TransEnterix, Inc.TRXC recently signed an agreement with Great Belief International Limited ("GBIL") to commercialize the SurgiBot System globally. Notably, TransEnterix's SurgiBot System is a single-port, robotically enhanced laparoscopic surgical platform.
Based in British Virgin Islands, GBIL is focused on making investments and managing assets in the healthcare industry. GBIL's revenues are mainly generated from investment in the Chinese medical sector.
The agreement has resulted in the transfer of SurgiBot System assets ownership with TransEnterix retaining the option to distribute the system outside China. After transferring all SurgiBot System assets, GBIL will manufacture the system in China and also get regulatory approval from the China Food and Drug Administration (CFDA).
GBIL expressed plans to enter into a distribution agreement with China National Scientific and Instruments and Materials Company (CSIMC). Meanwhile, TransEnterix retains the exclusive right to file for 510(k) FDA clearance or PMA approval for SurgiBot, and the exclusive right to distribute SurgiBot in the United States.
According to management, the company will get at least $29 million, of which $7.5 million is likely to be received by the end of December 2017 and $7.5 million by Mar 31, 2018.
Easing out the highly prevalent issue of rising labor costs, China is advancing at a lightning pace to establish itself as the world's leading manufacturer of robots. According to a report by Markets and Markets, the global medical robots market is expected to value $12.80 billion by 2021, at a CAGR of 21.1%, with China as a leading contributor to revenues.
Robot-based technologies have been enhancing the healthcare space with clinical applications, diagnostic support, operational efficiency, Electronic Health Record systems, practice workflows and supply chain management. The growing prevalence of minimally-invasive robot-assisted surgeries, self-automated home-based care, use of IT for quick and improved patient care are worth a mention in this regard.
Thus, the latest development is strategic keeping the bountiful opportunities in this niche space in mind.
Share Price & Estimate Revision Trend
TransEnterix's shares have outperformed the industry in the past six months. The stock has skyrocketed 237.6% compared with the industry's 3.1% gain. The current level is better than the S&P 500's return of 9.2%.
The estimate revision trend has been favorable for the company. For the current quarter, two estimates moved north compared with no movement in the opposite direction over the last two months. As a result, the Zacks Consensus Estimate for the current year has narrowed to a loss of 6 cents per share from a loss of 10 cents.
The consensus estimate for current-quarter earnings has risen to $2.07 from $2.06.
Zacks Rank & Key Picks
TransEnterix carries a Zacks Rank #3 (Hold).
A few better-ranked medical stocks are athenahealth, Inc. ATHN , Align Technology, Inc. ALGN and Luminex Corporation LMNX . Notably, athenahealth, Align Technology and Luminex sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
athenahealth has a long-term expected earnings growth rate of 22.3%. The stock has rallied roughly 22.6% over a year.
Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 136.9% in a year.
Luminex has a long-term expected earnings growth rate of 16.3%. The stock has gained 5.9% in the past three months.
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Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.