FOCL

Corporate Strategic Update

• FocalTherics (formerly EDAP) completed its transition to a pure-play, high-growth focal therapy company, becoming a U.S. domestic filer reporting in U.S. dollars, and reclassified noncore ESWL and distribution businesses as discontinued operations to improve financial reporting clarity.
• The company expects to close an underwritten public equity offering in August 2026 with $40 million in gross proceeds, leaving it fully capitalized to execute its strategic growth priorities.

Commercial HIFU Performance

• The company recorded 13 global Focal One capital system sales in Q2 2026, a 44% year-over-year increase, making this the best second quarter for capital sales in company history. Total worldwide installed base reached 184 systems, with 96 in the U.S. and 88 internationally.
• In the U.S., 8 capital systems were sold, including 4 additional purchases from existing hospital networks (Cleveland Clinic now has 6 global systems, Kaiser Permanente added a second system in San Diego). There are now 15 U.S. hospital networks with 2 or more Focal One systems.
• Internationally, 5 capital systems were sold across Europe, India, and Latin America, including a conversion from a competing HIFU technology at Imperial College London and a new sale in France following the announcement of national universal coverage for HIFU. India added 2 new systems.
• U.S. Focal One procedure volumes increased 47% year-over-year, demonstrating strong sustained utilization and durable recurring revenue growth from the installed base.

Clinical, Regulatory, and Reimbursement Progress

• In July 2026, the company submitted a 510(k) application to the FDA for FocalConnect, its proprietary remote connectivity technology that enables remote maintenance, proctoring, and real-time cross-site surgical collaboration.
• CMS has proposed a 12% increase in 2027 HIFU facility payment compared to 2026 rates, which would mark the fifth consecutive annual HIFU payment increase, creating a clear reimbursement pathway for hospital investments.
• The BPH clinical program is progressing, with 14 patients treated to date in an ongoing Latin American study. U.S. IRB approval has been obtained at the Icahn School of Medicine at Mount Sinai, with the first U.S. BPH patients planned for treatment in late 2026.
• The first commercial endometriosis program in Europe has launched at Toulouse University Hospital, with more than 10 additional hospitals across Europe, the U.K., and Latin America currently in clinical training. Endometriosis already has CE marking for Focal One.
• The combined total addressable market across prostate cancer, BPH, and endometriosis is estimated at over 4.3 million annual procedures and more than $10 billion in potential annual revenue.

• Management reiterates its full year 2026 guidance for core continuing HIFU segment revenue to be in the range of $50 million to $54 million.
• Long-term, management targets reaching 60% gross margin for the HIFU segment, with R&D and SG&A as a percentage of revenue expected to decline gradually as top-line revenue grows.
• The $40 million equity offering will be used to fund three key growth areas: accelerated commercial expansion, development of new BPH and endometriosis indications, and accelerated development of the company's new histotripsy platform technology.

Core continuing HIFU segment: Revenue for Q2 2026 was $13.2 million, representing 39% year-over-year growth from $9.5 million in Q2 2025. Gross margin for the HIFU segment was 55.6%, up 450 basis points from 51.1% in the prior-year period. HIFU segment revenue accounts for 70.2% of total company revenue in Q2 2026.

Discontinued noncore ESWL and Distribution segment: Total revenue for Q2 2026 was $5.6 million, a 34% year-over-year decline from $8.5 million in Q2 2025. Gross margin was 36.4%, up from 32.9% in the prior-year period. Operating expenses were $2 million, down from $2.7 million in Q2 2025. Operating income was $21,000, down from $76,000 in the prior-year period. Net loss for the segment was $75,000, compared to a net loss of $51,000 in Q2 2025. This segment accounts for 29.8% of total company revenue in Q2 2026.

• Noncash fair value changes for European Investment Bank warrants have reduced shareholder equity, resulting in a negative $3.2 million shareholder equity balance as of the end of Q2 2026, though the upcoming equity offering is expected to meaningfully improve this position in Q3 2026.
• Tariffs impacted Q2 2026 results by approximately $500,000.
• Unfavorable foreign exchange rate movements increased the net loss in Q2 2026 by $400,000 compared to the prior-year period.
• All forward-looking statements related to revenue growth, new indication launches, clinical trial results, regulatory approvals, and margin improvement are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, as detailed in the company's SEC filings.

Q: What does a mature Focal One account look like, and are second system purchases today for additional prostate cancer throughput or for new indications? / A: The company has 300 qualified active pipeline opportunities for future system sales. Currently, 15 U.S. hospital networks already hold 2 or more systems, with additional purchases typically to expand capacity across new hospital sites within the network, such as Cleveland Clinic's 6 global systems. Today, all utilization is anchored in the core prostate cancer indication; BPH and endometriosis will contribute incrementally over time and are not yet material to sales. This is expected to change as the new indications gain regulatory and market adoption.

Q: How will the $40 million equity offering be allocated to commercial expansion, R&D for new indications, and new technology development, and how should investors model future spending growth? / A: The offering will fund three core buckets: accelerated commercial growth (including targeted sales and marketing investments), clinical and commercial development for BPH and endometriosis new indications, and accelerated development of the new histotripsy technology. As HIFU revenue grows, R&D and SG&A as a percentage of revenue will decline gradually each year. No large increases in headcount are needed for BPH, as it targets the same existing urology teams and hospital sites that already use Focal One for prostate cancer.

Q: What factors drove the recent improvement in HIFU gross margin, and what is needed to hit the long-term 60% gross margin target? / A: Gross margin improved to 55.6% in Q2 2026 from 48% at the end of 2025 due to three core factors: a disciplined global pricing strategy for the new Focal One i system, lower bill of materials costs from improved sourcing and production efficiencies, and higher factory absorption from increased system demand. Continued BOM cost reductions and growing procedure/consumables volume (which carries high margins) will drive further improvement. The fifth consecutive annual CMS reimbursement increase will also support ongoing margin gains.

Q: What is the timeline and market opportunity for endometriosis, and what is the U.S. regulatory strategy? / A: Currently 11 centers are going through the training process for endometriosis in CE-marked European countries, and three Q1 2026 system sales were already to hospitals planning to treat both endometriosis and prostate cancer. Revenue contribution from endometriosis will be negligible in the next few quarters and is expected to start ramping meaningfully in 2027. In the U.S., Focal One already holds Breakthrough Device Designation for endometriosis; the randomized controlled trial manuscript is expected to be published in a top-tier journal later this year, which will support upcoming FDA discussions for U.S. indication clearance.