Why TransEnterix Dropped 17.5% in December

Markets Motley Fool

What happened

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Shares of TransEnterix (NYSEMKT: TRXC), a commercial-stage robotic-surgery company, fell 17.5% in December according to data from S&P Global Market Intelligence. The decline has this Fool scratching his head because the only news out of the company during the month was positive.

So what

Investors learned mid-month that TrasnEnterix had sold its SurgiBot assets to a Chinese-based medical-equipment provider. The company is slated to receive at least $29 million from the transaction as a series of payments.

The first payment of $7.5 million should have been received before the end of 2017. The second payment of $7.5 million is due before the end of the first quarter. The remaining $14 million represents minimum royalty payments that are owed once the SurgiBot System gains the regulatory thumbs up in China, or within five years time (whichever comes first).

I'm a fan of this deal because TransEnterix doesn't have the time (or resources) to give the SurgiBot the attention that it needs. This transaction gives the company a way to monetize the SurgiBot system now. Given the company's current financial position, bringing in additional capital in a non-dilutive way sounds like it should be good news for shareholders. However, the stock's drubbing in December suggests that Wall Street disagrees with that assessment.

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Now what

Short-term price movements aside, this company's fate still hinges on a successful launch of the Senhance System. While the company did record its first U.S. sale already, it's still far too early to draw any real conclusions about the market's reaction to the device. For that reason, I'll continue to watch this company's progress from the sidelines.

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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.