Profound Medical Corp. (TSX:PRN) shares jumped on Friday, October 30, after the company signed a Supply and distribution agreement with the interventional MRI division of Cook Medical. The deal gives Profound a second U.S. sales channel for its TULSA-PRO prostate treatment system.

The stock was up roughly 90 cents to around C$9 late in the session, a sharp gain on a day when the S&P/TSX Composite index slid about 629 points and health-care names were among the laggards.

What happened

Profound announced the agreement before the open on Friday. Under the deal, Cook Medical will buy TULSA-PRO systems from Profound at a predetermined transfer price and distribute them in the United States.

The system will become part of Cook's Copernicus program, which packages equipment and support for hospitals building interventional MRI suites. Cook recently unveiled that suite with Siemens Healthineers.

Profound did not disclose the transfer price or any other dollar figures. It also did not say whether the arrangement is exclusive or how long it runs.

"This agreement broadens our commercial reach by making TULSA-PRO part of a comprehensive offering," said Arun Menawat, Profound's chief executive and chairman.

Pete Polverini, vice-president of Cook's Interventional MRI division, said: "Together with Profound, we aim to bring the TULSA Procedure to more urologists and more hospitals."

Why it matters

The key detail for investors is where the money flows after a sale. Customers who buy a system through Cook will purchase single-use disposables and service contracts directly from Profound. That keeps the repeat Revenue from each procedure with the company, while Cook does the work of placing the Capital equipment.

Profound is not giving up its own sales force. Its direct capital sales team will keep selling to sites that already have compatible MRI scanners.

The TULSA Procedure uses MRI-guided ultrasound to ablate prostate tissue. According to the company, it has approved U.S. Medicare reimbursement in all major treatment settings, including hospitals, ambulatory surgery centres and physician offices.

Profound is also working with the U.S. Food and Drug Administration to win 510(k) clearance for TULSA-PRO on Siemens Healthineers' lower-field MAGNETOM Free.Max scanner. The system is already cleared for several 1.5T and 3T MRI systems.

The bigger picture

Friday's deal builds on momentum from earlier in the month. On October 7, Profound said it expected preliminary, unaudited third-quarter revenue of US$9.8 million to US$10.0 million.

That compared with US$5.3 million a year earlier and just US$2.5 million in the second quarter. The company said the range sat well above the consensus of about US$6.78 million, and that it expected gross Margin of more than seven-tenths of revenue.

Taken together, the revenue rebound and a new distribution partner give investors evidence that adoption of the procedure is picking up, rather than a single strong quarter.

The broader market offered no help. The S&P/TSX Composite fell to its lowest close since October 14 as technology and gold stocks slumped, which makes Profound's gain stand out.

What to watch next

Profound plans to release full third-quarter results after the market closes on Thursday, November 5, followed by a conference call. Investors will look for detail on how many systems were sold, how fast disposable revenue is growing and whether the Cook Partnership is expected to add sales in 2027.

The FDA decision on the Free.Max scanner is another catalyst to track. So is any disclosure of the transfer price, which will show how much margin Profound gives up on systems sold through Cook.

For now, the market has rewarded a deal that widens Profound's reach without handing away its most valuable recurring business.