PROCEPT BioRobotics Corporation (PRCT) Earnings

Management highlights

- Commercial Organization & Strategy * Completed the full U.S. sales force realignment, optimized account coverage, and transitioned procedure-based coverage to the clinical organization, allowing sales representatives to focus on therapy adoption and referrals * Promoted Kyle Kelsch, former head of capital sales, to lead the entire U.S. sales organization for improved continuity and focus * Accelerated the legacy AquaBeam to Hydros system upgrade program, with 14 replacement systems sold in Q2, up from initial year-start projections * Scaled the dedicated Hydros launch team model: 40% of Q2 system placements were supported by the launch team, up from 20% in Q1, with plans to reach 100% coverage of new placements by year-end. Early results show shorter time to first procedure and stronger early utilization for launch team-supported systems * Maintained strong pricing discipline: Q2 greenfield Hydros ASP was the highest on record, with overall U.S. Hydros ASP up sequentially from $485,000 in Q1 to $495,000 in Q2 * Launched direct-to-patient (DTC) patient activation pilots across 18 U.S. markets, with early encouraging leading indicators including increased website traffic, higher digital engagement, and greater interaction with patient education resources - Clinical & Regulatory Milestones * The American Urology Association (AUA) strengthened its recommendation for aqua ablation therapy for BPH in updated clinical guidelines, following a similar upgrade from the European Association of Urology earlier in 2026 * Aqua ablation is now supported by ~250 peer-reviewed publications, making it one of the most extensively studied BPH treatment technologies * Completed full enrollment of 280 patients in the Water4 randomized clinical trial, evaluating aqua ablation versus radical prostatectomy for prostate cancer. Primary endpoint results are on track to be presented at the 2027 AUA annual meeting * Received FDA IDE approval for the Water 4 AF randomized trial, which will evaluate aqua ablation against active surveillance for 333 global patients with grade group 1 and 2 prostate cancer - International Expansion * Continued disciplined international growth, prioritizing geographies with favorable reimbursement and capital dynamics. The UK remains the largest international market with a strong capital pipeline and encouraging adoption, and Japan remains a key focus market

Guidance

- Full year 2026 total revenue guidance is maintained at $390 million to $410 million, representing 27% to 33% year-over-year growth - Full year 2026 international revenue guidance is maintained at $50 million to $51 million - 2026 U.S. procedure guidance is revised downward to 54,000 to 56,000 procedures, representing 25% to 29% year-over-year growth (down from prior higher projections, driven by weaker-than-expected legacy AquaBeam performance) - Full year 2026 gross margin guidance is maintained at approximately 65% - Full year 2026 operating expense guidance is revised upward to $355 million to $360 million, reflecting disciplined increased commercial investment, primarily for DTC patient activation initiatives - Full year 2026 adjusted EBITDA loss guidance is revised to $30 million to $35 million, with positive adjusted EBITDA still expected in Q4 2026 at both ends of the revenue range - Management expects second half 2026 U.S. Hydros system ASP of $480,000 to $490,000, and expects approximately 40 total legacy system replacements for full year 2026 with an ASP of $300,000 to $325,000 - Long-term (LRP) targets set at Investor Day remain broadly intact, with 2027 guidance to be formalized in line with standard cadence as year-end 2026 approaches

Segment performance

ProCEPT BioRobotics reported total Q2 2026 revenue of $94.5 million, growing 19% year-over-year. - U.S. Segment: Total revenue of $83.4 million, up 20% year-over-year, representing 88% of total revenue. U.S. handpiece and consumable revenue was $48.4 million, up 12% year-over-year, 51% of total revenue. U.S. system revenue was $29.1 million, up 32% year-over-year, 31% of total revenue. 13,100 U.S. procedures were completed, growing 21% year-over-year. 65 Hydros systems were placed in Q2, including 50 greenfield, 14 replacement, and 1 leased system, with a U.S. Hydros ASP of $495,000. - International Segment: Total revenue of $11.1 million, growing 15% year-over-year, representing 12% of total revenue.

Risks & headwinds

- Q2 2026 procedure growth came in softer than expected, with the entire shortfall concentrated in underperformance of legacy AquaBeam accounts, while newer Hydros accounts performed in line with expectations - Management has not fully identified the root cause of the recent decline in legacy AquaBeam utilization, though anecdotal evidence suggests some patient and procedure shift to Hydros systems at multi-system practices, and the platform is older with fewer features than Hydros - Increased commercial investment for DTC and launch team expansion increases near-term operating expenses and adjusted EBITDA loss, though the company has offset this with spending cuts in other areas to maintain Q4 positive EBITDA guidance - Procedural utilization can be impacted by seasonal slowdowns (summer vacations) and hospital waiting lists that delay translation of patient activation into completed procedures

Analyst Q&A

• Q: Greenfield system placements are roughly flat year-to-date, how fast will the legacy replacement cycle progress? /

  A: Full year 2026 guidance assumes ~40 total replacement systems, up from initial 2026 projections after 14 replacements were completed in Q2, which exceeded year-start expectations. The replacement cycle will remain a core strategic priority in 2027, and upgrading legacy systems to Hydros under the launch team model is expected to lift long-term overall utilization.\n\nQ: What has changed relative to prior guidance that drove the lower procedure projection, and why is legacy AquaBeam underperforming? / A: The primary change is greater softness in legacy AquaBeam accounts than management anticipated, while Hydros performance remains in line with expectations. The sales force reorganization is now complete, with reps shifted to full-time sales roles starting in June, which took slightly longer to implement than planned. Management does not yet fully understand all drivers of the AquaBeam decline, but anecdotal feedback shows physicians with access to both systems preferentially use Hydros for its better imaging, AI, and workflow, and increased marketing focus on Hydros benefits has driven upgrade demand.\n\nQ: Why are hospitals still purchasing Hydros systems if overall utilization is declining? / A: Hospitals do not purchase $495,000 systems to leave them unused, and Hydros utilization meets or exceeds all management expectations. Strong system demand and record high ASP confirm that customers recognize the clinical value of the Hydros platform. The underperformance of older AquaBeam systems only reinforces the strategic case for accelerating upgrades, which the company is already doing.\n\nQ: What is driving the increased operating expense guidance, and where are the new commercial investments focused? / A: The main increase is tied to the ongoing DTC patient activation pilots across 18 U.S. markets. The company has offset this incremental spending by cutting unnecessary expenditure in other internal areas, so the commitment to positive adjusted EBITDA in Q4 2026 remains fully on track.