CapsoVision, Inc. Q2 FY2026 earnings call

• Commercial Adoption & Customer Growth

  • Delivered 10% year-over-year total revenue growth in Q2 2026, with 13% year-over-year growth in CapsuleCam Plus unit shipments
  • As of June 30 2026, over 176,000 patients worldwide have been imaged with CapsuleCam Plus, representing 23% year-over-year growth
  • Secured key customer renewals with major U.S. medical centers, becoming the top used capsule in Washington state hospitals, and expanded adoption across large gastroenterology networks and hospital systems
  • U.S. direct sales organization remains stable at 26 representatives supported by 7 regional sales managers and trainers; international expansion continues via direct sales and distributor partnerships, including a dedicated commercial team in Germany

• Product & Regulatory Milestones

  • Completed the commercial launch of AI Highlights, an AI-assisted clinical workflow tool, in the European Union and other international markets
  • Gained EU MDR regulatory clearance for CapsuleVue software and CapsuleCloud with AI analysis tools, classified as Class 2A medical devices that provide the regulatory foundation for international AI Highlights rollout
  • AI Highlights is fully integrated across CapsoVision's existing software ecosystem (CapsuleVue and CapsuleCloud), designed to streamline physician review by automatically flagging suspected pathology frames
  • Submitted AI Highlights for FDA clearance via the 510(k) pathway in December 2025; the FDA requested additional demographic data for the supporting clinical dataset, which the company is addressing
  • Development of CapsuleCam Colon (second-generation colon capsule endoscopy platform) is progressing; FDA submission is now planned for Q4 2026, a one-quarter delay to add more diverse patient subjects per FDA guidance
  • The Capsocan UGI clinical study for pancreatic cancer detection continues to enroll patients as planned, in early-stage clinical development

• Financial Position

  • Ended Q2 2026 with $9.1 million in cash and cash equivalents
  • Raised $14 million in gross proceeds via a private placement in Q1 2026, and recently established a $100 million at-the-market (ATM) equity offering program with Cantor Fitzgerald for opportunistic capital access

CapsoVision operates a single core product segment centered on its CapsuleCam Plus capsule endoscopy platform, with additional pipeline products in clinical and pre-commercial development. For Q2 2026, total company revenue was $3.6 million, representing 10% year-over-year growth from $3.3 million in Q2 2025. All revenue was derived from CapsuleCam Plus product and related services: 8,845 CapsuleCam Plus capsules were shipped in the quarter, a 13% year-over-year increase from 7,856 units shipped in Q2 2025. Gross profit for the quarter was $1.9 million, up from $1.8 million in the prior year period, with a gross margin of 51% (down from 55% in Q2 2025). Operating expenses totaled $9.5 million, up from $6.5 million in Q2 2025.

• Management expects full-year 2026 second half revenue to be higher than first half revenue, supported by expanding CapsuleCam Plus adoption, international AI Highlights availability, and the expected U.S. commercial launch of AI Highlights following FDA clearance
  • The fourth quarter of 2026 is expected to be stronger than the third quarter of 2026, in line with historical business seasonality
  • The company expects to obtain FDA clearance for AI Highlights by the end of Q3 2026, with U.S. commercial launch to follow shortly after clearance
  • FDA submission for the CapsuleCam Colon second-generation platform is now guided for Q4 2026, revised from the prior expected Q3 2026 submission
  • The company will continue to invest in clinical and product development for its long-term pipeline, including CapsuleCam Colon and pancreatic cancer detection applications

• Pricing pressure from competitors has pressured gross margins in Q2 2026, and competitive pressure may continue to impact pricing and margins in future quarters
  • Higher inbound customs and tariff expenses from recent changes to U.S. trade policies also reduced gross margins in Q2 2026
  • FDA clearance timing and outcome for AI Highlights and CapsuleCam Colon is not guaranteed, as regulatory review is outside of the company's control, which could delay product launches
  • The Capsocan UGI pancreatic cancer detection program is in early-stage clinical development, and there is risk that it will not yield positive results or reach commercialization
  • The company relies on capital market access to fund ongoing investment in product development and commercial expansion; unfavorable market conditions could limit the company's ability to raise additional capital

Q: What is the source of Q2 2026 pricing pressure, and are tariff impacts on inbound or outbound costs? Would Q4 2026 be stronger than Q3 2026, per historical trends? / A: Pricing pressure stems primarily from competition with one key existing competitor in the capsule endoscopy space. Tariff impacts are limited to inbound raw material and product costs. Management confirms Q4 2026 will be stronger than Q3 2026, consistent with the company's historical seasonality, which supports the expectation that full-year 2026 second half revenue will exceed first half revenue. Management added that launching AI Highlights in the U.S. will increase the value of the company's offering to help offset pricing pressure and support margins.

Q: What early customer feedback has CapsoVision received on the newly launched AI Highlights in EU/international markets, and what is the strategic value of this international pre-U.S. launch? / A: The international launch is intended to build real-world clinical experience with the AI tool integrated into CapsoVision's full platform, ahead of the U.S. launch. Management notes that AI Highlights is a key driver of adoption overall, as it reduces the time physicians spend reviewing capsule endoscopy studies, allowing them to complete more procedures. It also creates a competitive differentiator against rivals that lack an integrated AI offering, which is expected to open new customer doors in international markets and prepare the company for a strong U.S. launch.

Q: What key items remain to be addressed before the Q4 2026 FDA submission for CapsuleCam Colon, and what are the plans for the size of the sales force going forward? / A: The only key regulatory item outstanding for AI Highlights (related to FDA feedback) is completing the requested demographic analysis of the clinical dataset; no FDA outcome can be guaranteed, as regulatory approval is outside the company's control. For the sales force, the company will expand gradually in territories where it makes strategic sense, but can currently leverage its existing 26 U.S. representatives to sell both existing small bowel products and future colon products to the same customer base, so no immediate large expansion is needed.