The demand for robotics and automation continues to grow, particularly following the pandemic. As labor costs have escalated, companies have invested in labor-saving measures. Market forecasts project the multi-billion-dollar U.S. robotics industry will experience substantial expansion over the next decade. PROCEPT BioRobotics (PRCT) stands out among these innovators with its impressive clinical advancements.
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Specializing in robotic surgical systems, PROCEPT has made significant inroads in the healthcare sector with its AquaBeam Robotic System, offering innovative surgical solutions for prostatic hyperplasia (BPH). The company has pushed forward with new trials and technological advancements to improve patient care and transform urological solutions, as seen in its recent announcement of a clinical trial for Aquablation therapy and FDA clearance for its next-generation HYDROS Robotic System.
Solid financial results and promising growth projections make PROCEPT a compelling prospect for investors intrigued by the intersection of healthcare and robotics.
PROCEPT BioRobotics Pushing the Envelop
PROCEPT BioRobotics is a healthcare equipment company that designs and produces robotic surgical devices. Its flagship offering, the AquaBeam Robotic System, uses innovative real-time imaging and waterjet technology to treat benign prostatic hyperplasia (BPH) – a condition affecting up to 90% of men over the age of 80.
The company recently announced that its Aquablation therapy received Breakthrough Device Designation and has approval from the FDA for a pivotal clinical trial called WATER IV PCa, which compares Aquablation therapy to radical prostatectomy. The trial will involve 280 patients across 50 centers and be studied over 10 years. It will focus on reducing treatment-related harm and oncologic events.
The company’s next-generation HYDROS Robotic System platform has received FDA 510(k) clearance. Utilizing insights from over 50,000 procedures, the HYDROS system is designed to improve efficiency, enhance surgeon and staff experience, and offer a more precise and consistent treatment plan. The system is expected to be available in the U.S. market in the current quarter.
PROCEPT BioRobotics has priced its underwritten public offering of 1,923,076 shares at $91.00 per share, resulting in a gross total of around $175 million. Underwriters can purchase an additional 288,461 shares within 30 days at the public offering price minus associated discounts and commissions. The offer is set to close on October 31, 2024.
Analysis of PROCEPT BioRobotics
The company reported impressive Q3 2024 results, with total revenue reaching $58.4 million, a 66% year-over-year increase. The leap was primarily fueled by a rise in system sales and higher selling prices. U.S. handpiece and consumable revenue rose 74% year-over-year to $29.6 million, while U.S. system revenue grew by 46% year-over-year to $19.6 million. International revenue of $6.2 million marked a 122% year-over-year increase.
PROCEPT achieved a 63.2% gross margin, an improvement from the prior year’s 53.8%, attributed to better overhead absorption and increased U.S. robotic system average selling prices. Operating expenses totaled $59.3 million, due mainly to a rise in sales and marketing expenses to expand commercial activities and a surge in research & development expenses.
The company recorded a net loss of $21.0 million for the quarter, a slight improvement from the $24.6 million loss in the same quarter of the previous year. Adjusted EBITDA was a loss of $12.4 million, improving from a $19.4 million loss in the last year. GAAP earnings per share (EPS) of -$0.40 beat expectations by $0.09.
At the end of the quarter, the company reported $199.8 million in cash, cash equivalents, and restricted cash.
Following its encouraging Q3 report, PRCT’s management has offered forward guidance. It expects to generate revenue between $222.5 million and $223.0 million in 2024, representing a 63% to 64% increase from the prior year and a substantial improvement on the previously projected $217.0 million revenue. The gross margin is forecasted to be about 61% compared to the previous prediction of 59%. The total operating expense is projected to be approximately $231.5 million for 2024, in line with earlier estimates. The anticipated loss in Adjusted EBITDA for 2024 is estimated at $60.0 million, less than the previously predicted $67.5 million loss.
What Is the Price Target for PRCT Stock?
The stock has been upward, climbing roughly 122% year-to-date. The stock trades at the high end of its 52-week price range of $26.44 – $99.34 and shows ongoing positive price momentum as it trades above the 20-day (77.16) and 50-day (74.86) moving averages. The company’s P/S ratio of 23.89x, significantly higher than the Medical Devices industry average of 4.2x, suggests markets are pricing in significant growth.
Analysts following the company have been bullish on PRCT stock. Based on seven analysts’ recent recommendations, PROCEPT BioRobotics is rated a Strong Buy overall. The average price target for PRCT stock is $92.50, representing a potential -0.57% change from current levels.
PRCT in Review
PROCEPT BioRobotics is well-positioned to benefit from a world increasingly gravitating toward automation. By focusing on robotic healthcare solutions, the company has offered cutting-edge innovations to revolutionize urological solutions with groundbreaking technologies such as the AquaBeam Robotic System and the next-generation HYDROS Robotic System. These advancements and an encouraging upward financial trajectory make PROCEPT an attractive investment option for forward-looking investors.
