What PROCEPT BioRobotics Corp. told the SEC could break it.

PROCEPT manufactures both its robotic systems and its single-use disposable handpieces in California — concentrating production of its capital equipment and its high-margin recurring razor-and-blade revenue at one site. A California-specific event (earthquake, wildfire, power loss, labor disruption) at the single manufacturing location would simultaneously interrupt new-system placements and the disposable-handpiece stream that drives recurring revenue, with limited large-scale-manufacturing experience to fall back on. A genuine single-site manufacturing concentration.

“While we manufacture our robotic systems and handpieces in California”

Although PROCEPT manufactures its robotic systems and handpieces in California, it sources certain components from foreign suppliers — including a third-party manufacturer of ultrasound systems and probes located in China that is bundled with every robotic system — and its suppliers import raw materials/components from abroad. Increased U.S. tariffs or other trade restrictions could raise the cost of its products and inputs and force additional risk-mitigation measures. The China-located, single-source ultrasound component sits in the critical path of every system shipment, making this a specific China-sourcing and trade-policy exposure. A distinct tariff/China-component supply exposure.

“we source certain components from foreign suppliers, including a third-party manufacturer of ultrasound systems and probes located in China.”

PROCEPT relies on third-party suppliers, almost all of whom are single-source, for certain components, sub-assemblies and materials used in its AquaBeam and HYDROS robotic systems and single-use handpieces, and depends on contract manufacturers and single-source suppliers generally — leaving it vulnerable to supply shortages and price fluctuations. A critical bundled component (a third-party ultrasound system and probe) ships with every robotic system. With essentially no qualified second sources, a disruption, quality failure or price action at one supplier could halt system or handpiece production. A broad, high-exposure single-source supply dependence.

“We rely on third-party suppliers, almost all of whom are single source suppliers, to provide us with certain components, sub-assemblies and materials for our products.”