PROCEPT BioRobotics Corporation — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparisons are with Q1 2023 unless otherwise noted. PROCEPT develops and sells the AquaBeam Robotic System and related products for Aquablation therapy, initially focused on benign prostatic hyperplasia (BPH). The company reported a global installed base of 462 systems, including 354 in the United States.
Financial performance
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $44.5 million | $24.4 million; up 83% |
| Gross profit / gross margin | $25.0 million / 56% | $12.5 million / 51% |
| Operating expenses | $52.7 million | $40.9 million; up 29% |
| Operating loss | $27.6 million | $28.4 million |
| Net loss / loss per share | $26.0 million / $0.51 | $28.5 million / $0.63 |
| Net cash used in operating activities | $32.3 million | $35.9 million |
Revenue growth was driven primarily by U.S. sales, which increased $18.4 million. Handpieces and other consumables generated $26.0 million, system sales and rentals $16.0 million, and service $2.6 million. U.S. revenue was 90% of the total. Gross margin improved as higher unit volumes spread manufacturing overhead across more units and average selling prices increased.
R&D expense rose 22% to $13.1 million; selling, general and administrative expense rose 31% to $39.6 million, primarily reflecting personnel and commercial-organization expansion. Stock-based compensation expense was $6.3 million for the quarter. Interest and other income, net, increased to $2.7 million, primarily due to interest income; interest expense was $1.0 million.
Financial position and liquidity
- Cash and cash equivalents were $225.6 million at March 31, 2024, down from $257.2 million at December 31, 2023. Including $3.0 million of restricted cash, cash, cash equivalents and restricted cash totaled $228.6 million.
- Long-term debt carrying value was $51.4 million; the $52.0 million term loan is due October 2027 and bears interest at SOFR plus 2.25%. It is secured by substantially all company assets, including intellectual property.
- Current assets were $329.2 million and current liabilities $38.7 million. Total liabilities were $118.9 million; stockholders’ equity was $264.0 million.
- Cash used in investing activities was $1.9 million, mainly property and equipment purchases. Financing provided $2.6 million from stock-option exercises. Cash, cash equivalents and restricted cash declined $31.6 million during the quarter.
Outlook, commentary and risks
Management expects revenue to increase in absolute dollars as the company expands the installed base and drives system utilization, with near-term growth expected in both U.S. and international markets and a larger increase in the United States. It expects continued investment and higher absolute R&D and SG&A expenses, while anticipating long-term gross-margin improvement from increased production scale. No specific quarterly or full-year revenue or earnings guidance is provided in the filing.
Management believes existing cash, cash equivalents and anticipated revenue will fund operations and capital requirements for at least 12 months from the financial statements’ issuance date, while noting that assumptions may prove incorrect. The company reported an accumulated deficit of $480.5 million and expects continued investment in sales and marketing, operations and R&D. Its loan agreement has financial covenant requirements if available cash falls below $100 million; with at least $100 million in available cash, those financial covenants do not apply. The company also maintains cash deposits above insured limits.
Key business risks include adoption and utilization of Aquablation therapy, reimbursement and coverage, competition, execution of commercial expansion, manufacturing scale and costs, regulatory requirements, and the need for continued product development. The filing reports no material legal proceedings and no material changes to previously disclosed risk factors. Management stated that disclosure controls were effective as of March 31, 2024.
Important facts for investors to verify
- Whether system placements and procedure utilization continue to support recurring handpiece and consumables growth.
- Whether gross-margin gains persist as production scales and product/geographic mix changes.
- Cash burn, investment spending, and the assumptions supporting management’s stated 12-month liquidity outlook.
- Loan terms, SOFR exposure, collateral provisions, and covenant triggers if available cash declines below $100 million.
- Growth in R&D and SG&A, including the effect of stock-based compensation and commercial expansion on progress toward profitability.
- Reimbursement developments, competitive adoption, and the company’s ability to expand coverage and international access.