conference date: November 6, 2013 @ 2:00 PM Pacific Time
for quarter ending: September 30, 2013 (Q3, third quarter 2013)
(at the time this is being written)
Overview: Signs of improved surgical robot sales, but still deep in the red.
Basic data (GAAP) :
Revenue was $5.1 million, up 55% sequentially from $3.3 million, and flat from $5.1 million in the year-earlier quarter.
Net income was negative $10.2 million, sequentially from negative $13.4 million, but worse than negative $7.6 million year-earlier.
EPS (earnings per share) were negative $0.16, up sequentially from negative $0.20, but down from negative $0.14 year-earlier.
Full 2013 outlook unchanged: 14 to 17 commercialized systems. 3,200 to 3,400 procedures. [WPM: That implies 6 to 9 systems commercialized in Q4, with one already in]
Basically positive results in Q3, including the strengthening of the balance sheet. The recent financing included a one-year restriction on selling shares, demonstrating the commitment to long-term investment in Hansen.
The launch of the 6F Magellan catheter is now expected in early 2014. This is in response to physician preferences and enables more procedure types.
5 Hansen Robotic Catheter Systems shipped in the quarter, 3 Magellan and 2 Sensei. Revenue was recognized on 2 of the Sensei systems shipped and on 2 Magellan systems. "Commercialized" 4 systems, 2 Sensei and 2 Magellan. 3 Magellan evaluation systems remain in the field. 2 evaluation systems were removed due to hospitals' inability to buy them.
After the quarter ended commercialized a Magellan evaluation unit, raising the number of commercialized systems to 9 this year.
Artisan, Lynx or NorthStar Catheters sold was 790, down 10% sequentially from 875, up 15% y/y. Decline of catheter sales was mainly from seasonal effects in Europe.
Service revenue was $1.2 million, flat y/y.
Number of robotic procedures performed was 750, down 13% sequentially from 864 (an estimate), but up 14% y/y.
Making progress in establishing clinical reference regional centers in the U.S. and in Europe.
Cash and equivalents ended at $47.1 million, up sequentially from $21.1 million. Cash burn in the quarter was $10.5 million. Accounts receivable was $4.3 million. $3.4 million deferred revenue. Debt was $33.1 million, and the agreement for it was amended; it is long-term and interest-only.
At the beginning of the quarter Hanson made a private placement of $36 million stock and warrants, with potential for another $54 million from warrants. The financing includes a lock-up preventing the sale of the new stock on the market for one year. For details on warrants see the Hansen July 31, 2013 funding 8-K.
Cost of goods sold was $3.7 million, leaving gross profit of $1.3 million. Operating expenses were $11.5 million consisting of: $3.8 million for research and development and $7.7 million for selling, general and administrative (includes $1.0 million for litigation). Operating profit was negative $10.2 million. Other expense was $2.0 million. Income taxes zero.
There was $1.2 million of non-cash stock compensation expense.
Part of the reduction in EPS loss sequentially was the large share issuance, so the losses were distributed over more shares.
Continuing to build global team, which will be up 40% in 2013.
Hansen Medical is confident of the ultimate success of Magellan given the good results from surgeries so far. Also plans to invest in new products in 2014.
Guidance to 6 to 9 commercializations for Q4, confidence in? Economic environment is challenging, and hospitals are affected by the ACA. We have a detailed commercial execution plan, with the focus in the U.S., and an expanded sales force.
Still on track to get to 40% increase by end of year? Yes, we have a half dozen or so more to hire.
9 systems, split? 5 Magellan, 4 Sensei, commercialized so far this year.
Total value of commercialization from procedures? We offer flexible financing arrangements to hospitals. Most sales have been outright purchases, with one rental system. Hospitals often ask about financing, but usually end up just purchasing.
Average value for a system? We have an evaluation program, in limited accounts. On sale conversion we are getting a strong price for the system.
Market size opportunity for 6F catheter? We have received clearance from the FDA for the system changes for the 6F catheter. Two benefits: cardiologists and radiologists who don't like the 9F stick. Also, vessel access to size branches to the aorta, below the knee, etc. need the smaller catheter. Also, compatible to other companies 6F devices.
Other diameter catheters? Next generation will be larger, no timeline yet.
New share count? At end of quarter 96 million (not weighted).
Employees? Around 170.
SG&A expense going forward? We expect G&A to trend down on lower litigation and patent filing costs. In R&D we have not made final 2014 decisions, but we have lots of opportunities?
Sensei pricing? Our ASPs have been moving in the right direction. We will disclose on a full year basis. In Q3 ASPs were low single digits higher y/y, but depends on whether they are sold through distributors or direct to hospitals.
We will continue to hold G&A in check, despite our better cash position, so that we can take advantage of opportunities with R&D and marketing expansion.
The early Magellan launch demonstrated the tremendous benefits of the system. Now we are going to the community hospitals with this story.
All toll, we shipped 15 Magellans, 10 were commercialized (8 sold, 1 rental, 1 deferred revenue). 7 at some point had been evaluation, of which 2 were recognized, 3 are still in field, 2 withdrawn.
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