# Pulmonx Corp (LUNG)

Informational only - not investment advice.

CIK: 0001127537
SIC: 3841 Surgical & Medical Instruments & Apparatus
SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 38](/major-group/38/) > [SIC 3841 Surgical & Medical Instruments & Apparatus](/industry/3841/)
Latest 10-K filed: 2026-03-10
SEC page: https://www.sec.gov/edgar/browse/?CIK=1127537
Filing source: https://www.sec.gov/Archives/edgar/data/1127537/000112753726000015/lung-20251231.htm

## At a glance

FY2025 · period end 2025-12-31 · filed 2026-03-10 · accession 0001127537-26-000015 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001127537.json

| Metric | Value | FY | Provenance |
| --- | ---: | ---: | --- |
| Revenue | 90,497,000 USD | 2025 | verified |
| Net income | -54,003,000 USD | 2025 | verified |
| Assets | 129,291,000 USD | 2025 | verified |
| Free cash flow | -32,828,000 USD | 2025 | computed |
| Net margin | -59.67% | 2025 | computed |
| Operating margin | -59.30% | 2025 | computed |
| Revenue YoY | +8.01% | 2025 | computed |
| ROE | -99.79% | 2025 | computed |

Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Operating margin = operating income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity.

No market price, no rating, no forecast on this site. Not investment advice.

### Peer percentile fingerprint

| Ratio | LUNG | Peer median | Percentile | N |
| --- | ---: | ---: | ---: | ---: |
| Net margin | -59.7% | -6.0% | 15 | 63 |
| Operating margin | -59.3% | -2.7% | 13 | 63 |
| Revenue growth | 8.0% | 13.6% | 29 | 64 |
| FCF margin | -36.3% | 0.2% | 19 | 63 |
| ROE | -99.8% | -9.1% | 7 | 58 |
| ROA | -41.8% | -4.8% | 9 | 65 |
| Liabilities / equity | 1.39 | 0.89 | 66 | 63 |
| Current ratio | 5.07 | 3.23 | 70 | 65 |

Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 3841 Surgical & Medical Instruments & Apparatus, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking.

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 90497000 | USD | 2025 | 2026-03-10 |
| Net income | -54003000 | USD | 2025 | 2026-03-10 |
| Assets | 129291000 | USD | 2025 | 2026-03-10 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-10. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001127537.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  | 20,004,000 | 32,595,000 | 32,733,000 | 48,416,000 | 53,662,000 | 68,675,000 | 83,789,000 | 90,497,000 |
| Net income |  | -18,479,000 | -20,703,000 | -32,231,000 | -48,661,000 | -58,923,000 | -60,843,000 | -56,394,000 | -54,003,000 |
| Operating income |  | -15,052,000 | -17,838,000 | -32,332,000 | -47,304,000 | -58,637,000 | -61,935,000 | -57,704,000 | -53,663,000 |
| Gross profit |  | 12,286,000 | 22,414,000 | 21,202,000 | 35,630,000 | 39,865,000 | 50,752,000 | 62,001,000 | 67,139,000 |
| Diluted EPS |  |  |  | -3.16 | -1.35 | -1.59 | -1.60 | -1.44 | -1.33 |
| Operating cash flow |  | -18,394,000 | -20,765,000 | -30,633,000 | -41,388,000 | -45,083,000 | -37,610,000 | -31,537,000 | -32,376,000 |
| Capital expenditures |  | 316,000 | 720,000 | 911,000 | 3,671,000 | 1,318,000 | 807,000 | 1,447,000 | 452,000 |
| Assets |  |  | 53,533,000 | 263,708,000 | 235,173,000 | 193,676,000 | 177,781,000 | 162,850,000 | 129,291,000 |
| Liabilities |  |  | 35,572,000 | 37,574,000 | 41,934,000 | 39,669,000 | 59,466,000 | 77,041,000 | 75,175,000 |
| Stockholders' equity | -149,394,000 | -167,326,000 | -187,378,000 | 226,134,000 | 193,239,000 | 154,007,000 | 118,315,000 | 85,809,000 | 54,116,000 |
| Cash and cash equivalents |  | 4,124,000 | 14,767,000 | 231,561,000 | 148,480,000 | 101,736,000 | 83,547,000 | 70,905,000 | 69,751,000 |
| Free cash flow |  | -18,710,000 | -21,485,000 | -31,544,000 | -45,059,000 | -46,401,000 | -38,417,000 | -32,984,000 | -32,828,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  | -92.38% | -63.52% | -98.47% | -100.51% | -109.80% | -88.60% | -67.30% | -59.67% |
| Operating margin |  | -75.24% | -54.73% | -98.77% | -97.70% | -109.27% | -90.19% | -68.87% | -59.30% |
| Return on equity |  |  |  | -14.25% | -25.18% | -38.26% | -51.42% | -65.72% | -99.79% |
| Return on assets |  |  | -38.67% | -12.22% | -20.69% | -30.42% | -34.22% | -34.63% | -41.77% |
| Liabilities / equity |  |  |  | 0.17 | 0.22 | 0.26 | 0.50 | 0.90 | 1.39 |
| Current ratio |  |  | 2.90 | 19.96 | 11.85 | 9.14 | 6.50 | 5.58 | 5.07 |

## As-reported value updates

No tracked differences above grepcent's stated thresholds and capped precision rule were found between the earliest XBRL-filed value and the value currently on file for the standardized annual metrics grepcent tracks.


## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-08-04. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001127537.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q3 | 2022-09-30 |  |  | -0.38 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | -0.42 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 |  |  | -0.43 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 17,668,000 | -14,900,000 | -0.39 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 19,278,000 | -13,888,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 18,854,000 | -13,749,000 | -0.36 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 20,783,000 | -15,326,000 | -0.39 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 20,387,000 | -14,144,000 | -0.36 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 23,765,000 | -13,175,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 22,538,000 | -14,448,000 | -0.36 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 23,859,000 | -15,173,000 | -0.38 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 21,502,000 | -13,957,000 | -0.34 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 22,598,000 | -10,425,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 20,586,000 | -13,654,000 | -0.33 | reported discrete quarter |
| 2026-Q2 | 2026-06-30 | 22,756,000 | -10,080,000 | -0.24 | reported discrete quarter |

## Filed narrative (10-K & 10-Q)

## Business

Verbatim Item 1 Business section from LUNG's latest 10-K: [/company/LUNG/business/](/company/LUNG/business/).

## Risk Factors

Verbatim Item 1A Risk Factors from LUNG's latest 10-K: [/company/LUNG/risk-factors/](/company/LUNG/risk-factors/).

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1127537/000112753726000039/lung-20260630.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-08-04
Report date: 2026-06-30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions, that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections of this Quarterly Report entitled “Forward-Looking Statements” and “Risk Factors,” under Part II, Item 1A and those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on March 10, 2026.

Overview

We are a commercial-stage medical technology company that provides a minimally invasive treatment for patients with severe emphysema, a form of chronic obstructive pulmonary disease. Our solution, which is comprised of the Zephyr Valve, the Chartis System and the LungTraX Platform, is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches.

In 2018, we received pre-market approval (“PMA”) from the U.S. Food and Drug Administration (“FDA”) for the Zephyr Valve following its Breakthrough Device designation. The Zephyr Valve is commercially available in numerous countries globally. We have established reimbursement in major markets in North America, Europe and Asia Pacific and the Zephyr Valve has been included in treatment guidelines for COPD worldwide.

We also manufacture the AeriSeal System, which is a synthetic polymer foam designed to occlude, or close, collateral air channels in a target lung lobe and convert the target lung lobe to having little to no collateral ventilation (CV-). The AeriSeal System has received a “Breakthrough Device” designation by the FDA and a Certificate of Conformity (“CE Mark”) in Europe. The AeriSeal System is not approved by the FDA or approved for commercial sale in the United States. It is in a global clinical trial called CONVERT II to support a PMA application.

We market and sell our products in the United States through a direct sales organization. Our sales territory managers are focused on promoting awareness and increasing adoption of our solution primarily among the pulmonologists performing interventional pulmonary procedures across approximately 500 high-volume hospitals in the United States. We are expanding our commercial operations in the United States while continuing to foster our international growth. We employ both direct and distributor-based sales models, with 99% of our revenue generated in markets where we sell directly for the six months ended June 30, 2026.

In the United States, our solution is reimbursed based on established Category I Current Procedural Terminology (“CPT”) and ICD-10 Procedure Coding System (“PCS”) codes and associated APC and MS-DRG payment groupings. Current reimbursement in the United States is believed to cover the hospital costs of the procedure and related inpatient care. Commercial payors such as Aetna, Humana, and many of the largest Blue Cross Blue Shield plans including Anthem, Health Care Service Corporation, BCBS Michigan, and Highmark have all issued positive coverage policies for the Zephyr Valve, and United Healthcare no longer considers the procedure unproven or experimental. Medicare covers our solution for patients when medically necessary, and other commercial insurers are approving prior authorization requests on a case-by-case basis. Outside the United States, our solution is covered by major health systems across much of Europe, Australia, South Korea and Japan.

We manufacture all our products at our headquarters located in Redwood City, California. This facility supports production and distribution operations, including manufacturing, quality control, raw material and finished goods storage. We have manufactured all our products at this facility for over ten years. We also store finished goods at

33

secondary facilities. We seek to maintain higher levels of inventory to protect ourselves from supply interruptions and have an established distribution system for both U.S. and international customers.

To date, we have financed our operations primarily through the sale of our products, the sale of equity securities, and debt financing arrangements. We have devoted substantially all of our resources to research and development activities related to our solution, including clinical and regulatory initiatives to obtain marketing approval, sales and marketing activities, and investing in general and administrative infrastructure. We generated revenue of $22.8 million, with a gross margin of 78.0% and a net loss of $10.1 million, for the three months ended June 30, 2026 compared to revenue of $23.9 million, with a gross margin of 72.1% and a net loss of $15.2 million, for the three months ended June 30, 2025. For the six months ended June 30, 2026, we generated revenue of $43.3 million, with a gross margin of 78.0% and a net loss of $23.7 million, compared to revenue of $46.4 million, with a gross margin of 72.3% and a net loss of $29.6 million, for the six months ended June 30, 2025. As of June 30, 2026, we had an accumulated deficit of $545.3 million, cash and cash equivalents of $55.8 million, and $37.5 million of outstanding term loans and credit agreements, net of debt discount and debt issuance costs.

We have invested heavily in product development. Our research and development activities have been centered on driving continuous improvements to our solution. We have also made significant investments in clinical studies to demonstrate the safety and efficacy of the Zephyr Valve and to support regulatory submissions. We intend to continue to make significant investments in our sales and marketing organization throughout the United States, Europe and Asia Pacific. We have made, and intend to continue to make, investments in research and development efforts to develop our next generation products and support our future regulatory submissions to increase our addressable market and to expand indications and new markets. Because of these and other factors, we expect to continue to incur net losses for the next several years and we expect to require substantial additional funding, which may include future equity and debt financings.

Management believes that the Company’s existing cash and cash equivalents will allow the Company to continue its operations for at least the next 12 months from the date of the issuance of our condensed consolidated financial statements.

Factors Affecting our Business and Results of Operations

We believe there are several important factors that have impacted and that we expect will continue to impact our business and results of operations. These factors include:

Our Ability to Recruit, Train and Retain Our Sales Force and its Productivity

We have made, and intend to continue to make, significant investments in recruiting, training and retaining our direct sales force. This process requires significant education and training for our sales personnel to achieve the level of technical competency with our products that is expected by physicians and to gain experience building demand for our products. Upon completion of the training, our sales personnel typically require time in the field to grow their network of accounts and increase their productivity to the levels we expect. Successfully recruiting, training and retaining additional sales personnel will be required to achieve growth. In addition, inability to attract qualified sales personnel or the loss of any productive sales personnel would have a negative impact on our ability to grow our business.

We have in the past and expect in the future to enter into different compensation arrangements with our sales professionals, which include minimum guaranteed commissions. This has impacted our compensation expenses in the past and we expect it will do so in the future.

Physician, Patient and Hospital Awareness and Acceptance of Our Solution

We intend to continue to promote awareness of our solution through training and educating physicians, pulmonary rehabilitation centers, key opinion leaders and various medical societies on the proven clinical benefits of Zephyr Valves. In addition, we intend to continue to publish additional clinical data in various industry and scientific

34

journals and online and to present at various industry conferences. We plan to continue building patient awareness through our direct-to-patient marketing initiatives, which include advertising, social media and online education. We also intend to continue helping physicians in their outreach to patients and other healthcare providers. These efforts require significant investment by our marketing and sales organization, and vary depending upon the physician’s practice specialization, and personal preferences and geographic location of physicians, pulmonary rehabilitation centers and patients. In order to grow our business, we will need to continue to make significant investments in training and educating hospitals, physicians and patients on the advantages of our solution for the treatment of severe emphysema. We are also working to improve the efficiency of our commercial initiatives for treating centers to accelerate patient identification and treatment conversion.

Third-Party Reimbursement

Since achieving regulatory approval in the United States in 2018, we have launched the Zephyr Valve treatment and have made progress securing third-party payor reimbursement. The majority of our patients are Medicare-eligible beneficiaries. We estimate that roughly 75% of the potential Zephyr Valve patient population are Medicare beneficiaries, 5% are Medicaid beneficiaries, and 20% of the potential Zephyr Valve patient population is under third-party commercial payor policies or other government programs. We continue to work to broaden our coverage by private third-party payor policies. Commercial payors such as Aetna, Humana, and many of the largest Blue Cross Blue Shield plans including Anthem, Health Care Service Corporation, BCBS Michigan, and Highmark have issued positive coverage policies for the Zephyr Valve, and United Healthcare no longer considers the procedure unproven or experimental. Some commercial payors do not yet consider our solution medically necessary, but these same plans are approving prior authorization requests on a case-by-case basis. Medicare, currently without a public coverage policy, covers our solution for patients when medically necessary on a case-by-case basis and other commercial insurers not described above are approving prior authorization requests on a case-by-case basis.

We have a dedicated patient reimbursement support team in the United States that works collaboratively with patients and providers to help secure the appropriate prior authorization approvals in advance of treatment. Through this program, we continue to educate private insurers in the United States on our clinical data and patient selection tools in an effort to continue to expand the number of positive coverage policies. Outside of the United States, our solution is covered by major health systems across much of Europe, Australia, South Korea and Japan.

Competition

Our industry is highly

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A (excerpt)

Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1127537/000112753726000015/lung-20251231.htm
Complete FY 2025 MD&A: /company/LUNG/mda/fy2025/

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high
Filing date: 2026-03-10
Report date: 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion and analysis and other parts of this Annual Report on Form 10-K contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives, expectations, forecasts and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Part I, Item 1A, “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Overview

We are a commercial-stage medical technology company that provides a minimally invasive treatment for patients with severe emphysema, a form of chronic obstructive pulmonary disease. Our solution, which is comprised of the Zephyr Valve, the Chartis System and the LungTraX Platform, is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches.

In 2018, we received pre-market approval (“PMA”) from the U.S. Food and Drug Administration (“FDA”) for the Zephyr Valve following its Breakthrough Device designation. The Zephyr Valve is commercially available in numerous countries globally. We have established reimbursement in major markets in North America, Europe and Asia Pacific and the Zephyr Valve has been included in treatment guidelines for COPD worldwide.

We also manufacture the AeriSeal System, which is a synthetic polymer foam designed to occlude, or close, collateral air channels in a target lung lobe and convert the target lung lobe to having little to no collateral ventilation (CV-). The AeriSeal System has received a “Breakthrough Device” designation by the FDA and a Certificate of Conformity (“CE Mark”) in Europe. The AeriSeal System is not approved by the FDA or approved for commercial sale in the United States. It is in a global clinical trial called CONVERT II to support a PMA application.

We market and sell our products in the United States through a direct sales organization. Our sales territory managers are focused on promoting awareness and increasing adoption of our solution primarily among the pulmonologists performing interventional pulmonary procedures across approximately 500 high-volume hospitals in the United States. We are expanding our commercial operations in the United States while continuing to foster our international growth. We employ both direct and distributor-based sales models, with 95% of our revenue generated in markets where we sell directly for the year ended December 31, 2025.

In the United States, our solution is reimbursed based on established Category I Current Procedural Terminology (“CPT”) and ICD-10 Procedure Coding System (“PCS”) codes and associated APC and MS-DRG payment groupings. Current reimbursement in the United States is believed to cover the hospital costs of the procedure and related inpatient care. Commercial payors such as Aetna, Humana, and many of the largest Blue Cross Blue Shield plans including Anthem, Health Care Service Corporation, BCBS Michigan, and Highmark have all issued positive coverage policies for the Zephyr Valve, and United Healthcare no longer considers the procedure unproven or experimental. Medicare covers our solution for patients when medically necessary, and other commercial insurers are approving prior authorization requests on a case-by-case basis. Outside the United States, our solution is covered by major health systems across much of Europe, Australia, South Korea and Japan.

We manufacture all our products at our headquarters located in Redwood City, California. This facility supports production and distribution operations, including manufacturing, quality control, raw material and finished goods storage. We have manufactured all our products at this facility for over ten years. We also store finished goods at secondary facilities. We seek to maintain higher levels of inventory to protect ourselves from supply interruptions and have an established distribution system for both U.S. and international customers.

Table of Contents

To date, we have financed our operations primarily through the sale of our products, the sale of equity securities, and debt financing arrangements. We have devoted substantially all of our resources to research and development activities related to our solution, including clinical and regulatory initiatives to obtain marketing approval, sales and marketing activities, and investing in general and administrative infrastructure. We generated revenue of $90.5 million, with a gross margin of 74.2% and a net loss of $54.0 million, for the year ended December 31, 2025 compared to revenue of $83.8 million, with a gross margin of 74.0% and a net loss of $56.4 million, for the year ended December 31, 2024. As of December 31, 2025, we had an accumulated deficit of $521.6 million, cash and cash equivalents of $69.8 million, and $37.1 million of outstanding term loans and credit agreements, net of debt discount and debt issuance costs.

We have invested heavily in product development. Our research and development activities have been centered on driving continuous improvements to our solution. We have also made significant investments in clinical studies to demonstrate the safety and efficacy of the Zephyr Valve and to support regulatory submissions. We intend to continue to make significant investments in our sales and marketing organization throughout the United States, Europe and Asia Pacific. We have made, and intend to continue to make, investments in research and development efforts to develop our next generation products and support our future regulatory submissions to increase our addressable market and to expand indications and new markets. Because of these and other factors, we expect to continue to incur net losses for the next several years and we expect to require substantial additional funding, which may include future equity and debt financings.

Management believes that the Company’s existing cash and cash equivalents will allow the Company to continue its operations for at least the next 12 months from the date of the issuance of our consolidated financial statements.

Factors Affecting our Business and Results of Operations

We believe there are several important factors that have impacted and that we expect will continue to impact our business and results of operations. These factors include:

Our Ability to Recruit, Train and Retain Our Sales Force and its Productivity

We have made, and intend to continue to make, significant investments in recruiting, training and retaining our direct sales force. This process requires significant education and training for our sales personnel to achieve the level of technical competency with our products that is expected by physicians and to gain experience building demand for our products. Upon completion of the training, our sales personnel typically require time in the field to grow their network of accounts and increase their productivity to the levels we expect. Successfully recruiting, training and retaining additional sales personnel will be required to achieve growth. In addition, inability to attract qualified sales personnel or the loss of any productive sales personnel would have a negative impact on our ability to grow our business.

We have in the past and expect in the future to enter into different compensation arrangements with our sales professionals, which include minimum guaranteed commissions. This has impacted our compensation expenses in the past and we expect it will do so in the future.

Physician, Patient and Hospital Awareness and Acceptance of Our Solution

We intend to continue to promote awareness of our solution through training and educating physicians, pulmonary rehabilitation centers, key opinion leaders and various medical societies on the proven clinical benefits of Zephyr Valves. In addition, we intend to continue to publish additional clinical data in various industry and scientific journals and online and to present at various industry conferences. We plan to continue building patient awareness through our direct-to-patient marketing initiatives, which include advertising, social media and online education. We also intend to continue helping physicians in their outreach to patients and other healthcare providers. These efforts require significant investment by our marketing and sales organization, and vary depending upon the physician’s practice specialization, and personal preferences and geographic location of physicians, pulmonary rehabilitation centers and patients. In order to grow our business, we will need to continue to make significant investments in

Table of Contents

training and educating hospitals, physicians and patients on the advantages of our solution for the treatment of severe emphysema. We are also working to improve the efficiency of our commercial initiatives for treating centers to accelerate patient identification and treatment conversion.

Third-Party Reimbursement

Since achieving regulatory approval in the United States in 2018, we have launched the Zephyr Valve treatment and have made progress securing third-party payor reimbursement. The majority of our patients are Medicare-eligible beneficiaries. We estimate that roughly 75% of the potential Zephyr Valve patient population are Medicare beneficiaries, 5% are Medicaid beneficiaries, and 20% of the potential Zephyr Valve patient population is under third-party commercial payor policies or other government programs. We continue to work to broaden our coverage by private third-party payor policies. Commercial payors such as Aetna, Humana, and many of the largest Blue Cross Blue Shield plans including Anthem, Health Care Service Corporation, BCBS Michigan, and Highmark have issued positive coverage policies for the Zephyr Valve, and United Healthcare no longer considers the procedure unproven or experimental. Some commercial payors do not yet consider our solution medically necessary, but these same plans are approving prior authorization requests on a case-by-case basis. Medicare, currently without a public coverage policy, covers our solution for patients when medically necessary on a case-by-case basis and other commercial insurers not described above are approving prior authorization requests on a case-by-case basis.

We have a dedicated patient reimbursement support team in the United States that works collaboratively with patients and providers to help secure the appropriate prior authorization approvals in advance of treatment. Through this program, we continue to educate private insurers in the United States on our clinical data and patient selection tools in an effort to continue to expand the number of positive coverage policies. Outside of the United States, our solution is covered by major health systems across much of Europe, Australia, South Korea and Japan.

Competition

Our industry is highly competitive and subject to rapid change from the introduction of new products and technologies and other activities of industry participants. Our goal is to establish our solution as a standard of care for severe emphysema. Existing treatments include medical management, lung volume reduction surgery, lung transplantation as well as other minimally invasive treatments. Some of our competitors have several competitive advantages, including established relationships with pulmonologists who common

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]

Read the full FY 2025 MD&A: /company/LUNG/mda/fy2025/
All MD&A years: /company/LUNG/mda/


## MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page.

- [FY 2024 MD&A](/company/LUNG/mda/fy2024/): filed 2025-02-25; accession 0001127537-25-000012 (https://www.sec.gov/Archives/edgar/data/1127537/000112753725000012/lung-20241231.htm)
- [FY 2023 MD&A](/company/LUNG/mda/fy2023/): filed 2024-02-27; accession 0001127537-24-000024 (https://www.sec.gov/Archives/edgar/data/1127537/000112753724000024/lung-20231231.htm)
- [FY 2022 MD&A](/company/LUNG/mda/fy2022/): filed 2023-03-01; accession 0001127537-23-000011 (https://www.sec.gov/Archives/edgar/data/1127537/000112753723000011/lung-20221231.htm)
- [FY 2021 MD&A](/company/LUNG/mda/fy2021/): filed 2022-03-01; accession 0001127537-22-000013 (https://www.sec.gov/Archives/edgar/data/1127537/000112753722000013/lung-20211231.htm)




## Macro cross-references

Indicators mapped to this company's SIC classification (industry 3841 Surgical & Medical Instruments & Apparatus) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim.

- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm

Macro-to-micro threads including this sector: [Inflation (CPI / PCE / PPI)](/thread/inflation-cpi-pce-ppi/), [US labor market](/thread/us-labor-market/), [Growth & output](/thread/growth-output/), [Money & trade](/thread/money-trade/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/), [Industrial orders & inventories](/thread/industrial-orders/), [Trade & external](/thread/trade-external/).

All macro indicators: /indicators/


## For LLMs & downloads

Markdown twin: /company/LUNG.md · JSON record: /company/LUNG.json · verified financials: /company/LUNG/financials.json / /company/LUNG/financials.csv · machine TOC for the whole site: /llms.txt