PROCEPT BioRobotics Corp - PRCT
The slide continues
I first pointed out shares of PRCT back in August 2024 when the shares were trading for close to $80 a share. They naturally immediately shot higher and broke through $100 over the next couple months, at which point the company smartly chose to raise some additional funds. Unfortunately for investors, it’s been nothing but net ever since.
Today shares of PRCT are breaking through $20 and are now down around 75% since I first mentioned them. I have removed the paywall if anyone cares to take a look at those older thoughts.
If you’re new to the story, PRCT sells “AquaBeam Robotic System and HYDROS Robotic System, which are advanced, image-guided, surgical robotic systems for use in minimally invasive urologic surgery, with an initial focus on treating benign prostatic hyperplasia, or BPH,” which are basically used to reduce the size of an enlarged prostate in men.
Not Inferior is not the same as Superior
As I mentioned in that initial piece, “aquablation” was considered “not inferior” to the current standard of care by the FDA when the machine was first introduced and approved for sale, and unfortunately nothing much has changed in the interim.
One of the architects of their studies recently gave a talk about his experience with aquablation therapy and how his patients have responded. He’s a fan, but admits that the results tend to be pretty much equivalent to TURP, the long-time standard of care.
https://www.urotoday.com/video-lectures/lower-urinary-tract-conditions/video/5433-comparison-of-aquablation-with-turp-in-benign-prostatic-hyperplasia-bruce-kava.html
Unfortunately for the company, not proving to be a superior therapy to the current one (which costs a good deal less) is proving to be a bit of a challenge selling their machines into a greater number of hospitals and medical centers, which in turn reduces the number of potential procedures the company would be able to address with their machines.
Cancer trials remain ongoing
The company hopes that a forthcoming WATER IV PCa trial will open up an additional avenue of revenues for the company which would help to jumpstart sales.
Their machines are currently only used to reduce the size of the prostate in non-cancerous patients, which is something that the company hopes will change with new trials.
Now, why the cancer trials should provide a different response than the non-cancer trials I am not sure, but it could be a way for the company to drive additional sales and revenues.
New installations are stalling
This is supposed to be one of those razor/razor-blade sales pitches, where you sell a machine into a hospital or medical center and then force them to purchase various “consumables” and “handpieces” that keep the machine working so that the doctors can continue to use it for more procedures.
As you can see, the total number of machines being placed each quarter has stagnated over the past six quarters.
Placement of machines outside the United States (mostly Europe) is actually declining. That’s not something you want to see.
Meanwhile, if you try to figure out the amount of “consumable” sales the company recognizes per installed machine, which should be some sort of an indication about how much use each of their machines is receiving, well that number too has flattened out if not started to decline.
This is not what you want to see.
What you would hope and expect to see is that after a machine is placed and the surgeons gain some comfort and experience and subsequently start utilizing it, you would hope that number would increase. As surgeons do more procedures, the company’s “handpieces and other consumables” revenues should head higher.
Except in this instance they do not.
For a young company adding a ton of machines and working to educate a greater number of surgeons about its benefits, one might not be surprised to see this number stall out for a bit.
However, the higher the machine count goes, the less of an effect the newer installed machines should have on the overall adoption rate and thus it should start heading higher.
Expect it’s not.
Meanwhile, the bleed continues…
The company’s operating loss in the last quarter was around $32M while in all of FY2025 it was $103M.
Operating cash flows, which is closer to a cash burn, was $38M in Q1 2026 after declining to “only” $50M in FY2025 (from $100M in each of the 2 prior years).
Accounts receivables, which have always been stubbornly high, spiked in Q1 as well, and inventories appear inflated for the level of sales the company manages to recognize each quarter.
They do have around $245M in cash at the end of Q1, which should provide them a runway for the next couple of years, after which they may have to come up with a strategy to operate at least at a “break-even” level in order to stop the cash bleed.
Cutting back on stock-based-comp may help their GAAP results look a bit better, but the size of their overall cash bleeding hole is much bigger and will demand some real sacrifices (either cutting back on R&D or maybe reducing their worldwide sales efforts).
Not every new machine is worthy of continued subsidies by the investor class. Every company has to have a “sink or swim” moment.
PRCT’s is fast approaching.