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PROCEPT BioRobotics (PRCT +27%) is trading sharply higher after reporting a Q3 loss that was narrower than expected. Revenue jumped 66.4% yr/yr to $58.4 mln, which was also better than expected. It also increased FY24 revenue guidance to $222.5-223.0 mln. This surgical robotics company focuses on urology using Aquablation therapy to treat males suffering from lower urinary tract symptoms or LUTS, due to BPH.

• The company said that growth in the quarter was driven by strong demand and higher average selling prices for its robotic system. PRCT also benefitted from increased utilization from an expanded US installed base and record international revenue. PRCT exited Q3 with a US installed base of 445 systems, up 64% yr/yr. Additionally, PRCT exceeded its utilization per account expectations in Q3. International revenue more than doubled yr/yr to $6.2 mln.
• PRCT sold 45 robotic systems in the US at an average price of approximately $432,000. Of these 45 systems, approximately 80% were HYDROS and the majority of these sales were to new customers. It's also important to understand that PRCT continues to generate revenue even after equipment is sold. And that revenue was even larger than system sales. US handpiece and consumables revenue jumped 74% yr/yr in Q3 to $29.6 mln.
• On August 21, PRCT announced FDA 510(k) clearance of its next-generation platform, the HYDROS Robotic System. It features FirstAssist AI treatment planning, advanced image guidance, robotic resection, and a streamlined workflow. HYDROS is designed to improve efficiency, enhance surgeon and staff experience and deliver a more accurate and consistent treatment plan for better clinical outcomes.
• PRCT is pretty excited about HYDROS as it introduces significant technological advancements designed for mass-market adoption, and it believes HYDROS will power its next phase of growth. As soon as it received FDA clearance, PRCT said its capital sales team immediately shifted its focus to educating hospitals and surgeons on the benefits of the new system. In addition to its next generation system, the company is expanding into prostate cancer. The FDA recently approved a pivotal IDE clinical trial comparing Aquablation therapy to radical prostatectomy.

Overall, it is clear investors are impressed with PRCT's Q3 report. The company posted strong results despite transitioning to its new HYDROS system. Also, its consumables business was particularly strong, which tells us customers are using its system at a good clip. PRCT is not a name that is widely followed, but it is worth keeping an eye on. It's narrowly focused on urology, but BPH is also the most common prostate disease and impacts approximately 40 mln men in the US. On a final note, we are not making a prediction, but if PRCT keeps posting good results, we would not be surprised to see a larger surgical robotics company consider acquiring the company.