Stereotaxis, Inc. 10-K Analysis & Summary – 3/14/2025

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Stereotaxis, Inc.

10-K

Annual report

Filing date:

03/14/2025

TLDR:

ELI5:

Stereotaxis, a company that makes robots for heart surgery, didn’t make much more money this year than last year, and they lost more money overall. They bought another company to help them make better products, but they still need to improve their finances.

Accession #:

0001493152-25-010352

Published on

March 16, 2025

Analyst Summary

Stereotaxis’s total revenue increased slightly from $26.8 million in 2023 to $26.9 million in 2024, driven by growth in disposables, service, and accessories revenue, offsetting a decrease in systems revenue.
The company’s operating loss widened from $21.8 million to $24.7 million due to increased general and administrative expenses, including costs associated with the acquisition of Access Point Technologies (APT).
Gross margin decreased from 56% to 54% due to changes in product mix and acquisition-related accounting adjustments.
The company had $12.4 million in cash and cash equivalents as of December 31, 2024, and management believes this is sufficient to meet obligations for the next 12 months.
The acquisition of APT provides in-house catheter development and manufacturing expertise.
The company had a backlog of $15.2 million as of December 31, 2024, with approximately 70% expected to be recognized as revenue in 2025.
The current ratio decreased from 2.51 in 2023 to 1.22 in 2024, indicating a weakening liquidity position.
The debt-to-equity ratio increased from 1.22 in 2023 to 5.80 in 2024, suggesting a significant increase in financial leverage.
The company recognized a loss on revaluation of contingent consideration of $1.8 million related to the APT acquisition, indicating a decreased estimate of achieving milestone targets.

Opportunities and Risks

Opportunity: The acquisition of APT provides in-house catheter development, manufacturing expertise, and specialized knowledge.
Opportunity: The company is actively developing new products, including the GenesisX RMN System and the Stereotaxis MAGiC catheter.
Opportunity: The company is pursuing regulatory approvals in new markets, including the US and China.
Risk: The company has a history of operating losses and may not achieve profitability in the future.
Risk: The company is exposed to risks related to supply chain disruptions, inflationary pressures, and geopolitical factors.
Risk: The medical device market is intensely competitive, with rapid technological advances and frequent new product introductions.
Risk: The successful integration of APT is critical, and failure to do so could negatively impact future results.

Potential Implications

Company Performance

Successful integration of APT is critical for future revenue growth and improved profitability.
The company’s ability to obtain regulatory approvals for new products in key markets will significantly impact its long-term performance.
Continued operating losses may strain the company’s financial resources and limit its ability to invest in innovation and market expansion.
The company’s low inventory turnover suggests potential issues with inventory management or slow-moving inventory, which could impact efficiency and profitability.

Stock Price

Positive news regarding the integration of APT and regulatory approvals could lead to an increase in the stock price.
Continued operating losses and a weakening liquidity position could negatively impact investor sentiment and lead to a decrease in the stock price.
The company’s high debt-to-equity ratio may raise concerns about its financial stability and potentially pressure the stock price.
The price-to-book ratio of 0.27 suggests that the market values the company’s equity at less than its book value, which could indicate undervaluation or underlying concerns about the company’s prospects.

Stereotaxis, Inc. (STXS) – Form 10-K Report for FY 2024

Executive Summary

This report analyzes Stereotaxis, Inc.’s 10-K filing for the fiscal year ended December 31, 2024. Stereotaxis is a medical device company specializing in robotic systems for endovascular interventions. The company faces challenges including consistent operating losses, supply chain vulnerabilities, and competition. However, the acquisition of Access Point Technologies EP, Inc. (APT) presents opportunities for growth and innovation. The overall assessment is a hold, pending further evidence of successful integration of APT and improved profitability.

Company Overview

Stereotaxis designs, manufactures, and markets robotic systems and instruments for interventional procedures. Their primary focus is on cardiac ablation for arrhythmias. The company’s key products include the Genesis RMN System, GenesisX RMN System, and the Odyssey Solution. Recent developments include the acquisition of APT, CE Mark approval for the Stereotaxis MAGiC catheter in Europe, and regulatory approval for the Genesis RMN system in China.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management acknowledges ongoing challenges related to supply chain disruptions, inflationary pressures, and potential impacts from macroeconomic and geopolitical factors. They highlight the importance of strategic relationships and the integration of APT. The MD&A emphasizes the company’s commitment to innovation and expanding its product portfolio.

Financial Statement Analysis

Revenue

Total revenue increased slightly from $26.8 million in 2023 to $26.9 million in 2024. System revenue decreased slightly, while revenue from disposables, service, and accessories increased marginally, driven by the APT acquisition.

Cost of Revenue and Gross Margin

Cost of revenue increased by 3%, leading to a decrease in gross margin from 56% in 2023 to 54% in 2024. This decrease was primarily due to changes in product mix and acquisition-related accounting adjustments.

Operating Expenses

Research and development expenses decreased by 5%, while sales and marketing expenses remained consistent. General and administrative expenses increased by 22%, driven by the remeasurement of contingent consideration, higher administrative expenses, professional service fees, and amortization of acquisition-related intangible assets.

Liquidity and Capital Resources

The company used $8.5 million in operating activities in 2024, slightly less than the $9.1 million used in 2023. The company had $12.4 million in cash and cash equivalents as of December 31, 2024. Management believes that the cash on hand will be sufficient to meet its obligations for at least the next 12 months.

Key Ratios and Trends

Gross Margin: Decreased from 56% to 54%.
Operating Loss: Increased from $21.8 million to $24.7 million.
Cash Used in Operations: Decreased slightly from $9.1 million to $8.5 million.

Risk and Opportunity Assessment

Risks

Consistent Operating Losses: The company has a history of operating losses and may not achieve profitability in the future.
Supply Chain Vulnerabilities: The company is exposed to risks related to supply chain disruptions, inflationary pressures, and geopolitical factors.
Competition: The medical device market is intensely competitive, with rapid technological advances and frequent new product introductions.
Integration Risks: The successful integration of APT is critical, and failure to do so could negatively impact future results.

Opportunities

APT Acquisition: The acquisition of APT provides in-house catheter development, manufacturing expertise, and specialized knowledge.
Product Innovation: The company is actively developing new products, including the GenesisX RMN System and the Stereotaxis MAGiC catheter.
Market Expansion: The company is pursuing regulatory approvals in new markets, including the US and China.

Uncommon Metrics

Backlog: The company had a backlog of $15.2 million as of December 31, 2024, with approximately 70% expected to be recognized as revenue in 2025.
CEO Performance Award: The company will incur significant stock-based compensation expense related to the CEO Performance Award, regardless of whether the milestones are achieved.

Conclusion and Actionable Insights

Stereotaxis faces significant challenges, including consistent operating losses and external economic pressures. The acquisition of APT presents opportunities for growth and innovation, but successful integration is critical. The company’s financial performance and stock price are highly dependent on the successful commercialization of new products and the expansion into new markets.

Recommendation: A hold rating is appropriate at this time. Investors should monitor the company’s progress in integrating APT, improving profitability, and obtaining regulatory approvals for new products. A more positive outlook would be warranted if the company demonstrates sustained revenue growth, improved gross margins, and successful execution of its strategic initiatives.

Commentary

Stereotaxis, Inc. reported a slight increase in total revenue for 2024 compared to 2023, driven by growth in disposables, service, and accessories revenue, which offset a decrease in systems revenue. The company’s operating loss widened due to increased operating expenses, particularly in general and administrative costs, which include costs associated with the acquisition of Access Point Technologies (APT). The acquisition of APT is a significant strategic move, adding catheter manufacturing capabilities and potentially enhancing future revenue streams. However, Stereotaxis continues to operate at a net loss, indicating ongoing challenges in achieving profitability.

Financial Ratio and Metric Analysis

Profitability

Gross Profit Margin
- Metric: 54.22% (2024), 55.51% (2023)
- Trend: -2.32%
- Industry: The medical equipment and supplies industry typically sees gross profit margins ranging from 50% to 70%. Stereotaxis’s gross profit margin is within this range but slightly below the average.
Operating Profit Margin
- Metric: -91.91% (2024), -81.5% (2023)
- Trend: -12.77%
- Industry: Given the company’s stage and focus on growth, a negative operating margin is not uncommon. However, it is important to monitor the trend and compare it to peers with similar business models.
Net Profit Margin
- Metric: -89.33% (2024), -77.37% (2023)
- Trend: -15.46%
- Industry: Similar to the operating margin, a negative net profit margin reflects the company’s current investment phase. The trend indicates increasing losses relative to revenue.
Return on Assets (ROA)
- Metric: -51.46% (2024), -49.43% (2023)
- Trend: -4.11%
- Industry: A negative ROA indicates the company is not generating profit from its assets. The trend suggests a slight decrease in asset utilization efficiency.
Return on Equity (ROE)
- Metric: -393.97% (2024), -134.94% (2023)
- Trend: -192.0%
- Industry: A negative ROE reflects net losses and indicates the company is not generating returns for its shareholders. The trend indicates a significant decrease in shareholder value.
EPS (Basic and Diluted)
- Metric: -$0.30 (2024), -$0.27 (2023)
- Trend: -11.11%
- Industry: Negative EPS reflects the company’s losses on a per-share basis. The trend indicates increasing losses per share.

Liquidity

Current Ratio
- Metric: 1.22 (2024), 2.51 (2023)
- Trend: -51.4%
- Industry: A current ratio of 1.22 indicates that Stereotaxis has $1.22 of current assets for every $1 of current liabilities. The decrease from 2.51 in 2023 suggests a weakening liquidity position. A ratio between 1.5 and 2.0 is generally considered healthy.
Quick Ratio
- Metric: 0.84 (2024), 1.87 (2023)
- Trend: -55.1%
- Industry: A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without selling inventory. The decrease from 1.87 in 2023 indicates a significant decline in short-term liquidity.
Cash Ratio
- Metric: 0.57 (2024), 1.50 (2023)
- Trend: -61.9%
- Industry: The cash ratio indicates the company’s ability to cover current liabilities with only cash and cash equivalents. The decrease from 1.50 to 0.57 indicates a significant decrease in immediate liquidity.

Solvency/Leverage

Debt-to-Equity Ratio
- Metric: 5.80 (2024), 1.22 (2023)
- Trend: 375.4%
- Industry: A high debt-to-equity ratio indicates that the company relies heavily on debt financing. The increase from 1.22 to 5.80 suggests a significant increase in financial leverage.
Debt-to-Assets Ratio
- Metric: 0.76 (2024), 0.48 (2023)
- Trend: 58.3%
- Industry: The debt-to-assets ratio indicates the proportion of a company’s assets that are financed by debt. The increase from 0.48 to 0.76 suggests a higher reliance on debt to finance assets.
Interest Coverage Ratio
- Metric: N/A (Negative Operating Income)
- Trend: N/A
- Industry: Since the company has a negative operating income, the interest coverage ratio is not meaningful.

Activity/Efficiency

Inventory Turnover
- Metric: 1.48 (2024), 1.41 (2023)
- Trend: 4.96%
- Industry: An inventory turnover of 1.48 indicates that Stereotaxis sold its inventory 1.48 times during the year. This is relatively low, suggesting potential issues with inventory management or slow-moving inventory.
Days Sales Outstanding (DSO)
- Metric: 51.5 days (2024), 52.0 days (2023)
- Trend: -0.96%
- Industry: A DSO of around 51 days is relatively standard.
Days Payable Outstanding (DPO)
- Metric: 76.7 days (2024), 43.5 days (2023)
- Trend: 76.3%
- Industry: A DPO of 76.7 days indicates that Stereotaxis is taking longer to pay its suppliers. This could be a strategy to manage cash flow, but it could also strain supplier relationships if not managed carefully.
Asset Turnover
- Metric: 0.58 (2024), 0.64 (2023)
- Trend: -9.38%
- Industry: An asset turnover of 0.58 indicates that Stereotaxis generates $0.58 of revenue for every $1 of assets. This is relatively low, suggesting that the company is not efficiently utilizing its assets to generate revenue.

Valuation

Price-to-Earnings Ratio (P/E)
- Metric: N/A (Negative Earnings)
- Trend: N/A
- Industry: The P/E ratio is not meaningful due to negative earnings.
Price-to-Book Ratio (P/B)
- Metric: 0.27 (2024), 0.11 (2023)
- Trend: 145.5%
- Industry: A P/B ratio of 0.27 suggests that the market values the company’s equity at less than its book value.
Price-to-Sales Ratio (P/S)
- Metric: 1.94 (2024)
- Trend: N/A
- Industry: A P/S ratio of 1.94 suggests that investors are paying $1.94 for every dollar of Stereotaxis’s sales.
Enterprise Value to EBITDA (EV/EBITDA)
- Metric: N/A (Negative EBITDA)
- Trend: N/A
- Industry: The EV/EBITDA ratio is not meaningful due to negative EBITDA.

Growth Rates

Revenue Growth
- Metric: 0.55%
- Industry: The medical device industry is expected to grow at a rate of 5-7% annually.
Net Income Growth
- Metric: -16.1%
- Industry: N/A
EPS Growth
- Metric: -11.1%
- Industry: N/A

Other Relevant Metrics

Contingent Consideration: The company’s acquisition of Access Point Technologies, Inc. (APT) included $10.0 million for future consideration contingent on the business achieving certain revenue and regulatory milestone targets. The fair value of the contingent consideration is revalued each period, and changes in fair value are recognized in earnings. In 2024, the company recognized a loss on revaluation of contingent consideration of $1.8 million. This indicates that the company’s estimate of the likelihood of achieving the milestones has decreased.