Pulmonx (NASDAQ:LUNG) executives said the company is entering 2026 focused on rebuilding U.S. momentum, advancing clinical programs designed to expand its total addressable market, and tightening spending to improve operating leverage, following what management described as a weaker-than-expected U.S. performance in 2025.
Management outlines causes of 2025 U.S. underperformance
President and CEO Glen French, who recently returned to the role, said his early review points to “internal operational and executional challenges” as the primary drivers of the U.S. shortfall last year. He highlighted three main factors: the U.S. sales organization was spread across too many initiatives (some not fully tested), territory manager roles were materially changed at the beginning of 2025 in a way that proved disruptive, and the 2025 incentive structure and quota allocation did not effectively motivate the sales force.
Commercial reset emphasizes focus and sales force stability
French said the company is streamlining the U.S. sales team’s priorities back to a smaller set of “high-impact mandates” and re-centering activity around what Pulmonx believes historically drove results. As part of organizational changes, French has taken a more direct day-to-day role in the U.S. sales organization, with the two U.S. area vice presidents now reporting directly to him.
He described a “near-to-far” approach prioritizing activities closest to the treating physician and established valve centers before pursuing broader outreach. The strategy includes:
- Re-engaging physician “champions” around clinical performance and protocols for Zephyr valves.
- Focusing engagement on pulmonary service line administrators, rather than initially targeting C-suite leadership, to help embed therapy into workflows and align staffing.
- Concentrating physician education and direct-to-patient efforts in geographies and hospital systems that already have established treating centers with capacity.
French said most open U.S. sales positions are now filled, but management expects time will be required for productivity to ramp. The company’s outlook assumes U.S. sales growth resumes in the back half of 2026.
In the Q&A, executives added that territory ramp typically takes about six to nine months, and that the company’s “senior rep, junior rep” pairing in many geographies helps train newer personnel and speed onboarding. French also said the company adjusted its approach to quota allocation and incentive plan design in 2026, returning to elements that were “well-received and well understood,” after last year’s structure created concerns among reps about earnings potential.
French also addressed LungTrax Detect, calling it “a great technology” but noting it is best suited for a subset of larger systems where “all the elements are in place.” He said it is not being de-emphasized, but is being focused on the right hospital profiles, with early feedback suggesting it can help identify patients who might otherwise be missed.
AeriSeal and CONVERT II trial positioned as a key market-expansion effort
French said Pulmonx is prioritizing its AeriSeal program as the “nearest term opportunity” to expand the market, with the CONVERT II pivotal trial intended to evaluate safety and effectiveness of the AeriSeal system in limiting collateral ventilation in severe emphysema patients. He said AeriSeal could address severe COPD patients with collateral ventilation who are not currently candidates for Zephyr valves.
To accelerate enrollment, French said Pulmonx changed leadership in clinical affairs, including bringing in personnel with experience from the company’s LIBERATE pivotal trial. He said enrollment momentum is improving and reiterated expectations that enrollment will be completed in 2027. French said the company estimates AeriSeal could potentially expand total addressable market by about 20% globally.
Financial results, cost actions, and refinancing
COO and CFO Derrick Sung detailed steps taken to strengthen the balance sheet and reduce spending. Sung said Pulmonx executed a cost restructuring that reduced ongoing operating expenses by more than 10% and recently closed a $60 million credit facility with a five-year interest-only structure that extends debt maturity to 2031. The facility includes a $40 million term loan drawn at closing to refinance an existing loan and an option to draw an additional $20 million through the end of 2027, subject to revenue milestones.
Sung said Pulmonx expects to reduce annual cash burn from $32 million in 2025 to $23 million in 2026, a decrease of nearly 30%.
For the fourth quarter of 2025, Pulmonx reported worldwide revenue of $22.6 million, down 5% from $23.8 million a year earlier (down 7% on a constant currency basis). Full-year 2025 worldwide revenue was $90.5 million, up 8% year over year (up 7% on a constant currency basis).
U.S. revenue was $14.1 million in Q4, down 11% from $15.9 million in the prior-year period, while full-year 2025 U.S. revenue was $57.0 million, up 1%. The company added 10 new U.S. treating centers in the quarter.
International revenue rose 8% in Q4 to $8.5 million (up 2% on a constant currency basis), driven by strength in major European markets, partially offset by no sales to the distributor in China as the distributor worked through inventory from earlier 2025 orders. Sung said the company expects renewal of its Chinese registration certificate in the second half of 2026. Full-year 2025 international revenue was $33.5 million, up 23% (up 19% on a constant currency basis).
Gross margin was 77.6% in Q4 2025 versus 74% a year ago, which Sung attributed primarily to a lower mix of distributor sales in international markets. Full-year 2025 gross margin was 74%.
Q4 operating expenses were $27.4 million, down 11% year over year; excluding $3.9 million of stock-based compensation, operating expenses declined 10%. Full-year 2025 operating expenses were $128.8 million, up 1%, including $19.3 million of stock-based compensation.
Net loss for Q4 2025 was $10.4 million, or $0.25 per share, compared with a net loss of $13.2 million, or $0.33 per share, a year earlier. Full-year 2025 net loss was $54.0 million, or $1.33 per share. Adjusted EBITDA loss was $5.5 million in Q4 and $30.6 million for the full year. Pulmonx ended 2025 with $69.8 million in cash, cash equivalents, and marketable securities, down $31.7 million from the end of 2024.
2026 guidance reflects second-half improvement expectations
Pulmonx guided to 2026 revenue of $90 million to $92 million, with management expecting year-over-year growth in both the U.S. and international businesses to resume in the back half of the year. In the U.S., the outlook assumes improving productivity as newly filled territories ramp and the refocused commercial strategy takes hold. Internationally, the company expects minimal sales to its China distributor in the first half of 2026, while European markets are expected to remain strong; management expects international year-over-year growth to resume in the second half.
Sung said China represented less than 5% of global revenue in 2025 and noted a timing mismatch: most China sales last year were recognized in the first half of 2025, while 2026 guidance assumes minimal China contribution in the first half, with shipments resuming in the back half. He said this dynamic could drive “double-digit declines” year over year in the first half, flipping to double-digit growth in the second half.
The company expects 2026 gross margin of approximately 75%, trending slightly higher in the first half and lower in the second half as distributor mix increases. Operating expenses are expected to be $113 million to $115 million in 2026, inclusive of about $21 million in non-cash stock-based compensation. Excluding stock-based compensation, Sung said the outlook implies a 7% to 9% decrease versus 2025.
In closing remarks, French said 2026 will be a year of “focused execution,” and management emphasized confidence in the underlying business as it works to regain sales momentum and advance clinical priorities.
About Pulmonx (NASDAQ:LUNG)
Pulmonx Corporation is a commercial-stage medical device company focused on bronchoscopic lung volume reduction for patients suffering from severe emphysema. The company’s flagship therapy, the Zephyr® Endobronchial Valve System, employs one-way valves delivered via a minimally invasive bronchoscopic procedure to collapse diseased portions of the lung, reducing hyperinflation and improving respiratory function. Complementing this treatment, Pulmonx offers the Chartis® Pulmonary Assessment System, which provides clinicians with quantitative measurements of collateral ventilation to aid in patient selection and optimize clinical outcomes.
The Zephyr Valve received the CE mark in Europe in 2008 and FDA approval in the United States in 2018, and it has since been adopted by leading respiratory and thoracic centers across North America and Europe.
