Financial Performance - PROCEPT BioRobotics Corporation reported a quarterly loss of $0.38 per share, which was better than the Zacks Consensus Estimate of a loss of $0.41, representing an earnings surprise of +7.32% [1] - The company posted revenues of $83.33 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 3.35% and showing a significant increase from $58.37 million in the same quarter last year [2] Stock Performance - PROCEPT BioRobotics shares have declined approximately 57.1% since the beginning of the year, contrasting with the S&P 500's gain of 16.5% [3] - The current Zacks Rank for PROCEPT BioRobotics is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is -$0.25 on revenues of $96.42 million, and for the current fiscal year, it is -$1.48 on revenues of $325.4 million [7] - The trend of estimate revisions for PROCEPT BioRobotics was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Medical - Instruments industry, to which PROCEPT BioRobotics belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $83.3 million, representing a growth of 43% compared to Q3 2024 [10] - U.S. revenue for Q3 was $73.9 million, reflecting a growth of 42% year-over-year [10] - Gross margin for Q3 2025 was 64.8%, an increase of 160 basis points year-over-year [11] - Net loss for Q3 2025 was $21.4 million, compared to a loss of $21 million in the same period last year [11] - Adjusted EBITDA loss was $7.4 million, an improvement from a loss of $12.4 million in Q3 2024 [11] - Cash, cash equivalents, and restricted cash balances as of September 30 were approximately $297 million [12] Business Line Data and Key Metrics Changes - U.S. handpiece and other consumable revenue for Q3 2025 was $44.4 million, representing a growth of 50% compared to Q3 2024 [10] - Approximately 13,225 handpieces were sold in Q3, reflecting a 51% year-over-year unit growth [11] - U.S. system revenue was $24.7 million, with system revenue growth of 26% compared to Q3 2024 [11] - 57 new hydro systems were sold in Q3, with an average selling price of approximately $435,000 [11] Market Data and Key Metrics Changes - International revenue in Q3 2025 was $9.4 million, representing growth of 53% compared to the prior year period [11] - The company expects full-year international revenue to be approximately $37.5 million, representing annual growth of 56% [14] Company Strategy and Development Direction - The company aims to improve procedure utilization as a key to unlocking long-term value [5] - There is a focus on increasing therapy awareness and driving patient activation, which will be a core part of the near and midterm commercial strategy [7] - The company plans to invest in international markets that value transformational therapies [7] - Organizational changes have been made to enhance marketing and strategy capabilities [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to finish 2025 strongly despite some scrutiny in capital spending by large hospital systems [4] - The company anticipates total revenue for fiscal 2026 to be in the range of $410-$430 million, reflecting current momentum in capital sales [16] - Management acknowledged potential procedural headwinds in the first half of 2026 but remains optimistic about long-term growth [16][40] Other Important Information - The company is committed to building a world-class marketing organization to activate patients and accelerate utilization [10] - Management plans to host a formal analyst day in late February 2026 to outline multi-year revenue guidance and provide updates on various initiatives [17] Q&A Session Summary Question: Can you discuss the capital environment and the strength seen in the quarter? - Management noted strong performance in capital sales despite some variability in timing and capital allocation with customers [18][19] Question: What insights have you gained in your early tenure as CEO? - The CEO emphasized the need to better tell the company's story to clinicians and patients, highlighting the opportunity to transform medicine [21][23] Question: Can you elaborate on the utilization dynamics and expected improvements? - Management confirmed low single-digit growth in utilization but expects it to improve in Q4 due to initiatives aimed at enhancing the speed of new account launches [27][30] Question: How does the company plan to approach profitability and reinvestment? - The CEO indicated that strategic investments will be made to drive long-term growth without disrupting the path to profitability [43][44] Question: Will direct-to-consumer advertising be considered to educate patients? - Management acknowledged the need for patient education and indicated that cost-effective channels will be explored for outreach [60][63] Question: What are the expectations regarding system placements under operating leases? - Management clarified that the operating lease was a one-off situation and does not indicate a shift in business practice [74]

Revenue Performance - Total revenue for Q3 2025 was $83.3 million, a 43% increase year-over-year[4] - U.S. revenue reached $73.9 million, reflecting a 42% growth compared to the prior year[4] - International revenue for the quarter was $9.4 million, a 53% increase year-over-year[4] - Total revenue for the three months ended September 30, 2025, was $83.327 million, a 42.7% increase from $58.370 million in the same period of 2024[28] - U.S. total revenue reached $73.912 million, up 41.5% from $52.215 million year-over-year[28] - Total revenue for the nine months ended September 30, 2025, was $231.671 million, representing a 48.1% increase from $156.262 million in the same period of 2024[28] - Full year 2025 revenue guidance is approximately $325.5 million, representing a 45% increase over the previous year[9] - For fiscal year 2026, the company projects revenue between $410 million and $430 million, indicating growth of 26% to 32% compared to fiscal 2025[13] Product Revenue - U.S. handpiece and consumable revenue was $44.4 million, up 50% year-over-year[4] - Revenue from handpieces and other consumables in the U.S. increased by 50% to $44.411 million compared to $29.620 million in the prior year[28] - System sales and rentals in the U.S. for the three months ended September 30, 2025, were $24.747 million, up from $19.643 million in the same period of 2024[28] - The company reported a total of $9.415 million in revenue from outside the U.S. for the three months ended September 30, 2025, compared to $6.155 million in the prior year[28] Financial Metrics - Gross margin improved to 65% from 63% in the prior year, driven by operational efficiencies[5] - Operating expenses for Q3 2025 were $77.2 million, up from $59.3 million in the prior year[6] - Net loss for Q3 2025 was $21.4 million, compared to a loss of $21.0 million in the prior year[7] - Total current assets decreased to $454.752 million as of September 30, 2025, from $481.842 million at the end of 2024[26] - Total liabilities slightly decreased to $131.265 million from $131.797 million at the end of 2024[26] - Stockholders' equity decreased to $380.276 million from $402.220 million at the end of 2024, reflecting an accumulated deficit of $611.711 million[26] Market Expansion and R&D - The install base of robotic systems in the U.S. increased by 58 systems, totaling 653 systems as of September 30, 2025[10] - The company continues to focus on expanding its market presence and enhancing its product offerings through ongoing research and development initiatives[28]

Core Insights - PROCEPT BioRobotics Corporation reported a strong performance with a 43% year-over-year global revenue growth for Q3 2025, driven by increased demand for the HYDROS® Robotic System and Aquablation therapy adoption [3][4]. Financial Performance - Total revenue for Q3 2025 was $83.3 million, a 43% increase compared to Q3 2024 [4][9]. - U.S. revenue reached $73.9 million, reflecting a 42% growth year-over-year, primarily from system sales and increased handpiece revenue [4][9]. - U.S. handpiece and consumable revenue was $44.4 million, up 50% from the previous year, while system revenue was $24.7 million, a 26% increase [4][9]. - International revenue for the quarter was $9.4 million, marking a 53% increase compared to the prior year [4][9]. Gross Margin and Operating Expenses - Gross margin improved to 65% in Q3 2025 from 63% in the prior year, attributed to operational efficiencies despite increased tariff expenses [5]. - Operating expenses rose to $77.2 million from $59.3 million in the prior year, driven by expansion of the commercial organization and increased R&D and administrative expenses [6]. Net Loss and Adjusted EBITDA - The net loss for Q3 2025 was $21.4 million, slightly higher than the $21.0 million loss in Q3 2024 [7]. - Adjusted EBITDA loss improved to $7.4 million from a loss of $12.4 million in the prior year [7][18]. Cash Position - As of September 30, 2025, the company had cash, cash equivalents, and restricted cash totaling $297.3 million [7]. Full Year Guidance - The company maintains its revenue guidance for the full year 2025 at approximately $325.5 million, representing a 45% growth over the previous year [8][9]. - For 2026, the projected revenue is between $410 million and $430 million, indicating a growth of 26% to 32% compared to 2025 [10][9].

Core Insights - The small cap growth market performed well in Q3, with significant gains driven by speculative companies with weak fundamentals, indicating a potential broadening of the rally in the future [2][4][20] Market Performance - The Russell 2000 Growth Index returned 12.2% in Q3, marking its second consecutive quarter of 12% returns, outperforming the S&P 500's 8.1% [5] - The majority of gains in the Russell 2000 Growth Index were attributed to speculative companies lacking profitability, particularly those with high P/E ratios [5][6] Fund Performance - The Osterweis Opportunity Fund gained 5.14% in Q3 but underperformed the index due to a focus on avoiding speculative stocks [6] - The fund's long-term performance has outpaced the index since its inception and over the past decade, emphasizing a valuation discipline approach [6] Sector Analysis - Underperformance in Q3 was primarily due to security selection in Health Care, Consumer Discretionary, and Information Technology sectors [7] - Health Care stocks, particularly PROCEPT BioRobotics, faced challenges due to management changes, while Artivion saw strong growth driven by its Onyx heart valve product [8][9] - In Consumer Discretionary, Duolingo's user growth stagnated, leading to an exit from the stock, while Boot Barn performed well but was exited due to valuation concerns [10][11] - Information Technology saw mixed results, with semiconductors performing well while traditional software companies faced negative sentiment [12][13] - Rambus was a standout in IT, reporting a 43% year-over-year growth in product revenue, driven by demand for its memory interface chips [14][15] Sector Allocation - Sector allocation had a minor negative impact on relative performance, with underweights in Financials and Communication Services being beneficial, while underweights in Industrials and Materials detracted from returns [19] Future Outlook - The expectation is for a shift away from speculative stocks towards companies demonstrating sales and earnings growth, with a favorable environment for small cap stocks due to accommodative Fed policies [20][21]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for PROCEPT BioRobotics Corporation (PRCT) despite higher revenues, with actual results being crucial for stock price movement [1][2]. Financial Expectations - The upcoming earnings report is expected to show a quarterly loss of $0.41 per share, reflecting a year-over-year change of -2.5%, while revenues are projected to be $80.63 million, an increase of 38.1% from the previous year [3]. - The consensus EPS estimate has been revised 0.93% higher in the last 30 days, indicating a slight positive adjustment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for PROCEPT BioRobotics is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -6.67%, suggesting a bearish outlook [12]. - The stock currently holds a Zacks Rank of 3, complicating predictions of an earnings beat [12]. Historical Performance - In the last reported quarter, PROCEPT BioRobotics was expected to post a loss of $0.41 per share but actually reported a loss of -$0.35, achieving a surprise of +14.63% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates three times [14]. Industry Comparison - Idexx Laboratories (IDXX), a peer in the Zacks Medical - Instruments industry, is expected to report earnings per share of $3.14 for the same quarter, reflecting a year-over-year change of +12.1% and revenues of $1.07 billion, up 9.8% from the previous year [18][19].

Core Insights - Chicago Capital, LLC increased its stake in Procept BioRobotics by 999,873 shares, totaling 1,568,845 shares valued at $55.99 million as of quarter-end [1][2] - Procept BioRobotics' stock price was $34.61 as of October 21, 2025, reflecting a 48.57% decline year-over-year and underperforming the S&P 500 by 63.63 percentage points [2] - The company reported a revenue increase of 48% year-over-year in Q2, raising its full-year revenue outlook for 2025 to $325.5 million, a 45% increase over 2024 [9][10] Company Overview - Procept BioRobotics specializes in surgical robotics for urology, focusing on treating benign prostatic hyperplasia (BPH) with its AquaBeam Robotic System [4][5] - The company has a market capitalization of $1.95 billion and a trailing twelve months (TTM) revenue of $274.95 million, with a net income of -$84.15 million [3] Investment Rationale - Chicago Capital's significant increase in investment suggests confidence in Procept BioRobotics' growth potential despite recent stock price declines [7][11] - The company's rapid sales growth and attractive price-to-sales ratio of seven may indicate a compelling investment opportunity [10][11]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgency to invest now [1] - The energy demands of AI technologies are immense, with data centers consuming as much energy as small cities, leading to concerns about power grid capacity and rising electricity prices [2] - A specific company is highlighted as a key player in the AI energy sector, owning critical energy infrastructure assets that are essential for supporting the anticipated surge in energy demand from AI [3][7] Investment Opportunity - The company in focus is not a chipmaker or cloud platform but is positioned to benefit significantly from the increasing energy needs of AI data centers [3] - It operates in the nuclear energy sector and is capable of executing large-scale engineering, procurement, and construction projects across various energy sectors, including oil, gas, and renewables [7] - The company is described as debt-free and has a substantial cash reserve, equating to nearly one-third of its market capitalization, which positions it favorably compared to other energy firms burdened by debt [8] Market Dynamics - The company is strategically aligned with the U.S. LNG exportation sector, which is expected to grow under the current administration's energy policies [7] - There is a noted trend of onshoring driven by tariffs, which may benefit the company as American manufacturers bring operations back to the U.S. [5][6] - The company is gaining attention from Wall Street investors due to its undervalued status and potential for significant returns, trading at less than seven times earnings excluding cash and investments [10] Future Outlook - The influx of talent into the AI sector is expected to drive continuous innovation and advancements, making investments in AI a strategic move for future growth [12] - The combination of AI infrastructure needs, energy demands, and the company's unique positioning in the market suggests a potential for substantial returns in the coming years [14][15]

Company Overview - PROCEPT BioRobotics Corporation is a surgical robotics company focused on advancing patient care in urology by developing transformative solutions [3] - The company manufactures the AQUABEAM and HYDROS™ Robotic Systems, with the HYDROS system being the only AI-powered technology delivering Aquablation therapy [3] - Aquablation therapy is designed to provide effective, safe, and durable outcomes for men suffering from lower urinary tract symptoms (LUTS) due to benign prostatic hyperplasia (BPH), independent of prostate size and surgeon experience [3] Financial Reporting - The company will report its financial results for the third quarter of 2025 after market close on November 4, 2025 [1] - A conference call will be hosted by the company's management at 4:30 p.m. Eastern Time on the same day [1] Clinical Evidence - PROCEPT BioRobotics has developed a significant body of clinical evidence with over 150 peer-reviewed publications supporting the benefits and clinical advantages of Aquablation therapy [3] - BPH is the most common prostate disease, affecting approximately 40 million men in the United States [3]

Group 1 - The analyst has a strong interest in equity investment in global markets, inspired by successful investors like Warren Buffett [1] - A long-term investment horizon is emphasized, with a high tolerance for short-term volatility, which can present opportunities [1] - The approach combines detailed financial analysis, industry research, and macroeconomic trend evaluation to identify overlooked investment opportunities [1] Group 2 - The focus is on uncovering unique business models, products, and emerging opportunities in global markets [1] - A disciplined investment approach is employed to help navigate complex markets and build diversified portfolios with sustainable growth [1]