What happened
Shares of Asensus Surgical (ASXC), a manufacturer of robot-assisted surgical systems, are on the rise after the company released third-quarter earnings. Investors reacting to the highlights drove the stock 14.6% higher as of 10:38 a.m. EDT on Thursday.
So what
After markets closed yesterday, Asensus Surgical was able to report heaps of good news. Near the top of the list was the initiation of four new Senhance Surgical systems, three in Japan and one in Russia.
Image source: Getty Images.
With more Senhance Surgical systems in place, the company was able to report a 47% year-over-year bump in the number of procedures performed. It said that it was a record quarter for procedure volume.
In the year to date, the company has performed over 1,500 procedures and initiated six Senhance programs.
Now what
Asensus Surgical's systems are being installed in hospitals around the world at an increasing pace. Sadly, investors would probably be better off if the company stopped doing that.
ASXC revenue (TTM) data by YCharts. TTM = trailing 12 months.
That's because the cost of goods sold still exceeds the amount of revenue the company is generating. This is usually what happens when a company has a product nobody really wants.
Asensus Surgical finished September with $118 million in cash after losing $46.6 million in the first nine months of the year. More system placements will most likely lead to further losses.
Chronically negative gross profit margins don't necessarily mean Asensus Surgical is offering huge incentives to install and use its surgical systems. Regardless of the reason for the chronic losses, it's probably a good idea to stay away from this stock until the company's operation can sustain itself.
