PROCEPT BioRobotics Corporation — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. PROCEPT develops and sells the AquaBeam Robotic System and related products for Aquablation therapy, initially targeting benign prostatic hyperplasia (BPH). Its installed base was 322 systems globally, including 233 in the U.S.
Financial performance
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $33.1m | $16.7m | $57.5m | $30.9m |
| Gross profit / margin | $18.4m / 56% | $8.5m / 51% | $30.9m / 54% | $16.2m / 52% |
| Operating expenses | $44.1m | $26.4m | $84.9m | $49.8m |
| Operating loss | $(25.6)m | $(17.9)m | $(54.0)m | $(33.6)m |
| Net loss | $(25.3)m | $(19.2)m | $(53.8)m | $(36.4)m |
| Net loss per share | $(0.56) | $(0.43) | $(1.19) | $(0.82) |
| Operating cash flow | Not separately provided for the quarter | $(64.3)m | $(35.4)m |
At June 30, cash and cash equivalents were $149.7m, restricted cash was $3.8m, and total current assets were $230.0m against current liabilities of $35.9m. Long-term debt was $51.3m carrying value ($52.0m principal outstanding); the facility bears interest at SOFR plus 2.25%. Total liabilities were $116.5m and stockholders’ equity was $155.9m. Six-month capital expenditures were $10.7m.
Changes versus the prior comparable period
- Q2 revenue rose 98%; first-half revenue rose 86%. Growth reflected higher system sales, handpieces and service, primarily in the U.S., which contributed 90% of revenue.
- First-half handpiece and consumables revenue increased 135% to $27.5m; system sales and rentals increased 49% to $26.7m.
- Gross margin improved to 56% for Q2 and 54% for the first half, attributed mainly to spreading fixed manufacturing overhead across higher production volumes.
- First-half operating expenses rose 71%, with R&D up 91% and selling, general and administrative expense up 64%, as the company invested in product development and expanded its commercial organization. Net loss widened by $17.4m.
- Cash and cash equivalents declined from $221.9m at year-end 2022 to $149.7m; first-half operating cash use increased from $35.4m to $64.3m.
Outlook, risks and other notable items
- Management expects revenue to grow in absolute dollars as the installed base and system utilization expand, while expenses—particularly sales and marketing, operations and R&D—are expected to rise. No specific company revenue or earnings guidance was provided.
- Management believes existing cash and anticipated revenue can fund operations for at least 12 months from the financial statements’ issuance date, but notes this depends on assumptions and that additional financing may be needed.
- CMS’s July 2023 proposed 2024 outpatient payment rule included a proposed $8,847 payment per Aquablation procedure, approximately 3% above 2023 rates; the final rule was expected in November 2023.
- The $52.0m term loan matures in October 2027 and is secured by substantially all company assets, including intellectual property. If available cash falls below $100m, financial covenants apply; the filing describes a minimum cash or revenue-and-growth test.
- Risks include continued operating losses and cash burn, execution of commercialization and utilization growth, reimbursement and market adoption, scaling manufacturing, and reliance on suppliers. Cash deposits exceed insured limits; the company does not hedge foreign currency exposure.
- No material legal proceedings, material changes to previously disclosed risk factors, or off-balance-sheet arrangements were reported. Disclosure controls were assessed as effective.
Investor facts to verify
- Whether revenue growth and system utilization sustain the improving gross margin while operating expenses continue to expand.
- Cash runway, working-capital needs and covenant status if available cash approaches the $100m threshold.
- Final CMS 2024 reimbursement rates and changes in commercial and international coverage.
- Progress toward management’s stated growth drivers, including installed-base expansion and recurring handpiece sales.