Participants

Laine Morgan; Investor Relations; Gilmartin Group LLC

Steven Williamson; President, Chief Executive Officer, Director; Pulmonx Corp

Mehul Joshi Joshi; Chief Financial Officer; Pulmonx Corp

Anna Ponsi; Analyst; Stifel

Frank Takkinen; Analyst; Lake Street Capital Markets

John Young; Analyst; Canaccord

Jane-Marie Lai; Analyst; Citi

Joseph Downing; Analyst; Piper Sandler

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Pulmonx first quarter 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to turn the conference over to Laine Morgan, Investor Relations. Please go ahead.

Laine Morgan

Good afternoon, and thank you for participating in today's call. Joining me from Pulmonx are Steve Williamson, President and Chief Executive Officer; and Mehul Joshi, Chief Financial Officer. Earlier today, Pulmonx issued a press release announcing its financial results for the quarter ended March 31, 2025. A copy of the press release is available on Pulmonx's website. Before we begin, I'd like to remind you that management will make statements during the 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, the timing and results of clinical trials, physician engagement, expense management, market opportunity, guidance for revenue, gross margin and operating expenses. 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 annual report on Form 10-K filed with the SEC on February 25, 2025. Also, during this call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on 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, April 30, 2025.
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'll turn the call over to Steve.

Steven Williamson

Thanks, Laine. Good afternoon, everyone, and welcome to our first quarter 2025 earnings call. Here with me is Mehul Joshi, our Chief Financial Officer. I am pleased to report that Pulmonx delivered worldwide sales of $22.5 million in the first quarter of 2025, representing 20% growth over the same period last year and 21% on a constant currency basis. We're encouraged by our team's continued execution of our commercial initiatives, and we remain confident in our ability to deliver on our previously communicated revenue guidance of $96 million to $98 million for the full year 2025.
Throughout the first quarter, we made steady progress executing our Acquire, Test and Treat strategy, setting the stage for sustained growth and long-term success. This strategy is focused on helping our customers more efficiently acquire the right patients, test them for eligibility, and ultimately treat more patients suffering from COPD. We expect the strong foundation we are building will help accelerate penetration into our estimated $12 billion market opportunity and support growth at or above 20% over the long-term. As part of the first step of our strategy to acquire the right patients, we're increasing both clinician and patient awareness and engagement, while at the same time, rolling out tools like LungTraX Detect to help our customers identify patients with severe emphysema, who are already under their care. Our market research indicates that the vast majority of Pulmonologists are aware of endobronchial valves, but less than 1/3 have referred a patient for evaluation.
Our data indicate this is primarily related to a lack of familiarity with patient eligibility criteria. To address this gap in awareness, in Q1, we hosted over 40 peer-to-peer events, engaging and educating providers in the community, who manage COPD patients, about the selection criteria and benefits of Zephyr Valves. In addition, following the success of our previous Medscape CME courses, which engaged over 37,000 clinicians, in early April, we were excited to launch two new CME modules through Medscape that build on the prior programs. While virtual education is a cost-effective means of reaching a large audience, often in-person education of the highest potential clinicians can help drive engagement and action. As our sales team has successfully established a footprint of treating centers across the globe, we're now beginning to pilot cost-efficient programs to engage larger numbers of high-potential COPD clinicians in our most developed markets.
This year, we're expanding our field presence by hiring therapy awareness specialists dedicated to community physician education, who we expect to increase referrals for valve treatment. We've hired and trained our first seven target geographies in the U.S., and we anticipate they will begin to make an impact starting in the second half of the year. One of the dynamics we've also identified through our research is that clinicians less familiar with valves may be reluctant to refer unless prompted by the patient, for fear the patient may not qualify and be disappointed. For that reason, we've seen benefits to educating patients to be their own advocates, and encourage their physicians to explain their full range of options. In Q1, we continued to refine our direct-to-patient targeting and education, and we saw a record number of unique patient engagements driven by these DTP initiatives.
As a result of these efforts, we're confident we are on track to meet the patient education goals communicated on our last call. In addition to our work on education and engagement of providers, we are increasingly encouraged by our customers' progress in identifying patients, who may qualify for valves, who are already under management in their facilities for other medical conditions. Our LungTraX Detect system prospectively analyzes CT scans and hospital PACS systems to identify patients with radiographic emphysema, and seamlessly integrates them into a simple workflow for further evaluation. We are encouraged by the early results of our first handful of active centers where LungTraX Detect customers are seeing an average rate of emphysema detection of approximately 15%, consistent with previously published data. We're also seeing a significant increase in the number of patients entering workup in our pilot sites.
Most importantly, clinicians seem to grasp the benefits of shifting from lung cancer screening to a more comprehensive lung health screening approach. I'm pleased with the number of customers entering the contracting phase, and we expect to see more hospitals activating LungTraX Detect throughout the year. Now shifting to the second leg of our strategy. The test phase focuses on relieving what can be a bottleneck to care, the coordination of patient workflow and helping scale high-volume treatment centers. One key element to this is gaining hospital administrative support.
The concept that is increasingly resonating with hospital executives is the value of building and scaling comprehensive lung health programs, which offer broad benefits compared to siloed disease-specific programs for lung cancer, lung transplantation or COPD. For example, many hospitals today offer cancer screening, but these programs are often not set up to trigger action on other serious conditions found by the screening, such as emphysema. Leading hospitals are now establishing lung health programs that have care coordination and clinical pathways designed to support holistic patient care. These hospitals recognize that by investing in pulmonary patient care, they can attract many new patients into their health care system and optimize the care of patients they already see. By being proactive, these hospitals are improving the health of communities they serve, increasing reimbursement for their system and reducing mortality from lung disease.
We have found that the most successful centers have dedicated support staff, including clinical navigators who enhance workflow efficiency by guiding patients through the testing process. However, some institutions hesitate to add additional head count. To address this, we're marketing a new program that offers our hospitals a third-party technology-enabled solution to virtually manage patients through the hospital's workflow process. Early feedback from the first customer has been that the service efficiently streamlines the process of qualifying patients from LungTraX Detect and scheduling them for workup. We believe this third-party service is an efficient solution for hospitals to scale workup without adding internal head count.
Although we are in an early phase, we're encouraged by our results, thus far, and have begun targeted marketing of this program to LungTraX Detect customers and customers with internal resource constraints. Another way to expand test capacity is to expand the number of centers screening patients. In Q1, we also added 10 new U.S. accounts, ending the quarter with 285 active accounts. We define active accounts as centers that have placed a revenue-generating order in the quarter.
Looking ahead, we'll continue to add new high potential accounts opportunistically. Turning to the third and final leg of our strategy focused on treat. We are increasing our global footprint and seeking to expand indications to fuel our long-term growth potential. In Q1, we delivered strong international year-over-year revenue growth of 39%, marking a material acceleration. As we anticipated, results were driven by continued strength in China and growth in select international markets.
In Europe, we continue to deploy proven sales tools we utilize in the U.S. for use in local geographies. This includes operational best practice sharing, community physician engagement, virtual case discussions with experts and peer-to-peer education programs. Furthermore, we're exploring a variety of targeted approaches to increase severe emphysema screening and existing accounts looking to develop their case volumes further, such as review of pulmonary function test results and lung cancer screening test results for patients with high levels of trapped air or emphysema destruction. We anticipate the impact of our international efforts to continue to drive revenue growth in the near-term, particularly through the first half of 2025.
Outside of Europe, we're making progress on our Japanese post-market surveillance study, which supports our plans for broader commercialization in approximately 2026. As one of the largest medical device markets in the world, Japan represents a significant opportunity where an estimated 100,000 patients stand to benefit from Zephyr Valves. To build awareness of our technology in Japan, we hosted several medical education events during Q1, engaging over 500 COPD-focused physicians as we continue to enroll in our post-approval study and begin to see the market ahead of commercial launch. On expanding indications, we continue to increase enrollment and ACTIVATE centers around the world in our AeriSeal CONVERT II trial. Once we receive PMA approval, AeriSeal will allow us to treat emphysema patients with collateral ventilation, which we expect to expand our immediately addressable market of eligible patients by an estimated 20% globally.
We continue to anticipate the commercial launch for AeriSeal outside of the U.S. in approximately 2026 and in the U.S. in approximately 2027. Overall, I am pleased with the progress of our ongoing programs, which have positioned us as a strong partner to our accounts by offering comprehensive solutions across the entire patient care journey. We believe our combined efforts to grow patient volume, increase test efficiency, and expand the ability to treat patients will accelerate penetration of the market opportunity for Zephyr Valves.
That said, it will take time to implement these programs across our account base, and it will also take time for new patients to work through the system to treatment. While U.S. growth has moderated over the past four quarters, it has sharpened our view of key pressure points in the patient funnel. And we're taking decisive action to unlock the next phase of expansion. Early results from targeted initiatives are encouraging, and we believe they will set the foundation for accelerated U.S.
growth in the back half of the year. The question we consistently pressure test when assessing the U.S. opportunity is the total addressable market or TAM. Are there truly 500,000 patients with severe emphysema who can benefit from valves? Based on the engagement and volume we see through our direct-to-patient programs, we believe the answer is unequivocally yes.
Every day, physicians hear from patients across the country who are severely debilitated, out of options and unaware that treatment is available. The unmet need is large and it is urgent. Today, we have hundreds of customer sites covering major metropolitan areas. The infrastructure is in place. The challenge lies in better connecting these patients to the physicians who can treat them.
As I mentioned before, our data shows that fewer than 1/3 of community pulmonologists are actively referring patients for BLVR and typically only after all other options have failed. This gap in awareness is something we are actively addressing. As I highlighted, we've launched a multipronged strategy incorporating therapy awareness specialists, expanded peer-to-peer education efforts and launched a national CME program through Medscape to drive best practices more broadly. In parallel, LungTraX Detect is enabling hospitals to proactively identify valve candidates directly from hospital PACS systems, bypassing traditional referral bottlenecks and accelerating patient access to care. Further, we're working to enable greater efficiency, particularly with regard to the speed at which patients move through the workup and treatment process.
LungTraX Connect addresses this directly, streamlining everything from CT scan uploads to patient tracking and workflow management. It is becoming a critical tool for patient care coordinators to improve throughput, reduce delays and enhance the overall patient experience. The patients are there, the programs to treat them exist, and now the focus is connecting the two. We anticipated this plateau, we've acted decisively, and we've taken actions to stem what we believe is a temporary slowdown and expect Q1 to represent a low point of U.S. growth, as we anniversary our first half of tough comps and expect to see the impact of these initiatives in the second half of the year, positioning us to return to consistent, sustainable long-term U.S.
growth. Finally, I'd like to provide an update on the civil investigative demand we received from the U.S. Department of Justice in December of 2022. As a reminder, the original action was filed in connection with the request for information under the False Claims Act and the Anti-Kickback Statute. I am pleased to report that on March 31, 2025, we received notice that the DOJ formally declined to intervene in the case.
We remain committed to operating with the highest standards of integrity and compliance, and we're pleased to put the CID behind us, as we continue to focus on delivering value to patients, providers and shareholders. In conclusion, our Q1 performance reinforces our belief that Pulmonx is well positioned for sustainable growth in the long-term, and we are laying the foundation for continued success as we execute on our strategic initiatives. Now I'll turn the call over to Mehul to provide a more detailed review of our first quarter results.

Mehul Joshi Joshi

Thank you, Steve, and good afternoon, everyone. Total worldwide revenue for the three months ended March 31, 2025, was $22.5 million, a 20% increase from $18.9 million in the same period of the prior year and an increase of 21% on a constant currency basis. Our strong top-line performance underscores the continued execution of our long-term strategy and adoption of Zephyr Valves. U.S. revenue in the first quarter was $14.2 million, an increase of 11% from $12.9 million over the prior year period.
U.S. growth was generally as expected, particularly when considering the exceptionally challenging prior year comparison, a factor we accounted for in our projections. International revenue in the first quarter of 2025 was $8.3 million, a 39% increase from $6 million during the same period last year, and an increase of 43% on a constant currency basis. Strength in international revenue was particularly pronounced due to stronger-than-expected results in China. We believe this was driven by strong underlying demand for Zephyr Valves coupled with greater-than-expected distributor stocking in response to the evolving trade and regulatory landscape.
Our guidance contemplates this to be a driver of international revenue growth in the first half of 2025. Gross margin for the first quarter of 2025 was 73% compared to 75% in the prior year period. This gross margin is a direct result of robust international growth, which shifted our geographic revenue mix as anticipated. Importantly, this result is consistent with our expectations for the full year. Total operating expenses for the first quarter of 2025 were $30.9 million, an 8% increase from $28.6 million in the first quarter of 2024.
Noncash stock-based compensation expense was $5.6 million in the first quarter of 2025. Excluding stock-based compensation expense, total operating expenses in the first quarter of 2025 increased 10% from the same period of the prior year, consistent with our commitment to disciplined investment and cost optimization while scaling the business. R&D expenses for the first quarter of 2025 were $4.8 million compared to $4.2 million in the same period of the prior year. The increase was primarily driven by higher clinical expenses as enrollment in our clinical trials accelerates. Sales, general and administrative expenses for the first quarter of 2025 were $26.1 million compared to $24.4 million in the first quarter of 2024.
The increase was driven by expanded commercial investments, including direct-to-patient initiatives and programs to enhance clinician therapy awareness. Net loss for the first quarter of 2025 was $14.4 million or a loss of $0.36 per share as compared to a net loss of $13.7 million or a loss of $0.36 per share for the same period of the prior year. An average weighted share count of 40 million shares was used to determine loss per share for the first quarter 2025. Adjusted EBITDA loss for the first quarter of 2025 was $8.5 million as compared to $8 million in the first quarter of 2024. We ended March 31, 2025, with $88.7 million in cash, cash equivalents and marketable securities, a decrease of $12.8 million from December 31, 2024.
As a reminder, the first quarter is historically our most cash-intensive quarter, primarily due to the timing of annual bonus payments. We remain well-capitalized to achieve our near- and long-term objectives. Our current liquidity, combined with consistent top line growth and expanding operating leverage support our confidence in achieving cash flow break-even with the resources currently on hand. To further enhance balance sheet flexibility, in April 2025, we successfully extended the interest-only period on our $37 million term loan by an additional three years. The interest-only payment period will now run through the remaining loan period with a full principal payment due in October 2027.
Turning to guidance. We are reaffirming our full year 2025 guidance for revenue, gross margin and operating expenses. We continue to expect full year 2025 reported revenue to be in the range of $96 million to $98 million, anticipating growth generally in line with our prior expectations. While our revenue guidance incorporates current full year foreign exchange rate projections, future fluctuations in global currency markets could affect reported revenue growth. In the U.S., we remain focused on scaling commercial initiatives, as highlighted previously by Steve, which are expected to drive an acceleration of growth in the second half of 2025, as patient engagement and therapy adoption increases across our key accounts.
Internationally, we continue to project solid growth in the second quarter and thereby the first half of the year as previously communicated. We anticipate typical seasonality in the latter half of the year as we further strengthen our global footprint and commercial execution. We are actively monitoring global trade policies, including tariffs and assessing the potential impact on international revenue. We expect gross margin for the full year to be approximately 74%, with improvement anticipated in the second half of the year driven by favorable geographic mix, higher production volumes and the continued impact of cost optimization initiatives. We manufacture all our products in the United States and rely on a combination of in-house processing and third-party suppliers for raw materials and components.
The cost of materials imported to build our products is nominal. And with our current inventory position, we do not expect gross margins to be materially affected by fluctuations in global trade policies in the short term. Full year operating expenses are projected to be $133 million to $135 million, including approximately $22 million in noncash stock-based compensation. This outlook continues to reflect full investment in our Acquire, Test and Treat strategy, which remains central to our growth and market expansion plans. In closing, we are confident in our trajectory for 2025 and beyond.
With strong momentum, robust market expansion initiatives and continued operational discipline, we are well-positioned to drive the next phase of our growth. With that, I'd like to turn the call back to Steve for his closing remarks.

Steven Williamson

Thanks, Mehul. In summary, we had a strong start to the year marked by robust first quarter growth and continued success in our innovative commercial and clinical programs. Looking ahead, we've got a strong balance sheet and a clear strategy that we believe will support continued future growth at or above 20% over the long-term. We remain confident in our opportunity, plans and team as we build a promising future for patients around the world with severe lung disease. I'd like to thank you for your attention, and we'll now open up the call for questions.
Operator?

Question and Answer Session

Operator

(Operator Instructions) Rick Wise, Stifel.

Anna Ponsi

This is Annie on for Rick. I was hoping you could give us some additional color on your guidance outlook. It's nice to see the outperformance in the first quarter, but I'm hoping to better understand your caution about raising guidance, given all these positive commercial initiatives that are underway? And are you just thinking it might be too early in the year? Or are there other reasons that you're thinking about?
Any color there would be great.

Mehul Joshi Joshi

Yes, Annie, this is Mehul Joshi. I don't know if you said raising guidance. We have reiterated 2025 revenue guidance at $96 million to $98 million, as we had stated in the Q4 call. And in that, we had guided the first half growth to be driven by our international business and the second half growth to be driven by the U.S. business.
Q1 mostly materialized as anticipated and the first half is on track. So there has been no change from what we discussed about a quarter ago. And this is -- we're also continuing to execute on our U.S. initiatives, which Steve talked about, LungTraX, physician education programs, virtual navigator pilots, DTP and so on to help drive the U.S. growth.
So our guidance stands as is based on Q1 hitting as we anticipated.

Anna Ponsi

And then just one more follow-up. Can you kind of help us understand where upside to full year guidance could come from as the year unfolds?

Mehul Joshi Joshi

Yes. I would say I think the other question you had asked maybe that I hadn't answered is, why aren't we raising guidance? So I think because we hit 21% constant currency growth and our guidance is $96 million to $98 million, which is 16% to 18% on a constant currency basis. I think the one thing as I think everyone is concerned about is the global macroeconomic environment is in flux and tariffs and FX drive some uncertainty. So we're kind of watching and waiting on that.
Where there is opportunity is adoption of some of our initiatives in the U.S., specifically LungTraX, how we're working to educate COPD prescribing physicians, and our DTP program. So as those investments take hold and we make progress on those initiatives, that could be upside for Pulmonx in the second half of the year.

Steven Williamson

Yes, Annie, I'll just add on to that. So if you look at the DTP metrics that we have, they're actually doing very well. We see a large number of patients are first-time patients that are coming into our website and either taking a quiz or calling into our helpline and becoming educated on the product. Those numbers continue to grow quarter-over-quarter. We also have a strong foundation of treatment centers that are set up across the United States.
And the connection between those two is really what we're focused on. We've got a number of different initiatives. These therapy awareness specialists that I talked about, we've got seven of them have that will be -- actually, they just joined and they've been trained. So if we start to see big pick up there, and that coupled with what we're seeing with LungTraX Detect and as we go through the contracting process with that with some of these larger hospital systems, those would be potential tailwinds for the back half of the year.

Operator

Frank Takkinen, Lake Street Capital Markets.

Frank Takkinen

Congrats on the solid start to the year. I wanted to start with maybe kind of boiling down the Acquire, Test, Treat strategy you're implementing, Steve. I know there's a number of initiatives that you're putting in place at once, and I'm sure there's some early learnings. That's what I wanted to ask about, which of the programs do you think have been most impactful in the early days? And which of these do you think are really going to get at the bottlenecks that you referenced earlier in the remarks?

Steven Williamson

Yes. Our marketing and peer-to-peer education have really been highlights for us. We see very, very good response from the physicians that attend our peer-to-peer events. We also do a clinical excellence summit, which we bring in some of the smaller facilities or new programs to talk with some of the facilities that have built out big programs. I think those have been early success stories for us.
The next phase of that is really getting after these community physicians with the therapy awareness reps. That's going to be a good indicator for us as they get out there and we can start educating these doctors. And hopefully, we'll be able to move that needle on the percent of these doctors that are actually sending patients into treaters. So that's one. Secondly, I would say, LungTraX.
We really have seen a positive momentum. The sales force is out there. They're aggressively promoting it. We're seeing great traction. We've got dozens of accounts that have actually begun.
They're in various phases of the contracting stage right now. And so I think that would be really -- that's a big, big potential growth driver for us in the future.

Frank Takkinen

Sorry, one clarifying and sorry if I missed it. Did you disclose how many LungTraX accounts are active today?

Steven Williamson

We're really early in the process, Frank. So we haven't disclosed that. I will say that we've got dozens -- several dozen contracts that are currently going through process. So as you may or may well not know, in late January, we trained our sales force on this. They got out -- started rolling it out to their customers in kind of the February and March time frame.
So once they do that, we began security reviews and contracting. And so those take a little bit of time to get through the hospitals. And so I would say the traction that we're getting as we get into this contracting phase is something that I feel good about. I think we're seeing a willingness of customers to adopt this technology to identify patients possibly that are already in their system.

Frank Takkinen

That's helpful. And then just last one. I know it's a fluid environment, but what have you been hearing from some of your international partners as it relates to some of the tariff commentary? Have any of them changed ordering patterns or kind of given you any inclination to think that they may change ordering patterns? Any color related to the tariffs in your international market would be helpful.

Mehul Joshi Joshi

Yes. Frank, this is Mehul. So we haven't heard too much from most of our international partners and our direct businesses. But per our prepared remarks, we had strength in international revenue that was pronounced by stronger results in China. And as I had indicated that we believe that strong demand was really driven by underlying demand for Zephyr Valves, but also there was greater-than-expected stocking by the distributor in response to these evolving macroeconomic things that are going on.
So other than that, we haven't really heard too much. I think everyone is kind of still in the wait-and-see mode.

Steven Williamson

I'll add on to that, Frank, if I can, quickly. So in Europe, we haven't really seen much, as Mehul said. I don't know that we've seen really anything. What we have seen is, obviously, in China, there's a lot of back and forth there. However, that's something that's been contemplated in our '25 guidance.
We realized that there would be some first half buying from our Chinese distributors. And so we're seeing that play out as we had originally expected.

Operator

John Young, Canaccord.

John Young

I want to also focus maybe a bit on China. Any way you could help us think about how much China is today of OUS sales? And any metrics you're willing to share to on the amount of stocking or pull forward you saw in Q1? And also, do you expect continued China orders in Q2?

Mehul Joshi Joshi

Yes. John, thanks for the question. So we did -- as indicated, there was some strong buying. We believe our distributor bought ahead of some of the macro environment changes that are happening. There's likely -- we don't know exactly.
There's pretty strong demand in China. They've opened up 12 regions. There's approximately 20 sales reps that they have out there. So there's a lot of robust selling. And we think the distributor bought maybe a quarter's worth of inventory in the first quarter.
But we do expect continued purchasing in the second quarter from the distributor.

John Young

And then just as a follow-up to that, have the reciprocal tariffs been factored into that Q2 buying at this point? And how have you factored that into the 2025 guidance?

Mehul Joshi Joshi

Yes. I mean we haven't really reflected any potential impact of future tariffs on or trade policy changes that will affect global macroeconomic environment, right. But we do expect the distributor to buy in Q2 and won't get into how and when and how much. But yes, we do have that expectation. The other question you had asked is, can we break it out?
We don't -- as you know, we don't break out revenue by international market, but we do report in our Q in the segment information note kind of the regional breakout. So you'll be able to see that very shortly.

Operator

And our next question comes from Joanne Wuensch with Citi.

Jane-Marie Lai

It's Jane-Marie on for Joanne. How are you balancing SG&A leverage with your treatment center expansions, physician training and all those different program implementations associated with building awareness?

Mehul Joshi Joshi

Yes. Thanks for the question. We are really focused on operating leverage. It's one of our key strategic initiatives, and we're mostly investing in initiatives that drive revenue and future revenue. So we are balancing leverage with investment, but our goal is to grow revenues, as Steve cited in his remarks.
And so we're really focused on driving revenue growth with the investment that we have on hand. Now in Q1, our leverage was not as high because our gross margins were lower as a result of the geographic mix. But as we get into the second through fourth quarters, we'll continue to drive leverage in our P&L.

Jane-Marie Lai

And as a follow-up, it also sounds like your R&D will continue to grow for now, given all your trials and other innovations up ahead. When do you see it moderating or at least start to leverage as well?

Mehul Joshi Joshi

Well, clinical trial expenses are always consistent with enrollment. So as enrollment increases, our R&D expenses will continue to go up. And as we roll through '25 into '26 and complete enrollment, we'll see R&D expenses go up. But once enrollment is complete, they'll start to trail down thereafter.

Operator

(Operator Instructions) Joseph Downing, Piper Sandler.

Joseph Downing

The U.S. revenues came in a bit light versus our model. Curious, did you lose out on U.S. procedures due to weather dynamics or the tough flu season? And would you expect U.S.
volumes to accelerate? Or should we be thinking about the 1Q growth rate and geographic mix there as the right go-forward figures?

Steven Williamson

We didn't see a whole lot coming from weather or flu season. We -- actually, I think, one of the things that we were up against was a really tough comp. We continue to see growth in our largest hospital systems. We're building the programs. We've talked about these comprehensive lung care programs, lung health programs.
And those are starting to gain some traction with some of our larger accounts. And the concept there being that they have these patients coming in right now for cancer screening or nodule detection or nodule biopsy. And the ability to start to capture the 15% of those patients that are receiving CT scans, that do have radiographic emphysema and work them through to get them proper treatment, is very encouraging for some of these hospital administrators. So I would say that the comp was probably what made the U.S. growth seem a little bit lower than expected.
But at the same time, I think if you look at the initiatives that we're focused on right now across the board, they're really focused in these areas of connecting the patients that we've been able to identify from direct-to-patient advertising with these treating centers who are ready to take these patients and move forward.

Joseph Downing

And then just one more regarding the therapy awareness specialist. It seems like you're still in the early days here. So still a little bit more development to be had there. But do you expect maybe by the end of the year to expand past these seven territories you're already in? Or is it too early to say?

Mehul Joshi Joshi

Yes. I hope so because if we do, that means that it's really working well. Our goal was to put these in areas where we know that we've got strong sites that are able and willing and actually have a desire to grow. We want to make sure that we are educating the referring physicians in the communities there of this treatment. And so we'll look at metrics as they come on board to gauge their effectiveness.
And if we see that they're effective, we would put more of them in. It's a low-cost resource for us. And theoretically, the benefit should outweigh the cost by far.

Operator

I show no further questions at this time. I would now like to turn the call back over to Steve for closing remarks.

Steven Williamson

Well, thank you, everybody, for joining us today. To conclude, I want to take a moment to thank our Pulmonx employees worldwide for their continued dedication. They're out there fighting every day for every breath, so our patients don't have to. And for that, I'm very thankful. So thank you all for your time, and have a great week.

Operator

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