conference date: May 7, 2014 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2014 (Q1, first quarter 2014)
(at the time this is being written)
Overview: Not a good quarter, but beat the disastrous March quarter of 2013. No sight of possible profitability yet.
Basic data (GAAP) :
Revenue was $3.7 million, down 34% sequentially from $5.6 million but up 23% from $3.0 million in the year-earlier quarter.
Net income was negative $14.4 million, down sequentially from negative $11.9 million and improved from negative $17.2 million year-earlier.
EPS (earnings per share) were negative $0.14 , down sequentially from negative $0.12 but up from negative $0.26 year-earlier.
Does not give formal guidance. But expects growth in 2014 across many metrics, including systems commercialized and procedure volumes.
Cary Vance will become the new Hansen Medical President and CEO on May 23.
Believes the product lines, when fully developed, can potentially access about 1.5 million procedures per year.
The 6Fr Magellan catheter was approved by the FDA during the quarter. It was developed in response to physician preferences and enables more procedure types. The first clinical procedures using the 6Fr, at a hospital in Paris, were announced in April. A larger, 10Fr catheter is under development.
3 Magellan studies will be initiated in the second half of 2014. 300 patient IDE study of Sensei for atrial fibrillation has enrolled only 33 subjects to date, but hopes to complete enrollment by early 2015.
3 Hansen Robotic Catheter Systems shipped in the quarter. 2 systems were "Commercialized", 1 Sensei and 1 Magellan, in the quarter. An additional Magellan System was shipped to complete a study of the 6Fr catheter. 1 Magellan evaluation system remain in the field. 2 systems are now on rental agreements.
Artisan, Lynx or NorthStar Catheters sold was 685, up 14% sequentially 600 and up 16% y/y.
Product revenue for the quarter was $2.4 million, up from $1.6 million year-earlier.
Service revenue was $1.3 million, flat from $1.3 million year-earlier.
Number of robotic procedures performed was 827, up 1% sequentially from 815, up 6% y/y.
Cash and equivalents (including restricted cash) ended at $38.4 million, up sequentially from $35.3 million. Accounts receivable was $4.4 million. $3.2 million deferred revenue. Debt was $33.6 million. $14 million in cash was received from holders of Series A warrants, purchasing 11.4 million shares of common stock.
Cost of goods sold was $3.3 million, leaving gross profit of $0.4 million. Operating expenses were $13.6 million consisting of: $4.4 million for research and development and $9.2 million for selling, general and administrative. Operating profit was negative $13.2 million. Other expense was $1.2 million. Income taxes zero.
The FDA approval of the 6Fr catheter triggered the exercise of $14 million in series A warrants.
Centers of Excellence total 4. These centers allow for demonstrations and physician training. Also equipped a mobile lab with a Magellan and Sensei to drive around the U.S. showing them to physicians.
Sensei X2 prototype is now ready to show and could be commercialized in the second half of the year.
The 10-Q filed with the SEC for the quarter will note that additional cash will have to be raised over the next 12 months (going concern provision).
Magellan near term outlook, sales drivers? In the near term the momentum and maturing of the existing pipeline with hospitals will drive growth. Reports on 6Fr will drive growth as well, but that would be in the back half of the year. The successful embolization of smaller diameter vessels for cancer would be important.
We could also introduce a much larger catheter for larger, heart work, and a smaller, perhaps 4Fr catheter, but we have not decided on the timing of that work yet.
We added to the sales force in Q1, but now believe we have a good-sized, strong team in place. We do not see any need to grow expenses dramatically from where we are.
It takes 9 to 18 months to sell a system to a hospital. We have not lost any deals; we continue to work with the accounts in our pipeline. We would have liked to see more systems commercialized in Q1, but we are having good conversations. Hospitals are looking for donor funds to help support these purchases. We expect to sell more systems, but it will be up and down by quarter.
6Fr catheter? Many physicians prefer to use 7Fr or 6Fr devices. So it may become the lead product, but we need more experience. The pricing is the same.
Early adopters of mobility systems? We are testing with 2 teams in the U.S. Many of our current users have said they would like to move the systems from room to room. They could go in hybrid OR suites.
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