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di Giancarlo Nicoli

Stereotaxis, comments regarding the last conference call (Q4 & FY2009)

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With STXS, I’m down -20.56% since I selected it with CAPS, against a S&P -6.50%. My CAPS loss is -14.16.

This post is devoted to a review of Q4 and FY2009 numbers; and some comments regarding the last CC.

For a review of what Stereotaxis does and why I like the stock, please see my previous post.

On Thursday February 25, 2010, Stereotaxis reported: 16% revenue increase in the fourth quarter 2009; new orders up 22% sequentially; second consecutive quarterly increase; recurring revenue reached record $5.1 Million; cash burn declined to $2.9 Million; full year 2009 revenue up 27%; gross margin percentage of 67%; operating expenses decreased 14% .

There were many positive and constructive things said on the cc (transcript courtesy of SeekingAlpha):

#1 – During the year, we saw our first placements of Odyssey and non-Niobe or standard labs, demonstrating its broadening appeal as well as its potential to be a significant driver of future growth.“ Odyssey is an EP lab information management system, designed to optimize workflow and improve productivity, that enables live case transmission, remote procedure sharing, and even remote training. An EP lab can use it without a Niobe. I think it’s a positive that labs are purchasing it as a standalone, because I believe it will lead future Niobe sales (An Odyssey system is less expensive to purchase than a Niobe).

#2 – “(…) patient demand to be treated on the Stereotaxis System is emerging as awareness of the safety and efficacy is becoming more widespread. A live procedure featuring the Niobe was broadcast on the Today’s Show on NBC early in the month and led to several hundred inquiries into the University of Cleveland, where the procedure was performed, within a 24-hour period following the broadcast.The hospitals who informed us to pick several patients throughout North America have been scheduled for the procedure. We also were featured in a BBC documentary and individual hospitals such as Henry Ford in Michigan have advertised the Stereotaxis procedure in the Wall Street Journal New York Times, generating inquiries in the scheduling of procedures.” This a big driver towards widespread adoption of Stereotaxis technology, as everybody can learn from the Intuitive Surgical (ISRG) experience.

#3 – “(…) a worldwide market of more than 12,000 electrophysiology interventional cardiology labs combined (…)” It is the first time I find an accurate estimate of how many EP labs there are around the world. Total Niobe installed base should be 145 (or a number very close to that). It’s actually something more than a 1% penetration. There are vast, green pastures ahead!

#4 – “It’s now about 20, it’s in the mid-20s, 22% to 23% of total sites in Europe and the US are using it (note: Niobes) more than three cases a week.“ That leaves 75% of sites that are using Niobes less than three cases a week. There’s substantial growth ahead, not just from new sites, but from sites that already have a Niobe system.

#5 – On break-even: “To us a break-even quarter is probably something like a $23 million revenue quarter (…) it probably looks like something like 10 Niobe, 20 Odyssey, you know, 10 Cinema, that’s what kind of the quarter would like for us.”

#6 – I’m paraphrasing now. Since Niobe systems are usually sold along with x-ray equipment (typically from Siemens or Philips), Charley Jones of Barrington Research asks a tangential question: Do you have any expectation about the number of X-ray systems that will go into EP labs or new EP labs or redone EP labs in 2010 either in the US, globally, or split up? Mike Kaminski (STXS CEO) answers that STXS is assuming a worldwide number still between 250 and 300, and they get that through their partners. Half of them in the US and the lion’s share of the rest is in Europe and then bounce sprinkle. And China is coming up obviously with a very strong market. In other words, this is how large is the yearly market.

All in all, a good (but not stellar) quarter, and quite a bright horizon ahead for STXS.

Disclosure: I’m long STXS shares.

Just my opinion, not investment advice of any sort.

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