Summary
- The bionic exoskeleton market is growing at a tremendous pace, with Ekso Bionics at the forefront of the industry.
- Ekso Bionics has been a lead innovator and early mover in the bionic exoskeleton industry, and so has a significant competitive edge moving forward.
- Ekso Bionics' exoskeletons significantly augment user capabilities, which make them extremely promising in the military and medical fields.
- While Ekso Bionics' products are still extremely expensive and somewhat clumsy, rapid advances in robotic AI should help to alleviate these problems moving forward.
The bionic exoskeleton industry is starting to take off, with an increasing amount of approvals from the FDA for commercial, business, and military use of exoskeletons. While the exoskeleton industry is still in its infant stages of development, advances in exoskeleton technology are starting to accelerate market adoption. With increasingly sophisticated robotic AI, the exoskeleton market will continue to expand exponentially. Already, society is starting to see a notable increase in exoskeleton use.
There are a significant number of applications for exoskeletons, from assisting paraplegics, augmenting military capabilities, and even increasing labor productivity. While bionic exoskeleton technology is still relatively clumsy, and can oftentimes only be used in specific circumstances, notable improvements have started to occur within the last few years. Ekso Bionics (OTCQB:EKSO) has been at the forefront of the exoskeleton business, helping to push the frontiers of this promising industry. In fact, Ekso Bionics has been one of the first companies to enter the bionic exoskeleton space, and has helped make huge improvements in exoskeleton technology.
A Pioneer
Ekso Bionics has been making significant advances on numerous fronts, improving the functionality and practicality of exoskeletons for a variety of different uses. Ekso Bionics has been one of the first companies to enter the exoskeleton space, giving it an invaluable early mover advantage. Already, the company is starting to make important partnerships with key technological players, and was even contracted by Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Boston Dynamics division to work on a DARPA project.
Ekso Bionics has products for military use, medical use, and even recreational use, clearly making a concerted effort to cover all the promising exoskeleton markets. The company seems extremely well-positioned to seize upon its early-mover advantage, as the company's products are becoming increasingly sophisticated and user friendly. For instance, the Ekso GT, which is one of the company's latest upgraded suits, allows for faster adjustments between different individuals, more advanced hip abduction/thigh rotation to allow for more freedom of movement, adjustable foot ankle angle/stiffness for a more stable gait, etc. As Ekso Bionics has been one of the first exoskeleton makers to go public, the company should be able to cement a strong foothold and gain a competitive edge in this promising industry.
Vast Potential in the Military Market
One of the exoskeleton markets with the most near-term potential is the military. While exoskeletons are currently too expensive for widespread commercial use, the military can afford to outfit some of its service members with expensive bionic exoskeletons. Military exoskeletons can allow service members to run faster, lift several times their body weights, leap great heights, etc., which could make expensive exoskeletons well worth it on the battlefield.
With as much money as the U.S. government spends on each individual service member, exoskeletons should come to represent increasingly attractive investments for the military. For instance, some special warfare expertsestimate that the U.S. government spends $.5M-$1M a year per special forces soldier, which means that investments into exoskeletons could easily be worth the cost. While exoskeleton technology is not yet fluid enough to warrant widespread use among military members, Ekso Bionics' suits could easily become practical in a few years' time given the company's pace of innovation.
Ekso Bionics has long been an innovation leader in the military exoskeleton arena. For instance, the company was responsible for exoskeletons such as the famous HULC (Human Universal Load Carrier), which is now under development by Lockheed Martin (NYSE:LMT) for military usage. The HULC has the ability to significantly augment a user's physical capabilities, from allowing users to carry up to 200 pounds in load, and even run at 16 kmph at burst speeds. As the military will increasingly come to represent an attractive early market for the exoskeleton industry, Ekso Bionics should be one of the most well-positioned bionic exoskeleton companies moving forward.
Here is a picture of the HULC in action, which is now under development with Lockheed Martin.
(click to enlarge)
Source: lockheedmartin
Medical Implications
Ekso Bionics has already cemented itself within the medical field, building exoskeletons capable of assisting those with medical needs and/or handicaps. In fact, the company was one of the first to get FDA approval in this arena, with its Ekso suits receiving approval in 2012 for hospital use in the United States. Currently, the company supplies bionic suits to 31 rehabilitation centers in total (22 in the U.S., 1 in South Africa, and 8 in Europe).
Outside of the military, the medical industry represents the most promising market for Ekso Bionics' products, as the company's bionic exoskeletons help paraplegics regain mobility, aid in rehabilitation, etc. As the company's exoskeletons become more advanced, they will almost certainly become more common in the medical field. The potential life-changing applications are just too many to be ignored.
While exoskeletons have already penetrated the personal use commercial market, i.e. ReWalk's (NASDAQ:RWLK) bionic suit for paraplegics, the cost for these exoskeletons are exorbitant to say the least, often costing around $100k. The good news is that robotic AI is advancing at an incredible speed, which should drastically reduce the costs of bionic exoskeletons, all while improving functionality. With Ekso Bionics' technological edge, there is little doubt that it will be able to attain a significant share in the personal use commercial market.
Company Financials
Of course, Ekso Bionics should expect its R&D costs to increase significantly in the coming years, and remain a large part of the company's expenses for the foreseeable future. While the company's 2014 R&D expense of $3.87M nearly matched up with the company's total yearly revenue of $5.33M, this is not so surprising given the early stages of Ekso Bionics' development. Because bionic exoskeleton technology is nowhere near mature, disproportionate amounts of cash will be funneled into R&D. As the money spent on innovation eventually starts to make a notable impact on the company's products, company revenues should start to significantly outpace R&D expenses.
Obstacles
Currently, product cost is one of the biggest obstacles for the widespread adoption of Ekso Bionics' products. Ekso Bionics' suits usually cost in the upper 5 figure range to lower 6 figure range, which results in an incredibly niche exoskeleton market. Despite this, exoskeleton technology is still in its early infancy, which means there is a lot of room for improvement. In addition, demand for Ekso Bionics' products have never been higher, with the company shipping 64 devices in quarter 4. While this is still an extremely small number, it actually represents a 250% YOY increase for the company. As costs continue to decline, this shipment number should increase dramatically. With the amount of money spent on R&D, there is little doubt that costs/functionality should improve dramatically over time.
Another issue with Ekso Bionics' exoskeleton suits, or exoskeleton suits in general, is that they are still somewhat clumsy. Of course, this should eventually work itself out over time, as innovation has always been one of Ekso Bionics' strong points. In addition, robotic AI is improving at an exponential rate, which should help Ekso Bionics advance its suit technology considerably. Already, the company is coming out with updated versions of its suit, which usually come with notable improvements over previous versions. The company's Ekso GT suit, for instance, allows for increased stability, more freedom of mobility, new software features, etc. These constant improvements come from the company's own innovation efforts, and general improvements in robotic AI. If Ekso Bionics continues to focus its efforts on R&D, many of its current issues should become increasingly less problematic moving forward.
Conclusion
Ekso Bionics is still an incredibly small company, with a quarterly revenue of only $1.5M. The company's financials should not be too worrisome though, as Ekso Bionics' true value lies in its growth potential. In fact, the company nearly tripled in sales on a YOY basis in the past quarter. At a market capitalization of $127M, Ekso Bionics is an attractive investment given the company's early mover advantage in key markets, and the general growth potential of bionic exoskeletons. If/when costs start to drop, the global exoskeleton markets should open up exponentially.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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