Good afternoon and welcome to the PROCEPT BioRobotics Second Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Matt Bacso, Vice President, Investor Relations, for a few introductory comments. Good afternoon and thank you for joining PROCEPT BioRobotics Second Quarter 2025 earnings conference call. Presenting on today's call are Reza Zadno, Chief Executive Officer, Larry Wood, Incoming Chief Executive Officer, and Kevin Waters, Chief Financial Officer. Before we begin, I'd like to remind listeners that statements made on this conference call that relate to future plans, events, or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. While these forward-looking statements are based on management's current expectations and beliefs, these statements are subject to several risks, uncertainties, assumptions, and other factors that could cause results to differ materially from the expectations expressed on this conference call. These risks and uncertainties are disclosed in more detail in PROCEPT BioRobotics filings with the Securities and Exchange Commission, all of which are available online at www.sec.gov. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date, August 6, 2025. Except as required by law, PROCEPT BioRobotics undertakes no obligation to update or revise any forward-looking statements to reflect new information, circumstances, or unanticipated events that may arise. During the call, we will also reference certain financial measures that are not prepared in accordance with GAAP. More information about how we use these non-GAAP financial measures, as well as reconciliations of these measures to their nearest GAAP equivalent, are included in our earnings release. With that, I would like to now turn the call over to Reza. Good afternoon. Before we review our second quarter results and provide an update on our outlook for 2025, I'd like to share a few brief remarks on our progress and welcome Larry Wood to PROCEPT. As we mark this leadership transition, we do so from a position of strength, supported by several sustainable growth drivers. We expect to exit 2025 with an estimated installed base of 715 systems, with only a 20% procedural share in the hospital market, highlighting significant room for expansion. The recent launch of HYDROS, our next-generation robotic platform, will serve as a foundation for continued innovation. Enrollment in the WATERFORT trial is progressing well, positioning us to enter the highly synergistic prostate cancer market. Financially, the company is well capitalized, with gross margins expanding into the mid-60% range, establishing a clear path to profitability. None of this momentum would be possible without a strong team executing at a high level. PROCEPT will continue to evolve and scale, investing in strategic capabilities while developing and strengthening leadership to support future growth. A great example of that evolution is the succession process that has yielded Larry Wood as our next CEO. While many of you know Larry from his time building the TAVR business at Edwards, we are excited to have him here today to make a few comments before he officially starts on September 2. Larry? Good afternoon. As my official start date at PROCEPT is only a few weeks away, I won't be commenting on the quarter or taking any questions. I am appreciative of the opportunity to speak with all of you today. Before looking ahead, I would like to reflect with gratitude. I had the privilege of spending 40 years at Edwards Lifes ciences, working alongside extraordinary individuals to build and scale a leading global TAVR business. For those of you who know me from Edwards, you know what excites me is the opportunity to change the standard of care and improve patients' lives in a meaningful way. In many ways, I see the opportunity at PROCEPT BioRobotics to have many parallels with the same goals and mission. We will focus on evidence, purposeful innovation, and always striving to provide transformational therapies for patients who need it. It is an incredible honor to step in the role of CEO of PROCEPT BioRobotics. I am both humbled and energized by the opportunity to lead such a talented, mission-driven, and forward-thinking team. As I begin this new chapter, I want to emphasize how deeply I believe in PROCEPT potential to become a global leader in urology. Having served on the board of directors and audit committee this past year, I've had a unique vantage point to assess the company's strengths and future growth prospects, and I can say confidently I would not be here today if I did not believe that the future is extraordinarily bright. I also want to thank Reza and the team for laying such a strong foundation. Their vision and leadership have positioned the company well for the road ahead. As a team, I know we can achieve great things, to innovate, grow, and build a culture rooted in trust, collaboration, and performance. I look forward to sharing more about my vision as I transition into the CEO role. While change is inevitable, our direction remains clear. I approach this new chapter with a deep sense of responsibility and commitment to our employees, customers, patients, and shareholders. Thank you, and I cannot wait to officially be in the role in early September. With that, I will pass it back to Reza for the quarterly business update. Thanks, Larry. Beginning with our quarterly revenue results, we delivered another strong quarter with results exceeding expectations across key performance indicators. The HYDROS sales funnel remains healthy and well-positioned for conversion, with average selling prices above the prior quarter. Procedure volumes outperform expectations, reflecting both increased utilization and strong surge in adoption. We delivered record international revenue performance. Gross margin impact from tariffs has been effectively mitigated through disciplined execution and a more favorable environment. These results support our confidence in continuing to execute at a high level. Next, I want to provide an update on the recent 2026 proposed Medicare physician fee schedule. In mid-July, CMS announced that Aquablation therapy was assigned a Category 1 CPT code effective January 1, 2026. The new CPT Category 1 code was assigned a 2026 National Medicare Physician Proposed Payment of 16.14 total RVUs under the 2026 proposed Medicare physician fee schedule. By comparison, the prior term was assigned 15.82 total RVUs. Securing a Category 1 CPT code marks a significant milestone for PROCEPT, the urology community, and the patients we serve. This transition acknowledges the clinical value and growing adoption of Aquablation therapy, reinforcing its role in the treatment of BPH as we work towards establishing it as the surgical standard of care. We believe the Category 1 designation will support broader support, adoption, and expand patient access to Aquablation therapy. Most importantly, the Category 1 code will reduce administrative burdens and ensure consistent reimbursement for both surgeons and hospitals. While overall professional fees have declined across the BPH-resective procedure category, they continue to be collectively higher than national averages for non-resective BPH and kidney stone and bladder stone procedures, which are high-volume procedures performed by urologists in the hospital and ASC settings. Additionally, the 2026 Medicare Proposed Hospital Outpatient Prospective Payment System, or OPPS, continues to recognize Aquablation therapy's hospital facility fee at APC Level 6. The 2026 OPPS proposed rule establishes hospital-based Aquablation therapy reimbursement at $9,765, an increase of 5.6% from $9,247 in 2025. As we have communicated previously, the more important variable driving acquisition adoption is a stable facility reimbursement rate that supports investment for the HYDROS robotic system. Turning to the global macro- environment, specifically our exposure to tariffs. As a reminder, with greater than 95% of the direct material cost for a single-use handpiece sourced in the United States, our primary tariff exposure lies with our ultrasound system and associated components sourced from China. Back in April, based on a 10.45% Chinese tariff rate, we estimated the potential cost of goods sold headwinds of approximately $5 million. Given that Chinese tariff rates have declined to approximately 5.5%, we estimate our cost of goods sold headwinds in the second half of 2025 to now be approximately $1 million- $2 million. During this period, we have been actively pursuing operational strategies to materially mitigate this exposure. We remain confident that the current tariff environment does not compromise our path to achieving our long-term profitability and gross margin objectives. Next, I want to provide a brief update on WATERFORT enrollment. As a reminder, we initiated enrollment in the first quarter of 2025, and activity is progressing to our expectations. As with all large clinical studies, the first phase is site selection and activation. Once activated, enrollment starts to accelerate. At our current pace, we continue to expect full enrollment by the second half of 2026. In connection with the WATERFORT trial, Dr. Rahul Mehan successfully completed three same-day surgery prostate cancer procedures at NISC in Arizona. While the vast majority of patients in the WATERFORT trial will be treated in the hospital setting, Dr. Mehan has elected to treat acquisition patients in the ambulatory surgery center. Although still early, this announcement is exciting for two key reasons. First, we have demonstrated that localized prostate cancer can be treated and patient discharged the same day. Second, as highlighted during our AUA analyst day in April, the procedure involves removing nearly twice as much tissue as in benign prostatic hyperplasia cases. Despite this, Dr. Mehan was able to safely and successfully treat these patients and discharge them the same day. Last, I'd like to share an important organizational update. Building on our strong performance, we have made the decision to strengthen our commercial execution in support of our long-term objective to become the benign prostatic hyperplasia surgical standard of care. To advance this goal, we are eliminating the role of the Chief Commercial Officer and searching for two new leadership positions: Senior Vice President of Sales and Senior Vice President of Marketing, both reporting directly to the CEO. As a result of this change, Sham Shiblaq will no longer serve as CCO effective September 1. We appreciate Sham's leadership and contributions to the company's growth over the last six years and wish him all the best. With that, I will turn the call over to Kevin to provide more detail on second quarter performance and our financial outlook. Thanks, Reza. Total revenue for the second quarter of 2025 was $79.2 million, representing growth of 48% compared to the second quarter of 2024. U.S. revenue for the second quarter was $69.6 million, representing growth of 46% compared to the prior year period. Turning to U.S. procedures, handpiece and other consumable revenue for the second quarter of 2025 was $43.1 million, representing growth of 58% compared to the second quarter of 2024. We also recorded approximately $2.2 million of other consumable revenue in the second quarter of 2025. In the second quarter, we sold approximately 12,750 handpieces, representing year-over-year unit growth of 59%. As noted during our first quarter earnings call, we exited March with strong procedural momentum that was sustained throughout the second quarter. With the sale and disruption now behind us, the second quarter represented one of the most stable operating periods we've seen in the past six months. This is particularly noteworthy as it signals a clear return to the procedural momentum that was disrupted in the fourth quarter of 2024. In the second quarter of 2025, over 1,300 surgeons performed an Aquablation therapy procedure, reflecting strong engagement across our surgeon community. Given this large and growing number of surgeons, our commercial team is highly focused on identifying high-potential surgeons and driving increased utilization. Turning to the U.S. robot placements, we generated total U.S. system revenue of $22.1 million, representing system revenue growth of 24% compared to the second quarter of 2024. In the second quarter, we sold 48 new HYDROS robotic systems and replacement systems. The pricing for our Greenfield systems was at an average selling price of approximately $455,000. As we have previously communicated, the timing of deal closures can vary quarter-t o- quarter, and we continue to take confidence in the fact that once opportunities reach the later stages of our sales funnel, it is more a matter of when they close, not if. Additionally, the momentum with our IDN customers during the second quarter continues to progress nicely and reinforces our confidence heading into the second half of 2025. Furthermore, adoption of the HYDROS system by BPH hospitals is steadily increasing, reinforcing our confidence in the opportunity to penetrate the remaining high-volume BPH hospitals and expand in the medium and lower volume hospitals. International revenue in the second quarter of 2025 was $9.6 million, representing growth of 69% compared to the prior year period. Growth in the second quarter was driven primarily by strong sales momentum in the United Kingdom, Japan, and Korea. Moving down the income statement, gross margin for the second quarter of 2025 was 65.4%, representing an increase of 640 basis points year- over- year. The year-over-year margin expansion was driven primarily by improved operational efficiencies and higher average selling prices compared to the second quarter of 2024. Total operating expenses for the second quarter of 2025 amounted to $74 million compared to $58.3 million during the same period in the prior year. We believe our path to profitability is becoming increasingly clear, as reflected in our recent performance. This clarity is driven by our gross margin expansion into the mid-60% range, which is a direct result of our ability to leverage existing overhead at higher revenue levels, along with increased average selling prices for both systems and handpieces. Net loss was $19.6 million for the second quarter of 2025 compared to $25.6 million in the same period of the prior year. Adjusted EBITDA was a loss of $8 million compared to a loss of $18 million in the second quarter of 2024. Our cash, cash equivalents, and restricted cash balances as of June 30 were approximately $306 million. Moving to our 2025 financial guidance, we now expect full-year 2025 total revenue to be approximately $325.5 million, representing growth of approximately 45% compared to 2024. We continue to expect to sell approximately 210 new robotic systems in the United States in 2025. The quarterly volume has shifted slightly due to the timing of certain sales that move from June into the third quarter. As a result, we now anticipate Greenfield system sales in the third quarter to total approximately 52 units, with average selling prices expected to be approximately $440,000/ system. Our primary commercial focus in 2025 remains capitalizing on the significant opportunity to expand HYDROS adoption in Greenfield accounts. As such, we have revised our expectations for replacement system sales in the third and fourth quarters, which we now expect to be immaterial. We continue to believe that replacement sales represent a meaningful long-term growth driver for the business. However, given our current position early in the adoption curve, we anticipate this opportunity to begin contributing more substantially starting in 2026. Taking all of this into account, we now expect full-year U.S. system revenue to total approximately $93.5 million. Turning to U.S. handpieces, for the full year, we now expect sales of approximately 53,000 handpieces, representing a 64% increase in unit volume compared to 2024. We remain confident in our visibility into new account launches and quarterly procedure volumes, which contributed to our outperformance in the second quarter. In terms of quarterly cadence, we expect to sell approximately 13,350 U.S. handpieces in the third quarter. We are maintaining handpiece average selling prices to be approximately $3,200 and other consumables revenue expectations to be approximately $9 million for the full year. Additionally, we expect U.S. service and other revenue to now be approximately $17 million for the full year. Given strong positive momentum, we now expect full-year international revenue to be approximately $36 million, representing annual growth of 50%. Turning to gross margins, the current tariff landscape remains highly fluid. That said, we believe we are well-positioned to manage both gross margins and overall profitability in this environment. As Reza noted, at current tariff rates, we estimate a potential gross margin headwind of approximately $1 million- $2 million in 2025, which is expected to result in a modest decline in gross margin during the second half of the year compared to the first half. Taking these impacts into consideration, we are now expecting a full-year gross margin of approximately 64.5%, which is at the high end of our previously issued gross margin guidance. Although we are not yet providing guidance for 2026, we remain confident that the current tariff environment does not compromise our path to achieving our long-term profitability objectives. Turning to operating expenses, we now expect full-year 2025 operating expenses to total approximately $302 million, representing a 29% increase compared to 2024. For the third quarter of 2025, our operating expense guidance reflects anticipated spending of approximately $79 million, inclusive of certain one-time expenses associated with the CEO transition. In addition, based on current interest rates and our cash position, we project full-year interest and other income to be approximately $9 million. After considering all relevant factors, we continue to expect a full-year 2025 adjusted EBITDA loss of approximately $35 million, with fourth quarter results approaching break-even. With that, I will turn the call over to Reza for final comments. Thanks, Kevin. To reiterate, PROCEPT BioRobotics is strategically well-positioned to achieve our long-term goal of becoming a global leader in urology. We are building the leadership team and the capabilities necessary to scale the business effectively to reach our goals. I'm confident Larry and his team will do just that. As for me, serving as CEO of this incredible company has been the greatest honor of my professional career. I'm immensely proud of what we have completed together, the milestones we have reached, the challenges we have overcome, and the culture of performance, integrity, and innovation we have built. To our employees, I want to thank each and every one of you for your hard work, dedication, and trust over the years. At this point, we will take questions. Operator? Certainly. As a reminder, to ask a question, please press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again. Please stand by while we compile our Q&A roster. Our first question will come from Matthew O'Brien of Piper Sandler. Your line is open, Matthew. Great. Thanks so much for taking the questions. Reza, best of luck in retirement. Larry, welcome to the new role. I thought maybe we could start with guidance. Just the confidence level that you guys have in maintaining the guidance here, especially with the system number in the quarter maybe coming in a little lighter than some folks had maybe expected. Just the confidence you have there, some of the puts and takes as you think about guidance for the back half of the year. I do have a follow-up. Yeah, thanks, Matthew. Let me take that in two parts. First, let me make sure you're clear on what the actual guidance is because I did hear you say we maintained guidance, but we actually did slightly increase guidance. Let me just walk through the guidance, and then I'll separately go through what gives us confidence and how we formulated that guidance. Just starting with the full-year guidance, we did affirm our full-year system Greenfield guide of 210, although we did note that we had a few systems that moved into the back half of the year purely due to timing. Our overall number remains unchanged. At the same time, we've actually increased the average selling prices we now expect in the third and fourth quarter to $440,000/ system based on what we see in the pipeline. When you look at handpiece sales, we're actually really pleased with the trends in the business. We essentially raised the full-year guidance by the Q2B, which gets us to that 53,000 number. Some other items on service, we increased that guide by about $1 million, which is a function of renewing service contracts. We also increased international revenue by about $1.5 million, given the trends we're seeing in the United Kingdom, Korea, and Japan to get to a full-year number of $36 million. Those are the numbers. To your second part of your question around confidence and formulation, our guidance is always based on the trends we see currently in the business. We went through a normal process in formulating guidance. We do appreciate that in times of change, execution can be difficult. It's important to remember we have hundreds of people in the field on our sales force. These are dedicated professionals. Many have been doing this for 20+ years. We have a high degree of confidence in that team and the ability to execute from a pure people perspective. We've continuously said ever since you've known us, Matt, that we think we have the best sales force out there in medical device, and we're going to leverage them over the next six months during this period of change. When you actually look through the details, remember our capital sales cycle is 6-9 months. Therefore, we have a ton of visibility into deals currently in the funnel. That sales team is out there executing on that. When you look at procedures, we have strong visibility over the next 30 to 60 days. These are elective procedures. They're typically booked months in advance. We're in every case, and that provides some relative level of stability to our forecast. It is a long-winded way of saying we have a ton of confidence in the team and in our guidance and feel good about executing in the back half of the year. Appreciate that. As the follow-up, and I think you're kind of touching on some of those points there, Kevin, you know, with Reza leaving now with Sham and getting that update on this call that he's leaving, there is quite a bit of disruption. Historically, when investors see this level of disruption, you get a little worried that there is going to be some loss of focus among sales reps or other folks in the organization. Can you just kind of touch on how you're going to minimize the potential for that level of disruption as we think about the growth of the business over the rest of this year and into 2026? Thanks. I'm going to apologize. This might be somewhat repetitive, but I'm going to say it again. We have full confidence in the team we have in the field. This is not a company with 20 or 30 reps now. We have hundreds of people in the field. We go through a very methodical process internally to formulate guidance. Those people are committed to executing in the back half of the year. We appreciate times of change. Execution can be difficult. We have confidence in the team and process, and we're moving forward. Understood. Thank you. Our next question will be coming from Brandon Vazquez of William Blair. Your line is open, Brandon. Hi, everyone. Thanks for taking the question. Maybe first, just talk to us a little bit more about why now was the right time to split up the CCO role and kind of expectations for what the organization might look like differently. What can you do more efficiently with two roles instead of one? Again, why now is the right time to do that? Yeah, thanks, Brandon. As I said in the prepared remarks, this was really a result of our decision to further strengthen our commercial execution to support our long-term objective of becoming a leading global urology company. With this decision, eliminating the CCO role, we have the opportunity of bringing two executives for one Senior Vice President of sales and one split for marketing. Okay. Maybe separately, we've talked a lot about in the past how one of the, or not the gating factors, but the predictors of utilization growth is simply time in your accounts, right? As you look now and we're getting deeper and deeper into accounts and more tenure, as you look at some of your oldest accounts, do you guys feel like pretty uniformly the more time you give accounts, the closer they get to Aquablation therapy being standard of care in those accounts? Maybe just curious if you can talk to us as we're looking forward from here, how many of these accounts, you probably can't put a number on it, but how many of your accounts are really getting predominantly, most of their BPH volumes are being done Aquablation and becoming a workhorse solution, just to give us a better sense of how this can trend in the future? I'm not going to put an exact number on it, as you alluded to, but I do think your characterization is fair, that the longer you are an account, the more acquisition procedures you do. We do have multiple examples where Aquablation therapy is the standard of care within that hospital practice. We have a long way to go. If you look at where we're at, we're planning to exit the year at only 20% of the U.S. respective market share. We feel that we're just scratching the surface of the potential here, but we definitely have multiple examples of us being the standard of care within our given customers. One moment for our next question. Our next question will be coming from Richard Newitter of Truist Securities. Your line is open. Hi, thanks for taking the questions. Maybe the first one for me is on the recent physician fee schedule reduction within urology procedures, especially including yours. What gives you the confidence or what are you hearing, if anything, that physician behavior won't change on their treatment algorithm or whether they do a resective procedure versus something else that may be a minimally invasive procedure that potentially saw some lift to the economic remuneration? I'd love to just hear your thoughts there. Do you have a follow-up? Yeah, thanks. Thanks for the question. As you mentioned, all resective procedures, payments went down by about 25%. We were modestly higher than the other resective procedures. I think we should focus always on the clinical outcomes. Adoption and utilization of our system from a hospital point of view is mostly on the APC level of six that was not modified. 50% of the physicians we work with are salaried in this hospital. Adoption and utilization is primarily on clinical outcomes. We believe these surgeons will continue doing BPH procedures, and they are happy with the clinical outcomes we are providing. Okay, thanks. Just on the system placement, I guess the only real change that I'm seeing on the placement side, maybe two systems got pushed into 4Q, but it sounds like you have good visibility there out of 3Q. Just more of a kind of a de minimis replacement assumption this year. I guess what changed there and why would replacements just start picking up next year? Maybe elaborate on that a little bit. Thanks. Yeah, I think you're characterizing that correctly, Rich, where the system absolute revenue number has increased since the beginning of the year, primarily due to ASPs, and our overall guide of $210 million remains the same. Compared to our last quarter guide of $95 million, we've reduced that to $93.5 million. That is solely, as you pointed out, the fact that we do not think we're going to execute on the number of replacements that we felt we were going to do at the beginning of the year. This is really focused. We do feel with the amount of Greenfield deals we have in the funnel, the opportunity there, the fact that we're still 20% penetrated into the total hospital environment, we feel that's where the focus needs to be in the near term. Reps are not incentivized on replacements, and it's just not a focus. I'd also point out why we think in the future this will become more robust is if you look at the useful life of our system, our capital is a bit unique in that we peg the useful life somewhere in the five to seven-year range. If you start to look at when we really started to garner a significant number of placements, that really started in earnest in 2021, post-receiving full Medicare coverage. That is why I made the comment that I think 2026 could be the year where you start to see a more robust replacement cycle that coincides with the useful life of the system, not 2025. Very helpful. Thank you. One moment for our next question. Our next question will be coming from Chris Pasquale of Nephron Research. Your line is open, Chris. Thanks. I thought the statistic around 1,300 surgeons performing at least one case in the quarter was interesting. It implies about 10 per physician. I'm curious how that utilization curve looks. Do you have a significant number of doctors who are still only doing one or two cases, kind of dabbling, or is it more tightly bunched around that run rate of maybe three or four months? It's fairly consistent in the trajectory with surgeons where we've said it typically takes our average surgeon three to four quarters to start performing at the corporate average, and that remains consistent. On average, we have about two to three surgeons per account. That remains consistent. Where we've put in a lot of effort, and I think it's starting to bear fruit in the numbers here, is how we launch accounts. We're now launching accounts with multiple surgeons and asking those surgeons, encouraging those surgeons to schedule multiple patients. It's very inefficient for us as a company, inefficient for the surgeon and his or her patients to treat one patient a day. I think that's starting to manifest itself a little bit now, and you're seeing it in the numbers. Okay. Could you talk a little bit more about the international strength? You know, that continues to kind of run ahead of expectations. In the past, you said most of that is the United Kingdom. Is that still true, or are other regions starting to be more meaningful? Yeah, so consistent with previous quarters, the upside we're seeing is primarily related to UK demand. However, while still relatively minor, we are starting to see some good progress in both Japan and Korea. We're really looking to build those markets for the long term. We're starting to see kind of some good traction there. To put it in perspective, between those three markets I just mentioned, the U.K., Japan, and Korea, that would represent about 70% of all international sales. That's helpful. Thanks. Thank you. Thank you. Our next question will be coming from Josh Jennings of TD Cowen. Your line is open, Josh. Hi, this is Eric Hom for Josh. Thank you for taking the question. I wanted to ask you about the HYDROS robotic system rollout. Now that you're a few quarters into that launch, I was wondering if you could talk a little bit about the value proposition of that system and how it's being received by customers. Maybe more specifically, if there's any metrics like utilization where maybe you're seeing more procedures take place with the folks who have that. Just wondering if there's anything to call out there. Yeah, let me take the utilization metric first. It's too early. It's the answer on utilization. What we're seeing are good anecdotes with accounts launching with multiple surgeons, with multiple patients per day, as I just mentioned. It's early. If you go back to our HYDROS installations, they really began in earnest in the first quarter of 2025. Given the fact that it does take three to four quarters for an account to ramp, I think we'll have a lot more to say at the conclusion of 2025 with how we see that ramp. The general receptivity has been fantastic in terms of the features that HYDROS offers. Yeah, and I can add to that, you know, definitely as we have said, setup time is simpler. The fact that we have the single use that reduces the one more step of restoration that's cheaper for the hospital. Of course, the first AI assist, these are all the features that still are the value proposition for HYDROS robotic system. Understood. That makes sense. Maybe on the capital sales team, I was wondering if you could share how you're feeling about the size of that team currently and how you're thinking about the pace of repetitions over the next 12 months or so. Yeah, look, we feel good about the size. We've provided that we have about 40 quarter-carrying reps, but more importantly, we're adding strategically around those reps based on the needs of the business. We've talked about ads in different areas there. I'm not going to get into specifics, but directionally, the pipeline is strong. The rep productivity is performing to our expectations. We'll continue to add to that group heading into 2026. We feel good about how that team's performing and the productivity around that group. Okay, that makes sense. Thank you for taking the questions. Thank you. Our next question will be coming from Patrick Wood of Morgan Stanley. Patrick, your line is open. Awesome. Thanks, guys. Just two for me quickly. One, you touched on the Category 1 CPT code shift at the start, but like, have you had conversations with surgeons to get a sense of that faster flow from them? You know, any uptake in terms of, you know, volumes just from the ease of quality of life from the coding side on their end? Any sort of anecdotes around what that could do for volumes, if anything? The question is on Category 1. We are very excited about moving to Category 1. As you know, that's considered the established procedure versus when you are in Category 3, you are considered experimental. It standardizes the billing, removes all the operational barriers and the clinical, and at the end of the day, it is the clinical outcomes which will drive utilization. Patrick, this is Kevin as well. To your question about physician feedback, the reality is this is not going to be implemented until January 2026. In terms of surgeon experience, there is none today. I don't think we have heard anecdotes from our customers that the payment is going to be a barrier to adoption. They are still excited about the clinical benefits that our procedure offers and the standardization to their practice. The early feedback, I'd say it's been fairly neutral. It's how I would characterize it with surgeon feedback. Classic. They've got better things to worry about. I mean, the other one is, you touched on it in relation to the IDNs, but looking forward to the distribution of new placements and particularly some of the lower volume facilities, how are you feeling about that? How that mix could hit going forward rather than just the high volume facilities? How are you feeling about the lower volume? Yeah, we feel good. I think it's important to, since you brought it up here, to remind folks that these large IDNs in the U.S. account for about 30% of all resective procedures being performed in the hospital. There's about 17 of these IDNs, and we're very fortunate to be able to have relationships and contracts with most all of them. We started to see some of those deals come through in the first half of 2025. I would suggest it's going to be a big part of our growth strategy as we exit the year and head into 2026. We are starting to form great relationships at the top. We've hired a handful of folks to run a strategic accounts team led by very accomplished and experienced individuals. Where historically we've always worked deals from the bottom up, which we continue to do, this group really allows us to work from the top down. We feel good about the pipeline and the deals and the progress that we see with IDNs. Appreciate the color. Thanks, guys. Thanks, Patrick. Our next question will be coming from Nathan Treybeck of Wells Fargo. Nathan, your line is open. Great, thanks. Reza, congratulations. It was a pleasure working with you and Larry. I'm looking forward to working with you as well. I just wanted to touch on the capital environment. I guess in light of recent macro concerns, can you confirm you're not hearing from hospitals about any slowing or pausing of capital spending? Yeah, I could confirm that. We believe the environment is relatively stable. I said in our prepared remarks, the deals that moved from Q2 to Q3, I would not characterize as due to any type of macro- headwind. These are more due to individual hospital discussions, IDN budgets, and when those come to fruition. We believe we're operating in a very stable environment. I'd also point out, and we've said this numerous times, given the macro- backdrop we've been through over the last three years, our robotic offering and Aquablation therapy provides a unique benefit to hospitals, even in challenging macro- times. It allows hospitals to recruit and retain surgeons. It allows them to now standardize their practice and treat more patients than they otherwise were treating. When I have conversations with hospital CFOs, they get excited about that much more than any type of macro headwinds that could be perceived in the environment today. We're not seeing it, Nathan. Thanks, Kevin. Just for my follow-up, has there been any, I guess, evolution in your outlook or strategy for entering the ASCs and now with the commercial organization changes? Is this something you're going to be looking at a little more closely? Thanks. Thank you for the question. As we have said, our primary focus is hospital-based, and we still have a long runway over there. 90% of the resective procedures are done in the hospital. We had a pilot program, and that's going well. Our primary focus is hospital-based and also in the waterfall. As you've heard, one of our physicians did cases at an ambulatory surgery center. That's something for the future we look at, but our primary focus is hospital. Thanks. One moment for our next question. Our next question is going to be coming from Ryan Zimmerman of BTIG. Ryan, your line is open. Oh, thanks for taking our questions. Reza, you're a young guy. My question is, why are you retiring now? No, I'm kidding. I think it's funny about the older than 20. Okay, I wish you the best on your retirement. Maybe I want to ask a couple of things. Number one, the tariff impacts got arguably a little bit better, right? The gross margins, I understand they're going to be impacted in the back half of the year, but your gross margin guidance is unchanged despite the tariff dynamics coming down. Maybe, Kevin, you can elaborate on what's driving that. Yeah, so our gross margin guidance on the previous call, we actually had guided to a range to account for a $5 million impact. That range was 63%- 64.5% on our last call. What we've essentially done with this guide, Ryan, is lower the exposure from $5 million- $1 million- $2 million. That puts margins now at 64.5%. While we did increase the range, we also chopped off the bottom end and we're guiding to the high range. Overall, tariffs aside, we feel really good about kind of our ability to continue to expand margins here with operational efficiencies and higher volumes. Yeah, okay. Let's talk about utilization for a minute if we could. You know, if I heard you, Kevin, 13,350 is the handpiece number for Q3. I think it was 13,500 last time. I could be wrong. It does arguably, at 52 units, imply about a mid-single-digit kind of growth rate versus last year on utilization. It shifts back, you know, the utilization uptick to the fourth quarter to make that 53,000. I know there's some nuances in kind of how everyone calculates utilization, but just, you know, simple math, that's what it's coming out at. Is there anything to read into here with how that utilization is shifting on the systems? No, there's nothing to read into. Let me walk you through kind of that year-over-year comparison. Our Q3 year-over-year utilization at 13,350 would assume about 4% year-over-year growth. We just grew one in Q2 on average right around 5%, right? I view those numbers as relatively comparable and nothing should be read into it. I think the bigger question is, how can Q4 grow 25% if we're at single digits for the year? That's a relatively easy answer for us. If you go back to Q4 of 2024 with saline and our commentary around 2,000 lost procedures in Q4, and if you take those and add them back to the 2024 number, that's more of an apples-to-apples comparison. That would actually put the Q4 growth required at a number very comparable to the first nine months. I don't feel like we're sitting here today relying on a huge hockey stick of growth in the fourth quarter to meet our targets. If anything, I think you'll find the fourth quarter guide might even be slightly less in the first nine months. We feel good about the setup for the rest of the year. Kevin, just to push a little, I mean, the guidance originally was for linear growth in terms of, you know, growth improving through the year, throughout the year, if I'm not mistaken, when you originally guided 2025, right? Yeah, and we're just probably going to talk semantics here, Ryan, because 4%, 5%, 6%, I mean, that's, I mean, you could do the math on how many procedures that is. I feel good about the setup for Q3. I'll just say that. Okay. All right. I'll leave it at that. Thank you. Thanks, Ryan. Our next question will be coming from Michael Sarcone of Jefferies. Michael, your line is open. Hey, good afternoon, and thanks for taking the questions. Reza, congrats on the retirement. Larry, looking forward to working with you here. I guess the first question for me, maybe Kevin, any comments you could give us on second half revenue phasing? I know you've got a few systems that got deferred into 3Q. I just wanted to know if that or if there's anything else you'd call out as we think about the revenue phasing in the back half? Yeah, I tried to give you guys enough to get there, but let me tell you what we said. I think you're going to find what comes out on the other end pretty mathematical. We guided the 52 systems in the third quarter. That would put the Q4 number around 67 at a $440,000 ASP. We guided the 13,350 handpieces in the third quarter. What we didn't guide to, however, which I think I'm going to help you out here, was international revenue. If you look at international revenue, the third quarter, as we all know, with seasonality, is typically a step down from the second quarter. Typically for us, that's about a half million dollars, $1 million step down sequentially. I think if you plug all of those into your model, you can come out with a number. We did not guide that specific revenue number in Q3 and Q4. Understood. That's helpful. Thanks. Maybe understanding that the expected tariff impacts have eased a bunch, just wanted to know if you've made any progress or how you're thinking about the sole source ultrasound supplier based in China? Yeah, we're working very closely with that partner. We do think we can onshore that ultrasound longer term to mitigate any longer term tariff impact. I think the primary takeaway for me there is that we have very good relationships with the supplier, and the continuity of supply is unquestioned. Given this environment and that it seems to be, again, fairly fluid, I think we're looking at strategies longer term to not only mitigate that, but look at other parts as well that we could start to bring in-house or work with someone in a domestic fashion. Got it. Thank you. Thank you. Our next question will be coming from Mike Kratky of Leerink Partners. Your line is open, Mike. Hi everyone. This is Sam on for Mike. Thanks for taking our question. Can you just kind of provide any additional color on the degree of penetration that you're seeing today in low to medium volume hospitals and how their case volume typically evolves after adopting Aquablation, specifically how long it may take them to become kind of more high volume hospitals following adoption? I have a follow-up. Yeah, that's a pretty specific question. I think the constituency of our sales between high volume and low and medium volume hospitals remains consistent. There's nothing really to point out there. We'd also suggest that our low-hanging fruit in the near term is continuing to penetrate high volume hospitals. Even with the ramp we've had over the last 2-3 years, we still feel there's a significant opportunity to penetrate the 860 high volume hospitals that are out there in the U.S. At the same time, we also recognize, given the value proposition, that we can turn, to your point, these smaller hospitals into larger hospitals, but it's too early to get into the details as to where the procedures are being driven or where those can ultimately go. Got it. Understood. Just kind of following commentary from last quarter, what commercial impact have you guys seen from the recent LCD updates from Medicare administrative contractors? Have any additional contractors updated their LCDs or expressed interest to remove restrictions on Aquablation? It's too early. Most of those LCDs that we mentioned do not become active until the fall. We'll have to see. At the same time, I don't think the expectation is that it should be immediate. These things take time to phase in. It takes time to get everybody up to speed. If there were going to be any impact, I would suggest that wouldn't occur until 2026. Got it. Understood. Thanks. One moment for our next question. We'll be coming from Suraj Kalia of Oppenheimer &Co. Your line is open. Gentlemen, thank you for taking my questions. Reza, congrats on your retirement. Larry, looking forward to working with you again. Kevin, you provided a lot of additional color on guidance, handpieces, units. Maybe if I could comment it from a little different angle, how should we think about the ratio of handpieces shipped versus actually used in the quarter? I guess what I'm just trying to get my arms around is, you know, the 2,000 or so cases that got pushed from Q4 into presumably this year, utilization numbers, you know, we went back and forth in 4%, 5%, or 6% up year- over- year. Maybe if you could tie all of this together and tell us how should we think about shipments vs actual utilization? Yeah, look, we monitor this metric closely. We have the advantage here at PROCEPT of having visibility into when all our procedures are being done. We also do not typically utilize distributors in the U.S., and that differential between procedures and handpieces has remained relatively consistent throughout our time as a public company. Got it. Reza, for WATERFORT, how should we think about the Venn diagram between urologists who are using Aquablation to treat BPH and who are also pretty proficient with robotic radical prostatectomies? Is there a lot of overlap, or would you say these guys are relatively segregated? Gentlemen, thank you for taking my questions. Thank you. We are working with all of them, so they're all included in this study. Okay. One moment for our next question. Our next question will be coming from Mason Caricco of Stephens Inc. Mason, your line is open. Hey, guys. Thanks for the questions here. Realizing you've guided handpiece ASP this year, are you willing to give any color on how we should be thinking about ASP into 2026, increasing mix to HYDROS as well? Yeah, we're not going to comment on 2026, but let me tell you what we've said historically regarding HYDROS. As we start to sell more HYDROS, the mix of handpieces between HYDROS and Aquablation will begin to increase. Therefore, you should start to see low single-digit increases with HYDROS handpieces as we move forward. In terms of kind of building a model, if that's where we're going here, I would be relatively conservative on handpiece price as we move forward into 2026. Got it. Okay. Some placements in the U.S. Are you implementing any flexible purchasing options to help close deals? If so, are you seeing an increasing mix of hospitals starting to utilize that option if, like I said, it is available? Yeah, look, we're obviously aware of kind of what goes on in the capital environment. We definitely understand flexible purchasing options are important to customers. With that in mind, we do work with third-party leasing companies if one of our customers would like to seek financing for their HYDROS robotic system. We continue to work with those folks. At the same time, we have done some flexible purchasing deals internally, but the ability to sell capital in the near term, that model is unchanged. Awesome. Thanks. Appreciate it. I'm showing no further questions in the queue. Thank you for joining, and the call is now concluded. Thank you.