conference date: May 5, 2009 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2009 (1st quarter 2009)
(at the time this is being written)
Overview: Revenue growth has stalled due to global economic woes.
Basic data (GAAP) :
Revenues were $7.1 million, down 3% sequentially from $7.3 million and up 14% from $6.2 million year-earlier.
Net loss was $14.3 million, improved sequentially from a loss of $14.9 million, but worse than the net loss of $11.6 million year-earlier.
EPS (earnings per share) were negative $0.57 per share, improved sequentially from negative $0.59, but worse than negative $0.53 year-earlier.
Reiterated. Expect 53 to 60 systems to sell in 2009.
System sales were good considering economic conditions. Ten Sensei Robotic Systems were sold in the quarter. About 600 Artisan Control Catheters were shipped, up from 520 sequentially. Installed base is now 65 systems. Seven systems were sold in the U.S., three outside.
Cost structure is improving. Believes current cash will fund the company until it reaches cash flow break-even. Expenses were down over $1 million from Q4 2008. Expects to continue to decline, in part because of lower litigation costs.
An important paper about using Sensei systems in electrophysiology (EP) market was published. Believes clinicians are seeing how the systems are superior to manual methods. Enhanced products are being developed.
Invested in Advanced Cardiac Therapeutics (ACT).
Platform for vascular surgery should be available in late 2009.
After the end of the quarter, in April, the company issued and sold 11.7 million shares for $35.1 million. Also in April a jury awarded Hansen $36.3 million in damages from Luna Innovations; however, with appeals likely, the timing of any collection on this amount is uncertain.
Cash and equivalents were $29.3 million at the end of the quarter, declining $5.9 million in the quarter mainly due to operating losses. Accounts receivable dropped to $6.75 million. Accounts payable were $3.6 million.
Cost of goods sold was $5.2 million, leaving $1.9 million in gross profit. Operating expenses of $15.8 million included $5.65 million for research and development and $10.1 million for selling, general, and administrative. These included $2.6 million in non-cash stock compensation. Other expense was $0.4 million. No tax provision.
$585,000 average system selling price, down sequentially and year-earlier prices, due to discounting and currency exchange rates.
Is it too early to be cutting prices? We are not cutting prices. We are in an environment that did requires some discounting last quarter. If you compare in the U.S. only, there was only a 2% decrease from Q4 2008. In Europe, the currency exchange rate was 20% negative from year-earlier.
Prices going forward then? We can't predict foreign currency markets. We hope prices trend upward as the economy recovers.
Intuitive Surgical effects from Luna decision? No comment. Pleased with trial outcome.
Catheter prices? Catheter prices are flat in the U.S., down to exchange rates internationally. Also distributors get a discount, and are selling more, particularly internationally.
We spent $2 million in Q1 for the Luna litigation. The trial was in April, so there will be Q2 expenses, probably over $1 million. Then most of the expense should be over in Q3.
We are not factoring in any Luna award money into future guidance.
Does ACT technology replace Intellisense? No, the ACT is a temperature sensing system, which will be helpful in addition to force sensing (Intellisense). This will help in PE ablation.
Directionality? More stable now, better than Q4, but there still is pressure, and the sales cycles are long due to reluctance of hospitals to do capital spending. Thawing out.
We believe we will see the typical capital system seasonal pattern of a stronger second half compared to the first half.
Small diameter catheter for EP timing? In Europe possibly by the end of 2009, in U.S. 2010.
Will you be able to charge more for improved catheter technology? We believe so, but we need to gather more data to convince people to pay a premium. We believe there is a problem with current irrigated catheter temperature sensing.
We believe we will receive an ablation indication in 2010 from the FDA; currently in the heart we are approved for mapping only.
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