PROCEPT BioRobotics Corp (PRCT) stock intrinsic value fair value estimate & owner earnings analysis

PROCEPT BioRobotics sells the Aquablation robotic system for treating an enlarged prostate (BPH). It earns money three ways: selling or renting the robots ($106M in 2025), single-use handpieces used in every procedure ($181M, up 49%), and service ($20M). Revenue grew 37% to $308M in 2025 and gross margin improved from 61% to 64%. About 88% of revenue comes from the United States. The growth is real, but our method values a business on the cash it actually leaves for owners after paying for everything, including stock compensation. On that measure the company has not yet produced anything. Owner earnings per share were about -$3.25 (2021, a partial-year share count after the IPO), -$1.62 (2022), -$2.52 (2023), -$1.61 (2024) and -$1.68 (2025). In 2025 the business used $49.0M of operating cash, and stock compensation of $47.6M was added back in that figure; treating it as the real cost it is, owner earnings were roughly -$93M. Operating expenses of $300M (sales and administrative $229M, research $71M) were still well above the $196M of gross profit, and both grew faster than the prior year's gap closed. We recorded ten-year-style history from the filings available (five years since the 2021 IPO). Why all three cases come out at $0. Every case must be built only from things that are secured or that the company has already done repeatedly. The company has never earned positive owner earnings, so there is no demonstrated earnings level to grow from. Continued sales growth, further gross-margin gains and spending leverage are all plausible, but each depends on something that has not yet happened, so under our rules they are left out rather than discounted. Bear case: continued losses with no earnings, $0. Base case: the same, $0. Bull case: the identified strengths (recurring handpiece revenue at a 64% gross margin, rising utilization of a growing installed base) are real, but the filings do not show the point at which they outrun operating costs, so the bull case also carries no value. These figures do not mean the shares are certain to be worthless; they mean there is no cash-generating record yet on which to base a value. Balance sheet. The company held $286.5M of cash at year-end 2025 against a term loan secured by substantially all of its assets; an August 2025 amendment moved all principal repayment to the maturity date, and the lender requires the company to keep a minimum of $50M (or 50% of cash, if higher) in collateral accounts. Our method does not credit cash on the balance sheet as value and does not deduct debt, because it values only the cash the business generates. The cash does give the company time to reach break-even, which is why we see no near-term financing pressure, but time is not earnings. What would change our view. Two consecutive years of positive owner earnings after stock compensation would give us an earnings level to value. Stock compensation, which rose from $10M in 2022 to $48M in 2025, is the largest single obstacle: it has grown almost as fast as the gross profit the company adds each year. Could not be fully reconciled: the working-capital lines for 2021 through 2023 are built from individually tagged items and omit an accrued-liabilities line that was not separately tagged, so those earlier-year owner-earnings figures may be off by a few million dollars. The conclusion is unaffected because every year is deeply negative.