PROCEPT BioRobotics Corporation — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; unaudited. The company develops and sells the AquaBeam Robotic System and related products for Aquablation therapy, initially targeting benign prostatic hyperplasia (BPH).
Financial performance
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Revenue | $14.2 million | $7.2 million | +97% |
| Gross profit / margin | $7.7 million / 54% | $3.5 million / 49% | Margin +5 percentage points |
| Research and development | $5.0 million | $4.5 million | +11% |
| Selling, general and administrative | $18.4 million | $10.3 million | +78% |
| Operating loss | $15.7 million | $11.3 million | Loss increased |
| Net loss | $17.2 million | $12.8 million | Loss increased |
| Operating cash used | $18.2 million | $15.2 million | Cash use increased |
- Revenue growth reflected higher AquaBeam system and handpiece sales, particularly in the U.S.; management attributed U.S. growth partly to broader insurance coverage and expanded sales and marketing personnel. System sales and rentals were $8.5 million, handpieces and consumables $5.2 million, and service $0.5 million.
- U.S. revenue was $12.6 million, or 88% of total revenue; international revenue was $1.6 million. Gross margin improved with greater production volume and higher U.S. average selling prices.
- SG&A growth reflected expansion of sales, marketing, reimbursement, and administrative functions. The company reported a $0.39 basic and diluted loss per share, versus $2.65 in Q1 2021; the share-count comparison is affected by the 2021 IPO and preferred-stock conversion.
Financial position and liquidity
- At March 31, 2022, cash and cash equivalents were $284.3 million, down from $304.3 million at year-end 2021; restricted cash was $3.8 million. The accumulated deficit was $278.7 million.
- Total liabilities were $68.2 million, including $50.3 million of non-current loan debt. The company had drawn $50.0 million under its loan facility; the stated interest rate was 9.37%, and substantially all assets were pledged as collateral. The company reported compliance with loan covenants.
- Cash used in investing activities was $0.1 million; financing provided $1.3 million, primarily from stock-option exercises. Cash, cash equivalents, and restricted cash declined $17.0 million during the quarter.
- Management expects cash, anticipated revenue, and available debt financing to fund operations for at least 12 months from issuance of the financial statements. The company has not achieved positive operating cash flow and expects continued losses and increased spending.
Outlook, risks, and notable items
- No specific revenue or earnings guidance was provided. Management expects revenue to grow as the installed base and system utilization increase, and expects continued investment in commercialization, R&D, manufacturing, and public-company costs.
- The company had 150 installed systems globally, including 93 in the U.S., at quarter-end. All local Medicare Administrative Contractors had issued positive coverage determinations, while management continued seeking additional commercial and international coverage.
- COVID-19-related procedure delays, hospital budget or staffing constraints, travel and training restrictions, and supply-chain disruption could hinder system placements and utilization. Management also cited risks including adoption, reimbursement, manufacturing scale-up, competition, and future financing needs.
- A new San Jose lease covers approximately 158,221 square feet, with a planned term of 122 months and aggregate base rent of $49.2 million; a landlord allowance of up to $7.9 million applies to tenant improvements. Existing Redwood City lease payments and debt repayments totaled approximately $53.9 million in scheduled future payments at quarter-end.
- A lender success fee may become payable upon specified liquidity events or achievement of a $200 million trailing-12-month revenue target by September 2029; the recorded derivative liability was $1.5 million. No material legal proceedings or material changes to previously disclosed risk factors were reported.
Important facts for investors to verify
- Whether system placements translate into sustained procedure utilization and recurring handpiece revenue.
- How Medicare and commercial coverage, reimbursement, and hospital procedure volumes affect adoption.
- Cash burn relative to management’s stated 12-month liquidity expectation, including planned operating-expense growth.
- Loan repayment timing, interest-rate exposure, covenant compliance, and potential dilution or constraints if additional financing is needed.
- Execution and total costs associated with the San Jose facility, tenant improvements, and manufacturing and supply-chain expansion.