Pulmonx's Turnaround Gains Traction: Operating Leverage and a Rebuilt Sales Engine
Cost cuts, a renewed sales force, and a China certificate renewal position the company for a return to growth.
LUNG · Earnings Call · 2026-07-29
The Turnaround Takes Shape
After a brutal secular decline, Pulmonx (NASDAQ: LUNG) is showing signs of life. The stock has rallied 65% over the past three months, reflecting growing investor confidence that the company's strategic reset is finally paying off. The Q2 2026 earnings call, held on July 29, painted a picture of a company past the trough, executing on a three-pronged strategy: reaccelerating sales growth, driving near-term financial leverage, and advancing market-expanding clinical initiatives. Glen French, President and CEO, opened the call with a confident tone: “Pulmonx delivered total worldwide revenue of $22.8 million in the second quarter of 2026, consistent with our expectations as our efforts to regain commercial traction play out as anticipated.” — Glendon French, President and Chief Executive Officer · 2026-07-29 While revenue was down 5% year-over-year, the sequential improvement in the U.S. (up 7% from Q1) and the company's reaffirmed full-year guidance of $90–92 million suggest momentum is building.Cost Alignment and Operating Leverage
The most striking change is the dramatic improvement in profitability. Derrick Sung, COO and CFO, highlighted the impact of the cost alignment initiative: “Net loss for the second quarter of 2026 was $10.1 million, a reduction of 34% as compared to a net loss of $15.2 million in the same period of the prior year.” — Derrick Sung, Chief Operating Officer and Chief Financial Officer · 2026-07-29 Adjusted EBITDA loss narrowed nearly 40% to $5.1 million, and management expects to burn only about $23 million of cash in 2026, a 30% reduction from 2025. This newfound discipline is visible in the numbers. Gross margin jumped to 78% from 72% a year ago thanks to a favorable product mix and supply-chain efficiencies. Operating expenses fell 16% year-over-year, with the company guiding to $109–111 million for the full year. The message is clear: Pulmonx is no longer spending ahead of its revenue.Rebuilding the Sales Force and Growth Engine
The company's growth problem was largely self-inflicted—high sales force turnover and misaligned incentives. Glen French has been rebuilding the team methodically. “We are filling the sales positions. We have a normal sort of amount of turnover that happens in medical device companies.” — Glendon French, President and Chief Executive Officer · 2026-07-29 All sales leadership roles are now filled, and the team is being rounded out. The company added 12 new U.S. treating centers in Q2, and the near-to-far framework is focusing reps on high-quality valve programs. This is a theme that was already emerging in the prior quarter. Back in April, French noted, “we have been focused on narrowing the items that we're asking our U.S. sales force to do.” — Glendon French, President and Chief Executive Officer · 2026-04-30 And Derrick Sung gave a clear roadmap: “We do expect to demonstrate a sequential quarterly year-over-year improvement in growth as the year goes on.” — Derrick Sung, Chief Operating Officer and Chief Financial Officer · 2026-04-30 With the sales force now approaching full productivity, the company expects to exit 2026 at double-digit growth.China and AeriSeal: Catalysts Ahead
Two long-awaited catalysts are moving forward. China, which had been a drag due to a suspended registration, received its renewal in June. Management expects to resume China shipments early next year, adding a meaningful growth lever. Meanwhile, the CONVERT II trial for AeriSeal is enrolling on track, with completion expected in 2027. AeriSeal could expand the total addressable market by roughly 20%, providing a long-term growth runway beyond the Zephyr Valve. The company's balance sheet is also more secure. The recent restructuring of its credit facility extends maturity to 2031 and provides access to an additional $20 million. As Derrick Sung summarized,We believe that we have a clear path with the cash that we have on hand and an additional buffer with the access from the debt facility. So with the capital that we have access to today, we feel like we can clearly get the cash flow break even over the next few years.