Earnings Call Transcript - PRCT Q1 2024

Matt Bacso, Vice President of Investor Relations

Good morning, and thank you for joining PROCEPT BioRobotics' first quarter 2024 earnings conference call. Presenting on today's call are Reza Zadno, Chief Executive Officer; Sham Shiblaq, Chief Commercial 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, May 1, 2024. 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 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'll turn the call over to Reza.

Reza Zadno, CEO

Good morning, and thank you for joining us. For today's call, I will provide opening comments and the general business update, followed by Sham, who will go into detail on a few key commercial initiatives. Kevin will then provide additional details regarding our financial performance and updated 2024 guidance before opening the call to Q&A. We are pleased to report another strong quarter with total revenue for the first quarter of 2024 of $44.5 million, representing growth of 83% compared to the first quarter of 2023. Growth in the quarter was driven by strong U.S. system sales, increased utilization from our expanded U.S. installed base, and record international revenues. U.S. monthly utilization increased approximately 7% compared to the prior year period, which is significant given an 84% increase in our installed base. We exited the first quarter of 2024 with a U.S. installed base of 354 systems out of a target market of 2,700 total hospitals that perform BPH surgeries. The significant increase in new accounts in conjunction with our ability to move accounts up the utilization curve further demonstrates not only our team's consistent commercial execution, but growing customer and patient demand for Aquablation therapy. As we highlighted earlier this year, there are multiple factors trending in the right direction, which will allow us to continue to execute against our long-term growth plan while being disciplined in ensuring a path to profitability. We believe these underlying fundamentals reflect the technology that is laying the foundation to become the BPH surgical standard of care and a business that will be a leading urology franchise globally. Starting with the hospital CapEx environment. We continue to believe the market is stable to improving compared to the previous 9 to 12 months. Specifically, we are having more proactive conversations with the hospital CFOs and IDN network partners who just a few quarters ago were exercising more caution in pursuing general CapEx investment given lingering macro headwinds. With a growing and increasingly educated patient population, along with motivated urologists, we are seeing hospitals prioritize investment in our AquaBeam Robotic System to ensure they stay competitive and not lose patients to other area hospitals. Given the disruptive nature of our technology and that patient outcomes are independent of certain skill or experience, every BPH hospital can now build a robust BPH practice with Aquablation therapy and not have to refer patients out to area specialists. Given these market dynamics, we are still very early in our adoption curve with a long runway in front of us selling to BPH hospitals. Additionally, in the first quarter, we launched a pilot program at our first ambulatory surgery center in the United States with one of our most experienced Aquablation surgeons. To be clear, we sold 38 systems in the first quarter, but placed 39. The 39th is the aforementioned ASC and is included in our U.S. installed base of 354. Our primary commercial strategy remains focused on penetrating BPH hospitals and partnering with the thousands of urologists who perform resective surgeries. For Aquablation therapy to be the market leader, we first need to convert the majority of TURP and laser procedures, which are primarily performed in the hospital setting before making a meaningful transition to ASCs. Our objective in placing systems at ASCs is to ultimately expand the surgical market long-term and increase overall surgical patient volumes that were previously either on medication or failed medication. To note, there's established Medicare reimbursement for Aquablation therapy in the ASC at approximately $6,200 per procedure. We are encouraged with early utilization metrics at this center and will provide additional updates when it makes sense in the future. Turning to our commercial organization. We entered 2024 with approximately 40 capital sales reps, of which 10 were added in the third and fourth quarter of 2023. As a reminder, we believe the productivity curve for a capital rep is approximately six months. Over this six months period, they are responsible for building out their respective pipelines. Thus, we do not expect the capital reps added in the fourth quarter of 2023 to start meaningfully contributing to U.S. system sales until the second half of 2024, which is factored into our 2024 guidance. Additionally, we hired a new strategic account team, which is not included in the 40 capital reps. Sham will provide further detail on this team's early impact in the first quarter. Next, touching on our utilization team. Given our strong commercial momentum and expanding pipeline, 2023 was an investment year to meaningfully increase headcount and add capacity to support future growth. Similar to our capital rep team, we entered 2024 with the most experienced utilization team in the company's history. While we will continue to increase headcount in 2024, it will be at a slower pace compared to 2023. Our goal in 2024 will be for these reps to continue to identify and train new surgeons at the existing and new accounts to increase utilization. With respect to international performance in the first quarter, we generated $4.3 million of international revenue in the first quarter of 2024, representing growth of 65% compared to the prior year period. Growth in the first quarter was once again driven primarily by strong sales momentum in the United Kingdom. Given the accelerating interest from U.K. surgeons and strong unit economics on handpiece and system average selling prices, we plan to make further investments in 2024 in the U.K. to accelerate growth and expand patient awareness. Additionally, following our post-market survey in Japan, we have generated significant interest from Japanese surgeons. We are currently in the final stages of signing sales contracts with some of the most reputable urology practices in Japan, and we plan to launch the Aquablation therapy program later this year. While we are excited about these early placements, it will take time to build our pipeline and launch accounts to start generating meaningful procedure volumes and revenue. Like the U.S. and the United Kingdom, our strategy is to lead with clinical data and key opinion leader adoption to support a more robust and sustainable commercial launch. Lastly, I want to touch on prostate cancer. A few weeks ago, we announced we will be hosting an investor event and surgeon panel at the 2024 American Urological Association Conference in San Antonio on Friday, May 3rd at 8 a.m. Central. A webcast option will be available on our IR website for those who cannot attend in person. The agenda for Friday's event will be to highlight the six-month follow-up data of patients treated for prostate cancer with Aquablation therapy. Additionally, one of our panelists will share a specific prostate cancer case and how the patient was treated. Lastly, we will conduct a fireside chat with Dr. Inderbir Gill, founding Executive Director of USC Urology and Chairman of Urological Cancer Surgery at the Keck School of Medicine of USC. The fireside chat will focus on limitations of current prostate cancer treatment options and why Aquablation therapy has the potential to be a great option for patients and, ultimately, surgeons who want to recommend the treatment that is effective and reduce the rates of unnecessary harm. We look forward to seeing many of you this Friday in person. To conclude my prepared remarks, every key metric we track continues to move in the right direction. To summarize, our pipeline and sales funnel continued to grow nicely in what we currently believe is a stable to improving macro environment. On average, the longer an account has been active, the more procedures they do. We are launching new accounts with more surgeons while sustaining retention rates consistently above 90%. Our commercial organization is the largest and most tenured in the company's history, which we believe will lead to increased productivity. And lastly, we will continue to enroll patients in both prostate cancer studies to support Aquablation therapy's clinical value in this therapeutic area to expand our footprint in the larger urology market. Given this positive momentum, we believe Aquablation therapy is laying the foundation to become the BPH surgical standard of care and PROCEPT is emerging as a leading global urology company. With that, I will turn the call over to Sham.

Sham Shiblaq, Chief Commercial Officer

Thanks, Reza. I appreciate the opportunity to speak today as this is my first time participating in our quarterly earnings calls, while I've met a number of you at various investor events and bus tours. My name is Sham Shiblaq, and I am PROCEPT's Chief Commercial Officer and have been with the company since March 2019. Having been at the process for over five years now is very fulfilling to look back at what we have collectively been able to accomplish in a relatively short period. While our recent history has been exciting, we believe our future will be transformational. To build off Reza's section, I want to provide additional context on a few key areas, starting with an update on our strategic accounts team and relationships with IDNs. As Reza mentioned, we successfully hired a strategic accounts team who joined PROCEPT with decades of experience selling capital equipment and building successful robotic programs and large IDNs. The role of this team will be to focus on partnering with strategic IDN networks across the country to improve our sales efficiencies in both the capital selling process and improved utilization at targeted IDNs. As a reminder, we successfully established sales and legal contracts with the majority of large strategic IDNs in 2023, which allowed this new team to hit the ground running in the first quarter. Our IDN strategy is initially focused on the top 17 strategic IDNs that account for 29% of BPH hospitals. Regarding system sales in the first quarter, we saw several sales to these strategic IDNs. In prior quarters, hospitals in these IDNs would access regional or local funds to purchase the AquaBeam system. In the first quarter of this year, multiple strategic IDNs used corporate funds to complete AquaBeam purchases. This is a positive shift demonstrating the support of Aquablation therapy at the corporate level of strategic IDNs. The systems purchased by these IDNs in the first quarter were already in our targeted sales pipeline and well progressed in our sales process, so they did not add to our forecast incrementally. Nevertheless, the strategic account team played a crucial role in utilizing corporate funds to deploy AquaBeam systems in hospitals where we already have an existing surgeon champion. Given an improving hospital CapEx environment and the team's early contributions in the quarter that is typically seasonally difficult, we not only have a high degree of confidence but high expectations for what they can accomplish in future quarters. Turning to surgeon interest and patient awareness. As we have communicated to investors over the last few years, our primary focus is for Aquablation therapy to become the standard of care for BPH surgery. And to achieve this goal, we have prioritized surgeon engagement, patient outcomes, and training. Regarding surgeon engagement, in the first quarter, we held numerous peer-to-peer medical education events, which included participation from hundreds of urologists who were introduced to Aquablation therapy for the first time. Given the growth we have experienced over the last few years, our medical education events have been a great way to highlight our technology and for customers to share their positive experience with Aquablation with prospective physicians. This allows our participating surgeons to engage more effectively with their respective hospital CFOs to eventually acquire an AquaBeam Robotic System. Regarding first quarter procedure volumes, the primary drivers of procedure volume continued to be active surgeon growth and adding new surgeons at both existing and new accounts. Additionally, our ability to maintain surgeon retention rates above 90% demonstrates the clear patient and surgeon benefits of our technology, which ultimately leads to increased utilization. As a company, we benefit greatly from this high level of surgeon retention as our commercial team can focus on adding new surgeons. And with that, I will turn the call over to Kevin.

Kevin Waters, CFO

Thanks, Sham. Total revenue for the first quarter of 2024 was $44.5 million, representing growth of 83% compared to the first quarter of 2023. U.S. revenue for the quarter was $40.2 million, representing growth of 85% compared to the prior year period. In the first quarter, we sold 38 AquaBeam Robotic Systems with average selling prices of $373,000, generating total U.S. system revenue of $14.2 million, representing system revenue growth of 62% compared to the first quarter of 2023. As Reza indicated, we sold 38 systems in the first quarter, but placed an additional system at an ASC. While we may consider additional ASC placements in 2024, these placements are not factored into our system revenue guidance for 2024. U.S. handpiece and consumable revenue for the first quarter of 2024 was $23.6 million, representing growth of approximately 101% compared to the first quarter of 2023. Handpiece growth was driven by an increase in the installed base of AquaBeam Robotic Systems, which has grown 84% from the first quarter of 2023. Additionally, monthly utilization of 6.8 handpieces per account increased approximately 7% compared to the first quarter of 2023. Utilization in the first quarter exceeded our initial guidance and as expected was down sequentially, given normal elective procedure seasonality compared to the calendar fourth quarter. Overall, we continue to see increased utilization across all cohorts, which is a direct reflection of strong commercial execution, training new surgeons, and surgeons taking the next step to adopt Aquablation therapy as their treatment of choice for all resective procedures. We shipped 6,811 handpieces in the U.S. in the first quarter representing unit growth of 100% compared to the first quarter of 2023. First quarter handpiece average selling prices were approximately $3,200. We also recorded $1.8 million of other consumable revenue in the first quarter of 2024. International revenue for the first quarter was $4.3 million, representing growth of approximately 65%. Gross margin for the first quarter of 2024 was 56.2%, representing an all-time high and 120 basis points above the high end of our first quarter guidance we provided in February. Gross margin expansion in the first quarter was due to strong execution from our operations team and our ability to absorb overhead expenses along with revenue overachievement. Moving down the income statement. Total operating expenses in the first quarter of 2024 were $52.7 million compared to $40.9 million in the same period of the prior year and $50.8 million in the fourth quarter of 2023. The increase was driven by increased sales and marketing expenses, primarily to expand the commercial organization and increased research and development expenses, and general and administrative expenses. When comparing revenue growth to operating expense growth, we grew revenues 83% in the first quarter on 29% operating expense growth, which results in a favorable ratio of 2.9x. Total interest and other income was $1.7 million. Quarterly interest expense from our $52 million term loan was offset by favorable interest income from our cash balances. Net loss was $26 million for the first quarter of 2024 compared to $28.5 million in the same period of the prior year. Adjusted EBITDA was a loss of $20.4 million compared to a loss of $23.9 million in the first quarter of 2023. Our cash and cash equivalents balance as of March 31 was $229 million. We believe our strong balance sheet will provide the liquidity and capital resources needed to support and grow our current business. Moving to our 2024 financial guidance. We now expect full-year 2024 total revenue to be approximately $213.5 million, representing growth of approximately 57% compared to 2023. Starting with U.S. systems, we continue to expect approximately 45% of system sales to be in the first half of 2024, which we attribute to normal seasonality and our expanded sales force becoming more productive in the second half of 2024. This exhibits a similar cadence to what we experienced in 2023. We also anticipate system average selling prices in 2024 to be approximately $370,000. Turning to U.S. handpieces, we continue to expect to sell approximately 33,000 handpieces for the full year with average selling prices of approximately $3,200. We also expect other consumables revenue to be approximately $9 million for the full year. Regarding quarterly cadence, we expect utilization to modestly increase sequentially throughout the year. Additionally, we expect U.S. service revenues to be approximately $12 million. Lastly, on international revenue. Given another strong quarter and positive momentum in the United Kingdom, we now expect full-year international revenue to be approximately $18.5 million, representing growth of approximately 56%. Moving down the income statement, we now expect full-year 2024 gross margins to be approximately 58% to 59%, an increase from our previously issued guidance of 57% to 58%. Regarding quarterly cadence, we expect gross margins to increase sequentially throughout the year, with the second quarter being approximately 57%. Turning to operating expenses, we continue to expect full-year 2024 operating expenses to be approximately $231.5 million, representing growth of 29%. In terms of quarterly cadence, we expect the second and third quarter operating expense growth to be in the low 30 percentage range compared to the prior year period. Given current interest rates, we expect to generate net interest income of approximately $7 million in 2024. Given the increase in revenue and gross margin, we now expect full-year 2024 adjusted EBITDA loss to be approximately $70 million, an improvement from a loss of $73 million from our previous guidance. Lastly, we expect our cash burn to approximate our adjusted EBITDA and improve sequentially throughout the year.

Reza Zadno, CEO

Thanks, Kevin. In closing, I want to thank our employees, customers, and shareholders for all their support to help us along our journey to becoming the standard of care for BPH. We will continue to leverage our commercial and clinical investment to execute on our long-term strategy. Have a great day, and I look forward to seeing many of you at our AUA investor event on May 3 at 8 a.m. Central Time in San Antonio, Texas. At this point, we will take questions. Operator?

Operator, Operator

Our first question comes from Craig Bijou with BofA Securities.

Craig Bijou, Analyst

Congrats on a good start to the year. I wanted to focus on, Kevin, your comments on utilization and the sequential improvement in the monthly utilization. And it's a little bit different than kind of the seasonality that you saw last year. So maybe if you can give us a little bit more color on kind of what you're seeing that gives you the confidence that you can see that utilization accelerate throughout the year?

Kevin Waters, CFO

Thank you, Craig, it's great to see you this morning. You're right in your observation. We are very happy with the strong start to the year in monthly utilization, which has risen by about 7% compared to last year. Following the first quarter, we believe this gives us strong proof points and confidence to continue increasing sequential utilization throughout the year. Specifically, we monitor various metrics related to utilization, such as the initiation of new accounts with multiple surgeons, which has seen an increase from the previous year and contributes to sequential growth in utilization. We are also observing that older cohorts are performing more procedures than they did previously. Additionally, our surgeon retention rates remain above 90%. When we combine these factors, while we want to manage expectations, our guidance suggests we will end the year with approximately 500 systems in the U.S. With a larger installed base, the impact of new accounts is becoming less dilutive, which gives us confidence to modestly boost sequential utilization throughout the year.

Craig Bijou, Analyst

I appreciate that information. It was encouraging to observe the improvement in profitability metrics, particularly the gross margin, and the raised guidance while operating expenses remained consistent despite the increased revenue outlook. I'd like to understand better how confident you are in your ability to maintain leverage in the business and if there is potential for additional leverage or upside beyond what you already anticipate.

Kevin Waters, CFO

Yes. And we stated this on our last call when we issued full-year operating expense guidance that we wanted 2024 to be a year where investors felt there was room to overachieve on the top line, but we would be disciplined and kind of maintain our guidance around our operating expenses, and that manifested itself in our first-quarter results. And specifically, when I look at OpEx, what's exciting for the business is really the exit velocity that our guidance implies from a leverage standpoint. You're going to see year-over-year OpEx growth in the fourth quarter in the low 20% range with improving margins, which should be 60% plus exiting the year. I think this is going to demonstrate to our investors tremendous leverage as we exit the year, and we feel really good about our ability to achieve that.

Operator, Operator

Our next question comes from Matthew O'Brien with Piper Sandler.

Matthew O'Brien, Analyst

Maybe just for starters on the ASC side. You just talked about what you're going to be looking for in terms of pursuing that opportunity, the investments you need to make to go down that pathway, the profitability profile versus the hospital? And I guess, why is now the time to start to pursue that just given all the opportunity that you have within the hospital setting?

Reza Zadno, CEO

Yes. Thanks, Matt. Our primary commercial strategy remains focusing on penetrating high-volume hospitals and partnering with the thousands of urologists who are performing resective surgeries. And at the same time, we know in order to become a market leader, we have to convert the majority of TURP and laser procedures first in the hospital before we make meaningful transition to ASCs. In the prepared remarks when we talked about the particular site that we installed the system is one of our most tenured and experienced surgeons. And in fact, this individual actually requested to pursue an ASC. This was, quite frankly, a pull, not a push. But our objective in placing the system at ASC is to ultimately expand this market. I don't know, Sham, if you want to add anything to this?

Sham Shiblaq, Chief Commercial Officer

Yes. Thanks, Matt, for the question. The why now question is a good one in the sense of this is not a new interest from our surgeons. We've received desire to go to ASC in the past and we've talked about it. As Reza mentioned, we have a lot of opportunity remaining in the hospital setting. We continue to be hyper-focused on that opportunity. With that being said, when we look at specific markets, there are some areas that have adopted the technology quite rapidly, where we have large penetration in certain geographic areas, surgeons with a lot of Aquablation experience. We have established Medicare reimbursement in the ASC. There are a lot of things that we potentially feel like we want to validate in 2024 as far as the pilot program goes. And like Reza mentioned, we have surgeons that have a desire to do it. So we're using 2024 as a pilot year for us to kind of get this program up and running. So in the future, if we desire to expand ASC, we have that process worked out.

Kevin Waters, CFO

Yes. Thanks. So I'll first address our Q1 performance. The majority of this upside did come from us operating more efficiently at our new facility. We had increased production. We had reduced scrap, and we had improved fixed cost absorption, particularly compared to the fourth quarter, which we talked about on our last call as one-time items. I think the first quarter kind of proved that out. And we do expect this trend to continue to improve as we increase revenue. You also do see some pricing favorability in our revised guidance. We now believe we're going to be solidly in the 370 range on systems. You see handpiece ASPs going up about $40 to $3,200. All of that is helping drive confidence and predictability in our gross margins.

Operator, Operator

Our next question comes from Josh Jennings with TD Cowen.

Joshua Jennings, Analyst

Great to see the strong start here in 2024. I wanted to follow up on just some of these profitability questions and thinking about the operating expense guidance for '24 and the leverage. I think you've called out, I guess, 2x revenue growth over OpEx growth in '24 versus 1.5x in 2023. As you think about 2025 and I know you're not issuing guidance for the out years, but is that the right kind of pace of leverage improvement to think about as we're moving into 2025 and 2026 as we're updating our models?

Kevin Waters, CFO

Yes. We’re not going to provide specific guidance for 2025, so I’ll just share a few thoughts. I’ve consistently said that achieving a 2:1 operating expense leverage is a solid target for reaching profitability, and it’s something we’re aiming for in the years ahead. We actually demonstrated even better than that in the first quarter. I can’t speak to the overall mentality of the company, but having been here for over five years, I’ve seen a shift. In the past, the management team focused heavily on revenue growth, striving to prove our technology could set the standard of care, which required significant investment. Now, I believe the mindset has shifted towards a commitment to profitability. We understand that with our revenue growth, we now need to deliver profits to our shareholders. This mentality has been embraced by the entire PROCEPT team, and we’re operating in a more disciplined manner than before. While the first quarter represents just one period, I feel optimistic about the direction the business is heading.

Operator, Operator

Our next question comes from Richard Newitter with Truist Securities.

Richard Newitter, Analyst

Congrats on a great start to the year. Several from me. Maybe just starting on the IDN strategic accounts team. Good to see that in place. It seems like it's coming right at a time when you have good visibility into all of the corporate C-suite level IDN contracts in place. What does this really do for you in terms of if you could talk to your visibility into the funnel conversion? Does this just give you a better line of sight to timing of the existing funnel and when that can translate to revenue? I'm also just wondering if perhaps it does something for your visibility into pricing right, now that you're putting a firm stake in the ground for a $370,000 ASP. That tended to fluctuate, and you've always said to brace for that. So has anything changed there? And I have a follow-up.

Kevin Waters, CFO

Yes. So I'll start. This is Kevin. Maybe I'll turn it over to Sham. And as Sham did mention in his remarks, we did see in the first quarter for the first time, multiple strategic IDNs use corporate funds to complete AquaBeam purchases in the first quarter. While this is positive, these deals were already in our targeted sales pipeline, they were well progressed in the funnel, where in prior quarters, regional or local funds were used, and it is good to see this momentum. Just the dynamics of that team, I would argue that some of these deals wouldn't have gone over the finish line without the incremental adds that we had in the strategic accounts team and their relationships with these administrators at IDN. So with that, maybe I'll turn it over to Sham to talk a little bit about the team dynamics there.

Sham Shiblaq, Chief Commercial Officer

Sure. So I think there's a couple of things to think about when you think about IDN relationships and programmatic success. Every IDN actually has a different goal. It's really important that when you are starting to get to the point where we are as a company, we're not working with one or two hospitals in IDN. We have significant footprint now in some of these IDNs that we understand what their goals are as a hospital network and that we're building programs to achieve those goals for each hospital. In the past few years, we were really focused on starting to build our footprint. That is not something that companies need to necessarily focus on when you're just trying to show that you have a great program and there's the clinical benefit of the procedure. For our strategic accounts team, they have a bifurcated kind of goal. One is to obviously get new hospitals to acquire the technology, but number two is to make sure those programs are very successful. The IDN wants to continue to buy more robots in the future. What we talked about in our prepared remarks was the first time we really saw in Q1 of '24, that we sell corporate IDNs allocating funds at the corporate level to buy robots for PROCEPT. In the past, yes, we had contracts with the IDNs but they would let the local funds or regional funds be used. This shift is obviously showing that our IDN team is starting to make a difference in understanding the needs of corporate IDNs, and hopefully, long term, that will serve us well.

Operator, Operator

Our next question comes from Christopher Pasquale with Nephron Research.

Christopher Pasquale, Analyst

I have a couple of follow-up questions regarding the ASC opportunity. This is a significant milestone for a few reasons. To begin with, physicians usually prefer not to perform procedures in environments where there is a high risk of bleeding. Could you share your insights on what this indicates about the current safety status of Aquablation and how some of the initial challenges with the procedure have been addressed?

Reza Zadno, CEO

Yes, thank you. As you remember, we released data on bleeding more than a year ago regarding the protocol we started in January of 2020. We are pleased with the outcomes of all the procedures performed since then. In fact, we believe it's the best in class regarding bleeding compared to other procedures. Many facilities have already begun allowing same-day discharges. We are seeing significant progress, and the issues we faced before the 2020 protocol are not a concern anymore. As Sham and I mentioned, this is primarily about market expansion. Initially, we focused on high-volume hospital centers, starting with 860 and aiming for 2,700. As Kevin pointed out, in 2019, there were 300,000 resective procedures, but there are over 12 million men with BPH, many of whom have not responded to medication. Our ultimate goal is to expand that market, beginning with hospitals. We view this as complementary rather than mutually exclusive; we plan to place our system in both hospitals and ASCs.

Sham Shiblaq, Chief Commercial Officer

Yes, I would like to add that we are being very intentional about our approach. We have significant interest in moving to the ASC setting, but we are focusing on effectively penetrating the hospital market first. There are still many opportunities available to us there. We have experienced and high-volume Aquablation surgeons who have made inroads into numerous hospitals in their regions. You will hear more about this on Friday at our investor conference. The MSAs are specific geographic areas that don’t have a full network of Aquablation hospitals, presenting us with the chance to build out the ASC and grow that market from there.

Operator, Operator

Our next question comes from Nathan Treybeck with Wells Fargo.

Nathan Treybeck, Analyst

Congrats on the strong quarter. I wanted to focus on AUA. You talked about showing six-month follow-up data from your prostate cancer trial. I guess what are the key data points that you expect physicians will be focused on here? And assuming the data is good, do you expect Aquablation use in prostate cancer in 2024?

Reza Zadno, CEO

Yes, thanks. We are very excited to share more data on Friday and hope you can attend. The agenda will focus on the six-month follow-up for early patients whose initial goal was to eliminate the contraindication for those with BPH and cancer, which the FDA has since removed. The next steps involve the two IDE studies we have initiated. Currently, if patients have BPH and cancer, they can treat their BPH. Our aim is to utilize the safety profile we've established for BPH since it involves the same organ and procedure for treating cancer patients. However, it's too early to determine if this is ready for commercialization in cancer. We intend to present more data, starting with the safety profile and demonstrating efficacy.

Sham Shiblaq, Chief Commercial Officer

Nathan, we're very excited about the opportunity. On Friday, you will hear from a couple of surgeons about their personal experiences with Aquablation in treating BPH and cancer. The new labeling enables us to treat BPH patients who also have prostate cancer. You will see some data on this on Friday, which represents a significant segment of men. We will continue to gather data, and in regard to prostate cancer, we will proceed with caution. We'll collect the necessary information and allow surgeons to drive the adoption once they have reviewed the data.

Operator, Operator

I'm not showing any further questions at this time. I'd like to turn the call back over to Reza Zadno, CEO, for any closing remarks.

Reza Zadno, CEO

Yes. Thanks, everyone, for attending this call. We look forward to seeing many of you hopefully at the AUA investor event on May 3. And thanks again, and see you soon.

Operator, Operator

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.