IPO Alert: What investors need to know about Procept BioRobotics’ upcoming market debut

The medical device market has been in the spotlight ever since coronavirus tightened its grip across the world last year as the demand for critical supplies like ventilators and PPE shot up. Though healthcare agencies channelized their resources for pandemic care, companies like Procept BioRobotics Corporation that mostly provide non-COVID-related supplies also witnessed high demand.

$100 Mln IPO

The Redwood City-headquartered company, which is specialized in surgical systems for the treatment of prostate disease, last week filed for an initial public offering of up to $100 million. It revealed plans to list in the Nasdaq Global Market under the ticker symbol PRCT but is yet to disclose the number of shares being offered. The lead underwriters in the offering are Bank of America Securities and Goldman Sachs.

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Read management/analysts’ comments on quarterly reports

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So far, the healthcare firm has raised around $337 million through private placements, with the latest being a funding round of $85 million. By the end of the first half, there was a total installed base of 124 AquaBeam Robotic Systems, Procept’s lead product designed to treat benign prostatic hyperplasia, a condition characterized by the enlargement of the prostate.

Revenue Jumps

For the first six months of 2020, Procept reported a multi-fold increase in revenues to $15.7 million supported by strong system sales and rental income. Interestingly, the topline number is twice that of the revenue generated in the whole of 2020. Meanwhile, net loss widened to $27.4 million from $25.7 million in the corresponding period of last year, hurt by a sharp increase in operating costs.

The bottom line is expected to remain under pressure in the near term as the company would incur additional costs when it becomes a public entity. High investments in research & development and marketing would also weigh on margins, while the growth initiatives might hit roadblocks due to the pandemic-related disruption.

Pros and Cons

Meanwhile, it is estimated that the present level of liquidity and revenue flow would be sufficient for Procept to meet future capital requirements and fund its operations, at least for the next twelve months. The strong adoption of AquaBeam systems in the healthcare market can be seen as a testament to its superior efficiency compared to alternative surgical systems, which bodes well for the business as far as long-term growth is concerned.

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After defying pandemic, IPO market is bracing for another busy year

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Also, recurring revenues from post-warranty services would make the topline performance fairly predictable. Studies have shown that benign prostatic hyperplasia is the fourth most commonly diagnosed disease that occurs in around 50% of men in their 50s and 70% in their 60s. The Aquablation therapy delivered by AquaBeam system is believed to be the only image-guided, heat-free robotic therapy that is capable of overcoming the shortcomings of alternative surgical interventions.

Investing in Procept

Procept was founded in 2009 and is currently led by chief executive officer Reza Zadno. Being a loss-making entity, the upcoming IPO is of great significance for the biotech firm as far as future growth is concerned. Profitability would be the main factor prospective investors would be weighing. As of June, the company had an accumulated deficit of $229 million.