PRCT - Earnings call 4 2023 | PROCEPT BioRobotics Corporation

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Operator

Good day, and thank you for standing by. Welcome to the Q4 2023 PROCEPT BioRobotics' Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Matt Bacso, Vice President of Investor Relations. Please go ahead.

Matthew Bacso

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

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

that expressed are to While on www.sec.gov. statements are uncertainties, and at materially Securities are statements these which in several these based risks, expectations results forward-looking subject filings and this assumptions could and expectations of conference call. online the from disclosed PROCEPT the factors risks These with other beliefs, and differ uncertainties all available on management's detail Exchange cause Commission, in more to are BioRobotics' current

cautioned BioRobotics any or today's XX, date, which events undue these reliance Listeners to circumstances, information, required no February PROCEPT that update to undertakes place obligation of may unanticipated on revise by speak arise. as are forward-looking forward-looking not statements law, reflect only new as XXXX. Except statements, to

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

Reza Zadno

and afternoon, us. thank Good you for joining

our business and the detail today's opening initial followed For Q&A. Starting guidance regarding and provide results. performance a Kevin, to update financial XXXX who call revenue will comments opening provide with our call, by will additional I quarterly before

installed revenue our revenue of base. XXXX. XX% the $XXX.X monthly accounts of my new in of report million, of The the our an average throughout growth accounts to fourth fee, XX% to utilization the especially XX%. with $XX.X full total significant another million, the in of representing these U.S. was amplifies XX%, of total for fourth in the faster, quarter growth U.S. by increased get pleased XXXX a basis, increase quarter team's in are considering The conjunction compared increase our utilization care substantial the year exceptional representing approximately On to accomplishments year. ability strong in pride quarter We further in

Given our account average therapy, the per for of strong underlying Aquablation handpieces were and we X.X fiscal to demand XXXX quarter. a in handpieces fourth X.X account able record in per month per deliver approximately utilization

of Due guidance reminder, care our rapid this assumed to in standard utilization rate support company's confident ability for has BPH for Aquablation I than therapy, to handpieces of As adoption our initial ever become of per the a XXXX and more month. approximately X.X patients. am

States. reflect globally. Starting the we laying to the our be in XXXX, allow growth disciplined current the these to urology We there while against underlying with will believe believe fundamentals being and showing standard in business the urology surgical which enter plan United we leading a that BPH care to foundation execute are positive As factors, will of become continue the technology path us several franchise a long-term a profitability. market is that to

We the see associated where market men in urologists are to reason BPH. are a fortunate very #X with operate symptoms large

be we of to years growth surgical to current millions Given the currently will the population who and market shortcomings attractive men believe of alternatives many underlying for aging that treatment, continues increase and forego come.

urology to our volumes believe continue nicely. also grow at patient We accounts

and normal to to indicated patient fact, of some schedule who failed In addition that procedure. Aquablation in activities have number men seeking have medication are increasing urologists now therapy

our headwinds, hospitals a average challenging persistent Through goals. to recovery we lengthen due spending, pandemic. from year for inflation capital achieve hospital accelerating to the pressure the pertains sales it to was most XXXX were these As able XXXX to

we believe to in with urologists, increasingly now market patient With months. growing is we prioritize and motivated the population X However, educated stable area compared Robotic and System to lose continue X the competitive in hospitals. they patients not our a investment along to are cutting-edge to previous AQUABEAM the other more surgical believe hospitals to technologies space. stay We allows seeing a ensure offer BPH cutting-edge to technology hospitals

with of exited quarter the also base X,XXX target perform of market total fourth of surgeries. XXX installed hospitals We XXXX a of a out systems that U.S. BPH

BPH hospitals. strategy most remaining the commercial to is it not influential number significant low-volume also initial did perform centers, important at that successful X,XXX low-volume the to the point surgeries. our not It therapy mean hospitals, A KOLs hospitals low-volume surgery BPH was are historically have While resective who target of we programs hospital does out XXX high-volume Aquablation is to small. been selling large

therapy disruptive the outcomes experience, practice that a and patients to or of have skill surgeon centers our low build area out Given independent of nature technology Aquablation robust BPH and of not patient specialists. to are refer can with volume

market of curve dynamics, in are very still long us. early front these in adoption Given runway a our we with

cleared pipeline, into and of our to capital add consists of continue our greenfield have more a as significant to level pipeline hospitals. sales have team. new currently low-volume the our opportunities year meaningfully a to of doubled this than the Also assigned we confidence opportunity to stage at high territories we of terms close. of In ago, Compared grow number percentage we a to where expand

later, our by our in will what and to close are progress, continues are we philosophy discuss what be seeing guidance us how informed opportunities customers telling pipeline, rate. Kevin As overall

organization. commercial to Turning

further our plan XXXX. on commercial in mentioned expand our As call, was field-based team to earnings previous

and XX XX quarter were sales our sales approximately in fourth added the entered XXXX. XXXX personnel, we rep, with Speaking third capital of specifically of capital which about

productivity reps As a curve the approximately we reminder, believe months. X is capital of

to respective our contributing XXXX U.S. period, is meaningfully the responsible until capital are system not fourth we XXXX they factored sales to added second Thus, XXXX, into Over reps building of for guidance. the their the do of which expect the X-month out pipelines. start in quarter half

closely an the territories XXXX entered metric important we capital more with correlates reps However, This confidence strongly XX to percentage we been closing. of have increased of to continuity with within since is deals months. future PROCEPT track for than highest

hired role we on previously. new capital strategic reps in our both and mentioned process with strategic improved strategic is accounts networks partnering utilization of capital exclusively the The included XX IDNs. sales team, a will the focused the targeted our which selling not at accounts across improve in Additionally, team efficiency IDN country to be

vol in XXXX, are we tailwind guidance. of Despite IDN could XXXX. a building be making reminder, successful these price believe a majority establishing As relationships, sales revenue strategic we not ] IDNs progress in legal our we initial large XXXX in any with corporate [ the were contracts in and which receiving

on utilization our Next, team. touching

team. Given to future the pipeline, to rep our history. our was capital and in growth, year investment most entered utilization an headcount company's expanding XXXX commercial momentum support XXXX to with similar meaningfully experienced strong add capacity and We increase the team

continue headcount much pace be it While at compared will we will to XXXX, slower a in increase to XXXX.

utilization. accounts new continue be as Our new goal will to in and educating existing these identifying, surgeons increase training and XXXX to for reps

Turning to patient and surgeon awareness. interest

care for increased patient meaningfully, outcomes growth is standard surgeon interest XX% surgeon investors levels. to to this And we primary training. in last has for of goal, achieve of As to XX therapy and Surgeon BPH focus over engagement, we've resulting Aquablation become to surgery. the have XXXX active our months, approximately communicated the prioritized compared

patient surgeon primary surgeon demonstrates above ultimately volume increased benefits quarter-to-quarter to the ability sustain active XX% continues to surgeon utilization. and procedure While rates to clear the of driver be our growth, also which of technology, our retention leads

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

interest, that also to patients a in As drive reported our many search uptick Hospital seeking it hospitals customers have of patient therapy. meaningful relates a advertising we to activity. therapy attracting specific Aquablation out new continue amount to Aquablation are significant their and seen direct have patient

Our current and awareness. continue on will engagement be to strategy focused surgeon

However, is our indicator through to and surgeon and another awareness presence a product Aquablation in therapy see following we actively patients marketplace. the positive believe for expanding researching

payment private coverage. hospital of reimbursement CMS which procedure, the for increase is $X,XXX Aquablation code touch X.X% for In roughly on fourth to prospective the APC our want the its approximately will The X over I finalized and outpatient each system. procedure Next, XXXX, XXXX provide hospital XXXX pay quarter Level rates.

Following the men of now XX% have estimate in Aquablation therapy, we roughly January addition from the to of of an is approximately XX% in increase U.S. access UnitedHealthcare June, which XXXX. in

of revenue prior year of international standard Aquablation large its the arrangement, momentum in the United $X.X therapy period. activities, to primarily October, Since compared hospitals of fourth our growth in pipeline by quarter endorsement, quarter sales fourth increased of driven the Growth XXXX, market we in strongest XX% in has NICE for recommendation the million to respect the the meaningfully. was strong With international NHS development granted generated Kingdom. representing

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

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

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

support to as generating United pipeline strategy Like more robust a some take U.S. clinical launch. Japan to and and it's meaningful commercial a launch start data time volume. very long view with accounts procedure lead we our our to market to to going attractive While is build and sustainable the term, Kingdom,

Lastly, we in to continue studies. prostate cancer make patients enrolling both progress

who our very cancer. in September, the from urologists enthusiastic world the received since interested but treat numerous are potential cancer all BPH, to In also we announced in around not only fact, inquiries initiative have prostate prostate we about

will this XX accounts. the extremely and I headwind, As growth look revenue company capital I'm on as in what active utilization we over by clinical selling appropriate. In progress Despite macro back we our to generated of the was make increasing information able disclose accomplish to significant last summary, a macro we environment. when challenging proud at front, months, continue

members, moved we our team a were its necessary commercial navigate. and challenges investments execution a to future Additionally, presented the hired new of number that larger essential team growth. which for able These successfully own into facility as significant was and

is believe Moving funnel confidence been has On summarize active, currently right average, track I our what metric more a direction. into pipeline grow the ability in an And the they more is in in continued to and sales XXXX. we account procedures longer environment. our plan. of our Every higher moving the we catalysts, degree macro stable a have nicely do. these to achieve long-term growth to

XX%. launching more surgeons, above are sustaining retention We rates consistently new while accounts with

to area commercial And both in in patients lastly, prostate the our market. company's clinical this believe will therapy's largest urology and the expand support increased we is to studies to we cancer organization lead value tenured Aquablation in enroll which continue therapeutic history, Our larger most footprint productivity. the in will to

that, positive a is the Given global is standard surgical momentum, and of the emerging will to the BPH therapy become we leading believe over urology as company. With this I Aquablation laying Kevin. foundation PROCEPT to turn call care

Kevin Waters

representing million, growth with of revenue Systems Robotic of growth the of fourth the compared Total was to quarter compared XXX% prices Robotic grown an representing In $XX.X Handpiece XX% Systems, was to base we generating revenue for the XXXX quarter Reza. representing for which was prior AQUABEAM from $XXX,XXX, of approximately million, the the growth XXXX revenue period. fourth AQUABEAM XXXX. of year fourth representing the fourth installed the quarter U.S. of Thanks, $XX.X of to of XXXX. XX% fourth and to fourth $XX.X growth of in fourth has by U.S. $XX.X for average system of consumable increase of the quarter, driven quarter million, compared system XX% of revenue quarter XXXX. growth selling quarter revenue the handpiece was total sold quarter XX% XX U.S. the of compared million, XXXX.

increase Aquablation seen in quarter choice quarter X.X% next from Monthly base. the installed of in Additionally, fourth resective seasonal execution due of procedure we per for volumes, utilization compared a was from the utilization increased to commercial to an strength XXXX. account, approximately XX% adopt outperformance to fourth the our have as reflection all quarter strong their treatment therapy as fourth surgeons normal direct step procedures. taking elective of Utilization

fourth level selling X,XXX shipped base. quarter utilization in in we fourth account the We surgeons unit new to the approximately growth quarter, States surgeon increase increased see representing XXX% average utilization compared of existing of with as train and time handpieces XXXX the We our prices. over United continue of to stable

$X.X the growth fourth million, fourth $X.X quarter margin consumable of relocation impact. September associated representing in the of also We our million recorded of corporate International impacted To of was $X.X million revenue on XXXX. this XXXX other by was XX%, more fourth which revenue of was the quarter quarter XX%. Gross detail the approximately approximately XXXX. for provide primarily for headquarters negatively $X.X of with items million

inventory First, move. we certain attributable mainly due recorded adjustments, write-offs were to primarily to year-end which our

thus we sold produced of than in XXXX, units average overhead due to increasing fewer unabsorbed inventory Second, the back half cost anticipated of expense. the

to we in an increase of incurred compared producing quarter units the Lastly, XXXX. approximate scrap XX% when third

addressed range are return and quarter throughout in these seeing in already XXXX. where guidance first we quarter to have I see margin factors will shortly, sequentially mid-XX% the XXXX. improvements the first the will discuss We increased levels of

XXXX. $XX.X $XX.X of in quarter in were in Total the expenses Moving down million the million million year of and of statement. the the fourth period third income the compared operating same quarter XXXX to $XX.X prior

to quarter forward as income and $XX.X from compared $X in million expand loss fourth of Adjusted were of in operating quarter our expenses million revenues for same quarterly commercial equity our expense quarter $XX was growth. expense fourth was with was exceeded accelerated loss by financing $X our on guidance operating operating of expenses as we increased to XXXX XX% August Net sequentially fourth term year. the prior $XX.X investments revenue was a fourth million our investments pulled increased expense income million offset a when XXXX. $XX.X XXXX. and interest from loan compared we to balances, other the growth, of the organization million In XXXX. Total in of comparing interest the period grew ahead Although growth operating million, recent interest XX% $XX.X favorable quarter, the our of cash in significantly loss million to EBITDA which R&D

and believe cash sheet Our resources We support as needed XX equivalents our capital balance will $XXX business. December strong provide and of grow balance million. cash liquidity and current to was the our

our guidance. Moving financial XXXX to

total revenue approximately $XXX expect representing with million, XXXX. year We to growth XX% Starting XXXX full approximately of to Systems. be compared U.S.

to the seasonality similar force normal first we were and system half to our full of roughly sales sales half of cadence XXXX. XX% in year, expect exhibit sales the our more year becoming XXXX which second the We a attribute or to productive system in of expanded

compared to also XXXX. in We prices anticipate stable average selling XXXX

Turning handpieces. to U.S.

XX,XXX approximately approximately of the full expect year average with prices handpieces We to for sell selling $X,XXX.

revenue to approximately We year. for also full $X expect other million consumables be the

similar to XXXX trends, cadence, quarterly XXXX declined expect of compared we quarter quarter first XXXX. seasonal sequentially Regarding utilization to the fourth

$XX.X Additionally, to we approximately expect U.S. revenue be service million.

on revenue. Lastly, international

and Given year $XX be we another in strong momentum the of representing United approximately quarter approximately growth Kingdom, international revenue positive million, XX%. to expect full

the down income Moving statement.

throughout to gross we margins year be XX%. quarter full to what XX% Based sequentially on the expect first XXXX expect are gross We be increasing to seeing quarter-to-date, we range margins and approximately to the XX% in year. XX%

into investments demonstrate to associated XXXX a to future with with why moving meaningful growth. Regarding to I context margins, expansion. was believe begin margin facility headwinds larger support XXXX a gross year this transition provide we will XXXX show temporary and

now and in such manufacturing we refined facility and as firmly First, reduce scrap. are operating have production-related stability our expenses our new processes to are with

of Second, will the in hiring production slow pace XXXX. personnel

increased absorb confidence and us in production will handpieces that Third margin these are expenses, more component which gross expansion. spend which allow XXXX to cost fixed and begin importantly, consistent with we show disposable believe most our forecasted to levels the had provide largest overhead we us will fully of expenses,

expenses. Turning to operating

in X.Xx. This which us growth favorable expansion underlying be XXXX XXXX associated operating growth put approximately investments is we of compared our support year operating strategic to costs in on R&D, is administrative the to million, operating to expenses revenue a When guidance and commercial with an to expenses, team leverage We at our representing XX%. growth increase X.Xx, expense deliver of expect in expect and improvement to plan. comparing execute position $XXX.X and general long-term a to business full

interest generate we to $X approximately expect net income Given rates, million in interest current XXXX. of

year loss to full million. XXXX be expect We $XX approximately adjusted EBITDA

we Jose XXXX. At million significantly back to point, call XXXX for I'd $XX.X CapEx million, San complete, normalized the this approximately like to turn comments. $X given to spend be from expect down move more in closing $X Lastly, Reza to to at is our million

Reza Zadno

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

Have investor conferences. our clinical on a strategy. day, We you to our will investments upcoming and at I leverage great and long-term many to commercial continue look execute meeting forward of to

At this we questions. take Operator? point, will

Operator

Bijou question our will Craig Bank of And Instructions] first America. from come [Operator of

Craig Bijou

a the the categories $X putting a your the kind start, you number little on Street. to gave Street color just wanted a maybe of Kevin your I systems ask about about for and the higher I a I above on a came that kind of little the congrats or of think categories. And you and so give. than of estimates in rev didn't in year. the But with to out to know wanted or some And talk confidence was million level strong specifically Street. bit that guide was expectations finish number Reza, bit specific comfort And you

guys talk that the and just estimates are compares Street thinking? systems for how about what maybe So how you to

Kevin Waters

Craig, Thanks, Yes. with speak you. good to and

quarter. set see XXXX. primarily our was, part right? So really, to outperformance QX, seeing if mean, fourth remarks, overachievement you fantastic the the see we're informed prepared we of raise quarter. what did was And at utilization. On look really the is is, top in by utilization I around We And into the that, after my And fourth in increased market. I reality saw the the expectations. at quarter, we fourth said a carrying in also in in was we that international the And as when where look really we we primarily consensus utilization, had that guidance,

So we're revenue. seeing of the international coming U.K. to million out a lot We're now of $XX good of guiding things

range. $XX the in I probably $XX to Street million somewhere was million think the

So we sold. another that that absolute of guide. And was part an you in the number then guide observing did systems not of correct are

Street back business provided our that I find consensus you'll all feel we metrics Street And an shifts for predictable recurring of international more think think systems. opportunity sales current the we utilization, revenue to our implied and that as encompasses guidance do a well. of number other give the revenue ASP, model, I around into system the to as

Craig Bijou

Got I it. little And OpEx. follow bit And higher wanted to That's on number up than came in helpful. expected. that a

increase from? is So forward QX. there R&D did coming that that expense mention specifically, You in some pull where was of

improving. to we be R&D and And broadly, higher expense? increase growth to going growth 'XX SG&A? more is potential it is to get maybe that then rev more leverage 'XX? in I there then we OpEx is So as expect continue recognize to ratio it But ratio a into Is that of beyond? And even for a the just higher should

Kevin Waters

indicator primarily, ability to At of to prepared we growing leverage from expenses out, Xx what We've believe to X.Xx expansion. specific million last I or do in are of around then that of of we to improvement of revenue kind 'XX your the question When become I on of our Most prostate an look in profitable ability Street OpEx I question correct. good XX%. around is we those relationships. added business R&D a still almost the to of company very our cases OpEx the have our when guided to as not guidance of take OpEx scalability you the our But don't demonstrating we're guidance. revenue and And would million, what our our like. year 'XX as this a can basis, factors correct. advantage answer consensus, in X.Xx. it's were comment which a some on growth which 'XX. driving it's and around studies. see look an and above X.Xx 'XX expenses? increase You're strategic look we're are those in good But added the is the cover the gets forward-looking. leverage rate as right cancer investments team the where to from commercial Yes, to with incremental is support of almost muscle are full margin twice we $X kind $XXX.X of as accounts We IDN improving But growth, time, on at X.Xx pointed about kind business. And you good Street the this to operating And the to it XX%. you represent consensus feel does incremental is again, key very at think our to And ratio

Operator

Joshua Our will of from coming next question Cowen. TD be Jennings

Joshua Jennings

X-part great see to strong year. on wanted to I the demand. the patient a And question just to finish ask and surgeon

I you comment that rates been I urologists follow-up. the that on more label. there's also help the Reza, could utilization just September in I understand think, medical on Aquablation. in localized seeking removed of prostate when was one And from just hoping impact have cancer your us was you contraindication I prepared any you out failing build some relayed talked are that patients remarks, therapy think seeing and

Reza Zadno

patients an that and and coming indicator accounts, surgeons on refer only but middle new high accounts of other new Definitely, added from see very to in low QX, Surgeon from the would and not those interest that. Kevin was hospitals. accounts. mini-volume and was ] that QX strong, indicator a these we we [ in volume mentioned, of great So job in to factors some utilization, past, as retention board, of and high-volume contributed and they launching United, an so there multiple contribution at did surgeons centers was is

it's using in those we or procedures, to their algorithm our and accounts one the those treating their is resective for we some they're other as see of patients shapes step question. to they step. are very It's but are for But treat prostate one to to us part centers. anecdotally, using that's all it's hard they do less and said just to less past, assess they they majority schedule how through go that hard second treatment but patients patient. need whether resective because, contraindication, sizes. And when of and refer are not assess your The checking that that one as contributed the we a much of Now that mentioned very to that,

Joshua Jennings

And just follow-up pipeline. just on capital a the

I mentioned confidence here think lower Reza, you're mix like year the days the It sounds and you mix where robotic you you some mix more capital the can centers just any ago here and versus based programs provide share but pipeline some great. versus of the on today pipeline be stands that be details of just the resective guidance in would that 'XX. volume well, entering of the on Kevin, maybe guess, may in any both on, as seeing pipeline. in a I I hoping of was detail early early the more days 'XX

Reza Zadno

capital is see environment a environment. capital we than stable fairly is what current ago, XXXX Definitely, a difficult the year is was more

our deliver that where patient accounts, capital of some they say to increased based guidance. the And and mentioned, mid is our great interested. the see we're when continue being flow stable and to volume they continues to investment ROI flow. potential customers grow. also able happy placement coming of very board. of volume low increased talk also, in But continue accounts to more I'm to also, robot patient clinical However, see they We And number see continue they prioritizing And are produce we as favorable see exceed our environment, environment we that pipeline, I on terms on centers, definitely in outcomes. and and in

Operator

be will question O'Brien coming next Matthew from Sandler. Piper Our of

Matthew O'Brien

do Just even does that? required going the year robot that bring actually And Is those bulk the Is that's Because be to in on be said getting to purchases there? in How that's some Kevin, systems the more domestically. for of discounting XXX IDN potentially I'm some the going about side. maybe to I these do some guidance. about there starting like table? we investment think, what right? ASP think systems? something you not Are contribution to this

you that to fair? Is anything is upside So this get that all year. there

Reza Zadno

the take difficult on and it's Kevin short is answer the no. [indiscernible], I'll comment The will predict numbers. IDN to with So IDNs.

continue would it very relationship. XX with we we However, and benefit IDNs, maintain close national multisystem positive we didn't months from whilst thought a conversation we happen. to ago, order, have a

As we interest move at And IDNs. XXXX, we Kevin into from number. the let see I'll the continuously about these talk surgeons

Kevin Waters

Yes. Matt, hear it's good from you. to

the you metrics in given kind and ballpark, right? the into XXX backing you've take around You're all of mean I it's you're systems, of consensus.

on You're in this Reza point for an capital thinking of is IDN. about as of the sales kind how important range we're XXXX. And mentioned,

meet our guidance doesn't large on we're out buys, done rely dependent in put any buys from that on been not bulk to being buys. strategic bulk And IDN dependent our on we've number all XXXX rely local we to at and fortunate So there. large capital on the purchasing very any relationships But bulk continue most the strong have of level. IDNs we haven't been while to it the large contracts does signed any and

Matthew O'Brien

really up That's folks tripping other is And I here it. the side of then thing helpful. the that's Got gross really things. think OpEx margin on and

issue? really the of good mix that's expectations. the looking is lot of And little then margin is in think, in maybe below a leverage, versus Is X.Xx investments. nicely, But but 'XX. face that so bit a a acceleration And I gross number

side that's investments little the on et on of that's of a IDN some margin just side, side, international R&D different even seeing weighing the even the talk about improvement cetera, these maybe So that bit making from incremental that things. you're you're

Kevin Waters

Yes.

year show to our gross a XXXX that at throughout more us able gross slower turn revenue, absorb our the perhaps year feel this be going So it I'll Reza around consistent a to let the ability margin look for little R&D really we with to When margins, we're XX hiring, expansion is initiatives. that increasing year. where do overhead, and we us being color over me margin provide comment on to on to guidance, conviction gives

the And And this our going we're thinking bounced bit to historically, quarter-to-quarter, that's kind exit of then quarter is at company, margin the is coupled for I way to the margin unpredictable. with to the revenue to where XX%, as start is starting business, if we growth see going a to And that you And what's imply would which XX% levels, north to expansion an been think with XX% the for inherent important XX% strictly around range. is to profitability couple look just our due going Street somewhat guide think model. that's it, is the I could a have see you velocity to exciting the I in your and our higher in while X.Xx XX%, in about what's think just in business event you first move. this of rapid really which is midpoint the say year that is leverage, to with at of I margin be expansion how XXXX

back some the So story margins. on that's

is R&D being talking going a to correctly we about Craig let to that business. XXXX. main in pointed to as invest those spend Reza in have because that little You I expenses us driver out continue investments said in earlier, I'm time consensus in operating the of over the

ahead, go Reza. So

Reza Zadno

Difficulty] are innovations R&D our decided These quarter, deliver not accelerate we ultimate also long-term but of robotic are Last products. competitive So some very superior only sensitive, value you you strategy. good have. a to R&D And initiatives nature, critical it's [Technical a and discussion for hope internal we innovation, appreciate of question our to that committed I milestones disruption. to goal are from the company, initiatives. are a that as is these the

Operator

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

Christopher Pasquale

Comments have hospitals market off that to you going much about about thinking Aquablation. historically were procedures done about BPH now work resective not We that a resective adopting XXX,XXX penetrate. started of

last [indiscernible] did You year.

layer new the in way to But long go. you're by the expanding runway. market a idea bringing it got you've actually So hospitals, even implies then you if in more that

market are versus that pool how could get do expansion be on it driven you the has that as you really actually your years to in much I to number, cannibalization So where your few would centers thoughts growth TURP treatment? providing of date. XXX,XXX love a think expand And

Reza Zadno

past, ramp Definitely, the think were And that not resective where seen doing are hospitals, many we low-volume the have hospitals, those centers. they hospital I in you procedures. high-volume mentioned they is

are they not to small they hospitals. are hospitals. they them as said the patients. So In have not, hospital again, see in These patients past, other and the these were past, hospitals low-volume the referring we

where question what asked our use? would were we and where process the we number are based point, Now still the they early year When answer last procedures. cannibalizing surgeons this that we're in is point, at cases At will keep we them. this they our XXXX, others or product, of from A still on this expand. resective that is believe common did stays. we current it if get using in TURP this not they currently Greenlight. we market And But

Kevin Waters

us with think market enviable Let BPH being we me today, mean, good available the an men year, near waiting for that agree procedures for innings, that position think surgical alternatives it's there's a I where think with lack managed but term, with just a the us that definitely of reliant be as doing are millions sidelines it's that out, expansion next great like pointed our We we on in. men bit cannibalized great early the Reza again, TAM. the of And to pointed a out, we're XX,XXX you market, suggest growth of you today But talk but you. where, in those funnel. our you into just the on would the majority market which Aquablation isn't the market as are about we're procedures coming actively candidates. see as XX million pointed treatment could given therapy great are from in out, position to definitely in Greenlight. grow, and the little men It's and a already we TURP

Christopher Pasquale

a of every about which every of continue? dynamics some thinking quarter? expansion of kind you the few you just you've are of force here? their adding leads Up how sort Kevin, of quarters, into bunches sales Or been a Does from now, to terms stop-start shift couple kind productivity. then, doing steadier do cadence in that in until And reps helpful. kind of That's Okay.

Kevin Waters

steady the business. one adds in team. we a to them Reza of think key the reps coverage, to our the added layers I of utilization, a account team, mentioned different capital help junior team become now his it's the remarks, sales that a more support point expand. added we've also We've the much latter. some to as at We're those see cadence few sales where case force

the back At cadence 'XX. guidance. the as more you've capital into the So much steady it factored move becomes not bulky big in to That's going I our think have time, of half asset in seen rep forward, same past. we're the we a do additional out with

Operator

Our the Truist of comes or line from question Securities. Rich Newitter next from comment

Unknown Analyst

is This Rich. [indiscernible] for

come programs. you're more this track will I'm So operation to profit seen be improvement? make like would when wondering to on had thinking in be more It year substantial to

Kevin Waters

the growing improvement believe on we sheet and balance financial pace EBITDA our the bit time, We're providing With And of today business that reiterate, consistent stating cash Yes. profitable. said, not very at long-term be business at a a which when is be. our we're do a scale, quickly we're position not levels today 'XX. nature it flips and of significant our for prepared at will the with just characterized to leverage, very And there. I past, financial our And capital flips the get but revenue, kind recurring our to OpEx with profile, the to But the little given sufficient to having again, as the that long-term hard that a has give been the revenue profitability given expense comfortable will you. hearing profitability, support of this are target we to our business the this cash pretty when of given would do in this for we've in we're I in operating raise, business time increase. think, we've showing margin ability target plans and given reach in

Unknown Analyst

And you system year? on your cadence the could ASP provide Great. color also, some throughout

Kevin Waters

I'm cadence. understanding...I'll Again, ASPs I'm you, or them to a give having about time that? hard how sorry. both

Unknown Analyst

year. Through the

Kevin Waters

Yes.

half in my cadence to I we did to range. there, time, were to in was at will the and sold, guiding that that systems $XXX,XXX the were to prepared said in XXXX, XX% ASPs where that in first we're specific regarding in expect of similar also to XXXX pricing, XX% to suggest remarks, But all we same stable our a $XXX,XXX be the of be the I our not somewhere very second that relatively approximately number. So systems half. Then said

Operator

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

Brandon Vazquez

Everyone, can you hear me okay?

Reza Zadno

Yes.

Brandon Vazquez

try time side, on you I more the when years just profitable lines to on won't line like slightly within get talk different. more or But maybe might when about are OpEx right. what a the All the coming Great. catalysts milestones maybe this. specific I can know it's guess, on if I positive. time we over P&L turn think I can that like you it ask first some gets meaningfully or flip

are business, good to a highly catalysts margins, milestones P&L that the need like meaningful happen what in recurring the have guys leverage see years? You coming more to or

Kevin Waters

the proof to the really, a more to margin north look have metric place out, to more to greater XXXX gross that systems clear operating XXXX, we than show able as gross a think, our do is to the and is slightly times us, point you At a XX% improve meaningful a being in for to expanding velocity of profitability. point a as I profitable we The expenses. with have the for investors great also margins, goal business That gross get as operating will profitability. think I guidance now it's good that planning a very to continue same But that we're be revenue, being disciplined even XXXX, around year, on pointed throughout the throughout exit I leverage show towards that high recurring to business. as and be pathway the year, demonstrate going we that revenue, as a is pathway In be is margins in will expansion OpEx move proof a business with time, is expense this point, we will become be. to that to recurring regarding revenue. think think as a recurring which installed and not degree cadence we which I of and revised proof a would few year

Brandon Vazquez

seeing cohorts what X what can questions to But of about levels utilization are talk TPT call with Compare doing? then maybe newer system ordering patterns? Okay. here. little of placements. 'XX, your in some you're expiring of is in the And then follow-up kind the I'll in together that the TPT kind And in expiration? a lump that you Any changes you'd little into terms of seeing months year a quick out couple oldest of here, of as from now bit any impact of you're that a kind follow-up,

Reza Zadno

utilization short-term issue. and continue the roughly TPT, clinical from impact, buying So see to we That related are XX% do not is outcome. an delivered have Customers by not coverage, benefit an with now is we've is see the to utilization not us, longer accounts driven payment that to no, a what as their been access with increase. we utilization, the And TPT, related

Kevin Waters

to today, curve ago. attribute we awareness, normal team in specialists We've a see themselves but X manifesting are utilization, utilization to and X continue increase and just market a to those it's very it's we obviously are accounts follow-up ramp. utilization And quite accounts up utilization related in purposeful, adoption frankly. And ramping higher years in than installing investments out just the made to new faster higher also our to OpEx, this Reza, that that systems did

So in we're are impact almost through. be first going to that want definitive are to just quarter months we think the TPT the And X these I now away X with pay on off going the seeing We're that just again, investments term. here. TPT longer

Operator

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

Nathan Treybeck

just guide? positive utilization I on And 'XX. growth on your this trends in about in comments given adoption in a be surgeon surgeon which that implied and grew X% So meeting a conservatism about your utilization guide is mean your X active would your this growth is just there XX% trends, month, year-over-year.

Reza Zadno

No.

far strong, very underlying that it's trends is companies, business competitor strong trends, accounts. Overall, we seasonality very So our QX momentum typical the feel trends of and lowest. is other see in our as as the see a utilization, see what about and QX, good generally, we we

So believe continue QX, we point in will following to increase of utilization seasonality, year. normal the the throughout low

Kevin Waters

over we're we've versus on guide we just what aggressive, I market. shown conservative I question to on history that last mean, based the if mean, conservative the look in think just seeing be and at years, the And I philosophically, your you X

record year, you're track time, plan utilization think is X felt that. a that up our I we've would guidance, I way commentary I point the the last to given at for I it. And to according proof as quarter quarters, conservative XX our this classify an made, you system the quarters we hope going on appropriate same characterize think catch a not bit all And think, in a one that the the is if our that company first public was we over was, therefore, last went year. things of like playing year, to were guide

Nathan Treybeck

Okay.

Is In timing be there cancer AUA. prostate and could for your provide? about assuming data, update previously terms think you were I talked trial would you early of XXXX, people any it

Reza Zadno

Thanks.

continue from since and who studies, numerous we fact, world on in around urologists we see our of those those are progress initiation And interested inquiries in BPH. cancer making the studies. We announced both

as when So information progress, we making continue disclose [indiscernible]. will we it's

Kevin Waters

have are company, to prostate the but community importance we last like at event. urology AUA. few the We'll to we've within investor likely years. done And only AUA, on recognize in we cancer, our not Obviously, more the an

playing, but treat. believe we ourselves have to promise can't Nathan, present, where definitely educate we you, going the as to to kind an a minimum, So what will we we're we see why as at ability market we to of

So things like that.

haven't at but AUA. key We opinion the to fleshed definitely leaders team it's think I fair out the fully and hear from agenda, say management you'll

Operator

from comment from Partners. the Our line Kratky comes Leerink next Mike or of question

Michael Kratky

hospitals XXXX XXXX high-volume you to the growth qualitatively, extent between XXX saw within are So expecting you compared what XXXX? and in penetration additional penetration the to

Kevin Waters

roughly We're XX% and both we've base XX% pipeline pipeline XXX and volume our to you and consistent mean hospitals. installed have are And the of are the our our installed So referenced. that XX% to pretty hospitals would of been numbers seeing low that medium base that XX% there.

Michael Kratky

portion little Got really just Understood. as that you of patients then any remain market treatment talked in bit BPH are back, it. you a intervention, seeing ultimately seeking so factors in of think highlight And an accelerate follow-up, terms signals the of a about help large, of just taking overall step shift a given the that market from could it's kind the underpenetrated? but there surgical are growth you so of this underlying

Reza Zadno

accounts I what mean don't definitely, direct-to-consumer as consumer, for to we robot. have where the the our advertise direct advertising, our are accounts

even our various is among there accounts, awareness as they So them. patients those treatment, who Aquablation better treatment that for we low volume patients other, with is keep technology, option is for they But and times and accounts them. for treat where mid-volume in see for come a many another they patients, come if ask increased

do not future, we the rely So expansion on this market. as in near of Kevin mentioned,

capture goal We our patients. doctor have to into are in is failed there the who a of have definitely, seen resective on tapping current process still early the XX market, or those is and those million either but medication, men to medication

Operator

I'm to I'd conference over the turn for closing this the back showing questions management any like no time. to remarks. queue at additional in

Reza Zadno

to see a I you Yes, very of the conferences. you many Thank attending hope have and this day. I to call, upcoming nice in want for and much, conference thank everyone

Operator

thank and today's Ladies the in program. for participating you This gentlemen, conference. concludes

disconnect. now wonderful a have may Everyone, day. You

PROCEPT BioRobotics (PRCT) 27 Feb 242023 Q4 Earnings call transcript