PROCEPT BioRobotics (PRCT) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $79.2 million, representing a growth of 48% compared to Q2 2024 [21] - U.S. revenue for Q2 was $69.6 million, reflecting a growth of 46% year-over-year [21] - Gross margin for Q2 2025 was 65.4%, an increase of 640 basis points year-over-year [25] - Net loss for Q2 2025 was $19.6 million, compared to a net loss of $25.6 million in Q2 2024 [26] - Adjusted EBITDA loss was $8 million, an improvement from a loss of $18 million in the prior year [26] Business Line Data and Key Metrics Changes - U.S. handpiece and consumable revenue for Q2 2025 was $43.1 million, a growth of 58% compared to Q2 2024 [21] - Approximately 12,750 handpieces were sold in Q2 2025, representing a year-over-year unit growth of 59% [22] - U.S. system revenue was $22.1 million, with 48 new HydroS robotic systems sold [23] - International revenue reached $9.6 million, marking a growth of 69% compared to the prior year [24] Market Data and Key Metrics Changes - The company expects to exit 2025 with an estimated installed base of 715 systems, with only 20% procedural share in the hospital market, indicating significant room for expansion [4] - The 2026 proposed Medicare physician fee schedule includes a category one code for Ag population therapy, which is expected to enhance adoption and reimbursement consistency [14][15] Company Strategy and Development Direction - The company aims to become a global leader in urology, focusing on evidence-based innovation and expanding Hydro's adoption in greenfield accounts [10][34] - A leadership transition is underway, with Larry Wood set to become the new CEO, emphasizing a commitment to innovation and growth [10][36] - The company is eliminating the role of Chief Commercial Officer to strengthen commercial execution, creating two new leadership positions [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve long-term profitability despite current tariff challenges, estimating a potential gross margin headwind of $1 million to $2 million in 2025 [31][92] - The company remains optimistic about the stability of the capital environment, with no indications of hospitals slowing or pausing capital spending [91] - Management highlighted the importance of clinical outcomes in driving adoption and utilization of their systems, despite recent reductions in physician fee schedules [60] Other Important Information - The company is actively pursuing operational strategies to mitigate tariff exposure, with a focus on maintaining gross margins and profitability [16][31] - Enrollment in the WATERFORT trial is progressing well, with expectations for full enrollment by 2026 [17] Q&A Session Summary Question: Guidance confidence and system placements - Management confirmed slight increases in guidance, with confidence stemming from strong sales force execution and visibility into the sales funnel [41][46] Question: Disruption from leadership changes - Management reassured that the experienced sales team will maintain focus and execution despite leadership transitions [48][49] Question: CCO role split rationale - The decision to split the CCO role aims to enhance commercial execution and support long-term growth objectives [52] Question: Utilization growth in accounts - Management noted that longer tenure in accounts correlates with increased utilization of aquablation procedures, with examples of it becoming the standard of care [55] Question: Impact of physician fee schedule reductions - Management emphasized that clinical outcomes will drive continued adoption, despite reductions in resective procedure payments [60] Question: System placements and future expectations - Management indicated that replacement sales are expected to pick up in 2026, aligning with the useful life of the systems [62] Question: International market strength - The UK remains the primary driver of international revenue growth, with emerging progress in Japan and Korea [68] Question: Hydros rollout and customer reception - Early feedback on the Hydros system has been positive, with expectations for utilization metrics to improve as accounts ramp up [75]