Analyzing SI-BONE, Inc. (NASDAQ:SIBN) and Medical Device Peers: ROIC vs. WACC Insights

• SI-BONE, Inc. (NASDAQ:SIBN) currently shows a negative Return on Invested Capital (ROIC) of -8.99% against a Weighted Average Cost of Capital (WACC) of 8.22%, indicating it's not yet generating value from investments.
• This capital inefficiency is common among its peers, with Axonics, Inc. (NASDAQ:AXNX) and OrthoPediatrics Corp. (NASDAQ:OP) also exhibiting negative ROIC figures.
• Tactile Systems Technology, Inc. (NASDAQ:TCMD) stands out with an ROIC of 7.93% and WACC of 8.04%, demonstrating significantly better capital efficiency, nearly covering its cost of capital.

SI-BONE, Inc. (NASDAQ:SIBN) is a leading medical device company that develops implants for patients with lower back and pelvic joint problems. Its main product is the iFuse Implant System, a minimally invasive option for surgery. SI-BONE, Inc. competes with other medical technology firms like Axonics, Inc. (NASDAQ:AXNX) and OrthoPediatrics Corp. (NASDAQ:OP).

A key way to measure a company's performance is by comparing its Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC). ROIC shows the profit generated from investments. WACC is the average cost a company pays for its funding. A company creates value when its ROIC is higher than its WACC.

Currently, SI-BONE, Inc. has an ROIC of -8.99% and a WACC of 8.22%. Since the return is negative and below the cost of capital, the company is not yet generating value from its investments. The ROIC to WACC ratio of -1.09 shows that for every dollar invested, the company is currently losing money.

This situation is common for growing companies in the medical device industry. A look at SI-BONE, Inc.'s peers shows similar challenges. For instance, Axonics, Inc. has an ROIC of -2.68%, and OrthoPediatrics Corp. has an ROIC of -6.41%. Both are also currently destroying value from an efficiency standpoint.

However, Tactile Systems Technology, Inc. (NASDAQ:TCMD) stands out in this group. With an ROIC of 7.93% and a WACC of 8.04%, its ROIC to WACC ratio is 0.99. This means Tactile Systems Technology, Inc. is very close to covering its capital costs with its returns, showing much greater capital efficiency than its peers.