PROCEPT BioRobotics (PRCT) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Condensed Consolidated Financial Statements (unaudited) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, reveal significant revenue growth, improved gross margins, a narrowed net loss, a strong cash position, and reduced operational cash burn Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $513.1 million, driven by reduced cash, while liabilities slightly decreased and stockholders' equity declined to $385.8 million due to net loss Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $302,717 | $333,725 | | Total current assets | $458,067 | $481,833 | | Total assets | $513,054 | $534,048 | | Total current liabilities | $49,727 | $53,173 | | Total liabilities | $127,258 | $131,778 | | Total stockholders' equity | $385,796 | $402,270 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q2 2025, revenue grew 48% to $79.2 million and gross profit increased 64% to $51.7 million, narrowing the net loss to $19.6 million, with similar trends for the six-month period Q2 Performance Comparison (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $79,182 | $53,353 | | Gross Profit | $51,746 | $31,482 | | Loss from operations | ($22,189) | ($26,828) | | Net loss | ($19,578) | ($25,626) | | Net loss per share | ($0.35) | ($0.50) | Six-Month Performance Comparison (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | $148,344 | $97,892 | | Gross Profit | $95,907 | $56,516 | | Loss from operations | ($49,626) | ($54,477) | | Net loss | ($44,316) | ($51,583) | | Net loss per share | ($0.80) | ($1.01) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased from $402.2 million at the end of 2024 to $385.8 million by June 30, 2025, primarily due to a $44.3 million net loss, partially offset by stock-based compensation and common stock issuance - Stockholders' equity decreased by $16.4 million during the first six months of 2025, from $402.2 million to $385.8 million[17] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities improved to $32.0 million, while investing activities used $4.6 million, and financing provided $5.7 million, resulting in a $31.0 million decrease in total cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($32,023) | ($48,022) | | Net cash used in investing activities | ($4,638) | ($2,989) | | Net cash provided by financing activities | $5,676 | $7,882 | | Net decrease in cash | ($31,008) | ($43,129) | Notes to Condensed Consolidated Financial Statements The notes detail business operations, accounting policies, and financial components, highlighting FDA 510(k) clearance for the HYDROS Robotic System, a $52.0 million term loan, and $22.3 million in stock-based compensation expenses - The company received 510(k) clearance from the FDA for its next generation robot system, the HYDROS Robotic System, on August 20, 2024[21] - Total stock-based compensation expense for the six months ended June 30, 2025 was $22.3 million, a significant increase from $14.2 million in the same period of 2024[47] - The company has a $52.0 million term loan facility, with the entire principal amount due at maturity in October 2027[33][37][40] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong 52% revenue growth to increased system adoption and utilization, improving gross margin to 65%, while operating expenses rose 31% for expansion, narrowing net loss, with $302.7 million cash deemed sufficient for the next twelve months Overview PROCEPT BioRobotics specializes in urological surgical robotics, treating BPH with its AquaBeam and HYDROS Robotic Systems using Aquablation therapy, with 762 global systems installed by June 30, 2025, including 595 in the U.S - The company develops, manufactures, and sells the AquaBeam and HYDROS Robotic Systems for treating BPH[72] - As of June 30, 2025, the company had a global installed base of 762 robotic systems, including 595 in the U.S[72] Factors Affecting Our Performance Key performance drivers include expanding the robotic system installed base, increasing system utilization, securing broader reimbursement, improving gross margins through cost management, and continuous R&D investment for product innovation - Key performance drivers include: - Growing the install base of robotic systems - Increasing system utilization among urologists - Expanding reimbursement and coverage by third-party payors - Improving gross margins by managing manufacturing costs - Investing in R&D for continuous innovation[76][77] Components of Our Results of Operations Revenue is primarily from system sales/rentals, handpieces, and service contracts, while cost of sales includes manufacturing overhead, materials, and labor, and operating expenses comprise R&D and SG&A - Revenue is primarily derived from system sales/rentals, single-use handpieces, and service contracts[78] - Gross margin is expected to increase over the long term with higher production volumes and improved manufacturing efficiencies[81] Results of Operations Q2 2025 revenue grew 48% to $79.2 million, with gross margin improving to 65%, while SG&A expenses increased 38% to $56.3 million due to commercial expansion, reflecting similar positive trends for the six-month period Revenue by Type - Q2 Comparison (in thousands) | Revenue Source | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | System sales and rentals | $25,027 | $20,897 | 20% | | Handpieces and other consumables | $49,132 | $29,531 | 66% | | Service | $5,023 | $2,925 | 72% | | Total revenue | $79,182 | $53,353 | 48% | - Gross margin increased to 65% in Q2 2025 from 59% in Q2 2024, primarily due to spreading fixed manufacturing overhead costs over more production units[92] - SG&A expenses increased 38% in Q2 2025 compared to Q2 2024, driven by higher employee-related costs to expand the commercial organization[94] Liquidity and Capital Resources The company ended Q2 2025 with $302.7 million in cash and $52.0 million in debt, with management confident this cash is sufficient for the next twelve months, as net cash used in operations improved to $32.0 million - As of June 30, 2025, the company had cash and cash equivalents of $302.7 million and an accumulated deficit of $590.3 million[96] - The company believes its existing cash and anticipated revenue will be sufficient to meet capital requirements for at least the next twelve months[97] Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($32,023) | ($48,022) | | Net cash used in investing activities | ($4,638) | ($2,989) | | Net cash provided by financing activities | $5,676 | $7,882 | Critical Accounting Policies and Estimates There have been no material changes to the company's critical accounting policies and estimates during the three months ended June 30, 2025, as compared to those disclosed in its 2024 Annual Report on Form 10-K - No material changes were made to significant accounting policies during the three months ended June 30, 2025[113] Item 3. Quantitative and Qualitative Disclosure About Market Risk The company's exposure to market risks, including interest rates, credit risk, and foreign currency exchange rates, has not materially changed since December 31, 2024 - The company's exposure to market risks has not changed materially since December 31, 2024[115] Item 4. Controls and Procedures As of June 30, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[116] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[118] Part II. Other Information Item 1. Legal Proceedings The company is not currently a party to any legal proceedings that management believes would have a material adverse effect on the business - The company is not presently a party to any legal proceedings that would have a material adverse effect on its business[121] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent quarterly reports - During the three months ended June 30, 2025, there were no material changes to the company's previously disclosed risk factors[123] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None - None[125] Item 3. Defaults Upon Senior Securities None - None[126] Item 4. Mine Safety Disclosures Not applicable - Not applicable[127] Item 5. Other Information The company eliminated the Chief Commercial Officer role, replacing it with two SVP positions, and disclosed Rule 10b5-1 trading plan adoptions by the CEO and Chief Legal Officer - On August 4, 2025, the company decided to eliminate the position of Chief Commercial Officer, with the incumbent separating from the company on September 1, 2025[128][129] - The CEO, Reza Zadno, adopted a Rule 10b5-1 stock sale plan on June 3, 2025, for the potential sale of up to 76,978 shares[129] - The Chief Legal Officer, Alaleh Nouri, terminated a prior Rule 10b5-1 plan and adopted a new one in June 2025 for the potential sale of up to 70,836 shares[130][131] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report, including certifications by the CEO and CFO and the Second Amendment to the Loan and Security Agreement - Exhibits filed with the report include the Second Amendment to the Loan and Security Agreement with CIBC, and certifications from the Principal Executive Officer and Principal Financial Officer[134]