All right, morning. Thanks so much for joining us. My name is Matt O'Brien. I cover med tech here at Piper. Really excited to have PROCEPT BioRobotics with us today. From the company, you've got Reza, who's the CEO, and then Kevin, who's the CFO of the company, and Matt Bacso is down in the audience. Guys, thanks so much for coming all the way across the country for us. Thanks for inviting us. Really appreciate it. So, you know, I don't want to talk too much about Q4 and the guide on the 56 robots, but you did note much of your sales force was out still getting trained on HYDROS in starting September. So is that number still good as far as up to 56? I think it's up at 11 sequentially. And then when that sales force comes off all the training that they're doing, what kind of productivity or efficiencies should we expect out of that group as we head into next year? Good. Thanks. Definitely Q4, we have exciting a lot of good things happening with the initiation of the sites for the cancer study, the launch of HYDROS. When we talk about sales training, it's mostly the utilization reps. The capital reps were trained right around the time when we received FDA approval. So the disruption associated with that was minimal because we wanted to convert as fast as we could the pipeline to HYDROS. So the disruption was mostly related to utilization reps. As for the numbers that we gave, the pipeline, the enthusiasm for HYDROS is exceeding our expectation. Accounts like the system for all the features we talked about, the techs and nurses like because of the ease of setup and utilization, and the hospitals because they save time and money for they don't need to reprocess the scope. So as far as the numbers we gave, we are comfortable because of the pipeline that we see in those. Got it. As far as the, I don't know, Kevin, you want to add anything? I'll take the second part of the question regarding expectations kind of coming off of that training, but I'll let Reza finish. Yeah. So as for the, again, the numbers, the pipeline is strong. And not only that, also the ASPs that we were anticipating. So the numbers and ASP are where we expect them to be. Just in terms of, again, back to the second part of your question, the productivity of our capital team, and really looking forward to 2025. Obviously, we're not here today to comment on 2025 system placements, but when you look at expectations and you look at a normal productivity ramp, we now have 40-plus capital reps that are out in the field. On average, we expect these folks to sell anywhere between five or six systems per year, HYDROS systems in 2025. But on top of that team, we've now also supplemented with junior capital reps, which are more responsible for, think of farming, knocking on doors, lower-level conversations, and really getting a foot in the door. So that obviously helps. Then the other part of our organization, we've started to build up on the commercial team, is really this strategic accounts team. So we've brought in some high-level sales folks to run IDN accounts, government accounts, and we're starting to see a lot of progress there as well. Okay. To that point, Kevin or Reza, I'm not sure which one you want to take it, but I couldn't get over the growth of the business with Gen 1. Gen 2 seems like a phenomenal product. We could talk about some of the features there. But to that end, with these IDN systems out there, do you think HYDROS is so unique that we're going to start to get bigger IDN bulk purchases? I know that's the narrative. So I can address the part of that question. Definitely, our previous system generated great clinical results, and we installed as soon as we had introduced that product in 2021 in the U.S. We had done some focus groups and wanted to know what are the features we should add to or introduce a new platform. We knew in order to penetrate in the mass market, we needed to come up with a system that ease of use was there, the setup, and also some of the reduce the learning curve on those. So we are very happy with what the AquaBeam delivered, but definitely HYDROS was designed for the mass market, and we are very happy about that. And Kevin, you want to take it. Yeah. I mean, I think while we haven't historically had large bulk buys, so to speak, from IDNs, we have sold numerous systems to numerous IDNs. And I do think with HYDROS now, we're getting much more mind share from the large IDNs. And while we're not dependent on any type of bulk buy to kind of get to where we need to get to or to continue to sustain our growth, it is good to see, and there's a lot of progress going on. So more to come on that, I'd say. What's really resonating, Kevin or Reza, with the clinicians or the CEOs at these hospitals with HYDROS versus Gen 1? So, HYDROS, from a setup point of view, definitely the techs and nurses, because many of the components inside the tower, the connections are already made, that reduces the setup time. From a CFO and CEO point of view, there is a scope that previously they were re-sterilizing that, but today it's an integrated scope and it's disposable. So they save money. They don't need to reprocess that. So that is saving money and time for the CFOs and CEOs. And of course, the features in the product, that's what the doctors like. This is the FirstA ssist AI and also the ergonomically positioned, the touch screens. So that's what the surgeons like. And it reduces the learning curve. So its benefits are to the tech, to the administrators, and to the doctor. That's what resonates with them. I'm just going to add one more to Reza's comments. It's the platform itself, and while AquaBeam is a great system, I think everyone understood that there was a next iteration, and that next iteration would be the platform that will allow us to continue to innovate, so when you talk to a hospital CFO, they can see that there'll be upgrades in the future. This could be a system that could sustain their hospital for five to ten years, not three to five, and that's also resonating. Are you starting to see the backlog even grow because of HYDROS? I don't want to get too much into next year, but. Yeah. Look, as Reza said, we're really happy kind of with the funnel. HYDROS has definitely accelerated, I'd say, the deals that are coming into the funnel and the interest, not only from new customers, but also from existing customers as well. Oh, interesting. Okay. To that point, Kevin, maybe this is more of a finance question, but is there an upgrade cycle if you bought AquaBeam the last year or two where you can get to HYDROS? Do they have to pay extra for that? I mean, how's that going to work? Yeah. So we do have a program in place where if you recently purchase an AquaBeam, we will give you a discount on your HYDROS system. By the way, that's all factored into our margin guidance. It's factored into our ASP guidance. But it's still important to remember that our primary opportunity in the near term for HYDROS are greenfields. And that's how we're incentivizing the sales team. We're still somewhat under-penetrated, given there's 2,700 hospitals in the U.S. that do BPH surgery. So we have a long runway in front of us with greenfield opportunities. But at the same time, we do recognize that given the relatively short payback of our previous generation system, given the customer interest, and given all the features that Reza went through, there is an opportunity here for a replacement cycle. We're not going to talk much about that in the fourth quarter of 2024, but as we think about 2025, 2026, we'll be providing a lot more color and detail around how we kind of frame that opportunity when we give 2025 guidance. Okay. Got it. All right. I can't imagine the replacement cycle is going to be massive, though, just given you sold your first system in 2020 and probably last year or so. I think that's fair. Again, in 2025, everyone should expect the majority of our sales should be to greenfield accounts, but recognize that there is a unique opportunity here with the replacement cycle. Where are you guys at in terms of penetrating the higher volume BPH centers? I know there's about 800 in the U.S. Yeah, 860 high-volume centers. As we had said previously, about 70% of our accounts are high-volume centers. And 30% roughly are the low and mid-volume. But again, as we said previously, low and mid-volume are not necessarily small hospitals. These are large hospitals that traditionally would either not do BPH or they would refer the complex cases to other hospitals because they have those patients. Many of those hospitals are cancer centers for prostate. So with our system, they can keep those patients. And as we had said, the interesting thing we are seeing in those low and mid-volume hospitals is the ramp to come to the ramp from zero to where they are is similar to high-volume centers. Got it. Okay, but it's fair to say, Reza, Kevin, you're still well below half penetrating the high-volume. Yeah. So I mean, if you do the math here, if 30% of our accounts are small, we have roughly 330-ish are high volume of the 860. So much less than 50% on that. Got it. Okay. What about the reimbursement side of things? We're switching over from Cat III to Cat I next year. That's always an area where people seize up a little bit just because of the uncertainty. How do you kind of ease some of that concern that investors may have about that transition? Yeah. So to be clear, the Cat I is physician payment. So this will then, from a market point of view, the data will come out around July of 2025 and become effective in 2026. January of 2026 will become effective. So this is physician payment. The facility payment, in fact, went up about 5%. The process is there's a survey sent to doctors. They fill the survey. The survey is analyzed, then reviewed by the RUC, that committee gives a relative value to that. And it's important, as the name indicates, it's a relative. So in our FDA trial, when we did the study, we had gathered the total time compared to TURP, and they were similar. So we believe that will be similar to other resective procedures because these are compared to other relative. So we believe it will be in that range. And again, from a cost point of view, it's not the majority of the cost. It is the facility payment that has, in fact, went up. So we don't believe that's going to be meaningfully different than other resective procedures. So it doesn't keep me awake. Good. Okay. And it's hospital-based too, right? So the changes are typically. So right now, we are hospital-based. Yeah, mostly hospital-based. I mean, the changes there typically are a little bit more controlled versus in other settings. Is that fair? Again, it is relative to other resective procedures, so whether it is TURP or GreenLight, there will be relative to those. Got it. Yeah. Okay. What about kind of this language still as far as where Aquablation is contraindicated, things like that? Where are you guys at in terms of removing some of that language that's out there? And is it really a gating factor? Don't physicians vote with their feet and do what they want to do? It's best for patients. Yeah. So I think to clarify that, from an FDA point of view, there is no size. So when we talk, it was between both size or age. From an FDA point of view, there is no size restrictions. But from a CMS point of view, there is a restriction of up to 150 grams. But from private payers, the only private payer that stays with that 150 is Humana. All the other ones, there is no size restrictions. Similar to the age restriction, we are able initially. There was an age restriction of 80 years old. We were able to work with these MACs, and five out of seven have removed those age restrictions. There are still two we are working on. So we will continue to work with the payers and the surgeons to remove these restrictions because from an FDA point of view, clinical outcome, there are no limitations. Got it. Okay. But it is, again, not all the private payers. These are CMS, and we will work. We don't see that as an obstacle. We will work, and we are hopeful we will remove that. Okay. What is your average prostate size that you're treating in the hospital? Because if I hear one more time that it's only over a certain amount, you're going to throw up. I just want to hear from you guys. What's the average size prostate you're treating? The bell curve, the top of the bell curve is a 70 g or CC. It's between 60 and 80. That top rectangle is there. It mimics the prostate size of men, which is from 30 to 70, comes down to 150 on the tail and continues. We are where the prostate sizes are. Okay, so you're right in the middle of that bell curve. Yeah. I'd encourage everyone. We have a slide on our IR deck on our website that actually shows the patients and the prostate sizes we have treated over the last three years. And there is a misunderstanding on that from what I hear from many folks that they think that's the market that we're showing. Those are actual Aquablation treatments and the sizes we treated. And as Reza pointed out, you'll find that 80% of everything we treat is kind of right in that 40 g-80 g range. Got it. Got it. Yeah. And some of the information we hear is because physicians for larger prostate, they don't have many options immediately that they think of, but they use it on all sizes. Got it. Okay. Hopefully, we can put that to bed one of these days. So guidance, Kevin, I think for next year on the ASP side is $425K per HYDROS. I think you sold everything at $435K in Q3. So is there a potential upward bias to that? Yeah. So to be clear, we haven't given ASP guidance for 2025. So that was for Q4 of 2024. And look, we're not going to comment on kind of individual customer prices. As with AquaBeam, we're going to be flexible with HYDROS pricing. And at the end of the day, we want the system installed at a hospital, and we're willing to negotiate on price. With that said, the early indicators on HYDROS is we feel very comfortable saying we definitely are seeing a premium for HYDROS compared to AquaBeam. How large can that premium be? We would just ask, let us get through one more full quarter of commercialization here. We launched this product midway through the third quarter. So we're really now in our first quarter of full-scale HYDROS launch. We feel good about pricing. Even from a macro standpoint, we're seeing much less pushback than we were seeing two to three years ago. I think people recognize the value that HYDROS brings, and we're getting a higher price. How high? To be determined. But again, just remember, it's going to continue to be variable quarter to quarter. We're going to use our system pricing. We'll be flexible there because we're very inflexible when it comes to the disposable pricing. Got it. So your higher volume centers that were using AquaBeam are using it a lot. Is the ability to do cases faster because of HYDROS? Is there potential for upside to even what your higher volume centers are doing? Were they restricted at all in terms of how often they could use it? Not so much in terms of the speed of the system. I think it's more about OR time and block time and physician access, which I do think HYDROS could offer a unique opportunity for some of these high-volume centers to where we talk about a replacement cycle. I think we can see some of our high-volume centers maintain their AquaBeam program, but then supplement that by buying a HYDROS. So I think we can start to see with HYDROS now, some of our higher volume centers have more than one system, which is something we've seen a handful of AquaBeams, but I think HYDROS can accelerate that. Really? Okay. So multi. And also, because in a high-volume center, you may have 10-14 surgeons that two or three are the high volume, so with HYDROS, it's easier because the learning curve is faster to bring these other surgeons that are too not just ours. They do maybe one or zero per month of a BPH. It's easier to attract those. I mean, AquaBeam is a good system, and the predictability around AquaBeam was very good. I mean, we knew our customers knew that they block an hour of OR time. That room's going to be in and out in an hour. And while HYDROS does have some efficiencies regarding setup and ease of use, that hour block time is probably still what's going to be blocked for a HYDROS system as well. Okay. Got it. So maybe talk a little bit about utilization. There's a pretty meaningful step-up that's expected over the next couple of years. Just think about how comfortable you are in terms of that level of step-up. And I do want to get back to this multi-system order per hospital in a second. Yeah. So I'll take utilization. And if you look at our utilization in the first nine months of 2024 compared to the first nine months of 2023, on a weighted average basis, we're roughly up about 9%-10% per account. And if you look at expectations kind of in 2025 and 2026, it would suggest something less than that. And our implied guide in Q4 also suggests something less than that as well, to be fair. But remember, we called out some very specific factors for fourth quarter utilization, one being what Reza has already alluded to, taking our utilization reps out of the field. But then we also do have a few macro lingering issues in the fourth quarter that do impact us, the weather-related events, which caused hospitals to shut down to a certain extent, some in October. I'm alluding to the hurricanes. Then obviously, the saline shortage in urology, I think, is much more prevalent than perhaps some other adjacencies with the amount of saline used. And that is impacting the fourth quarter. But we do believe as we get into 2025, those dynamics should be behind us. And therefore, I would look to the first nine months of 2024 utilization growth to be more reflective of kind of how we see the next two years versus Q4 in and of itself. Q4, there's some unique things going on, which I obviously just alluded to. Got it. And I thought Aquablation had used less saline. It does use less than other resective procedures. That is true. But some hospitals that Kevin mentioned, because of the shortage of saline, they were not prioritizing elective procedures. So it uses less saline than other procedures, but that was elective procedure. Got it. Okay. I don't want to make too much out of this, but mentioning potentially having systems or hospitals ordering multiple systems, this is not going to be intuitive, right, where some hospitals have 10 or 12 or whatever. Correct. Correct. But what are you seeing as far as some hospitals ordering a second system or even third? I mean, that could be a pretty meaningful opportunity, I would think. Yeah. I mean, we've had a handful of accounts over the last one to two years that have ordered a second system, and my commentary, it's still not going to be the boldest of our systems, and unlike Intuitive, we do not see hospitals in the near term having 8-10 systems, right? I mean, we're one specialty in urology. We don't have to share across multiple departments, but at the same time, when we look at accounts that have an AquaBeam, I do think there is a high probability that some of these high-volume accounts will not want to trade back in their AquaBeam, but they'll want the new system, and when I think of second systems, I'm thinking of it more in that. I got it. And think of it on the fringes, Matt. I mean, this isn't something that's going to be a huge driver for systems in the next 12 months-24 months, but we recognize the opportunity is there, and we're not ignoring it. And also, it's only we are in the, let's call it, 440 systems versus the 2,700 hospitals. So we still have a long way to go. And then, of course, as you know, we started a pilot program at the ASC. So these are all these opportunities for system placement. Yeah. All these questions go around the fact that we get, just like we get the prostate size question still a lot. We still get the question around kind of our ability to sell capital, and is there a natural ceiling in this space? We're not seeing it, right, and I think there's more tailwinds and headwinds there. It's the new system. It could be multi-systems. It could be different sites of service as we think about the ASC environment as we move forward, so this company, while our business has shifted now to the majority being disposables, we're still going to have a heavy capital component for the foreseeable future, and we don't see that slowing down. Got it. Okay. Kevin, congrats on the gross margin lift in Q3. How much of that was a benefit from the HYDROS ASP versus what you guys have been doing internally? And then I know HYDROS is more expensive to make right now. When can you kind of narrow that delta? Yeah. So the majority of the margin uplift that we've seen throughout this year and Q3 in particular, it has been more related to internal efficiency than anything to do with ASPs or costs. So it's nice to see an uplift in ASPs. Those are more than offsetting the increased cost of HYDROS. To answer your question specifically, HYDROS does cost about 10% more than our previous generation system. We obviously think we make that up through higher ASPs. But at the same time, over time, that HYDROS cost is going to come down to more in the AquaBeam range. So it's not going to be a headwind. But our single biggest driver for margin expansion is really just volume. And Reza and I have been very consistent over the last two to three years saying that we're building this business to support a multi-billion dollar business. And to do that, you have to make a lot of investments in infrastructure. We moved facilities last year to a facility that was four times the capacity of our previous facility. Those costs, they're expensive. And our ability to absorb those over more units over the next one to two years are going to be the primary driver for margin expansion. And we do think kind of just with increased productivity, we can continue to expand margins. At the same time, we are starting to look internally now that we're in our footprint as to how can we make our current product even cheaper, both on the disposable and the capital. But those would all be, I would say, uplifts to margins that aren't currently being modeled. Got it. Okay. Excellent. So maybe let's take cancer here real quick. So what should we be expecting from a clinical data perspective in 2025? Yeah. So we mentioned previously that AUA, we planned we had two studies on the cancer, PRCT-001 and PRCT-002. PRCT-002 enrollment is complete. We hope we can show the data of that at the AUA. And definitely, although it's early, the WATER IV study, that's enrollment. We are site initiation. So we can give an update. There's a lot of interesting and exciting activity happening on cancer. Whatever data we have or progress, we'll present at AUA. Are you starting to see any kind of halo effect to the rest of the business having done some of this work and starting to show that this is more of a platform technology versus really focused just on BPH? Yeah. That's an interesting question. A lot of these hospitals, again, as I mentioned, for example, previously, the smaller mid-volume hospitals, they were cancer centers. So some of these hospitals, the chair of the department is a cancer specialist. Not that they're buying it to treat prostate cancer, but when they see this technology in the future, so that's the halo effect we are seeing for BPH. Got it. Got it. Okay. All right. Well, as I look at the clock, I think we're just about out of time. So we'll cap it there. Jens, thanks so much for coming in. Thank you very much. Thanks, Matt. Appreciate it. Thank you.