Background
Asensus Surgical is a medical device company dedicated to becoming a leader in performance-guided surgery. The company focuses on improving minimally invasive surgery by digitizing the interface between the surgeon and patient. Asensus is currently selling the Senhance Surgical System which was FDA cleared in 2017 and is the first digital laparoscopic platform on the market, and it serves as a machine vision system for use in robotic surgery. The system provides digital benefits to the surgeon including haptic feedback, advanced instrumentation, eye-sensing camera control, and reusable standard instruments. The system is currently being sold in the US, Europe, Japan, Taiwan, and Russia.
Fundamentals
· Market cap of $150.05 million (07.03.2022)
· Price-to-earnings ratio of -2.27 (07.03.2022)
· Beta of 1.60 (07.03.2022)
Recent Developments
· Revenue of $2.48 million in Q4 2021
· Asensus reported a loss of $15.9 million in Q4 2021
Analysis
The Senhance system is an advanced surgical system designed for the new but rapidly growing field of robotic surgery. While there is a lot of excitement around this cutting-edge technology and its ability to improve patient outcomes, only about 2% of procedures performed globally are currently done using robotic-assisted surgery. This statistic indicates that there is significant room for growth in the robotic surgery market. In 2020, the global robotic surgery market size was estimated to be $6.1 billion but it is projected to reach $22.27 billion by 2028. According to this forecast, the market will grow at a compound annual growth rate of 17.6% from 2021 to 2028. This growth offers an exciting opportunity for Asensus Surgical.
Asensus is not the only company developing and commercializing surgical technology in this new field. Their main competitor is Intuitive Surgical which sells the Da Vinci system, a platform designed to advance minimally invasive surgery and improve operating room efficiency through integrated technologies for robotic-assisted surgery. The Da Vinci system was FDA cleared in 2000 which is almost two decades ahead of the Senhance system that was FDA cleared in 2017. Intuitive Surgical is considered the leader in the field and in December 2021 they announced that the number of robotic-assisted procedures performed worldwide using the Da Vinci system surpassed 10 million. Asensus is far behind with only 4,000 robotic procedures performed using the Senhance system as of March 2021.
Prominent leaders in the medical device industry have also entered the robotic surgery market in the last couple of years. Medtronic introduced its Hugo robotics-assisted surgery system and Johnson&Johnson introduced its Ottava robotic-assisted surgery system. While Asensus and Intuitive entered the market far earlier than these companies, Medtronic and Johnson&Johnson are able to develop and scale this technology quicker as they have access to more capital and already control large segments of the total medical device market. The emergence of these leading companies in the robotic surgery market validates the growth opportunity in this new field but also creates major competition for the smaller companies such as Asensus and Intuitive.
While Asensus has a promising product in a promising market, so far, the demand has been too weak to produce a positive gross profit. Asensus currently installs 10-12 systems per year and the cost of goods sold is greater than the revenue generated by the company. Most recently, Asensus reported a loss of $15.9 million in Q4 2021. In order to be successful long term, Asensus must figure out how to scale through increasing sales or forming strategic partnerships in order to drive up revenue. Without scaling, Asensus will lose to the competition and will not make high enough revenue to greatly increase its stock value.
Conclusion
Although there are several main competitors, the 2028 projected market size is large enough that taking even a small percentage of the market would lead to huge increases in revenue. Since the surgical robotics market is currently very small and shows extreme growth potential, it will be difficult for one company to completely meet the projected demand which will open the door for several companies to capture pieces of the market. Asensus surgical is not positioned to be the leader of the industry, but it could reasonably position itself as a mid-sized player in the market and still generate significant revenue. If Asensus was able to scale effectively and capture just 1% of the 2028 projected market, they would generate over $222 million in revenue.
In the past, I made a 1500% return on Asensus, and the price is coming back down to the price I previously purchased. With a low price and potential for large market growth and revenue increases, Asensus has potential for another big jump.
Sources
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