Asensus Surgical (NYSEAMERICAN:ASXC) (until recently known as TransEnterix) is a small biotech company seeking to commercialize surgical devices. ASXC stock has gone on a rocky ride over the past few years.
However, the company’s stock is back on the upswing. Shares have been rallying, and the upward trend got further juice on the news of Food and Drug Administration (FDA) approval for the company’s Senhance surgical platform.
Before investors rush into the stock, though, it’s worth taking a longer look into the company’s history. In prior years, Asensus has had numerous run-ups in its share price before on seemingly positive news that turned out not to amount to much.
Thus, it’s worth extra caution before investing this time, as the company has a poor track record.
Name and Ticker Change
On Feb. 23, the company announced that it was changing its name and ticker symbol. TransEnterix changed its official name to Asensus Surgical on its website and other such official communications. Additionally, on March 5, Asensus’ ticker symbol changed from TRXC stock to ASXC stock. Shares continue to trade on the same stock exchange as they did previously.
Historically, name changes generally aren’t a great sign. It often indicates that a management team is not pleased with its track record. By changing the corporate name, it makes it harder for investors to find information about the company’s past.
And in Asensus’ case, the management team may want investors to forget about its past few years.
Short sellers such as Bleecker Street Research and White Diamond went after the company, pointing out its history of stock promotions and citing medical experts claiming that the company’s robotics system was a “piece of junk.”
New investors just looking into the Asensus story may not see these sobering reports thanks to the name change. Notably, in prior years, the company also changed the name of its surgical robot platform from ALF-X to Senhance, perhaps for similar reasons.
CEO Anthony Fernando stated that the corporate name change was to show a direction change.
“As the company evolves from a robotics company to a digital surgery company, the rebrand better reflects our vision,” he said.
However, since neither TransEntrix nor Asensus all that clearly maps onto either of those concepts, color me skeptical on the purpose of this name change.
A Long Track Record of Failure
Rather, I’d suggest the company’s management wants folks to forget about the past decade. Over the past decade, on a split-adjusted basis, TRXC aka ASXC stock has plummeted from $100 to just $4 now. That’s a tremendous loss of value, especially during a raging bull market.
Additionally, the firm has generated minimal revenues for the past decade. In many years, it produced no revenue at all. Other years, it made just a few million in sales. The company gained a bit of traction in 2018, with revenues hitting $24 million.
That quickly fizzled out, however, and 2019 revenues dropped 65% back to just $9 million. For full-year 2019, the company lost $92 million in the course of generating that $9 million of revenue.
In fact, it appeared TransEnterix might be heading toward bankruptcy given its poor balance sheet, plunging revenues, and massive operating losses, but the recent rise in the company’s stock price has allowed it to raise a considerable amount of funds. Thus, any imminent wipeout scenario has been averted.
Additionally, the company did secure some further approval from the FDA. The issue with this company’s products has long been limited customer/commercial demand, not a lack of regulatory approval. See the reports linked above for more discussion on that front. That said, perhaps this nod from the FDA may help boost Asensus’ business a bit.
ASXC Stock Verdict
If you owned TRXC stock for more than a few months, you know this company has a long and underwhelming track record. In general, you should be wary of companies that reverse split their stocks, change their names and ticker symbols, and fail to produce meaningful revenues or profits for many years at a time.
As of now, there’s little reason to believe that Asensus Surgical will fare any better in its new corporate form than the old one. Management could prove that wrong, of course, but that will require more revenues and profits, not just press releases.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.