Stereotaxis, Inc. — Form 10-Q Summary
Business context and reporting period
Stereotaxis designs and sells robotic magnetic navigation systems, interventional laboratory information systems, disposable devices, accessories, and related services. Its primary market is cardiac electrophysiology, with planned expansion into coronary, neurovascular, and peripheral interventions. This unaudited filing covers the three and nine months ended September 30, 2023, compared with the corresponding 2022 periods.
Key financial metrics
| Metric | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 |
|---|---|---|---|---|
| Total revenue | $7.8 million | $7.7 million | $22.2 million | $20.8 million |
| Systems revenue | $3.5 million | $2.4 million | $8.7 million | $4.6 million |
| Disposables, service and accessories | $4.3 million | $5.2 million | $13.5 million | $16.2 million |
| Gross profit | $4.1 million | $4.6 million | $12.1 million | $14.2 million |
| Gross margin | 52% | 60% | 55% | 68% |
| Operating loss | $5.6 million | $5.1 million | $16.5 million | $14.3 million |
| Net loss | $5.4 million | $4.9 million | $15.7 million | $14.1 million |
| Net loss attributable to common stockholders | $5.7 million | $5.3 million | $16.7 million | $15.1 million |
| Loss per share | $0.07 | $0.07 | $0.21 | $0.20 |
Operating expenses were $9.7 million in the third quarter and $28.7 million for the first nine months, compared with $9.6 million and $28.5 million, respectively, in the prior-year periods. Nine-month stock-based compensation expense was $8.0 million, including $5.3 million related to the CEO performance award.
Cash used in operating activities was $6.7 million for the first nine months of 2023, compared with $5.9 million in 2022. Investing activities provided $19.8 million, primarily from the maturity of short-term investments, versus $2.0 million used in 2022. Financing activities provided $0.1 million. Cash, cash equivalents, and restricted cash totaled $23.0 million at September 30, 2023, including $22.1 million of unrestricted cash and cash equivalents. Working capital was $22.5 million, down from $29.0 million at December 31, 2022.
The Company reported no debt. Balance-sheet obligations included $5.6 million of operating lease liabilities and $8.2 million of total deferred revenue, of which $2.0 million was long-term. Total assets were $44.5 million and stockholders’ equity was $18.7 million at September 30, 2023.
Material changes versus the prior comparable period
- Third-quarter revenue increased 2%, while nine-month revenue increased 7%, driven by higher system sales.
- Systems revenue increased 47% in the third quarter and 87% for the first nine months.
- Disposables, service and accessories revenue declined 19% in the third quarter and 16% year to date, reflecting lower disposable sales, prior-year Biosense Webster royalties, and procedure challenges related to partner supply constraints.
- Gross margin declined to 52% in the quarter and 55% year to date, principally because of product mix and the greater proportion of lower-margin system revenue.
- Operating and net losses widened, and operating cash use increased, despite higher revenue.
- Series B Convertible Preferred Stock was converted into 5.6 million common shares in April 2023. Common shares issued increased to 80.9 million at September 30, 2023, from 74.9 million at December 31, 2022.
- Short-term investments declined from $19.8 million at year-end 2022 to zero at September 30, 2023, largely reflecting maturities that increased cash balances.
Guidance, outlook, commentary, risks and unusual items
The filing does not provide quantitative revenue, earnings, or cash-flow guidance. Management continues to pursue growth in electrophysiology and expansion into additional endovascular indications, while seeking regulatory approvals for the MAGiC catheter in various geographies.
- Supply-chain shortages, inflation, logistics delays, and manufacturing interruptions may increase costs or limit the Company’s ability to produce, service, or ship products.
- Hospital staffing shortages, cost pressures, financing constraints, and capital-project delays may lengthen sales and installation cycles or reduce demand for systems and disposables.
- Partner catheter shortages and procedure-volume disruptions may continue to pressure recurring disposable revenue.
- Regulatory approvals may be delayed, require additional clinical or non-clinical data, or be denied. Strategic relationships supporting compatible imaging and interventional devices may not continue on acceptable terms.
- The Company holds cash in excess of FDIC insurance limits. It reported no losses related to Silicon Valley Bank or other deposits during the periods presented.
- Series A Convertible Preferred Stock remains outstanding with a $5.6 million carrying amount, a 6% cumulative dividend, and potential conversion of approximately 48.9 million common shares. The filing states that no cash dividends have been paid or are presently expected.
- Remaining transaction-price obligations on system contracts were approximately $12.1 million at September 30, 2023. No legal proceedings or subsequent events were reported as material.
- Management concluded that disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether system-sales growth can offset declining disposable, service, accessory, and royalty revenue.
- Whether gross margins recover from the 55% year-to-date level as product mix changes.
- The pace of operating cash burn and whether the $23.0 million cash balance is sufficient to fund operations without additional capital.
- The timing and commercial impact of MAGiC catheter and other regulatory approvals.
- The potential dilution from Series A preferred stock, options, restricted stock units, and other equity awards.
- The effect of supply-chain constraints, hospital capital-budget pressure, procedure volumes, and strategic-partner availability on future results.
- The extent to which recurring deferred revenue and the $12.1 million of remaining system-contract obligations convert into recognized revenue.