Summary
- TransEnterix designs, develops, acquires, and sells medical devices.
- In the six months ended June 30, 2019, the company reported sales of $5.82 million, 0.52x the revenue reported in the same period in 2018.
- With the amount of money invested in marketing, it is worrying that revenue is declining at such a fast pace.
- At a EV/Sales ratio of 14x, the valuation is too high for a company reporting declining revenue and negative FCF.
- The company will not likely file for bankruptcy in the future. Instead, TransEnterix will probably try to sell equity. As a result, the risk of dilution on this name is very significant.
With free cash flow of -$39.7 million in the first six months of 2019 and $23 million in cash, TransEnterix (TRXC) is selling assets to obtain some money. As a result, the share price is declining at a fast pace. The market appears to be quite worried about the stock dilution risk. Also, the company reported massive revenue declines in 2019, and it is trading at 14x forward sales, which is expensive. Competitors are trading at less than 14x sales and do report some revenue growth.
Source: 10-Q
Business And The Sale Of AutoLap System
Founded in 2006, TransEnterix designs, develops, acquires, and sells medical devices.
Source: Company’s Website
The company’s leading device is the Senhance System, which digitizes the interface between the surgeon and the patient in laparoscopy. With this technology, healthcare professionals can increase control and enhance precision. Read the lines below for more details on the robot changes surgery:
Source: Company’s Website
Surgeons can use Senhance System in the United States, the EU, Japan, Taiwan, and other countries. The company makes only 12% of its revenue from the United States. In the first part of 2019, 72% of the total amount of revenue was generated through the sale of systems, and 23% was made from the sale of instruments and accessories. The image below offers further information on the matter:
