Please ensure Javascript is enabled for purposes of website accessibility

Why TransEnterix Is Cratering Today

By George Budwell – May 10, 2019 at 9:12AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales of the company's Senhance robotic surgery system took a discouraging dip in the first quarter.

What happened

Shares of the robotic surgery company TransEnterix (ASXC -0.40%) dropped by as much as 29.4% in pre-market trading Friday in response to the company's rough first-quarter earnings report, which it released after the closing bell Thursday.

Not only did the company miss Wall Street's consensus estimate for its non-GAAP EPS by 10%, it also whiffed on revenue by a staggering 62% for the period. In fact, TransEnterix's sales fell by 54% in Q1 compared to the same period a year ago. That's a steep drop-off any way you slice it.

A downward trending red arrow set against a black and red grid.

Image Source: Getty Images.

So what

Those unexpectedly poor financial results boil down to the simple fact that TransEnterix only sold a single Senhance System during the quarter -- reportedly to a hospital in Taiwan. 

After Senhance's lightening-fast start last year, Wall Street doubtless didn't expect this type of abrupt decline in the system's commercial momentum. Senhance, after all, appeared to be well on its way to becoming a healthy revenue source for the company. 

Now what

TransEnterix CEO Todd Pope did give investors a reason to be optimistic, however. Pope noted that the company expects to sell two to four units in the second quarter. So, while Senhance's commercial progress has definitely slowed down from the five units sold in Q4 2018, the system isn't dead in the water.

Unfortunately, there is more bad news for investors to digest this morning. The company exited Q1 with only $48.4 million in the bank. Management said that this amount, combined with additional debt proceeds, should be sufficient to fund operations into late 2020. However, Senhance sales will have to pick up in order for the company to meet this projected cash runway. Investors, therefore, might want to forgo trying to catch this falling knife today.

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Asensus Surgical, Inc. Stock Quote
Asensus Surgical, Inc.
ASXC
$0.45 (-0.40%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.