Stereotaxis, Inc. is a medical technology company that designs, manufactures, and markets robotic systems, instruments, and information systems for the interventional laboratory. The company's primary focus has been on electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias. However, Stereotaxis is also expanding its technology into other endovascular indications, including coronary, neuro, and peripheral interventions.
Business Overview
Stereotaxis' proprietary Robotic Magnetic Navigation technology enables physicians to complete more complex interventional procedures with greater success and safety. The company's flagship product, the Genesis RMN System, uses externally applied magnetic fields to directly control the tip of flexible interventional catheters or devices, improving navigation, efficiency, and reducing x-ray exposure. The Odyssey Solution consolidates lab information onto one large integrated display, enhancing workflow and productivity.Stereotaxis has strategic relationships with leading fluoroscopy system manufacturers, catheter providers, and electrophysiology mapping system companies, offering customers a comprehensive suite of compatible products. The company has received the necessary regulatory clearances and approvals to market its systems in the U.S. and Europe, and is working to expand its global footprint.
Financials
In the fiscal year 2023, Stereotaxis reported annual revenue of $26.771 million and a net loss of $20.713 million. The company's annual operating cash flow was -$9.139 million, and its annual free cash flow was -$9.505 million.For the first quarter of 2024, Stereotaxis generated revenue of $6.880 million, a 5% increase from the prior year period. System revenue was $2.612 million, while recurring revenue, which includes disposables, service, and accessories, was $4.268 million. Gross margin for the quarter was 58%, with recurring revenue gross margin at 76% and system gross margin at 27%.
Operating expenses in the first quarter of 2024 were $8.712 million, including $2.589 million in non-cash stock compensation expense. Excluding stock compensation, adjusted operating expenses were $6.123 million, down from $6.849 million in the prior year period. The company reported an operating loss of $4.746 million and a net loss of $4.507 million for the quarter.
Liquidity
As of March 31, 2024, Stereotaxis had $18.246 million in cash, cash equivalents, and restricted cash, with no debt. The company used $2.346 million in cash for operating activities during the first quarter of 2024, compared to $2.802 million in the prior year period.Outlook
Stereotaxis expects modest double-digit revenue growth for the full year 2024, driven by revenue recognition of system backlog and new system orders, excluding any contribution from the recently announced acquisition of Access Point Technologies, Inc. (APT). The company is not providing a specific revenue estimate for the current quarter due to the challenges in estimating revenue in any given period.Innovation Strategy and Growth Initiatives
Stereotaxis is pursuing a comprehensive innovation strategy to drive substantial commercial success. Key initiatives include:1. Regulatory submissions and commercialization of the company's proprietary MAGiC ablation catheter in the U.S. and Europe. The MAGiC catheter is designed to perform minimally invasive cardiac ablation procedures.
2. Development and regulatory submissions of a smaller, self-shielding robotic system to enhance the accessibility of Stereotaxis' technology. The company expects European regulatory clearance in mid-2024 and U.S. clearance in the second half of the year.
3. Expansion of the robotic platform's capabilities beyond electrophysiology, including the development of a family of robotically steered guidewires and guide catheters for a broader range of endovascular indications.
4. Advancement of the company's digital surgery platform, Synchrony, for broad operating room connectivity, which is expected to begin formal regulatory testing in the third quarter of 2024.
Acquisition of Access Point Technologies, Inc. (APT)
In May 2024, Stereotaxis announced the acquisition of APT, a privately-held Minnesota-based developer of innovative electrophysiology catheters. The acquisition is expected to close in the third quarter of 2024, subject to customary closing conditions.The strategic rationale for the acquisition includes:
1. Enhancing Stereotaxis' in-house capabilities for developing and manufacturing a broader family of interventional devices that can be navigated by the company's robotic systems.
2. Providing a portfolio of differentiated, high-quality catheters that can be sold alongside Stereotaxis' robotic systems, particularly in the U.S. market where APT currently has a limited presence.
3. Generating approximately $5 million in annual revenue for Stereotaxis during the first year post-acquisition.
Risks and Challenges
Stereotaxis faces several risks and challenges, including:1. Macroeconomic and geopolitical factors, such as supply chain disruptions, inflation, and the ongoing impact of the COVID-19 pandemic, which could adversely affect the company's operations and financial performance.
2. Reliance on strategic relationships with technology leaders and innovators in the interventional market, which may not continue or be replaced with equivalent alternatives.
3. Lengthy and uncertain regulatory approval processes, which could delay or prevent the commercialization of the company's products.
4. Intense competition in the interventional medical device market, which could impact Stereotaxis' ability to gain market share and maintain profitability.