Pulmonx (LUNG) Q3 2026 earnings review
Pulmonx sales grow again, and cost cuts halve its loss
Pulmonx returned to sales growth while cutting its operating loss in half. The maker of Zephyr lung valves grew worldwide revenue 6% from a year ago to $22.8 million, as US sales ended a four-quarter slide and international markets outside China expanded 9%. Chief executive Glen French credited his rebuilt US sales team and lower overhead, and by our math the unchanged full-year plan points to 10% growth in the fourth quarter.
| Worldwide revenue excluding China | +7.4% from a year ago (by our math; total revenue +6.2%) |
|---|---|
| US revenue | $14.9M +6.8% from a year ago (after four quarters of decline) |
| Operating loss | $7.5M cut in half from $14.4M a year ago |
| Full-year outlook | Sales held gross margin raised to ~77%; cash burn cut to ~$22M |
⚖️ Verdict: 🟢 Bullish
The story got better because US hospital demand finally turned positive alongside deep cost cuts. Raising the gross margin forecast to 77% and trimming expected cash burn to $22 million show the reorganization is saving real cash. One caution: the $90 million to $92 million sales plan still leaves Pulmonx short of the $92.5 million needed to unlock its next $10 million loan tranche.
The question now is whether the third-quarter US rebound marks a lasting recovery in procedures per hospital or just a temporary bounce. If newer sales reps are gaining traction, fourth-quarter sales will hit the $24.8 million target implied by the full-year plan; if hospital usage stalls again, the company will miss its year-end goal. Fourth-quarter US revenue will settle it.
🐂 Bull Case
US Sales Grew After Four Quarters of Decline
Pulmonx makes the Zephyr Valve, a tiny medical device that helps patients with severe lung disease breathe better without major surgery. Its most important market is the United States, where sales had fallen from a year ago for four straight quarters while the company rebuilt its sales team.
"We are very pleased to have returned to year-over-year revenue growth in the third quarter." Chief executive Glen French credited "a fully staffed U.S. sales leadership team, a more focused global commercial team, and a realigned cost structure" for the turnaround.
The numbers support his claim, because US revenue rose 6.8% from a year ago to $14.9 million. Sales also grew 5.2% from the second quarter, even though the third quarter is usually a slower summer period for hospital procedures. One good quarter eases the concern about falling hospital productivity, but it takes a second quarter to prove the recovery will last.
What to watch: fourth-quarter US revenue and the number of new hospitals added in the third quarter, which arrives on the conference call. A second straight quarter of US growth would confirm that newer sales representatives are winning more procedures at existing hospitals.
Lower Sales Costs Halved the Operating Loss
Pulmonx restructured its operations at the start of the year to cut ongoing expenses by more than a tenth. The lung-device maker needed to shrink its losses while waiting for hospital procedure volumes to recover.
- Selling and overhead costs: $20.0 million, down 31.4 percentage points of revenue from a year ago to 87.7%
- Research and development costs: $4.9 million, down 1.2 percentage points of revenue to 21.3%
- Operating loss: $7.5 million, cut in half from $14.4 million a year ago
- Adjusted EBITDA loss (operating cash loss excluding stock pay and depreciation): $3.5 million, down 57% from $8.2 million
This cost discipline matters because revenue rose while total operating expenses fell 18% from a year ago. Pulmonx also lowered its full-year expense plan by $1.5 million at the middle of the range, to $108.5 million. Because stock-based pay fell by only $1 million in the new plan, the extra $0.5 million cut comes from real cash savings.
What to watch: fourth-quarter operating expenses, which the full-year plan puts at $27.8 million by our math. Staying at or below that level while sales rise in the fourth quarter would show the company can grow without adding back sales overhead.
Foreign Markets Outside China Kept Growing Near 9%
Pulmonx paused shipments to China last year while waiting for regulators to renew its product permit. Although the company won that renewal in June, it recorded zero sales in China for a third straight quarter "as we restart commercial activity in the region following the renewal of our Chinese registration certificate".
Excluding China, international sales rose 8.5% from a year ago to $7.9 million, and grew 9.3% at constant exchange rates. That beat the 8.6% constant-currency pace from the first half of the year. The missing China comparison also shrank to $0.2 million from $1.5 million in the second quarter, so total worldwide sales excluding China grew 7.4% by our math.
What to watch: first-quarter 2027 international revenue, when Pulmonx plans to resume material shipments to its Chinese distributor. A return of Chinese orders on top of 9% growth elsewhere would give the business a second growth driver next year.
🐻 Bear Case
Sales Still Miss the Target for Extra Loan Cash
When Pulmonx refinanced its debt in March, it highlighted up to $20 million in extra loan capacity to back its turnaround. The catch is that the lender requires at least $92.5 million in trailing twelve-month revenue before the company can draw the first $10 million.
In the third quarter, Pulmonx kept its full-year revenue forecast at $90 million to $92 million. By our math, trailing twelve-month sales reached $88.8 million in September, which gives the company more breathing room above its $85 million minimum loan requirement. However, even the top of its full-year forecast sits below the $92.5 million threshold needed to unlock the extra loan cash.
To hit the middle of its full-year plan, Pulmonx must generate $24.8 million in the fourth quarter, or 9.9% growth from a year ago by our math. That fourth-quarter target compares against an easy period last year when sales fell 4.9%, yet it still leaves the extra loan money out of reach.
What to watch: fourth-quarter revenue against the $24.8 million implied target, and the 2027 revenue outlook arriving in February. Unless fourth-quarter sales beat the top of the current forecast by more than $0.5 million, Pulmonx cannot tap its credit line this year.
Yearly Costs Still Exceed Sales by $17.5 Million
Pulmonx has promised to reach cash-flow breakeven using its existing resources, and the third quarter showed real progress on expenses. Even after those cuts, the company's cost structure remains built for a much larger business.
For the full year, Pulmonx plans to spend $108 million to $109 million on operating expenses while bringing in $90 million to $92 million of revenue. Excluding $14 million of non-cash stock pay, cash operating expenses of $94.5 million at the middle of the range still exceed total revenue by $3.5 million, before counting the cost of making the devices.
What to watch: the 2027 operating expense and cash burn plan in the fourth-quarter report. At a 77% gross margin, Pulmonx needs about $123 million in yearly sales just to cover its current cash operating expenses.
Risks this quarter didn't answer
Three standing questions about hospital adoption and future products got no update in the earnings release, because Pulmonx usually saves these details for its conference call or quarterly filing.
- New US hospitals added: not in the release; the conference call will show whether Pulmonx kept up its pace of adding about 10 treating centers per quarter.
- StratX lung-scan volumes: not in the release; any concrete number on the call would show whether patient screening is rising ahead of procedures.
- AeriSeal clinical trials: not in the release; investors need the publication date for the first trial and the European enrollment timeline for the second trial to judge when this new treatment can launch.
💲 Other KPIs
Total cash fell by $3.2 million in the third quarter to $52.9 million ($52.7 million in cash plus $0.3 million in restricted cash), by our math. That is a much slower cash drain than in the first half of the year, when cash dropped by $13.9 million across two quarters.
Combined current and long-term inventory declined 4.8% from the second quarter to $19.2 million, by our math. After rising slightly in the first half while sales fell, inventory is now coming down as procedure volumes pick up, which helps reduce cash tied up in working capital.
The basic and diluted share count rose 5.5% from a year ago to 43.2 million shares. The increase comes from ongoing employee stock grants and warrants issued during the March debt refinancing, which spreads any future profit across more shares.
🔮 Guidance
Unchanged. The plan calls for full-year sales to grow 0.6% at the middle of the range. By our math, that leaves $24.8 million for the fourth quarter, or 9.9% growth from a year ago. Part of that fourth-quarter jump comes from an easy comparison against last year's 4.9% drop.
Raised. Pulmonx lifted its full-year gross margin target by 1 percentage point to 77%, which is 2.8 points higher than in 2025. By our math, the new target points to a 76.1% margin in the fourth quarter, matching the third quarter. It is the second 1-point raise this year, aided by lower manufacturing costs and the pause in lower-margin sales to China.
Cut. The company lowered its full-year expense plan by $1.5 million at the middle of the range, and cut the expected stock-pay portion by $1 million to $14 million. By our math, that leaves $27.8 million of operating expenses for the fourth quarter, up 1.3% from a year ago and up from $24.9 million in the third quarter.
Cut. Management lowered its expected full-year cash drain by $1 million to about $22 million, which is 31% less than the $31.7 million decrease in 2025. Because total cash has fallen by $17.1 million over the first nine months, the plan points to a $4.9 million cash decrease in the fourth quarter by our math.
❓ Key Questions
How many US hospitals joined in the third quarter?
Pulmonx added 27 treating centers in the first half against a target of about 40 per year, but did not give the third-quarter count in the release. The number shows whether hospital sign-ups stayed on pace while existing centers recovered.
Did StratX lung scans rise alongside US revenue?
Doctors use StratX software reports to check if a patient qualifies for Zephyr valves, making scan volume a leading indicator for procedures. Sharing the regional scan numbers would show whether the US rebound has a growing patient pipeline behind it.
What was China revenue in the fourth quarter of 2025?
The release showed that China revenue was $234 thousand in the third quarter of 2025, down from $1.5 million in the second quarter. Knowing the fourth-quarter 2025 figure is necessary to calculate the exact comparison for the rest of this year.
How will Pulmonx reach the $92.5M loan milestone?
The company's credit line unlocks an extra $10 million only when trailing twelve-month revenue hits $92.5 million, above the $90 million to $92 million forecast for 2026. Investors need to know when in 2027 management expects to cross that mark.