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Why TransEnterix Shares Dropped 11.7% Today

By Todd Campbell – Aug 7, 2018 at 5:50PM

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An increase in robotic surgery system sales failed to offset concerns over the company's net loss.

What happened

After reporting a second-quarter 2018 loss and sales that were about in line with its preliminary guidance last month, TransEnterix (ASXC -0.52%) shares fell 11.7% on Tuesday.

So what

In July, TransEnterix reported preliminary second-quarter revenue of between $6 million and $6.3 million, and today it announced revenue was actually $6.4 million, up 304% from last year.

A giant red arrow crashed through a floor as a man in a suit watches.


The company won the FDA green light last fall to begin marketing Senhance in the U.S., and in Q2 TransEnterix reports it sold four Senhance Systems, including one in the United States. Overall, Senhance system sales accounted for $4.7 million of revenue, instruments accounted for $1.5 million of revenue, and services accounted for $200,000 of revenue in the quarter.

However, the company's operating expenses increased to $18.5 million last quarter from $13.1 million in the same quarter last year, and as a result, TransEnterix's net loss in Q2 2018 was $34.2 million, or $0.17 per share, up from a net loss of $14.7 million, or $0.11 per share, in Q2 2017.

Now what

The tiny upstart is trying to break into a market that's dominated by Intuitive Surgical, and frankly, the one sale in the U.S. last quarter offers little conviction that it's making headway. For comparison, Intuitive Surgical's da Vinci robots are installed at over 4,000 locations worldwide, and it shipped 220 da Vinci systems in Q2 2018 alone.

Nevertheless, TransEnterix's new orders offer tailwinds to future instrument revenue, and since new instruments are allowing the use of surgical robots in more procedures, the overall market opportunity is big. If TransEnterix can chip away even a small slice of this market from Intuitive Surgical, it could be meaningful. After all, Intuitive Surgical's sales were $909 million, up 20% year over year.

Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Intuitive Surgical. The Motley Fool has a disclosure policy.

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