PROCEPT BioRobotics Corporation

Good afternoon and welcome to Procept Biorobotics' first quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Matt Baxo, Vice President, Investor Relations, for a few introductory comments.

Good afternoon, and thank you for joining Procept Biorobotics' first quarter 2026 earnings conference call. Presenting on today's call are Larry Wood, Chief Executive Officer, and Kevin Waters, Chief Financial Officer. Before we begin, I'd like to remind listeners that statements made on this conference call that relate to future plans, events, or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. While these forward-looking statements are based on management's current expectations and beliefs, these statements are subject to several risks, uncertainties, assumptions, and other factors that could cause results to differ materially from the expectations expressed on this conference call. These risks and uncertainties are disclosed in more detail in Procept by Robotics filings with the Securities Exchange Commission, all of which are available online at www.sec.gov. Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as of today's date, April 29th, 2026. Except as required by law, Pro Step by Robotics undertakes no obligation to update or revise any forward-looking statements to reflect new information, circumstances, or unanticipated events that may arise. During the call, we'll also reference certain financial measures that are not prepared in accordance with GAAP. More information about how we use these non-GAAP financial measures as well as reconciliations of these measures to their nearest GAAP equivalent are included in our earnings release. With that, I'd like to turn the call over to Larry.

Good afternoon, and thank you for joining us. Over the past six months, we have taken decisive actions to reset the organization. We have sharpened our focus on operational excellence, accountability, and commercial discipline. Our first quarter performance reflects the early impact of these efforts. We are encouraged by our Q1 results and the momentum we are building, having reported total revenue of $83.1 million, representing an annual growth of 20%. Starting with procedures, we completed approximately 12,200 US procedures in the first quarter of 2026, where commercial realignment initiatives modestly affected Q1 procedure growth. Performance was largely in line with expectations. The team is adapting well, and we expect the full benefit of these changes to materialize in the second half of 2026. Regarding handpieces, we believe field inventory levels and customer purchasing behavior have normalized, with handpieces sold representing approximately 95% of procedures in the first quarter. On a weighted average basis, we continue to expect approximately a one-to-one ratio of handpieces to procedures for the full year. Turning to US systems, we sold 49 hydro systems, which included two replacement systems. We remain confident in our full-year system plan and are encouraged by the early positive customer response to the AquaBeam replacement program. With regards to pricing, as we emphasized in our last earnings call, establishing price discipline remains fundamental to long-term value creation. In the first quarter of 2026, the U.S. hydro system averaged selling prices of approximately $485,000. This represents an all-time high and a 14% increase compared to the fourth quarter of 2025, despite what is typically a seasonally challenging quarter for capital. Given our increased pricing discipline across the organization and strong first quarter pricing, we now expect full year 2026 system pricing to be modestly above our initial guidance range. Additionally, U.S. handpiece average selling prices were approximately $3,500, representing a 5% increase compared to the fourth quarter of 2025 and a 10% increase year over year. Now I'll provide an update on our commercial organization. We previously described two key changes that we believe are strategically important for long-term performance. First, we realigned our commercial team into an integrated regional structure where our clinical and sales functions now report to a common regional leader. The new structure creates a single point of accountability at the regional level to ensure clinical and commercial activities are coordinated around customer success and procedure growth. Second, we are continuing to advance our dedicated launch team to drive more consistent launches, reduce variability in activation, and accelerate procedure volume ramp for customers. We view launches as a key lever for improving downstream utilization and overall performance. The realignment of the commercial organization and implementation of the launch team was finalized in early Q1 and, as expected, resulted in some short-term disruption in the first quarter. We view this as a normal transition period as teams ramp, establish account relationships, and standardize new operating processes. Most important, we believe these changes, along with our marketing programs, better position us for sustained high growth. We will continue to manage through the transition thoughtfully, and we expect the benefits to build as the organization settles into the new model. Now let's look at gross margins and how we're progressing towards profitability. In the fourth quarter of 2025, we reported gross margins of 61% and indicated this level was temporary. We guided the full year 2026 gross margins of approximately 65%, reflecting expected improvement. Driven by increased price discipline and better leverage of our cost structure, we delivered first quarter gross margins of 65%. With this strong start, we expect gross margins to increase modestly on a sequential basis throughout the year. We will also continue to manage operating expenses as we work toward achieving positive adjusted EBITDA in the fourth quarter of 2026. Turning to regulatory and clinical updates, in March at the 41st annual European Association of Urology Congress in London, the EAU updated clinical guidelines to give aqua ablation therapy a strong recommendation as a surgical treatment for men with BPH and moderate to severe LUTs, reflecting the high quality of evidence and favorable patient outcomes. The therapy is now recommended as an alternative to TURP, especially for patients seeking to preserve ejaculatory function. This upgrade for prostates 30 to 80 milliliters and the additional modes for treating prostates greater than 80 milliliters is supported by multiple clinical trials, including WATR and WATR2, all of which demonstrated durable improvements in urinary symptoms, preservation of ejaculatory and urinary function, and effectiveness across a wide range of prostate anatomies. A strong recommendation from one of the most respected global guideline bodies reflects the strength of the clinical evidence supporting aqua ablation therapy and reinforces its role as a modern surgical option for physicians seeking to deliver durable symptom relief while preserving quality of life outcomes that matter most to patients. At EAU, we also announced the first international launch of hydros in the UK. This milestone marks the beginning of a broader global expansion. Specifically in the first quarter, we sold seven new hydro systems in the United Kingdom at an average selling price of over 400,000 US dollars. Building on the recent approval and strong clinical momentum, including the rapid adoption at high volume NHS hospitals, our UK capital pipeline continues to grow nicely. We have also received FDA clearance on our second generation first assist AI software. and advancement in personalized image-guided planning for aquablation therapy. This milestone further strengthens the capability of the HYDROS robotic system and enables more precise identification of prostate anatomy and more complete treatment planning to help surgeons plan with greater confidence and consistency. We remain deeply committed to advancing the standard of care in urology through our continued innovation for the millions of men affected by BPH. Lastly, we are approaching the completion of patient enrollment in the Water Force study, and based on current trends, expect to be fully enrolled by the end of May. We have been very pleased with the pace of enrollment, which is on track to be completed in less than 18 months. For a clinical trial of Water Force size and complexity, the speed of enrollment highlights strong surgical interest and a patient willingness to participate, factors we believe will ultimately translate into broader market adoption post-approval. Based on current timelines, we expect to present the Water 4 primary endpoint at AUA in the spring of 2027. With that, I will turn the call over to Kevin.