TransEnterix, Inc. Reports Operating and Financial Results for the Third Quarter 2019

Nov. 12, 2019 21:05 UTC

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)-- TransEnterix, Inc. (NYSE American: TRXC), a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery, today announced its operating and financial results for the third quarter of 2019 and provided a business update.

Recent Highlights

  • Anthony Fernando appointed President and CEO on November 8, 2019
  • Total revenue of $2.0 million in the third quarter of 2019
  • Amended AutoLap Asset Sale terms, the Company now expects total of $17 million
  • Repaid Term Loan providing simplified balance sheet and financial flexibility
  • Announced proposed reverse stock split to be voted upon at a Special Meeting of Stockholders

“I am enthusiastic to have the opportunity to lead TransEnterix and excited about the opportunity that lies ahead for the company. The Senhance System has a differentiated position in the surgical robotics market and we have assembled a great team to execute on this opportunity,” said Anthony Fernando, President and CEO of TransEnterix. “In the near term, we are focused on taking the actions needed to implement changes in our commercial strategy that I believe will drive shareholder value.”

Commercial and Clinical Update

In the quarter ended September 30, 2019, the Company sold one Senhance® System in Asia, to an end user hospital.

AutoLap Transaction Update

On October 15, 2019, the Company amended the previously-announced AutoLap Sale Agreement such that the purchase price for the AutoLap Assets of $17 million is to be paid in installments of $3 million, which was received on October 15, 2019, issuance of an irrevocable $13 million letter of credit received by October 31, 2019, and $1 million to be paid by December 15, 2019.

The letter of credit was issued as required, and as of the date of this press release, the Company believes that it has satisfied all requirements to release the letter of credit funds and has submitted the letter of credit for payment. The Company continues to anticipate receiving the final $1 million payment by December 15, 2019.

Repayment of Hercules Term Loan

On November 4, 2019, the Company entered into a payoff letter with Hercules Capital, Inc. pursuant to which the Company terminated the Hercules Loan Agreement, as amended. The Company determined it was in the best interests of the Company to pay down the debt and terminate the Hercules Agreement to simplify the Company’s balance sheet and provide additional flexibility as the Board of Directors continues to explore strategic and financial alternatives for the Company. Under the payoff letter, the Company repaid all amounts owed under the Hercules Loan Agreement totaling approximately $16.4 million, which included end of term fees of $1.4 million, and Hercules released all security interests held on the assets of the Company and its subsidiaries, including, without limitation, on the intellectual property assets of the Company.

Reverse Stock Split

The Company is expected to hold a Special Meeting of Stockholders on December 11, 2019, to authorize the Board of Directors to effect a reverse stock split of the Company’s common stock. The reverse stock split proposal includes a proposed range between 1-for-10 and 1-for-40 shares of outstanding common stock. The final ratio will be determined by TransEnterix's Board of Directors after stockholder approval. In addition, if the reverse stock split selected is in the range of 1-for-20 to 1-for-30, the authorized common stock would be reduced to 500,000,000 shares, and if the range selected is greater than 1-for-30, the authorized common stock would be reduced to 250,000,000 shares.

Third Quarter Financial Highlights

For the three months ended September 30, 2019, the Company reported revenue of $2.0 million as compared to revenue of $5.4 million in the three months ended September 30, 2018. Revenue in the third quarter of 2019 included $1.3 million in system sales, $373 thousand in instruments and accessories, and $374 thousand in services.

For the three months ended September 30, 2019, total net operating expenses were $96.4 million, as compared to $13.1 million in the three months ended September 30, 2018. During the three months ended September 30, 2019, the Company recorded a goodwill impairment charge of $79.0 million and an in-process research and development impairment charge of $7.9 million. No impairment charges were recorded during the three months ended September 30, 2018.

For the three months ended September 30, 2019, net loss was $97.8 million, or $0.43 per basic share, as compared to a net loss of $20.2 million, or $0.10 per basic share, in the three months ended September 30, 2018. Net loss and net loss per share are GAAP measures.

For the three months ended September 30, 2019, adjusted net loss was $20.6 million, or $0.09 per basic share, as compared to an adjusted net loss of $12.7 million, or $0.06 per basic share in the three months ended September 30, 2018, after adjusting for the following charges: goodwill and intangible assets impairment, change in fair value of contingent consideration, amortization of intangible assets, change in fair value of warrant liabilities, acquisition-related costs, reversal of transfer fee accrual and the loss (gain) on the sale of the SurgiBot assets. Adjusted net loss is a non-GAAP measure. See the reconciliation to GAAP below.

The Company had cash and cash equivalents and restricted cash of approximately $22.8 million as of September 30, 2019. The Company believes that existing cash and the expected proceeds from the AutoLap transaction are sufficient to support the business into early 2020.

Conference Call

TransEnterix, Inc. will host a conference call on Tuesday, November 12, 2019, at 4:30 p.m. ET to discuss its third quarter 2019 operating and financial results. To listen to the conference call on your telephone, please dial (844) 804-5261 for domestic callers or (612) 979-9885 for international callers and reference conference ID 5398297 approximately ten minutes prior to the start time. To access the live audio webcast or archived recording, use the following link http://ir.transenterix.com/events.cfm. The presentation materials for the conference call will be available for download at http://ir.transenterix.com/events.cfm. The replay will be available on the Company's website.

About TransEnterix

TransEnterix is a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery by addressing the clinical and economic challenges associated with current laparoscopic and robotic options in today's value-based healthcare environment. The Company is focused on the commercialization of the Senhance® Surgical System, which digitizes laparoscopic minimally invasive surgery. The system allows for robotic precision, haptic feedback, surgeon camera control via eye sensing and improved ergonomics while offering responsible economics. The Senhance Surgical System is available for sale in the US, the EU, and select other countries. For more information, visit www.transenterix.com.

Use of Non-GAAP Measures

The adjusted net loss and adjusted net loss per share presented in this press release are non-GAAP measures. The adjustments relate to the change in fair value of warrant liabilities, amortization of intangible assets, change in fair value of contingent consideration, acquisition-related costs, loss on extinguishment of debt, goodwill and intangible assets impairment, reversal of transfer fee accrual and the loss (gain) on the sale of the SurgiBot assets. These financial measures are presented on a basis other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). In the tables that follow under "Reconciliation of Non-GAAP Measures,” we present adjusted net loss and adjusted net loss per share, reconciled to their comparable GAAP measures. These items are adjusted because they are not operational or because these charges are non-cash or non-recurring and management believes these adjustments are meaningful to understanding the Company's performance during the periods presented. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

Forward-Looking Statements

This press release includes statements relating to the repayment of the Company’s debt and future corporate plans. These statements and other statements regarding our future plans and goals constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations and include whether taking the actions needed to implement the Company’s commercial strategy will drive shareholder value, whether the Company will receive the cash under the issued irrevocable letter of credit in November 2019 and the $1 million payment by December 15, 2019, whether the reverse stock split proposal will be presented to stockholders for approval, whether the reverse stock split proposal will be approved by the Company’s stockholders at a special meeting, and whether the reverse stock split, if implemented, will have the desired impact on the company’s stock price, and whether TransEnterix has sufficient cash and expected proceeds from the AutoLap transaction to support the business into early 2020. For a discussion of the risks and uncertainties associated with TransEnterix's business, please review our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019 and our other filings we make with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are based on our expectations as of the date of this press release and speak only as of the origination date of this press release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20191112006050/en/

Contacts

TransEnterix, Inc.
Investor Contact:
Mark Klausner, 443-213-0501
invest@transenterix.com
or
Media Contact:
Terri Clevenger, 203-682-8297
terri.clevenger@icrinc.com

 

Source: TransEnterix, Inc.

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