PRCT

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included elsewhere in this report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in the section titled “Risk Factors” and elsewhere in this report. Please also see the section titled “Cautionary Note Regarding Forward-Looking Statements.” Overview We are a surgical robotics company focused on advancing patient care by developing transformative solutions in urology. We develop, manufacture and sell the AquaBeam Robotic System and HYDROS Robotic System, which are advanced, image-guided, surgical robotic systems for use in minimally invasive urologic surgery, with an initial focus on treating benign prostatic hyperplasia, or BPH. BPH is the most common prostate disease and impacts approximately 40 million men in the United States. Each of our robotic systems employs a single-use disposable handpiece to deliver our proprietary Aquablation therapy, which combines real-time, multi-dimensional imaging, personalized treatment planning, automated robotics and heat-free waterjet ablation for targeted and rapid removal of prostate tissue. We designed our robotic systems to enable consistent and reproducible BPH surgery outcomes. We believe that Aquablation therapy represents a paradigm shift in the surgical treatment of BPH by addressing compromises associated with alternative surgical interventions. We designed Aquablation therapy to deliver effective, safe and durable outcomes for males suffering from lower urinary tract symptoms, or LUTS, due to BPH that is independent of prostate size and shape, and delivers resection independent of surgeon experience. 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 June 30, 2026, we had an install base of 1,036 AquaBeam Robotic Systems and HYDROS Robotic Systems globally, including 816 in the United States. Our U.S. pivotal trial, the WATER study, is the only FDA pivotal study randomized against transurethral resection of prostate, or TURP, which is the historical standard of care for the surgical treatment of BPH. In this study, Aquablation therapy demonstrated superior safety and non-inferior efficacy compared to TURP across prostate sizes between 30 ml and 80 ml, and superior efficacy in a subset of patients with prostates larger than 50 ml. We have established strong relationships with key opinion leaders, or KOLs, within the urology community and collaborated with key urological societies in global markets. This support has been instrumental in facilitating broader acceptance and adoption of Aquablation therapy. 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. 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. We generated revenue of $177.6 million and incurred a net loss of $58.5 million for the six months ended June 30, 2026, compared to revenue of $148.3 million and a net loss of $44.3 million for the six months ended June 30, 2025. As of June 30, 2026, we had cash and cash equivalents of $227.9 million and an accumulated deficit of $700.1 million. 19 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. These factors include: •Grow our install base of robotic systems: As of June 30, 2026, we had an install base of 1,036 robotic systems globally, including 816 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. We target approximately 2,700 hospitals that perform resective BPH procedures in the United States. To penetrate these hospitals, we expect to continue to increase our direct team of capital sales representatives, who are focused on driving system placement within hospitals by engaging with key surgeons and decision makers to educate them about the compelling value proposition of Aquablation therapy. As we increase our install base of robotic systems, we expect our revenue to increase as a result of the system sale and resulting utilization. •Increase system utilization: Our revenue is significantly impacted by the utilization of our robotic systems. Once we place a system within a hospital our objective is to establish Aquablation therapy as the surgical treatment of choice for BPH. Within each hospital we are initially focused on targeting urologists who perform medium-to-high volumes of resective procedures and converting their resective cases to Aquablation therapy. To accomplish this, we will continue expanding our team of highly trained Aquablation representatives and clinical specialists who are focused on driving system utilization within the hospital, providing education and training support and ensuring excellent user experiences. As urologists gain experience with Aquablation therapy, we expect to leverage their experiences to capture more surgical volumes and establish Aquablation therapy as the surgical standard of care. •Reimbursement and coverage decisions by third-party payors. Healthcare providers in the United States generally rely on third-party payors, principally federal Medicare, state Medicaid and private health insurance plans, to cover all or part of the cost of procedures using our robotic system. The revenue we are able to generate from sales of our products depends in large part on the availability of sufficient reimbursement from such payors. Effective in 2021, all local MACs, representing 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 believe that these favorable coverage decisions have been a catalyst for hospital adoption of our robotic systems. We believe 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. We plan to leverage these successes in our active discussions with commercial payors to establish additional positive national and regional coverage policies. We believe that additional commercial payor coverage will contribute to increasing utilization of our system over time. Outside of the United States, we have ongoing efforts in key markets to expand established coverage and further improve patient access to Aquablation therapy. •Cost of sales. The results of our operations will depend, in part, on our ability to increase our gross margins by more effectively managing our costs to produce our robotic systems and single-use disposable handpieces, and to scale our manufacturing operations efficiently. We anticipate that as we expand our sales and marketing efforts and drive further sales growth, our purchasing costs on a per unit basis may decrease, and in turn improve our gross margin. As our commercial operations continue to grow, we expect to continue to realize operating leverage through increased scale efficiencies. •Investment in research and development to drive continuous improvements and innovation. We are currently developing additional and next generation technologies to support and improve Aquablation therapy to further satisfy the evolving needs of surgeons and their patients as well as to further enhance the usability and scalability of our robotic systems. We also plan to leverage our treatment data and software development capabilities to integrate and further develop artificial intelligence and machine learning to 20 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. Components of Our Results of Operations Revenue We generate our revenue primarily from the sales and leases 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. 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. The following table presents revenue by significant geographical locations for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 United States 88 % 88 % 88 % 88 % Outside the United States 12 % 12 % 12 % 12 % 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 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. A significant portion of our cost of sales currently consists of manufacturing overhead costs. These overhead costs include compensation for personnel, including stock-based compensation, facilities, equipment and operations supervision, quality assurance and material procurement. We expect our cost of sales to increase in absolute dollars for the foreseeable future primarily as, and to the extent, our revenue grows, or we make additional investments in our manufacturing capabilities, though it may fluctuate from period to period. We calculate gross margin percentage as gross profit divided by revenue. Our gross margin has been and will continue to be affected by a variety of factors, primarily, product and geographic mix and the resulting average selling prices, production volumes, manufacturing costs and product yields, and to a lesser extent the implementation of cost reduction strategies. We expect our gross margin to increase over the long term as our production volume increases and as we spread the fixed portion of our manufacturing overhead costs over a larger number of units produced, thereby significantly reducing our per unit manufacturing costs, though it may fluctuate from quarter to quarter. Our gross margins can fluctuate due to geographic mix. To the extent we sell more systems and handpieces in the United States, we expect our margins will increase due to the higher average selling prices as compared to sales outside of the United States. Operating Expenses Research and Development Research and development, or R&D, expenses consist primarily of engineering, product development, regulatory affairs, consulting services, clinical trial expenses, materials, depreciation and other costs associated with products and technologies being developed. These expenses include employee and non-employee compensation, including stock-based compensation, supplies, materials, quality assurance expenses, consulting, related travel expenses and facilities expenses. 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 21 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. 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, post-market clinical affairs, professional education, finance, information technology, and human resource functions. 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. Clinical study expenses include trial design, site reimbursement, data management and travel expenses. 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. Interest Expense Interest expense consists primarily of interest expense from our long-term debt. Interest and Other Income, Net Interest and other income, net, consists primarily of interest income from our cash and cash equivalents balances. 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. 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 net-operating loss carryforwards. 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. Results of Operations The following tables show our results of operations for the periods indicated: 22 Three Months Ended June 30, Change 2026 2025 $ % (in thousands, except percentages) Revenue $ 94,498 $ 79,182 $ 15,316 19 % Cost of sales 32,119 27,436 4,683 17 Gross profit 62,379 51,746 10,633 21 Gross margin 66 % 65 % Operating expenses: Research and development 20,101 17,632 2,469 14 Selling, general and administrative 69,668 56,303 13,365 24 Total operating expenses 89,769 73,935 15,834 21 Loss from operations (27,390) (22,189) 5,201 23 Interest expense (842) (895) (53) (6) Interest and other income, net 1,465 3,642 (2,177) (60) Loss before provision for income taxes (26,767) (19,442) 7,325 38 Provision for income taxes 94 136 (42) (31) Net loss $ (26,861) $ (19,578) $ 7,283 37 Six Months Ended June 30, Change 2026 2025 $ % (in thousands, except percentages) Revenue $ 177,631 $ 148,344 $ 29,287 20 % Cost of sales 61,304 52,437 8,867 17 Gross profit 116,327 95,907 20,420 21 Gross margin 65 % 65 % Operating expenses: Research and development 41,567 34,034 7,533 22 Selling, general and administrative 134,756 111,499 23,257 21 Total operating expenses 176,323 145,533 30,790 21 Loss from operations (59,996) (49,626) 10,370 21 Interest expense (1,660) (1,773) (113) (6) Interest and other income, net 3,208 7,172 (3,964) (55) Loss before provision for income taxes (58,448) (44,227) 14,221 32 Provision for income taxes 51 89 (38) (43) Net loss $ (58,499) $ (44,316) $ 14,183 32 Comparison of Three and Six Months Ended June 30, 2026 and 2025 23 Revenue Three Months Ended June 30, Change 2026 2025 $ % (in thousands, except percentages) System sales and leases $ 32,466 $ 25,027 $ 7,439 30 % Handpieces and other consumables 55,196 49,132 6,064 12 Service 6,836 5,023 1,813 36 Total revenue $ 94,498 $ 79,182 $ 15,316 19 Six Months Ended June 30, Change 2026 2025 $ % (in thousands, except percentages) System sales and leases $ 59,705 $ 47,567 $ 12,138 26 % Handpieces and other consumables 104,587 91,620 12,967 14 Service 13,339 9,157 4,182 46 Total revenue $ 177,631 $ 148,344 $ 29,287 20 Revenue increased $15.3 million, or 19%, to $94.5 million during the three months ended June 30, 2026, compared to $79.2 million during the three months ended June 30, 2025, and increased $29.3 million or 20% to $177.6 million during the six months ended June 30, 2026, compared to $148.3 million during the six months ended June 30, 2025. The growth in revenue was primarily attributable to $83.4 million and $155.4 million in revenue derived from the United States for the three and six months ended June 30, 2026. The increase was due to higher sales volumes of systems, handpieces, other consumables, and service contracts. Cost of Sales and Gross Margin Cost of sales increased $4.7 million, or 17%, to $32.1 million during the three months ended June 30, 2026, compared to $27.4 million during the three months ended June 30, 2025, and increased $8.9 million or 17% to $61.3 million during the six months ended June 30, 2026, compared to $52.4 million during the six months ended June 30, 2025. The increase in cost of sales was primarily attributable to the growth in the number of units sold. Gross margin increased to 66% during the three months ended June 30, 2026, compared to 65% for the three months ended June 30, 2025, and remained flat at 65% during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The year over year increase in gross margin was primarily attributable to a one-time tariff refund of $2.9 million, partially offset by increases in overhead absorption, warranty replacements and excess and obsolete reserves. Research and Development Expenses R&D expenses increased $2.5 million, or 14%, to $20.1 million during the three months ended June 30, 2026, compared to $17.6 million during the three months ended June 30, 2025 and increased $7.5 million or 22% to $41.6 million during the six months ended June 30, 2026, compared to $34.0 million during the six months ended June 30, 2025. 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. These expenses support ongoing product improvements and the development of additional and next generation technologies. Selling, General and Administrative Expenses SG&A expenses increased $13.4 million, or 24%, to $69.7 million during the three months ended June 30, 2026, compared to $56.3 million during the three months ended June 30, 2025, and increased $23.3 million or 21% to $134.8 million during the six months ended June 30, 2026, compared to $111.5 million during the six months 24 ended June 30, 2025. The increase in SG&A expenses was primarily due to employee-related expenses of our sales and marketing organization such as salaries and wages and stock-based compensation expense primarily to expand the commercial organization, and employee-related expenses of our administrative organization such as salaries and wages and stock-based compensation expense, to drive and support our growth in revenue. Interest Expense Interest expense decreased approximately $0.1 million, or 6%, to $0.8 million during the three months ended June 30, 2026, compared to $0.9 million during the three months ended June 30, 2025, and decreased $0.1 million or 6% to $1.7 million during the six months ended June 30, 2026, compared to $1.8 million during the six months ended June 30, 2025. The decrease in interest expense was primarily due to a decrease in the interest rate as compared to the prior period. Interest and Other Income, Net Interest and other income, net, decreased $2.2 million for the three months ended June 30, 2026 and decreased $4.0 million during the six months ended June 30, 2026. The decreases were primarily due to a decrease in interest income, which was due to our decreased cash balances. Provision for Income Taxes Provision for income taxes was immaterial for all periods presented. Liquidity and Capital Resources Overview As of June 30, 2026, we had cash and cash equivalents of $227.9 million, an accumulated deficit of $700.1 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. 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; •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. 25 Based on our operating plan, we currently believe that our existing cash and cash equivalents and anticipated revenue will be sufficient to meet our capital requirements and fund our operations through at least the next twelve months from the issuance date of the financial statements. We have based this estimate on assumptions that may prove to be wrong, and we may need to utilize additional available capital resources. If these sources are insufficient to satisfy our liquidity requirements, we may seek to sell additional public equity or debt securities or obtain an additional credit facility. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. Additional financing may not be available at all, or in amounts or on terms unacceptable to us. If we are unable to obtain additional financing, we may be required to delay the development, commercialization and marketing of our products. 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. 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. The loan borrowed under the Term Loan Facility bears interest at an annual rate equal to the secured overnight financing rate ("SOFR") (calculated based on an adjustment of .10%, .15% and .25%, respectively, for one-month, three-month or six-month term SOFR as of a specified date, subject to a floor of 1.5%) plus an applicable margin of 2.25%. The obligations under the loan and security agreement are secured by substantially all of our assets, including our intellectual property and by a pledge of all of our equity interests in its U.S. subsidiaries and 65% of our equity interests in our non-U.S. subsidiaries that are directly owned by us. 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. 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. 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. 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. 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. If we maintain at least $100.0 million in available cash, then we are not required to meet such financial covenants. 26 Cash Flows The following table summarizes our cash flows for the periods presented: Six Months Ended June 30, 2026 2025 (in thousands) Net cash (used in) provided by: Operating activities $ (57,378) $ (32,023) Investing activities (5,867) (4,638) Financing activities 4,718 5,676 Effect of exchange rates on cash, cash equivalents and restricted cash (62) (23) Net decrease in cash, cash equivalents and restricted cash $ (58,589) $ (31,008) Net Cash Used in Operating Activities During the six months ended June 30, 2026, net cash used in operating activities was $57.4 million, consisting primarily of a net loss of $58.5 million and an increase in net operating assets of $31.6 million, partially offset by non-cash charges of $32.8 million. 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 expansion of our commercialization activities resulted in an increase in accounts receivable and inventory. Non-cash charges consisted primarily of stock-based compensation, depreciation, and reserves for excess and obsolete inventory. During the six months ended June 30, 2025, net cash used in operating activities was $32.0 million, consisting primarily of a net loss of $44.3 million and an increase in net operating assets of $13.8 million, partially offset by non-cash charges of $26.1 million. 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 expansion of our commercialization activities resulted in an increase in inventory and accounts payable, partially offset by a decrease in accounts receivable, due to timing of cash receipts. Non-cash charges consisted primarily of stock-based compensation, depreciation, and provision for credit losses. Net Cash Used in Investing Activities During the six months ended June 30, 2026, net cash used in investing activities was $5.9 million, consisting of purchases of property and equipment. During the six months ended June 30, 2025, net cash used in investing activities was $4.6 million, consisting of purchases of property and equipment. Net Cash Provided by Financing Activities During the six months ended June 30, 2026, net cash provided by financing activities was $4.7 million, consisting of proceeds from exercises of stock options and proceeds from the issuance of common stock under the ESPP. During the six months ended June 30, 2025, net cash provided by financing activities was $5.7 million, consisting of proceeds from exercises of stock options and proceeds from the issuance of common stock under the ESPP. Contractual Commitments and Contingencies The information included in Note 11 to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference. 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. 27 Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in our audited consolidated financial statements as of and for the year ended December 31, 2025, and the notes thereto, which are included in our Annual Report on Form 10-K dated February 26, 2026, or Annual Report, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report. There have been no material changes to our significant accounting policies during the six months ended June 30, 2026. Recent Accounting Pronouncements The information included in Note 2 to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.