Procept BioRobotics (PRCT) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We have a history of significant net losses, we expect to continue to incur operating losses for the foreseeable future and we may not be able to achieve or sustain profitability
2. 02Our revenue is primarily generated from sales of our robotic systems and the accompanying single-use disposable handpieces, and we are therefore highly dependent on the success of those products
3. 03Our quarterly and annual operating results may fluctuate significantly and may not fully reflect the underlying performance of our business. This makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide
4. 04The terms of our loan and security agreement require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business
5. 05We may need additional funding to finance our planned operations, and may not be able to raise capital when needed, which could force us to delay, reduce or eliminate one or more of our product development programs and future commercialization efforts
6. 06The commercial success of our products will depend upon the degree of market acceptance of our products among hospitals, surgeons and patients
7. 07We have limited experience in training and marketing and selling our products and we may provide inadequate training, fail to increase our sales and marketing capabilities or fail to develop and maintain broad brand awareness in a cost-effective manner
8. 08We rely on third-party distributors to effectively distribute our products in certain markets
9. 09We may not be able to maintain adequate levels of third-party coverage and reimbursement, and third parties may rescind or modify their coverage or delay payments related to our products
10. 10We face competition from many sources, including larger companies, and we may be unable to compete successfully
11. 11If we are unable to continue to innovate and improve our products, we could lose customers or market share
12. 12We have limited experience manufacturing our products in large-scale commercial quantities, and we face a number of manufacturing risks that may adversely affect our manufacturing abilities which could delay, prevent or impair our growth
13. 13We depend upon third-party suppliers, including contract manufacturers and single source suppliers, making us vulnerable to supply shortages and price fluctuations that could negatively affect our business, financial condition and results of operations
14. 14If we receive a significant number of warranty claims or our products require significant amounts of service after sale, our operating expenses may substantially increase, and our business and financial results will be adversely affected
15. 15We need to ensure strong product performance and reliability to maintain and grow our business
16. 16We may not be able to achieve or maintain satisfactory pricing and margins for our products
17. 17We may encounter difficulties in managing our growth, which could disrupt our operations
18. 18Our results of operations will be materially harmed if we are unable to accurately forecast customer demand for, and utilization of, our products and manage our inventory
19. 19Our information technology systems, or those used by third party service providers, partners, our contractors or consultants, may fail or suffer security breaches, and such failure could negatively affect our business, financial condition and results of operations
20. 20and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results
21. 21Natural or man-made disasters and other similar catastrophic events outside of our control may significantly disrupt our business, and negatively impact our business, financial condition and results of operations
22. 22The sizes of the addressable markets for our products have not been established with precision and our potential market opportunity may be smaller than we estimate and may decline
23. 23Until we are able to achieve broader market acceptance of our products, we may face risks associated with a more concentrated customer base
24. 24Cost-containment efforts of our customers, purchasing groups and governmental organizations could have a material adverse effect on our sales and profitability
25. 25We may seek strategic alliances, joint ventures or collaborations, or enter into licensing or partnership arrangements in the future and may not be successful in doing so, and even if we are, we may not realize the benefits or costs of such relationships
26. 26Our future growth may depend, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties
27. 27Changes in United States trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations
28. 28We are highly dependent on our senior management team and key personnel, and our business could be harmed if we are unable to attract and retain personnel necessary for our success
29. 29Our ability to utilize our net operating loss carryforwards and research and development credit may be limited
30. 30We may acquire other businesses which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations

Risks Related to Governmental Regulation

1. 31Changes to the reimbursement rates for our products and procedures utilizing our products, as well as measures to reduce healthcare costs may adversely impact our business
2. 32Healthcare reform measures could hinder or prevent the commercial success of our products
3. 33reduced Medicare payments to several categories of healthcare providers, including hospitals, and increased the statute of limitations period for the government to recover Medicare overpayments to providers from three to five years
4. 34We must comply with anti-kickback, fraud and abuse, false claims, transparency, and other healthcare laws and regulations
5. 35for future products or modifications to existing products are delayed or not issued, it will negatively affect our business, financial condition and results of operations
6. 36If any of these events were to occur, it will negatively affect our business, financial condition and results of operations
7. 37The FDA classifies medical devices into one of three classes on the basis of the intended use of the device, the risk associated with the use of the device for that indication, as determined by the FDA, and on the controls deemed by the FDA to be necessary to reasonably ensure their safety and effectiveness
8. 38and 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
9. 39In the process of obtaining PMA approval the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including, but not limited to, technical, clinical trial, manufacturing and labeling data
10. 40If we do not develop new products or product enhancements in time to meet market demand or if there is insufficient demand for these products or enhancements, or if our competitors introduce new products with functionalities that are superior to ours, our results of operations will suffer
11. 41Modifications to our marketed products may require new 510(k) clearances, or may require us to cease marketing or recall the modified products until clearances or approvals are obtained
12. 42Our products must be manufactured in accordance with federal and state regulations, and we could be forced to recall our devices or terminate production if we fail to comply with these regulations
13. 43Our products may in the future be subject to product recalls that could harm our reputation, business and financial results
14. 44We may be subject to regulatory or enforcement actions if we engage in improper marketing or promotion of our products
15. 45Legislative or regulatory reforms may make it more difficult and costly for us to obtain regulatory clearance or approval of any future products and to manufacture, market and distribute our products after clearance or approval is obtained
16. 46If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject to enforcement action, and we may not achieve or sustain profitability
17. 47Any of these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates
18. 48If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as required or expected, we may not be able to obtain regulatory clearance or approval for or commercialize our products
19. 49Our employees, collaborators, independent contractors and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
20. 50We must comply with environmental and occupational safety laws

Risks Related to Our Intellectual Property

1. 51We have to obtain, maintain and protect our intellectual property and failure to do so may adversely impact our competitive position
2. 52Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
3. 53We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time-consuming and unsuccessful, and if unsuccessful, the commercial value of our products and services will be adversely affected and our competitive position may be harmed
4. 54We may be unsuccessful in licensing or acquiring intellectual property rights from third parties that may be necessary to develop, manufacture and/or commercialize our current and/or future products or services
5. 55If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed
6. 56If our trademarks and tradenames are not adequately protected, then we may not be able to build name recognition in our markets and our business may be adversely affected
7. 57We may become a party to intellectual property litigation or administrative proceedings that could be expensive, time-consuming, unsuccessful, and could interfere with our ability to sell and market our products or services
8. 58Our use of “open source” software could subject our proprietary software to general release, adversely affect our ability to sell our current or future products and services, and subject us to possible litigation
9. 59Intellectual property rights do not necessarily address all potential threats
10. 60Patents covering our products could be found invalid or unenforceable if challenged in court or before administrative bodies globally
11. 61We may not be able to protect our intellectual property and proprietary rights throughout the world
12. 62jurisdictions, as well as elsewhere, at risk of being invalidated or interpreted narrowly, and could provoke third parties to assert claims against us. We may not prevail in any proceedings that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful

Risks Related to Ownership of Our Common Stock

1. 63The market price of our common stock may be volatile or may decline steeply or suddenly regardless of our operating performance, which could result in substantial losses for holders of our common stock, and we may not be able to meet investor or analyst expectations
2. 64We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock
3. 65Future securities issuances could result in significant dilution to our stockholders and impair the market price of our common stock
4. 66Delaware law and provisions in our amended and restated certificate of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock
5. 67The provisions of our amended and restated certificate of incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers

Risks Related to Being a Public Company

1. 68If we are not able to maintain adequate internal control over financial reporting, or if we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the trading price of our common stock could decline
2. 69If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information
3. 70The requirements of being a public company may strain our resources, result in more litigation, and divert management’s attention

General Risks

1. 71Litigation and other legal proceedings may adversely affect our business
2. 72General economic and financial market conditions may exacerbate our business risks
3. 73Ongoing and potential conflicts could adversely affect our business, financial condition, or results of operations
4. 74If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, or if they change their recommendations regarding our common stock adversely, the trading price or trading volume of our common stock could decline
5. 75The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation and adversely impact our financial results