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Presentation

Pulmonx Corporation beats earnings expectations. Reported EPS is $-0.25, expectations were $-0.39.

Operator: Good day, and thank you for standing by. Welcome to the Pulmonx Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today’s call is being recorded. I would now like to hand it over to your speaker today, Laine Morgan, Investor Relations. Please go ahead.

Dorothy Morgan: Good afternoon, and thank you for participating in today’s call. Joining me from Pulmonx are Glen French, President and Chief Executive Officer; and Derrick Sung, Chief Operating Officer and Chief Financial Officer. Earlier today, Pulmonx issued a press release announcing its financial results for the quarter ended December 31, 2025. A copy of the press release is available on the Pulmonx website. Before we begin, I’d 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 our operating trends, commercial strategies and future financial performance, including long-term outlook and full year 2026 guidance, the timing and results of clinical trials, physician engagement, expense management, market opportunity, guidance for revenue, gross margin, operating expenses, cash usage, commercial expansion, and product demand, adoption and pipeline development are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. 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 our filings with the Securities and Exchange Commission, including our quarterly report on Form 10-Q filed with the SEC on November 12, 2025. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 4, 2026.

Pulmonx 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. And with that, I will turn the call over to Glenn.

Glendon French: Thank you, Laine. Good afternoon, everyone, and welcome to our Fourth Quarter and Full Year 2025 Earnings Call. Since returning as CEO, I have conducted a thorough review of our business, and I am both confident in the company’s future and determined to accelerate its progress. During the past few months, Derrick and I have taken a deliberate bottom-up approach to assess the business, building on what’s working, addressing what isn’t and better aligning our spending with our strategic goals. We conducted a line-by-line review of all programs to identify and prioritize those with the highest returns on capital, with an emphasis on balancing growth with profitability. We have already taken significant steps to realign our cost structure, while preserving key commercial and clinical investments.

Derrick will provide additional details on the impact of this prioritization along with our recently announced debt refinancing, which significantly strengthens our balance sheet and provides greater financial flexibility as we execute on our strategy. Our top 3 priorities are clear: first, reaccelerating U.S. sales growth; second, advancing our TAM expanding clinical initiatives; and third, aligning our spending to deliver continued financial leverage as we move predictably towards profitability. With this backdrop, I’d like to walk through our initial assessment of what drove our weaker-than-expected U.S. revenue performance last year. At a high level, we believe the underperformance was largely due to internal operational and executional challenges.

First, the U.S. sales organization was stretched across too many competing initiatives, some of which were not fully tested, distracting our sales team from critical activities. This diluted operational focus and challenged efficient execution. Second, at the beginning of 2025, U.S. Territory Manager roles and responsibilities were materially altered in a way that later prove disruptive to the sales organization. And third, the 2025 U.S. sales incentive structure proved to be suboptimal in effectively directing and motivating our U.S. sales organization. Altogether, these issues resulted in significant turnover in our U.S. sales organization during 2025, disrupting customer continuity and account management. While our assessment is ongoing, these insights have meaningfully shaped the strategies we have already begun to implement.

Our first area of focus has been on organizational alignment to optimize our resourcing and decision-making in critical areas. Derrick and I are leaning on talented leaders within the organization, allowing us each to have fewer direct reports so that we can dedicate substantial time and attention to the company’s most important priorities. As a result, I have taken a more direct role in day-to-day operations of our U.S. sales organization and our 2 U.S. area Vice Presidents now report directly to me. We have also established new leadership of our clinical affairs organization in order to accelerate enrollment of our CONVERT II trial of AeriSeal, a critical step towards significantly expanding our addressable market. A cornerstone of our refined sales strategy is returning our attention to our customers’ clinical and operational excellence and refocusing on what we know drives results.

In 2025, our sales team was asked to manage an increasingly broad and prescriptive set of initiatives, including multiple new call points and services like LungTraX Detect, while well intentioned, this breadth of initiatives did not deliver the expected return on sales force time and came at the cost of focus on the foundational strategies that both built our U.S. and international markets and drove consistent growth over the years. We are now streamlining priorities of the U.S. sales team to a small set of high-impact mandates that we know drive results. Our commercial strategy follows a deliberate near to far approach where we are focused initially on those opportunities that are nearest to our critically important treating physician before shifting our attention to those opportunities, which might be farther away.

This includes better supporting our treating physicians, engaging pulmonary service line directors within hospitals and prioritizing our COPD and patient education efforts in those areas closest to our well-established treating hospitals. That means 3 things: first, the strongest programs begin with the clinical performance of our Zephyr Valves and the confidence of our physician champions. These champions are essential in establishing clinical protocols, bringing colleagues along and ensuring that patients who need this therapy receive it in a timely manner. Our experience consistently shows that frontline clinical buy-in is the foundation of every high-performing center. We are now empowering our sales team to reengage with the clinical champions at their trading centers rather than diverting time to what have proven to be lower-return activities away from these physicians; second, when strong clinical leadership is matched with the right administrative support, it makes a significant difference in helping patients move through the funnel efficiently and scaling the program.

With that in mind, we are prioritizing engagement with pulmonary service line administrators rather than initially trying to reach top level C-suite administrators who are typically less accessible. By focusing on administrators who are closest to the pulmonary and thoracic service lines, we ensure that our therapy is effectively protocolized into daily clinical workflows and that staffing is aligned to support them; third, we must ensure that there is a steady flow of patients to our treating centers and that each patient is supported through every step on their path to treatment. To ensure that patients are aware that valves may be an option, we are first focusing on physician education efforts within hospital systems that already offer valves before expanding outreach to the broader community.

Similarly, we are concentrating our direct-to-patient efforts on geographies with established treating centers that have the capacity to accommodate interested patients rather than spreading those efforts broadly across the country. We expect this focus to meaningfully increase the return on invested time and resources. Taken together, these changes are designed to foster the right culture and consistency for a more stable, high-performing sales force with lower turnover. With the majority of our open U.S. sales positions now filled, we are encouraged by the early positive feedback from our team, which reinforces our confidence that these actions are resonating internally. That said, it will take time for our newly filled territories to ramp up in productivity, leading to our expectation that U.S. sales growth will resume in the back half of this year.

Turning to our pipeline. Our AeriSeal program remains a key focus and represents our nearest term opportunity to expand our market. We continue to view AeriSeal as a way to reach a large number of severe COPD patients with collateral ventilation who are not candidates today for treatment with Zephyr Valves. Our CONVERT II pivotal trial is an important step to bringing this novel technology to market. The trial is designed to evaluate the safety and effectiveness of the AeriSeal system in limiting collateral ventilation in patients with severe emphysema. With our strengthened clinical leadership team now in place, we are pleased to see enrollment momentum accelerating. We continue to see strong potential for AeriSeal as both a revenue generator and a market expander for Zephyr Valves over the medium and long term.

We expect enrollment in the trial to be completed in 2027, which would bring us one step closer to potentially growing our total addressable market by an estimated 20% globally. In conclusion, 2026 will be a year of focused execution at Pulmonx. We remain confident in the business and are excited to rebuild momentum through a clear operating plan that targets our highest impact initiatives. We have much greater visibility into what went wrong last year, and we have already begun taking decisive action to fix it. And we have the right strategy and the right people in place to execute. I returned to Pulmonx because I believe deeply in this technology and what it means for patients who have few treatment options. That conviction has only grown stronger over the past few months.

We have work to do, and we are doing it. And we look forward to demonstrating that progress to you in the quarters ahead. With that, I will turn the call to Derrick to briefly review our fourth quarter and full year performance as well as our expectations for 2026.

Derrick Sung: Thank you, Glen, and good afternoon, everyone. I’d like to start off by commenting on 2 significant developments that meaningfully strengthen our financial outlook and balance sheet as we position the company for profitable growth. First, we recently executed a cost restructuring initiative that reduced our ongoing operating expenses by over 10%. With this action, we believe we have achieved an appropriate balance between expense management and continued investment in our key growth initiatives. Second, we are very pleased to have recently closed on a $60 million credit facility with a 5-year interest-only structure that meaningfully strengthens our balance sheet by extending the maturity of our existing debt out to 2031 and by providing us with access to additional undrawn capital.

The initial $40 million term loan drawn at closing refinances our previously existing loan and we now have an option to draw an incremental $20 million through the end of 2027, subject to the achievement of certain revenue milestones. Taken together, these 2 developments provide us with increased balance sheet flexibility and cash runway over the next few years as we focus on rebuilding momentum in our core business and advancing our clinical priorities. We are committed to demonstrating meaningful operating leverage and reducing our cash burn starting in 2026. As a case in point, we expect to significantly decrease our annual cash burn from $32 million in 2025 to $23 million in 2026, representing a reduction of nearly 30%. Now turning to our recent performance.

Total worldwide revenue in the fourth quarter of 2025 was $22.6 million, a 5% decrease from $23.8 million in the same period last year and a decrease of 7% on a constant currency basis. Worldwide revenue for the full year ending December 31, 2025, was $90.5 million, an 8% increase over the prior year and a 7% increase on a constant currency basis. U.S. revenue in the fourth quarter was $14.1 million, an 11% decrease from $15.9 million during the same period of the prior year. We added 10 new U.S. treating centers during the quarter. U.S. revenue for the full year 2025 was $57 million, a 1% increase over the prior year. International revenue in the fourth quarter of 2025 was $8.5 million, an 8% increase from $7.9 million during the same period last year and an increase of 2% on a constant currency basis.

International growth was driven by continued strength in our major European markets, offset by a lack of sales to our distributor in China. Our distributor continues to work through inventory from large orders placed in the first half of 2025 as we await the renewal of our Chinese registration certificate, which we expect in the second half of 2026. International revenue for the full year 2025 was $33.5 million, an increase of 23% over the prior year and a 19% increase on a constant currency basis. Gross margin for the fourth quarter of 2025 was 77.6% compared to 74% in the prior year. The year-over-year increase was driven primarily by the lower mix of distributor sales in our international markets. Gross margin for the full year 2025 was 74%.

Total operating expenses for the fourth quarter of 2025 were $27.4 million, an 11% decrease from the same period last year. Noncash stock-based compensation expense was $3.9 million in the fourth quarter of 2025. Excluding stock-based compensation expense, Total operating expenses in the fourth quarter of 2025 decreased 10% from the same period of the prior year. Total operating expenses for the full year 2025 were $128.8 million, a 1% increase over the prior year. Noncash stock-based compensation expense was $19.3 million for the full year 2025. Excluding stock-based compensation expense, total operating expenses for the full year 2025 increased 3% over the prior year. R&D expenses for the fourth quarter of 2025 were $4.6 million compared to $4 million in the fourth quarter of 2024, reflecting increased clinical trial activity.

Sales, general and administrative expenses for the fourth quarter of 2025 were $22.9 million compared to $27 million in the fourth quarter of 2024 as we began to implement cost controls during the quarter. Net loss for the fourth quarter of 2025 was $10.4 million, or a loss of $0.25 per share as compared to a net loss of $13.2 million or a loss of $0.33 per share for the same period of the prior year. An average weighted share count of 41.4 million shares was used to determine loss per share for the fourth quarter of 2025. Net loss for the full year 2025 was $54 million or $1.33 per share. Adjusted EBITDA loss for the fourth quarter of 2025 was $5.5 million as compared to $7.5 million in the fourth quarter of 2024. Adjusted EBITDA loss for the full year 2025 was $30.6 million.

We ended December 31, 2025, with $69.8 million in cash, cash equivalents and marketable securities a decrease of $31.7 million from December 31, 2024. Now turning to our outlook for 2026. We expect to deliver full year 2026 revenue in the range of $90 million to $92 million. Our revenue guidance contemplates a return to year-over-year growth in both our U.S. and international businesses starting in the back half of the year. In the U.S. we expect our recently filled sales positions and our refocused commercial strategy to gradually drive improving sales productivity as the year progresses. Internationally, we expect revenue growth in the first half of 2026 to be negatively impacted by minimal sales to our distributor in China. Our guidance contemplates continued strength throughout the year from our European markets and we expect year-over-year sales growth in our international business to resume in the second half of the year.

We expect gross margin for the full year 2026 to be approximately 75%, trending slightly higher in the first half of the year and lower towards the second half of the year as we increase our mix of distributor sales. We are committed to demonstrating meaningful operating leverage this year. We expect full year 2026 operating expenses to fall between $113 million and $115 million, inclusive of approximately $21 million of noncash stock-based compensation expense. Excluding stock-based compensation expense, our guidance implies a 7% to 9% decrease in operating expenses from 2025, reflecting our cost realignment efforts, while maintaining investments in key growth initiatives. To conclude, we remain confident in the fundamentals of our business.

We are operating with financial discipline and focus, and we are taking decisive actions to refine our strategy, regain sales momentum and position the company to deliver sustainable and profitable growth over time. With that, I’d like to thank you for your attention. We will now open up the call for questions. Operator?

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Operator: [Operator Instructions] Our first question will come from the line of John Young from Canaccord.

John Young: It’s nice to see the operating level you guys are starting to demonstrate here. I wanted to ask on your comments on the sales force, particularly the comment that you filled all the new physicians. Could you just tell us the percentage of the sales force overall that turned over in Q4? And when did you start hiring and complete that hiring of the new reps?

Glendon French: So John, nice to hear your voice. The turnover was really across the entire year, so it wasn’t in the fourth quarter. The magnitude was directionally on the order of half of the sales organization across the year. When we got here some number of those territories had been filled. So we have some folks who joined in the middle to back part of the year. And we’ve been about the task of filling additional openings since then. And we find ourselves now with nearly all of those openings filled.

John Young: Got it. And just as a follow-up, you spoke a bit about the incentives not being aligned with the sales force last year. Can you talk about maybe some color on how you’re incentivizing sales now? And what are the focused sales strategies now in the U.S. that you guys are really focused on with these new reps to get them up to speed?

Glendon French: Yes. So the incentives that we have in place aren’t fundamentally different. I think the way that we had set things up at the beginning of last year, was a bit of a challenge for many of our folks. One of the big questions, there’s essentially 2 elements. One is the design of a compensation plan, and the second is the allocation of quota to each of the territories and then how you do that is important. And we embraced a new approach to the allocation of quotas which involved a couple of things that both the amount of the quota that we allocated out and how we allocated it out across our sales organization together conspired to create a situation where there were some number of reps who felt like it was going to be difficult for them to make the kind of money they were looking to make.

And by the time we realized that this new system was not being constructive we had started some movement that impacted us across the year. As it relates to this year, we have been very careful, both on the design of the sales incentive plan and with the allocation of those quotas and the amount of the quota that we’re allocating at the initial point. So we basically looked at where we stubbed our toe in 2025 and simply made the changes, went back to those things that we knew had worked in the past that were well received and well understood and embraced many of those elements. So we’re quite confident that we have in place a plan that is both viewed as quite reasonable as well as a design that I think people can get their heads around and get behind.

So — and it’s been — it’s been tested over time. Last year was the anomaly in terms of the construct, and frankly, we paid a price for that.

Operator: Our next question will come from the line of Jason Bednar from Piper Sandler.

Jason Bednar: I want to start here on the U.S. business, if I could. I fully appreciate there isn’t a silver bullet in reversing the slide that the business has been through, but you’ve already taken a lot of actions. You talked about, Glen, a lot of initiatives that are underway. You talked about the sales force just in the prior question as being a big one. I guess my question here is, though, is why wouldn’t the growth come back sooner now that, that sales force is fully in place and addressed. You had captive accounts that lost their covering rep or saw their rep change. I would think there shouldn’t be new education with physicians that’s necessary. You should need to really prime the referral pump with patients into those treating accounts. So I guess, why — again, very simply, why wouldn’t that come back quicker in the U.S.?

Glendon French: Well, I think we’ve got a couple of reactions to your question. One is that as you saw across the year relative to prior year, we were in fairly steep decline. I think we had 11% growth year-over-year in the first quarter, 6% growth in the second quarter, 1% growth in the third quarter, and we just announced on the order of a negative 10% year-over-year situation. So we’re springing off of somewhat spongy ground to begin with, if you look at the shape of that curve. And we have, in many cases, some folks that are just coming up to speed. We feel great about the team that we have in place. We have a construct where most of our sales folks are sort of doubled up in geographies with sort of a senior/junior rep alignment.

So that’s a design that allows people to come up to speed very quickly. But we want to be careful given sort of the soft ground that we’re springing off of here coming off of the fourth quarter and the average tenure of the sales force being quite a bit different at this point this year as it was last year. So with that integrated in, that explains our sort of back half projection.

Jason Bednar: Okay. All right. Fair enough. Appreciate that. Derrick, I know you said you reduced the cost structure by 10%, something on the order of that number. Can you expand upon what changed? Where did you source those savings from? Is that a gross number or is the net savings lower since you’ve had the add back some spending on the sales force side. And then — sorry, it’s a multi-parter. But with these changes that you made, can you give us a sense of what your fixed versus variable cost structure looks like now, just so we can have an idea of how much torque you have in the P&L once that top line starts to hum later this year?

Derrick Sung: Yes. Jason, thanks for the question. So we clearly got out in front of our SKUs over the last couple of years in terms of spending in anticipation of sales growth that just didn’t materialize in the time frame that we we thought it would. So we did take the difficult, but necessary steps to realign our cost structure to our current growth profile. The kind of the 10% reduction that I spoke of is kind of roughly 10% of kind of recurring costs across the board that we took out. There’s some puts and takes. There’s obviously some restructuring costs that we incur that we’re actually incurring this year. And so when you look at the numbers, the guide that we’re providing is kind of like 7% to 9% guide, incorporates some of that relative to where we were last year.

The majority of the costs that we took out, and we were very careful to ensure that we kept our sights on continuing to invest in our key growth initiatives, namely on the sales side, as Glen mentioned, we’re continuing to invest there. The sales force was not directly impacted by the cost restructuring. And on the R&D side, we’re continuing to invest in long-term future growth drivers, namely AeriSeal this year and into future years. So most of the expense reduction came from G&A and marketing. And we believe that with those expense reductions that we’ve made, which are recurring, we’re in a strong position now to demonstrate operating leverage, not only as you see this year, but as you see moving forward.

Operator: Our next question will come from the line of Rick Wise from Stifel.

Unknown Analyst: It’s Annie on for Rick. So I heard you call out AeriSeal in the CONVERT II trial as a key priority here for 2026. Obviously, there’s some investment required to ramp up enrollment and move toward commercialization, eventually. So I’m hoping you can talk about kind of how you plan to balance that out with your U.S. sales organization investments and your plans to extend the cash runway.

Glendon French: Yes. The — so first of all, the CONVERT trial we came in, we spent — I looked around, make sure we had the right people in the right places. And one of the key things that we looked at was ensuring that that we had the proper alignment within our U.S. sales organization. And the other area that I looked at immediately was making sure that we had the best possible alignment within our clinical function given the role of AeriSeal in our future. And the CONVERT II trial, we were not enrolling in the CONVERT II trial as fast as I felt we should be. And — so we made some realignments, we brought in a number of people who had been involved directly in the execution of our pivotal trial or our LIBERATE trial. One individual was here running another function and took over, once again, had formally run clinical and is now running it again.

So I’m thankful that he agreed to do that. And we brought in 2 folks underneath him who were very much involved in the execution of that trial. So in some ways, from a burn perspective, as you think about the execution of that trial, first of all, it’s not all that spectacular, a proportional amount of our annual burn. And number two, we’re trying to get things optimized and aligned to deliver on, I think, what we had hoped we would be doing from a rate of clinical enrollment. So I also don’t think that, that’s going to have a meaningful impact on the overall spend of the company and certainly will not touch or pressure in any way the appropriate spending on our commercial operations.

Unknown Analyst: Got it. Got it. And then just one more for me. Just thinking about longer term, appreciating that 2026 is more of a transition year for Pulmonx as your new commercial focus kind of takes hold? So I’m curious just how you’re thinking about the company’s longer-term growth potential? How would you sort of frame your longer-term growth aspirations now based on your time back into your respective roles.

Glendon French: Yes. Maybe I’ll start, and if Derrick wants to add to that. I’ll encourage him to do so. We came back — when I departed, we had put up 5 quarters of 40% growth in the U.S. And as a company, we’re growing 30%, and then things slipped and they slipped quite a bit. And it got a lot of people’s attention and had everything to do with my coming back. I think without a question, our intention is to take our growth profile to a much better place exactly where that is. I think we’ll learn a lot about that as we go through the year and we see the kind of traction that we get from the programs that we’re initiating. And the types of things that we’ll continue to refine and adopt as we go forward. So I don’t really think we’re in a position to be telling you much more than we expect us to get substantially better and we’re about that task, and I’m very confident we’re headed in the right direction.

Derrick Sung: Yes. And Annie, this is Derrick. I’ll just add, even within — with the full year 2026, our guidance implies, obviously, that we will sort of step up in growth through the year. And we expect that by the end of this year, we’ll be moving on a global basis to double-digit growth. So again, I don’t want to sort of give guidance beyond 2026, but even within this year, by the end of this year, our guidance implies that we will be growing double digits by the fourth quarter.

Operator: [Operator Instructions] Next question comes from the line of Frank Takkinen from Lake Street Capital Markets.

Unknown Analyst: This is Nelson on for Frank. Comprehensive overview. I guess maybe just you’ve described 2025 underperformance is largely internal wrong roll structure, wrong incentives, maybe too many incentives. But anything out there maybe fundamental from a market perspective — market penetration perspective that surprised you that maybe more challenging? Or just anything there that could be interesting.

Glendon French: The market is becoming increasingly active, which is, I think, a net positive. There are broader investments in the pulmonary space. Intuitive has a nice and growing business in the cancer side of our business. So these service line directors in hospitals are — they’re managing many more procedures and a lot more — the economics, I think, have gotten them moved up the hierarchy within hospitals. So I think that’s sort of a net positive. Again, in the short term, there have been moments along the way where there have been certain pressure on resources, but that’s fairly easy to respond to. These procedures aren’t done in operating rooms. So the procedure rooms are much more plentiful around the hospital. So we’ll be able to flex in that regard and pick up the resources necessary to set up and execute these programs.

So I think in general, the macro elements, whether you’re talking about reimbursement, whether you’re talking about places to do the procedure, people to execute the procedure. We just have to have the fundamentals in place. And as folks become increasingly invested in pulmonary, be that cancer or emphysema or COPD those are good things for us. So I think from a macro perspective, that feels like a net positive over time.

Unknown Analyst: Got it. And then you had mentioned like you specifically called out LungTraX Detect being a lower return activity that pulled sales force retention away? And maybe I missed it, but is that program being shelved or deprioritized, handed off? Or how are you thinking about just that in general.

Glendon French: We set off at the beginning of last year with the hypothesis that, that was a technology that would be useful potentially in most of our accounts. It is a great technology. It does all that we’ve said it does. One of the challenges, though, is that it’s really optimal for a certain subset of some of our larger systems at sites where all the elements are in place. And in any case, it’s something that is not — it doesn’t fit well in every single hospital. It took us some time to figure that out. I think that my review of prior updates indicated that there was a lot of discussion about it taking more time than we had thought it might take to set up think in properly selected hospitals that sort of have an appropriate profile, there’s an absolute place for LungTraX Detect.

So it’s not being deemphasized, I think, is being focused in certain types of situations as a real positive, potential positive. We have a number of accounts that are underway, and we’re keeping a close eye on them. But the initial feedback is that it is being helpful in terms of identifying patients that otherwise wouldn’t have gotten picked up.

Operator: Our next question will come from the line of Larry Biegelsen from Wells Fargo.

Unknown Analyst: This is Simran on for Larry. Maybe just another follow-up question on the U.S. sales force. I mean I would be curious to maybe understand how are you thinking about the ramp in terms of months to productivity and what early indicators should we be watching for to confirm that the ramp is tracking to plan.

Derrick Sung: Simran, this is Derrick. I’ll jump in and Glen can add some color here. I mean in general, it obviously differs territory to territory depending on what state the territory is when it was filled and when and how long it was open. But we normally look at kind of 6 to 9 months for a new rep or a new territory to get up the productivity curve. Now as Glen mentioned, it wasn’t like everybody left all at once and everybody came in all at once. So there’s a kind of — there’s a time frame here and for the new territories to ramp up to productivity. And so that is embedded in our guidance. So specifically, when we think about kind of U.S. sales growth, we kind of look at it as a gradual ramp from, say, mid- to high single-digit declines in the first quarter moving towards high single-digit growth in Q4, and I would think of it as kind of a sort of a linear-ish step-up.

And I think the best metric to look at, honestly, is just sort of being able to deliver on those sales because in aggregate, it will all be obviously reflected in our U.S. sales performance.

Glendon French: Yes, I would absolutely — I’m sorry, I would absolutely agree with what Derrick said. I would however — and I was — I hesitated when you asked the question because I thought it was a little bit of a smart a** response to say, look at the revenue number. But I do agree with Derrick, that, that is really what the — what’s going to be reflective of these folks coming up to speed. I will say that one of the most meaningful positive changes within our sales organization, since I departed was the adoption of this sort of senior rep, junior rep combination. The majority of our territories in general and certainly virtually every single one of our larger territories has this combination. And one of the real benefits of the combination is not only the ongoing ability to have one plus one equals something greater than 2.

But also, it facilitates, I believe, and I can see with the number of combinations of more tenured and newer folks together. It really facilitates the training process and bringing new people up to speed when they can be working with somebody who’s got a little bit more tenure, a little bit more ability to bring them up to speed. So anyway, that’s a real positive about the new construct. The new as defined as since I left a couple of years ago.

Unknown Analyst: Got it. That’s very helpful. And maybe just on the OUS side, and apologies if I missed this, but I guess just Japan, how do we think about contribution from that geography? I know the previous management team talked about enrollment in that post-approval study really kind of occurring in the back half of 2025, I believe, or maybe early 2026. So maybe just — is that a contributor to 2026 international sales? And just kind of what’s the status in that geography?

Glendon French: Well, it is a contributor because these are revenue-generating patients that are going into that trial. So it’s essentially — as a post-approval study. We are continuing to enroll the patients. And they — the enrollment is accelerating. So cases are increasing. That’s — it’s about all I’m prepared to say about that…

Derrick Sung: Yes. I mean it’s not a meaningful — I would say that it is not a meaningful growth driver in 2026 as we contemplate within our guidance versus 2025. We — as Glen said, we expect to continue through the post-market study in 2026. And true commercialization, I think, comes the following year. So it’s not a huge key to our guidance in 2026.

Unknown Analyst: Got it. That’s helpful. And sorry, for China as well, is that also the case? I know you talked about you’re awaiting the renewal certificate in the second half. So should we assume China sales are relatively kind of flattish to the prior year? Or are they depressed, I guess, just help me understand the China piece.

Derrick Sung: Yes. And thank you for asking because the China piece is a bit nuanced and does impact the year-over-year growth rates from an optics perspective, so I think it is important to clarify that. So — just to put this in context, China sales were less than 5% of our global revenue last year. But the majority of those sales into our China distributor last year, we realized in the first half of 2025. And so our guidance — in our guidance, we don’t contemplate much of a meaningful contribution from China at all in the first half of the year. And we do expect China to resume — our shipments to resume into China and sales to resume into China in the back half of the year. So there’s this mismatch in timing with tough comps, if you will, from the first half of 2025 relative to the first half of 2026, where we’re contemplating minimal sales.

And then the back half of 2026, where we expect our China sales to resume. And so that results in a — from a year-over-year growth perspective kind of double-digit declines year-over-year in the first half, and then that will flip to double-digit growth in the back half of the year. So we do get a bit of this sort of mismatch in timing that will result in some of this sort of funky optical year-over-year growth dynamics that you should be aware of.

Operator: This concludes the question-and-answer session. I will now turn it back over to Glen French for any closing remarks.

Glendon French: Thank you very much I just want to summarize by reinforcing that we remain confident in the business, and we’re really excited to rebuild momentum through a clear operating plan that targets our highest impact initiatives. I am confident that we have the right strategy and the right people in place to execute and we look forward to demonstrating our progress to you in the quarters ahead. Thank you very much for your time and your questions, and thank you very much to all the Pulmonx employees who work every day so hard on behalf of our patients. Have a good day.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

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