Procept BioRobotics (PRCT) Q2 2026: Hydros Upgrades Drive 32% System Revenue Growth Amid Legacy Headwinds
Hydros system adoption and disciplined pricing propelled strong capital sales, but legacy AquaBeam utilization fell short, pressuring procedure growth and prompting a strategic acceleration of system upgrades. Commercial realignment and direct-to-patient pilots are setting the stage for improved utilization, though near-term procedure guidance reflects persistent softness in the legacy installed base. With margin discipline and a robust replacement cycle, the business is positioned for a more durable growth trajectory as Hydros accounts gain share.
Summary
- Hydros Platform Outperformance: New Hydros accounts delivered higher utilization, while legacy AquaBeam sites drove a procedure shortfall.
- Replacement Cycle Acceleration: Management is prioritizing upgrades to Hydros, aiming to boost productivity across the installed base.
- Commercial Model Shift: Dedicated launch teams and direct-to-patient pilots are expected to unlock procedure growth in coming quarters.
Business Overview
Procept BioRobotics is a surgical robotics company focused on minimally invasive urology. Its core revenue streams are Hydros system sales (capital equipment for aquablation, a BPH treatment), handpiece consumables (single-use devices for each procedure), and service and support. The business is split between U.S. and international markets, with the U.S. representing the majority of revenue. Key growth levers are new system placements, procedure volume, and system upgrades from legacy AquaBeam to the advanced Hydros platform.
Performance Analysis
System sales strength defined the quarter, with U.S. Hydros placements and replacement activity driving a 32% year-over-year increase in system revenue. Average selling prices (ASP) for Hydros systems reached a record $495,000, reflecting sustained pricing discipline and customer commitment to aquablation programs. Handpiece revenue, closely tied to procedure volume, grew at a slower pace, constrained by underperformance in legacy AquaBeam accounts.
Procedure growth of 21% YoY fell below expectations, as softness was concentrated in older AquaBeam sites, not the newer Hydros base. The company placed 65 Hydros systems in the U.S. (50 greenfield, 14 replacements), and replacement momentum is expected to continue, with 40 upgrades targeted for the year. International revenue grew 15%, led by the UK, but remains a smaller share of the business.
- Segment Divergence: Hydros outperformed, while legacy AquaBeam accounts saw declining utilization, impacting total procedure growth.
- Pricing Power: Hydros ASP rose to $495,000, up from $485,000 in Q1 and $435,000 for FY25, signaling strong customer value perception.
- Margin Discipline: Gross margin held at 66% despite increased commercial investment and a higher mix of replacement sales.
While system sales and pricing were robust, the company’s procedure guidance was revised lower, reflecting persistent headwinds in legacy accounts. Management expects sequential improvement as more sites transition to Hydros and the launch team model scales.
Executive Commentary
"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."
Larry Wood, Chief Executive Officer
"We continue to expect improvements in both cash usage and adjusted EBITDA in the second half of the year, driven by higher revenue, increased operating leverage and continued improvements in working capital."
Kevin Waters, Chief Financial Officer
Strategic Positioning
1. Hydros Platform as Core Growth Driver
The Hydros system, featuring advanced imaging, workflow, and AI, is outperforming legacy platforms and now accounts for the majority of procedure volume. Management is accelerating upgrades and using dedicated launch teams to maximize new account productivity, aiming for all new systems to launch under this model by year-end.
2. Replacement Cycle Momentum
Replacement sales are emerging as a key commercial lever. Fourteen legacy AquaBeam systems were upgraded this quarter, and management expects 40 upgrades for the year. Upgrades can cause short-term disruption, but are expected to deliver higher utilization and more durable growth over time as legacy underperformers convert to Hydros.
3. Commercial Realignment and Launch Teams
A newly realigned sales force and launch team model are designed to accelerate new account ramp and boost procedure volume. Transitioning procedure coverage to the clinical organization frees sales reps to focus on therapy adoption and referral generation. Early results show shorter time to first case and improved initial utilization in launch team-supported sites.
4. Direct-to-Patient Activation
Direct-to-patient pilots are now active in 18 U.S. markets, leveraging TV, radio, digital, and social media to educate and activate patients. Early indicators include increased website traffic and patient inquiries, but management notes that a lag exists between patient activation and realized procedure volume due to hospital scheduling constraints.
5. Clinical and Regulatory Validation
Guideline upgrades from both the American and European urology associations reinforce aquablation’s clinical credibility. The Water4 randomized prostate cancer trial is fully enrolled, and FDA approval for a new trial (Water4 AF) expands the evidence base, supporting long-term adoption and reimbursement.
Key Considerations
This quarter highlights a business in operational transition, with clear separation in performance between legacy and next-generation platforms. Management’s focus is shifting from broad-based expansion to targeted upgrades and productivity gains.
Key Considerations:
- Legacy Drag: Underutilization in AquaBeam accounts is the primary cause of weaker procedure growth, underscoring the urgency of the upgrade strategy.
- Launch Team Leverage: The expansion of the launch team model is expected to lift utilization and accelerate new account ramp, a key metric for forward growth.
- Pricing Resilience: Record Hydros ASP and stable handpiece pricing suggest robust customer value perception, supporting margin structure.
- Patient Activation Pilots: Early digital engagement is positive, but procedure conversion will take time and depends on hospital throughput.
- Operating Leverage Path: Management expects improved EBITDA and margin leverage as commercial investments yield returns and R&D spend normalizes post-Water4 trial.
Risks
Legacy account weakness remains a material overhang, with utilization declines not yet fully understood or reversed. Execution risk is elevated during the transition period as upgrades and commercial model changes could disrupt short-term growth. Competitive procedures (such as PAE) and entrenched physician habits (TURP) present ongoing headwinds. Direct-to-patient investments carry uncertain ROI and may take time to translate into higher volumes.
Forward Outlook
For Q3 2026, Procept BioRobotics expects:
- Modest sequential procedure growth, with Q4 remaining the strongest seasonal quarter
- Continued Hydros system placements and a growing share of launch team-supported accounts
For full-year 2026, management maintained guidance:
- Total revenue: $390–410 million, up 27–33% YoY
- U.S. procedures: 54,000–56,000, reflecting 25–29% growth
- Gross margin: 65%
- Adjusted EBITDA loss: $35–30 million, with positive EBITDA expected in Q4
Management emphasized:
- Replacement upgrades and launch team expansion as primary drivers for utilization improvement
- Patient activation pilots and commercial investments are expected to support growth, balanced by cost discipline elsewhere
Takeaways
Procept’s growth narrative is increasingly defined by platform transition and operational discipline.
- Hydros Upgrade Cycle: System sales and replacements are outpacing legacy performance, with launch teams set to drive future utilization gains.
- Commercial Model Reset: Realigned sales force and direct-to-patient pilots signal a pivot to higher-quality growth and improved account productivity.
- Utilization Watch: Investors should monitor the pace of legacy system upgrades, launch team penetration, and conversion of patient activation to realized procedures as key forward indicators.
Conclusion
Procept BioRobotics is executing a deliberate transition from legacy AquaBeam to Hydros, with system sales, disciplined pricing, and commercial innovation offsetting near-term procedure softness. The replacement cycle and launch team model are central to the path toward durable growth and profitability, but legacy headwinds will require continued vigilance through 2026.
Industry Read-Through
Procept’s experience underscores the importance of platform innovation and commercial model agility in medtech. Legacy product drag can materially impact growth, even as next-gen systems outperform, highlighting the value of disciplined upgrade strategies. The use of dedicated launch teams and direct-to-patient marketing reflects a broader industry shift toward more hands-on account activation and patient engagement. For peers in surgical robotics and procedure-driven medtech, the quarter illustrates both the challenges and opportunities of transitioning installed bases and the need to sustain pricing power amid capital budget constraints.