EDAP

Corporate Strategic Update

• Focal Therix completed its rebranding from EDAP, transitioning to a pure-play, high-growth focal therapy company. The firm became a U.S. domestic filer and now reports financials in U.S. dollars, and reclassified non-core ESWL distribution businesses as discontinued operations to improve reporting clarity for investors.
• An underwritten public equity offering expected to close August 14, 2026 will generate $40 million in gross proceeds, leaving the company fully capitalized to execute its growth strategy.

Commercial HIFU Performance

• The company recorded 13 Focal One capital system sales in Q2 2026, a 44% year-over-year increase, marking the best second quarter for global system sales on record. Total worldwide install base reached 184 systems (96 in the U.S., 88 international).
• Eight U.S. system sales were recorded, including two lease conversions at top NCI-designated cancer centers, and four existing hospital networks purchased additional systems (including a fourth system at Cleveland Clinic's U.S. network and a second system at Kaiser Permanente San Diego). 15 U.S. hospital networks now hold two or more Focal One systems.
• Five international system sales were recorded across Europe, India, and Latin America, including a conversion from a competing HIFU platform at Imperial College London, a new sale in France following national reimbursement approval, and two sales in India.
• U.S. Focal One procedure volumes grew 47% year-over-year, demonstrating sustained recurring revenue growth from the expanding install base.

Clinical, Regulatory and Reimbursement Progress

• A 510(k) application for Focal Connect, the company's proprietary remote connectivity platform for remote maintenance, proctoring, and surgeon training, was submitted to the FDA in July 2026.
• CMS has proposed a 12% increase in 2027 HIFU facility payments, which would mark the fifth consecutive annual CMS payment increase for Focal One robotic HIFU, creating a predictable reimbursement pathway for hospital investments.
• The company's BPH clinical program has treated 14 patients in an ongoing Latin American study, with U.S. patient enrollment at Icahn School of Medicine at Mount Sinai planned to start in late 2026. BPH will leverage the existing urologist install base and trained provider network upon approval.
• The first commercial endometriosis program in Europe launched at Toulouse University Hospital, with more than 10 additional hospitals across Europe, the UK, and Latin America in the clinical training pathway. The indication already holds CE marking, and the company estimates the combined total addressable market across prostate cancer, BPH, and endometriosis exceeds $10 billion in potential annual revenue.

• Management reaffirmed its full-year 2026 guidance for core continuing HIFU segment revenue, confirming no upward or downward revision from prior guidance ranges. • Management expects R&D and SG&A as a percentage of core HIFU revenue will decline gradually each year as top-line growth scales, with SG&A seeing more substantial percentage declines as the business matures. • Endometriosis revenue contribution is expected to remain immaterial through the remainder of 2026, with meaningful contributions to top-line growth projected to begin in 2027. • The Histotripsy technology development program is targeting a 1-2 year development horizon, with key near-term milestones already in progress.

Continuing Operations (Core HIFU Segment): Q2 2026 revenue was $13.2 million, representing 39% year-over-year growth from $9.5 million in Q2 2025. Gross margin was 55.6%, up 440 basis points from 51.1% in the prior year period. Operating expenses totaled $15.4 million in Q2 2026, up from $11.5 million in Q2 2025. This segment contributes 100% of the company's continuing operations revenue, aligned with the firm's strategic focus on focal therapy.

Discontinued Operations (Non-core ESWL and Distribution Segments): Q2 2026 total revenue was $5.6 million, a 34% year-over-year decline from $8.5 million in Q2 2025, driven by ongoing termination of distribution agreements. Gross margin was 36.4% in Q2 2026, up from 32.9% in the prior year period. Operating expenses were $2 million, down from $2.7 million in Q2 2025 as the company shifts investment to the core HIFU business. Operating income was $21,000 in Q2 2026, down from $76,000 in Q2 2025, and net loss for the segment was $75,000 compared to a $51,000 net loss in Q2 2025. Ending inventory for discontinued operations was $4.5 million at quarter-end, down from $5.1 million at the end of 2025.

• Management noted that forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, with detailed risk factors available in the company's SEC filings, including the 2025 Form 10-K. • The company has reported negative shareholder equity of -$3.2 million as of Q2 2026, driven by recurring operating losses and non-cash fair value changes on European Investment Bank warrants, though the upcoming $40 million equity offering is expected to meaningfully improve shareholder equity in Q3 2026. • Q2 2026 results included a $400,000 unfavorable impact from foreign exchange rate movements, and a $500,000 negative impact from tariffs on the quarter's financial performance. • New indications BPH and endometriosis are still in early commercial and clinical stages, with regulatory approval timelines and commercial adoption rates uncertain, particularly for endometriosis in the U.S. market.

Q: An analyst asked what drives incremental second system purchases at existing hospital networks, whether they are for existing prostate cancer throughput or early adoption of new indications, and how a mature system placement program looks structurally. / A: Management noted that the 300-system qualified pipeline only represents a fraction of the company's total addressable market. All incremental system sales this quarter were driven by growing prostate cancer demand to meet higher patient throughput; BPH and endometriosis are not yet material drivers of additional capital purchases, though they will become more important for sales growth over time as the new indications launch.

Q: An analyst asked how the $40 million equity offering will be allocated, and how much additional spending should be expected for sales resources and R&D to support multi-indication expansion and 40% annual growth. / A: The offering proceeds are split into three core buckets: accelerated commercial expansion (sales and marketing for core HIFU), investment in new indications (BPH and endometriosis clinical and commercial development), and accelerated development of the new histotripsy technology platform. Management expects R&D and SG&A as a percent of revenue will decline gradually as revenue scales; BPH will leverage existing urology sales and clinical teams, so no material additional headcount is needed for that indication's launch.

Q: An analyst asked what factors drove the Q2 2026 gross margin improvement, and what is needed to hit the long-term 60% gross margin target. / A: Improvement came from three factors: disciplined global pricing implemented after the Focal One system refresh at the end of 2025, reduced system material costs, and improved factory absorption from higher system demand, plus stronger growth from higher-margin consumables. To reach 60% gross margin, management will continue focusing on additional cost reductions, and growing procedure volumes (which carry high incremental margin) will continue to drive overall margin expansion. The proposed 12% CMS reimbursement increase also supports future margin improvement.

Q: An analyst asked for a timeline and importance of the HIFUSA clinical study readout, and what to expect for early endometriosis revenue in Europe and U.S. regulatory progress. / A: HIFUSA study patient treatment is complete, and readout and publication are expected by the end of 2026 or early 2027; the study of focal therapy for active surveillance patients is highly anticipated and management expects it will support the value proposition for Focal One. 11 European centers are currently in endometriosis training, and 3 Q1 2026 system sales already reflected endometriosis capability, but revenue contribution will be small until 2027. In the U.S., Focal One already holds Breakthrough Device Designation for endometriosis, and the randomized trial manuscript is expected to be published in a top-tier journal later this year to support FDA interactions.