Stereotaxis Inc (NASDAQ:STXS) Explodes Up The Charts

Source: bizjournals.com

Shares of Stereotaxis Inc (NASDAQ:STXS) have exploded up the chart after news that a US hospital completed more than 1000 procedures using its Niobe system. This news sent shorts scrambling and caused a major short squeeze in the stock. As of last month, almost 500k shares were sold short. With average daily volume of just 60k, it's easy to see how a short covering rally could ignite the stock higher.

Stereotaxis describes itself as "a healthcare technology and innovation leader in the development of robotic cardiology instrument navigation systems designed to enhance the treatment of arrhythmias and coronary disease, as well as information management solutions for the interventional lab. Over 100 issued patents support the Stereotaxis platform, which helps physicians around the world provide unsurpassed patient care with robotic precision and safety, improved lab efficiency and productivity, and enhanced integration of procedural information. Stereotaxis' core Epoch Solution includes the Niobe ES remote magnetic navigation system, the Odyssey portfolio of lab optimization, networking and patient information management systems, and the Vdrive robotic navigation system and consumables."

This week's news said that the Hoffman Heart and Vascular Institute at Saint Francis Hospital and Medical Center in Hartford, CT has completed more than 1,000 cardiac ablation procedures using its Niobe remote magnetic navigation system. Drs. Joseph Dell’Orfano and Aneesh Tolat, electrophysiologists with Arrhythmia Consultants of Connecticut, were among the early adopters of the Niobe system and each has surpassed 500 procedures on the system, making the hospital the leading site in New England to use Stereotaxis technology.

Saint Francis first installed the Niobe system in 2007 and then in early 2012 upgraded to the Niobe ES, the latest generation magnetic navigation platform. The hospital helped pioneer the practice of remote magnetic navigation for electrophysiology procedures in New England, providing feedback and expertise during early usage. Led by Drs. Tolat and Dell’Orfano, Saint Francis has performed more procedures with the Niobe system than any hospital in the region, primarily for complex left atrial and supraventricular tachycardia cases.

Revenue for the full year ended December 31, 2015 was $37.7 million, up 8% compared to $35.0 million for 2014. Systems revenue in 2015 was $10.6 million on seven Niobe ES systems, seven Vdrive systems and $2.8 million in Odyssey sales, compared to $7.8 million in the prior year period. Recurring revenue was $27.0 million, down 1% from $27.2 million in the prior year period. Total procedures declined by 3% from the same period last year; however, VT procedures increased by 15%.

At December 31, 2015, Stereotaxis had cash and cash equivalents of $5.6 million, compared to $3.6 million at September 30, 2015, with unused borrowing capacity of $5.2 million on its revolving line of credit with Silicon Valley Bank. During the quarter, the Company recognized $0.3 million in gross proceeds from its 2015 warrants offering. Cash burn for 2015 was $2.7 million compared to $9.2 million in 2014. At December 31, 2015, total debt was $18.4 million related to HealthCare Royalty Partners long-term debt with no borrowings against its revolving line of credit with Silicon Valley Bank.

Ventricular Tachycardia procedures in the fourth quarter grew 28% year over year, with increased clinical evidence supporting Stereotaxis’ technology as the standard of care. This is a prime growth area for the company. There are an estimated 60,000 VT procedures performed worldwide and growing at over 10% each year. The VT market could be a $100 million a year business for STXS.

Currently trading with a market cap of just $35 million, STXS has rocketed up the charts on short covering. While the company is growing and the latest news is positive, the company continues to post losses. Net loss was $(7.4) million for 2015, or $(0.35) per share, compared to $(5.2) million, or $(0.26) per share, for 2014. From the chatter that we've seen on Twitter, we expect the shorts to continue attacking the company and will use the higher prices to initiate new short positions. For believers in the company, we recommend not chasing this rally and wait on a pullback to go long. We will be updating Insider Financial as soon as we know more. For continuing coverage on STXS, sign up for our free newsletter today and get our next hot stock pick!

Disclosure: We have no position in STXS and have not been compensated for this article.