PROCEPT BioRobotics Corporation (NASDAQ:PRCT) is a leading surgical robotics company focused on advancing patient care in urology. The company has developed the AquaBeam Robotic System, an innovative, image-guided surgical system for minimally invasive treatment of benign prostatic hyperplasia (BPH), the most common prostate disease impacting approximately 40 million men in the United States.
Business Overview
PROCEPT's AquaBeam Robotic System employs a single-use disposable handpiece to deliver the company's proprietary Aquablation therapy. This technology combines real-time, multi-dimensional imaging, personalized treatment planning, automated robotics, and heat-free waterjet ablation to provide targeted and rapid removal of prostate tissue. The company has established a significant and growing body of clinical evidence, including approximately 150 peer-reviewed publications, supporting the benefits and clinical advantages of Aquablation therapy.
As of March 31, 2024, PROCEPT had an installed base of 462 AquaBeam Robotic Systems globally, including 354 in the United States. The company's U.S. pivotal trial, the WATER study, is the only FDA pivotal study randomized against the historical standard of care, transurethral resection of the prostate (TURP). In this study, Aquablation therapy demonstrated superior safety and non-inferior efficacy compared to TURP across prostate sizes between 30 ml and 80 ml, and superior efficacy in a subset of patients with prostates larger than 50 ml.
PROCEPT has established strong relationships with key opinion leaders within the urology community and collaborated with key urological societies in global markets. This support has been instrumental in facilitating broader acceptance and adoption of Aquablation therapy, leading to its inclusion in clinical guidelines of various professional associations, including the American Urological Association.
The company manufactures the AquaBeam Robotic System, handpieces, integrated scope, and other accessories at its facility in San Jose, California.
Financials
PROCEPT generated revenue of $44.5 million and incurred a net loss of $26.0 million for the three months ended March 31, 2024, compared to revenue of $24.4 million and a net loss of $28.5 million for the three months ended March 31, 2023. For the full year 2023, the company reported annual revenue of $136.2 million and a net loss of $105.9 million, with annual operating cash flow of -$108.0 million and annual free cash flow of -$133.2 million.
As of March 31, 2024, PROCEPT had cash and cash equivalents of $225.6 million and an accumulated deficit of $480.5 million. The company's strong balance sheet provides the liquidity and capital resources needed to support and grow its current business.
Key Performance Drivers
PROCEPT's performance is driven by several key factors, including growing its installed base of AquaBeam Robotic Systems, increasing system utilization, securing favorable reimbursement and coverage decisions from third-party payors, and managing its cost of sales and operating expenses effectively.
The company is focused on driving adoption of Aquablation therapy among urologists who perform hospital-based resective BPH surgery, initially targeting 860 high-volume hospitals that the company estimates perform, on average, more than 200 resective procedures annually and account for approximately 70% of all hospital-based resective procedures. Additionally, there are approximately 1,840 additional U.S. hospitals that perform the remaining 30% of resective BPH procedures that PROCEPT is targeting.
To penetrate these hospitals, the company is continuing to increase its direct team of capital sales representatives, who are focused on driving system placement within hospitals by engaging with key surgeons and decision-makers to educate them about the compelling value proposition of Aquablation therapy. PROCEPT is also expanding its team of highly trained Aquablation representatives and clinical specialists who are focused on driving system utilization within the hospital, providing education and training support, and ensuring excellent user experiences.
Recent Performance
In the first quarter of 2024, PROCEPT sold 38 AquaBeam Robotic Systems, with an average selling price of $373,000, generating total U.S. system revenue of $14.2 million, representing a 62% increase compared to the first quarter of 2023. U.S. handpiece and consumable revenue for the first quarter of 2024 was $23.6 million, representing growth of approximately 101% compared to the prior year period. International revenue for the first quarter was $4.3 million, representing growth of approximately 65%.
Gross margin for the first quarter of 2024 was 56.2%, representing an all-time high and 120 basis points above the high end of the company's first quarter guidance. The increase in gross margin was due to strong execution from PROCEPT's operations team and its ability to absorb overhead expenses along with revenue overachievement.
Outlook
Looking ahead, PROCEPT has provided full-year 2024 financial guidance. The company now expects total revenue to be approximately $213.5 million, representing growth of approximately 56.8% compared to 2023. The company expects full-year 2024 gross margins to be approximately 58% to 59%, an increase from its previously issued guidance of 57% to 58%. PROCEPT continues to expect full-year 2024 operating expenses to be approximately $231.5 million, representing growth of 29%.
Given the increase in revenue and gross margin, the company now expects full-year 2024 adjusted EBITDA loss to be approximately $70 million, an improvement from a loss of $73 million from its previous guidance. PROCEPT expects its cash burn to approximate its adjusted EBITDA and improve sequentially throughout the year.
Recent Developments
The company is also exploring opportunities in the ambulatory surgery center (ASC) setting, having placed its first system at an ASC in the first quarter of 2024. While the hospital setting remains PROCEPT's primary focus, the ASC opportunity represents a potential market expansion, as it could allow the company to reach patients who may prefer a non-hospital setting for their BPH treatment.
In addition to its core BPH business, PROCEPT is also advancing its research and development efforts to explore the use of Aquablation therapy for the treatment of prostate cancer. The company is conducting two IDE studies, PRCT001 and PRCT002, to evaluate the safety and efficacy of Aquablation therapy in patients with BPH and prostate cancer, as well as in patients with prostate cancer alone. The company plans to present 6-month follow-up data from these studies at the upcoming American Urological Association (AUA) conference, which could potentially open up a new market opportunity for PROCEPT.
Conclusion
Overall, PROCEPT BioRobotics is well-positioned for continued growth, driven by the strong clinical evidence supporting Aquablation therapy, its expanding commercial footprint, and its focus on operational excellence. The company's robust balance sheet and disciplined approach to managing expenses provide a solid foundation for its long-term success. As PROCEPT continues to execute on its strategic initiatives, it is poised to solidify its position as a leading provider of innovative surgical solutions in the urology market.