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Why TransEnterix Stock Crumbled in the First Half of 2019

By George Budwell - Jul 8, 2019 at 11:18AM

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Investors were none too pleased with the robotic surgery specialist's first-quarter earnings report.

What happened

Shares of TransEnterix (ASXC -0.58%) lost a staggering 39.8% of their value over the first half of 2019, according to data from S&P Global Market Intelligence. What spooked investors? 

The robotic surgery company's stock took a big hit in May following the release of its disappointing first-quarter earnings report. Apart from missing Wall Street's consensus estimates for both its top and bottom lines, TransEnterix also said that it only sold a single Senhance Surgical System during the three-month period. 

A woman slumped over a chair appearing to contemplate some problem, with a red downward pointing arrow hovering above her.

Image source: Getty Images.

So what

Last year, Senhance's commercial launch got off to a blistering start, with the company selling a whopping 15 systems worldwide and hauling in a handsome $24 million in revenue in the process. Wall Street, in turn, was clearly expecting more of the same this year.

However, Senhance's commercial momentum ground to halt in the first quarter, causing the medtech company to post a hefty net operating loss of $22.5 million. TransEnterix also reported that it had a meager $49 million remaining in restricted cash and short-term investments by the end of the quarter. So while the company said that its cash position, combined with additional debt proceeds, should be sufficient to fund operations through late 2020, its current burn rate clearly suggests otherwise.  

Now what

On the bright side, short-sellers have started to back away from TransEnterix over the past six months. Short interest in this stock, in fact, has fallen by over 11% from where it stood at the end of 2018. That's an encouraging sign that the worst might be over for TransEnterix. Short-sellers, after all, rarely let off the the gas when a company is truly in a jam. Even so, investors should probably still take a cautious stance with this small-cap robotic surgery specialist until it has definitively shown that this last quarter was simply a bump in the road.  

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