
The investment firm, which is known for its short-selling strategies, challenged the surgical robotics company’s claims of market dominance and raised concerns about its growth projects, product adoption hurdles, and the safety of its Aquablation system.
Spruce Point Capital’s report alleges that Procept has exaggerated its addressable market and faces growing competition from less invasive alternatives.
PRCT shares are down more than 9% this week, trading under $77 apiece.
Procept BioRobotics won FDA 510(k) clearance for its Hydros robotic surgery system in August 2024. The system delivers the company’s Aquablation therapy, which uses a waterjet resection to precisely eradicate prostate tissue. It provides the potential for an effective cancer treatment while maintaining the patient’s quality of life.
The image-guided, automated, heat-free robotic therapy uses real-time ultrasound imaging to give surgeons a multi-dimensional view of the prostate. The company’s Aquablation therapy allows for personalized treatment planning tailored to patients.
Procept BioRobotics did not immediately respond to requests for comment.
Challenges of market claims
In its report “Pulling Back the Curtain on Procept,” Spruce Point disputes Procept’s estimate of 400,000 benign prostatic hyperplasia (BPH) surgeries annually in the U.S. The short seller suggested that the number is less than half of that estimate. Spruce Point also alleges that the company’s Aquablation system addresses a niche market, which limits its growth potential.
“While we acknowledge that some of the datasets involved have limitations and may suffer from exclusions, we cannot generate a procedure volume anywhere close to Procept’s figures,” Spruce Point said in a news release.
The report also alleges safety and reliability issues with Procept’s Aquablation system. Spruce Point alleged increased reports of equipment malfunctions and adverse events. The short seller also noted rising inventory levels and days sales outstanding, suggesting potential overproduction and slowing sales.
Procept’s recent launch of the Hydros system, which uses artificial intelligence, also faced skepticism from Spruce Point. According to the report, Spruce Point alleged that some urologists criticized the system’s AI capabilities and described them as underwhelming.
Spruce Point has also cast doubt on the surgical robotic company’s long-term growth and profitability and alleged the company relies on expensive sales representatives and questioned its ability to sustain high gross margins. The short seller claims that Procept’s valuation, currently at a $4.7 billion market cap with a 14x revenue multiple, is not sustainable compared to Procept BioRobotics’ peers.