PROCEPT BioRobotics Corporation

Good day and thank you for standing by. Welcome to Q2 2026 ProCEPT BioRobotics earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, Please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Webb Campbell, Investor Relations.

Good afternoon, and thank you for joining Procept BioRobotics second 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 BioRobotics filings with the Securities and 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, August 4th, 2026. Except as required by law, Process BioRobotics undertakes no obligation to update or revise any forward-looking statements to reflect new information, circumstances, or unanticipated events that may arise. During this 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. This was an important quarter for Procept as we continue to execute against the priorities we established at the beginning of the year. Coming into the year, we made several significant changes to our commercial organization, including realigning our regional structure and establishing a dedicated launch team to support the continued rollout of the Hydros robotic system. We also initiated patient activation pilots designed to help patients better understand aqua ablation as a treatment option and make it easier for those seeking care to connect with participating physicians. Today, we remain focused on execution across the organization, including driving strong hydrosystem sales and procedure volume. I am encouraged by the dedication and effort of our team and the progress we're making. and I remain confident in the significant growth opportunity ahead. In the second quarter, we delivered total revenue of $94.5 million, growing 19% year-over-year. We completed over 13,100 U.S. procedures, growing 21%, a strong increase but softer than our expectations. Importantly, the shortfall was not broad-based across our installed base. It was concentrated primarily in the legacy AquaBeam accounts. Our newer Hydros accounts continue to perform well, with procedures per count significantly exceeding those of our legacy AquaBeam accounts during the second quarter. We believe this performance demonstrates the value of the Hydros platform. Its enhanced imaging, workflow, and clinical capabilities are helping physicians adopt aqua ablation more quickly and utilize the system more consistently. The contrast between the performance of Hydros and legacy AquaBeam accounts has also made the opportunity in our existing installed base increasingly clear. We are therefore accelerating our efforts to upgrade legacy AquaBeam systems to Hydros. We sold 14 replacement systems during the quarter, and we expect replacement activity to remain an important part of our commercial strategy. These upgrades can create modest near-term disruption of accounts transition between platforms. However, based on the utilization we are seeing from Hydros accounts, We believe upgrading the legacy install base will improve account productivity and support stronger, more durable procedure growth over time. Handpiece sales represented approximately 98% of procedures this quarter, and we continue to expect an approximate one-to-one ratio of handpieces to procedures for the full year. Regarding system sales, we saw strong system demand in the quarter, placing 65 hydro systems in total in the United States. This included 50 greenfield systems, 14 replacement systems, and one hydro system placed under an operating lease. Approximately 40% of the hydro systems placed during the quarter were launched through our dedicated launch team, up from approximately 20% in the first quarter. We expect another meaningful increase in the third quarter. By year end, we expect to have the capability to support the launch of all new hydro systems while maintaining the flexibility to prioritize dedicated launch resources where they can have the greatest impact. Early results remain encouraging with newly launched accounts demonstrating shorter time to first case and stronger early utilization than we've historically observed. In addition, our increased focus on the replacement program has also been well received by customers and will enable us to retire legacy AquaBeam systems and relaunch them with Hydros. Turning to pricing, as I mentioned, pricing discipline remains fundamental to our strategy. and our team executed with that discipline in this quarter. Our Q2 Greenfield Hydros ASP was the highest to date, reinforcing the value customers placed on aqua ablation therapy. Overall, our US Hydro System ASP was approximately $495,000, up from $485,000 we reported in the first quarter and $435,000 for the full year 2025. Hospital capital investment at that magnitude Validates a commitment to building and expanding a long-term aquablation program. Strong system sales this quarter give us continued confidence in the value of our platform and our customers as well as the outlook. Before I turn to guideline updates and our regulatory process, I would like to provide some additional context on our second quarter performance. While procedure growth did not accelerate to the degree we had expected, the shortfall was driven primarily by software procedures across our legacy aqua beam accounts. Despite these challenges with our privacy-locked AquaBeam accounts, we made meaningful progress during the first half of the year. Most importantly, we demonstrated the durability of demand for the Hydros platform through strong capital placements, accelerated system adoption within our replacement program, and meaningful improvements in average selling prices for both systems and handpieces. Operationally, we have completed several important initiatives that position the business for long-term success. We substantially completed the U.S. sales force realignment and optimized account coverage across the organization. As part of that effort, at the beginning of the second quarter, we promoted our former head of capital sales, Kyle Kelsch, to lead our entire U.S. sales organization, providing greater leadership continuity and commercial focus. Beginning in June, procedure-based coverage transitioned to our clinical organization, allowing our sales representatives to spend their time in physicians' offices driving therapy adoption, referrals, and expanding utilization. We have also launched several direct-to-patient pilots, and we are now active across 18 markets in the United States with television, radio, digital, and social media campaigns, and we are actively gathering data to assess which channels and messages are most effective at engaging patients and motivating them to seek care. We're encouraged by the leading indicators we're seeing, including increased website traffic, stronger digital engagement, and greater interaction with our patient education resources. In summary, we believe the deliberate changes we have made establish the right foundation for durable, high-quality growth in the years ahead. It is also the right foundation for healthy growth margin expansion and our path to profitability. Today, we believe we are in a strong position to deliver our 2026 revenue and Gross Margin Guidance, and we believe we are on track to deliver on our expectation for positive adjusted EBITDA in the fourth quarter. Now I'd like to highlight a few important clinical and regulatory milestones from the quarter. In May, the American Urology Association strengthened its recommendation for aqua ablation therapy and its updated BPH treatment guidelines, further recognizing aqua ablation as an important surgical treatment option for men with BPH. This follows the European Association of Neurology's upgrade of aqua ablation to a strong recommendation earlier this year and reflects the continued strength and maturity of our clinical evidence. Today, aqua ablation is supported by approximately 250 peer-reviewed publications, making it one of the most extensively studied technologies in BPH. Turning to our cancer initiative, we reached an important milestone in the second quarter by completing enrollment in Water4. are first randomized clinical trial evaluating aquaplation therapy versus radical prostatectomy with all 280 patients enrolled. Water 4 reflects our commitment to building the highest level of clinical evidence. With a prospective randomized trial, we remain on track to present the primary endpoint results at the AUA annual meeting in the spring of 2027. We also received FDA IDEA approval for a second randomized protocol, Water 4 AF, which will evaluate aqua ablation against active surveillance in men with grade group 1 and 2 disease and that will be up to 333 patients globally. Lastly, I'd like to highlight our international progress. We continue to take a disciplined approach to market expansion, prioritizing geographies with attractive reimbursement and capital dynamics. The UK remains our largest international market where we continue to see strong capital pipeline and encouraging adoption. We also remain focused on the opportunity in Japan. With that, I will turn it over to Kevin to walk through our financial results and guidance in more detail.