PROCEPT BioRobotics Corp Q4 FY2024 earnings call

Management Statement and Operational Highlights

• HYDROS Launch: In August 2024, PROCEPT received FDA 510(k) clearance for the next-generation HYDROS Robotic System. The HYDROS incorporates FirstAssist AI, enhancing surgeon accuracy. Market receptivity exceeded expectations with a robust capital pipeline and higher selling price.
• Prostate Cancer Initiative: Demonstrated Aquablation therapy does not spread cancer cells, leading to the lifting of FDA contraindication for BPH patients with prostate cancer. Finished PRCT-002 feasibility study and initiated the WATER IV PCa pivotal trial with breakthrough device designation for prostate cancer treatment.
• Saline Shortage Impact: Hurricane Helene in September 2024 disrupted Baxter's saline production, causing a 10-20% delay or cancellation of ~2,000 procedures in Q4 2024. Affected 50% of accounts, with recovery starting in December.
• 2024 Performance: PROCEPT achieved strong revenue growth, significant gross margin expansion, and successful launch of the HYDROS System, with 60% y-o-y growth in the US installed base.

Segment Performance

• Total Revenue: Fourth quarter 2024 total revenue was $68.2 million, up 57% year-over-year (y-o-y) compared to Q4 2023. Full year 2024 total revenue was $224.5 million, up 65% y-o-y.
• Robotic Systems: Fourth quarter 2024 sold 60 robotic systems, 95% of which were HYDROS with an average selling price of approximately $460,000. In 2024, 190 robotic systems were sold. The US installed base exited Q4 2024 at 505 systems, a 60% y-o-y growth.
• Handpieces: Fourth quarter 2024 shipped approximately 8,750 handpieces in the US at an average selling price of ~$3,200, a 37% y-o-y unit growth. Full year 2025 guidance for handpieces is ~52,500 units at ~$3,200 ASP.
• International Revenue: Fourth quarter 2024 international revenue was $7.8 million, a 137% y-o-y growth. 2025 full year international revenue guidance is ~$32.5 million, representing a 36% annual growth, driven by strong momentum in the UK and pending launches in Japan.
• Gross Margin: Fourth quarter 2024 gross margin was 64%, an all-time high. 2025 full year gross margin guidance is approximately 64.5%, a ~400 basis point improvement from 2024.

Guidance

• 2025 Revenue: Full year 2025 total revenue is expected to be approximately $320 million, a ~43% y-o-y growth.
  • US Systems: Expected to sell ~210 new robotic systems in 2025, with ~45% sold in H1 2025. HYDROS ASP is expected to be in the range of $430,000 to $440,000.
  • Handpieces: Full year 2025 guidance for handpieces is ~52,500 units at ~$3,200 ASP.
  • Other Consumables: ~$8 million full year guidance.
  • International: ~$32.5 million full year international revenue guidance, up 36% y-o-y.
• Gross Margin: 2025 full year gross margin expected to be ~64.5%, a ~400 basis point improvement from 2024.
• Operating Expenses: Full year 2025 operating expenses expected to be ~$300 million, a 28% y-o-y growth. First quarter 2025 operating expenses guidance is ~$71 million.
• Cash Position: As of December 31, 2024, cash, cash equivalents, and restricted cash balances were $337 million.

Risks

• Saline Shortage: Hurricane Helene disrupted Baxter's saline production, leading to a 10-20% delay/cancellation of ~2,000 procedures in Q4 2024, impacting 50% of accounts with residual effects in Q1 2025.
• Competitive Landscape: Potential counter marketing from competitors, though PROCEPT is the only company running an FDA randomized trial for prostate cancer treatment.
• Clinical Trial Timing: Delays in enrolling patients in the WATER IV trial could impact revenue from prostate cancer treatment.

Question and Answer

Q: Impact of the saline shortage on procedures and 2025 impact?

A: Kevin Waters explained that the saline shortage led to a 10-20% delay/cancellation of ~2,000 procedures in Q4 2024, with residual effects in Q1 2025, but recovery was seen in February and March.

Q: Handpiece ASP and OpEx spend?

A: Kevin Waters clarified that handpiece ASP is steady at ~$3,200, with other consumables contributing to lower perceived ASP. OpEx includes noncash stock-based compensation, with core operating expense growth at 20% excluding that.

Q: International expansion and replacement revenue?

A: Sham Shiblaq discussed strong international momentum in the UK and focus on Japan. Replacement revenue ~$3 million in 2025, with focus on greenfield sales.

Q: Gross margin and profitability path?

A: Kevin Waters stated 2025 gross margin expected ~64.5%, with a clear pathway to profitability, though specific timing not specified.

Q: Competitive landscape and prostate cancer data?

A: Reza Zadno and Sham Shiblaq mentioned no direct resective competitors, and excitement about prostate cancer data to be presented at AUA 2025.