Stifel 2026 Healthcare Conference - PULMONX CORP

Explicit Guidance:

• No explicit financial guidance (revenue, earnings, margins, or cash flow) or specific forward-looking numerical targets provided in the transcript.
• Management states an expectation to deliver double-digit growth in international markets (specifically ex-China Europe) in 2025, following 15% growth in 2024 and 9% growth in the current quarter.
• Anticipated revenue recognition timelines for new products: Aracel (AeroSeal) revenue expected to begin at the end of next year (post-2025) in non-US markets, with meaningful revenue contribution anticipated in 2028; US commercialization targeted for late 2029 following FDA approval.

Business-Segment Outlook:

• International (Europe ex-China): Expected to maintain double-digit growth trajectory in 2025, driven by focused execution on patient throughput and same-store sales rather than new account acquisition.
• US Market: Outlook centered on accelerating growth after a bottom-out in previous quarters; strategy shifts from 30 sales imperatives to four key focus areas (account efficiency, patient identification, and best practices) to drive double-digit growth.
• Sales Force & Territories: Sales force growth described as "slow" and "opportunistic." Current 44 territories may increase as territories are split to support higher-performing junior reps, targeting a 5% annual territory growth rate when revenue potential justifies splitting high-value ($3M+) or geographically massive accounts.
• Account Penetration: Currently operating at ~10% penetration of the treatable addressable market (approx. 400+ accounts); potential cap identified around 600 accounts, with growth driven by expanding patient volume within existing accounts rather than doubling the account count.

Market and Competitive Outlook:

• TAM Expansion: Introduction of Aracel (AeroSeal) expected to expand the Total Addressable Market (TAM) by approximately 20% by converting patients previously ineligible for valve therapy due to collateral ventilation.
• Treatment Volume: Projected to perform 10x more valve procedures this year than the total annual volume of historical Lung Volume Reduction Surgery (LVRS), leveraging a less invasive, bronchoscopic approach suitable for patients too frail for surgery.
• Patient Identification: Focus on "low-hanging fruit" (patients with trapped gas/emphysema) via pulmonary function labs and quantitative CT analysis (Strat-X) to ensure high success rates (80% green light) and reduce patient disappointment rates (20% failure rate without AeroSeal).

Macro / Industry Outlook:

• Regulatory Timeline: Anticipates enrollment completion for the CONVERT-2 IDE trial in Europe and Australia by the end of next year; commercial rollout in CE-mark markets follows immediately.
• FDA Process: US regulatory path estimated to take roughly two years post-trial follow-up for CONVER-2, leading to a potential FDA clearance in late 2029.
• Industry Dynamics: Shift from traditional high-risk surgical candidates to broader COPD/emphysema populations capable of withstanding minor bronchoscopic procedures.

Strategic Initiatives:

• Product Commercialization (International): Commencing commercialization of Aracel in European and Australian markets immediately following trial enrollment completion (early next year), with revenue ramp-up starting end of next year.
• Product Commercialization (US): Full US launch of Aracel targeted for late 2029, contingent on FDA approval.
• Operational Restructuring: Implementation of a proctoring-based training model (virtual expert + onsite support) to shorten physician ramp-up time from 6–12 months to significantly less, aiming to onboard physicians capable of treating 5+ patients faster.
• Acquisition Integration: Leveraging acquired AeroSeal technology (from AERIS) to address collateral ventilation; initial study shows 75% success rate in sealing fissures, thereby converting treatable candidates for valve therapy.
• Sales Efficiency: Reduction of operational focus from 30 imperatives to 4 core strategic pillars to improve ROI and organizational efficiency.

Risks and Headwinds to Outlook:

• Regulatory Uncertainty: Delays in the FDA process for Aracel could push US commercialization beyond the late 2029 target.
• Physician Adoption: Dependence on successful physician training and proctoring to ensure procedural volume; historically, new accounts struggled to transition from training to consistent patient treatment.
• Market Penetration Ceiling: Account growth is viewed as "opportunistic" with a theoretical cap (~600 accounts), requiring intense focus on same-store sales expansion rather than net new account acquisition.
• Execution Risk: Reliance on splitting territories and hiring junior reps requires accurate assessment of individual rep readiness and geographic business potential.

Management Tone on the Future:

• Confidence Level: High confidence in the "back to basics" strategy, citing a clear trajectory from "bottoming out" to double-digit growth.
• Operational Clarity: Emphasis on a "very simple execution play" involving filling seats, accelerating training, and driving patient volume through existing centers.
• Strategic Shift: Clear pivot away from chasing new accounts toward maximizing utilization of the current ~400-account base and leveraging new technology (Aracel) to unlock latent demand.

Miscellaneous:

• Historical Context: International business grew 15% in 2024 and expects similar growth in 2025; US sales growth returned to positive territory (+7%) after consecutive quarters of slowing growth.
• Technology Differentiation: Emphasis on Strat-X software for pre-procedure fissure completeness calculation and Chartus catheter for in-procedure collateral ventilation measurement to ensure patient selection accuracy.