, and does the progress on the first control build and summer acceleration remain valid despite outsourcing components? How does outsourcing impact this timeline? - Joshua Jennings (TD Cowen, Research Division)

2025Q3: Our aim is to still meet the timeline for design freeze by the end of 2026. We're anticipating some disruptions during the outsourcing process but are committed to managing it efficiently. A consulting firm, PA Consulting, has been engaged to help with this plan, and we expect it to be completed by the end of November. - Stephen From(CEO & Director)

Contradiction Point 2

PA Consulting Engagement Duration and Cost

It involves the duration and cost of the consulting engagement with PA Consulting, which is critical for managing the outsourcing process and cash preservation efforts.

How long will the consulting engagement last, and what is the cost? How are you addressing cash preservation while achieving design freeze by year-end 2026? - Ryan Zimmerman (BTIG)

20251113-2025 Q3: PA Consulting was engaged a few weeks ago and expects to complete the analysis by the end of November. The engagement was done at a good cost with a fixed fee. - Stephen From(CEO)

What is the anticipated duration and cost of the consulting engagement; and what steps are being taken to preserve cash while achieving design freeze by year-end 2026? - Ryan Zimmerman (BTIG)

2025Q3: PA Consulting was engaged recently and their engagement is expected to be completed by the end of the month. - Stephen From(CEO & Director)

Contradiction Point 3

System Readiness and Clinical Trial Priorities

It highlights shifts in the company's focus and priorities regarding the readiness of the system for clinical trials, which could impact investor expectations and regulatory progress.

Can you confirm the timeline for system development to meet regulatory and clinical standards? How is the outsourcing impacting this timeline? - Joshua Jennings (TD Cowen)

20251113-2025 Q3: The timeline for design freeze remains towards the end of 2026. Outsourcing may cause some disruption, but efforts are being made to communicate these issues proactively to mitigate unexpected challenges. A consulting firm, PA Consulting, is assisting in the process, with the plan expected to be finalized by the end of November. - Stephen From(CEO)

What milestones should investors expect in 2025, and what's your view on the balance sheet and cash investment strategy? - Eric Anderson (TD Cohen)

2025Q2: Stephen From is assessing the company's progress before providing reliable milestones. The company is well-positioned with a system that addresses a real need. Despite market challenges, the company can see the goal line for system completion, which will enhance its market opportunity. - Stephen From(CEO)

Contradiction Point 4

Outsourcing and System Design

It involves differing statements about the purpose and impact of the outsourcing initiative, which could influence expectations regarding production and technological advancements.

Will the PDV's design remain consistent with the outsourcing initiative? - Joshua Jennings (TD Cowen)

20251113-2025 Q3: The outsourcing initiative is not a restart but rather an effort to improve manufacturability and reduce costs while maintaining the technology's innovation. The company is moving towards a pre-DV2 system, which will include all features and specifications for commercialization. - Stephen From(CEO)

What is delaying first-in-human readiness? What issues are being addressed, and how might timelines be affected? - Adam Maeder (Piper Sandler)

2025Q2: Adam Sachs explained that issues found were manageable but distract from the main goal of completing a fully integrated production equivalent system. Stephen From emphasized that a complete assessment is needed before giving any timeline guidance, as they don't want to mislead investors. - Adam Sachs(President), Stephen From(CEO)

Contradiction Point 5

Financial Strategy and Cash Management

It involves changes in financial strategy and cash management, which are critical for ensuring the company's financial stability and investor confidence.

How long will the consulting engagement take? What is the cost? How will you preserve cash while reaching design freeze by year-end 2026? - Ryan Zimmerman (BTIG)

20251113-2025 Q3: A small layoff of about 15% of employees was conducted post-fundraising. - Stephen From(CEO)

How will you ensure operational funding based on current cash and annual financial outlook? - Unidentified Analyst(BTIG)

2025Q1: The company's focus is on disciplined spending to ensure budget compliance while delivering safe and effective products. All costs are reviewed for efficiency, and the company is strategically evaluating financing options, including supportive insiders and potential new investors. The upcoming milestones are expected to facilitate financing. There is optimism regarding the company's ability to finance itself. - Sarah Romano(CFO)