Baxano Experiences Double-Digit Revenue Spike in 2013

Baxano Surgical Inc.’s latest earnings report is an exemplar of contradiction.

Despite double-digit increases in fourth-quarter and full-year revenue, the company still reported significant losses. In the three-month period ending Dec. 31, 2013, Baxano generated $6 million in sales, a 44.2 percent increase compared with the same quarter in 2012. The iO-Tome and iO-Flex products gained from last year’s acquisition of Baxano Inc. contributed $2.9 million to the quarter’s overall results, but it failed to prevent a loss of $8.4 million, or 19 cents per share, according to the company’s latest earnings release. Nevertheless, the deficit was considerably less than the $12 million (44 cents per share) Baxano Surgical lost in 2012.

Domestic revenue was $5.1 million in the fourth quarter of 2013, a 70 percent increase compared with the $3 million reported in Q4 of 2012. International revenue fell 27.2 percent to $800,000 in the final quarter of 2013.

“In the fourth quarter we saw good sequential growth in our iO-Flex and VEO product lines and early interest in our recently launched iO-Tome product,” said Ken Reali, President and CEO of Baxano Surgical. “We have completed our merger integration activities and have put in place the foundational elements we believe are needed for growth and leadership in the minimally invasive spine market.”

Gross margin rose 7 percent to 69.7 percent in the fourth quarter of 2013 due to lower overall product costs, increased volumes and lower inventory write-downs.

For the full year, revenue jumped 27.5 percent to $18.6 million. Not surprisingly, the increase in revenue came from inherited Baxano products but those additional goods could not prevent the company from hemmorhaging money:Its full-year net loss came in at $32 million, or 85 cents per share (compared with $29.9 million or $1.10 per share in 2012).

Full-year gross margin fell to 69.7 percent in 2013 from 70.4 percent in 2012. Executives attribute the decrease to the $300,000 the company shelled out for the 2.3 percent medical device tax.

Baxano expects first quarter 2014 revenue to range between $4.7 million and $5.2 million — significantly less than the $6.6 million forecast by industry analysts.

Based inRaleigh, N.C., Baxano Surgical designs, develops and markets devices that treatdegenerative spine conditions.