InspireMD (NSPR) Q2 2026 earnings call transcript

Thank you, Operator, and good morning, everyone. The second quarter was an important period for I'm Good morning, I'm Good morning, and welcome to the InspireMD. While our reported financial results reflect the accounting impact of the voluntary recall of our approved Seaguard Prime 135 carotid stent system, the quarter was defined by the actions we took to strengthen the business, sharpen our execution, and position our company for a successful return to the U. S. market. Over the last several months, we've remained focused on four priorities. Optimizing our international business, advancing our key regulatory programs and milestones to U. S. market reentry, implementing design enhancements to the Seaguard Prime delivery system, and aligning our organization and cost structure around these priorities.

I believe we are making meaningful progress on each of these objectives. Notwithstanding our temporary absence from the U. S. market, our total revenue was essentially unchanged from the second quarter of last year. It's important to note our international business continued to perform very well, growing approximately 21% year over year, reflecting continued physician adoption and strong demand for Seaguard across our international markets. At the same time, our reported U. S. revenue reflects customer credits associated with the voluntary recall announced at the beginning of May. Those credits more than offset gross U. S. product sales during the quarter and therefore obscure the underlying performance of the business.

Importantly, our confidence in the Seaguard implant remains the foundation value driver of our business and will continue to be the asset that builds our market leadership, regardless of which delivery method is chosen for each patient's need. The clinical outcomes and evidence we've developed over many years has set a new standard of care, translating to physician enthusiasm and utilization, which remains strong, giving us confidence as we anticipate our U. S. relaunch. We continue to believe C-Guard is the most differentiated technology available for carotid revascularization and stroke prevention. Turning now to our SeaGuardians 2 submission of approval of our SeaGuard Prime 80 platform for TCAR.

We recently announced an outstanding 30-day results from the trial, which we believe strengthen our pending submission. In fact, our latest discussions and feedback from FDA remain constructive and interactive, and all signals point to potential approval in the fourth quarter, as we previously indicated. Once approved, the Seaguard Prime 80 platform would essentially double our addressable market by offering our implant for TCAR in addition to CAF procedures.

We also enrolled the first patient in Seaguardian 3, our pivotal study evaluating next generation SwitchGuard neuroprotection system. Taken together, we're encouraged by the progress across our comprehensive TCAR programs. Also, as previously noted, our submission of the original Seaguard platform for CAS, clinically proven in over 75,000 global U. S. cases, continues and based on the progress to date, we currently expect a decision from FDA in the fourth quarter of this year. Should these anticipated approvals be realized, we would have both TCAR and CAS platforms commercially available before the end of the year, giving us the opportunity to address the entirety of the approximately 75,000 annual stenting procedures in the U. S. When we spoke to you last quarter, we outlined a clear plan to address the improvements for the Seaguard Prime 135 CAS delivery system.

Since then, we've identified the required design modifications, initiated validation and performance testing, and continue to work closely with the FDA as we advance these improvements with a completed early submission of our pre-sub dossier. These modifications and testing have gone exceedingly well, and we're optimistic that the associated timelines of first half of 2027 for market reentry of this platform has the potential for an earlier approval. While this has clearly been a challenging time for the company, I believe our ability to weather these setbacks has made us a stronger and more focused organization.

The SeaGuard 135 delivery system modifications and remediation is well understood. The path forward is clearly defined, and our team remains fully focused on implementation.

During the quarter, we also took decisive actions to better align our organization and cost structure with our near-term priorities. These decisions allow us to focus our resources on the regulatory and commercial milestones that we believe will have the ability to create the greatest long-term value for our shareholders. We also believe we've created a leaner, more efficient, and focused organization that is better positioned to execute, not only to return Seaguard to the U. S. market, but to expand access for our physicians and patients they treat. Before turning the call over to Mike, I'd like to leave you with four key messages.

First, the underlying fundamentals of our business remain strong, as demonstrated by continued international growth, physician anticipation for our Seaguard implant, as what we believe is the best treatment for carotid disease with clear line of sight for our U market relaunch Second we believe voluntary recall is proving to be a well and manageable event We understand the issue, we've identified the solution, and we're executing against a clear regulatory pathway to reestablish traction and growth.

Third, we continue to advance multiple regulatory catalysts, including Seaguard Prime 80 for TCAR. The redesigned pre-SeaGuard Prime 135 platform for CAS, the original SeaGuard delivery system, as well as our next generation SwitchGuard Neuroprotection system. And finally, we've aligned our organization and cost structure to support these priorities while positioning InspireMD for long-term sustainable growth. While we still have important work ahead of us, I believe today we are a more focused and disciplined company and ultimately have better positioned ourselves for success.

With that, I'll turn the call over to Mike to review the financials. Mike.

Thank you. As Marvin described, the second quarter financial results need to be interpreted in the context of the voluntary recall that we announced at the beginning of May. For the second quarter of 2026, total revenue is $1.8 million, which was essentially flat with the revenue for the second quarter of 2025. The recall action affected our reported revenue in two ways.

First, we ceased commercial sales of Seaguard Prime late in April, so we generated less than one month of sales in the U. S. before the recall took effect. Second, we booked a $734,000 credit for the return of the Seaguard Prime 135 product that had not yet been consumed by our customers.

International revenue was $2.1 million, representing growth of 21% versus the same quarter a year ago. This performance continues to reflect the growing global demand for our Seaguard platform. The entirety of international growth was driven by continued demand, while changes in foreign exchange rates were immaterial. Gross profit for the second quarter of 2026 was a loss of $0.8 million, or negative 43.7% of revenue, compared to a gross profit of $0.3 million, or 17.6% of revenue for the second quarter of 2025. This decline in gross margin resulted primarily from the $734,000 credit to revenue that I described previously and a $612,000 impairment charge for Seaguard Prime 135 inventory on our books that was no longer commercially viable as a result of the recall.

On a non-gap basis, which excludes the impact of the recall-related customer credits and impairment charge, adjusted gross profit was $0.6 million. A reconciliation of adjusted gross profit to gross profit, the most directly comparable gap measure, is included in today's earnings release and posted in the investor relations section of our website. Total operating expenses for the second quarter of 2026 were $13.7 million, an increase of $0.4 million compared to $13.3 million for the second quarter of 2025. The increase was primarily due to greater headcount-related expenses for the U. S. commercial team and higher development, clinical, and regulatory expenses related to SwitchGuard NPS and Seaguard Prime 80 for TCAR, partially offset by lower general and administrative compensation expenses.

Financial income was $121,000 as compared to a loss of $132,000 for the second quarter of 2025. Net loss for the second quarter of 2026 totaled $14.3 million, or 17 cents per basic and diluted share, compared to a net loss of $13.2 million, or 26 cents per basic and diluted share, for the same period in 2025. As of June 30, 2026, cash and cash equivalents and marketable securities were $30.4 million, compared to $54.2 million at the end of 2025. As Marvin discussed, we have proactively taken actions to reduce our cost structure and improve our financial flexibility and operational efficiency. Included in these efforts was a workforce reduction action initiated in the third quarter that reduces the number of positions in our organization by almost 20%, and save the company approximately $9 million on an annual basis.

We expect to incur a restructuring charge of between $900,000 and $1.2 million in the third quarter to account for the severance and related costs associated with this workforce reduction event.

This concludes our prepared remarks. We will now open the call for questions.

Thanks, Adam. Thanks for the question. I think the wiggle, as you mentioned it, is we're just trying to be realistic about the regulatory timeframes, as always, requests from FDA and just general timeframes. We have testing that has been required and is completed, and we're just trying to make sure that we're understanding, you know, a realistic approval timeline here relative to the workload, our responses to FDA, and so forth. So I think we're on top of the details and what's necessary and required. So it's really nothing more than that. We just want to be realistic about giving ourselves some room here on these responses and FDA's response back.

Specific to the legacy system.

Okay, thanks, Marvin.

And so the delivery mechanism performs well. We're in the process right now of doing DV testing and making sure that all of the technical work that we've done from the engineering group is now stacking up in terms of measured approach. So we're confident in this system. We're confident that we've solved it, and this is our platform for the future. So, we originally guided around the first half 2027 approval. We think that that remains realistic. There's a couple of long poles in the tent that we're still sorting out related to biocomp testing, the statutory review process that FDA puts on these things. We have submitted early our pre-sub request to FDA to review all of the results to date and our anticipated response.

We hope that that gives us a little more clarity and is more favorable. But if we can eliminate some of these long poll items, we believe that there is a possibility that we could pull that approval process in. But right now we're calling the first half of 27 as being realistic, and we're optimistic that we can make those improvements.

Yeah, the enrollments thus far have gone very well. We don't take any of that for granted. Obviously, this is the first time SwitchGuard has been used in human applications, so I think the investigators are very pleased with the performance, and we continue to enroll in the trial. Our expansion of that trial will, to a certain extent, depend on the resources that are available to us, but so far we have initiated sites that we believe are high volume and enthusiastic about SwitchGuard and continue to progress in those enrollments with the timeline that you had previously mentioned as being what we're calling at this point. Obviously, the enrollment process will determine, you know, timelines, but so far we're really pleased about the responses and the performance of the device itself.

Yeah, hi, Frank. Good questions. So, in terms of the timing for when we'll realize those cost savings, those, those, the vast majority of those, those actions that we described have already been set in motion. I would expect that we should see the full impact of that, those, those, those cost savings in, in Q4 of this year. There will be some partial savings in Q3, but there will be also some offsetting costs associated with restructuring. So from a clean standpoint, I would say a Q4 should be a good view of what the new cost structure looks like.

Frank, let me jump in on the second part of your question there. Obviously, we want to make sure that we're anticipating a very aggressive relaunch, and we've built a plan to enable that commercial readiness built for that momentum. So even though we're conserving our financial resources to extend the cash runway, we're trying to strike a balance in maintaining the commercial readiness to do so. So reducing these layers makes a lot of sense to us, but at the same time, I think we're continuing to maintain the strength of our commercial organization to make sure that we're ready in a fairly tight window here, that we're out of the gate relaunching and doing so properly with a great team on the field.

So we feel good about the ability to do that.

Yes, it's a great question, Frank. So as I mentioned, there's two testing scenarios that we're looking at here. BioComp testing takes a bit of time. We don't believe that is necessary, but we need to validate that with, obviously, with FDA and their review of this under the pre-sub scenario that we have set up. And then the statutory review process, we would be looking for more of an accelerated review of those changes that we've made to the prime. And if FDA agrees with that, those could pull those timelines in significantly. But again, no commitments at this point. We're still guiding around all of those factors being as they are. So first half of 27 is what we're calling at the moment.

But given the fact that we believe we've solved this problem technically with minimal implications from a technical point of view, we're hopeful that FDA agrees with that assessment and that we can pull that in.

Sure. Thanks, Marie. We're glad to have you on the call, by the way. So, I think what we've spent a lot of time doing over the last month or so is making sure that we are optimizing the structure of our field organization for the folks that performed really well on our initial launch. As you know, we take a very deliberate approach to where carotid procedures are through claims data and territory management. We're looking very closely at time to productivity of our team. So this is a very deliberate and structured approach. The playbook for our commercial launch and relaunch has been looked at very closely. We have a new head of sales and marketing who has real clarity on how we go about doing that.

And so we're thrilled with the group that we have on the field, their ability to understand where their customers are and what the anticipated and pent-up demand is going to be. And so, obviously, that playbook will be executed, and we feel like that the group that's with us now will be able to reestablish our commercial presence quickly. VAC committees and otherwise, you know, we continue to look closely at where we have those approvals and making sure that customers understand timelines and our process here. So, that part of the work we spent a lot of time looking at to make sure we get the full benefit of the value of our relaunch. We know that there is pent-up and anticipated demand for this product, and this voluntary recall gave us the opportunity to take a quick pause and make sure that we're being very efficient and realistic and aggressive about our relaunch plans.

So, that feels very good.

Yeah, Marie, I think it's a great question. Our OUS business has matured very well over the last several years. Remember, we've been in the OUS markets now for years, sold over 75,000 implants. We think, first of all, the performance of this device drives, you know, world-class outcomes and that the physicians in our OUS markets are very accustomed to that being the new standard of care, which we hope to translate into the U. S. market as well.

We've grown that OUS business significantly and nicely over time, but we also recognize the need to pivot a bit and look for higher margins and margin expansion in those markets. It's obviously not as a robust economic market as the U. S. , and so we're beginning to look closely at fine-tuning those pricing and margin assumptions so that we can count on that business not only being a great top-line business, But being able to contribute at least partially on the bottom line. So we're thrilled to have the results that we do in our OUS market.

Yeah, Jeremy, great question. And we are absolutely in touch with all of our customers, including the current users and new users. The anticipation in this marketplace is palpable. When we launched this product, we saw a terrific reaction to a new technology that came to market after 20 years of, you know, older technology. And we're, of course, in touch with all of those customers. I think they're excited and anticipating having this product back in their hands is unanimous. It's consistent. It's unanimous. That's why our sales team, we've kept them together and allowed them to continue to cultivate those relationships. And the expectation is as soon as we have approval of the 135 as well as the approval on the 80 for TCAR, we will be able to transfer that interest and enthusiasm into revenue in a quick fashion.

So that's the work of the sales organization right now is to prepare for that relaunch, and the feedback from customers is excitement and enthusiasm for having it back in their hands.

Yeah, it's very fundamental to our overall TCAR strategy. The fact is that for every TCAR procedure, there's an implant used, there's a stent used, and then a neuroprotection device that's also used in the procedure, and we felt it was important to have both. We've made some improvements on the current predicate in the market that's approved with our switch guard, so we think we will have a device that has some features and functions that the customers have been looking for that are otherwise unavailable. Obviously, the sales dollars and margin associated with that product are significant, and so the ability to address the entirety of the TCAR market with both the implant and the neuroprotection system here are really fundamental to our TCAR strategy overall.

So we think we benefit by better technology and obviously internally with higher revenue and margin opportunities. So it remains a fundamental part of our overall plan.

I'd like to turn the call back to Marvin Slossman for closing remarks. So, I'd like to thank everyone again for joining the call today and the continued interest in InspireMD. We certainly recognize we have important work ahead of us, but we believe that we've made meaningful progress over the past several months. We've got a clear path forward, multiple important regulatory catalysts ahead, and a team that remains fully focused on execution. We appreciate the continued support and look forward to updating on our progress next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.