Profound Medical Corp. (NASDAQ:PROF; TSX:PRN) (“Profound” or the “Company”), a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue, today reported financial results for the third quarter ended September 30, 2023. Unless specified otherwise, all amounts in this press release are expressed in U.S. dollars and are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board applicable to the preparation of interim condensed consolidated financial statements, including International Accounting Standards 34, Interim Financial Reporting.

“As we have continued to prioritize our TULSA-PRO® commercial activities in the United States over sales of capital equipment in international markets the resulting strong recurring revenue trend, which correlates directly with the number of patients treated with TULSA, continued with a 40% increase compared to Q3-2022, marking the sixth consecutive quarter of recurring revenue growth,” said Arun Menawat, Profound’s CEO and Chairman. “Receiving the U.S. Food and Drug Administration’s 510 (k) clearance of our TULSA AI Thermal Boost module was another key highlight of the quarter. This software module, which enables surgeons to temporarily increase the ablation target temperature to increase the likelihood of ablating aggressive cancer cells, has already been used by several TULSA-PRO® sites, and the feedback has been very positive.”

Summary Third Quarter 2023 Results

For the quarter ended September 30, 2023, the Company recorded revenue of approximately $1.7 million, with the full amount coming from recurring revenue, which consists of the sale of TULSA-PRO® consumables, lease of medical devices, procedures and services associated with extended warranties. This compares to revenue of approximately $2.0 million in the same three-month period a year ago, which included $1.2 million in recurring revenue and $800,000 from the one-time sale of capital equipment in international markets.

Total operating expenses, which consist of research and development (“R&D”), general and administrative (“G&A”), and selling and distribution (“S&D”) expenses, were approximately $7.6 million in the third quarter of 2023, a 18% decrease from approximately $9.3 million in the third quarter of 2022.

Expenditures for R&D for the three months ended September 30, 2023 were approximately $3.4 million, a decrease of 28% compared with approximately $4.7 million in the three months ended September 30, 2022, primarily due to: lower headcount and reimbursement of workforce costs associated with a research project; a decrease in share based compensation due to fewer awards granted for employees; decreases in materials costs due the conclusion of engineering expenses; lower other expenses because of lower office supplies purchased; lower travel expenses as less time was required on site for maintenance and repairs; and a decrease in amortization expense due to intangible assets associated with the Sonalleve® brand and technology being fully amortized. Partially offsetting these amounts was an increase in clinical trial costs associated with the CAPTAIN trial treatments and recruitment efforts; an increase in consulting fees due to regulatory consultants being utilized to assist with regulatory approvals in various countries.

G&A expenses for the 2023 third quarter decreased by 15% to approximately $2.0 million, compared with approximately $2.4 million in the same period in 2022, due primarily to lower share based compensation, software and other expenses due to fewer awards granted for employees, decreased license costs for the enterprise resource planning and customer relationship management software, and lower office supplies purchased. These were partially offset by an increase in consulting fees due to additional legal costs.

Third quarter 2023 S&D expenses were approximately $2.2 million, down less than 1% from the third quarter of 2022.

Net finance income for the three months ended September 30, 2023 was approximately $1.0 million, compared with approximately $3.3 million in the three months ended September 30, 2022.

Third quarter 2023 net loss was approximately $5.6 million, or $0.26 per common share, compared to approximately $5.0 million, or $0.24 per common share, in the three months ended September 30, 2022.

Liquidity and Outstanding Share Capital

As at September 30, 2023, Profound had cash of approximately $33.6 million.

As at November 2, 2023, Profound had 21,365,733 common shares issued and outstanding.

For complete financial results, please see Profound’s filings at www.sedarplus.ca, www.sec.gov and on the Company’s website at www.profoundmedical.com under “Financial” in the Investors section.

Conference Call Details

Profound Medical is pleased to invite all interested parties to participate in a conference call today at 4:30 pm ET during which time the results will be discussed.

To participate in the conference call by telephone, please pre-register via this link to receive the dial-in number and your unique PIN.

The call will also be broadcast live and archived on the Company's website at www.profoundmedical.com under "Webcasts" in the Investors section.

About Profound Medical Corp.

Profound is a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue.

Profound is commercializing TULSA-PRO®, a technology that combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop temperature feedback control. TULSA-PRO® is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum to help preserve the patient’s natural functional abilities. TULSA-PRO® has the potential to be a flexible technology in customizable prostate ablation, including intermediate stage cancer, localized radio-recurrent cancer, retention and hematuria palliation in locally advanced prostate cancer, and the transition zone in large volume benign prostatic hyperplasia (“BPH”). TULSA-PRO® is CE marked, Health Canada approved, and 510(k) cleared by the U.S. Food and Drug Administration (“FDA”).

Profound is also commercializing Sonalleve®, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sonalleve® has also been approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids and has FDA approval under a Humanitarian Device Exemption for the treatment of osteoid osteoma. The Company is in the early stages of exploring additional potential treatment markets for Sonalleve® where the technology has been shown to have clinical application, such as non-invasive ablation of abdominal cancers and hyperthermia for cancer therapy.

Forward-Looking Statements

This release includes forward-looking statements regarding Profound and its business which may include, but is not limited to, the expectations regarding the efficacy of Profound’s technology in the treatment of prostate cancer, BPH, uterine fibroids, palliative pain treatment and osteoid osteoma. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of Profound. The forward-looking events and circumstances discussed in this release, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the Company, including risks regarding the medical device industry, regulatory approvals, reimbursement, economic factors, the equity markets generally and risks associated with growth and competition. Although Profound has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it will have on Profound’s operations, the demand for its products, global supply chains and economic activity in general. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law.

For further information, please contact:

Stephen KilmerInvestor Relationsskilmer@profoundmedical.com T: 647.872.4849

Profound Medical Corp.Interim Condensed Consolidated Balance Sheets(Unaudited)

    September 30,2023$     December 31, 2022$  
         
Assets        
         
Current assets        
Cash   33,625     46,517  
Trade and other receivables   6,619     6,344  
Inventory   7,425     7,941  
Prepaid expenses and deposits   648     1,222  
Total current assets   48,317     62,024  
         
Property and equipment   940     899  
Intangible assets   530     680  
Right-of-use assets   657     818  
         
Total assets   50,444     64,421  
         
Liabilities        
         
Current liabilities        
Accounts payable and accrued liabilities   2,016     2,091  
Deferred revenue   673     471  
Long-term debt   1,905     523  
Derivative financial instrument   -     563  
Lease liabilities   250     239  
Income taxes payable   343     298  
Total current liabilities   5,187     4,185  
         
Long-term debt   5,341     6,651  
Deferred revenue   727     764  
Lease liabilities   629     817  
         
Total liabilities   11,884     12,417  
         
Shareholders’ Equity        
         
Share capital   212,608     205,825  
Contributed surplus   18,386     18,704  
Accumulated other comprehensive income   16,588     16,837  
Deficit   (209,022 )   (189,362 )
         
Total Shareholders’ Equity   38,560     52,004  
         
Total Liabilities and Shareholders’ Equity   50,444     64,421  

Profound Medical Corp.Interim Condensed Consolidated Statements of Loss and Comprehensive Loss(Unaudited)

  Three months endedSeptember 30,2023$   Three months endedSeptember 30,2022$   Nine months endedSeptember 30,2023$   Nine months endedSeptember 30,2022$  
         
Revenue        
Recurring - non-capital 1,728   1,235   4,797   3,420  
Capital equipment -   800   393   2,004  
  1,728   2,035   5,190   5,424  
Cost of sales 668   945   1,867   2,962  
Gross profit 1,060   1,090   3,323   2,462  
         
Operating expenses        
Research and development 3,415   4,733   10,410   11,601  
General and administrative 2,024   2,393   6,210   7,371  
Selling and distribution 2,181   2,198   6,537   6,794  
Total operating expenses 7,620   9,324   23,157   25,766  
         
Operating loss 6,560   8,234   19,834   23,304  
         
Net finance income (1,014 ) (3,271 ) (275 ) (4,243 )
         
Loss before taxes 5,546   4,963   19,559   19,061  
         
Income taxes 18   34   101   81  
         
Net loss attributed to shareholders for the period 5,564   4,997   19,660   19,142  
         
Other comprehensive (income) loss        
Item that may be reclassified to loss        
Foreign currency translation adjustment- net of tax (3,915 ) 11,103   249   14,992  
Net loss and comprehensive loss/(income) for the period 1,649   (6,106 ) 19,909   4,150  
         
Loss per share        
Basic and diluted loss per common share 0.26   0.24   0.93   0.92  

Profound Medical Corp.Interim Condensed Consolidated Statements of Cash Flows(Unaudited)

  Nine months endedSeptember 30,2023$   Nine months endedSeptember 30,2022$  
     
Operating activities    
Net loss for the period (19,660 ) (19,142 )
Adjustments to reconcile net loss to net cash flows from operating activities:    
Depreciation of property and equipment 532   520  
Amortization of intangible assets 152   654  
Depreciation of right-of-use assets 163   174  
Share-based compensation 2,510   3,673  
Interest and accretion expense 582   46  
Deferred revenue 163   13  
Change in fair value of derivative financial instrument 232   (145 )
Interest income on trade and other receivables (119 ) (251 )
Changes in non-cash working capital balances    
Trade and other receivables (155 ) (1,235 )
Prepaid expenses and deposits 574   654  
Inventory (54 ) (1,294 )
Accounts payable and accrued liabilities 165   (501 )
Income taxes payable 45   -  
Foreign exchange on cash (410 ) (2,348 )
Net cash flow used in operating activities (15,280 ) (19,182 )
     
Financing activities    
Payment of long-term debt interest (489 ) -  
Proceeds from share options exercised 241   263  
Proceeds from warrants exercised 2,423   -  
Payment of lease liabilities (220 ) (240 )
Total cash from financing activities 1,955   23  
     
Net change in cash during the period (13,325 ) (19,159 )
Foreign exchange on cash 433   (1,785 )
Cash – Beginning of period 46,517   67,152  
Cash – End of period 33,625   46,208  
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