With its lender tightening credit requirements Profound Medical Corp. (PROF), a maker of incision free medical devices that treat prostate cancer, may soon breach a key debt covenant as the company’s cash burn accelerates.

In the latest nine months, Profound Medical’s cash burn increased from ($19.3 million) to ($31.9 million), or 65.2%.

At the current pace, Profound will run out of cash in approximately 7.5 months from the end of the third quarter, or mid-May 2026.

The deterioration prompted Profound’s banker to intervene.

On the last day of the most recent quarter, Profound revealed its banker is now requiring the company’s unrestricted cash must at all times be the greater of: (i) to the extent that EBITDA is a negative number or loss for the most recent six-month period, the amount of such loss, or (ii) $10 million, reported on a monthly basis.

Management’s assessment of its cash burn appears similar to ours.

In the latest quarterly filing, Profound inserted new language signaling the cash burn is likely to persist similar to DuDIl’s estimate:

“As per management’s most recent forecasts, we project to be in violation of such financial covenant under the CIBC Credit Agreement by June 30, 2026, where unrestricted cash will no longer exceed the required liquidity amount for the most recent six-month period. As per the terms of the CIBC Credit Agreement, based on this projected breach, CIBC may exercise the right to declare the outstanding debt obligation as immediately due and payable. Accordingly, if we are unable to negotiate a covenant waiver or replace or refinance our existing debt on favorable terms or at all, such default could materially adversely impact our results of operations and financial results and may have a material adverse effect on the trading price of our Common Shares.”

Profound’s shares are up 58.3% in the last three months.

With an Enterprise Value (EV) of nearly $200 million, Profound is priced as if it will grow annual sales to more than $3.8 billion, up from an estimated $25.2 million in FY25. To justify its current share price of $6.75 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Profound must:

—Grow sales 75% annually between 2026-2034, versus the company’s estimated FY25 sales growth of 65.2% and FY23 and FY24 sales growth of 5.6% and 57%, respectively
—Increase NOPAT margin to 3%, versus our FY23 and FY24 estimates of(366.7%) and (303.3%)

Notably, the current share price also implies Profound increases Return on Invested Capital (ROIC) to 15% from our FY23 and FY24 estimates of (181.6%) and (279.6%), respectively: