Shares of TransEnterix (NYSEMKT:ASXC), a medical device company marketing the Senhance robot-assisted surgical system, are plunging again in response to a dismal second-quarter earnings report. Investors disturbed by a lack of new system sales drove the stock 21.7% lower on Thursday.
In 2018 Transenterix sold an encouraging 15 Senhance robots. Now it looks like the party's over before it ever kicked into high gear.
The company sold one surgical robot system in the second quarter, which is exactly how many it sold in the first quarter this year. While it's hardly a fair comparison, Transenterix's main rival, Intuitive Surgical (NASDAQ:ISRG), shipped 273 da Vinci Surgical Systems during the second quarter alone.
Intuitive Surgical also reported sales of consumable instruments that are rising faster than the systems themselves. This signals how useful hospitals find the machines, and it doesn't look like installed Senhance systems have been very busy. Despite installing 15 systems in 2018, Senhance sold just $560,000 worth of instruments and accessories during the second quarter of 2019, a figure which was 63% lower than a year earlier.
Dismal results for sales of new systems, and the accessories that need to be replaced after each procedure is finished, don't bode well for Transenterix's future, and it won't be long before the company needs some cash. Transenterix spent $15.5 million on sales and marketing during the first half of 2019 and recorded just $5.8 million in sales. Sadly, the cost of sales was a little higher than revenue, which left nothing to pay for operating expenses that soared to $43.8 million in the first half.
In July, the company received about $17 million in cash and a $30 equity investment for the sale of the AutoLap positioning system. Adding the proceeds of the AutoLap sales to $34 million in cash and securities on the balance sheet at the end of June gives the company very little breathing room.
TransEnterix thinks its cash and short term assets will run out in mid-2020, which means it has just six months to convince investors the Senhance launch isn't doomed. If it can't, raising significant sums through another equity offering will be nearly impossible.