PRCT 10-K & 10-Q changes, risk factors and insider trading

As of December 31, 2024,2025, we had $52.0 million outstanding in the form of a term loan under our loan and security agreement with Canadian Imperial Bank of Commerce, which was entered into in October 2022 and amended in June 2023.2023 and August 2025. The loan is secured by substantially all of our assets, including all of the capital stock held by us, if any. The loan and security agreement contains a number of restrictive covenants, and the terms may restrict our current and future operations, particularly our ability to respond to certain changes in our business or industry, or take future actions. See the section of this Annual Report on Form 10-K titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness.”

•inability of third parties to comply with applicable provisions of the FDA’s Quality Management System Regulations, or QSR,QMSR, or other applicable laws or regulations enforced by the FDA, state and global regulatory authorities;

We and certain of our partners or service providers are from time to time subject to cyberattacks and security incidents. The emergence and maturation of AI capabilities may also lead to new and/or more sophisticated methods of attack. While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets, personal information or other proprietary or sensitive information or other similar disruptions. Additionally, theft of our intellectual property or proprietary business information could require substantial expenditures to remedy. Such theft could also lead to loss of intellectual property rights through disclosure of our proprietary business information, and such loss may not be capable of remedying. If we or our third-party partners, consultants, contractors, suppliers, or service providers were to suffer an attack or breach, for example, that resulted in the unauthorized access to or use or disclosure of health-related or other personal information, we may have to notify consumers, partners, collaborators, government authorities, and the media, and may be subject to investigations, civil penalties, administrative and enforcement actions, and litigation, any of which could harm our business and reputation. Likewise, we rely on third parties to conduct clinical trials, and similar events relating to their computer systems and networks could also have a material adverse effect on our business.

AsThe atariff resultpolicy ofenvironment newhas administrationbeen and associated policy changes or shifting proposals by the U.S. government, there maycan be greater restrictions and economic disincentives on international trade. For example, the U.S. government has pursued a new approachexpected to trade policy, including renegotiating or terminating certain existing bilateral or multi-lateral trade agreements. It has also imposed tariffs on certain foreign goods and has raised the possibility of imposing significant, additional tariff increases or expanding the tariffs to capture other types of goods. These tariffs and other changes in U.S. trade policy have in the past and could continue to triggerbe retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on certain U.S. goods. Foreign governments may also adopt other protectionist measures that could limit our ability to offer our products and services outside of the U.S.dynamic. The ultimate impact of anythese newly enacted and potential future tariffs or other restrictions on international trade will depend on various factors, including ifthe anyultimate levels of such tariffs, how long such tariffs areremain ultimatelyin implemented,place, and how other countries respond to the timingU.S. tariffs. While we manufacture our robotic systems and handpieces in California, we source certain components from foreign suppliers, including a third-party manufacturer of implementation,ultrasound systems and theprobes amount,located scope,in natureChina. ofIn the tariffs, and corresponding actions by foreign governments. We,addition, our suppliers and our customersalso import certain raw materials, components and other products from foreign suppliers. Therefore, increased tariffs or other trade restrictions could increase the cost of our products and the components and raw materials that go into making them. These conditions may also require us to take additional risk mitigation measures that could result in increased costs. These increased costs could continue to adversely impact the gross margin that we earn on our products, whichpotentially could makemaking our products less competitive and reducereducing consumer demand. In addition, some of our suppliers may experience disruption to their respective supply chains due to the broader impact of these tariffs, which could also negatively affect our cost of materials and timing of our production processes. As such, the increase of tariffs, the adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the United States economy, which in turn could have an adverse effect on our business, financial condition and results of operations.

We are highly dependent on our senior management and other key personnel. Our success will depend on our ability to retain senior management and to attract, recruit, retain, manage and motivate qualified personnel in the future, particularly with respect to an expected increase in hiring in connection with becoming a public company, including sales and marketing professionals, scientists, clinical specialists, engineers and other highly skilled personnel and to integrate current and additional personnel in all departments. The loss of members of our senior management, sales and marketing professionals, scientists, clinical and regulatory specialists and engineers could result in delays in product development and harm our business. If we are not successful in attracting and retaining highly qualified personnel, it would have a material adverse effect on our business, financial condition and results of operations. In July 2025, we announced a planned transition in our Chief Executive Officer role. We have also implemented leadership changes within our sales and marketing organizations. Such change and any future significant leadership changes or senior management transitions involve inherent risk. Leadership transition periods can be disruptive and may result in a loss of personnel with deep institutional or technical knowledge, or result in changes to business strategy or objectives, and may adversely affect our relationships with customers and results of operations.

Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QSR,QMSR, facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials. Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents.

Even though we have obtained marketing authorization for our robotic systems, it and any other product for which we obtain clearance or approval, and the manufacturing processes, post-market surveillance, post-approval clinical data and promotional activities for such product, are or, in the case of future products, will be, subject to continued regulatory review, oversight, requirements, and periodic inspections by the FDA and other domestic and foreign regulatory bodies. In particular, we and our suppliers are required to comply with FDA’s QSRQMSR and other regulations enforced outside the United States which cover the manufacture of our products and the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of medical devices. Regulatory bodies, such as the FDA, enforce the QSRQMSR and other regulations through periodic inspections. The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions:

In addition, we are required to conduct costly post-market testing and surveillance to monitor the safety or effectiveness of our products, and we must comply with medical device reporting requirements, including the reporting of adverse events and malfunctions related to our products. Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR,QMSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.

The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QSR,QMSR, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices. Furthermore, we are required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QSRQMSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors. Our products are also subject to similar state regulations and various laws and regulations of foreign countries governing manufacturing.

In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of any future products or make it more difficult to obtain clearance or approval for, manufacture, market or distribute our products. For example, on February 22, 2024, the FDA finalized a rule amending the Quality System Regulation, or QSR, which establishes current good manufacturing practice requirements for medical device manufacturers, to align more closely with the International Organization for Standardization, or ISO, standards. The rule, called the Quality Management System Regulation, or QSMR,QMSR, becomesbecame effective in February 2026.

Moreover, a new President of the United States, as well as many members of the U.S. Congress were elected on November 5, 2024. The policies of the new administration and their impact on the regulation of our products in the United States are uncertain. The outcome of this election could result in significant legislative and regulatory reforms impacting the FDA’s regulation of our products. Anyany change in the laws or regulations pursued by the current presidential administration and Congress that govern the clearance and approval processes relating to our current and future productsproducts, including with respect to FDA regulations, could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products. Significant delays in receiving clearance or approval, or the failure to receive clearance or approval for our new products would have an adverse effect on our ability to expand our business.

Our success will depend, in part, on preserving our trade secrets, maintaining the security of our data and know-howknow-how, appropriately incorporating AI tools, and obtaining, maintaining and enforcing other intellectual property rights. We may not be able to obtain, maintain and/or enforce our intellectual property or other proprietary rights necessary to our business or in a form that provides us with a competitive advantage.

Failure to obtain, maintain and/or enforce intellectual property rights necessary to our business and failure to protect, monitor and control the use of our intellectual property rights could negatively impact our ability to compete and cause us to incur significant expenses. The intellectual property laws and other statutory and contractual arrangements in the United States and other jurisdictions we depend upon may not provide sufficient protection in the future to prevent the infringement, use, violation or misappropriation of our patents, trademarks, data, technology and other intellectual property rights, products and services, and may not provide an adequate remedy if our intellectual property rights are infringed, misappropriated or otherwise violated.violated, including in connection with our use of AI, as intellectual property protection in the field of AI is evolving and there is uncertainty regarding the degree and extent of protection that may be available for AI technologies and related system inputs and outputs.

From time-to-time we may become involved in legal proceedings relating to patent and other intellectual property matters, product liability claims, employee claims, tort or contract claims, federal regulatory investigations, securities class action and other legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business. Litigation is inherently unpredictable and can result in excessive or unanticipated verdicts and/or injunctive relief that affect how we operate our business. WeRegardless of merit, litigation may be time-consuming and disruptive to our operations and result in significant legal costs (including judgments, settlements, legal fees, and other related defense costs). If we do not prevail in these legal proceedings, we could incur judgments or enter into settlements of claims for monetary damages or for agreements to change the way we operate our business, or both. There may be an increase in the scope of these matters or there may be additional lawsuits, claims, proceedings or investigations in the future, which could have a material adverse effect on our business, financial condition and results of operations. Adverse publicity about regulatory or legal action against us could damage our reputation and brand image, undermine our customers’ confidence and reduce long-term demand for our robotic systems, even if the regulatory or legal action is unfounded or not material to our operations.

•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 therapytherapy, we expect to leverage their experiences to capture more surgical volumes and establish Aquablation therapy as the surgical standard of care.

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 revenuesrevenue in absolute dollars to be larger in the United States.

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,develop and enhance and commercialize newexisting products and technologies, though it may fluctuate from quarter to quarter. However, over time, we expect our R&D expenses to decrease as a percentage of revenue to vary over time depending on the level and timing of initiating new product development efforts.revenue.

Selling, general and administrative, or SG&A, expenses includeconsist primarily of compensation for personnel, including stock-based compensation, related to selling, marketing, 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 costscosts, bad debt expense and general corporate expenses including allocated facilities-related expenses. Post-market clinical study expenses include trial design, site reimbursement, data management and travel expenses. We expect our SG&A expenses to increase in absolute dollars for the foreseeable future as we expand our commercial infrastructure andin incurorder additionalfor feesus associatedto with operating as a public company, including legal, accounting, insurance, compliance with the rules and regulations of the SEC and those of any stock exchangeexecute on which our securitieslong-term aregrowth traded, investor relations, and other administrative and professional services expenses,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.

Revenue increased $88.3$83.6 million, or 65%,37%, to $308.1 million during the year ended December 31, 2025, compared to $224.5 million during the year ended December 31, 2024, compared to $136.2 million during the year ended December 31, 2023.2024. The growth in revenue was primarily attributable to an increase of $31.4$15.8 million and $51.9$60.0 million in revenues from higher sales volumes of both our robotic systems and our single-use disposable handpieces.handpieces, respectively.

Cost of sales increased $22.3$24.4 million, or 34%,28%, to $111.8 million during the year ended December 31, 2025, compared to $87.4 million during the year ended December 31, 2024, compared to $65.1 million during the year ended December 31, 2023.2024. The increase in cost of sales was primarily attributable to the growth in the number of units sold.sold and increase in warranty costs.

Gross margin increased to 61%64% during the year ended December 31, 2024,2025, compared to 52%61% for the year ended December 31, 2023.2024. The increase in gross margin was primarily attributable to the growth in unit sales, which allowed us to spread the fixed portion of our manufacturing overhead costs over more production units, andpartially decreasesoffset by an increase in scrap and warranty costs.

R&D expenses increased $13.9$9.0 million, or 29%,14%, to $71.3 million during the year ended December 31, 2025, compared to $62.3 million during the year ended December 31, 2024, compared to $48.4 million during the year ended December 31, 2023.2024. The increase in R&D expenses was primarily due to employee-related expenses from increased headcount of our R&D organization,organization such as wellsalaries asand increaseswages inand third-partystock-based product development costs.compensation. These expenses support ongoing product improvements and the development of additional and next generation technologies.

Interest expense of $4.2$3.6 million during the year ended December 31, 20242025 remaineddecreased relatively$0.6 flatmillion or 14% compared to fiscal 2023.2024. The decrease was primarily due to decreases in interest rates during the year.

Interest and other income, net, increased $2.1$2.3 million to $9.4$12.1 million during the year ended December 31, 20242025 compared to $7.3$9.8 million during the year ended December 31, 2023.2024. The increase in interest and other income, net was primarily due to higheran increase in average cash balances during the year, partially offset by decreases in interest rates earned on our cash equivalents.rates.

As of December 31, 2024,2025, we had cash and cash equivalents of $333.7$286.5 million, an accumulated deficit of $546.0$641.6 million, and $52.0 million outstanding on our loan facility. We expect our expenses will increase for the foreseeable future, as we continue to make substantial investments in sales and marketing, operations and research and development. Moreover, we expect to incur additional expenses as a result of operating as a public company, including legal, accounting, insurance, compliance with the rules and regulations of the SEC and those of any stock exchange on which our securities are traded, investor relations, and other administrative and professional services expenses. Our future funding requirements will depend on many factors, including:

In October 2022, we entered into a loan and security agreement with Canadian Imperial Bank of Commerce. The Agreementagreement provides for a senior secured term loan facility in the aggregate principal amount of $52.0 million,million (the “Term Loan Facility”), which was borrowed in full. Proceeds from the term loan facility were used to repay and terminate our previous loan facility, transaction fees, and related expenses.

The obligations under the loan and security agreement are secured by substantially all of our assets, including its intellectual property and by a pledge all of our equity interests in its U.S. subsidiaries and 65% of our equity interests in its non-U.S. subsidiaries that are directly owned by us. We are obligated to maintain in deposit accounts held at the lender equal to at least the lesser of (i) $100.0 million or (ii) all of our non-operating cash.

The loan and security agreement contains certain customary representations and warranties, affirmative and negative covenants, and events of default. 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 to maintain cash reserve not less than the greater of (i) $20.0 million, (ii) the absolute value of EBITDA losses (if any) for the most recent consecutive four-month period then ended or (iii) the aggregate outstanding principal amount of $52.0 million. The minimum 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 itwe isare not required to meet such financial covenants.

During the year ended December 31, 2024,2025, net cash used in operating activities was $99.2$49.0 million, consisting primarily of a net loss of $91.4$95.6 million and an increase in net operating assets of $47.3$7.8 million, partially offset by non-cash charges of $39.5$54.4 million. The cash used in operations was primarily dueattributable 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 increases in inventory, accounts receivable, prepaid expenses and other current assets along with long-term assets, a decrease in accounts payable, partially offset by an increase in accrued compensation, deferred revenue, leaseother accrued liabilities, and accrued interest expense. Non-cash charges consisted primarily of stock-based compensation, bad debt reserves, accruals for excess and obsolete inventory and depreciation.

Revenue is derived primarily from the sales of the AquaBeam Robotic Systems and HYDROS Robotic Systems, along with handpieces that are for one-time use during each surgery using our robotic systems. Included in the term “sales”, we include sales-type leases accounted for in accordance with ASC 842. Each of our robotic systems contains both software and non-software components that are delivered together as a single product and generally contain a one-year warranty.

Intermediary sales - For systems sold to distributors or to leasing companies, revenue is recognized when we transfer control to our intermediary, in accordance with agreed upon shipping terms. We have determined in these type of arrangements the intermediary is our customer.

Hand piecesHand-pieces and other consumables - Revenue from sales of handpieces and other consumables is recognized when control is transferred to the customers, in accordance with agreed upon shipping terms.

We have determined that certain promises in the multiple-element arrangements, such as installation, training and certain ancillary products, are immaterial, and do not represent separate performance obligations for which transaction price is allocated.

Expected Volatility. Since there has been limited public market for our common stock and limited company specificcompany-specific historical volatility, weour haveexpected determined the sharestock price volatility assumptions were determined using a blended volatility, by examining the historical volatilities for optionsindustry grantedpeers based on an analysis ofand the volatility of athe peerCompany’s groupstock offollowing publiclyour tradedinitial companies.public offering. In evaluating similarity,similar peers, we consider factors such as industry, stage of life cycle and size.

Our business, financial condition and operating results are affected by a number of factors, whether currently known or unknown, including risks specific to us or the healthcare industry as well as risks that affect businesses in general. In addition to the information set forth in this Quarterly Report on Form 10-Q, you should consider carefully the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 26, 2026. The risks and uncertainties disclosed in such Annual Report and in this Quarterly Report could materially adversely affect our business, financial condition, cash flows or results of operations and thus our stock price. During the threesix months ended MarchJune 31,30, 2026, there were no material changes to our previously disclosed risk factors. Besides risk factors disclosed in the Annual Report and this Quarterly Report, additional risks and uncertainties not currently known or we currently deem to be immaterial may also materially adversely affect our business, financial condition or results of operations.

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.”

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 MarchJune 31,30, 2026, we had an install base of 9711,036 AquaBeam Robotic Systems and HYDROS Robotic Systems globally, including 765816 in the United States.

We generated revenue of $83.1$177.6 million and incurred a net loss of $31.6$58.5 million for the threesix months ended MarchJune 31,30, 2026, compared to revenue of $69.2$148.3 million and a net loss of $24.7$44.3 million for the threesix months ended MarchJune 31,30, 2025. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $245.6$227.9 million and an accumulated deficit of $673.2$700.1 million.

•Grow our install base of robotic systems: As of MarchJune 31,30, 2026, we had an install base of 9711,036 robotic systems globally, including 765816 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.

•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 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.

We generate our revenue primarily from the sales and rentalsleases 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.

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. Post-market clinicalClinical 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.

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 non-operatingnet-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.

Comparison of Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Revenue increased $14.0$15.3 million, or 20%,19%, to $83.1$94.5 million during the three months ended MarchJune 31,30, 2026, compared to $69.2$79.2 million during the three months ended MarchJune 31,30, 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 $72.0$83.4 million and $155.4 million in revenue derived from the United States for the three and six months ended MarchJune 31,30, 2026. The increase was due to higher sales volumes of system sales,systems, handpieces, other consumables, and service contracts.

Cost of sales increased $4.2$4.7 million, or 17%, to $29.2$32.1 million during the three months ended MarchJune 31,30, 2026, compared to $25.0$27.4 million during the three months ended MarchJune 31,30, 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 65%66% during the three months ended MarchJune 31,30, 2026, compared to 64%65% for the three months ended MarchJune 31,30, 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 thea growthone-time tariff refund of $2.9 million, partially offset by increases in unit sales, which allowed us to spread the fixed portion of our manufacturing overhead costsabsorption, overwarranty more production units,replacements and to a lesser extent, an increase in average selling prices on both our system salesexcess and handpieces.obsolete reserves.

R&D expenses increased $5.1$2.5 million, or 31%,14%, to $21.5$20.1 million during the three months ended MarchJune 31,30, 2026, compared to $16.4$17.6 million during the three months ended MarchJune 31,30, 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.

SG&A expenses increased $9.9$13.4 million, or 18%,24%, to $65.1$69.7 million during the three months ended MarchJune 31,30, 2026, compared to $55.2$56.3 million during the three months ended MarchJune 31,30, 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 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 decreased approximately $0.1 million, or 7%,6%, to $0.8 million during the three months ended MarchJune 31,30, 2026, compared to $0.9 million during the three months ended MarchJune 31,30, 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, decreased $1.8$2.2 million for the three months ended MarchJune 31,30, 2026 and decreased $4.0 million during the six months ended June 30, 2026. The decreasedecreases waswere primarily due to a decrease in interest income, which was due to our decreased cash balances.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $245.6$227.9 million, an accumulated deficit of $673.2$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 obligations under the loan and security agreement are secured by substantially all of our assets, including itsour intellectual property and by a pledge of all of our equity interests in its U.S. subsidiaries and 65% of our equity interests in itsour non-U.S. subsidiaries that are directly owned by us.

During the threesix months ended MarchJune 31,30, 2026, net cash used in operating activities was $38.1$57.4 million, consisting primarily of a net loss of $31.6$58.5 million and an increase in net operating assets of $21.9$31.6 million, partially offset by non-cash charges of $15.4$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, inventory,receivable and accounts payable.inventory. Non-cash charges consisted primarily of stock-based compensation, depreciation, and reserves for excess and obsolete inventory.

During the threesix months ended MarchJune 31,30, 2025, net cash used in operating activities was $17.0$32.0 million, consisting primarily of a net loss of $24.7$44.3 million and an increase in net operating assets of $4.3$13.8 million, partially offset by non-cash charges of $12.1$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 reservesprovision for excesscredit and obsolete inventory.losses.

During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $2.9$5.9 million, consisting of purchases of property and equipment. During the threesix months ended MarchJune 31,30, 2025, net cash used in investing activities was $1.8$4.6 million, consisting of purchases of property and equipment.

During the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $0.2$4.7 million, consisting of proceeds from exercises of stock options.options and proceeds from the issuance of common stock under the ESPP. During the threesix months ended MarchJune 31,30, 2025, net cash provided by financing activities was $1.3$5.7 million, consisting of proceeds from exercises of stock options.options and proceeds from the issuance of common stock under the ESPP.

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 threesix months ended MarchJune 31,30, 2026.