conference date: May 8, 2013 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2013 (Q1, first quarter 2013)
(at the time this is being written)
Overview: Slow, slow robotic surgical system sales. The estimated number of sales in 2013 is also disappointing.
Basic data (GAAP) :
Revenue was $2.9 million, down 33% sequentially from $4.3 million and down 37% from $4.6 million in the year-earlier quarter.
Net income was negative $17.2 million, down sequentially from $9.7 million but improved from negative $11.8 million year-earlier.
EPS (earnings per share) were negative $0.26, down sequentially from $0.15 and down from negative $0.20 year-earlier.
Estimated 3,100 to 3,400 procedures for full 2013. Anticipates 14 to 17 systems to be commercialized [not necessarily recognized for revenue] in 2013.
CEO Bruce Barclay is "encouraged by the breadth of clinical applications in the peripheral vasculature." Has growing confidence in the business. Is in discussion to create several regional reference and training centers.
4 Hansen Robotic Catheter Systems shipped in the quarter, 3 Magellan and 1 Sensei. Revenue was recognized on 1 systems, a Sensei, in the U.S. The three Magellan systems were shipped to Europe for commercial evaluation.
Believes can commercialize 14 to 17 Magellan and Sensei systems in 2013. One evaluation system is now on a monthly payment program with a potential Q4 purchase date. There are now 6 Magellan and 1 Sensei systems shipped under the evaluation program; they are listed as inventory on the balance sheet.
Nine Magellan vascular surgery systems were in clinical use at the end of the quarter. About 150 vascular surgeries have been performed with the systems. A wide variety of procedure types have been performed. Aortic arch and carotid arteries are of particular interest.
Is in advanced discussions with several key accounts for Magellan systems.
Artisan, Lynx or NorthStar Catheters sold was 592, down sequentially from 840 but up 3% y/y. The sequential decrease was due to reduction of hospital inventories in the quarter.
Number of robotic procedures performed was 781, up 3% sequentially from 755 and up 23% y/y.
Cash and equivalents ended at $31.3 million, burning $9.9 million in the quarter.
30 new patent applications were filed in the quarter. This added about $0.5 million to SG&A expense.
6F vascular catheter commercial launch expected before year's end. Developing a broader range of catheters as well.
In discussion with FDA for an updated IDE in atrial fibrilation.
There was a loss to settle a shareholder lawsuit of $4.5 million in the quarter. Will also issue $4.2 million in common stock to settle.
Cost of goods sold was $2.5 million, leaving gross profit of $0.5 million. Operating expenses were $16.0 million consisting of: $4.1 million for research and development; $7.4 million for selling, general and administrative, and the $4.5 million litigation loss. Operating profit was negative $15.6 million. Other expense was $1.6 million. Income taxes slight benefit.
Expects improved gross margins as 2013 progresses.
Has a program in place to sell common shares to raise cash, but has not yet done so.
Projections, Sensei vs. Magellan? Not at this time.
Commercial evaluation program color, transition to normal sales? We have one more potential evaluation, but don't anticipate using it much after that.
Sales force is divided into a capital sales force and a clinical sales force. The capital sales force is not compensated for evaluation placements, until they become sales.
ROI argument for systems? ROI comes from bringing more patients to the hospitals and gaining efficiency with cases. Believes return comes in 2 to 4 years depending on the account. We have already had feedback that the systems are attracting patient interest.
Magellan learning curve for operators? It has been a pleasant surprise that Magellan has a simpler learning curve than Sensei. We encourage first cases in lower extremities, but they seem to quickly go to other areas of the body. Each current sight has multiple physician users.
Device tax? Goes under SG&A.
We expect expenses to grow moderately in 2013 mainly to expand the sales force.
The investment loss of $0.6 million was from Luna; it was a mark down, not to zero.
There was service revenue in the quarter of $1.3 million.
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