Stereotaxis Inc. Reports Operating Results (10-Q)
Stereotaxis Inc. has a market cap of $183.7 million; its shares were traded at around $3.32 with and P/S ratio of 3.4.
Highlight of Business Operations: Revenue. Revenue decreased from $10.6 million for the three months ended March 31, 2010 to $10.2 million for the three months ended March 31, 2011, a decrease of approximately 4%. Revenue from the sale of systems decreased from $5.2 million to $4.3 million, a decrease of approximately 18%, primarily due to a decrease in the number of NIOBE systems sold. We recognized revenue on one NIOBE system and a total of $2.7 million for ODYSSEY and CINEMA systems during the 2011 period, versus four NIOBE systems and a total of $0.8 million for ODYSSEY and CINEMA systems during the 2010 period. Revenue from sales of disposable interventional devices, service and accessories increased to $5.9 million for the three months ended March 31, 2011 from $5.4 million for the three months ended March 31, 2010, an increase of approximately 10%. The increase was attributable to the increased base of installed systems, the resulting disposable sales and service contracts, as well as favorable pricing.
Cost of Revenue. Cost of revenue increased from $2.9 million for the three months ended March 31, 2010 to $3.0 million for the three months ended March 31, 2011, an increase of approximately 3%. Cost of revenue for systems sold increased from $2.1 million for the three months ended March 31, 2010 to $2.2 million for the three months ended March 31, 2011. This increase was primarily due to an increase in ODYSSEY systems sold partially offset by a decrease in the number of NIOBE systems sold. Cost of revenue for disposables, service and accessories remained constant at $0.8 million for the three months ended March 31, 2010 and 2011. As a percentage of our total revenue, overall gross margin decreased to 71% for the three months ended March 31, 2011. Gross margin for systems was 49% for the three months ended March 31, 2011 compared to 60% for the three months ended March 31, 2010. The decrease was primarily due to a change in product mix from NIOBE to ODYSSEY systems. Gross margin for disposables, service and accessories was 86% for the current quarter compared to 84% for the three months ended March 31, 2010 due to decreased costs on disposables.
Liquidity refers to the liquid financial assets available to fund our business operations and pay for near-term obligations. These liquid financial assets consist of cash and cash equivalents. At March 31, 2011 we had $30.4 million of cash and equivalents. We had working capital of approximately $2.8 million and $12.4 million as of March 31, 2011 and December 31, 2010, respectively. The decrease in working capital is due principally to the $10.0 million use of cash from operating activities.
As of March 31, 2011, the Company had $17.1 million outstanding under the revolving line of credit and a current borrowing capacity of $19.5 million based on the Companys collateralized assets, including amounts already drawn. As such, the Company had the ability to borrow an additional $2.4 million under the revolving line of credit at March 31, 2011. As of March 31, 2011, the Company was in compliance with all covenants of the bank loan agreement and had no remaining availability on its Lender loan and guarantee.
Under the 2010 amendment to the loan agreement, the Company entered into a $10 million term loan maturing on December 31, 2013 with $2 million of principal due in 2011 and $4 million of principal due in each of 2012 and 2013. Interest on the term loan accrues at the rate of prime plus 3.5%. Under this agreement, the Company provided its primary lender with warrants to purchase 111,111 shares of common stock. The warrants are exercisable at $3.60 per share, beginning on December 17, 2010 and expiring on December 17, 2015. The fair value of these warrants of $228,332, calculated using the Black Scholes method, will be deferred and amortized to interest expense ratably over the life of the term loan.
In July 2008, the Company and Biosense Webster entered into an amendment to their existing agreements relating to the development and sale of catheters. Pursuant to the amendment, Biosense Webster agreed to pay to the Company $10.0 million as an advance on royalty amounts that were owed at the time the amendment was executed or would be owed in the future by Biosense Webster to the Company pursuant to the royalty provisions of one of the existing agreements. The Company and Biosense Webster also agreed that an aggregate of up to $8.0 million of certain agreed upon research and development expenses that were owed at the time the amendment was executed or may be owed in the future by the Company to Biosense Webster pursuant to the existing agreement would be deferred and will be due, together with any unrecouped portion of the $10.0 million royalty advance, on the Final Payment Date (as defined below). Interest on the outstanding and unrecouped amounts of the royalty advance and deferred research and development expenses will accrue at an interest rate of the prime rate plus 0.75%. Outstanding royalty advances and deferred research and development expenses and accrued interest thereon will be recouped by Biosense Webster by deductions from royalty amounts otherwise owed to the Company from Biosense Webster pursuant to the existing agreement. The Company has the right to prepay any amounts due pursuant to the Amendment at any time without penalty. Approximately $18.0 million had been advanced by Biosense Webster to the Company pursuant to the amendment. As of March 31, 2011, $10.8 million of royalty payments owed by Biosense and $2.8 million in supplemental payments had been used to reduce the advances together with the accrued interest thereon and the remaining approximately $6.4 million of amounts owed to Biosense Webster has been classified as short-term debt in the accompanying balance sheet. The Company recorded research and development expenses of $0.1 million and disposables, service and accessories revenue of $0.9 million for the three months ended March 31, 2011, related to this agreement.
Read the The complete Report