conference date: July 31, 2014 @ 2:00 PM Pacific Time
for quarter ending: June 30, 2014 (Q2, second quarter 2014)
(at the time this is being written)
Overview: Sold four robotic systems, more than I expected. But far from profitability.
Basic data (GAAP) :
Revenue was $6.9 million, up 86% sequentially from $3.7 million and up 109% from $3.3 million in the year-earlier quarter.
Net income was negative $12.3 million, improved sequentially from negative $14.4 million and improved from negative $13.4 million year-earlier.
EPS (earnings per share) were negative $0.11 , improved sequentially from negative $0.14 and improved from negative $0.20 year-earlier.
Does not give formal guidance.
Hansen Medical signed an exclusive Japanese distribution agreement with Adachi.
Admits commercialization has been slower than anticipated. Working to accelerate utilization and sales.
3 Magellan studies will be initiated in the second half of 2014. 300 patient IDE study of Sensei for atrial fibrillation hopes to complete enrollment by end of 2014; converted to a single-arm study.
A number of first-time Magellan 6Fr catheter procedures were performed. Initial feedback on 6Fr has been very positive. Now working on 10Fr catheter for larger stents and devices.
On July 31, in Q3, agreed to exchange certain warrants for stock, with cash proceeds to the company of $23.1 million. A possible additional $7.1 million warrant exchange is expected, subject to conditions.
4 systems were "Commercialized", 1 Sensei X and 3 Magellan, in the quarter. In addition, converted a previously rented Magellan system to a sale. Two sales were to the Middle East, and 2 were to Adachi for Japan. [In Q2 2013 Hansen sold only 1 system]
Artisan, Lynx or NorthStar Catheters sold was 928, up 35% sequentially from 685 and up 6% y/y from 875.
Product revenue for the quarter was $5.5 million, up from $2.0 million year-earlier.
Service revenue was $1.4 million, up from $1.3 million year-earlier.
Number of robotic procedures performed was 868, up 5% sequentially from 827, nearly flat y/y 864. Global addressable markets may be 2 million procedures per year.
Hansen has identified sites that are underutilizing Sensei systems and created a program to increase their use. Most common reasons for underutilization are the original physician left, and earliest Sensei systems were sold without sufficient training and support.
Cash and equivalents (including restricted cash) ended at $32.2 million, down sequentially from $38.4 million. Accounts receivable was $4.1 million. $3.4 million deferred revenue. Debt was $33.9 million.
Cost of goods sold was $5.0 million, leaving gross profit of $1.9 million. Operating expenses were $13.0 million consisting of: $4.8 million for research and development and $8.1 million for selling, general and administrative. Operating profit was negative $11.1 million. Other expense was $1.2 million. Income taxes zero.
Sensei X2 prototype is now ready to show and could be commercialized in the second half of the year.
Believes Hansen has sufficient cash to execute on its plans.
We are formulating a strategic plan right now. We will announce more initiatives in the coming quarter.
Warrant exchange? Just the best way to get cash in the near term, in the interest in all shareholders.
SG&A run rate? Sales and marketing expense will continue to grow. We are doing cost reductions in other administrative areas.
Magellan procedure label expansion? We have 3 single center Magellan studies with between 10 to 15 patients each. If total cost of procedures is looked out instead of additional catheter cost, the robotic procedures make sense.
Size of Sensei installed base? 120 systems are installed. A guess would be half are underutilized. We are checking hospital by hospital.
How does the Magellan pipeline look? What I am most concerned about is quality and execution of the pipeline. We are seeking to better understand how many deals can close and how quickly. The number of potential deals in the pipeline is satisfactory.
Most of the procedures so far are Sensei, because we have a lot more systems in the field. The Magellan systems so far are with KOLs, not with high-volume hospitals. As we get into high-volume hospitals the ratio should change.
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