Exchange: OTC | Sector: Healthcare | Industry: Medical Instruments Supplies
Q3 2025
Published: Feb 14, 2025
Earnings Highlights
Revenue of $1.59M up 0.3% year-over-year
EPS of $0.00 increased by 88.1% from previous year
Gross margin of 53.6%
Net income of -24.67K
"" -
Encision Inc (ECIA) QQ3 2025 Results โ Revenue Resilience with Narrow Losses in a Niche AEM Instrument Market; Strategic Levers in AEM EndoShield and Monitors Underpins Medium-Term Upside
Executive Summary
Encision Inc delivered a modest top-line in QQ3 2025 with revenue of $1.586 million and a robust gross margin of 53.6%, reflecting favorable product mix and pricing that partially mitigated cost pressures. The quarter produced a small operating loss of $20.9 thousand and a net loss of $24.7 thousand, yielding an EPS of -0.0021. Margins improved versus the prior-year period on a gross basis (YoY gross margin +16.9 percentage points) but were diluted by elevated operating expenses, notably R&D and SG&A associated with ongoing product development and go-to-market investments. EBITDA stood at roughly $173 thousand, underscoring a break-even level of operating leverage at the current scale, though the company still reported negative net income despite a modest cash generation dynamic on a go-forward basis.
From a liquidity and balance-sheet perspective, Encision carries a lean but improving cash position (~$0.348 million) against total assets of ~$3.859 million and liabilities of ~$2.171 million, including short-term debt of ~$0.329 million. The current ratio sits near 1.67x, with a quick ratio of 0.82x and a cash ratio of 0.22x, highlighting modest near-term liquidity but limited cushion for sharp downside scenarios. Working capital showed a heavy inventory position ( ~$1.363 million) and elevated receivables (~$0.780 million), reflecting a capital-intensive business with longer receivables cycles in a niche market. Free cash flow for the quarter was modestly positive at about $14 thousand, while operating cash flow remained negative at roughly $45.8 thousand, indicating ongoing working-capital investments to support growth and sales execution.
Management commentary was not included in the provided transcript data, limiting directๅผ็จs from the QQ3 call. Still, the results point to a company leveraging its AEM instrument portfolio (endoscopes, handles, and burn-protected systems) to stabilize revenue while investing in product development and market expansion. The stock remains a micro-cap with a negative earnings trajectory on a trailing basis, implying a higher sensitivity to volume growth and operating leverage as a function of mix, pricing, and distributor performance.
Operating Income: -$20,867; Operating Margin: -1.32% (YoY improvement in margin, but still negative)
Net Income: -$24,668; Net Margin: -1.56%
EBITDA: $173 (approx. breakeven level on an operating basis; note scale effects)
EPS: -0.0021; Weighted Avg Shares: 11.877 million
Financial Highlights
Revenue: $1,585,581 (YoY +0.25%, QoQ -9.67%)
- Gross Profit: $850,290; Gross Margin: 53.6% (YoY +16.9pp, QoQ +2.6pp)
- Operating Income: -$20,867; Operating Margin: -1.32% (YoY improvement in margin, but still negative)
- Net Income: -$24,668; Net Margin: -1.56%
- EBITDA: $173 (approx. breakeven level on an operating basis; note scale effects)
- EPS: -0.0021; Weighted Avg Shares: 11.877 million
Balance Sheet and Cash Flow (as of QQ3 2025):
- Cash and equivalents: $347,919; Total Assets: $3,858,727; Total Liabilities: $2,171,342; Shareholdersโ Equity: $1,687,385
- Current assets $2,686,651 vs. current liabilities $1,611,323; Current ratio 1.67x; Quick ratio 0.82x; Cash ratio 0.22x
- Receivables: $779,900; Inventory: $1,363,377; Accounts payable: $495,015; Short-term debt: $328,996
- Net cash provided by operating activities: -$45,845; Capital expenditures: $59,918; Free cash flow: $14,073; Net cash from financing activities: $188,675; Net change in cash: $117,905
Key profitability and efficiency metrics (selected):
- Revenue per unit and mix effects not disclosed; Inventory Turnover 0.54x; Receivables Turnover 2.03x; Payables Turnover 1.49x; Asset Turnover 0.41x; Gross Margin 53.6%; Operating Margin -1.32%; Return on Equity -1.46%; Debt Ratio 0.34; Debt to Equity 0.78.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.59M
0.25%
-9.67%
Gross Profit
850.29K
16.92%
2.63%
Operating Income
-20.87K
88.98%
86.87%
Net Income
-24.67K
88.09%
85.51%
EPS
0.00
88.07%
85.31%
Key Financial Ratios
currentRatio
1.67
grossProfitMargin
53.6%
operatingProfitMargin
-1.32%
netProfitMargin
-1.56%
returnOnAssets
-0.64%
returnOnEquity
-1.46%
debtEquityRatio
0.78
operatingCashFlowPerShare
$-0
freeCashFlowPerShare
$0
priceToBookRatio
3.17
priceEarningsRatio
-54.17
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No QQ3 2025 management quotes were provided in the supplied transcript data. Consequently, no direct quotes or theme-based quotes can be extracted from the earnings call in this dataset. Transcript highlights would typically cover themes such as: strategy around expanding AEM instrument adoption, pricing/turchasing strategies, geographic/channel expansion, capital allocation decisions, and near-term profitability trajectory. In the absence of quotes, the analysis relies on the disclosed financials to infer management emphasis on product innovation, sales execution, and working-capital management.
โ
โ
Forward Guidance
There is no formal forward guidance disclosed in the provided data for QQ3 2025. Given the current earnings profile (modest revenue, negative net income, and negative operating cash flow with a small positive free cash flow) and ongoing investments in R&D and go-to-market initiatives, a conservative base-case outlook would anticipate: (1) continued revenue stabilization or low-single-digit growth as AEM instruments gain broader adoption; (2) gradual improvement in gross margin if product mix remains favorable and cost discipline strengthens; (3) reliance on working-capital liquidity given inventory intensity and receivables cycles; (4) potential swing factors include hospital capital budgets, surgeon adoption rates, distributor performance, and competitive dynamics. Key factors investors should monitor include: sales pipeline development for AEM EndoShield 2 burn protection systems, instrument lifetime expansion, pricing/tiered packaging strategies, receivables aging, inventory levels, and any monetization of new monitoring solutions. If management provides quantitative guidance, it will be critical to assess break-even points and required top-line velocity to transition toward a positive operating margin.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ECIA Focus
53.63%
-1.32%
-1.46%
-54.17%
PCYN
35.20%
-6.82%
-4.57%
-5.88%
ETCC
1.68%
7.39%
-11.60%
-11.76%
SCIA
28.10%
9.25%
2.89%
15.98%
SCND
45.70%
-86.10%
-22.30%
-3.25%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Fundamentally, Encision remains a speculative recovery/turnaround play within a highly specialized segment of medical instruments. The QQ3 2025 results show a negative bottom-line despite a robust gross margin and modest top-line growth, underscoring the need for meaningful revenue acceleration and improved operating leverage. If management can translate AEM instrument adoption and monitoring solutions into sustained volume growth, the company could move toward profitability and stronger cash generation. However, absent explicit guidance and with limited liquidity headroom, the stock remains highly sensitive to quarterly sales momentum and working-capital management. Investors should monitor: order intake and backlog progression, progression of EndoShield 2 deployments, competitive dynamics, AR aging, and inventory management. In a best-case scenario, a moderate uplift in revenue coupled with improved fixed-cost absorption could yield a positive operating margin in late 2025 or 2026; in a downside scenario, continued losses and greater working-capital strain could press liquidity and capex flexibility.
Key Investment Factors
Growth Potential
Encisionโs growth in QQ3 2025 hinges on expanding AEM instrument adoption (endomechanical instruments, fixed-tip electrodes, and ergonomic handles) and the complementary EndoShield 2 burn protection system, along with the AEM monitor product line. Incremental growth drivers include direct and independent U.S. sales force expansion, potential international sales penetration, and product-line expansion within the AEM safety ecosystem. If market uptake accelerates and operating leverage improves, the company could move toward a more favorable margin profile as volume offsets fixed costs.
Profitability Risk
Key risks include: (1) reliance on a narrow product portfolio with exposure to hospital capex cycles; (2) negative earnings trajectory and modest operating cash flow, implying continued profitability and liquidity risk if sales growth stalls; (3) extended working capital requirements driven by high inventory and receivables; (4) competitive pressure from larger medical device players; (5) regulatory and reimbursement dynamics that could affect instrument adoption; (6) dilution risk if additional financing is required to sustain working-capital needs or R&D investments.
Financial Position
Balance sheet remains lean with ~$347.9k in cash against ~$1.31M in total debt and ~$2.17M in current liabilities. The current and quick ratios indicate moderate liquidity headroom but limited cushion for adverse revenue scenarios. Inventory levels are elevated relative to current assets, suggesting working-capital intensity and potential obsolescence risk if product cycles shift. Equity stands at ~$1.69M, with a debt-to-equity profile of ~0.78x and a debt ratio around 0.34x, indicating limited leverage but modest coverage of assets by equity.
SWOT Analysis
Strengths
High gross margin discipline (53.6%) in a niche surgical safety product stack, suggesting favorable product economics when volumes scale.
Focused, patent-protected AEM instrument family with complementary burn-protection and monitoring solutions, enabling cross-sell opportunities.
Litigation- and tax-efficiency risk appear modest given the small net income footprint and concentrated product line.
Weaknesses
Negative net income and negative operating cash flow in QQ3 2025 reflect limited operating leverage at current scale.
Heavy working-capital needs (high inventory and receivables) despite subdued revenue growth.
Reliance on a narrow product portfolio and limited scale reduces pricing power and hurdle to achieving sustained profitability.
Opportunities
Accelerated adoption of AEM EndoShield 2 burn protection systems and broader use of AEM monitors could lift volumes and lifetime value.
Expansion into adjacent laparoscopic safety instruments and international markets could broaden the addressable market.
Potential partnerships or channel optimization with distributors could improve sales execution and reduce cost of sales as scale expands.
Threats
Competitive pressure from larger, diversified medical-device manufacturers with broader portfolios.
Macroeconomic volatility affecting hospital capex and instrument replacement cycles.
Operational leverage risk: failing to achieve scale could prolong losses and pressure liquidity.