TransEnterix Reports Disappointing First Quarter Earnings

Posted on May 10, 2019 by Medtech[y] Staff

There's no way to sugarcoat it, TransEnterix has started off 2019 with a very disappointing first quarter earnings report. In August 2018, we wrote that the fourth quarter of 2018 and the first quarter of 2019 would be critical in understanding how the company has built their capital pipeline. Additionally, we've also written that the U.S. market is the most important and the company needs to prove through sales that they can drive surgeon adoption at home as opposed to internationally.

So how did TransEnterix do?

  • Total revenue of $2.2 million in the first quarter of 2019
  • Sold one Senhance System globally in the first quarter in 2019
  • Received U.S. FDA clearance for Senhance Ultrasonic System

We've always taken the approach that when analyzing TransEnterix, you need to look at the company from a long game perspective. The capital equipment sales process within a hospital system can take between six months to over a year. TransEnterix CEO, Todd Pope, has consistently made this clear, always using a four to six quarter metric when discussing Senhance system sales.

The issue now is that TransEnterix is now beyond the four to six quarters since Senhance received approval. Selling one system globally in the quarter is beyond disappointing.

“Commercially, we were disappointed with our results in the first quarter. We did however make solid progress towards the expansion of our global sales infrastructure and the development of our U.S. installed base to support future growth,” said Todd M. Pope, President and CEO of TransEnterix. “As we look to the balance of 2019, we will continue to leverage the commercial foundation we have built globally to drive the adoption of Senhance both in the U.S. and abroad. We remain confident in the quality of the global pipeline and expect to show meaningful revenue growth in the second half of the year.”

Selling one system in Asia isn't going to cut it.

While the company is still making positive steps as they received FDA 510(k) clearance for its Senhance Ultrasonic System, which deliver controlled energy to effectively ligate and divide tissue, and minimize thermal injury to surrounding structures.

Aside from not selling more Senhance systems, operating expenses and losses significantly increased when compared to the same quarter last year.

  • For the three months ended March 31, 2019, net loss was $22.5 million, or $0.10 per share, as compared to a net loss of $882 thousand, or $0.00 per share, in the three months ended March 31, 2018
  • For the three months ended March 31, 2019, total net operating expenses were $21.6 million, as compared to $5.4 million in the three months ended March 31, 2018.

The company has $49 million in the bank and believes they have sufficient cash to fund the business into late 2020.

Selling more systems in the U.S. will help and it should be the main focus for TransEnterix throughout the rest of 2019.

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