Stereotaxis, Inc. — Form 10-Q Summary
Business context and reporting period
Stereotaxis designs and markets robotic systems, disposable devices, accessories, and information systems for minimally invasive endovascular procedures, with a primary focus on electrophysiology and cardiac ablation. The filing covers the unaudited three months ended March 31, 2022, compared with the three months ended March 31, 2021.
Key financial metrics
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Total revenue | $7.0 million | $8.6 million | Down 18% |
| Systems revenue | $1.6 million | $2.6 million | Down 37% |
| Disposables, service and accessories | $5.4 million | $5.8 million | Down 6% |
| Gross profit | $4.9 million | $6.0 million | Down 18% |
| Gross margin | 70% | 70% | Flat |
| Operating loss | $4.1 million | $1.5 million | Loss increased |
| Net loss | $4.1 million | $1.5 million | Loss increased |
| Net loss attributable to common stockholders | $4.4 million | $1.9 million | Loss increased |
| Basic and diluted loss per share | $0.06 loss | $0.02 loss | Higher loss |
| Cash used in operating activities | $2.2 million | $0.3 million | Higher use |
| Cash used in investing activities | $1.2 million | Less than $0.1 million | Higher use |
| Cash, cash equivalents and restricted cash at period-end | $36.9 million | $43.9 million | Down $7.0 million |
Operating expenses were $9.0 million, compared with $7.5 million in the prior-year quarter. Research and development and sales and marketing expenses were broadly stable, while general and administrative expense increased 62% to $3.6 million, primarily because of higher stock-based compensation related to the CEO Performance Award.
As of March 31, 2022, the company had $35.1 million of cash and cash equivalents, $1.8 million of restricted cash, $35.6 million of working capital, and no debt. Total liabilities were $19.5 million, including $6.1 million of current deferred revenue, $2.1 million of long-term deferred revenue, and $6.1 million of operating lease liabilities.
Material changes versus the prior comparable period
- Total revenue declined 18%, reflecting lower system shipments, lower procedure volumes, and reduced time-and-material service projects.
- Systems revenue fell to $1.6 million from $2.6 million, while systems gross profit declined to $0.3 million from $1.2 million.
- Recurring and procedure-related revenue remained the majority of revenue; disposables, service and accessories represented $5.4 million, compared with $5.8 million in Q1 2021.
- Sublease revenue of $0.2 million recorded in Q1 2021 was eliminated because the sublease ended December 31, 2021.
- Gross margin remained approximately 70%, and disposables, service and accessories gross margin improved to 85% from 84%.
- Operating losses widened primarily because of lower gross profit and higher general and administrative costs.
- Cash used in operations increased to $2.2 million, and capital expenditures increased to $1.2 million, primarily for equipment and construction and design costs associated with the new St. Louis facility.
- Share-based compensation increased to $2.5 million from $1.4 million; $1.8 million of Q1 2022 expense related to the CEO Performance Award.
Guidance, outlook, risks and unusual items
The filing does not provide specific quantitative revenue, earnings, or cash-flow guidance. Management expects continued uncertainty in 2022 and anticipates periodic disruption to procedure volumes, service activities, and system placements, with capital system orders potentially delayed.
- Management reported that Q1 2022 procedure volumes declined nearly 11% year over year, driven by COVID-19 resurgences, hospital staffing issues, and other factors.
- COVID-19, hospital labor shortages, supply-chain constraints, logistics delays, inflation, and delayed hospital construction projects may reduce demand, delay installations, increase costs, and extend sales cycles.
- Manufacturing and supply chains were described as manageably impacted as of the filing date, but the company could face material interruptions or higher input costs.
- Strategic relationships supporting compatibility with imaging, sensing, and disposable-device technologies are important to commercialization and may not continue on acceptable terms.
- The company began payments under a new ten-year facility lease in January 2022. Future minimum operating lease payments totaled $9.2 million as of March 31, 2022, with a present value of lease liabilities of $6.1 million.
- The Series A Convertible Preferred Stock carries a 6% cumulative dividend and has senior rights to common stock. The filing reports approximately 45.8 million common shares issuable upon conversion of Series A Preferred and 5.6 million shares issuable upon conversion of Series B Preferred.
- No CEO Performance Award market-capitalization milestones had been achieved as of March 31, 2022. The award covers up to 13.0 million shares and had approximately $49.5 million of unrecognized compensation cost remaining, assuming continued service.
- Management stated that pending or threatened ordinary-course claims were not expected to materially affect financial position, results, or liquidity. No legal proceedings, subsequent events, or risk-factor updates were reported in Part II of the filing.
Important facts for investors to verify
- Whether procedure volumes and system placements recover from COVID-19-related and staffing-related disruptions.
- The pace and profitability of system shipments, given the substantial year-over-year decline in systems revenue and gross profit.
- Operating cash burn, capital expenditures, and the sufficiency of the $36.9 million cash and restricted-cash balance to fund ongoing losses and lease obligations.
- The effect of CEO Performance Award compensation and potential dilution from preferred-stock conversions, options, warrants, and restricted stock units.
- Exposure to supply-chain constraints, inflation, hospital construction delays, and the loss or disruption of strategic technology relationships.
- The timing and amount of revenue expected from approximately $9.4 million of remaining system-contract performance obligations at March 31, 2022.