conference date: May 4, 2011 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2011 (first quarter 2011)
(at the time this is being written)
Overview: Showed one-time GAAP net income largely based on a $23 million sale of intellectual property.
Basic data (GAAP) :
Revenue was $5.3 million, up 51% sequentially from $3.5 million and up 96% from $2.7 million in the year-earlier quarter.
Net income was $11.7 million, reversing sequentially from negative $11.0 million, and from negative $3.8 million year-earlier. Includes $23.0 million gain on sale of intellectual property.
EPS (earnings per share) were $0.21, up sequentially from negative $0.20, and also up from negative $0.10 year-earlier.
Does not expect to achieve positive quarterly net income in future quarters of 2011, nor for the year as a whole.
The agreement with Philips for limited rights to FOSSL (Fiber Optic Shape Sensing and Localization) resulted in a $29 million upfront payment, of which $23 million was reported as a gain on sale of intellectual property in Q1. Up to $78 million in future payments are possible. $6 million was for vascular robotic development, of which $2 million was taken as a reduction in R&D expense, and the rest will be recognized when amortized.
Continuing to invest heavily in the business with the goal of growing long term.
5 Sensei Robotic Systems had recognized revenue, but only 2 new systems shipped out in the quarter, both international; one resulted in recognized revenue. $511,000 average price per system. To date 99 systems have shipped. At the end of the quarter 13 systems that had been shipped had not yet been recognized for revenue. In Q2 already shipped one Sensei system in the U.S.
693 Artisan Control Catheters were sold, a record, up 4% sequentially and 9% for year-earlier. $1620 average sale price per unit.
Number of EP (electrophysiology) procedures performed 671, up 4% sequentially from 647 and up 9% from year-earlier.
Pre-market notification filed with FDA for a vascular robotic system and catheter, and a public exhibition was made in Europe.
Lynx irrigated ablation catheter was launched in Europe. Physicians using Lynx have given positive feedback. Lynx catheters have higher margins than Artisan catheters. An American ablation catheter version will have a clinical study this year.
Vascular market could be ten times as large as the EP market. Believes could do the commercial launch in the second half of 2011. Physician interest is high.
Cash and equivalents ended at $45.1 million. $29 million cash was received from Philips in the quarter. Cash from Philips for product development are amortized (spread over Q1 and future quarters). Debt ended at $5.3 million, down $0.9 million in the quarter.
Cost of revenues was $5.3 million, resulting in gross profit of $0.8 million. Operating expenses of $12.2 million included $4.2 million for R&D and $8.0 million for selling, general, and administrative. Gain on sale of intellectual property was $23.0 million. Leaving income from operations $11.6 million.
Includes $2.3 million non-cash stock compensation expense.
Accounting as of this call is preliminary, particularly for the Philips payment.
SEC filing of 10Q? Expect to file on time.
$6 million not recognized of $29 million? Need to calculate fair value for the two elements. Once final, straight line amortization from Q1 to Q3 of 2011. Gross R&D would have been $6.2 million for the quarter. 2011 expense trends should be similar overall to 2010.
Lynx sales in Q1? Included with Artisan catheters. There were Lynx sales in Q1.
Deferred revenue includes maintenance agreements as well as shipped but not recognized Sensei systems.
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