PROCEPT BioRobotics Corporation (PRCT) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed mixed signals: strong revenue guidance and strategic focus on growth, but concerns about profitability delays, tariff impacts, and vague responses on future plans. The Q&A highlighted management's confidence in long-term growth but also noted uncertainties in capital sales timelines and utilization improvements. The market cap suggests moderate stock movement, balancing positive growth prospects with operational challenges.
Key Financial Performance
Total Revenue $83.3 million for Q3 2025, representing growth of 43% compared to Q3 2024. The growth was driven primarily by U.S. capital systems shipped.
U.S. Revenue $73.9 million for Q3 2025, representing growth of 42% compared to the prior year period.
Handpiece and Other Consumable Revenue $44.4 million for Q3 2025, representing growth of 50% compared to Q3 2024. Approximately $2.4 million of this was other consumable revenue. This growth was supported by the sale of approximately 13,225 handpieces, reflecting 51% year-over-year unit growth.
U.S. System Revenue $24.7 million for Q3 2025, representing growth of 26% compared to Q3 2024. 57 new HYDROS systems were sold, with an average selling price of approximately $435,000. Additionally, 1 HYDROS system was placed under an operating lease model.
International Revenue $9.4 million for Q3 2025, representing growth of 53% compared to Q3 2024.
Gross Margin 64.8% for Q3 2025, representing an increase of 160 basis points year-over-year. The margin expansion was driven primarily by greater organizational effectiveness.
Operating Expenses $77.2 million for Q3 2025, compared to $59.3 million in Q3 2024. This increase reflects investments in organizational changes and commercial initiatives.
Net Loss $21.4 million for Q3 2025, compared to $21 million in Q3 2024.
Adjusted EBITDA Loss of $7.4 million for Q3 2025, compared to a loss of $12.4 million in Q3 2024. This improvement reflects better operational performance.
Cash Balances Approximately $297 million in cash, cash equivalents, and restricted cash as of September 30, 2025.
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Operating Highlights
Aquablation therapy: Highlighted as a highly differentiated solution for BPH patients with strong clinical evidence and potential for expansion into prostate cancer treatment. Actively studying this in the WATER IV clinical trial.
HYDROS systems: Sold 57 new systems in Q3 2025, with an average selling price of $435,000. Initiative launched to improve speed of new account launches and procedural targets.
International expansion: Sharpening focus on international markets with increased investment and organizational support. International revenue grew 53% YoY in Q3 2025.
U.S. market: Strong growth in U.S. revenue, up 42% YoY in Q3 2025. U.S. installed base increased by 47% YoY to 653 systems.
Revenue growth: Total revenue for Q3 2025 was $83.3 million, a 43% increase YoY. Full-year 2025 revenue guidance is $325.5 million, representing 45% growth YoY.
Gross margin improvement: Gross margin for Q3 2025 was 64.8%, up 160 basis points YoY, driven by greater organizational effectiveness.
Organizational changes: New hires include Pooja Sharma as Chief Marketing and Strategy Officer and Stephen McGill promoted to Senior VP, General Manager, International. Focus on improving commercial execution and operational excellence.
Long-term growth strategy: Investing in marketing, R&D, and international expansion to drive sustained utilization growth and profitability. Hosting Analyst Day in February 2026 to outline multiyear revenue guidance and strategic priorities.
Prostate cancer treatment: Exploring Aquablation therapy's potential for prostate cancer treatment as part of the WATER IV clinical trial.
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Risk or Challenges
Macroeconomic Conditions: Large hospital systems are scrutinizing capital spending due to evolving macroeconomic conditions, which could impact the company's ability to sell capital systems.
Procedural Utilization: The timing from sale to first procedure is highly variable, delaying the realization of utilization benefits and causing hospitals to hold excess handpieces.
Organizational Changes: Recent organizational changes and influx of new talent could create short-term disruptions, potentially impacting operational efficiency.
Inventory Optimization: Field inventory optimization efforts are causing modest headwinds in handpiece sales, particularly in the fourth quarter of 2025.
Tariff Expenses: Fourth quarter gross margin includes approximately $2 million of tariff expenses, which could impact profitability.
Market Awareness: Low awareness of Aquablation therapy among patients and healthcare providers could limit market penetration and growth.
International Expansion: While international markets present opportunities, increased investment and organizational support are required, which could strain resources.
Prostate Cancer Expansion: Expansion into prostate cancer therapy is still in the clinical trial phase, posing risks related to evidence generation and market acceptance.
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Guidance & Outlook
Revenue Guidance for 2025: Full year 2025 total revenue is expected to be approximately $325.5 million, representing growth of approximately 45% compared to 2024.
Robotic System Sales for 2025: Approximately 213 new robotic systems are expected to be sold in the United States in 2025, with 65 systems anticipated in the fourth quarter.
Handpiece Sales for 2025: Sales of approximately 52,000 handpieces are expected for the full year, representing a 61% increase in unit volume compared to 2024. Average selling prices are expected to remain at approximately $3,200.
International Revenue for 2025: Full year international revenue is expected to be approximately $37.5 million, representing annual growth of 56%.
Gross Margin for 2025: Full year 2025 gross margin is expected to be in the range of 64% to 64.5%, with a fourth quarter gross margin of approximately 63%.
Operating Expenses for 2025: Full year 2025 operating expenses are expected to total $302 million, representing a 29% increase compared to 2024.
Adjusted EBITDA for 2025: Full year 2025 adjusted EBITDA loss is expected to be approximately $35 million.
Revenue Guidance for 2026: Total revenue for fiscal 2026 is anticipated to be in the range of $410 million to $430 million, reflecting current momentum in capital sales and modest procedural headwinds in the first half of 2026.
Strategic Investments for 2026: Targeted strategic investments will be made in 2026 to enhance commercial capabilities and operational excellence, designed to drive sustained long-term utilization growth and position the company for durable profitability.
Analyst Day in 2026: A formal Analyst Day is planned for late February 2026 in New York City to outline multiyear revenue guidance and provide updates on marketing priorities, R&D initiatives, prostate cancer trial, and profitability targets.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you discuss the strength in the capital environment and the performance of the capital team in Q3?
A:Kevin Waters explained that the capital team's performance in Q3 was strong, with variability in timing from IDN partners being a factor. He noted that future weakness in capital is more about timing and allocation rather than macroeconomic issues. The team executed well, and they expect mid-60 range of systems in Q4.
Q:Larry, what are your observations and plans as the new CEO, and why the confidence in providing 2026 revenue guidance?
A:Larry Wood shared that his first 8 weeks as CEO have been positive, with validation from KOLs and field visits. He emphasized the need to tell the company's story better to clinicians and patients. He expressed confidence in the company's future and initiatives, with plans to provide more details in February. He also mentioned that Pooja starts tomorrow and will contribute to the long-term plans.
Q:Can you elaborate on the slower ramp in HYDROS placements and its impact on utilization?
A:Kevin Waters confirmed that year-over-year growth in utilization was in the low single digits, aligning with expectations. He attributed this to the significant number of HYDROS systems sold and elongated launch timelines. Larry Wood added that focusing on utilization and improving the launch process is a priority, with organizational changes being made to drive this.
Q:What are the next steps for PROCEPT in moving past early adopters to broader adoption?
A:Larry Wood highlighted the importance of patient activation and generating evidence to show the differentiation of their procedure. He emphasized educating both patients and clinicians about the benefits of Aquablation and the need to amplify their message to drive broader adoption.
Q:Can you provide more details on the 2026 revenue outlook and the components contributing to it?
A:Kevin Waters stated that the guidance brackets current consensus and mentioned the international business as a component in the $45-$50 million range. He noted that more details will be provided in February, and the guidance reflects potential headwinds from organizational changes.
Q:What is the trajectory to profitability, and will there be reinvestments under the new leadership?
A:Larry Wood stated that strategic investments will be made, potentially redirecting spending rather than adding incremental costs. He emphasized the focus on long-term growth and value, even if it delays profitability by a quarter. Kevin Waters added that the path to profitability remains clear.
Q:What changes are being made to improve commercial activities and utilization?
A:Larry Wood mentioned improving the handoff between capital sales and utilization teams, focusing on time-to-utilization targets, and restructuring field resources to drive market building and case volume. He emphasized the need for a different approach as they move beyond early adopters.
Q:How do you plan to address the challenge of educating patients and clinicians about Aquablation?
A:Larry Wood discussed the importance of direct-to-patient education and leveraging cost-effective channels like social media. He also emphasized the need to educate clinicians about the differentiated outcomes of Aquablation and the long-term benefits of earlier therapy for BPH.
Q:What are your thoughts on the impact of new PFS rates and procedure adoption?
A:Larry Wood stated that the new PFS rates are in line with expectations and emphasized that procedural reimbursement is a larger factor. He believes that the differentiated technology of Aquablation will drive adoption, regardless of economics.
Q:How do you approach guidance and expectations under the new leadership?
A:Larry Wood emphasized creating a realistic range for guidance that reflects execution potential and realities. He plans to focus on driving execution rather than adjusting guidance based on external expectations.
Q:Is direct-to-consumer (DTC) advertising being considered to address patients deferring care?
A:Larry Wood acknowledged the importance of patient education and mentioned cost-effective methods like social media. He emphasized the need to tell the story of Aquablation's benefits to both patients and clinicians, without fundamentally changing the path to profitability.
Q:Are there any new trends in hospital purchasing behavior that could impact capital sales?
A:Larry Wood noted that the purchasing process is taking longer due to additional steps and macro concerns. However, he does not expect this to fundamentally change capital projections, as systems are still being purchased.
Q:What is the focus for driving utilization in new and existing accounts?
A:Kevin Waters highlighted the importance of launching accounts more robustly and focusing on driving utilization in existing accounts. He mentioned initiatives to improve both metrics and emphasized the opportunity presented by the aging installed base.
Q:What is the strategy for addressing variability in system sales to first surgery timelines?
A:Larry Wood emphasized the need for a strategic plan to drive adoption and utilization immediately after system placement. He mentioned renewed focus on launching systems and ensuring a high cadence of cases early on.
Q:What is the potential for Aquablation in treating localized prostate cancer?
A:Larry Wood stated that the focus remains on BPH, with prostate cancer being a natural adjacency. He mentioned the ongoing WATER IV trial and plans to provide updates in February, emphasizing that BPH is the primary growth driver.
Q:What is the outlook for ASP growth, particularly with the HYDROS system?
A:Kevin Waters noted that HYDROS carries a higher consumable ASP, contributing to low single-digit price increases as the mix shifts. He advised being conservative in modeling ASP growth, as price increases are not a primary strategy.
Q:What factors are impacting Q4 gross margin and guidance?
A:Kevin Waters mentioned a $2 million tariff-related expense impacting Q4 gross margin by 200 basis points. He emphasized that margins are not a hindrance to profitability and that the focus remains on revenue growth and manageable OpEx.
Q:Why was there a lowered outlook for Q4 despite a strong Q3?
A:Kevin Waters explained that the Q4 guidance reflects a reduction in handpiece sales due to inventory optimization and destocking. Larry Wood added that the focus is on procedure growth, with efforts to manage customer inventory levels more effectively.
Q:Review of Unclear Management Responses
A:Management avoided providing detailed components of the 2026 revenue guidance, stating that more information would be shared in February. They also did not provide specific details on the changes being made to improve utilization or the exact impact of new PFS rates on procedure adoption. Additionally, they were vague about the potential for direct-to-consumer advertising and its impact on profitability.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America change
Aquablation potential
Aquablation solution
Aquablation therapy
BPH Aquablation
BPH patient
Capital pricing
Chief Marketing
Edwards Lifesciences
Edwards focus
General Manager
HYDROS system
International job
Lifesciences marketing
Manager International
Marketing Officer
McGill Vice
North America
Officer Securities
Officer experience
President General
Procedure utilization
Relations afternoon
States surface
afternoon PROCEPT
awareness
benefit
experience Edwards
field
handpiece sale
launch timing
leader
life
opportunity procedure
patient Aquablation
quality
system hospital
PRCT Transcript
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The earnings call reveals a mixed performance with strong revenue growth and improved gross margins, but significant concerns arise from increased losses, higher operating expenses, and weak Q4 handpiece sales. While guidance for 2026 shows potential, the immediate impact of discontinuing bulk discounts, increased ASP, and the sales force realignment creates uncertainty. The Q&A session highlights management's confidence in future growth but lacks concrete evidence for some claims. Given the market cap and these factors, a negative stock price reaction is expected.
PRCT Report
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