In January, things went bad for TSO3, Inc (TSX: TOS) halving shares from around $3 and starting a decline that ended Tuesday’s trading at 79 cents.
An unimpressive quarterly report after Tuesday’s closing bell and the nosedive got steeper in Wednesday morning action, starting with a gap down to 61 cents. TSO3 tried to stop the bloodletting with a compelling piece of news early in the afternoon session that took a few minutes to deliver a punch, but when it did, shares found positive ground.
For the first quarter, the medical sterilization specialist logged revenues of just $300,000, versus $5.8 million during the fourth quarter of 2017 and $4.2 million in the year-prior quarter. The company noted that it didn’t ship any of its Sterizone VP4 Sterilizers during the March quarter, with revenue only realized through consumables and service parts.
In fairness, TSO3 is transitioning to a stand-alone sales model underscored by a co-commercialization agreement with Getinge Infection Control AB that allows TSO3 to sell directly to end users in Canada and the U.S. The company recently hired and trained its own sales force and kicked-off marketing initiatives to get the ball rolling.
The change in model is going forward and potential customers are being moved toward closure, according to Ric Rumble, CEO and president of TSO3.
"Not all of our quotations will lead to sales, but we have achieved traction in these early stages and look forward to a productive 2018," said Rumble in Tuesday’s news release.
Gross profit for Q1 2018 was negative at ($300,000), a swing of $2.6 million from Q4 and $1.9 million from Q1 2017.
Net loss for the quarter was $4.5 million, or 5 cents per share, widening from $1.4 million, or 2 cents per share, in Q4 2017 and $2.0 million, or 2 cents per share, in the quarter a year earlier.
On the bright side, TSO3 still had $10.0 million in cash on hand and no debt at the end of the first quarter.
Furthermore, TSO3 said this afternoon that the U.S. Food and Drug Administration has cleared the latest 510(k) submission for the terminal sterilization of multi-channeled flexible endoscopes using the company's Sterizone VP4 Sterilizer. The TSO3 sterilizer is the only terminal sterilization method that is FDA cleared to sterilize multi-channeled flexible endoscopes of up to 3.5 meters in length, such as video colonoscopes, duodenoscopes and gastroscopes.
These are frequently used devices in common procedures today. For example, in the U.S., doctors use duodenoscopes about 700,000 times a year in a procedure known as an endoscopic retrograde cholangiopancreatography, or ERCP for short, for things like diagnosing and treating conditions of the pancreas or bile ducts.
Outbreaks of deadly infections have implicated improper cleaning (sometimes due to faulty endoscope design) as the culprit in transmitting highly resistant bacterial infections between patients.
"The recent and highly publicized outbreaks associated with use of flexible endoscopes have highlighted the need for innovative approaches to reprocessing of these complex devices," said Rumble today, adding that the clearance is a big step in reaching a goal to provide a sterile instrument for every procedure.
After stumbling around the area of 60 cents and having trading halted for an hour, shares of TOS got energized around 1:45 p.m. in Toronto, including leaping as high as $1.00 shortly after the trading halt was lifted. Shares haven’t held all the gains, but as of about 2:15 p.m., they’re holding in the green at 80 cents, up 1.3% on the day after having been down as much as 29.1% in the morning.
