Earnings call transcript: Pulmonx reports Q2 2025 revenue beat, stock gains

Pulmonx Corp reported its Q2 2025 earnings, revealing a net loss of $0.38 per share, slightly better than the forecasted loss of $0.40. The company recorded revenue of $23.9 million, surpassing expectations of $23.47 million. Following the announcement, Pulmonx’s stock price increased by 1.94%, closing at $3.09. According to InvestingPro analysis, the company’s current valuation suggests it may be undervalued, despite experiencing a significant 16.7% decline over the past week.

Key Takeaways

• Pulmonx’s revenue exceeded expectations, growing 15% year-over-year.
• The company’s stock rose nearly 2% in after-hours trading.
• Pulmonx revised its 2025 revenue guidance to $90-92 million, indicating 7-10% growth.
• Strong international performance with a 32% increase in revenue.

Company Performance

Pulmonx demonstrated robust performance in Q2 2025, with total revenue increasing by 15% year-over-year. The company saw significant growth in its international markets, where revenue surged by 32%. In the U.S., revenue grew by 6%, contributing to the overall strong performance. Pulmonx continues to expand its product offerings and market reach, reinforcing its position as a leader in pulmonary health solutions.

Financial Highlights

• Revenue: $23.9 million, a 15% increase year-over-year.
• U.S. Revenue: $14.7 million, up 6% year-over-year.
• International Revenue: $9.1 million, up 32% year-over-year.
• Net Loss: $15.2 million or $0.38 per share.
• Gross Margin: 72%
• Cash Position: $84.2 million

Earnings vs. Forecast

Pulmonx reported an earnings per share (EPS) of -$0.38, slightly better than the forecasted -$0.40, representing a 5% positive surprise. The revenue of $23.9 million exceeded the forecast of $23.47 million by 1.66%. This performance marks a continuation of the company’s trend of meeting or slightly exceeding market expectations.

Market Reaction

Following the earnings release, Pulmonx’s stock price increased by 1.94% in after-hours trading, closing at $3.09. This positive movement reflects investor confidence in the company’s financial performance and future prospects. While the stock remains below its 52-week high of $9.37 but above its 52-week low of $2.50, analyst targets range from $6 to $17, suggesting significant potential upside. InvestingPro subscribers can access detailed Fair Value analysis and comprehensive financial health scores to make more informed investment decisions.

Outlook & Guidance

Pulmonx has revised its 2025 revenue guidance to a range of $90-92 million, representing a 7-10% growth over the previous year. The company anticipates U.S. revenue to account for two-thirds of the total in the second half of the year. Pulmonx is also investing in its "acquire, test, and treat" strategy to drive future growth.

Executive Commentary

Steve Williamson, CEO of Pulmonx, highlighted the company’s strong international performance and growth potential. "We’re delivering strong international performance, expanding our reach and laying the foundation for long-term sustainable growth," he stated. Williamson also emphasized the potential upside of the company’s initiatives, saying, "This is not a question of if, but when, and we believe the work we’re doing now sets us up to unlock meaningful value over time."

Risks and Challenges

• Slower ramp-up of U.S. initiatives could impact future growth.
• Capacity constraints from increased cancer screenings may pose operational challenges.
• Market competition and reimbursement changes could affect profitability.
• Economic uncertainties and supply chain disruptions may pose risks.
• Potential delays in product trials and regulatory approvals.

Q&A

During the earnings call, analysts inquired about the slower ramp-up of U.S. initiatives and the impact of capacity constraints from cancer screenings. Executives addressed these concerns, emphasizing the potential for ecosystem expansion and the record levels of Stratix scanning in June and July.

Full transcript - Pulmonx Corp (LUNG) Q2 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by, and welcome to Pulmonic’s Second Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to Jeremy Feffer of LifeSci Advisors Investor Relations.

Please go ahead.

Jeremy Feffer, Investor Relations, LifeSci Advisors, LifeSci Advisors: Good afternoon, and thank you all for participating in today’s call. Joining me from Palmonix this afternoon are Steve Williamson, President and Chief Executive Officer and Mehul Joshi, Chief Financial Officer. Earlier today, Palmonix issued a press release announcing its financial results for the second quarter ended 06/30/2025. A copy of the press release is available on Palmonix’s website. Before we begin, I would like to remind you that management will make statements during this call that include forward looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward looking statements. All forward looking statements, including without limitation, those relating to the company’s operating trends, commercial strategies and future financial performance, the timing and results of clinical trials, expense management, market opportunity, guidance for revenue, gross margin and operating expenses, commercial expansion and product demand, adoption and pipeline development are based on our current estimates and various assumptions. Forward looking statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of Pulmonics’ filings with the Securities and Exchange Commission, including the company’s annual report on Form 10 Q filed with the SEC on 05/02/2025.

Also during this call, management will discuss certain non GAAP financial measures. Reconciliations of these non GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on Pulmonics’ Investor Relations website. These non GAAP measures are not intended to be a substitute for the company’s GAAP results. This conference call contains time sensitive information and is accurate only as of the live broadcast today, 07/30/2025. Pulmonics disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information, future events or otherwise.

Now I’ll turn the call over to Steve.

Steve Williamson, President and Chief Executive Officer, Pulmonics: Thank you, Jeremy. Good afternoon, everyone, and thank you for joining us today. We’re pleased to report second quarter twenty twenty five revenue of $23,900,000 Our international business excelled delivering 9,100,000 in revenue well above expectations and a testament to the strength of our global footprint. Growth was robust across all key regions reinforcing our conviction that the foundational investments we’ve made internationally, particularly in education, market development and pathway creation are scaling effectively. We continue to see momentum in these markets from repeatable initiatives such as peer to peer education, regional multidisciplinary emphysema boards and targeted physician engagement.

These are not isolated tactics, they are building blocks of long term sustainable OUS growth and the results are becoming increasingly evident. Shifting to The U. S, in the second quarter, U. S. Revenue totaled $14,700,000 reflecting slower than expected growth in procedure volume.

This trend has been driven by a combination of tough year over year comparisons, a decline in conventional strata scans and operational pressures at interventional pulmonology centers. We believe increasing attention on robotic bronchoscopy and lung cancer screening has in many cases temporarily constrained bronch suite availability and diverted IP focus. Now it’s important to note, we view these dynamics not as threats, but as future tailwinds. The rise of lung cancer screening is a good thing. It’s surfacing more disease earlier, expanding imaging volume and enabling timely intervention.

In fact, we’re intentionally aligning with these trends. We believe that the very same infrastructure being built for early cancer diagnosis, including the hiring of clinicians and support staff will create capacity to find and treat more patients with severe emphysema. That said, our original 2025 guidance assumed a second half rebound in U. S. Performance fueled by the ramp up of our new commercial initiatives.

Based on current conversion trends, we now believe that this inflection will take more time to materialize than initially anticipated. As a result, we are revising our full year 2025 revenue guidance from a range of 96,000,000 to $98,000,000 to a range of 90,000,000 to $92,000,000 This is a recalibration based on timing, not a shift in strategic direction or a change in our confidence in the opportunity. Importantly, this revision to guidance gives us the opportunity to exceed expectations of our initiatives ramp faster than expected, while also providing flexibility if conversion timelines continue to vary across programs and geographies. We believe this is a prudent and transparent adjustment based on current visibility while preserving meaningful upside. So let me walk you through what happened, what we’re doing about it, and why we remain confident in our path forward.

The softness in Q2 procedure volume was primarily due to a decline in static scans in prior quarters, a leading indicator for ZEPHYR bronchoscopic lung volume reduction procedures. We expected some of this softness driven by capacity constraints and evolving priorities within IP centers. We also expected that our new commercial initiatives, direct to patient outreach, referring physician engagement and the rollout of LungTrax Detect would help overcome that decline by opening up alternative pathways to the funnel. These programs are gaining traction, but they’re taking longer than traditional referral models to convert. These new pathways involve multiple stakeholders and more complex workflows, often requiring one or two additional quarters from identification to procedure.

In response, we’ve taken deliberate targeted steps to expand the funnel, improve conversion, accelerate adoption and grow Stratix across The U. S. Market. First, our direct to patient campaigns continue to gain momentum. We expect to exceed seventy thousand first time patient engagements this year through a mix of digital quizzes, inbound calls, SMS based support and connected TV advertising.

These efforts are driving measurable increases in website traffic and patient inquiries. Already one third of the patients treated in 2025 were engaged through these campaigns, a strong indicator that we’re not just creating awareness, but driving action. We’ve also launched the therapy awareness specialist or task role to bridge the gap between community pulmonologists and treating centers. Many referring physicians remain unclear on how to identify the right patient, where to send them, or whether the procedure is reimbursed. In territories where tasks have been deployed, we’ve seen patient workups increased by an average of 19% compared to the four quarter average.

That’s the type of early signal we look for when we’re launching a new commercial model. We also continue to invest in clinical training and enablement across our IP customer base. This includes onboarding new physicians, providing procedural best practices and supporting multidisciplinary teams and building sustainable workflows. Finally, we’re making steady progress with LungTrax Detect, our AI powered screening tool that passively identifies emphysema patients from routine CT scans. Several hospitals are already live and early site data is encouraging.

At one hospital, a patient flagged by DETECT was originally undergoing follow-up for a lung nodule and was successfully treated with Zephyr Vals. At another five patients were identified and moved into diagnostic workup phase within thirty days of installation. The adoption of Lung Track Detect involves the engagement of a number of stakeholders from identifying a clinical champion, declaring IT and security reviews, to contracting, to integrating into clinical workflow. Each step takes time, but the payoff is clear. We continue to evolve our sales and implementation processes based on customer feedback and we currently have a robust and growing pipeline of hospitals that are in line to adopt this technology.

We’ve also expanded our capacity footprint. In Q2 alone, we opened 12 new screening centers and trained 26 new physicians. These actions don’t just grow our network, they create new points of patient access and expand our capacity to treat. So why are we confident this strategy will work? First, Stratix referrals rebounded to record levels in June and July, which we view as a direct response to the initiatives we’ve deployed.

Second, lung cancer screening is scaling rapidly, nearly tripling since 2020 and generating millions of CT scans annually. Based on published data and our internal experience to date, we estimate that fifteen percent of these CT scans will show valve eligible radiographic emphysema and about twenty five percent of those patients will be eligible for further ZEPRA valve evaluation. That’s a massive and growing opportunity that we are now better equipped than ever to capture. Third, health systems continue to prioritize high value minimally invasive interventions. Zephyr valves offer a strong clinical value proposition, a favorable reimbursement profile and a scalable procedural workflow.

We fit squarely within those strategic objectives. Fourth, physician enthusiasm remains high. Reimbursement remains stable and an estimated five hundred thousand patients in The US remain untreated despite being eligible. The unmet need is not in question. The challenge is matching the right patient with the right care and that’s exactly what our strategy is built to do.

We’re also continuing to invest in long term value drivers. The CONVERT-two trial evaluating ARISEAL in collateral ventilation positive patients is progressing well. This product was designed to unlock treatment for the twenty percent of patients who complete a STRATX workup only to be ruled out for valves due to collateral ventilation. Enrollment is expected to complete in the 2026. In Japan, we continue to enroll patients in our post approval study.

This study is required before full commercialization and will unlock access to a market with an estimated 100,000 BLDR eligible patients. We remain on track to complete enrollment in approximately 2026. And finally, we’ve launched a new collaboration with Yeager, a global leader in pulmonary function testing to embed BLVR screening logic into their diagnostic platforms. Over 16,000,000 PFTs are conducted in The U. S.

Annually. Based on published data, roughly thirty five percent to forty percent of those tested have COPD and within that group up to thirty percent may have emphysema severe enough for ZEP for consideration. This is what we mean when we say we’re not just selling a product, we’re building an ecosystem for long term sustainable 20% growth. We’re also advancing our robust clinical evidence base. At the American Association of Bronchology and Interventional Pulmonology meeting in Austin this August, early results from Lung Track Detect will be presented showing how AI enabled detection of emphysema from routine low dose CT scans can shorten the time from diagnosis to treatment.

In September, the European Respiratory Society Congress will feature multiple presentations from new screening techniques to combination therapies that continue to broaden clinical validation and support practical adoption of Zephyr valve treatment. So while we are revising our full year outlook, our conviction and our long term growth trajectory is stronger than ever. We’re investing behind a clear scalable strategy. We’re seeing positive signals across all major initiatives. We will continue to improve and drive focused execution of our strategy and we remain confident that the work we’re doing today will translate into sustainable, durable future growth.

Finally, we’re committed to transparency with our shareholders, our customers, our employees, and most importantly, the patients we serve. That’s why we’ve taken the time today to walk you through not just the what, but the why behind this guidance revision and why we believe the underlying drivers are both sound and strengthening. Now, I’ll turn the call over to Mehul to provide more detail on our financial performance.

Mehul Joshi, Chief Financial Officer, Pulmonics: Thank you, Steve, and good afternoon, everyone. Total worldwide revenue for the three months ended 06/30/2025 was $23,900,000 a 15% increase from $20,800,000 in the same period of the prior year and an increase of 13% on a constant currency basis. This performance reflects sustained adoption of ZEPHYRA valve and continued execution across our organization. U. S.

Revenue in the second quarter reached $14,700,000 a 6% increase from $13,900,000 in the prior year period. While this growth was below our expectations, it’s important to note the challenging prior year comparison. International revenue for the 2025 was a record $9,100,000 a 32% increase compared to 6,900,000 in the same period last year and a 27% increase on a constant currency basis. Growth was distributed across our core markets in Europe and Asia, underscoring the continued expansion of global demand for CefraVals and the strengthening of our commercial execution outside of The United States. International revenue performance aligns with our outlook, which anticipated outsized international growth in the first half of the year, followed by a more moderate trajectory in the second half of the year.

We remain encouraged by the long term potential of our international footprint and continue to invest in strategic markets to support sustainable growth over time. Gross margin for the 2025 was 72% compared to 74% in the same period last year and consistent with our prior expectations. The year over year decline was primarily driven by an anticipated shift in geographic revenue mix with international markets, including distributor sales accounting for a larger share of total revenue. Total operating expenses for the 2025 were $32,000,000 a 3% increase over $30,900,000 in the 2024. Non cash stock based compensation expense was $5,600,000 in the 2025.

Excluding stock based compensation expense, total operating expenses in the 2025 increased 4% from the same period of the prior year. Research and development expenses for the 2025 were $5,300,000 compared to $5,600,000 in the prior year period. The year over year decline was due primarily to the one time non cash impairment charge related to internally developed software recorded in Q2 twenty twenty four. Excluding this item, R and D spending increased 36% year over year, reflecting higher clinical trial activity and ongoing investments in R and D programs. Sales, general and administrative expenses for the 2025 were $26,700,000 up 5% from $25,300,000 in the 2024.

The increase was driven by continued investment in our commercial efforts, including enhanced direct to patient outreach and targeted initiatives aimed at increasing clinician awareness and adoption of Zephyr valve therapy. Net loss for the 2025 was $15,200,000 or a loss of $0.38 per share as compared to a net loss of $15,300,000 or a loss of $0.39 per share for the same period of the prior year. An average weighted share count of 40,400,000.0 shares was used to determine loss per share for the second quarter twenty twenty five. Adjusted EBITDA loss for the 2025 was 8,400,000 as compared to $7,600,000 in the 2024. We ended the quarter with $84,200,000 in cash, cash equivalents and marketable securities, down $4,500,000 from 03/31/2025.

Total cash utilization for the 2025 was $17,300,000 and in line with our 2025 operating plan. We remain laser focused on disciplined capital allocation and cash burn as we continue to fund key growth initiatives, including advancing our clinical programs. Turning to guidance, we are revising our full year 2025 outlook for revenue and operating expenses to reflect updated expectations and current market dynamics. Gross margin expectations remain unchanged. We are updating our full year 2025 revenue guidance to a range of 90,000,000 to $92,000,000 representing year over year growth of approximately 7% to 10%.

As Steve mentioned, this revision reflects a shift in the expected timing of contribution from our growth initiatives in The U. S, which are ramping slower than originally anticipated. Our guidance continues to incorporate current full year foreign exchange rate assumptions. So we acknowledge that future currency fluctuations may impact reported results. International performance was strong in the 2025 as anticipated, driven by robust demand across both direct and distributor markets.

Looking ahead, we expect a return to typical seasonality in the second half of the year. As previously communicated, our distributor channel, including China is expected to moderate. However, we expect continued momentum in our direct markets across Europe and Asia, where underlying demand and commercial execution remains strong. We are closely monitoring the global trade environment, including evolving tariff policies and continue to assess potential implications for international revenue. At this time, we do not anticipate any material near term impact.

We are reaffirming our full year gross margin outlook of approximately 74%. We continue to expect sequential improvement in the second half of the year, driven by a more favorable geographic revenue mix, increased production volumes and the ongoing benefits of cost optimization initiatives. All our products are manufactured in The United States using a blend of in house processing and third party suppliers for raw materials and components. The proportion of imported materials remains minimal and with our current inventory position, we do not anticipate any material impact to gross margin from near term fluctuations in global trade or tariff policy. We are revising our full year 2025 operating expense guidance down from a range of 133,000,000 to $135,000,000 to a range of $128,000,000 to $130,000,000 which includes approximately $22,000,000 in non cash stock based compensation.

This reduction reflects the impact of targeted cost efficiency initiatives implemented across the organization aimed at enhancing operating leverage. Importantly, this revised operating expense outlook continues to support full investment in our acquire, test and treat strategy, the cornerstone of our long term growth and market expansion plans. We remain committed to scaling our platform with discipline, ensuring we balance strategic execution with prudent financial management. Our revised revenue and operating expense outlook remains aligned with our original cash utilization targets for 2025, And we currently expect cash burn to track at or below 2024 levels. With a strong balance sheet and a disciplined execution focused operating plan, we remain confident in our ability to meet near term milestones while advancing our long term growth strategy.

With that, I’d like to turn the call back to Steve for his closing remarks.

Steve Williamson, President and Chief Executive Officer, Pulmonics: Thanks, Mehul. Before we wrap up, I want to reiterate a few key points. We’re delivering strong international performance, expanding our reach and laying the foundation for long term sustainable growth. While we’ve adjusted our full year revenue guidance to reflect the longer timelines associated with ramping our U. S.

Initiatives, the underlying signals from physician training to patient engagement to ecosystem development are all moving in the right direction. The conviction we have in our strategy is grounded in real world traction and reinforced by the steps we’re taking to broaden access, accelerate identification of workup and support physicians and patients throughout the treatment journey while maintaining fiscal discipline. This is not a question of if, but when, and we believe the work we’re doing now sets us up to unlock meaningful value over time. We appreciate your continued partnership and interest in Pulmonics and we look forward to keeping you updated on our progress in the quarters ahead. With that, we’ll now open the call for questions.

Conference Operator: Thank Our first question comes from the line of Frank Takinen with Lake Street Capital Markets. Your line is now open.

Frank Takinen, Analyst, Lake Street Capital Markets: Great. Thank you for taking the questions. I was hoping to first follow-up on one related to the revised guidance. I was hoping you could help us kind of parse out Q3 versus Q4 expected contribution and then underneath that expectations on a U. S.

Versus OUS growth basis?

Mehul Joshi, Chief Financial Officer, Pulmonics: Yeah. Hey, Frank, this is Mehul. Maybe I’ll start by saying, our initial guidance indicated international revenue growth would drive the first half growth in 2025. The U. S.

Would drive the second half growth. International growth is consistent with initial guidance. The first half was robust, the second half was slow, primarily from very low ordering from China. And we expect direct markets to be robust with typical seasonality in the second half. So there has really been no change to international revenue expectations.

But as I said, distributor revenue was high in the first half, and it will be significantly lower in the second half. So that’s kind of a first half, second half dynamic. The U. S. Will grow in the second half, but not to the extent we originally expected due to the slower ramp of our growth initiatives that Steve described.

U. S. Revenue in the first half was approximately 62% of total revenue. And in the second half, we expect it to be at least two thirds, maybe a little bit higher in the second half of the year. So that’s kind of The U.

S. International breakout. We do expect Q3 to probably be flat to Q3 of a year ago, and then you can figure out Q4 from there. So the first half second half guidance appears to be a little bit disproportionate. But if you normalize for some of the China revenue that we did get in the first half, it it’ll make more sense.

So hopefully that’s helpful.

Frank Takinen, Analyst, Lake Street Capital Markets: Yep, that’s great. Thank you. Appreciate that color. And then I was hoping to follow-up on some of Steve’s comments related to StratEx scanning trends. One, can you just help us understand a little bit better maybe what was I don’t know if distracting is the correct word, but what the IPs were up to instead of doing StratEx?

And then any metrics around the June, July record scanning? Just how much larger were those than previous, Stratix scanning months?

Rick Wise, Analyst, Stifel: Yes. If you look back

Steve Williamson, President and Chief Executive Officer, Pulmonics: hey, Frank, by the way, if you look back across the from the beginning of the year, we saw a slight decline in Stratix as we went into the year, but we were expecting that that would pick up as we saw the pilot sites really start to engage and start putting more patients through. And really there’s been two things in my mind that as we look at where we’re headed for the second half that made us find it prudent to change the guidance. The first is these pilot sites ramped up pretty quickly. They came on board quickly. They got through their contracting processes, their security reviews quicker than we’re seeing after our broader launch.

You’ll recall that we launched this to the sales force in Q1, got them trained up in Q1. They started launching in Q2 and selling then. And as we’re starting to go through these contracting processes, which we’re doing more of now, Our funnel is robust and is growing there as I mentioned, but it’s taking longer. And I don’t know that that’s all bad. As I look at the some of the accounts that we’ve gone into, they’re part of larger organizations.

Those larger organizations have to sign off on new software coming in. And so it’s given us visibility at higher levels to talk about ways that we can help address this patient population that’s not currently being addressed. Capacity is really constraints have come from the cancer screening and cancer procedures that are being done, the biopsies that are being done. But with that capacity constraint comes a lot of low dose CT scans. And those offer an opportunity to integrate both cancer and COPD detection in a single clinical pathway.

And that’s what we’re seeing in some of these accounts. And I think that’s what’s really driving our June and July uptick in Stratix. We see that the work that we’re doing in these accounts have really increased their Stratix utilization and are putting more patients into the funnel. What it’s also done though is it’s shown us that there is a capacity constraint. These accounts now have these lists of patients that they need to follow-up based on the software telling them that they’ve got patients that have radiographic emphysema.

There’s a follow-up process that needs to go through. Those patients need to be worked up. And really what we’ve been focused on is talking to these administrators that were instrumental in bringing in additional capacity to do these lung cancer screening programs and build up these nodule biopsy programs to show them that they have the opportunity to not only take care of these patients, but to take care of the incidental findings and early intervention that’s capable for these severe emphysema patients. So as we build out this ecosystem, I’ll tell you, I’ve been in a number of these conversations, I’ve been on a number of these calls and it’s resonating. There’s a positive response from hospitals that have made significant investments in building out lung cancer screening to take advantage of those patients that are coming through.

But to broaden that out and say, we’ve already made this investment, what else do we need to do to capture even a broader patient population and realize a bigger return.

Frank Takinen, Analyst, Lake Street Capital Markets: Okay. That’s helpful. Appreciate the color. Thank you.

Conference Operator: Thank you. Our next question comes from the line of Rick Wise with Stifel. Your line is now open.

Rick Wise, Analyst, Stifel: Hi, Steve. Hi, Mehul. I want to follow-up on some of these points you made, and thanks for all the detail. And just I just want to make sure I’m understanding clearly. As you said, you may regret saying it, but Stratix trend record levels in June and July.

If if those June, July trends continue on the whatever trend line they are, and you haven’t quantified it, but feel free to, however you want. But if those trends continue through the end of the year in that direction, whatever that is, would that basically meet? Would that be the biggest factor causing you to meet the guidance you’re giving us? Or it sounds like you would do better, all things. A lot of moving pieces here, but help me think that through.

Steve Williamson, President and Chief Executive Officer, Pulmonics: Yeah, the point of telling you about the Stratix is to show that we do see that we are making an impact. Now the Stratix to treatment timelines vary depending on where the account is, which account it is, where those patients are in the process. In some instances, I talked about a new LungTrax detect account that just came on board. They found five patients put them right into workup immediately. So they’re moving very quickly.

Others might not move as quickly and depending on where those patients are in the process, there’s just significant variability there. And that’s why I was talking about potential upside to the guidance depending on how quickly they do convert. And so I think it’s a little too early to tell right now, Rick, but it’s a good kind of first level sign for us and lets us see that there’s some progress being made here. We’re really focused on a rebound in The U. S.

And we’re expecting one in the back half of The United States here. We’re expecting that growth rate to go up. It’s just how much it does and how quickly is something that we’re working through right now.

Rick Wise, Analyst, Stifel: And not to belabor this point, Steve, but would you say and I’m not trying to get you to say your numbers are too low. I appreciate you’re taking a hopefully, prudently, thoughtfully conservative approach to giving us second half guidance. But would you say, you’ve set the guidance or tried to frame the guidance in the most conservative terms possible? I’m sure you haven’t given us your best case, but just there’s so many moving pieces, a lot of moving timelines as you’re saying, it’s all evolving, but how do you think you’ve framed this guidance?

Steve Williamson, President and Chief Executive Officer, Pulmonics: It’s a multivariate problem for us, right? There’s a number of different issues or opportunities that come through. And we try to see what’s the speed of which we will see the patient treatments go up from those. What we’ve looked at is, we feel pretty confident with OUS as Mehul said for the year and that hasn’t changed at all. It’s just in The U.

S. We did see that we didn’t rebound as quickly as we expected and because of that, I don’t think we want to get over our skis just yet. We know that it’s taking time to get through the contracting process, security reviews. We have more of these accounts coming on. They seem excited.

There is a overarching willingness to adopt the concept of lung health rather than just lung cancer screening. And so as we see more of these accounts come on board, it’s how quickly we can set them up with the proper workflow to get those patients through. So our guidance is designed to say, look, if we continue to see the growth where we are right now that would fall in our guidance. However, there is potential upside to this if these initiatives kick in faster than we expect.

Rick Wise, Analyst, Stifel: And just a last one for me, just to make sure I’m clear. This isn’t about new competitive dynamics that are making clinicians pause and look at other approaches to emphysema, either detection or treatment. There’s no other dynamic other than these complicated, multifaceted, multivariate approaches to driving change in how patients are identified and work through the funnel, if I’m hearing you correctly. Thank you.

Steve Williamson, President and Chief Executive Officer, Pulmonics: Yes. This isn’t a direct competition situation at all. We remain the premier offering in valves. Our sales force has done a great job of educating clinicians and training clinicians and we continue to train more. We’ve done some work to make sure that we’re training additional physicians in existing facilities, so that they can expand their capacity in that manner.

And at the same time, it’s making sure that they’ve got the ecosystem in place, so that as these patients are identified, whether it’s through these CT scans or through this PFT screening agreement that we’re just inking now, but we’d expect that to generate more patients as well. Theoretically, these patients should come through and already be in the workup process. So if they’ve already had a CT scan that checks one box that they needed to do for workup. If they’ve had a PFT, same thing. So we get these patients hopefully a little bit later on in the process and they can move in quicker.

The capacity is one though that we really need the administration to look at and say, okay, we’ve built this lung cancer platform and we do thousands and thousands of procedures in this space, we have the opportunity to treat a major underserved patient population, which has a very, very strong clinical value proposition with Zephyr valves, but also a strong economic one. It’s also a very symbiotic procedure for the hospitals. So these patients that come in can be symbiotic to thoracic surgery, cardiology, other areas of the hospital that very intriguing and good revenue drivers for the hospital systems. So by talking to the administrators about the ability to clinically take care of these patients and again there’s hundreds of thousands of them in The United States that are just underserved. We’ve got a number of them coming into direct to patient pipelines.

We’re working on getting the referrals up and making sure that the workflow is smoother for these hospitals. It’s just once they get there, we need to make sure that they get treated. And in order to get treated, oftentimes they need to have buy in from the hospital system that they’re willing to expand the capacity of that group.

Rick Wise, Analyst, Stifel: Thank you, Steve.

Conference Operator: Thank you. And I’m currently showing no further questions at this time. I’d like to turn the call back over to Steve Williamson for closing remarks.

Steve Williamson, President and Chief Executive Officer, Pulmonics: Thanks, Shannon. I’d like to thank you all for joining today and thank our employees worldwide that are focused on providing relief to the hundreds of thousands of patients that are suffering from emphysema right now. I believe our strategy is working. It’s just taking more time to implement. As I mentioned, we’re confident we’re headed in the right direction and appreciate all your support.

Thank you.

Conference Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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