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What changed in PROCEPT BioRobotics Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PROCEPT BioRobotics Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+299 added−336 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in PROCEPT BioRobotics Corp's 2025 10-K

299 paragraphs added · 336 removed · 261 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

87 edited+11 added−48 removed225 unchanged
Biggest changeThese include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; 21 Table of Contents • labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; FDA guidance on off-label dissemination of information and responding to unsolicited requests for information; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of a supplement for certain modifications to PMA devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with the new federal law and regulations requiring Unique Device Identifiers, or UDI, on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
Biggest changeThese include: establishment registration and device listing with the FDA; medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk 19 Table of Contents to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; complying with the new federal law and regulations requiring Unique Device Identifiers, or UDI, on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
We believe that our strong body of clinical evidence and support from key societies, supplemented by the momentum from Medicare coverage, have led to favorable coverage decisions from many large commercial payors – which we estimate allows access to Aquablation therapy to approximately 95% of all men in the United States.
We believe that our strong body of clinical evidence and support from key societies, supplemented by the momentum from Medicare coverage, have led to favorable coverage decisions from many large commercial payors – which we estimate allows access to Aquablation therapy to approximately 95% of all men in the United States.
Clinical Trials Clinical trials are almost always required to support a PMA or de novo request and are sometimes required to support a 510(k) submission.
Clinical trials are almost always required to support a PMA or de novo request and are sometimes required to support a 510(k) submission.
This surgery may be done manually, or with the assistance of a robot, but in either case is a procedure that requires a high degree of surgeon skill. Non-Resective Procedures In non-resective procedures, prostate tissue is not removed at the time of surgery. By not removing tissue, symptom relief is generally less significant and durable compared to resective procedures.
This surgery may be done manually, or with the assistance of a robot, but in either case, it is a procedure that requires a high degree of surgeon skill. Non-Resective Procedures In non-resective procedures, prostate tissue is not removed at the time of surgery. By not removing tissue, symptom relief is generally less significant and durable compared to resective procedures.
HydroCision also granted us a non-exclusive license to patents allowing us to make, sell, import, export, or otherwise dispose of products made using the Fluid Jet Technology Patents. In exchange for the license from HyrdoCision, we paid HydroCision $2.5 million in 2019. No further payments have been made or are otherwise required under the HydroCision License Agreement.
HydroCision also granted us a non-exclusive license to patents allowing us to make, sell, import, export, or otherwise dispose of products made using the Fluid Jet Technology Patents. In exchange for the license from HydroCision, we paid HydroCision $2.5 million in 2019. No further payments have been made or are otherwise required under the HydroCision License Agreement.
The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), de novo classification or a PMA in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination.
The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), de novo classification or a PMA or PMA supplement in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination.
Key Benefits of Aquablation Therapy We believe our Aquablation therapy addresses the compromise between safety and efficacy of alternative surgical interventions, providing the following unique benefits: • significant and durable symptom relief; • favorable safety profile compared to other BPH resective procedures; • outcomes consistent across all prostate sizes and shapes and resection independent of surgeon experience; • personalized treatment planning and improved decision-making; and • targeted and controlled resection with consistent resection times.
Key Benefits of Aquablation Therapy We believe our Aquablation therapy minimizes the compromise between safety and efficacy of alternative surgical interventions, providing the following unique benefits: • significant and durable symptom relief; • favorable safety profile compared to other BPH resective procedures; • outcomes consistent across all prostate sizes and shapes and resection independent of surgeon experience; • personalized treatment planning and improved decision-making; and • targeted and controlled resection with consistent resection times.
In addition, patients typically stay in the hospital for an average of five days after surgery and have long recovery times. Our Solution O ur first generation AquaBeam Robotic System, an advanced, image-guided, surgical robotic system for use in minimally invasive urologic surgery, received De Novo FDA approval in December 2017.
In addition, patients typically stay in the hospital for an average of five days after surgery and have long recovery times. Our Solution Our first generation AquaBeam Robotic System, an advanced, image-guided, surgical robotic system for use in minimally invasive urologic surgery, received De Novo FDA approval in December 2017.
We utilize a well-known third-party logistics providers located in United States, United Kingdom, and the Netherlands to ship our products to our customers globally. We rely on third-party suppliers, almost all of whom are single source suppliers, to provide us with certain components, sub-assemblies and materials for our products.
We utilize a well-known third-party logistics provider located in United States, United Kingdom, and the Netherlands to ship our products to our customers globally. We rely on third-party suppliers, almost all of whom are single source suppliers, to provide us with certain components, sub-assemblies and materials for our products.
Additionally, from a governance perspective, we maintain a mix of skills, backgrounds and experience on our executive team and on our board to serve the needs of our diverse stakeholders. Health, Safety and Wellness The health, safety and wellness of our employees is an area where we continued to invest and expand throughout 2024.
Additionally, from a governance perspective, we maintain a mix of skills, backgrounds and experience on our executive team and on our board to serve the needs of our diverse stakeholders. Health, Safety and Wellness The health, safety and wellness of our employees is an area where we continued to invest and expand throughout 2025.
Prior Authorization Approval Process For certain customers, our reimbursement strategy includes leveraging our market access team as advisors when needed to support in obtaining appropriate prior authorization approvals in advance of treatment. We believe we are highly effective in providing education to obtain prior authorizations when needed.
For certain customers, our reimbursement strategy includes leveraging our market access team as advisors when needed to support in obtaining appropriate prior authorization approvals in advance of treatment. We believe we are highly effective in providing education to obtain prior authorizations when needed.
These advanced features are designed to further deliver safe, effective, and durable outcomes for men suffering from lower urinary tract symptoms (LUTS) caused by BPH, regardless of prostate size and shapes and resection independent of surgeon experience.
These advanced features are designed to further deliver safe, effective, and durable outcomes for men suffering from lower urinary tract symptoms (LUTS) caused by BPH, regardless of prostate size and shape and resection independent of surgeon experience.
Regulation of Medical Devices, European Economic Area, or EEA The European Union, or EU, has adopted specific directives and regulations regulating among other things, the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
European Economic Area, or EEA The European Union, or EU, has adopted specific directives and regulations regulating among other things, the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
We estimate that approximately 3.9 million men, including approximately 3.3 million patients who are on drug therapy and 600,000 who have failed drug therapy, are under the care of a primary care physician. To achieve this objective, we will invest in marketing initiatives directed at primary care physicians in order to expand networks for BPH patients to visit a urologist.
We estimate that approximately 4.0 million men, including approximately 3.3 million patients who are on drug therapy and 600,000 who have failed drug therapy, are under the care of a primary care physician. To achieve this objective, we will invest in marketing initiatives directed at primary care physicians in order to expand networks for BPH patients to visit a urologist.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Additionally, there has been a recent trend of increased foreign, federal, and state regulation of payments and transfers of value provided to healthcare professionals or entities.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. 22 Table of Contents Additionally, there has been a recent trend of increased foreign, federal, and state regulation of payments and transfers of value provided to healthcare professionals or entities.
Once a device is on the EU market, manufacturers must comply with certain vigilance requirements, such as the reporting of serious incidents and field safety corrective actions (even those occurring outside the EU) to the relevant Competent Authorities. The Competent Authorities of each EU Member State oversee the implementation of the MDR within their jurisdiction.
Once a device is on the EU market, manufacturers must comply with certain vigilance requirements, such as the reporting of serious incidents and field safety 21 Table of Contents corrective actions (even those occurring outside the EU) to the relevant Competent Authorities. The Competent Authorities of each EU Member State oversee the implementation of the MDR within their jurisdiction.
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Post-Market Regulation After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
Whether or not we have or are required to obtain FDA clearance or approval for a product, we will be required to obtain authorization before commencing clinical trials and to obtain marketing authorization or approval of our products under the comparable regulatory authorities of countries 18 Table of Contents outside of the United States before we can commence clinical trials or commercialize our products in those countries.
Whether or not we have or are required to obtain FDA clearance or approval for a product, we will be required to obtain authorization before commencing clinical trials and to obtain marketing authorization or approval of our products under the comparable regulatory authorities of countries outside of the United States before we can commence clinical trials or commercialize our products in those countries.
We believe that everyone should feel included and fairly treated, and we embrace the unique qualities of our employees including all genders and gender identities, races, ethnicities, ages, 26 Table of Contents national origins, disabilities, sexual orientations, military and socioeconomic backgrounds, and religions, as well as any other protected characteristics.
We believe that everyone should feel included and fairly treated, and we embrace the unique qualities of our employees including all genders and gender identities, races, ethnicities, ages, national origins, disabilities, sexual orientations, military and socioeconomic backgrounds, and religions, as well as any other protected characteristics.
This robust body of evidence includes more than 150 peer- 12 Table of Contents reviewed publications in premier journals, such as the Journal of Urology, European Urology and BJU International, as well as nine clinical studies, including our three core studies: WATER, WATER II and OPEN WATER. Prostate Therapy • WATER.
This robust body of evidence includes more than 150 peer- 12 Table of Contents reviewed publications in premier journals, such as the Journal of Urology, European Urology and BJU International, as well as nine clinical studies, including our four core studies: WATER, WATER II, WATER III and OPEN WATER. Prostate Therapy • WATER.
Talent Development Professional growth is a key indicator of employee satisfaction and helping our employees reach and exceed their goals helps us retain and engage our outstanding talent. We foster professional growth by providing stretch assignments, projects and manager-led coaching and mentoring to help employees meet their career goals.
Talent Development 24 Table of Contents Professional growth is a key indicator of employee satisfaction and helping our employees reach and exceed their goals helps us retain and engage our outstanding talent. We foster professional growth by providing stretch assignments, projects and manager-led coaching and mentoring to help employees meet their career goals.
In our U.S. pivotal trial, Waterjet Ablation Therapy for Endoscopic Resection of prostate tissue, or the WATER study, Aquablation therapy demonstrated superior safety and non-inferior efficacy results compared to transurethral resection of the prostate, or TURP, the historical standard of care for the surgical treatment of BPH.
In our U.S. pivotal trial, Waterjet Ablation Therapy for Endoscopic Resection of prostate tissue, or the WATER study, Aquablation therapy demonstrated superior safety and non-inferior efficacy 5 Table of Contents results compared to transurethral resection of the prostate, or TURP, the historical standard of care for the surgical treatment of BPH.
Once we place a system within a customer, our objective is to establish Aquablation therapy as the surgical treatment of choice for BPH. Within each customer site, we are initially focused on targeting urologists who perform medium-to-high volumes of resective procedures and converting their resective cases to Aquablation therapy.
Once we place a system within a customer, our objective is to establish Aquablation therapy as the surgical treatment of choice for BPH. Within each customer site, we are initially focused on targeting urologists who perform resective procedures and converting their resective cases to Aquablation therapy.
This results in highly variable depth of tissue penetration, damage to tissue which may extend deeper than cavity created, a potential for unintended prostate capsule perforation, potential damage to nerve bundle responsible for erectile function, and delayed healing of prostatic urethra. 10 Table of Contents • Prostate size limitations.
This results in highly variable depth of tissue penetration, damage to tissue which may extend deeper than cavity created, a potential for unintended prostate capsule perforation, potential damage to nerve bundle responsible for erectile function, and delayed healing of prostatic urethra. • Prostate size limitations.
While there is no active material litigation involving any of our patents or other intellectual property rights and we have not 17 Table of Contents received any notices of patent infringement, we may be required to enforce or defend our intellectual property rights against third parties in the future.
While there is no active material litigation involving any of our patents or other intellectual property rights and we have not received any notices of patent infringement, we may be required to enforce or defend our intellectual property rights against third parties in the future.
In the United States, we are focused on driving adoption of Aquablation therapy among urologists that perform hospital-based resective BPH surgery. We estimate that approximately 290,000 of the 400,000 annual BPH surgeries are resective procedures performed across approximately 2,700 hospitals.
In the United States, we are focused on driving adoption of Aquablation therapy among urologists that perform hospital-based resective BPH surgery. We estimate that approximately 300,000 of the approximate 400,000 annual BPH surgeries are resective procedures performed across approximately 2,700 hospitals.
In addition, certain foreign laws govern the privacy and security of personal information, including health-related information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, certain foreign laws govern the privacy and security of personal information, including health- 23 Table of Contents related information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Employees and Human Capital Resources Our growing and skilled employee base drives our success and helps us progress towards our vision of restoring patient lives by delivering the BPH treatment of choice. As of December 31, 2024, we had 756 employees. Our future success depends on our ability to attract, retain, engage and further develop top talent.
Employees and Human Capital Resources Our growing and skilled employee base drives our success and helps us progress towards our vision of restoring patient lives by delivering the BPH treatment of choice. As of December 31, 2025, we had 888 employees. Our future success depends on our ability to attract, retain, engage and further develop top talent.
As of December 31, 2024, we had 44 pending and registered trademark filings worldwide, some of which may provide trademark protection in multiple countries. We also rely, in part, upon unpatented trade secrets, know-how and continuing technological innovation, and may in the future rely upon licensing opportunities, to develop and maintain our competitive position.
As of December 31, 2025, we had 77 pending and registered trademark filings worldwide, some of which may provide trademark protection in multiple countries. We also rely, in part, upon unpatented trade secrets, know-how and continuing technological innovation, and may in the future rely upon licensing opportunities, to develop and maintain our competitive position.
The prostate sits underneath the bladder and surrounds the top part of the urethra, which carries urine from the bladder. 8 Table of Contents The prostate is approximately the size of a walnut in men younger than 30 years old; as men age, the prostate grows larger.
The prostate sits underneath the bladder and surrounds the top part of the urethra, which carries urine from the bladder. The prostate is approximately the size of a walnut in men younger than 30 years old; as men age, the prostate grows larger.
Furthermore, minimal intraoperative visualization, which is generally limited to a cystoscope, provides limited visibility of the prostate and makes it difficult for the surgeon to see and preserve critical parts of the prostate during tissue resection.
Furthermore, minimal intraoperative visualization, which is generally limited to a cystoscope, provides limited visibility of the prostate and makes it difficult for the surgeon to see and preserve 10 Table of Contents critical parts of the prostate during tissue resection.
The HTA Regulation aims to boost cooperation among EU Member States in assessing health technologies and providing the basis for cooperation at EU level for joint clinical assessments in these areas. The HTA Regulation entered into force on January 11, 2022 and started to apply from January 12, 2025.
The HTA Regulation aims to boost cooperation among EU Member States in assessing health technologies and providing the basis for cooperation at EU level for joint clinical assessments in these areas. The HTA Regulation entered into force on January 15 Table of Contents 11, 2022 and started to apply from January 12, 2025.
California Regulation 22 Table of Contents The State of California requires that we obtain a license to manufacture medical devices. In accordance with the State of California regulations, our license to manufacture is renewed annually with any updated manufacturing information.
California Regulation The State of California requires that we obtain a license to manufacture medical devices. In accordance with the State of California regulations, our license to manufacture is renewed annually with any updated manufacturing information.
The SEC maintains a website that contains the materials we file with the SEC at www.sec.gov. 27 Table of Contents
The SEC maintains a website that contains the materials we file with the SEC at www.sec.gov. 25 Table of Contents
This assessment must be based on clinical data, which can be obtained from (1) clinical studies conducted on the devices being 23 Table of Contents assessed, (2) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or (3) both clinical studies and scientific literature.
This assessment must be based on clinical data, which can be obtained from (1) clinical studies conducted on the devices being assessed, (2) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or (3) both clinical studies and scientific literature.
We have developed a significant and growing body of clinical evidence, which includes nine clinical studies and over 150 peer-reviewed publications, supporting the benefits and clinical advantages of Aquablation therapy. As of December 31, 2024, we had an install base of 647 AquaBeam Robotic Systems and HYDROS Robotic Systems globally, including 505 in the United States.
We have developed a significant and growing body of clinical evidence, which includes nine clinical studies and over 150 peer-reviewed publications, supporting the benefits and clinical advantages of Aquablation therapy. As of December 31, 2025, we had an install base of 912 AquaBeam Robotic Systems and HYDROS Robotic Systems globally, including 718 in the United States.
We estimate that approximately 50% of BPH patients who are on drug therapy as well as 50% who have failed drug therapy are under the care of a urologist, equating to approximately 3.9 million men.
We estimate that approximately 50% of BPH patients who are on drug therapy as well as 50% who have failed drug therapy are under the care of a urologist, equating to approximately 4.0 million men.
The MDR and its associated guidance documents and harmonized standards govern, among other things, device design and development, preclinical and clinical requirements, premarket conformity assessment and post-market surveillance, vigilance, and market surveillance.
The MDR and its associated guidance documents and harmonized standards 20 Table of Contents govern, among other things, device design and development, preclinical and clinical requirements, premarket conformity assessment and post-market surveillance, vigilance, and market surveillance.
We believe that the primary basis on which we compete include: • improved outcomes for patients; • product safety, efficacy, reliability and durability; • quality and volume of clinical data; • effective marketing to and education of patients, physicians and hospitals; • company, product and brand recognition; • sales force experience and access; • product support and service; • technological innovation, product enhancements and speed of innovation; • pricing and revenue strategies; • effectiveness of reimbursement teams and strategies • regulatory status and speed to market; and • dedicated clinical representatives.
Non-surgical treatments for BPH are primarily pharmaceuticals. 16 Table of Contents We believe that the primary basis on which we compete include: • improved outcomes for patients; • product safety, efficacy, reliability and durability; • quality and volume of clinical data; • effective marketing to and education of patients, physicians and hospitals; • company, product and brand recognition; • sales force experience and access; • product support and service; • technological innovation, product enhancements and speed of innovation; • pricing and revenue strategies; • effectiveness of reimbursement teams and strategies • regulatory status and speed to market; and • dedicated clinical representatives.
There is a co-primary endpoint based on morbidity evaluated at the six-month follow-up. A key secondary endpoint is to measure the rate of Grade Group progression in the Aquablation therapy arm, which will be evaluated at the twelve-month follow-up. The study is planned to enroll up to 280 patients at up to 50 centers and follow them for 10 years.
A key secondary endpoint is to measure the rate of Grade Group progression in the Aquablation therapy arm, which will be evaluated at the twelve-month follow-up. The study is planned to enroll up to 280 patients at up to 50 centers and follow them for 10 years.
Reimbursement Outside of the United States Outside of the United States, reimbursement levels vary significantly by country, and within some countries by region, as well as by payor type. Reimbursement is obtained from a variety of sources, including government sponsors, hospital budgets or private health insurance plans, or combinations thereof.
Outside of the United States, reimbursement levels vary significantly by country, and within some countries by region, as well as by payor type. Reimbursement is obtained from a variety of sources, including government sponsors, hospital budgets or private health insurance plans, or combinations thereof. Obtaining reimbursement is a key part of our market development strategy outside of the United States.
Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA determines that the device is substantially equivalent to a predicate device, it will grant 510(k) clearance to commercially market the device.
The FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA determines that the device is substantially equivalent to a predicate device, it will grant 510(k) clearance to commercially market the device.
Despite being used for almost a century, this procedure is still the most frequently performed resective surgery and is considered the historical standard of care for the surgical treatment of BPH for prostates less than 80 ml. • Photoselective Vaporization of the Prostate, or PVP.
TURP is a resective procedure which uses electrocautery to cut and remove prostate tissue. Despite being used for almost a century, this procedure is still the most frequently performed resective surgery and is considered the historical standard of care for the surgical treatment of BPH for prostates less than 80 ml. • Photoselective Vaporization of the Prostate, or PVP.
Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available therapies (so called health technology assessments) in order to obtain reimbursement.
In the EU, pricing and reimbursement schemes vary widely from country to country. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available therapies (so called health technology assessments) in order to obtain reimbursement.
Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs by limiting coverage and the amount of reimbursement for particular products. In addition, no uniform policy of coverage and reimbursement for procedures exists among third-party payors. Therefore, coverage and reimbursement for procedures can differ significantly from payor to payor.
Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs by limiting coverage and the amount of reimbursement for particular 14 Table of Contents products. In addition, no uniform policy of coverage and reimbursement for procedures exists among third-party payors.
The results of the OPEN WATER study were first published in Journal of Clinical Medicine in 2020. The study has concluded with one-year data. Cancer Therapy • PRCT001 . The PRCT001 study is a global, prospective, post-market, multi-center study of Aquablation therapy in patients with BPH and localized prostate cancer. The study is designed to assess safety in this population.
There was no OPC established for this study. The results of the OPEN WATER study were first published in Journal of Clinical Medicine in 2020. The study has concluded with one-year data. Cancer Therapy • PRCT001 . The PRCT001 study is a global, prospective, post-market, multi-center study of Aquablation therapy in patients with BPH and localized prostate cancer.
As of December 31, 2024, our rights to foreign issued patents included 21 granted Chinese patents, 30 granted Japanese patents, seven Brazilian patents, six Indian patents, and 17 granted European patents, of which 12 have been validated in Germany, 10 in Spain, 11 in France, 17 in the United Kingdom, six in Ireland, nine in Italy, one in Switzerland, and three European patents with unitary effect.
As of December 31, 2025, our rights to foreign issued patents included 22 granted Chinese patents, 35 granted Japanese patents, eight granted Brazilian patents, six granted Indian patents, and 19 granted European patents, of which 13 have been validated in Germany, 10 in Spain, 11 in France, 19 in the United Kingdom, seven in Ireland, 10 in Italy, one in Switzerland, and three European patents with unitary effect.
Obtaining coverage and reimbursement can be a time-consuming process that could require supporting scientific, clinical and cost-effectiveness data. 14 Table of Contents Payors continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and procedures.
Therefore, coverage and reimbursement for procedures can differ significantly from payor to payor. Obtaining coverage and reimbursement can be a time-consuming process that could require supporting scientific, clinical and cost-effectiveness data. Payors continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and procedures.
We also believe we will compete with non-resective and non-surgical treatments. The non-resective 16 Table of Contents treatments include, among others, UroLift marketed by Teleflex Incorporated and Rezum marketed by Boston Scientific Corporation. Non-surgical treatments for BPH are primarily pharmaceuticals.
We also believe we will compete with non-resective and non-surgical treatments. The non-resective treatments include, among others, UroLift marketed by Teleflex Incorporated and Rezum marketed by Boston Scientific Corporation.
As of December 31, 2024, our rights to foreign patent applications include 18 pending European applications, 17 pending Chinese applications, 14 pending Japanese applications, two pending Brazilian applications, one pending Indian application and three pending Hong Kong applications.
As of December 31, 2025, our rights to foreign patent applications include 20 pending European applications, 22 pending Chinese applications, 15 pending Japanese applications, one pending Brazilian application, one pending Indian application and three pending Hong Kong applications.
Regardless of the degree of risk presented by the medical device, clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board, or IRB, for each clinical site. The IRB is responsible for the initial and continuing review of the IDE, and may impose additional requirements for the conduct of the study.
Regardless of the degree of risk presented by the medical device, clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board, or IRB, for each clinical site.
In the WATER and WATER II studies, surgical retreatment rates were only 5.2% at five years 5 Table of Contents and 3.0% at five years, respectively. In the OPEN WATER study, there were no surgical retreatments at one year.
In the WATER and WATER II studies, surgical retreatment rates were only 5.2% at five years and 3.0% at five years, respectively. In the OPEN WATER study, there were no surgical retreatments at one year. The retreatment rates in the WATER and WATER II studies compare favorably to surgical retreatment rates observed for alternative treatments for BPH.
The retreatment rates in the WATER and WATER II studies compare favorably to surgical retreatment rates observed for alternative treatments for BPH. One study published in the BJU International Journal reported on 52,748 men undergoing TURP or photoselective vaporation of the prostate or PVP, with an approximated three-year freedom from surgical retreatment of 92% and 89%, respectively.
One study published in the BJU International Journal reported on 52,748 men undergoing TURP or photoselective vaporization of the prostate or PVP, with an approximated three-year freedom from surgical retreatment of 92% and 89%, respectively.
In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. 24 Table of Contents The majority of states, as well as many of the non-U.S. jurisdictions where we operate, also have anti-kickback laws which establish similar prohibitions and, in some cases, may apply more broadly to items or services covered by any third-party payor, including commercial insurers and self-pay patients.
The majority of states, as well as many of the non-U.S. jurisdictions where we operate, also have anti-kickback laws which establish similar prohibitions and, in some cases, may apply more broadly to items or services covered by any third-party payor, including commercial insurers and self-pay patients.
The OPEN WATER study was a prospective, multicenter, all-comer study conducted in a commercial setting spanning patients with prostate sizes between 20 ml and 150 ml. Due to the size of this study, it was sufficiently powered to statistical conclusions with the data. There was no OPC established for this study.
Notably, the rate of stress incontinence was zero percent among Aquablation patients. • OPEN WATER. The OPEN WATER study was a prospective, multicenter, all-comer study conducted in a commercial setting spanning patients with prostate sizes between 20 ml and 150 ml. Due to the size of this study, it was sufficiently powered to draw conclusions from the data.
While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device.
Manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device. The FDA’s permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance.
We generated revenue of $224.5 million and $136.2 million for the years ended December 31, 2024 and 2023, respectively, and incurred a net loss of $91.4 million and $105.9 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $546.0 million.
We generated revenue of $308.1 million and $224.5 million for the years ended December 31, 2025 and 2024, respectively, and incurred a net loss of $95.6 million and $91.4 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $641.6 million.
The ACA contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which have impacted existing government healthcare programs and will 25 Table of Contents result in the development of new programs.
The ACA contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which have impacted existing government healthcare programs and will result in the development of new programs. Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.
As of December 31, 2024, we had rights to 60 issued U.S. patents, expiring between 2028 and 2042, 133 issued foreign patents, expiring between 2028 and 2041, 38 pending U.S. patent applications, six pending PCT applications, and 55 foreign patent applications.
As of December 31, 2025, we had rights to 73 issued U.S. patents, expiring between 2028 and 2042, 157 issued foreign patents, expiring between 2028 and 2041, 40 pending U.S. patent applications, three pending PCT applications, and 66 pending foreign patent applications.
Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.
The approval process varies from country to country and the time may be longer or shorter than that required for FDA clearance or approval. 18 Table of Contents FDA Regulations Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.
Resective Procedures Resective prostate procedures generally provide more significant and longer-lasting symptom relief than non-resective procedures, but may result in a higher incidence of irreversible complications, including urinary incontinence, erectile dysfunction and ejaculatory dysfunction. 9 Table of Contents Resective surgeries may be performed endoscopically, allowing the procedure to be completed through a tubular instrument, or via an open or a laparoscopic procedure, called a simple prostatectomy.
Resective Procedures 9 Table of Contents Resective prostate procedures generally provide more significant and longer-lasting symptom relief than non-resective procedures, but may result in a higher incidence of irreversible complications, including urinary incontinence, erectile dysfunction and ejaculatory dysfunction.
The study has completed enrollment across three centers in the United States. • WATER IV PCa. WATER IV PCa is a global multicenter, prospective, randomized clinical study designed to assess the safety and efficacy of Aquablation therapy compared to radical prostatectomy in men with Grade Group 1 to 3 localized prostate cancer.
WATER IV PCa is a global multicenter, prospective, randomized clinical study designed to assess the safety and efficacy of Aquablation therapy compared to radical prostatectomy in men with Grade Group 1 to 3 localized prostate cancer. There is a co-primary endpoint based on morbidity evaluated at the six-month follow-up.
Our direct sales organization actively engages with providers to drive awareness, adoption and utilization of our Aquablation therapy.
We also intend to leverage our relationships with urologists to drive utilization of Aquablation therapy beyond the current surgical market. Our direct sales organization actively engages with providers to drive awareness, adoption and utilization of our Aquablation therapy.
We estimate that approximately 50% of BPH patients who are on drug therapy as well as 50% who have failed drug therapy are under the 6 Table of Contents care of a urologist, equating to approximately 3.9 million men.
We target approximately 2,700 hospitals that perform resective BPH procedures in the United States. We estimate that approximately 50% of BPH patients who are on drug therapy as well as 50% who have failed drug therapy are under the care of a urologist, equating to approximately 4.0 million men.
The results of the WATER II study served as the basis for increased reimbursement and coverage and were first published in BJU International in 2019. The study has concluded with five-year data. • OPEN WATER.
The results of the WATER II study served as the basis for increased reimbursement and coverage and were first published in BJU International in 2019. The study has concluded with five-year data. • WATER III. The WATER III study is an international, prospective, multicenter study comparing Aquablation therapy to laser enucleation in prostate sizes between 80 ml to 180 ml.
Regulation of Medical Devices Outside the United States In order for us to market our products in countries outside the United States, we must obtain regulatory approvals and comply with extensive product and quality system regulations in other countries.
Foreign Regulations In order for us to market our products in countries outside the United States, we must obtain regulatory approvals and comply with extensive product and quality system regulations in other countries. These regulations, such as requirements for approvals or clearance and the time required for regulatory review, will vary from country to country.
We are committed to continuing to build upon our foundation of clinical evidence, which we believe will help drive increased awareness and adoption of our products. To further strengthen this base, we plan to support new clinical studies aimed at advancing our commercial, regulatory, and reimbursement efforts.
We are committed to continuing to build upon our foundation of clinical evidence, which we believe will help drive increased awareness and adoption of our products.
Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
The outcome of the HTA will often influence the pricing and reimbursement status granted to the product under review by the competent authorities of individual EU Member States. On January 31, 2018, the 15 Table of Contents European Commission adopted a proposal for a regulation on HTA, or HTA Regulation.
The outcome of the HTA will often influence the pricing and reimbursement status granted to the product under review by the competent authorities of individual EU Member States. On December 13, 2021, the EU Regulation No 2021/2282 on HTA, amending Directive 2011/24/EU, or HTA Regulation, was adopted.
On the other hand, surgical intervention is proven to provide effective and durable symptom relief compared to drug therapy, but the use of surgery is significantly under-penetrated.
While drug therapy is typically a first line treatment option, limited efficacy and negative side effects contribute to low compliance and high failure rates and drop outs. On the other hand, surgical intervention is proven to provide effective and durable symptom relief compared to drug therapy, but the use of surgery is significantly under-penetrated.
The samples size of the study is 125 and is planned to be conducted in the United States, Hong Kong, Lebanon, Canada, and Portugal. • PRCT002 . The PRCT002 study is an investigational device exemption, or IDE (G230155), prospective, post-market, multi-center study of Aquablation therapy in patients with localized prostate cancer.
The PRCT002 study is an investigational device exemption, or IDE (G230155), prospective, post-market, multi-center study of Aquablation therapy in patients with localized prostate cancer. The study has completed enrollment across three centers in the United States. • WATER IV PCa.
Currently, in the United States, we primarily sell our products to hospitals, or end customers, and to a lesser extent, distribution partners, ambulatory surgery centers and leasing companies. The end customers in turn bill various third-party payors, such as commercial payors and government agencies, for reimbursement for the procedures using our products.
The end customers in turn bill various third-party payors, such as commercial payors and government agencies, for reimbursement for the procedures using our products.
We have subsequently received FDA clearance of a 510(k) pre-market notification for modifications to our robotic systems where we used the initially authorized device as the predicate device for our more recent 510(k) clearance. 510(k) Clearance Process 19 Table of Contents Our HYDROS Robotic System is a class II device that was cleared under the 510(k) premarket notification process.
Our currently marketed robotic systems are Class II devices, which were initially granted marketing authorization pursuant to a de novo classification. We have subsequently received FDA clearance of a 510(k) premarket notification for modifications to our robotic systems where we used the initially authorized device as the predicate device for our more recent 510(k) clearance.
Our total addressable patient population in the United States includes approximately 8.2 million patients, comprising of 6.7 million receiving drug therapy, 1.1 million who have tried but failed drug therapy and 400,000 undergoing surgical intervention each year.
Our total addressable patient population in the United States includes approximately 8.0 million patients, which include men receiving drug therapy, those who have recently failed medication and those who undergo surgical intervention. In calendar 2024, approximately 400,000 men underwent surgical intervention.
Our total addressable patient population in the United States includes approximately 8.2 million patients, comprised of 6.7 million receiving drug therapy, 1.1 million who have tried but failed drug therapy and 400,000 undergoing surgical intervention each year.
Our total addressable patient population in the United States includes approximately 8.0 million patients, which include men receiving drug therapy, those who have recently failed medication and those who undergo surgical intervention. In calendar 2024, approximately 400,000 men underwent surgical intervention.
Outside of the United States, we have ongoing efforts in key markets to expand established coverage and improve payment which we believe will expand patient access to Aquablation therapy.
Outside of the United States, we have ongoing efforts in key markets to expand established coverage and improve payment which we believe will expand patient access to Aquablation therapy. 6 Table of Contents We primarily sell our products through our direct sales organization in the United States, which targets urologists across the United States, who we believe represent the primary physician specialty managing the care of patients with BPH.
We target the 2,700 hospitals where we estimate approximately 290,000 respective BPH surgeries of the 400,000 BPH surgeries are performed annually. Within each hospital, we are focused on targeting urologists who perform medium-to-high volumes of resective procedures and converting their resective cases to Aquablation therapy.
We are first 13 Table of Contents focused on driving adoption of Aquablation therapy among urologists who perform hospital-based BPH resective surgery. We target the 2,700 hospitals where we estimate approximately 300,000 resective BPH surgeries of the approximate 400,000 BPH surgeries are performed annually.
License Agreement with AquaBeam LLC In 2008, we assigned to AquaBeam LLC, or AquaBeam, certain provisional patent applications, or AquaBeam Patent Applications, which have since issued as patents, and any future patent applications that claim priority to the AquaBeam Patent Applications, or AquaBeam Patents.
See the section titled “Risk Factors—Risks Related to Our Intellectual Property” for additional information regarding these and other risks related to our intellectual property portfolio and their potential effect on us. 17 Table of Contents License Agreement with AquaBeam LLC In 2008, we assigned to AquaBeam LLC, or AquaBeam, certain provisional patent applications, or AquaBeam Patent Applications, which have since issued as patents, and any future patent applications that claim priority to the AquaBeam Patent Applications, or AquaBeam Patents.
Endoscopic procedures access the prostate through the urethra, so no incisions are made in the patient’s abdomen. Common alternative endoscopic resective procedures include: • Transurethral Resection of the Prostate. TURP is a resective procedure which uses electrocautery to cut and remove prostate tissue.
Resective surgeries may be performed endoscopically, allowing the procedure to be completed through a tubular instrument, or via an open or a laparoscopic procedure, called a simple prostatectomy. Endoscopic procedures access the prostate through the urethra, so no incisions are made in the patient’s abdomen. Common alternative endoscopic resective procedures include: • Transurethral Resection of the Prostate.
Our failure to maintain compliance with the QSR or other applicable regulatory requirements could result in the shut-down of, or restrictions on, our manufacturing operations and the recall or seizure of our products.
A company’s facilities, records, and manufacturing processes are subject to periodic scheduled or unscheduled inspections by the FDA. Failure to maintain compliance with applicable QMSR requirements could result in the shutdown of, or restrictions on, manufacturing operations and the recall or seizure of marketed products.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTo the extent that our employees, consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions could have a material adverse effect on our competitive position, business, financial condition, results of operations and prospects. 64 Table of Contents We may be subject to claims that we or our employees have misappropriated the intellectual property of a third party, including trade secrets or know-how, or are in breach of non-competition or non-solicitation agreements with our competitors and third parties may claim an ownership interest in intellectual property we regard as our own.
Biggest changeTo the extent that our employees, consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions could have a material adverse effect on our competitive position, business, financial condition, results of operations and prospects.
We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S. and foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain additional patent protection in the future.
We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S. and foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain additional patent protection in the future.
We may experience delays in our ongoing clinical trials for a number of reasons, which could adversely affect the costs, timing or successful completion of our clinical trials, including related to the following: • we may be required to submit an investigational device exemption application, or IDE, to the FDA, which must become effective prior to commencing certain human clinical trials of medical devices, and the FDA may reject our IDE and notify us that we may not begin clinical trials; • regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; • regulators and/or an Institutional Review Board, or IRB, or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; • we may not reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; • our third-party contractors, including those manufacturing products or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we might have to suspend or terminate clinical trials for various reasons, including a finding that the subjects are being exposed to unacceptable health risks; • we may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB and/or regulatory authorities for re-examination; • regulators, IRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • the cost of clinical trials may be greater than we anticipate; • clinical sites may not adhere to the clinical protocol or may drop out of a clinical trial; • we may be unable to recruit a sufficient number of clinical trial sites; • regulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and 56 Table of Contents commercial supplies, the supply of devices or other materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • approval policies or regulations of the FDA or equivalent foreign regulatory authorities may change in a manner rendering our clinical data insufficient for approval; and • our current or future products may have undesirable side effects or other unexpected characteristics.
We may experience delays in our ongoing clinical trials for a number of reasons, which could adversely affect the costs, timing or successful completion of our clinical trials, including related to the following: • we may be required to submit an investigational device exemption application, or IDE, to the FDA, which must become effective prior to commencing certain human clinical trials of medical devices, and the FDA may reject our IDE and notify us that we may not begin clinical trials; • regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; • regulators and/or an Institutional Review Board, or IRB, or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; • we may not reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; 54 Table of Contents • our third-party contractors, including those manufacturing products or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we might have to suspend or terminate clinical trials for various reasons, including a finding that the subjects are being exposed to unacceptable health risks; • we may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB and/or regulatory authorities for re-examination; • regulators, IRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • the cost of clinical trials may be greater than we anticipate; • clinical sites may not adhere to the clinical protocol or may drop out of a clinical trial; • we may be unable to recruit a sufficient number of clinical trial sites; • regulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • approval policies or regulations of the FDA or equivalent foreign regulatory authorities may change in a manner rendering our clinical data insufficient for approval; and • our current or future products may have undesirable side effects or other unexpected characteristics.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the level of surgeon and hospital adoption and demand for our products; 28 Table of Contents • changes in reimbursement rates by government or commercial payors; • positive or negative coverage in the media or clinical publications, or changes in public, patient and/or physician perception, of our products or competing products and treatments, including our brand reputation; • the degree of competition in our industry and any change in the competitive landscape, including consolidation among competitors or future partners; • any safety, reliability or effectiveness concerns that arise regarding our products or other procedures in which our products are used; • unanticipated pricing pressures in connection with the sale of our products and downward pressure on healthcare costs in general; • the effectiveness of our sales and marketing efforts, including our ability to deploy a sufficient number of qualified sales representatives to sell and market our products; • the timing of customer orders or medical procedures using our products and the number of available selling days in any quarterly period, which can be impacted by holidays, the mix of products sold and the geographic mix of where products are sold; • unanticipated delays in product development or product launches; • the cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our agreements with third-party suppliers; • our ability to raise additional capital on acceptable terms, or at all, if needed to support the commercialization of our products; • our ability to achieve and maintain compliance with all regulatory requirements applicable to our products and services; • our ability to obtain, maintain and enforce our intellectual property rights; • our ability and our third-party suppliers’ ability to supply the components of our products in a timely manner, in accordance with our specifications, and in compliance with applicable regulatory requirements; and • introduction of new products, technologies or alternative treatments that compete with our products.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the level of surgeon and hospital adoption and demand for our products; 26 Table of Contents • changes in reimbursement rates by government or commercial payors; • positive or negative coverage in the media or clinical publications, or changes in public, patient and/or physician perception, of our products or competing products and treatments, including our brand reputation; • the degree of competition in our industry and any change in the competitive landscape, including consolidation among competitors or future partners; • any safety, reliability or effectiveness concerns that arise regarding our products or other procedures in which our products are used; • unanticipated pricing pressures in connection with the sale of our products and downward pressure on healthcare costs in general; • the effectiveness of our sales and marketing efforts, including our ability to deploy a sufficient number of qualified sales representatives to sell and market our products; • the timing of customer orders or medical procedures using our products and the number of available selling days in any quarterly period, which can be impacted by holidays, the mix of products sold and the geographic mix of where products are sold; • unanticipated delays in product development or product launches; • the cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our agreements with third-party suppliers; • our ability to raise additional capital on acceptable terms, or at all, if needed to support the commercialization of our products; • our ability to achieve and maintain compliance with all regulatory requirements applicable to our products and services; • our ability to obtain, maintain and enforce our intellectual property rights; • our ability and our third-party suppliers’ ability to supply the components of our products in a timely manner, in accordance with our specifications, and in compliance with applicable regulatory requirements; and • introduction of new products, technologies or alternative treatments that compete with our products.
Even if we can prove the effectiveness of treatment utilizing our products through clinical trials, there may not be broad adoption and use of our products and surgeons may elect not to use our products for any number of other reasons, including: • lack of experience with our products and concerns that we are relatively new to market; • perceived liability risk generally associated with the use of new products and treatment options; • lack or perceived lack of sufficient clinical evidence, including long-term data, supporting clinical benefits or the cost-effectiveness of our products over existing treatment alternatives; • the failure of key opinion leaders to provide recommendations regarding our products, or to assure surgeons, patients and healthcare payors of the benefits of our products as an attractive alternative to other treatment options; • perception that our products are unproven; • long-standing relationships with companies and distributors that sell other products or treatment options; • concerns over the capital investment required to purchase our robotic systems and perform procedures utilizing our products; • lack of availability of adequate third-party payor coverage or reimbursement; 31 Table of Contents • pricing pressure, including from group purchasing organizations, or GPOs, and integrated delivery networks, or IDNs, seeking to obtain discounts on our robotic systems based on the collective buying power of the GPO and IDN members; • competitive response and negative selling efforts from providers of alternative treatments; • limitations or warnings contained in the labeling cleared or approved by the FDA or other authorities.
Even if we can prove the effectiveness of treatment utilizing our products through clinical trials, there may not be broad adoption and use of our products and surgeons may elect not to use our products for any number of other reasons, including: • lack of experience with our products and concerns that we are relatively new to market; • perceived liability risk generally associated with the use of new products and treatment options; • lack or perceived lack of sufficient clinical evidence, including long-term data, supporting clinical benefits or the cost-effectiveness of our products over existing treatment alternatives; • the failure of key opinion leaders to provide recommendations regarding our products, or to assure surgeons, patients and healthcare payors of the benefits of our products as an attractive alternative to other treatment options; • perception that our products are unproven; • long-standing relationships with companies and distributors that sell other products or treatment options; • concerns over the capital investment required to purchase our robotic systems and perform procedures utilizing our products; • lack of availability of adequate third-party payor coverage or reimbursement; 29 Table of Contents • pricing pressure, including from group purchasing organizations, or GPOs, and integrated delivery networks, or IDNs, seeking to obtain discounts on our robotic systems based on the collective buying power of the GPO and IDN members; • competitive response and negative selling efforts from providers of alternative treatments; • limitations or warnings contained in the labeling cleared or approved by the FDA or other authorities.
There are also criminal penalties, including imprisonment and criminal fines, for making or presenting a false or fictitious or fraudulent claim or statement to the federal government; • criminal healthcare statutes that were added by HIPAA, and its implementing regulations, which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs; similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate them in order to have committed a violation; • the Physician Payments Sunshine Act, or Sunshine Act, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS information related to certain payments made in the preceding calendar year and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse-midwives) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • foreign and state laws and regulations, including state payment reporting, anti-kickback and false claims laws, that may apply to items or services reimbursed by any third-party payor, including private insurers; foreign and state laws that require medical device companies to comply with the medical device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government and other national governments, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and foreign and state laws and regulations that require drug and device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
There are also criminal penalties, including imprisonment and criminal fines, for making or presenting a false or fictitious or fraudulent claim or statement to the federal government; • criminal healthcare statutes that were added by HIPAA, and its implementing regulations, which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs; similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate them in order to have committed a violation; • the Physician Payments Sunshine Act, or Sunshine Act, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS information related to certain payments made in the preceding calendar year and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse-midwives) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • foreign and state laws and regulations, including state payment reporting, anti-kickback and false claims laws, that may apply to items or services reimbursed by any third-party payor, including private insurers; foreign and state laws that require medical device companies to comply with the medical device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government and other national governments, or otherwise restrict payments that may be made to healthcare providers and other potential referral 46 Table of Contents sources; and foreign and state laws and regulations that require drug and device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Our future funding requirements will depend on many factors, including: • the degree and rate of market acceptance of our current and future products; • the scope and timing of investment in our sales force and expansion of our commercial organization; • the scope, rate of progress and cost of our current or future clinical trials and registries; • the cost of our research and development activities; • the cost and timing of additional regulatory clearances or approvals; • the costs associated with any product recall that may occur; • the costs associated with the manufacturing of our products at increased production levels; • the costs of attaining, defending and enforcing our intellectual property rights; • whether we acquire third-party companies, products or technologies; • the terms and timing of any other collaborative, licensing and other arrangements that we may establish; • the emergence of competing technologies or other adverse market developments; and • the rate at which we expand internationally. 30 Table of Contents We may seek to raise additional capital through equity offerings or debt financings and such additional financing may not be available to us on acceptable terms, or at all.
Our future funding requirements will depend on many factors, including: • the degree and rate of market acceptance of our current and future products; • the scope and timing of investment in our sales force and expansion of our commercial organization; • the scope, rate of progress and cost of our current or future clinical trials and registries; • the cost of our research and development activities; • the cost and timing of additional regulatory clearances or approvals; • the costs associated with any product recall that may occur; • the costs associated with the manufacturing of our products at increased production levels; • the costs of attaining, defending and enforcing our intellectual property rights; • whether we acquire third-party companies, products or technologies; • the terms and timing of any other collaborative, licensing and other arrangements that we may establish; • the emergence of competing technologies or other adverse market developments; and • the rate at which we expand internationally. 28 Table of Contents We may seek to raise additional capital through equity offerings or debt financings and such additional financing may not be available to us on acceptable terms, or at all.
The market price of our common stock may be highly volatile and fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • variations between our actual operating results, or those of companies that are perceived to be similar to us, and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company or our failure to meet these estimates or the expectations of investors; • additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • hedging activities by market participants; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; 71 Table of Contents • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • changes in third-party payor reimbursement policies; • an inability to obtain additional funding; • general economic, industry and market conditions, including price and volume fluctuations in the overall stock market; • lawsuits threatened or filed against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from political conditions, election cycles, war or incidents of terrorism, or responses to these events, many of which are outside of our control.
The market price of our common stock may be highly volatile and fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • variations between our actual operating results, or those of companies that are perceived to be similar to us, and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company or our failure to meet these estimates or the expectations of investors; • additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • hedging activities by market participants; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • changes in third-party payor reimbursement policies; • an inability to obtain additional funding; • general economic, industry and market conditions, including price and volume fluctuations in the overall stock market; • lawsuits threatened or filed against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from political conditions, election cycles, war or incidents of terrorism, or responses to these events, many of which are outside of our control.
Our continued success depends on our ability to: • improve outcomes for patients; • maintain product safety, efficacy, reliability and durability; • expand the quality and volume of our clinical data; • effectively market to and educate patients, physicians and hospitals; • maintain company, product and brand recognition; • broaden our sales force experience and access; • maintain product support and service; • maintain and widen our technology lead over competitors by continuing to innovate and deliver new product enhancements on a continuous basis; • develop successful pricing and revenue strategies; • continue to maintain and expand reimbursement coverage for procedures using our products; • achieve desired regulatory status and speed to market; and • maintain dedicated clinical representatives. 34 Table of Contents One of the major hurdles to adoption of our products will be overcoming established treatment patterns, which will require education of surgeons and supportive clinical data.
Our continued success depends on our ability to: • improve outcomes for patients; • maintain product safety, efficacy, reliability and durability; • expand the quality and volume of our clinical data; • effectively market to and educate patients, physicians and hospitals; • maintain company, product and brand recognition; • broaden our sales force experience and access; • maintain product support and service; • maintain and widen our technology lead over competitors by continuing to innovate and deliver new product enhancements on a continuous basis; • develop successful pricing and revenue strategies; • continue to maintain and expand reimbursement coverage for procedures using our products; • achieve desired regulatory status and speed to market; and • maintain dedicated clinical representatives. 32 Table of Contents One of the major hurdles to adoption of our products will be overcoming established treatment patterns, which will require education of surgeons and supportive clinical data.
See the section of this Annual Report on Form 10-K titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness.” 29 Table of Contents The loan and security agreement contains customary representations and warranties and affirmative covenants and also contains certain restrictive covenants, including, among others, limitations on: the incurrence of additional debt, liens or other encumbrances on property, acquisitions and investments, loans and guarantees, mergers, consolidations, liquidations and dissolutions, asset sales, dividends and other payments in respect of our capital stock, prepayments of certain debt, transactions with affiliates and changes to our type of business, management of the business, control of the business or business locations.
See the section of this Annual Report on Form 10-K titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness.” 27 Table of Contents The loan and security agreement contains customary representations and warranties and affirmative covenants and also contains certain restrictive covenants, including, among others, limitations on: the incurrence of additional debt, liens or other encumbrances on property, acquisitions and investments, loans and guarantees, mergers, consolidations, liquidations and dissolutions, asset sales, dividends and other payments in respect of our capital stock, prepayments of certain debt, transactions with affiliates and changes to our type of business, management of the business, control of the business or business locations.
For example: • others may be able to make products that are similar to our robotic systems and our other current or future products or utilize similar technology but that are not covered by the claims of our patents or that incorporate certain technology in our robotic systems and our other current and future products that is in the public domain; • we, or our future licensors or collaborators, might not have been the first to make the inventions covered by the applicable issued patent or pending patent application that we own now or may own or license in the future; • we, or our future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our current or future pending patent applications will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and • we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
For example: • others may be able to make products that are similar to our robotic systems and our other current or future products or utilize similar technology but that are not covered by the claims of our patents or that incorporate certain technology in our robotic systems and our other current and future products that is in the public domain; • we, or our future licensors or collaborators, might not have been the first to make the inventions covered by the applicable issued patent or pending patent application that we own now or may own or license in the future; • we, or our future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our current or future pending patent applications will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and 67 Table of Contents • we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
Our dependence on third-parties subjects us to a number of risks that could impact our ability to manufacture our products and harm our business, including: • interruption of supply or sterilization resulting from modifications to, or discontinuation of, a third party’s operations; • delays in product shipments resulting from uncorrected defects, reliability issues or a third party’s failure to produce components or complete sterilizations that consistently meet our quality specifications; • price fluctuations due to a lack of long-term supply arrangements with our third parties for key components or sterilization requirements; • inability to obtain adequate supply or services in a timely manner or on commercially reasonable terms; • difficulty identifying and qualifying alternative third parties for the supply of components or for sterilization of our products in a timely manner; • inability of third parties to comply with applicable provisions of the FDA’s Quality System Regulations, or QSR, or other applicable laws or regulations enforced by the FDA, state and global regulatory authorities; • inability to ensure the quality of products manufactured or sterilization conducted by third parties; • production delays related to the evaluation and testing of products and services from alternative third parties and corresponding regulatory qualifications; • trends towards consolidation within the medical device manufacturing supplier industry; and • delays in delivery by our suppliers and service providers.
Our dependence on third-parties subjects us to a number of risks that could impact our ability to manufacture our products and harm our business, including: • interruption of supply or sterilization resulting from modifications to, or discontinuation of, a third party’s operations; • delays in product shipments resulting from uncorrected defects, reliability issues or a third party’s failure to produce components or complete sterilizations that consistently meet our quality specifications; • price fluctuations due to a lack of long-term supply arrangements with our third parties for key components or sterilization requirements; • inability to obtain adequate supply or services in a timely manner or on commercially reasonable terms; • difficulty identifying and qualifying alternative third parties for the supply of components or for sterilization of our products in a timely manner; • inability of third parties to comply with applicable provisions of the FDA’s Quality Management System Regulations, or QMSR, or other applicable laws or regulations enforced by the FDA, state and global regulatory authorities; • inability to ensure the quality of products manufactured or sterilization conducted by third parties; • production delays related to the evaluation and testing of products and services from alternative third parties and corresponding regulatory qualifications; • trends towards consolidation within the medical device manufacturing supplier industry; and • delays in delivery by our suppliers and service providers.
Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.
Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QMSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.
It is also possible that other federal, state or foreign enforcement authorities might take action, including, but not limited to, through a whistleblower action under the 54 Table of Contents federal civil False Claims Act, or FCA, if they consider our business activities constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil or administrative penalties, treble damages, fines, disgorgement, exclusion from participation in government healthcare programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations.
It is also possible that other federal, state or foreign enforcement authorities might take action, including, but not limited to, through a whistleblower action under the federal civil False Claims Act, or FCA, if they consider our business activities constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil or administrative penalties, treble damages, fines, disgorgement, exclusion from participation in government healthcare programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations.
Although we require our third-party suppliers and providers to supply us with components and services that meet our specifications and other applicable legal and regulatory requirements in our agreements and contracts, and we perform incoming inspection, testing or other acceptance activities to ensure the components meet our requirements, there is a risk 36 Table of Contents that these third parties will not always act consistent with our best interests, and may not always supply components or provide services that meet our requirements or in a timely manner.
Although we require our third-party suppliers and providers to supply us with components and services that meet our specifications and other applicable legal and regulatory requirements in our agreements and contracts, and we perform incoming inspection, testing or other acceptance activities to ensure the components meet our requirements, there is a risk 34 Table of Contents that these third parties will not always act consistent with our best interests, and may not always supply components or provide services that meet our requirements or in a timely manner.
Our ability to accurately forecast demand and utilization could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our products or for products of our competitors, our failure to accurately forecast customer acceptance of new products, unanticipated changes in general market conditions or regulatory matters and weakening of 37 Table of Contents economic conditions or consumer confidence in future economic conditions.
Our ability to accurately forecast demand and utilization could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our products or for products of our competitors, our failure to accurately forecast customer acceptance of new products, unanticipated changes in general market conditions or regulatory matters and weakening of 35 Table of Contents economic conditions or consumer confidence in future economic conditions.
Our failure to comply with applicable regulatory requirements could result in enforcement action by any such agency, which may include any of the following sanctions: • adverse publicity, warning letters, untitled letters, it has come to our attention letters, fines, injunctions, consent decrees and civil penalties; • repair, replacement, refunds, recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • denial of our requests for regulatory clearance or approval of new products, new intended uses or modifications to existing products; • withdrawal or suspension of regulatory clearance or approval that have already been granted; or • criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by any such agency, which may include any of the following sanctions: • adverse publicity, warning letters, untitled letters, it has come to our attention letters, fines, injunctions, consent decrees and civil penalties; 47 Table of Contents • repair, replacement, refunds, recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • denial of our requests for regulatory clearance or approval of new products, new intended uses or modifications to existing products; • withdrawal or suspension of regulatory clearance or approval that have already been granted; or • criminal prosecution.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QSR, facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QMSR, facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Our international business operations are subject to a variety of risks, including: • difficulties in staffing and managing foreign and geographically dispersed operations, to the extent we establish non-U.S. operations; • differing and multiple payor reimbursement regimes, government payors or patient self-pay systems; • difficulties in determining and creating the proper sales pathway in new, international markets; 42 Table of Contents • to the extent we utilize third-party distributors in foreign markets, our ability to effectively screen, recruit and retain qualified third-party distributors and training them in our technology and product offering and business; • compliance with various U.S. and international laws, including export control laws and the U.S.
Our international business operations are subject to a variety of risks, including: • difficulties in staffing and managing foreign and geographically dispersed operations, to the extent we establish non-U.S. operations; • differing and multiple payor reimbursement regimes, government payors or patient self-pay systems; • difficulties in determining and creating the proper sales pathway in new, international markets; • to the extent we utilize third-party distributors in foreign markets, our ability to effectively screen, recruit and retain qualified third-party distributors and training them in our technology and product offering and business; • compliance with various U.S. and international laws, including export control laws and the U.S.
In addition, although some future products may share product features, components, sub-assemblies and materials with our existing products, the manufacture of these products may require modification of our current production processes or unique production processes, the hiring of specialized employees, the identification of new suppliers for specific components, sub-assemblies and materials or the 35 Table of Contents development of new manufacturing technologies.
In addition, although some future products may share product features, components, sub-assemblies and materials with our existing products, the manufacture of these products may require modification of our current production processes or unique production processes, the hiring of specialized employees, the identification of new suppliers for specific components, sub-assemblies and materials or the 33 Table of Contents development of new manufacturing technologies.
As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, 39 Table of Contents and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QSR, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices.
The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QMSR, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our products; • harm to our reputation; • initiation of investigations by regulators, which could result in enforcement action against us or our contract manufacturers; • costs to defend the related litigation; • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • loss of revenue; and • exhaustion of any available insurance and our capital resources.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our products; • harm to our reputation; • initiation of investigations by regulators, which could result in enforcement action against us or our contract manufacturers; 39 Table of Contents • costs to defend the related litigation; • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • loss of revenue; and • exhaustion of any available insurance and our capital resources.
Screening, recruiting and retaining qualified third-party distributors and training them in our technology and product offering and business practices requires significant time and resources. To develop and expand our distribution, we may be required to scale and improve our processes and procedures that support 32 Table of Contents our distributors.
Screening, recruiting and retaining qualified third-party distributors and training them in our technology and product offering and business practices requires significant time and resources. To develop and expand our distribution, we may be required to scale and improve our processes and procedures that support 30 Table of Contents our distributors.
Furthermore, we are required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors.
Furthermore, we are required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QMSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors.
For example, the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 38 Table of Contents 2009, and regulations promulgated thereunder, or collectively, HIPAA, imposes obligations on “covered entities,” including certain health care providers, health plans, and health care clearinghouses, and their respective “business associates” that create, receive, maintain or transmit protected health information for or on behalf of a covered entity.
For example, the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations promulgated thereunder, or collectively, HIPAA, imposes obligations on “covered entities,” including certain health care providers, health plans, and health care clearinghouses, and their respective “business associates” that create, receive, maintain or transmit protected health information for or on behalf of a covered entity.
Third-party coverage and reimbursement for procedures using our products or any of our products in development for which we may receive regulatory clearance or approval may not be available or adequate 33 Table of Contents in either the United States or international markets.
Third-party coverage and reimbursement for procedures using our products or any of our products in development for which we may receive regulatory clearance or approval may not be available or adequate 31 Table of Contents in either the United States or international markets.
We cannot predict the number, timing or size of future joint ventures or acquisitions, or the effect that any such transactions might have on our operating results. 45 Table of Contents Risks Related to Governmental Regulation Changes to the reimbursement rates for our products and procedures utilizing our products, as well as measures to reduce healthcare costs may adversely impact our business.
We cannot predict the number, timing or size of future joint ventures or acquisitions, or the effect that any such transactions might have on our operating results. Risks Related to Governmental Regulation Changes to the reimbursement rates for our products and procedures utilizing our products, as well as measures to reduce healthcare costs may adversely impact our business.
We may experience increased costs in order to execute upon our sustainability goals and measure achievement of those goals, which could have an adverse impact on our business and financial condition. In addition, this emphasis on environmental, social and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements.
We may experience increased costs in order to execute upon our sustainability goals and measure achievement of those goals, which could have an adverse impact on our business and financial condition. 74 Table of Contents In addition, this emphasis on environmental, social and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements.
If we are unable to obtain, maintain and enforce our issued patent, trademarks and other intellectual property rights related to our products, services or technology, or if the scope of the issued patents, trademarks or other intellectual property right protection is insufficient, our competitors could develop, manufacture and commercialize products, services 60 Table of Contents or technology similar or superior to ours, and our competitive position may be adversely affected.
If we are unable to obtain, maintain and enforce our issued patent, trademarks and other intellectual property rights related to our products, services or technology, or if the scope of the issued patents, trademarks or other intellectual property right protection is insufficient, our competitors could develop, manufacture and commercialize products, services or technology similar or superior to ours, and our competitive position may be adversely affected.
Proceedings to enforce our patent and trademark rights in foreign jurisdictions could result in substantial costs and divert our attention from other aspects of our business, could put our patents and trademarks or applications in those 70 Table of Contents jurisdictions, as well as elsewhere, at risk of being invalidated or interpreted narrowly, and could provoke third parties to assert claims against us.
Proceedings to enforce our patent and trademark rights in foreign jurisdictions could result in substantial costs and divert our attention from other aspects of our business, could put our patents and trademarks or applications in those jurisdictions, as well as elsewhere, at risk of being invalidated or interpreted narrowly, and could provoke third parties to assert claims against us.
Any provision of our amended and restated certificate of incorporation currently in effect or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
Any provision of our amended and restated certificate of incorporation currently in effect or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for 71 Table of Contents their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
We rely on a combination of contractual provisions, confidentiality procedures and patent, trade secret, copyright and trademark laws to protect our proprietary technology, products, services, brands, trade secrets, know-how and data and prevent others from duplicating our robotic systems or its disposable components, and our other current and future products, services and technology.
We rely on a combination of contractual provisions, confidentiality procedures and patent, trade secret, copyright and trademark laws to protect our proprietary technology, products, services, brands, trade secrets, know-how and data and 57 Table of Contents prevent others from duplicating our robotic systems or its disposable components, and our other current and future products, services and technology.
The loss of exclusivity or the narrowing of our patent claims could limit our ability to stop others from using or commercializing similar or identical technology and products. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to 63 Table of Contents management and other employees.
The loss of exclusivity or the narrowing of our patent claims could limit our ability to stop others from using or commercializing similar or identical technology and products. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, and intermediaries from corruptly authorizing, promising, providing, or offering, directly or indirectly, improper payments or anything else of value to government officials and persons in the private sector for the purpose of obtaining or retaining business.
Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, and intermediaries from corruptly authorizing, promising, providing, or offering, directly or indirectly, improper payments or anything else of value to government officials and persons in the private sector for the purpose of obtaining or retaining 42 Table of Contents business.
Product recalls may divert management attention and financial resources, expose us to product liability or other claims, harm our reputation with customers and adversely impact our business, financial condition and results of operations. We may be subject to regulatory or enforcement actions if we engage in improper marketing or promotion of our products.
Product recalls may divert management attention 52 Table of Contents and financial resources, expose us to product liability or other claims, harm our reputation with customers and adversely impact our business, financial condition and results of operations. We may be subject to regulatory or enforcement actions if we engage in improper marketing or promotion of our products.
A court may decide that a patent or other intellectual property right of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims or other intellectual property narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents or other intellectual property do not cover the technology in question.
A court may decide that a patent or other intellectual property right of 60 Table of Contents ours is invalid or unenforceable, in whole or in part, construe the patent’s claims or other intellectual property narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents or other intellectual property do not cover the technology in question.
Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. In addition, any protection afforded by foreign patents may be more limited than that provided under U.S. patent and 65 Table of Contents intellectual property laws.
Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. In addition, any protection afforded by foreign patents may be more limited than that provided under U.S. patent and intellectual property laws.
Third parties may also raise claims challenging the validity or enforceability of our patents before administrative bodies globally, even outside the context of litigation, including through re-examination, post-grant review, IPR, interference proceedings, derivation 69 Table of Contents proceedings and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings).
Third parties may also raise claims challenging the validity or enforceability of our patents before administrative bodies globally, even outside the context of litigation, including through re-examination, post-grant review, IPR, interference proceedings, derivation proceedings and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings).
Any person or entity purchasing or otherwise acquiring any interest in our shares of capital stock shall be deemed to have notice of and consented to this exclusive forum provision, but 73 Table of Contents will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest in our shares of capital stock shall be deemed to have notice of and consented to this exclusive forum provision, but will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
In addition, violations of these laws, or allegations of such violations, would significantly disrupt our business and have a material adverse effect on our business, financial condition and results of operations. 44 Table of Contents Our ability to utilize our net operating loss carryforwards and research and development credit may be limited.
In addition, violations of these laws, or allegations of such violations, would significantly disrupt our business and have a material adverse effect on our business, financial condition and results of operations. Our ability to utilize our net operating loss carryforwards and research and development credit may be limited.
Our pending and future patent applications may not result in the issuance of patents or, if issued, may not issue in a form that will be advantageous to us. The coverage claimed in a patent application can be significantly reduced before the patent is issued. The scope of a patent may also be reinterpreted after issuance.
Our pending and future patent applications may not result in the issuance of patents or, if issued, may not issue in a form that will be advantageous to us. The coverage claimed in a 58 Table of Contents patent application can be significantly reduced before the patent is issued. The scope of a patent may also be reinterpreted after issuance.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property rights, and other owners may be able to license their rights to other third parties, including our competitors.
If we fail in defending any such claims, in addition to paying 61 Table of Contents monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property rights, and other owners may be able to license their rights to other third parties, including our competitors.
Our amended and restated certificate of incorporation and bylaws currently in effect contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change of control of our 72 Table of Contents company or changes in our management that the stockholders of our company may deem advantageous.
Our amended and restated certificate of incorporation and bylaws currently in effect contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change of control of our company or changes in our management that the stockholders of our company may deem advantageous.
If the FDA disagrees with our determination and requires us to submit new 510(k) notifications or PMA applications for modifications to our previously cleared products for 50 Table of Contents which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.
If the FDA disagrees with our determination and requires us to submit new 510(k) notifications or PMA applications for modifications to our previously cleared products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.
A third party that perceive us to be a competitor may be unwilling to assign or license its intellectual property rights to us. In addition, the licensing or acquisition of third-party intellectual property rights is a competitive area, and other companies may also 62 Table of Contents pursue similar strategies to license or acquire such third party’s intellectual property rights.
A third party that perceive us to be a competitor may be unwilling to assign or license its intellectual property rights to us. In addition, the licensing or acquisition of third-party intellectual property rights is a competitive area, and other companies may also pursue similar strategies to license or acquire such third party’s intellectual property rights.
We may also need to hire additional employees or engage outside consultants to comply with these requirements, which will increase our costs and expenses. 74 Table of Contents In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming.
We may also need to hire additional employees or engage outside consultants to comply with these requirements, which will increase our costs and expenses. In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming.
Furthermore, the monetary cost of such litigation and the diversion of the attention of our management could outweigh any benefit we receive as a result of the proceedings. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our business.
Furthermore, the monetary cost of such litigation and the diversion of the attention of our management could outweigh any benefit we receive as a result of the proceedings. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material 66 Table of Contents adverse effect on our business.
As of December 31, 2024, we had $52.0 million outstanding in the form of a term loan under our loan and security agreement with Canadian Imperial Bank of Commerce, which was entered into in October 2022 and amended in June 2023.
As of December 31, 2025, we had $52.0 million outstanding in the form of a term loan under our loan and security agreement with Canadian Imperial Bank of Commerce, which was entered into in October 2022 and amended in June 2023 and August 2025.
Additionally, the American Taxpayer Relief Act of 2012, among other things, further 46 Table of Contents reduced Medicare payments to several categories of healthcare providers, including hospitals, and increased the statute of limitations period for the government to recover Medicare overpayments to providers from three to five years.
Additionally, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several categories of healthcare providers, including hospitals, and increased the statute of limitations period for the government to recover Medicare overpayments to providers from three to five years.
Foreign data protection laws, including the General Data Protection Regulation, including as implemented in the United Kingdom, or collectively or GDPR, may also apply to our processing of health-related and other personal data regardless of where the processing in question is carried out.
Foreign data protection laws, including the General Data Protection Regulation, including as implemented in the United Kingdom, or collectively or GDPR, may also apply to our processing of health-related and other personal data 37 Table of Contents regardless of where the processing in question is carried out.
Any termination of collaborations we enter into in the future, or delays in entering into new strategic partnership agreements could delay tour sales and marketing efforts, which would harm our business prospects, financial condition and results of operations.
Any termination of collaborations we enter into in 40 Table of Contents the future, or delays in entering into new strategic partnership agreements could delay tour sales and marketing efforts, which would harm our business prospects, financial condition and results of operations.
The term “remuneration” has been broadly interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of, or a specific intent to violate, the law.
The term “remuneration” has been broadly interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of, or a 45 Table of Contents specific intent to violate, the law.
If we fail to maintain necessary marketing authorizations for our robotic systems, or if approvals or clearances 48 Table of Contents for future products or modifications to existing products are delayed or not issued, it will negatively affect our business, financial condition and results of operations.
If we fail to maintain necessary marketing authorizations for our robotic systems, or if approvals or clearances for future products or modifications to existing products are delayed or not issued, it will negatively affect our business, financial condition and results of operations.
Class II devices are subject to the FDA’s General Controls, 49 Table of Contents and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents.
Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents.
We may also be hindered or prevented from enforcing our rights with respect to a government entity or 61 Table of Contents instrumentality because of the doctrine of sovereign immunity. Our ability to enforce our patent or other intellectual property rights depends on our ability to detect infringement.
We may also be hindered or prevented from enforcing our rights with respect to a government entity or instrumentality because of the doctrine of sovereign immunity. Our ability to enforce our patent or other intellectual property rights depends on our ability to detect infringement.
Moreover, we may be required to expend significant time and resources to redesign our technology, products, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis.
Moreover, we may be required to expend significant time and resources to 69 Table of Contents redesign our technology, products, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis.
Therefore, we may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by such employees, consultants, advisors or third parties, despite the existence generally of these confidentiality restrictions.
Therefore, we may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by such employees, consultants, advisors or third parties, despite the existence generally of these confidentiality 62 Table of Contents restrictions.
Moreover, individuals and groups that are non-practicing entities, commonly referred to as “patent trolls,” purchase patents and other intellectual property assets for the purpose of making claims of 67 Table of Contents infringement in order to extract settlements.
Moreover, individuals and groups that are non-practicing entities, commonly referred to as “patent trolls,” purchase patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements.
It is also quite common that depending on the country, the scope of patent protection may vary for the same product or technology. For example, certain jurisdictions do not allow for patent protection with respect to method of treatment.
It is also quite common that depending on the 68 Table of Contents country, the scope of patent protection may vary for the same product or technology. For example, certain jurisdictions do not allow for patent protection with respect to method of treatment.
In particular, we must perform system and process evaluations, document our controls and perform testing of our key controls over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting.
In particular, we must perform system and process evaluations, document our controls 72 Table of Contents and perform testing of our key controls over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting.
Initiating and completing clinical trials necessary to support any future PMA applications or de novo requests, or to provide additional safety and efficacy data beyond those typically required for a 510(k) clearance, for our possible future 55 Table of Contents product candidates, will be time-consuming and expensive and the outcome uncertain.
Initiating and completing clinical trials necessary to support any future PMA applications or de novo requests, or to provide additional safety and efficacy data beyond those typically required for a 510(k) clearance, for our possible future product candidates, will be time-consuming and expensive and the outcome uncertain.
While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at 40 Table of Contents any time, thereby reducing the predictive accuracy of these underlying factors.
While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.
These risks could be difficult to eliminate or manage, and, if not addressed, could harm our business, financial condition and results of operations. 68 Table of Contents Intellectual property rights do not necessarily address all potential threats.
These risks could be difficult to eliminate or manage, and, if not addressed, could harm our business, financial condition and results of operations. Intellectual property rights do not necessarily address all potential threats.
A loss of key personnel or their work product could hamper or prevent our ability to commercialize our product, which could have an adverse effect on our business, financial condition and results of operations.
A loss of key personnel or their work product could hamper or prevent 63 Table of Contents our ability to commercialize our product, which could have an adverse effect on our business, financial condition and results of operations.
If the FDA grants the de novo classification request, the applicant will receive authorization to market the device. This device type may be used subsequently as a predicate device for future 510(k) submissions. The 510(k), de novo or PMA processes can be expensive, lengthy and unpredictable.
If the FDA grants the de novo classification request, the applicant will receive authorization to market the device. This device type may be used subsequently as a predicate device for future 510(k) submissions. 48 Table of Contents The 510(k), de novo or PMA processes can be expensive, lengthy and unpredictable.
We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights 66 Table of Contents with respect to our products or services, including interference proceedings, post grant review and inter partes review before the USPTO or equivalent foreign regulatory authority.
We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our products or services, including interference proceedings, post grant review and inter partes review before the USPTO or equivalent foreign regulatory authority.
Current and future legislative and regulatory proposals to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement for the procedures associated with the use of our products.
Current and future legislative and regulatory proposals to further reform healthcare or reduce healthcare costs may 44 Table of Contents limit coverage of or lower reimbursement for the procedures associated with the use of our products.
Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our products or result in the failure of the clinical trial.
Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted 55 Table of Contents commercialization of our products or result in the failure of the clinical trial.
If our revenues or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially.
If our revenues or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, 70 Table of Contents the price of our common stock could decline substantially.
The FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found.
The FDA’s authority to require a recall must be based on a finding that there is reasonable 51 Table of Contents probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found.
Although patent, trademark, trade secret, and other intellectual property disputes in the medical device area have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and could include ongoing royalties.
Although patent, trademark, 65 Table of Contents trade secret, and other intellectual property disputes in the medical device area have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and could include ongoing royalties.
The potential inability to obtain sufficient product liability insurance at an 41 Table of Contents acceptable cost to protect against product liability claims could prevent or inhibit the marketing and sale of our products.
The potential inability to obtain sufficient product liability insurance at an acceptable cost to protect against product liability claims could prevent or inhibit the marketing and sale of our products.
We cannot assure you that, upon inspection, such regulatory authorities will determine that any of our future clinical trials complies with the GCP 57 Table of Contents regulations.
We cannot assure you that, upon inspection, such regulatory authorities will determine that any of our future clinical trials complies with the GCP regulations.
In particular, we and our suppliers are required to comply with FDA’s QSR and other regulations enforced outside the United States which cover the manufacture of our products and the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of medical devices.
In particular, we and our suppliers are required to comply with FDA’s QMSR and other regulations enforced outside the United States which cover the manufacture of our products and the methods and documentation of the design, testing, 50 Table of Contents production, control, quality assurance, labeling, packaging, storage and shipping of medical devices.
False Claims Act liability is 47 Table of Contents potentially significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties (adjusted annually for inflation) per false claim or statement for violations.
False Claims Act liability is potentially significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties (adjusted annually for inflation) per false claim or statement for violations.
Regulatory bodies, such as the FDA, enforce the QSR and other regulations through periodic inspections.
Regulatory bodies, such as the FDA, enforce the QMSR and other regulations through periodic inspections.
Impacts to our business may include, but are not limited to, procedures performed, demand for our products, and ability to spend on capital equipment and healthcare in general. A broadening of this conflict, or the initiation of other conflicts globally may heighten these risks.
Impacts to our business may include, but are not limited to, procedures performed, demand for our products, and ability to spend on capital equipment and healthcare in general. A broadening of this conflict, or the initiation of other conflicts globally may heighten these risks. Any such disruption may also amplify the impact of other risks described.
For example, on February 22, 2024, the FDA finalized a rule amending the Quality System Regulation, or QSR, which establishes current good manufacturing practice requirements for medical device manufacturers, to align more closely with the International Organization for Standardization, or ISO, standards. The rule, called the Quality Management System Regulation, or QSMR, becomes effective in February 2026.
For example, on February 22, 2024, the FDA finalized a rule amending the Quality System Regulation, or QSR, which establishes current good manufacturing practice requirements for medical device manufacturers, to align more closely with the International Organization for Standardization, or ISO, standards.
The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • customer notifications for repair, replacement, refunds; • recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for 510(k) clearance or PMA of new products or modified products; • operating restrictions; • withdrawal of 510(k) clearances on PMA approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution. 52 Table of Contents If any of these actions were to occur it would harm our reputation and cause our product sales and profitability to suffer and may prevent us from generating revenue.
The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • customer notifications for repair, replacement, refunds; • recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for 510(k) clearance or PMA of new products or modified products; • operating restrictions; • withdrawal of 510(k) clearances on PMA approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs part of our overall risk management system, we monitor and test our safeguards and train all of our employees on cybersecurity safeguards related to our information technology systems. Personnel at all levels and departments are made 76 Table of Contents aware of our cybersecurity policies through random cybersecurity testing and remedial trainings.
Biggest changeAs part of our overall risk management system, we monitor and test our safeguards and train all of our employees on cybersecurity safeguards related to our information technology systems. Personnel at all levels and departments are made aware of our cybersecurity policies through random cybersecurity testing and remedial trainings.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have established policies and processes for assessing, identifying, and managing material risks from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe principal office lease commenced in July 2022, and will continue for 122 months following thereafter, with two five year options to extend the term of the lease.
Biggest changeItem 2. Properties 75 Table of Contents Our principal office is located at 150 Baytech Drive, San Jose, California, where we lease approximately 158,221 square feet of office space. The principal office lease commenced in July 2022, and will continue for 122 months thereafter, with two five-year options to extend the term of the lease.
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Item 2. Properties Our principal office is located at 150 Baytech Drive, San Jose, California, where we lease approximately 163,221 square feet of office space, inclusive of approximately 5,000 square feet of temporary storage space on a month-to-month lease.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputation harm, and other factors. Item 4. Mine Safety Disclosures None. 77 Table of Contents Part II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputation harm, and other factors. Item 4. Mine Safety Disclosures None. 76 Table of Contents Part II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 77 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 78 Item 6. [Reserved] 79 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 80 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 89 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 76 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 77 Item 6. [Reserved] 78 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 79 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 88 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Common Stock As of February 20, 2025, t here were 212 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Biggest changeHolders of Common Stock As of February 19, 2026, t here were 218 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issue Purchases of Equity Securities Market Information Our common stock has been listed on the Nasdaq Global Market under the symbol “PRCT” since September 14, 2021. Prior to that date, there was no public trading market for our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been listed on the Nasdaq Global Market under the symbol “PRCT” since September 14, 2021. Prior to that date, there was no public trading market for our common stock.
Note that historic stock price performance is not necessarily indicative of future stock price performance. 78 Table of Contents
Note that historic stock price performance is not necessarily indicative of future stock price performance. 77 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Comparison of Years Ended December 31, 2024 and 2023 The following table shows our results of operations for the years ended December 31, 2024 and 2023: Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Revenue $ 224,498 $ 136,191 88,307 65 Cost of sales 87,399 65,142 22,257 34 Gross profit 137,099 71,049 66,050 93 Gross margin 61 % 52 % Operating expenses: Research and development 62,298 48,446 13,852 29 Selling, general and administrative 171,415 131,773 39,642 30 Total operating expenses 233,713 180,219 53,494 30 Loss from operations (96,614) (109,170) 12,556 12 Interest expense (4,184) (3,995) (189) (5) Interest and other income, net 9,385 7,268 2,117 29 Net loss $ (91,413) $ (105,897) 14,484 14 Revenue Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) System sales and rentals $ 90,299 $ 58,920 31,379 53 Hand pieces and other consumables 121,456 69,522 51,934 75 Service 12,743 7,749 4,994 64 Total revenue $ 224,498 $ 136,191 88,307 65 Revenue increased $88.3 million, or 65%, to $224.5 million during the year ended December 31, 2024, compared to $136.2 million during the year ended December 31, 2023.
Biggest changeResults of Operations Comparison of Years Ended December 31, 2025 and 2024 The following table shows our results of operations for the years ended December 31, 2025 and 2024: Year Ended December 31, Change 2025 2024 $ % (in thousands, except percentages) Revenue $ 308,054 $ 224,498 83,556 37 Cost of sales 111,828 87,399 24,429 28 Gross profit 196,226 137,099 59,127 43 Gross margin 64 % 61 % Operating expenses: Research and development 71,277 62,298 8,979 14 Selling, general and administrative 228,808 171,415 57,393 33 Total operating expenses 300,085 233,713 66,372 28 Loss from operations (103,859) (96,614) (7,245) (7) Interest expense (3,586) (4,184) 598 14 Interest and other income, net 12,063 9,753 2,310 24 Loss before income taxes (95,382) (91,045) (4,337) (5) Provision for income taxes 190 368 (178) (48) Net loss $ (95,572) $ (91,413) (4,159) (5) Revenue Year Ended December 31, Change 2025 2024 $ % (in thousands, except percentages) System sales and rentals $ 106,132 $ 90,299 15,833 18 Hand-pieces and other consumables 181,446 121,456 59,990 49 Service 20,476 12,743 7,733 61 Total revenue $ 308,054 $ 224,498 83,556 37 Revenue increased $83.6 million, or 37%, to $308.1 million during the year ended December 31, 2025, compared to $224.5 million during the year ended December 31, 2024.
We determined that certain promises in the multiple-element arrangements, such as installation, training and certain ancillary products, are immaterial, and do not represent separate performance obligations for which transaction price is allocated. We must make significant assumptions regarding the future collectability of amounts receivable from customers to determine whether revenue recognition criteria have been met.
We have determined that certain promises in the multiple-element arrangements, such as installation, training and certain ancillary products, are immaterial, and do not represent separate performance obligations for which transaction price is allocated. We must make significant assumptions regarding the future collectability of amounts receivable from customers to determine whether revenue recognition criteria have been met.
The minimum unrestricted cash covenant requires that we to maintain cash reserve not less than the greater of (i) $20.0 million, (ii) the absolute value of EBITDA losses (if any) for the most recent consecutive four-month period then ended or (iii) the aggregate outstanding principal amount of $52.0 million.
The minimum unrestricted cash covenant requires that we maintain cash reserve not less than the greater of (i) $20.0 million, (ii) the absolute value of EBITDA losses (if any) for the most recent consecutive four-month period then ended or (iii) the aggregate outstanding principal amount of $52.0 million.
Contractual Commitments and Contingencies The information included in Note 12 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference. 86 Table of Contents Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have any off-balance sheet arrangements, such as structured finance, special purpose entities or variable interest entities.
Contractual Commitments and Contingencies The information included in Note 12 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference. 85 Table of Contents Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have any off-balance sheet arrangements, such as structured finance, special purpose entities or variable interest entities.
See Note 8 to our consolidated financial statements included elsewhere in this Annual Report Form 10-K for information concerning certain of the specific assumption we used in applying the Black-Scholes option pricing model to determine the fair value of our stock options granted in the years ended December 31, 2024 and 2023.
See Note 8 to our consolidated financial statements included elsewhere in this Annual Report Form 10-K for information concerning certain of the specific assumption we used in applying the Black-Scholes option pricing model to determine the fair value of our stock options granted in the years ended December 31, 2025 and 2024.
If factors change and 88 Table of Contents we employ different assumptions, stock-based compensation expense may differ significantly from what we have recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.
If factors change and we employ different assumptions, stock-based compensation expense may differ significantly from what we have recorded 87 Table of Contents in the past. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.
The cash used in operations was primarily due to our net loss due to the increase in operating expenses to support our commercialization and development activities.
The cash used in operations was primarily attributable to our net loss due to the increase in operating expenses to support our commercialization and development activities.
We have determined in these type of arrangements the end user is our customer. 87 Table of Contents Intermediary sales - For systems sold to distributors or to leasing companies, revenue is recognized when we transfer control to our intermediary, in accordance with agreed upon shipping terms. We have determined in these type of arrangements the intermediary our customer.
We have determined in these type of arrangements the end user is our customer. 86 Table of Contents Intermediary sales - For systems sold to distributors or to leasing companies, revenue is recognized when we transfer control to our intermediary, in accordance with agreed upon shipping terms. We have determined in these type of arrangements the intermediary is our customer.
A detailed discussion comparing our results of operations for the years ended December 31, 2023 and 2022 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.
A detailed discussion comparing our results of operations for the years ended December 31, 2024 and 2023 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024.
Indebtedness In October 2022, we entered into a loan and security agreement with Canadian Imperial Bank of Commerce. The Agreement provides for a senior secured term loan facility in the aggregate principal amount of $52.0 million, which was borrowed in full.
Indebtedness In October 2022, we entered into a loan and security agreement with Canadian Imperial Bank of Commerce. The agreement provides for a senior secured term loan facility in the aggregate principal amount of $52.0 million (the “Term Loan Facility”), which was borrowed in full.
We expect our increase in revenues in absolute dollars to be larger in the United States. Cost of Sales and Gross Margin Cost of sales consists primarily of manufacturing overhead costs, material costs, warranty and service costs, direct labor, scrap and other direct costs such as shipping costs.
We expect our increase in revenue in absolute dollars to be larger in the United States. Cost of Sales and Gross Margin Cost of sales consists primarily of manufacturing overhead costs, material costs, warranty and service costs, direct labor, scrap and other direct costs such as shipping costs.
Net Cash Provided by Financing Activities During the year ended December 31, 2024, net cash provided by financing activities was $180.1 million, consisting primarily of proceeds from the issuance of common stock of $164.5 million, net o f issuance costs, and proceeds of $11.1 million from the exercise of stock options.
During the year ended December 31, 2024, net cash provided by financing activities was $180.1 million, consisting primarily of proceeds from the issuance of common stock of $164.5 million, net of issuance costs, and proceeds of $11.1 million from the exercise of stock options.
Our future funding requirements will depend on many factors, including: • the degree and rate of market acceptance of our products and Aquablation therapy; • the scope and timing of investment in our sales force and expansion of our commercial organization; • the scope, rate of progress and cost of our current or future clinical trials and registries; • the cost of our research and development activities; • the cost and timing of additional regulatory clearances or approvals; 84 Table of Contents • the costs associated with any product recall that may occur; • the costs associated with the manufacturing of our products at increased production levels; • the costs of attaining, defending and enforcing our intellectual property rights; • whether we acquire third-party companies, products or technologies; • the terms and timing of any other collaborative, licensing and other arrangements that we may establish; • the emergence of competing technologies or other adverse market developments; and • the rate at which we expand internationally.
Our future funding requirements will depend on many factors, including: • the degree and rate of market acceptance of our products and Aquablation therapy; • the scope and timing of investment in our sales force and expansion of our commercial organization; • the scope, rate of progress and cost of our current or future clinical trials and registries; • the cost of our research and development activities; • the cost and timing of additional regulatory clearances or approvals; • the costs associated with any product recall that may occur; • the costs associated with a regulatory or government action or other litigation; 83 Table of Contents • the costs associated with the manufacturing of our products at increased production levels; • the costs of attaining, defending and enforcing our intellectual property rights; • whether we acquire third-party companies, products or technologies; • the terms and timing of any other collaborative, licensing and other arrangements that we may establish; • the emergence of competing technologies or other adverse market developments; and • the rate at which we expand internationally.
Please also see the section titled “Cautionary Note Regarding Forward-Looking Statements.” The following generally compares our results of operations for the years ended December 31, 2024 and 2023.
Please also see the section titled “Cautionary Note Regarding Forward-Looking Statements.” The following generally compares our results of operations for the years ended December 31, 2025 and 2024.
The minimum revenue and growth covenant requires our revenue, for the consecutive twelve-month period as of each measurement date, of not less than $50.0 million and of at least 115% as of the last day of the consecutive twelve-month 85 Table of Contents period of the immediately preceding year.
The minimum revenue and growth covenant requires our revenue, for the consecutive twelve-month period as of each measurement date, of not less than $50.0 million and of at least 115% as of the last day of the consecutive twelve-month period of the immediately preceding year.
We have developed a significant and growing body of clinical evidence, which includes nine clinical studies and over 150 peer-reviewed publications, supporting the benefits and clinical advantages of Aquablation therapy. As of December 31, 2024, we had an install base of 647 AquaBeam Robotic Systems and HYDROS Robotic Systems globally, including 505 in the United States.
We have developed a significant and growing body of clinical evidence, which includes nine clinical studies and over 150 peer-reviewed publications, supporting the benefits and clinical advantages of Aquablation therapy. As of December 31, 2025, we had an install base of 912 AquaBeam Robotic Systems and HYDROS Robotic Systems globally, including 718 in the United States.
Net Cash Used in Investing Activities During the year ended December 31, 2024, net cash used in investing activities was $4.4 million, consisting of purchases of property and equipment. During the year ended December 31, 2023, net cash used in investing activities was $25.2 million, consisting of purchases of property and equipment.
Net Cash Used in Investing Activities During the year ended December 31, 2025, net cash used in investing activities was $9.4 million, consisting of purchases of property and equipment. During the year ended December 31, 2024, net cash used in investing activities was $4.4 million, consisting of purchases of property and equipment.
These factors include: • Grow our install base of robotic systems: As of December 31, 2024, we had an install base of 647 robotic systems globally, including 505 in the United States. In the United States, we are initially focused on driving adoption of Aquablation therapy among urologists that perform hospital-based resective BPH surgery.
These factors include: • Grow our install base of robotic systems: As of December 31, 2025, we had an install base of 912 robotic systems globally, including 718 in the United States. In the United States, we are initially focused on driving adoption of 79 Table of Contents Aquablation therapy among urologists that perform hospital-based resective BPH surgery.
Under the loan and security agreement, if we maintain less than $100.0 million in available cash, then we are required to meet either one of two financial covenants: a minimum unrestricted cash covenant or a minimum revenue and growth covenant.
The loan and security agreement contains certain customary representations and warranties, affirmative and negative covenants, and events of default. Under the loan and security agreement, if we maintain less than $100.0 million in available cash, then we are required to meet either one of two financial covenants: a minimum unrestricted cash covenant or a minimum revenue and growth covenant.
These expenses support ongoing product improvements and the development of additional and next generation technologies. Selling, General and Administrative Expenses SG&A expenses increased $39.6 million, or 30%, to $171.4 million during the year ended December 31, 2024, compared to $131.8 million during the year ended December 31, 2023.
These expenses support ongoing product improvements and the development of additional and next generation technologies. Selling, General and Administrative Expenses SG&A expenses increased $57.4 million, or 33%, to $228.8 million during the year ended December 31, 2025, compared to $171.4 million during the year ended December 31, 2024.
The expansion of our commercialization resulted in increases in inventory, accounts receivable, prepaid expenses and other current assets along with long-term assets, a decrease in accounts payable, partially offset by an increase in accrued compensation, deferred revenue, lease liabilities, and accrued interest expense. Non-cash charges consisted primarily of stock-based compensation, accruals for excess and obsolete inventory and depreciation.
The expansion of our commercialization activities resulted in increases in inventory, accounts receivable, prepaid expenses and other current assets along with long-term assets, accounts payable, accrued compensation, deferred revenue, other accrued liabilities, and accrued interest expense. Non-cash charges consisted primarily of stock-based compensation, bad debt reserves, accruals for excess and obsolete inventory and depreciation.
The increase in SG&A expenses was primarily due to employee-related expenses of our sales and marketing organization and administrative organizations as we expanded our infrastructure to drive and support our growth in revenue. Interest Expense Interest expense of $4.2 million during the year ended December 31, 2024 remained relatively flat compared to fiscal 2023.
The increase in SG&A expenses was primarily due to employee-related expenses of our sales and marketing organization and administrative organizations as we expanded our infrastructure to drive and support our growth in revenue. Interest Expense Interest expense of $3.6 million during the year ended December 31, 2025 decreased $0.6 million or 14% compared to fiscal 2024.
As of December 31, 2024, we had cash and cash equivalents of $333.7 million, an accumulated deficit of $546.0 million, and $52.0 million outstanding on our loan facility. We expect our expenses will increase for the foreseeable future, as we continue to make substantial investments in sales and marketing, operations and research and development.
Liquidity and Capital Resources Overview As of December 31, 2025, we had cash and cash equivalents of $286.5 million, an accumulated deficit of $641.6 million, and $52.0 million outstanding on our loan facility. We expect our expenses will increase for the foreseeable future, as we continue to make substantial investments in sales and marketing, operations and research and development.
Interest and Other Income, Net Interest and other income, net, consists primarily of interest income from our cash and cash equivalents balances, and fair value adjustments from our loan facility derivative liability.
Interest and Other Income (Expense), Net Interest Expense Interest expense consists primarily of interest expense from our long-term debt. Interest and Other Income, Net 81 Table of Contents Interest and other income, net, consists primarily of interest income from our cash and cash equivalents balances, and fair value adjustments from our loan facility derivative liability.
The growth in revenue was primarily attributable to an increase 83 Table of Contents of $31.4 million and $51.9 million in revenues from higher sales volumes of both our robotic systems and our single-use disposable handpieces.
The growth in revenue was primarily attributable to an increase 82 Table of Contents of $15.8 million and $60.0 million in revenues from higher sales volumes of both our robotic systems and our single-use disposable handpieces, respectively.
The assumptions used in determining the fair value of the obligation require significant judgment. Recent Accounting Pronouncements A discussion of recent accounting pronouncements is included in Note 2 to our financial statements contained in this Annual Report on Form 10-K.
Recent Accounting Pronouncements A discussion of recent accounting pronouncements is included in Note 2 to our financial statements contained in this Annual Report on Form 10-K.
Cost of Sales and Gross Margin Cost of sales increased $22.3 million, or 34%, to $87.4 million during the year ended December 31, 2024, compared to $65.1 million during the year ended December 31, 2023. The increase in cost of sales was primarily attributable to the growth in the number of units sold.
Cost of Sales and Gross Margin Cost of sales increased $24.4 million, or 28%, to $111.8 million during the year ended December 31, 2025, compared to $87.4 million during the year ended December 31, 2024. The increase in cost of sales was primarily attributable to the growth in the number of units sold and increase in warranty costs.
SG&A expenses also include commissions, training, travel expenses, promotional activities, conferences, trade shows, professional services fees, audit fees, legal fees, insurance costs and general corporate expenses including allocated facilities-related expenses.
SG&A expenses also include commissions, training, travel expenses, promotional activities, conferences, trade shows, professional services fees, audit fees, legal fees, insurance costs, bad debt expense and general corporate expenses including allocated facilities-related expenses. Post-market clinical study expenses include trial design, site reimbursement, data management and travel expenses.
We expect our R&D expenses to increase in absolute dollars for the foreseeable future as we continue to develop, enhance and commercialize new products and technologies, though it may fluctuate from quarter to quarter.
We expect our R&D expenses to increase in absolute dollars for the foreseeable future as we make strategic investments in R&D, continue to develop and enhance existing products and technologies, though it may fluctuate from quarter to quarter. However, over time, we expect our R&D expenses to decrease as a percentage of revenue.
During the year ended December 31, 2023, net cash provided by financing activities was $167.8 million, consisting primarily of proceeds from the issuance of common stock of $161.7 million, net of issuance costs, and proceeds of $2.5 million from the exercise of stock options.
Net Cash Provided by Financing Activities During the year ended December 31, 2025, net cash provided by financing activities was $11.2 million, consisting primarily of proceeds of $4.8 million from the exercise of stock options and proceeds of $6.4 million from the issuance of common stock under the employee stock purchase plan.
We also plan to leverage our treatment data and software development capabilities to integrate artificial intelligence and machine learning to enable computer-assisted anatomy recognition and improved treatment planning and personalization.
We also plan to leverage our treatment data and software development capabilities to integrate artificial intelligence and machine learning to enable computer-assisted anatomy recognition and improved treatment planning and personalization. Our future growth is dependent on these continuous improvements which require significant resources and investment.
The following table presents revenue by significant geographical locations for the periods indicated: Year Ended December 31, 2024 2023 United States 89 % 91 % Outside the United States 11 % 9 % We expect that both our United States and international revenue will increase in the near term as we continue to expand the install base of our robotic systems and increase the related single-use disposable handpieces sold.
We expect our revenue to increase in absolute dollars for the foreseeable future as we continue to focus on driving adoption of Aquablation therapy, and increased system utilization, though it may fluctuate from quarter to quarter. 80 Table of Contents The following table presents revenue by significant geographical locations for the periods indicated: Year Ended December 31, 2025 2024 United States 88 % 89 % Outside the United States 12 % 11 % We expect that both our United States and international revenue will increase in the near term as we continue to expand the install base of our robotic systems and increase the related single-use disposable handpieces sold.
During the year ended December 31, 2023, net cash used in operating activities was $108.0 million, consisting primarily of a net loss of $105.9 million and an increase in net operating assets of $26.2 million, partially offset by non-cash charges of $24.1 million.
During the year ended December 31, 2024, net cash used in operating activities was $99.2 million, consisting primarily of a net loss of $91.4 million and an increase in net operating assets of $47.3 million, partially offset by non-cash charges of $39.5 million.
Interest and other income, net, increased $2.1 million to $9.4 million during the year ended December 31, 2024 compared to $7.3 million during the year ended December 31, 2023. The increase in interest and other income, net was primarily due to higher interest rates earned on our cash equivalents.
The decrease was primarily due to decreases in interest rates during the year. Interest and other income, net, increased $2.3 million to $12.1 million during the year ended December 31, 2025 compared to $9.8 million during the year ended December 31, 2024.
Gross margin increased to 61% during the year ended December 31, 2024, compared to 52% for the year ended December 31, 2023. The increase in gross margin was primarily attributable to the growth in unit sales, which allowed us to spread the fixed portion of our manufacturing overhead costs over more production units, and decreases in scrap and warranty costs.
The increase in gross margin was primarily attributable to the growth in unit sales, which allowed us to spread the fixed portion of our manufacturing overhead costs over more production units, partially offset by an increase in warranty costs.
While these factors may present significant opportunities for us, they also pose significant risks and challenges that we must address. See the section titled “Risk Factors” for more information.
Factors Affecting Our Performance We believe there are several important factors that have impacted and that we expect will impact our operating performance and results of operations for the foreseeable future. While these factors may present significant opportunities for us, they also pose significant risks and challenges that we must address. See the section titled “Risk Factors” for more information.
Research and Development Expenses R&D expenses increased $13.9 million, or 29%, to $62.3 million during the year ended December 31, 2024, compared to $48.4 million during the year ended December 31, 2023. The increase in R&D expenses was primarily due to employee-related expenses from increased headcount of our R&D organization, as well as increases in third-party product development costs.
Research and Development Expenses R&D expenses increased $9.0 million, or 14%, to $71.3 million during the year ended December 31, 2025, compared to $62.3 million during the year ended December 31, 2024. The increase in R&D expenses was primarily due to employee-related expenses of our R&D organization such as salaries and wages and stock-based compensation.
Revenue Recognition Revenue is derived primarily from the sales of the AquaBeam Robotic Systems and HYDROS Robotic Systems, along with handpieces that are for one-time use during each surgery using our robotic systems. Each of our robotic systems contains both software and non-software components that are delivered together as a single product and generally contain a one-year warranty.
Each of our robotic systems contains both software and non-software components that are delivered together as a single product and generally contain a one-year warranty.
Our future growth is dependent on these continuous improvements which require significant resources and investment. 81 Table of Contents Components of Our Results of Operations Revenue We generate our revenue primarily from the sales and rentals of our robotic systems, sales of our single-use disposable handpieces that are used during each surgery performed with our system, and related accessories.
Components of Our Results of Operations Revenue We generate our revenue primarily from the sales and rentals of our robotic systems, sales of our single-use disposable handpieces that are used during each surgery performed with our system, and related accessories. Additionally, we also derive revenue from service and repair and extended service contracts with our existing customers.
Cash Flows The following table summarizes our cash flows for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ (99,213) $ (108,003) $ (80,382) Investing activities (4,409) (25,206) (2,653) Financing activities 180,125 167,795 3,612 Net increase (decrease) in cash, cash equivalents and restricted cash $ 76,503 $ 34,586 $ (79,423) Net Cash Used in Operating Activities During the year ended December 31, 2024, net cash used in operating activities was $99.2 million, consisting primarily of a net loss of $91.4 million and an increase in net operating assets of $47.3 million, partially offset by non-cash charges of $39.5 million.
If we maintain at least $100.0 million in available cash, then we are not required to meet such financial covenants. 84 Table of Contents Cash Flows The following table summarizes our cash flows for the years ended December 31, 2025, 2024, and 2023: Year Ended December 31, 2025 2024 2023 (in thousands) Net cash provided by (used in): Operating activities $ (48,985) $ (99,213) $ (108,003) Investing activities (9,356) (4,409) (25,206) Financing activities 11,193 180,125 167,795 Effect of exchange rates on cash, cash equivalents and restricted cash (74) — — Net increase (decrease) in cash, cash equivalents and restricted cash $ (47,222) $ 76,503 $ 34,586 Net Cash Used in Operating Activities During the year ended December 31, 2025, net cash used in operating activities was $49.0 million, consisting primarily of a net loss of $95.6 million and an increase in net operating assets of $7.8 million, partially offset by non-cash charges of $54.4 million.
Since there has been limited public market for our common stock and limited company specific historical volatility, we have determined the share price volatility for options granted based on an analysis of the volatility of a peer group of publicly traded companies. In evaluating similarity, we consider factors such as industry, stage of life cycle and size. Risk-Free Interest Rate.
Since there has been limited company-specific historical volatility, our expected stock price volatility assumptions were determined using a blended volatility, by examining the historical volatilities for industry peers and the volatility of the Company’s stock following our initial public offering. In evaluating similar peers, we consider factors such as industry, stage of life cycle and size. Risk-Free Interest Rate.
However, we expect our R&D expenses as a percentage of revenue to vary over time depending on the level and timing of initiating new product development efforts. Selling, General and Administrative Selling, general and administrative, or SG&A, expenses include compensation for personnel, including stock-based compensation, related to selling, marketing, clinical affairs, professional education, finance, information technology, and human resource functions.
Selling, General and Administrative Selling, general and administrative, or SG&A, expenses consist primarily of compensation for personnel, including stock-based compensation, related to selling, marketing, clinical affairs, professional education, finance, information technology, and human resource functions.
As a result of our strong KOL network and our compelling clinical evidence, Aquablation therapy has been added to clinical guidelines of various professional associations, including the American Urological Association. In the United States, we sell our products to hospitals. We target approximately 2,700 hospitals that perform resective BPH procedures in the United States.
As a result of our strong KOL network and our compelling clinical evidence, Aquablation therapy has been added to clinical guidelines of various professional associations, including the American Urological Association. We manufacture the robotic systems, the single-use disposable handpiece, integrated scope and other accessories at our facility in San Jose, California.
We manufacture the robotic systems, the single-use disposable handpiece, integrated scope and other accessories at our facility in San Jose, California. This includes supporting the supply chain distribution and logistics of the various components. Components, sub-assemblies and services required to manufacture our products are purchased from numerous global suppliers.
This includes supporting the supply chain distribution and logistics of the various components. Components, sub-assemblies and services required to manufacture our products are purchased from numerous global suppliers. Each robotic system is shipped to our customers with a third-party manufactured ultrasound system and probe.
We utilize a well-known third-party logistics provider located in the United States and the Netherlands to ship our products to our customers globally. 80 Table of Contents We generated revenue of $224.5 million and $136.2 million, for the years ended December 31, 2024 and 2023, respectively, and incurred a net loss of $91.4 million and $105.9 million for the years ended December 31, 2024 and 2023, respectively.
We utilize a well-known third-party logistics provider located in the United States and the Netherlands to ship our products to our customers globally.
Proceeds from the term loan facility were used to repay and terminate our previous loan facility, transaction fees, and related expenses. The term loan facility is scheduled to mature on October 6, 2027, the fifth anniversary of the Closing Date (the “Maturity Date”).
The Term Loan Facility is scheduled to mature on October 6, 2027, the fifth anniversary of the closing date, or the Maturity Date. We have the option to prepay the Term Loan Facility without any prepayment charge or fee.
However, over time, we expect our SG&A expenses to decrease as a percentage of revenue. Interest and Other Income (Expense), Net Interest Expense Interest expense consists primarily of interest expense from our long-term debt.
We expect our SG&A expenses to increase in absolute dollars for the foreseeable future as we expand our commercial infrastructure in order for us to execute on our long-term growth plan, though it may fluctuate from quarter to quarter. However, over time, we expect our SG&A expenses to decrease as a percentage of revenue.
Removed
Over time, we expect to gradually expand our focus to also include mid- and low-volume hospitals. These customers in turn bill various third-party payors, such as commercial payors and government agencies, for treatment payment of each patient.
Added
We generated revenue of $308.1 million and $224.5 million, for the years ended December 31, 2025 and 2024, respectively, and incurred a net loss of $95.6 million and $91.4 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $641.6 million.
Removed
Effective in 2021, all local Medicare Administrative Contractors, or MACs, which represent 100% of eligible Medicare patients, issued final positive local coverage determinations to provide Medicare beneficiaries with access to Aquablation therapy in all 50 states. We also have favorable coverage decisions from many large commercial payors.
Added
Provision for Income Taxes The provision for income taxes consists primarily of foreign income taxes, as the Company does not have U.S. federal or state taxable income for the periods presented.
Removed
We plan to leverage these successes in our active discussions with all commercial payors to establish additional positive national and regional coverage policies. Outside of the United States, we have ongoing efforts in key markets to expand established coverage and improve payment which we believe will expand patient access to Aquablation therapy.
Added
As we expand the scale of our international business activities, any changes in the United States and foreign taxation of such activities may increase our overall provision for income taxes in the future. We have a valuation allowance for our United States deferred tax assets, including federal and state non-operating loss carryforwards.
Removed
Each robotic system is shipped to our customers with a third-party manufactured ultrasound system and probe.
Added
We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized by way of expected future taxable income in the United States.
Removed
As of December 31, 2024, we had an accumulated deficit of $546.0 million. Factors Affecting Our Performance We believe there are several important factors that have impacted and that we expect will impact our operating performance and results of operations for the foreseeable future.
Added
Gross margin increased to 64% during the year ended December 31, 2025, compared to 61% for the year ended December 31, 2024.
Removed
Additionally, we also derive revenue from service and repair and extended service contracts with our existing customers. We expect our revenue to increase in absolute dollars for the foreseeable future as we continue to focus on driving adoption of Aquablation therapy, and increased system utilization, though it may fluctuate from quarter to quarter.
Added
The increase in interest and other income, net was primarily due to an increase in average cash balances during the year, partially offset by decreases in interest rates. Provision for Income Taxes Provision for income taxes was immaterial for all periods presented.
Removed
We expect our SG&A expenses to increase in absolute dollars for the foreseeable future as we expand our commercial infrastructure and incur additional fees associated with operating as a public company, including legal, accounting, insurance, compliance with the rules and regulations of the SEC and those of 82 Table of Contents any stock exchange on which our securities are traded, investor relations, and other administrative and professional services expenses, though it may fluctuate from quarter to quarter.
Added
In August 2025, we entered into a second amendment to the loan and security agreement (the “Second Amendment”), which, among other things, modified the repayment terms such that the entire principal amount outstanding is now due on the Maturity Date, replacing the prior repayment schedule of interest-only payments followed by monthly principal amortization payments.
Removed
Loss on loan extinguishment Loss on loan extinguishment was a result of our acquisition price of our new debt exceeded the carrying amount of our existing debt during the fiscal year ended December 31, 2022.
Added
After giving effect to the Second Amendment, we are obligated to maintain in collateral accounts held at the lender (a) if our cash and cash equivalents is less than $50.0 million, 100% of our cash and cash equivalents; or (b) if our cash and cash equivalents is greater than or equal to $50.0 million, the greater of (i) $50.0 million or (ii) 50% of our cash and cash equivalents, with amounts exceeding $50.0 million permitted to be held outside of the lender in collateral accounts managed by the lender.
Removed
Liquidity and Capital Resources Overview We completed a follow-on offering of common stock in October 2024, which raised $164.5 million in proceeds to us, net of issuance costs. Previously, our primary sources of capital have been from our initial public offering, private placements of redeemable convertible preferred securities and debt financing agreements.
Added
Revenue Recognition Revenue is derived primarily from the sales of the AquaBeam Robotic Systems and HYDROS Robotic Systems, along with handpieces that are for one-time use during each surgery using our robotic systems. Included in the term “sales”, we include sales-type leases accounted for in accordance with ASC 842.
Removed
Moreover, we expect to incur additional expenses as a result of operating as a public company, including legal, accounting, insurance, compliance with the rules and regulations of the SEC and those of any stock exchange on which our securities are traded, investor relations, and other administrative and professional services expenses.
Removed
The loan and security agreement provides for interest-only payments on the term loan facility for the first thirty-six months following the Closing Date (the “Initial Interest-Only Period”).
Removed
The Initial Interest-Only Period will be extended to an additional twelve months if we achieve either (i) $200.0 million or greater in revenue in any twelve-month period or (ii) $0 or greater in EBITDA in any six-month period.
Removed
Thereafter, amortization payments on the Term Loan Facility will be payable monthly until the Maturity Date in monthly installments equal to 20% of the then outstanding principal amount of the Term Loan Facility divided by 12 plus any accrued and unpaid interest. We have the option to prepay the Term Loan Facility without any prepayment charge or fee.
Removed
We achieved the twelve-month revenue target as of December 31, 2024.
Removed
We are obligated to maintain in deposit accounts held at the lender equal to at least the lesser of (i) $100.0 million or (ii) all of our non-operating cash. The loan and security agreement contains certain customary representations and warranties, affirmative and negative covenants, and events of default.
Removed
If we maintain at least $100.0 million in available cash, then it is not required to meet such financial covenants.
Removed
Loan Facility Derivative Liability We have determined that our obligation to pay success fees to a lender upon a successful liquidation event or achieving a revenue target represents freestanding financial instruments. The instrument is classified as a current liability in the consolidated balance sheets and is subject to remeasurement at each consolidated balance sheet date.
Removed
Any change in fair value is recognized through other income (expense) in the consolidated statements of operations and comprehensive loss. We adjust the carrying values of the loan facility derivative liability for changes in fair value and will continue to do so until the earlier of cash payment or expiration.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFuture fluctuations in the value of the U.S. Dollar may affect the price competitiveness of our products outside the United States. For direct sales outside the United States, we sell in both U.S. Dollars and local currencies, which could expose us to additional foreign currency risks, including changes in currency exchange rates.
Biggest changeForeign Currency Risk A portion of our net sales and expenses are denominated in foreign currencies, most notably the British Pound. Future fluctuations in the value of the U.S. Dollar may affect the price competitiveness of our products outside the United States. For direct sales outside the United States, we sell in both U.S.
Effects of Inflation Inflation generally affects us by increasing our cost of labor and research and development contract costs. We do not believe that inflation had a material effect on our financial statements included elsewhere in this Annual Report on Form 10-K. 89 Table of Contents
Effects of Inflation Inflation generally affects us by increasing our cost of labor and research and development contract costs. We do not believe that inflation had a material effect on our financial statements included elsewhere in this Annual Report on Form 10-K. 88 Table of Contents
We have reviewed the financial statements of these institutions and believe it has sufficient assets and liquidity to conduct its operations in the ordinary course of business with little or no credit risk to us. Our accounts receivable primarily relate to revenue from the sale or rental of our products.
We have reviewed the financial statements of these institutions and believe they have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us. Our accounts receivable primarily relate to revenue from the sale or rental of our products.
Item 7A. Quantitative and Qualitative Disclosures Interest Rate Risk Cash and cash equivalents of $333.7 million as of December 31, 2024, consisted of securities carried at quoted market prices with an original maturity of three months or less and therefore, there is minimal risk associated with fluctuating interest rates.
Item 7A. Quantitative and Qualitative Disclosures Interest Rate Risk Cash and cash equivalents of $286.5 million as of December 31, 2025, consisted of securities carried at quoted market prices with an original maturity of three months or less and therefore, there is minimal risk associated with fluctuating interest rates.
No customers accounted for greater than 10% of accounts receivable at December 31, 2024. We believe that credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms and diversity of our customer base. Foreign Currency Risk A portion of our net sales and expenses are denominated in foreign currencies, most notably the Euro.
No customers accounted for greater than 10% of accounts receivable at December 31, 2025. We believe that credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms and diversity of our customer base.
Our operating expenses in countries outside the United States, are payable in foreign currencies and therefore expose us to currency risk.
Dollars and local currencies, which could expose us to additional foreign currency risks, including changes in currency exchange rates. Our operating expenses in countries outside the United States, are payable in foreign currencies and therefore expose us to currency risk.

Other PRCT 10-K year-over-year comparisons