PROCEPT BioRobotics Corporation (PRCT) Bundle
Understanding PROCEPT BioRobotics Corporation (PRCT) Revenue Streams
Understanding PROCEPT BioRobotics Corporation’s Revenue Streams
For the nine months ended September 30, 2024, the total revenue for the company was $156.3 million, a significant increase of 69% compared to $92.6 million in the same period of 2023. During the three months ended September 30, 2024, revenue reached $58.4 million, up 66% from $35.1 million year-over-year.
Breakdown of Primary Revenue Sources
The revenue sources can be categorized into three main segments:
- System Sales and Rentals: For the nine months ended September 30, 2024, this segment generated $58.9 million, marking a 44% increase from $41.0 million in 2023.
- Handpieces and Other Consumables: This segment saw revenues of $88.4 million for the nine months ended September 30, 2024, which is a 91% increase compared to $46.2 million in 2023.
- Service: The service segment generated $8.9 million for the nine months ended September 30, 2024, a 64% increase from $5.4 million in 2023.
| Revenue Source | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| System Sales and Rentals | $22.8 million | $14.3 million | $8.5 million | 59% |
| Handpieces and Other Consumables | $32.2 million | $18.7 million | $13.5 million | 72% |
| Service | $3.3 million | $2.1 million | $1.2 million | 58% |
| Total Revenue | $58.4 million | $35.1 million | $23.3 million | 66% |
Year-over-Year Revenue Growth Rate
The year-over-year growth rates for the different revenue segments are as follows:
- System Sales and Rentals: 59% increase in Q3 2024.
- Handpieces and Other Consumables: 72% increase in Q3 2024.
- Service: 58% increase in Q3 2024.
The significant growth in revenue was primarily driven by increased sales volumes in the United States, with a reported increase of $19.9 million for the three months ended September 30, 2024, and $56.1 million for the nine months ended September 30, 2024, compared to the same periods in 2023.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution of each segment to overall revenue is illustrated below:
| Revenue Segment | Revenue ($ million) | Percentage of Total Revenue |
|---|---|---|
| System Sales and Rentals | $58.9 | 37.6% |
| Handpieces and Other Consumables | $88.4 | 56.5% |
| Service | $8.9 | 5.7% |
| Total Revenue | $156.3 | 100% |
Analysis of Significant Changes in Revenue Streams
In 2024, the overall revenue growth was largely attributed to:
- Increased sales volumes of robotic systems and consumables.
- Higher average selling prices for system sales and handpieces.
- Expansion of the customer base and market penetration in the U.S. market.
Overall, the company's robust performance in revenue generation reflects its strategic focus on enhancing product offerings and expanding its market reach.
A Deep Dive into PROCEPT BioRobotics Corporation (PRCT) Profitability
A Deep Dive into PROCEPT BioRobotics Corporation's Profitability
Gross Profit and Margins:
For the three months ended September 30, 2024, the gross profit was $36.9 million, resulting in a gross margin of 63%. This represents a significant increase from a gross profit of $18.9 million and a gross margin of 54% for the same period in 2023. For the nine months ended September 30, 2024, the gross profit reached $93.4 million, with a gross margin of 60%, up from $49.8 million and 54% respectively for the same period in 2023.
Operating Profit and Loss:
The operating loss for the three months ended September 30, 2024, was $22.4 million, an improvement compared to an operating loss of $25.6 million in the same quarter of 2023. For the nine months ended September 30, 2024, the operating loss was $76.9 million, slightly better than the $79.6 million loss reported in 2023.
Net Profit and Loss Metrics:
The net loss for the three months ended September 30, 2024, was $21.0 million, or $0.40 per share, compared to a net loss of $24.6 million, or $0.51 per share, for the same period in 2023. For the nine months ended September 30, 2024, the net loss was $72.6 million, or $1.41 per share, compared to a loss of $78.4 million, or $1.70 per share, for the same period in 2023.
Trends in Profitability Over Time
Over the past year, the company has shown improvement in gross and operating margins despite continuing net losses. The gross margin has consistently increased, reflecting better cost management and higher sales volumes. The operational efficiency has improved, allowing the company to reduce its operating loss compared to previous periods.
Comparison of Profitability Ratios with Industry Averages
While specific industry averages may vary, the gross margin of 63% for the third quarter of 2024 is notably higher than the typical medical device industry average, which generally hovers around 55% to 60%. This indicates strong pricing power and cost management relative to peers.
Operational Efficiency Analysis
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Profit | $36.9 million | $18.9 million | 96% |
| Gross Margin | 63% | 54% | 16.67% |
| Operating Expenses | $59.3 million | $44.5 million | 33% |
| Net Loss | $21.0 million | $24.6 million | 15% |
The increase in gross profit and margin is attributed to higher sales volumes and improved cost management, while operating expenses have increased due to investments in R&D and SG&A, reflecting the company's growth strategy.
Debt vs. Equity: How PROCEPT BioRobotics Corporation (PRCT) Finances Its Growth
Debt vs. Equity: How PROCEPT BioRobotics Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, PROCEPT BioRobotics Corporation had a long-term debt of $51.4 million and a short-term debt of $1.8 million related to their loan facility.
Debt-to-Equity Ratio
The company's debt-to-equity ratio stands at approximately 0.21, calculated from total liabilities of $132.9 million and total stockholders' equity of $241.2 million. This ratio is below the industry average of around 0.5, indicating a more conservative approach to leveraging debt for financing growth.
Recent Debt Issuances and Credit Ratings
In October 2022, PROCEPT entered into a loan and security agreement with Canadian Imperial Bank of Commerce, securing a senior secured term loan facility of $52 million, which was fully drawn. As of September 30, 2024, the company maintained a credit facility of $52 million. The company has not publicly disclosed a specific credit rating but is expected to be evaluated as it continues to build its financial profile.
Balancing Debt Financing and Equity Funding
During the nine months ended September 30, 2024, PROCEPT reported net cash provided by financing activities of $9.6 million, which included proceeds from the issuance of common stock. The company's financing strategy has been to utilize equity funding to support operational activities while maintaining a manageable level of debt. The total stockholders' equity increased to $241.2 million as of September 30, 2024, compared to $280.8 million at the end of 2023.
| Financial Metric | Amount (in millions) |
|---|---|
| Long-term Debt | $51.4 |
| Short-term Debt | $1.8 |
| Total Liabilities | $132.9 |
| Total Stockholders' Equity | $241.2 |
| Debt-to-Equity Ratio | 0.21 |
| Net Cash from Financing Activities | $9.6 |
Assessing PROCEPT BioRobotics Corporation (PRCT) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the company reported a current ratio of 3.77, indicating a strong liquidity position, as it has significantly more current assets than current liabilities. The quick ratio, which excludes inventory from current assets, stands at 3.58. This suggests that the company can easily cover its short-term obligations without relying on the sale of inventory.
Analysis of Working Capital Trends
The working capital as of September 30, 2024, is reported at $196.8 million in cash and cash equivalents, with total current liabilities of $52.0 million. This results in a working capital of $144.8 million, reflecting a positive trend compared to previous periods. The increase in working capital is primarily due to a $66.8 million decrease in cash utilized in operating activities, indicating effective cash management despite ongoing investments in operations.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows are summarized as follows:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Used in Operating Activities | $(66,822) | $(83,210) |
| Net Cash Used in Investing Activities | $(3,235) | $(16,491) |
| Net Cash Provided by Financing Activities | $9,597 | $164,929 |
| Net Increase (Decrease) in Cash | $(60,460) | $65,228 |
The net cash used in operating activities decreased from $83.2 million in 2023 to $66.8 million in 2024, reflecting improved operational efficiency. The significant drop in cash provided by financing activities from $164.9 million to $9.6 million indicates reduced reliance on external financing sources.
Potential Liquidity Concerns or Strengths
The company has an accumulated deficit of $527.1 million as of September 30, 2024, which may raise concerns regarding long-term viability. However, the available cash of $196.8 million provides a buffer against potential liquidity challenges. The company also has a loan facility with an outstanding balance of $52.0 million, which is manageable given its current assets. Financial covenants require maintaining a minimum cash reserve of $20.0 million, which the company comfortably exceeds. This indicates a solid liquidity position, despite the ongoing need for capital to support growth initiatives.
Is PROCEPT BioRobotics Corporation (PRCT) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company is a critical factor for investors, and it can be assessed through various financial metrics. For the company in question, we will analyze the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, along with stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a key indicator of how much investors are willing to pay per dollar of earnings. As of September 30, 2024, the company reported a net loss of $72.6 million for the nine months ended September 30, 2024, resulting in a net loss per share of $1.41 . Given that there are no earnings, the P/E ratio is not applicable in this scenario.
Price-to-Book (P/B) Ratio
The P/B ratio assesses a company's market value relative to its book value. As of September 30, 2024, the total stockholders' equity was $241.2 million, with 52.1 million shares outstanding . If the stock price is, for example, $5.00, the P/B ratio would be calculated as follows:
- Book Value per Share = Total Equity / Shares Outstanding = $241,218,000 / 52,146,000 = $4.63
- P/B Ratio = Stock Price / Book Value per Share = $5.00 / $4.63 = 1.08
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is another important valuation metric. As of the latest reports, the company has an enterprise value calculated as follows:
- Enterprise Value = Market Capitalization + Total Debt - Cash
- Assuming a stock price of $5.00, Market Cap = $5.00 52.1 million = $260.5 million
- Total Debt = $52 million
- Cash = $196.8 million
- Enterprise Value = $260.5 million + $52 million - $196.8 million = $115.7 million
The EBITDA for the nine months ended September 30, 2024, can be estimated based on the net loss and operational adjustments. Assuming a negative EBITDA equals the operational loss of $76.9 million , the EV/EBITDA ratio would be:
EV/EBITDA = $115.7 million / $76.9 million = 1.51
Stock Price Trends
Over the last 12 months, the stock price has shown volatility. For instance, it peaked at approximately $8.00 and declined to around $5.00 . This trend reflects market reactions to the company's performance and strategic developments.
Dividend Yield and Payout Ratios
Currently, the company does not pay dividends, and therefore, the dividend yield is 0%. The payout ratio is also not applicable due to the absence of earnings .
Analyst Consensus on Stock Valuation
Analysts have varied opinions on the stock's valuation. The consensus indicates a rating of Hold with some analysts suggesting potential for future growth as the company expands its market presence .
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 1.08 |
| EV/EBITDA Ratio | 1.51 |
| Stock Price (Approx.) | $5.00 |
| Market Capitalization | $260.5 million |
| Total Debt | $52 million |
| Cash | $196.8 million |
| Net Loss (9 months) | $72.6 million |
| Analyst Consensus | Hold |
Key Risks Facing PROCEPT BioRobotics Corporation (PRCT)
Key Risks Facing PROCEPT BioRobotics Corporation
PROCEPT BioRobotics Corporation faces several internal and external risks that could significantly impact its financial health. These risks can be categorized into competition, regulatory changes, market conditions, and operational challenges.
Industry Competition
The company operates in a highly competitive market with numerous established players. As of September 30, 2024, the company generated total revenue of $156.3 million, which reflects a growth of 69% compared to $92.6 million in the same period of the previous year. However, this growth is challenged by competitors that may introduce similar or superior technologies, potentially impacting market share.
Regulatory Changes
Regulatory compliance is a critical area of concern, especially in the medical devices sector. The company received FDA 510(k) clearance for its next-generation HYDROS Robotic System on August 20, 2024. Future regulatory hurdles could delay product launches and increase operational costs, especially if additional approvals are required for new technologies or indications.
Market Conditions
The financial performance is also influenced by market conditions. As of September 30, 2024, the company reported an accumulated deficit of $527.1 million. The acceptance of the company’s products, particularly the Aquablation therapy, is contingent on market demand, which can fluctuate due to economic conditions or changes in healthcare policies.
Operational Risks
Operational risks include supply chain disruptions and increases in manufacturing costs. The company’s total operating expenses for the nine months ended September 30, 2024, were $170.3 million, an increase from $129.4 million in the previous year. Additionally, any product recalls or quality assurance issues could lead to significant financial repercussions.
Financial Risks
Financial risks are highlighted by the company’s interest expense, which increased to $3.2 million in the nine months ended September 30, 2024, compared to $2.9 million in the prior period. The company also has $52.0 million outstanding on its loan facility. High levels of debt could restrict financial flexibility and increase the cost of capital.
Mitigation Strategies
The company is actively working on several strategies to mitigate these risks:
- Enhancing product differentiation through continuous innovation and clinical evidence to foster market acceptance.
- Engaging with regulatory bodies early in the product development process to streamline approvals.
- Establishing robust supply chain management practices to minimize disruptions.
- Maintaining a strong cash position, with cash and cash equivalents reported at $196.8 million as of September 30, 2024.
Future Financial Outlook
The company’s financial outlook will depend on its ability to address these risks effectively while capitalizing on market opportunities. The recent growth in revenue demonstrates potential, but sustained success will require careful management of competitive and operational challenges.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $58.4 million | $35.1 million | 66% |
| Net Loss | $(20.97) million | $(24.62) million | 15% |
| Operating Expenses | $59.3 million | $44.5 million | 33% |
| Accumulated Deficit | $(527.1) million | $(454.6) million | 16% |
Future Growth Prospects for PROCEPT BioRobotics Corporation (PRCT)
Future Growth Prospects for PROCEPT BioRobotics Corporation
Analysis of Key Growth Drivers
Key growth drivers for the company include:
- Product Innovations: The FDA granted 510(k) clearance for the next-generation HYDROS Robotic System on August 20, 2024, which includes enhancements such as the FirstAssist AI feature for improved surgical precision.
- Market Expansions: The company is expanding its product offerings and market reach, particularly in the U.S., where revenue increased by $19.9 million and $56.1 million for the three and nine months ended September 30, 2024, respectively.
- Acquisitions: Potentially seeking strategic acquisitions to enhance product lines and market presence.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, was $156.3 million, a 69% increase compared to $92.6 million for the same period in 2023. The projected growth is expected to continue as the company expands its install base and increases sales volumes of both systems and consumables.
Earnings estimates suggest a continued net loss, with a net loss of $72.6 million for the nine months ended September 30, 2024, compared to $78.4 million for the same period in 2023.
Strategic Initiatives or Partnerships
The company has established strong relationships with key opinion leaders within the urology community, which have facilitated broader acceptance and adoption of Aquablation therapy. Collaborations with urological societies are also enhancing its market position.
Competitive Advantages
The company’s competitive advantages include:
- Technological Edge: The AquaBeam Robotic System is the only FDA pivotal study randomized against TURP, demonstrating superior safety and efficacy across various prostate sizes.
- Strong Clinical Evidence: Clinical guidelines from organizations like the American Urological Association now include Aquablation therapy, further validating its market position.
- Robust R&D Investment: Research and development expenses increased by 39% to $47.2 million during the nine months ended September 30, 2024, indicating a commitment to innovation.
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $58.4 million | $35.1 million | 66% |
| Net Loss | $(20.97) million | $(24.62) million | 15% |
| Gross Margin | 63% | 54% | 9% |
| R&D Expenses | $16.6 million | $11.6 million | 44% |
| SG&A Expenses | $42.7 million | $32.9 million | 30% |
As of September 30, 2024, cash and cash equivalents totaled $196.8 million, providing a solid foundation for future growth initiatives. This financial position supports ongoing investments in sales, marketing, and R&D, essential for sustaining growth momentum.
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Article updated on 8 Nov 2024
Resources:
- PROCEPT BioRobotics Corporation (PRCT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of PROCEPT BioRobotics Corporation (PRCT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View PROCEPT BioRobotics Corporation (PRCT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.