The Five Pillars of Zomedica: Framework for Clinical Value and Shareholder Returns

Good afternoon, everyone, and welcome. I'm Larry Heaton, CEO of Zomedica. Thank you for joining. Today's session is different; we're focusing on the five pillars framework that guides everything we do commercially. These pillars are the lens through which we evaluate opportunities, acquisitions, and how we create long-term value. They ensure every product solves meaningful problems for veterinary practices and improves patient outcomes. The pillars are interconnected and together build a sustained recurring revenue model. After our remarks, we'll have a Q&A session. Let's get started.

To understand Zomedica, understand our lens: the five pillars framework. Most animal health companies are product-centric; we ask what a practice needs to succeed. Our first pillar is quality of care. Does the product measurably improve care? Our Trueforma platform uses bulk acoustic wave technology to deliver results in 20 minutes with reference-lab accuracy. It transforms point-of-care diagnostics. PulseVet shockwave therapy, backed by decades of research, treats musculoskeletal conditions in under five minutes without sedation. VetGuardian uses Doppler radar for contactless monitoring of temperature, pulse, and respiration. TrueView is the only fully automated digital microscope for in-house cytology. The AIC loop delivers targeted PEMF therapy for pain and inflammation. VettiGel rapidly controls bleeding in surgical settings. These products close the gap between clinical question and answer, improving care at the point of care.

The second pillar shifts from the exam table to the client relationship. Today's pet parents expect speed and transparency. In-clinic diagnostics like Trueforma allow veterinarians to review results with the client in the same visit, building trust and compliance. PulseVet's two-session treatment timeline improves owner compliance through visible results. VetGuardian gives pet parents confidence that their hospitalized pet is continuously monitored. Products like AIC loop and Calmer Canine extend care at home, deepening the client's engagement with the practice. This drives retention, which compounds practice economics.

The third pillar is veterinarian workflow. Practices face staffing and time pressures. Our diagnostics eliminate the reference lab sendout cycle, saving days. Trueforma and TrueView enable same-visit results, removing staff steps. PulseVet can be delivered by technicians, freeing DVMs for other patients. VetGuardian automates monitoring, reducing manual checks. These workflow improvements increase patient throughput with the same team, making it easier for practices to adopt and retain our products.

The fourth pillar is cash flow. Every Zomedica product is designed to add a revenue line or retain revenue that would leave the practice. Trueforma's consumable cartridge model creates recurring revenue per test. PulseVet generates high-margin procedure revenue with low startup cost; a practice can see $36,000 in annual cash flow from a device costing $34,000 over five years. TrueView keeps cytology revenue inside the clinic. VetGuardian creates a new monitoring fee per hospitalized patient. These accelerate the billing cycle and improve practice cash flow.

The fifth pillar is profitability. In-house diagnostics eliminate third-party lab fees, improving margins on every test. Workflow efficiency reduces labor costs; multi-product adoption compounds margin improvement. A practice using multiple Zomedica products experiences a single client relationship supporting multiple high-margin revenue streams, creating stickiness. I'll illustrate through a typical day: a morning Cushing's case uses Trueforma for same-visit diagnosis (pillars 1, 2, 4). Midday, a dog gets PulseVet shockwave by a technician (pillars 3, 4, 5). In surgery, VettiGel controls bleeding (pillar 1). Post-surgery, VetGuardian monitors, and at discharge, AIC loop for home therapy (pillars 1, 2, 3). Our growth strategy focuses on cross-selling to existing customers. Our commercial team and professional services veterinarians ensure products are fully integrated into clinic workflow, driving utilization and retention.

So, we've covered a lot of ground today. Let me bring it back to the core investment thesis. The five pillars are not a marketing tagline. They're an operational framework, a filter that every Zomedica product must pass before it enters the portfolio and a standard against which we measure performance after launch. That discipline is what keeps the portfolio coherent and what keeps our relationships with veterinary practices durable. Here's what that discipline produces in investor terms. Clinical adoption. Products that measurably improve care quality earn their place in daily clinical workflow. They're not occasional purchases. They're embedded tools that generate recurring utilization because the clinic cannot operate as well without them. Practice loyalty. Practices that are measurably more efficient, generating more revenue, and retaining more of it as margin do not easily walk away from the platform that produces those outcomes. The switching cost is real and it compounds with every additional product the practice adopts. Recurring revenue, consumable pull-through from the Truforma platform, procedure revenue from PulseVet Shockwave therapy, monitoring fees from the VetGuardian monitor, product sales from the ACC Loop and BetaDagel hemostatic gel. These are not one-time transactions. They are revenue streams that recur at the pace of clinical activity, which in a companion animal practice is measured in visits per week, not projects per year, and scalable growth. The professional services veterinarians infrastructure that drives adoption in one clinic is the same infrastructure that drives adoption in the next. The framework scales because the logic is consistent. Every practice has the same five pillars to address and Zomedica has the portfolio to address all of them. We believe the five pillars represent more than a mission statement. They are the architecture of a sustainable, scalable animal health business. When veterinarians thrive, pets receive better care, pet parents build stronger relationships with our clinics, and Zomedica grows, and the value of your company increases. Let's move on to the Q&A.

Okay, good afternoon. I'm a little bandwidth challenged, so I won't be on video, but I'm happy to take your questions. Let's jump in. Regarding development services segment revenue, we are currently working with three entities: two in human space, one in animal health. We have signed a contract with ROM Inc. and will issue 8Ks for material contracts. For Q2 outlook, we are a few days from quarter end and look forward to releasing earnings on August 5th. On cash flow breakeven and profitability: we have sufficient capital to achieve cash flow breakeven and profitability without dilution. We are all shareholders ourselves and understand dilution. We are reducing opex and capex quarter over quarter and year over year. Our first quarter of cash flow breakeven is expected at the end of this year (Q4 2026) and GAAP profitability as soon as possible, likely 2027. On the clip score feature in our ACT assays: feedback has been very positive, especially from academic veterinarians. Mainstream vets wanted the composite score matching Cornell's reference ranges, and the University of Georgia validation gave them confidence. Additional assays like insulin on the same cartridge boosted sales. We have three more equine assays planned this year. On safety: we have complete audits with insurance and weekly meetings with operations. What we are most proud of from Q2? You'll hear on August 5th; we believe it's good news. For Q3: product launches and GO community activities. International growth: very strong, especially UK and EU master distributor for equine products. Canada is growing via distributor. Share price: we continue to build fundamental value through revenue growth, margin improvement, cost control, and product launches. Partnership with Boehringer Ingelheim: spring program went well, they asked to continue offering Truforma, and we will support training for their sales team. The fall program will repeat, and Canada is joining. On quantifying the investment thesis: we do not provide product-level KPIs for competitive reasons. Key KPIs: revenue, margins, cash flow, opex, capex. Catalysts: many, but market will determine. Human health expansion: through development services partners; no direct investment until after profitability. Customer growth: US larger in absolute terms, international percentage growth similar. Growth opportunities outside US/Canada/Europe: Canada distributor is working well; EU master distributor for equine, adding small animal distribution. Which catalyst most meaningful: will play out over time, but they support Q4 cash flow breakeven goal. ROM business: doing well; they are shipping units for cell guardian and preparing for silver guardian and infant guardian. Thank you for the patience comment. Milestones between earnings and year-end: revenue growth, gross margin, cash burn, opex/capex reduction, product launches, GO activity, international growth. PIMS integration: going nicely; we are live in several accounts testing integration with the largest PIMS provider. Target to complete integration by September. Thank you for attending the fourth Friday at 4 webinar and for your support. We look forward to Q2 2026 earnings on August 5th. Have a great Fourth of July holiday.