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Here's Why TransEnterix Stock Tanked 27.3% in December

By Cory Renauer – Updated Apr 16, 2019 at 5:34PM

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A market downturn that hit biotech stocks across the board and a dilutive share offering pressured shares of the robotic surgery upstart.

What happened

Shares of TransEnterix (ASXC 7.88%), a company marketing a robotic surgery system, tumbled 27.3% in December, according to data from S&P Global Market Intelligence. It was a quiet month overall, but a market downturn that was tough on tech start-ups across the board took a heavy toll. Also at the end of December, TransEnterix announced a dilutive share offering that's limiting the stock's ability to recover.

So what 

Shares of the leading surgical robotics company, Intuitive Surgical, have exploded 1,300% over the past decade, and investors hoping TransEnterix would follow drove its stock to nosebleed valuations last summer. TransEnterix briefly had a market cap above $1.2 billion but finished the month of December worth just $488 million.

Tired man holding a downward-sloping arrow.

Image source: Getty Images.

Investors digesting the company's latest quarterly report were particularly disturbed by sales of instruments and accessories that suggest the robotic surgical systems the company has installed aren't being used very often. Sales of instruments and accessories that must be replaced after each procedure fell from $1.5 million during the three months ended June to just $867,000 during the three months ended September.

At the end of December, TransEnterix announced an at-the-market share offering intended to raise up to $75 million. If the stock surges again, the dilutive effects would be relatively minor. At recent prices, though, it could raise the outstanding share count 15% higher. 

Now what

TransEnterix recently released preliminary fourth-quarter results that lifted the stock. The company sold five Senhance Systems in the fourth quarter of 2018 and thinks revenue reached $7.4 million during the quarter.

Over the entire year, TransEnterix sold 15 Senhance Systems worldwide and collected top-line revenue of $24 million. The company didn't mention instrument and accessory sales in its preliminary report. If they haven't climbed significantly from third-quarter levels, this stock could fall much further in the new year.

Check out the latest TransEnterix earnings call transcript.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Intuitive Surgical. The Motley Fool has a disclosure policy.

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