Stereotaxis, Inc. (Nasdaq: STXS) today reported strong revenue growth, a significant increase in the gross margin, lower operating expenses and a significant reduction in the net loss for both the quarter and the nine month period ended September 30, 2009. Revenue for the recent third quarter totaled $13.3 million, an increase of 26% over $10.6 million for the 2008 third quarter. During the quarter, the Company recognized revenue on six Niobe® Magnetic Navigation Systems and seven Odyssey(TM) systems totaling $8.7 million. Disposables, services and accessories revenue reached a record $4.6 million, a 45% increase from the third quarter of 2008. Gross profit margin was 68% compared with 65% in the third quarter of 2008. Operating expenses declined 18% from the third quarter last year to $13.2 million.
For the first nine months of 2009, revenue grew 31% to $37.1 million compared with $28.2 million in the first nine months of 2008. Recurring revenue grew 56% from $8.6 million to $13.4 million and gross margin increased 37% to $24.7 million, or 67% of sales. Operating expenses decreased 19%, resulting in a 48% reduction in the operating loss to $18.0 million for the first nine months of 2009 compared with a $34.6 million operating loss in the same period in 2008.
Michael P. Kaminski, President and Chief Executive Officer, said, "The third quarter financial results reflect a solid improvement in our Company's march to breakeven. We remain focused on driving revenue growth and strong margins while controlling operating expenses, resulting in a significant reduction in our cash burn to $3.5 million. We are particularly excited about the introduction of the Odyssey platform for non-magnetic labs as seen by the first multiple system order for non-magnetic labs in September. There is tremendous interest in the Odyssey and Cinema platform driven by increased market awareness and recognition of the system value. By consolidating many diverse sources of diagnostic and other information into a single manageable format, Odyssey offers improved procedure efficiency, enhanced archiving and a unique opportunity to network labs and sites together for educational and consulting purposes, creating a platform for improved quality of care. We have experienced significant market interest in this platform and anticipate it becoming a third leg to our revenue growth in 2010."
"We are pleased with the third quarter recurring revenue of $4.6 million and the 45% growth over prior year but recognize that the challenge of driving clinical adoption is a process focused on moving the market to a new standard of care. We will continue to shift more resources into this important initiative to maximize our adoption at existing sites and to support the growth of the installed base."
"During the quarter, we generated $6.3 million of new capital orders, up from $5.0 million in the second quarter. We are encouraged by the increase in new orders, which along with our backlog, positions us well for continued growth. Lastly, with the infusion of $28 million in net proceeds from our recent capital raise and our incremental improvement in cash burn, we believe the Company is positioned well to execute its growth plan and strategy in 2010 and beyond," Mr. Kaminski concluded.
Third Quarter 2009 Financial Performance
Gross margin for the quarter was $9.0 million, or 68% of revenue, compared with $6.9 million, or 65% of revenue, in the third quarter of 2008. Third quarter operating expenses decreased 18% to $13.2 million from $16.1 million in the third quarter of 2008.
The operating loss in the third quarter decreased significantly to $(4.2) million compared with $(9.2) million in the prior year. The Company reported a net loss for the third quarter of 2009 of $(5.8) million, or $(0.14) per share. This compares with a net loss for the third quarter of 2008 of $(10.1) million, or $(0.28) per share. The weighted average shares for the recent third quarter totaled 42.0 million compared with 36.6 million in the third quarter of last year. The increase was due in large part to the issuance of 4.4 million shares as part of two concurrent private placements of stock completed in December 2008.
Cash used in operations was $3.5 million for the third quarter of 2009 compared with $5.5 million in the third quarter of 2008. Cash and equivalents at September 30, 2009 totaled $12.0 million, compared with $30.4 million at December 31, 2008. Total debt was $30.8 million, including $16.2 million drawn against the Company's $25 million line of credit. As previously disclosed, in October 2009 the Company received a commitment to expand its line of credit from $25 million to $30 million and to extend the maturity date from March 31, 2010 to March 31, 2011.
On October 15, 2009, the Company completed a public stock offering, issuing a total of 7,475,000 shares of common stock, including the exercise of the underwriter's over-allotment. The transaction was priced at $4.00 per share, representing gross proceeds of $29.9 million. Net of transaction costs, Stereotaxis received approximately $28 million in cash. This transaction will be reflected in the fourth quarter and year-end financial statements.
2009 Financial Guidance
The Company reiterates its outlook for 2009 as follows:
- Total revenue for 2009 is expected to exceed 2008 revenue.
- Gross margins above 65%.
- Operating expenses are now expected to be below $60 million for the full year 2009.
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