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Why Corindus Vascular Robotics Inc. Is Tanking

By Brian Feroldi - Mar 15, 2018 at 4:38PM

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Shares do an about-face after the company reports fourth-quarter results.

What happened

Shares of Corindus Vascular Robotics ( CVRS ), a robotic surgery company focused on vascular disease, fell 22% as of 3:39 p.m. EDT on Thursday after fourth-quarter results were released.

So what 

Here's an overview of the key numbers from the period:

  • Revenue jumped 740% to $4.2 million. The gain was driven by the sale of six new CorPath GRX Systems and four system upgrades.
  • Shipments of cassettes -- which are the consumable portion of the CorPath GRX System -- grew 74% year over year to 455.
  • Net loss declined to $8.0 million for the quarter or $0.04 per share. This matched Wall Street's estimate and was lower than the $9.8 million loss that was recorded in the same period last year.
  • Cash balance at year-end was $17.5 million.
  • The installed base at year-end was 33 systems.

Investors were given a sneak preview of the company's results in January so it isn't entirely clear why shares are selling off so much today. However, the stock also rocketed higher yesterday for no reason at all, so perhaps today's volatility isn't all that surprising.

A seated physician in scrubs using the CorPath GRX System with a patient lying under it

Image source: Corinus Vasvular Robotics.

Now what

Looking beyond the financials, Corindus has notched a number of noteworthy wins recently, including:

  • Winning Food and Drug Administration clearance for the CorPath GRX System to be used in peripheral vascular interventions
  • Winning FDA clearance for new software that will increase the attractiveness of the CorPath GRX platform
  • Launching a new educational series with Medtronic that is designed to educate cardiologists on the benefits of robotic-assisted vascular interventions

When combined with the huge revenue growth and sizable market opportunity, it looks like Corindus is on a nice roll. Given the company's current market cap of just $257 million, there could be a substantial amount of upside ahead if the momentum can continue.

On the flip side, Corindus' cash balance is dwindling, so it likely won't be long before this company decides to raise capital at shareholders' expense. That's not great news when considering that this stock has been more than two-thirds down since its IPO in 2014.

Overall, I find Corindus' technology, opportunity, and business model to be intriguing, but this stock is still way too speculative for my taste. If you're interested in investing in the robotic surgery space, I'd suggest looking elsewhere.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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