By Thomas Kerr, CFA
READ THE FULL MGRM RESEARCH REPORT
4th Quarter and Full Year 2024 Financial Results
Monogram (NASDAQ:MGRM) reported 4th quarter and full year 2024 financial results on March 12th which were largely in line with our expectations. Research and development expenses for 2024 were $8.8 million compared to $10.6 million in the prior year period. The R&D decrease was primarily due to the company moving into the verification and validation phase of its robot prototype. The move into the validation phase, which consisted largely of testing and documenting the system components and protocols led to decreases in prototype material and contractor services which are largely associated with the verification phase.
General & administrative expenses in 2024 were $4.4 million, which was a slight increase from $4.1 million in 2023. Marketing and advertising expenses decreased to $2.1 million in the quarter compared to $3.0 million in the prior year period. The decrease was largely caused by market conditions that significantly influenced the effectiveness of fundraising efforts, which impacted both the cost of investor acquisition and the overall success of a crowdfunded capital raise.
The company continues to operate a highly variable cost structure with 27 full-time employees working mostly in R&D and engineering. Other engineers are outsourced and can be used as needed on an adjustable basis.
Net loss for the full year was ($16.5) million compared to a net loss of ($13.7) million in the prior year. EPS was a loss of ($0.51) per share compared to a loss of ($0.61) per share in 2023. For 2024, operating cash flow was a use of cash of ($14.0) million. We expect the monthly burn rate to be approximately $1.2-$1.3 million in 2025 which takes into account the cost of the OUS clinical trial in India.
Cash and cash equivalents totaled $15.7 million as of December 31, 2024, compared to $13.6 million as of the end of 2023. In 2024, the company raised a total of $16.3 million in net proceeds from equity and preferred stock offerings. Net working capital was approximately $14.7 million and total stockholders’ equity was $14.5 million.
Regulatory Update
On February 26, 2025, Monogram announced an update regarding its 510(k) premarket filing submission to the FDA for the company’s mBôs TKA System. The company stated it had completed all supplemental testing and submitted its formal response to the Additional Information Request (AIR) by the FDA which was received in September 2024. There are no more submissions required at this time as the company awaits the FDA decision.
At this time, Monogram does not anticipate further requests for information from the FDA. Assuming a favorable decision by the FDA following receipt of the AIR, the next event is expected to be a clearance decision for the mBôs Total Knee Arthroplasty (TKA) System. If granted, that would enable the commercialization and marketing of the TKA system in the U.S.
Upon approval by the FDA, the company plans on enhancing components of the prototype before commercialization. Monogram continues to refine and enhance its next-generation technology in parallel with its regulatory and clinical trial preparations. The most significant advancement has been in the cutting system, which has facilitated an approximately 300% increase in feed rate. A video demonstrating these next-gen improvements can be found here.
Dr. Douglas Unis, Monogram’s Chief Medical Officer, stated, “The latest advancements in Monogram’s robotic system are a game changer. The new cutting system enables cutting speeds that are becoming competitive with manual surgery while maintaining the accuracy and functionality expected from robotic-assisted procedures. The performance is truly remarkable for a completely hands-free, unconstrained autonomous system. With these improvements, we are on track to deliver one of the most impressive robotic solutions on the market today.”
Monogram remains focused on developing a multi-application robotic system that is time-competitive with manual surgery without compromising accuracy or safety. The company continues to refine its technology to improve system performance and usability as it progresses toward commercialization.
Valuation and Estimates
Monogram has the potential to deliver strong revenue growth and positive earnings over the next 10 years after commercialization of its robotic system and customized press-fit implants. We believe the company can generate average annual revenue growth in the range of 25%-40% over the next 10 years and improve margins to industry averages over time.
Our primary valuation tool utilizes a Discounted Cash Flow process. Under the scenario described above, our DCF based valuation target is approximately $6.00 per share. Our target price may be conservative as it utilizes a high discount rate of 15.0% due to the unpredictability of earnings, higher prevailing interest rates, and the timeline of commercialization of the company’s products in the U.S.
We adjust our 2025 revenue estimates to zero and our 2025 EPS to a loss of ($0.44) per share. This is a conservative estimate as it’s possible that revenues can be generated in 2025 if FDA approval of its mBôs TKA System is received earlier than expected.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.
