Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to PROCEPT BioRobotics Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Matt Bacso, Vice President, Investor Relations, for a few introductory comments.

Matt Bacso

Good morning, and thank you for joining PROCEPT BioRobotics second quarter 2023 earnings conference call. Presenting on today’s call are Reza Zadno, Chief Executive Officer; and Kevin Waters, Chief Financial Officer.

as like call listeners plans, of that performance forward-looking I’d on statements events XXXX. begin, Private are conference the this relate statements we to Reform that remind made or Securities Before Litigation under Act defined to future

speak which statements conference place and differ no today’s forward-looking While these new this other Securities date, only expressed cautioned The could results available are are as statements www.sec.gov. to at July factors not from XX, of uncertainties in XXXX. reflect or and undue statements Listeners several the by undertakes may these are unanticipated to on on revise BioRobotics to forward-looking Exchange and Except PROCEPT more on law, management’s PROCEPT that subject are or these expectations any risks arise. and to detail which risks, materially events Commission, expectations circumstances that the as all current reliance BioRobotics’ required call. based obligation beliefs, are uncertainties, of online assumptions disclosed statements with update filings cause in to information, forward-looking

reference in release. During non-GAAP information nearest earnings equivalent will measures we these to also not of as our measures well prepared measures are in financial their financial GAAP the how are we accordance call, that More GAAP. these included with certain about use as reconciliations

to turn I’d like over Reza. With call that, to the

Reza Zadno

Good us. morning, thank and joining you for

financial updated guidance call a will additional by who the call, I provide and to business comments will XXXX our update, regarding today’s provide followed opening Q&A. and For opening before detail Kevin, performance

quarterly our with results. revenue Starting

continue report the customers and pleased to clinical Aquablation a our benefits where record quarter to therapy. realize are significant We patients

utilization commercial quarter representing combination U.S. of XX% increased interest increased Growth adoption system sales the growth positive Total outstanding XXXX and drive the outcomes to the payer $XX.X coverage, We quarter second patient XXXX. base. quarter installed continued real-world of of private system. compared in field-based from driven data, of of surgeon long-term believe by was expanded team clinical the to second million, expanded was our revenue for robotic an our strong and and

to following starting the publication NICE momentum Medtech of also sales briefing. led are by stronger United generate international the We innovation Kingdom the

a U.S. In $XX.X total system the robotic we by million, compared robots The second in increase growth driven XX% generating year. quarter, of XX the sold revenue in sales of U.S., the was key factors. representing prior sequential two to record

expanded and pipeline. growing sales the capital is First

how and meet deals with progress sales are we once surgeon funnel, to and our system pipeline Given of expectations. quarter have second confidence out to a our the sales visibility champion the unlikely partner good timing fall we into how of deals

plan closed deals that slow quarter the to handful quarter-to-quarter seasonally impact which we we the volatility. for meaningfully an quarter. capital Second, is It of in first in period is equipment, a can a ultimately QX as second communicated, complete important reminder typically

addition of the which opportunities the in capital been of new to continue pipeline, placement our grow of driven meaningfully, terms In reps has territories. number greenfield by robot

with first QX late the sales reps, which quarter approximately added XXXX in of We ended the XX of XXXX. XX were capital

half U.S. the X added of of the system reps to the XXXX. contributing months, fourth we start capital X to in of ramp to sales productivity the expect in XXXX back With quarter the

expectations first U.S. year, Given increased. of full half in slightly our sales around system the the outperformance our system sales year have

of the still second expect to sales XXXX. half be we in approximately system XX% However, of

with we analyzing trends. extremely U.S. Next, of are and surgeon touching on utilization pleased overall quarter and revenue When our the increased consumable handpiece XXX% to second activity. utilization compared accounts, XXXX.

the levels accounts Our to XX% the and new ramp accounts. of end existing these take compared grown has of XXXX, to months base U.S. installed time in X to

We are we the standard Aquablation on what is multiple have points we of where respective utilization viewed believe encouraged therapy seeing account specific given now by proof as care and are a hospital. within

of growth, current is active new previous for both procedures approximately a of surgeon combination primary XXXX. months surgeon any be rates of retention define XX% retention active which case procedure who continue We first performing surgeons active to a quarter. The drivers and of as and growth X surgeon performed in the surgeon the

focus a on from level of surgeons. as commercial team this company, greatly high surgeon we training benefit As retention our new can

as awareness we progress, us, reps around revenue opportunities to trend what of by telling targets. growth grows, as go in be Aquablation All what will the positive growth capital through confidence informed guidance, which are productivity gives us shortly, ramp overall continues these rates. achieving therapy indicators customers our our seeing Kevin how new Our are pipeline, to in XXXX and continue

U.S. and In Next, regarding progress Nationwide we operate expedited quarter IDN the Aquablation our quarter, team initiative we the second the an hospital our with our partner that for surgeon placement IDN pricing at champions largest to handpieces and IDNs the secures national in sales these be important to in will sales system in contract with predictable network. more continues to partners. allow with the a sold with it Partnering hospitals. an as as signed manner

include to QX, orders We in any the continues opportunity strategic there systems pipeline. sold record results team for in our multisystem believe did expand IDNs. as number large the an is orders sales from Even we not future though the of multisystem

in strategic many hospital or in categorize States, greater having networks United While than equal there are hospitals we as to XX IDNs the network.

ability XXX and XX% XX% the Thus, the strategic BPH and relationships hospitals. X,XXX XX market, our total When of market importance IDN IDNs analyzing increased in these of to our meaningful is hospitals to for predictability the the we visibility BPH account the U.S. and pipeline. high volume of penetrate estimate provide

June In recent to we to effect early updated updates. into UnitedHealthcare that its X. policy This Turning include announced April, went updated coverage payer Aquablation. policy on

will of Aquablation suffering United payer approximately men lives, positive for the in commercial greatly largest coverage covered accessibility States million from BPH. XX the improve with therapy As policy UnitedHealthcare’s

With now therapy. estimate roughly access the to UnitedHealthcare, addition of Aquablation in of men the have we XX% U.S.

benefit are anticipating not in QX any short-term rate. we coverage, utilization UnitedHealthcare Regarding our

However, expect modest be along fourth do to driver expanded to a in of we quarter. a of benefit with the UnitedHealthcare’s seasonality normal utilization coverage see

increase November. XXXX would Aquablation estimated for rates. CMS Additionally, its outpatient the has published the proposed prospective hospital The is hospital a The the code in procedure, final Aquablation a rule APC that rule for mid-July, payment for to published in XXXX X $X,XXX proposed system. payment Level be which is X% over each provide

activities, XX% prior quarter compared for primarily million our growth quarter second by a in This year is XXXX, NHS by of of to representing market $X.X second the Kingdom. the momentum this of Aquablation grown row With was development of Since our pipeline period. in the international international Growth business. the respect earlier we generated United strong the large to recent outperformance hospitals international positive therapy, quarter in second update of in year driven sales meaningfully. BPH revenue the has guidance

With the the have are U.K., respect activities in development with market to we initial we very generated. momentum pleased

and awareness. months and economics patient Given prices, surgeons handpiece over strong next further growth in investment XX U.K. system the unit to accelerate and make selling the expand interest to U.K. plan acceleration average the from we on

with Additionally, XXX of in Aquablation we therapy. initiated enrollment mid-July, our survey post-market Japan in patients to treat

attractive XXXX, view we sustainable not long from the Japan clinical our Japan launch. ontribution very more Kingdom, term. do in United to U.S. commercial meaningful and expect we market to support a strategy lead While as a revenue is with Like and data robust

year-to-date plan and process full BPH team increasing the entire summary, tailwinds to extremely growth our by order. I’m treating and execute continue of performance record allow penetrating I deliver to and will utilization with of our proud hospitals pleased highlighted strategic In to and collective the prostate shapes. ability sizes of the range believe our us I’m

of Given revolutionize therapy this believe truly momentum, treatment Aquablation will BPH. positive we the

over that, to I the call will With Kevin. turn

Kevin Waters

Total Thanks, quarter year the representing growth quarter revenue the $XX.X second of of XXXX. revenue XXXX million, of for XXX% U.S. to period. second for representing of compared was was compared prior to growth the $XX.X quarter the XX% million, Reza.

quarter, quarter second XXXX. a In of U.S. revenue an XX% sold increase XX of total record generating of robotic $XX.X compared million, second the the we systems, system to

the the quarter XXX of an now Our increase compared is systems, is at at second end second quarter to of U.S. of the base XXXX. XXX% which installed

to Second quarter X% first system quarter with average compared XXXX selling the of our and up in line prices were which $XXX,XXX, was expectations.

basis. While expect on were we system average and increased a system our pricing expectations from selling met quarter, prices quarterly variability first the around still

compared quarter and systems. U.S. to per approximately quarter an second the of XXX% driven installed by for representing utilization increased X% account quarter was of growth handpiece of growth consumable XXXX. second increase XXXX. base was $XX.X U.S. the Monthly revenue robotic compared handpiece in the the to second revenue of million,

reflection second of the to XXXX prices and representing their Aquablation compared in taking of handpieces of of the We $X,XXX. selling quarter U.S. second indicator approximately quarter, growth of existing leading therapy long our adopt for in U.S. a quarter growth adoption to handpiece a choice as overall We revenue next true view treatment the the term. shipped in market accounts with XXX% X,XXX procedures. unit all second of average resective surgeons utilization step was as the

revenue of $X.X representing International for growth quarter was XX%. second the million,

United revenue by As driven the was in the quarter in international primarily Reza performance mentioned, strong Kingdom.

expectations. a which Sequential overhead with quarter was operations Gross margin and expansion overachievement. record quarter of expenses due along in margin revenue of for gross team was execution to was to second ahead our ability the XXXX our the our from strong absorb XX%,

have XXXX. to XX% further for margin profile full we expenses margins Given favorable expect standard both our confidence now our and year absorb increased gross robot handpiece, overhead of approximately and

other million expenses down the expenses, was of expense, million XXXX and increased loan organization XXXX. expenses. offset second and and our The by compensation $XX.X quarterly first compared million $XXX,XXX as sales prior same quarter variable period income to development year interest quarter commercial the and was expense interest expenses marketing were favorable $XX.X from statement. and and Total of expand increase the operating Total $XX.X Moving primarily of to $XX income. general in in in by the increased the increased interest driven and administrative was term income million research the

million compared quarter $XX.X in million loss the of of quarter the Net for compared to second of a XXXX. second a million the to $XX.X was $XX.X XXXX EBITDA period same million the Adjusted prior loss year. loss in of was of $XX.X

was $XXX million. cash June Our cash as equivalents balance approximately of and XX

Moving to outlook. our financial XXXX

guidance increasing We revenue full to year XXXX. to our of $XXX total are representing growth million, XXXX compared XX%

following are guidance our We on based increasing factors. the revenue

U.S. with systems. Starting

to continue expect to half which in sales to second equates be XXX full placements XXXX, of We year. the system XX% the approximately of for

for and deals be the fourth timing sales we down third our in and year. to of second seasonality be pipeline, expect system the to of normal quarter to relative strongest quarter Given our the quarter

to handpiece revenue. U.S. Turning

We as full continue to account to utilization per mid-Xs expect per measured by year sold the approximately in be month. handpieces

monthly our and to base, the of flat the to and an strongest expect year. Given second utilization we expanding normal seasonality third quarter compared for installed be to the quarter fourth quarter quarter utilization roughly be

be Overall by and the the year. impacted our of end utilization to the installed supplies in guided quarters, an our is base significant will fourth additions XX% by grow third by which the to additional

Additionally, we our expect handpiece to to and selling continue revenue be consumables million. price other to be $X,XXX $X.X average

and international be million. revenue, strong quarter expect on $XX.X momentum, Lastly full positive year the approximately now we second to revenue given

over expect is Moving now margins We down gross previous a full guidance our XXXX which XX%, of be XX%. the to year statement. increase approximately slight income

$XXX to expenses, forecast expansion, This and and operating in and EBITDA costs to favorable in exit with now long-term administrative year we associated operating and R&D, investments as is we expect be a a profile to general in approximately in execute support operating a plan the puts increase million. Therefore, XXXX $XX.X improved XXXX. revenue, lesser adjusted Additionally, expenses now given commercial to million. the our growth expense to us be margin position we business on of increase full increased loss increased team extent, strategic

turn At I’d to like for closing Reza point, call to back this comments. the

Reza Zadno

customers employees, becoming to their our the help thank our to journey shareholders support for BPH. for want all of us along I care and closing, In Kevin. standard Thanks, to

a At continue We and investments questions. at point, and of our many leverage our forward look upcoming take on to Operator? investor will Have to commercial clinical day, conferences. strategy. you to long-term this we execute I great will our seeing

Operator

Thank you.

Our first Craig Securities. of question the line of Bijou America Bank from from comes

Craig Bijou

questions and strong the Good morning, guys. for Thanks taking on quarter. a congrats

highlight compared So a that probably you number. on the guys but I to on wanted And you utilization utilization. growth system And did QX. tick about that tougher was of to comp few talked start by a placements down a large very asking strong handpiece utilization impacted sequentially, number

you track this I closely. guys So know

leveling about or you you the us maybe talk big what think – system seeing the understand help can you did. Are dilutive quarter us effect off just if cohort placement from we how how utilization? understand So earlier a help any And of seeing cohorts? you’re can you quantify what about like of

Reza Zadno

Thanks, Craig.

we we happy with see. results and So that the the the trends are of underlying positive very QX utilization

So growth. definitely see we sequential when we analyze cohort, every

surgeon we the level, active training, importantly, in We new On see growth. see high I the surgeon more surgeon surgeon as and prepared retention, increased remarks. mentioned

because and can results CFO utilization. of the at the procedure of because clinical of is the efficiency the the this they increased and point importantly, data that hospital, CEO All standardization time. And in of predict hospital view real-world increase of the more from

accounts we placement. growth we stayed about a record sequentially This increase to an was they analyze add did It that have was you to cohorts, XX%. Kevin, when we That want the headwind. I sequential see but we don’t said, something we with this? robot are XX%. of know, as But us, was So increased.

Kevin Waters

to continue on. Reza’s XXXX, our cohorts earlier guidance accounts the assume spot do how that us to well the could allows And utilization. when be our new with sequential for that that to north cohorts average increases in Yes. the implies. you look into in ties per continue generate the We guide below those the about of X.X have month you XXXX to Good accounts morning, XXXX at prior doing Bijou. think average. And guide our that and it are for see been

And that’s shaking out. how it’s

XX% few seen first underlying this we’ve just having the the on really But trends which utilization You’re accounts correct that hasn’t drag where base our but in our natural a a quarters, sequentially, is for observing that that been increase talking in we’ve installed with quarter is occur. about changed.

once increased predictable pathway We an account to have is installed a very utilization.

Craig Bijou

Got it. guys. Very helpful,

the in – the investor were coming comments on the there say, or And I variability. some Kevin, dip. after given I pricing QX, So would your concerns, appreciate on system

back variability good see quarter. pricing. have to was it But level to this on XXX up You’ll it

maintain that could there can increasing mean, out on that are if And in confidence pricing any would expand So accounts regions? call you I maybe sensitivity? is whether can pricing. there certain sensitivity, you your it’s that you price anything you certain some seeing where or be

Kevin Waters

did Look, about talk variability my quarter-to-quarter in system Yes. remarks, pricing. I around prepared

lot guiding and XXX is you to While do market the And I that system. we average we’re have And to talked drive one account-to-account. company you to, don’t expect quarter-to-quarter a to that growth hospitals if share. with a grow goal a procedure our really partner do number and have about can’t as variability is

happy surgeon variability. to ASPs variability lot with call view do parameters. to pricing, have I we And still But we quarter-to-quarter the floors internal if So have procedures. And again, a I do as expect other definitely anything don’t limits them that. would than willing we’re and that but a waiting of to especially negotiate, wings in rebounding,

Craig Bijou

Thanks guys. questions, it. taking Got for the

Kevin Waters

Thanks, Craig.

Operator

question. Thank One moment you. for next our

of from next Joshua TD comes Our question the Jennings line from Cowen.

Joshua Jennings

about I at the morning. and and uptick reference in with your Aquablation to of field anecdotal, quarter. is core how about being out demand. patients of a patient is mean you Reza patient to diligence. driving reporting that’s good demand are an view Congrats the Kevin, would suggest patients, your Hi, our escalating. kind back broader your their And questions. When I Was taking base. just although mean checks just seeking on strong of kind that ask But in terms I demand appreciate urologists, and that doing savvy hoping own treatment, from love utilization what just team, get patient

Reza Zadno

patient Yes, Thanks, Yes. is patients. activities. the coverage, demand the for Josh. definitely, online about see patient or we full also helpful And by the very XX% do access

one of patients, awareness sexual function predictability activity. this of preservation among And drivers The see that. access. again and more we of and have they is Now the the online

Kevin Waters

demand, that’s but Reza’s would just awareness question, side demand and think specific to coin urologists other it of the your the say to regarding wasn’t training, definitely daily on follow-up launching a Josh, Twitter is our I has on whether Just social increased. very been media, We has with I know with I other And that basis. LinkedIn which accounts see that see a we new or peer-to-peer successful.

the it’s So surgeon awareness last and that both XX patient an increase definitely over seen demand months. and we’ve

Joshua Jennings

hired Any And executive anything the of could as that you both believe and to in terms and move this pick that. I to how earlier up can lead XXXX XXXX? we a just you marketing new or marketing year. your for share for effort and urologists plans Thanks Medtronic just patients Understood. through

one end but sales I just think – force number hires then as if be where But the about sitting give team. sneak And I sorry that rep And just great for Aquablation missed at can lot. plans on on, us XXXX, I’m of and you more the year? you guess, this in, specialists capital the we clinical should on commercial just in color would sorry, rep update Thanks an any one well. remarks, prepared give this expansion can a in

Kevin Waters

Yes. Thanks, Josh.

correct. You’re

on a commercial Now team. our gamut. executive both the marketing downstream. upstream whole recently and for we responsible he’s He’s have in hired focused And

bolster awareness broader commercial I to think and initiatives, it’s a commercial that and to marketing going prepared team the increase team. our very strategic complementary specific we’re not team. to he’s look at but And go into to be surround to items our definitely

we’re him board. to have on So happy

that that the recently, in prepared X And guidance to in hired It’s team, to guidance, rep sure really team or remarks, I and capital the X ago. we regarding reps capital hit we Specific OpEx the classes nice XXXX. allow properly have We we to us addition. months And running reps remainder them per our X capital to and the XX year. just trained does said they’re historically, to for of do increase add sure did and year, support. from make been ground capital as to make give more to a XX proper our ensure this continuity the continue

Joshua Jennings

Understood. Thanks, again.

Kevin Waters

Thanks, Josh.

Operator

moment question. One our next you. for Thank

from Mishan Our next Matthew question line of the from comes KeyBanc.

Matthew Mishan

good for a questions. number. for taking gave you XQ don’t Hi, the thanks believe And placement morning. I actually

versus you for help down XQ. said it expect be next level XQ you set like level us Could think then highest to may kind be you think in how I quarter it the you and down? of much

Kevin Waters

Yes. I’d with that. half, be at been to look decrease fair second consistent. say QX down really modestly, first to we’ve forecast half We as as sequential kind But modest our QX. for of

Matthew Mishan

And I moving gross know higher, this the just Excellent. at point, number’s but then the central the on sales higher. profitability. really not margin’s moving Okay. it’s

not Just moving a was little curious a the why and little up. loss EBITDA bit down

Kevin Waters

Yes.

do we in said, OpEx XXXX the high-return will these outsized the in well. that experience as are OpEx we increases second EBITDA have increased this this we where So $XXX believe making QX which increased with in in guide OpEx the given guide $XXX sequential half to sales went revenue to primarily we as our growth million even marketing. We view R&D we’re in and slightly. would continue investments ended these and margins, that for reason believe million up the and to allow allow investments business With slight these from is which QX, QX, are down –

margin And out XXXX. exiting same even OpEx, weren’t anticipating happy the really the mid-XXs increase until really with We time, with. you at in which the we’re expansion, pointed

be and second now the So raising XX%. XX% to closer going exiting opposed to in to we’re already as our we’re implies there XX% that the year the guidance that fact quarter, to by

margins. progress So there really nice on

look then revenue growing at at our growth revised on And when overall OpEx, guidance our of XX%, OpEx I now XX%. is

we’re the while early some starting commercialization still product, me, in in leverage see So our of business. already excuse this to

Matthew Mishan

Okay. Thank you much. very

Operator

our question. for next moment One you. Thank

the next from line Newitter comes of Richard question from Truist Our Securities.

Richard Newitter

questions. Thanks funnel. your taking guys couple you the way just on Hi. Maybe sized of first A for capital the questions. up

out. that to of bit the XQ coming context generation? last relative on of said XQ. that’s and a had move kind provided the what’s stride bolus the color NIM that some funnel their end expect Can also you expanding I little which into you really what’s be the at of hires of a you going on know hitting comment lead within you to extent You’ve the to as into rep year, And we

in if funnel could or you and to they half, whether is with started fits still front expected how that changes? talk So the the that in about contribute of first kind in than capital out faster

Reza Zadno

Definitely, capital the we in QX very with were to prepared Rich. mentioned led is strong. as Thanks, X outcome. that factors, the happy And remarks, I

pipeline, the have visibility on the have great We in growing and seen we sales pipeline.

of was capital Phase there QX second there add. that went we the mentioned Once see of QX, the expand. we in enters to And fruition. want are We I, and have to continue to some to from is high we don’t that, but that different come a in know, you the the previously, that as Kevin, seeing QX likelihood I see very deal phases. that

Kevin Waters

just – Reza. it’s thanks, Yes,

pipeline, of at specifically number we on this our high surgeon we as we a looked when XX end a which So at that I of identified up pipeline, have ago. we to XX% from about which champion we the consider Phase degree QX. our and pipeline, pipeline June gave But quarters is it, looked when a has of few mean, the certainty X, close,

increasing specifically. the that good answer we funnel, to So about feel question

And it you in our around as of second giving we the half very level had with reps. guide, productivity, comparable look productivity, of a capital our back if XXXX XX half reps capital assumes rep XX at essentially

to folks those see and produce QX definitely QX. start we’re So in to starting

and where be strongest at point I quarter. But really our think proof a quarter environment, a to the the it’s seasonality producing capital level. normal given have us, going really these reps will QX And definitely of just we for new meaningful be

Richard Newitter

for year be of capital start margin profitability, increasing, capital. With Should relative you a to to a a in investments as just quarter to a get It gross kind losses, we higher just kind to be have as all even where bigger expecting to could the steady of helpful. trying see really inflect? you see overage these – consumables, the a relative to I’m where consumables we and XXXX That’s start the then mix profit a when profitability OpEx of the I’m hard we a sudden, OpEx do to to going guidance sense increase. you the whether to Maybe think on profitability? turning think increase would think how side, feels can about it fast turn it’s when just profitable that how happen we when trying and flip you of like does.

Kevin Waters

Yes.

term margins this do we I longer-term environment. we’re of profitability. at as it definitely And profitability to model, get where about, do think talked And believe of OpEx particularly the way. team, the XX%. numbers, we’re use with today’s does make terms hard, you you’re about and recurring think while spending our on you with flip growth, thinking longer when model, cognizant Rich, your to we’re sure we management terminology, in revenue that right without when specific turn revenue dollars, focused responsible we’ve a can we about talking in do, It look

I profitability a attractive from And but focused think that investors the XXXX we’re standpoint. here making it’s through that we And profit on definitely objectives this and plans show the of nature business going a formulating and definitely now, there. sure is pathway to team this can business can and is get management

Richard Newitter

you. thank Okay,

Operator

moment Thank our next for you. questions. One

of next from Research. from Chris Our question line Nephron comes the Pasquale

Chris Pasquale

you those back the don’t the Thanks impact happening United treated, there congrats a Was guys. hoops? real previously? to expansion. quarter, bunch of or Reza, lack a had Could obstacle, jump and I able up patients expect fourth of the the wanted to the why show remind was to coverage on through us to there what you until they coverage circle quarter. just to just with Curious they were get

Reza Zadno

Chris. Thanks,

this And cases to United reason if So – X. for only pay mentioning had became and QX. cases. as the would were prior we The know, to preapproval. of willing That’s It a are receive functional. to that patient, about takes fully the time in that to not doing, they become QX, United XX% coverage, that impact we’re treat June some those big effective why still accounts you

Kevin Waters

year our normal utilization, we expansion very in one with And do QX of from see But have factors seasonality a to time, many start if benefit the is modest, you look to different I the do in guide, at at for same suggest, QX, United. along we and the levers And we to achieve achieve a expecting as full get the benefit, on therefore, to fourth wouldn’t bump guidance, United we’re these quarter take our particular comments utilization guidance. large relying in expanded that’s are but see I you utilization on the some X.X% in and utilization. to why

Chris Pasquale

start of relative to were thinking the Thanks. the about sense. Makes a year. how surprise And then international at nice we has been

important being about Japan, think a countries the that so talked story. territories guys in are there upside any have you far year? this And driven really Japan of not XXXX new other be XXXX? Which You outside could

Reza Zadno

Yes.

are the the as and that report international approval, So biggest previously, NICE with one came for contribution mentioned The QX XXXX. U.K. coverage. And of those one drivers. was we in with regulatory have the reason Japan, we – is received approval the don’t of because drivers of U.K., we assume the was the

study, XXX-patient and post-market enrollment We started do have in that a to July.

with don’t we We that’s are that. happy near-term anticipate why contribution. And

with development. region And we similar we by markets we on region So start was enter, previously to market said, very and U.K. go large we are And internationally, once as selective. U.S. have the same.

in but we the are We clinical. going Japan, from the reimbursement same, received again obtained support to with the NICE and do

we’ll by have – will we very go various So very regions. approach a targeted

Western the So and then approval we Japan, Europe Korea. our in with South and initially started have

Chris Pasquale

Thank you.

Operator

next Thank our for One you. moment question.

Zimmerman question BTIG. line Our comes next from Ryan of from the

Unidentified Analyst

taking Sam thank on questions. for This our you is Ryan. for And

The is about sold forward? first we many how leasing on one And outright going think placed How were systems quarter? should placements. the system leased versus in

Kevin Waters

Yes.

that our systems significant internal sold that quarter have were So to represents we our sales an of program we a don’t XX All portion customers. leasing in the business.

So we was that for point quarter. out, no did is This at the will hence, arrangements second the installed the the there. the quarter, in doing fourth recognize to system quarter, in system and place though, leasing revenue procedure. a expect I customer in second we

But suggest excuse you if you XX QX our QX, But that – leasing. as systems, be don’t do that when base prepared XXX, to installed our add of exiting due base exiting in we’ll noted our of just base that’s if my should would me, is timing installed actually look the at XXX, XXX. we the recognize on system. So remarks, and installed revenue

Unidentified Analyst

That’s there you’re indicated at we IDNs you, What that Then And again. targeting. about helpful. the you. percentage are for how remainder IDNs? should Thank placed of of systems the are forward going Thank XX year? you think

Kevin Waters

Yes.

in So date, have these of orders, nice to we single difficult XXXX. and And exact IDNs date, as we IDNs. What purchases orders do the are had continue to single have But IDNs. a have these the said opportunity moving partners, what really but orders multisystem haven’t forward with we these disclosed we predict. we number numerous we are that we orders those many, to suggest, don’t corporate to most from IDN haven’t view is have I as from

Unidentified Analyst

Thank you.

Operator

Thank One question. next our moment you. for

line the from Chatterji comes B. question next Neil from Our of Riley.

Neil Chatterji

for And good morning. questions. thanks Yeah, taking our

for low volume for curious how this of make of kind installs the I that the volume centers quarter in curious the – utilization. I’m mix about talked last the low think Just install. centers about saw impacting then what might be up you quarter, on you XX% and the just

Reza Zadno

Neil. Thanks, Yes.

to So the changed. XX%. XX% hasn’t It’s in mix the

volume earnings said, last volume As we we volume, not and had as ramp, mentioned small hospitals. low and the high what seeing, similar. low the are the call, are we Again, utilization are in have

not they historically, doing been BPH. have Just many

utilization ramp is the the So similar, the and this were the and mix same point. at

Kevin Waters

systems low was Yes. It high be – clear opposed no high bearing I on between low want the were of as dynamic any the placed amount. sequential hospitals. volume to volume no the to utilization dynamic really volume QX and utilization had our XX on that hospitals was versus

Neil Chatterji

spend to to Great. R&D. that there. Thanks color. turning Maybe for Continue just

update can any speed enhancements share you of you imaging, there or if Just the on Anything or there? efforts perhaps? planned kind us the terms could of kind in of on that delivery R&D curious pipeline,

Kevin Waters

Yes.

always It’s And product, highly too on And R&D, being obviously, company. processes. in QX can from the a advantage. future company talking but we’re near term. our about a So board. assured in clinical people, are getting you we’re in specific they’re standpoint. investments the across be working it’s the and kind innovation, robotic not much technology detail focused, QX, it’s not bedrock of And we to this the maintain of It’s

overall term. like details of not to longer our time. can is This robotic thinking about And it’s But at we’re but things to that You like improving system any workflow, design. talking I’m provide simpler this today, think definitely improving that we’re use. making going things

Neil Chatterji

Thanks.

Operator

next Thank question. you. One moment for our

Our next question comes from the Treybeck line from Fargo. of Wells Nathan

Nathan Treybeck

on congrats quarter. Hi, a great

Just can we capital go environment. to the back just

has obviously in on this approach you were You are from placement capital the spending. environment? mentioned what so far Thanks. terms QX QX? of QX. kind the in IDNs How time, cautious out up But taking that of a seeing in And shortfall caught played at you

Reza Zadno

Yes.

strategy patients. a bring to reason to because and this treatments in hospitals question. for are But staffing. P&L case, ROI treatments Definitely, pressure. the patients urologist. that are yes, as seeing one And we also, have thanks invest prioritizing fits in definitely and spend allowing allow in of their more is number and mentioned So in good QX in improvement treat those BPH patients innovative But we go many see hospital this

And them that also surgeons in allows the to we patients this so more fits and and their believe view, – in to attract it hospital. from point model, treat of

So that changed. hasn’t

Nathan Treybeck

second so urologist? trend XX% of to panel you AUA, Are seen of Okay. care your bypassing of earlier. they’ve XX% noted the offering Aquablation and seeing are drugs watchful then question, Thanks. my into under that waiters, surgeons urologist considering to penetration them And significant a the

Reza Zadno

you the – urologist? under mentioned of a patients I’m the So are care data of sorry, XX% the

Nathan Treybeck

Yes.

Reza Zadno

medication they when are under care a the half the and half are Patients under and of – between roughly generalist. urologist

though, in are coming demand. a the treatment. long large But to at get that this term, point, Patients a there may So be driver. already hospital is to

Kevin Waters

patients market that TURP still we’re be success. a some to cases. of are the overall of treating converted lot believe difficult treatment to option. to customers GreenLight the low the definitely I is still traction, you the wasn’t lot are compared we’re in our are patients who and foregone But a penetrating. But talk majority tell can We on reality an our have to who would otherwise if numbers, Aquablation numbers having mean, of of the of honest. It’s fairly terms

difficult – patients other exactly candidates of it’s out drug what – respective are [ph] those are seeing that, foregoing but our or we percent at volumes technologies. versus for to dropouts how drugs or parse are So

Nathan Treybeck

thanks. Okay,

Operator

next Thank you. for our moment One questions.

Our comes from Brandon of next line William question Blair. Vazquez the from

Brandon Vazquez

taking the Thanks everyone. questions. for Morning,

to look procedure you utilization. back new does the what First, us like like Maybe what systems? there new typically placement help ramp Is I a quote-unquote, ask technically out what how trends – base go seeing dilutive so does kind but different. the, versus we is in like kind color they can question, of we’re what – to can to can kind want legacy look the can system installed what just how there the on Do a ramp is same be? of an I slightly in of tease maybe – any wanted account? give

Kevin Waters

Yes.

that pre-XXXX, are So you to have getting increases provide X.X% try modestly. are with of the every group. seeing they year that up I’ll been at guide into we quarter, color, trend without of look us sequential if some full again, numbers, continue help to you in our and and right? And north specific And accounts

than quarter, less significant quarter, effect corporate that in given new dilutive they’re average. any me, the the – accounts, there’s of excuse first significantly But in

reasons capital and quarter weighted second just primary we more for until third to don’t the their any launch where robot, equipment, they procedures, a the it and that we of account even One in accounts don’t therefore, towards in install the the any example, being tends heavily some second have do And be month quarter. of subsequent quarter.

So a to you they’re that it just half would model that normal that for of utilization the mid-quarter. dilutive new placed take our account effect of is fact suggest an fairly I is maybe to And account what average forward, pronounced. for

Brandon Vazquez

the then And you pipeline, of some gave terms numbers guys system nice there. in it. incremental Got

which again, a was it increase what’s helpful. there’s remind kind on time the imagine us window window, but think pipeline, that to is great. I the XX% one a close sequential even Can frame knowing typical might that of you of kind in be of I large these?

compared has all changed to it going whether start be the of frame that the be, year, time macro Thanks. that to the this deeper that at into And curve? or follow-up lengthening just maybe would concerns macro or adoption

Kevin Waters

Yes.

first. last question your answer I’ll So

business pipeline seen about haven’t But reason with capital the the anywhere concerns. macro deals. of any lengthening with months. that We think average, is timing unpredictable half, because X why it it half, second it’s type on could – X to of the said, With these we from any is anywhere first be somewhat

X-month That specificity in to and account think inconsistent but us go to falls And range. giving been gives than I any norm. norm terms the through not consistent of within surgeon all shorter of but champion, system. opportunity work that’s administration But we’ve that the the had an months, identify X- an in benefits The the range. that definitely that further that’s X range, with in

Operator

would now to I Zadno like the closing remarks. turn to back conference over you. Reza for Thank

Reza Zadno

Thank you for attending this earnings call.

Have see nice in our we hope many the you with and pleased very in QX, day. to are results We upcoming a of conferences.

Operator

conference This for call. Thank concludes today’s you participating.

disconnect. You may now

PROCEPT BioRobotics (PRCT) 27 Jul 232023 Q2 Earnings call transcript