Investing in quality companies part of recession-resistant sectors is a good strategy to generate outsized gains over time. In this article, I have identified one such fundamentally strong TSX stock, which is down 80% from all-time highs.
Valued at a market cap of $209 million, Profound Medical (TSX:PRN) develops incision-free therapeutic systems for image-guided tissue ablation. Its flagship TULSA-PRO combines MRI, robotic ultrasound, and temperature feedback to target prostate tissue, while Sonalleve uses MRI thermometry to treat conditions including uterine fibroids and bone metastases. The company operates in Canada, the U.S., Germany, and Finland.
While the TSX stock has underperformed the broader markets in recent years, it is poised to stage a remarkable comeback in the upcoming decade. Let’s see why.
Is this TSX healthcare stock a good buy?
Profound Medical’s annual shareholder meeting highlighted its TULSA-PRO technology, which combines MRI (magnetic resonance imaging), robotics, and ultrasound to treat prostate conditions without traditional surgery.
The technology’s versatility positions it as a potential market disruptor in prostate cancer and BPH (benign prostatic hyperplasia) treatment. Unlike conventional approaches such as robotic prostatectomy or radiation therapy, TULSA-PRO aims to maintain quality of life by minimizing side effects, including incontinence and erectile dysfunction.
The product’s throughput capability could prove critical for scaling adoption and improving the economics for healthcare providers. Patient outcomes appear promising, with one high-risk case showing a 95% PSA (prostate-specific antigen) reduction and negative MRI findings 18 months post-treatment.
While current guidelines still consider radical prostatectomy and radiation as standard care for many cases, Profound Medical is positioning TULSA-PRO as an alternative that can handle treatments ranging from focal therapy to whole gland ablation and even post-radiation salvage cases.
The company faces a fragmented competitive landscape with numerous focal therapy options vying for market share. However, management believes TULSA-PRO’s MRI-guided precision gives it unique advantages over competing technologies.
A strong performance in Q1 of 2025
In the first quarter (Q1) of 2025, Profound Medical reported revenue of $2.6 million, an increase of 82% year over year. Q1 results included $1.8 million in recurring revenue and $820,000 from capital equipment sales, with gross margins improving to 71% from 60% a year earlier.
Despite this growth, the company reported a quarterly net loss of $10.7 million, or $0.36 per share, as it continues investing in its commercial infrastructure.
A major milestone announced during the call was initial data from the CAPTAIN trial, the first successful randomized controlled trial comparing TULSA-PRO to robotic radical prostatectomy. The data demonstrated statistically significant advantages for TULSA-PRO in several key metrics, including elimination of blood loss, overnight hospital stays, and post-procedure pain.
Management reiterated its 2025 guidance for 70-75% annual revenue growth, emphasizing that results will be back-end loaded as the company transitions from a placement model to capital sales.
Profound is also expanding its product offerings with a new AI-powered BPH treatment module scheduled for limited release in June and full launch in Q4. It also announced TULSA-PLUS, a turnkey solution that can include TULSA equipment and compatible MRI systems for physicians looking to establish complete prostate care programs.
With Medicare reimbursement now in effect and growing commercial insurance coverage, Profound’s management appears confident in the long-term adoption trajectory for its innovative technology.
Is the TSX stock undervalued?
Analysts expect Profound Medical to increase sales from $15.2 million in 2024 to $172 million in 2028. While still unprofitable, the TSX stock is forecast to end 2028 with adjusted earnings per share of $0.91 and a free cash flow of $63 million.
If Profound Medical stock is priced at 15 times forward free cash flow, which is quite cheap, it should gain 350% over the next three years.
