HNSN Hansen Medical, Inc. (MM)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES AND EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): February 23, 2015

 

 

HANSEN MEDICAL, INC.

(Exact name of registrant as specified in charter)

 

 

 

Delaware		001-33151		14-1850535
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

800 East Middlefield Road

Mountain View, California 94043

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (650) 404-5800

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On February 23, 2015, Hansen Medical, Inc. issued a press release announcing its financial results for the quarter and fiscal year ended December 31, 2014. A copy of the press release is attached as Exhibit 99.1 to this current report and is incorporated herein by reference.

To supplement Hansen Medical, Inc.’s financial results presented on a U.S. GAAP basis, Hansen Medical, Inc.’s press release contains non-GAAP financial information, including adjusted cost of revenues, adjusted gross margin, adjusted loss from operations, adjusted net loss, and adjusted net loss per share. Hansen Medical, Inc. believes that this non-GAAP presentation provides meaningful supplemental information regarding the company’s performance and liquidity by excluding non-cash charges, such as share-based compensation expenses and other special items. Hansen Medical, Inc. believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the company’s performance. These non-GAAP financial measures also facilitate management’s internal comparisons to the company’s historical performance and liquidity as well as comparisons to competitors’ operating results. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

The information in this current report and in the accompanying exhibit shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this current report and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Hansen Medical, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
99.1		Press release, dated February 23, 2015, entitled “Hansen Medical Reports Recent Business Highlights Fourth Quarter and Full-Year 2014 Results”.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

				HANSEN MEDICAL, INC. (Registrant)
Date: February 23, 2015				/S/ CHRISTOPHER P. LOWE
				Christopher P. Lowe
				Interim Chief Financial Officer

Exhibit 99.1

 

Hansen Medical Reports Fourth Quarter and Full-Year 2014 Results

MOUNTAIN VIEW, CA – February 23, 2015 – Hansen Medical, Inc. (NASDAQ: HNSN), a global leader in intravascular robotics, today reported recent business highlights and financial results for the fourth quarter and fiscal year ended December 31, 2014.

Fourth Quarter 2014 and Fiscal Year 2014 Operating Results:

 

•

The Company commercialized 3 Magellan™ Robotic systems in the fourth quarter and a total of 12 robotic systems in fiscal year 2014.

 

•

The volume of catheters sold were up 40% in the fourth quarter over the same period in the prior year and up 11% in fiscal year 2014 year-over-year.

 

•

Physicians performed an estimated 888 procedures in the fourth quarter and an estimated 3,366 procedures in fiscal year 2014, up 9% and 5%, respectively, over the same period in 2013.

 

•

The Company reported revenues of $5.0 million in the fourth quarter, down 10% over the same period in the prior year. For fiscal year 2014, total revenue were $19.5 million, up 15% year-over-year.

 

•

Gross margin was 0% and 15% for the fourth quarter and fiscal year 2014, respectively. Non-GAAP gross margin was 20% and 25% in the fourth quarter and fiscal year 2014, respectively; a decrease of 2% compared to the fourth quarter in 2013 and an improvement of 2% year-over-year. Diluted EPS was ($0.09) and ($0.46) for the fourth quarter and fiscal year 2014, respectively. Non-GAAP diluted EPS was ($0.08) in the fourth quarter, a 27% improvement compared to ($0.11) for the same period in 2013. For fiscal year 2014, non-GAAP diluted EPS was ($0.40), a 29% improvement compared to ($0.56) in 2013.

 

•

The Company has an order backlog for robotic systems and catheters, which are expected to be shipped and recognized as revenue in the first quarter of 2015. Backlog is defined as outstanding orders that the Company’s management believe will result in recognition of revenue in the future.

Recent Business Highlights:

 

•

A study conducted at Sierra Medical Center in El Paso, Texas found that the use of the Magellan system reduces radiation to operators by over 80% in Transarterial Chemoembolization (TACE) procedures.

 

•

The Company announced completion of the first clinical procedure with the Magellan system in Australia.

 

•

The Company announced completion of the world’s first intravascular robot-assisted retrieval of an Inferior Vena Cava (IVC) filter using the Magellan system.

 

•

The Company announced the completion of the first robotic prostatic artery embolization (PAE) in the United States. Dr. Sandeep Bagla, interventional radiologist, performed the procedure at Inova Alexandria Hospital in Alexandria, Virginia using the Magellan system.

 

•

Hansen and AB MEDICA s.p.a announced an exclusive distribution agreement for the Magellan and Sensei® systems in Italy.

 

•

The Company also announced the completion of the first end user hospital installation of a Magellan system in the Middle East, at King Fahd Hospital in Jeddah, Saudi Arabia through its exclusive distribution partner in Kingdom of Saudi Araba and United Arab Emirates, AFYA Medical Group.

“The Company continues to expand the utility of the Magellan Robotic System in the fourth quarter of 2014”, said Cary Vance, Hansen Medical’s Chief Executive Officer. “I believe 2015 will be a year of growth driven in part by the continuing adoption of robotics for Prostatic Artery Embolization (PAE), Uterine Fibroid Embolization (UFE) and Transarterial Chemoembolization (TACE). I believe these three markets are prime examples where robotic catheter precision may yield improved patient outcomes. Our objective for 2015 is to continue to expand and grow the utility of our robotic platforms, maintain our leadership position in R&D and continue to reduce our burn rate.”

 

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Fourth Quarter of 2014 Financial Results:

Total revenue for the fourth quarter ended December 31, 2014 decreased 10% to $5.0 million, compared to revenue of $5.6 million for the same period in 2013. This is primarily due to robotic systems in backlog as of December 31, 2014. The Company shipped three Magellan systems in the fourth quarter, all of which were recognized as revenue. The Company sold 837 catheters in the fourth quarter, up 40% over the same period in 2013.

Gross profit in the fourth quarter decreased 100% to $2,000, or 0% of sales, compared to $1.1 million, or 20% of sales, for the same period in 2013. The decrease in gross margin in the fourth quarter was due primarily to $0.7 million write-off of a discontinued Lynx catheter product line, and increase in service field costs. We discontinued the catheter product line primarily due to management’s assessment on return of sales and investment for the costs of maintaining regulatory filings and inventory. This was a one-time charge and the Company currently has no plan to discontinue any additional product lines.

Research and development expenses for the fourth quarter were $3.9 million, compared to $3.7 million for same period in 2013. The increase of $0.2 million was primarily due to an increase in expenses associated with clinical trials and development of prototype materials for new product initiatives.

Selling, general and administrative expenses for the fourth quarter were $6.8 million, compared to $8.0 million for the same period in 2013. The decrease of $1.2 million was primarily due to a decrease in legal expenses and stock-based compensation expenses, partially offset by an increase in sales and marketing expenses.

Net loss for the fourth quarter was $11.9 million, or $0.09 per share, compared to a net loss of $11.9 million, or $0.12 per share, for the same period in 2013. Weighted average shares outstanding used to compute diluted net loss per share were 133.0 million shares for the fourth quarter of fiscal year 2014, compared to 96.8 million shares in the fourth quarter of fiscal year 2013.

Our total balances in cash, cash equivalents, short-term investments and restricted cash were $31.9 million as of December 31, 2014, compared to $41.5 million as of September 30, 2014, and $35.3 million as of December 31, 2013.

Fiscal Year 2014 Financial Results

Total revenue for the year ended December 31, 2014 was $19.5 million, an increase of 15% compared to $17.0 million in fiscal year 2013. The Company commercialized 12 systems in 2014 (9 Magellan systems and 3 Sensei systems), compared to 12 systems in 2013 (7 Magellan systems and 5 Sensei systems). The Company sold 3,164 catheters in fiscal year 2014, up 11% compared to 2013.

Gross profit for fiscal year 2014 declined 14% to $3.0 million, or 15% of sales, compared to gross profit of $3.5 million, or 21% of sales in 2013. Gross profit for the year was negatively impacted by a $0.7 million write-off due to a discontinued Lynx catheter product line in the fourth quarter, an increase in stock-based compensation expenses, severance costs and field service costs.

Total operating expenses for 2014 were $49.3 million, compared to operating expenses of $52.4 million in 2013, which included a $4.5 million loss on settlement of litigation. Excluding the $4.5 million settlement loss in 2013, the $1.4 million increase over the prior year was due primarily to: i) a $1.5 million increase in sales and marketing expenses associated with the Company’s development of its global sales organization and increase in marketing activities, ii) a $1.9 million increase in research and development expenses associated with clinical trials and development of prototype materials for new product initiatives, and iii) a $0.6 million increase in costs associated with executive transition, partially offset by iv) a $2.6 million decrease in legal costs associated with litigation, patent and financing-related matters.

The Company reported a net loss of $54.2 million, or $0.46 per share, in fiscal year 2014, compared to a net loss of $55.7 million, or $0.70 per share in 2013. Fiscal year 2014 results included $2.8 million of non-cash stock compensation expense and a loss of $2.9 million related to a warrant exchange. Fiscal year 2013 results included $4.9 million of non-cash stock compensation expense, a settlement loss of $4.5 million and a loss of $1.9 million on the extinguishment of debt. Weighted average shares outstanding used to compute diluted net loss per share were 117.2 million for fiscal year 2014 compared to 79.1 million for fiscal year 2013.

 

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Non-GAAP Information

To supplement our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), we use certain non-GAAP financial measures: non-GAAP cost of revenues, non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, and non-GAAP net loss per share (“EPS”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP and may be different from non-GAAP measures used by other companies. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding non-cash charges, such as share-based compensation expenses and other special items. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results.

About Hansen Medical, Inc.

Hansen Medical, Inc., based in Mountain View, California, is a global leader in Intravascular Robotics, developing products and technology designed to enable the accurate positioning, manipulation and control of catheters and catheter-based technologies. The Company’s Magellan™ Robotic System, Magellan™ Robotic Catheter, Magellan™ 6Fr Robotic Catheter, and related accessories are intended to facilitate navigation to 9Fr anatomical targets in the peripheral vasculature and subsequently provide a conduit for manual placement of therapeutic devices. The Company’s mission is to enable Cardiac Arrhythmia and Endovascular Procedures and to improve patient outcomes through the use of Intravascular Robotics. Additional information can be found at www.hansenmedical.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words “plan”,” expects,” “potential,” “believes,” “goal,” “estimate,” “anticipates,” and other similar words. These statements are based on the current estimates and assumptions of our management as of the date of this press release and are subject to risks, uncertainties, changes in circumstances and other factors that may cause actual results to differ materially from the information expressed or implied by forward-looking statements made in this press release. Examples of such statements include statements regarding user experiences, utilization and the business environment. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others: factors relating to engineering, regulatory, manufacturing, sales and customer service challenges in developing new products and entering new markets; potential safety and regulatory issues that could slow or suspend our sales; the effect of credit, financial and economic conditions on capital spending by our potential customers; the rate of adoption of our systems and the rate of use of our catheters; our ability to manage expenses and cash flow, and obtain adequate financing; and other risks more fully described in the “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2013, as updated from time to time by our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. Given these uncertainties, you should not place undue reliance on the forward-looking statements in this press release. We undertake no obligation to revise or update information herein to reflect events or circumstances in the future, even if new information becomes available.

“Artisan Extend,” “Hansen Medical,” “Hansen Medical (with Heart Design),” “Heart Design (Logo),” “Sensei,” “Lynx,” “Artisan,” “Instinctive Motion,” “Fine Force Technology,” “IntelliSense” are registered trademarks, and “Magellan” and “Hansen Medical Magellan” are trademarks of Hansen Medical, Inc. in the U.S. and other countries.

Investor Contacts:

Hansen Medical, Inc.

650.404.5836

investor_relations@hansenmedical.com

 

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HANSEN MEDICAL, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

		Three months ended December 31,								Year ended December 31,
		2014				2013				2014				2013
Revenues:
Product		$	3,322			$	4,296			$	13,812			$	11,790
Service			1,710				1,324				5,683				5,192
Total revenues			5,032				5,620				19,495				16,982
Cost of revenues:
Product			3,635				3,957				13,123				11,150
Service			1,395				547				3,368				2,331
Total cost of revenues			5,030				4,504				16,491				13,481
Gross profit			2				1,116				3,004				3,501
Operating expenses:
Research and development			3,905				3,722				18,034				16,139
Selling, general and administrative			6,789				8,047				31,254				31,765
Loss on settlement of litigation			—				—				—				4,500
Total operating expenses			10,694				11,769				49,288				52,404
Loss from operations			(10,692	)			(10,653	)			(46,284	)			(48,903	)
Warrant exchange							—				(2,914	)			—
Loss on extinguishment of debt			—				—				—				(1,935	)
Interest and other expense, net			(1,235	)			(1,213	)			(5,020	)			(4,769	)
Loss before income taxes			(11,927	)			(11,866	)			(54,218	)			(55,607	)
Income tax credit (expense)			10				(22	)			(28	)			(115	)
Net loss		$	(11,917	)		$	(11,888	)		$	(54,246	)		$	(55,722	)
Basic and diluted net loss per share		$	(0.09	)		$	(0.12	)		$	(0.46	)		$	(0.70	)
Weighted average shares used to compute basic and diluted net loss per share			133,008				96,774				117,204				79,052

 

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HANSEN MEDICAL, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

		December 31, 2014				December 31, 2013
ASSETS
Cash, cash equivalents and short-term investments		$	26,501			$	29,940
Accounts receivable, net			5,121				5,114
Inventories			11,492				12,203
Prepaids and other current assets			1,678				1,914
Property and equipment, net			2,328				3,641
Restricted cash			5,376				5,394
Other assets			1,179				2,953
Total assets		$	53,675			$	61,159
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		$	2,534			$	3,337
Deferred revenue			3,527				3,115
Debt			34,385				33,358
Other liabilities			5,460				4,473
Total liabilities			45,906				44,283
Total stockholders’ equity			7,769				16,876
Total liabilities and stockholders’ equity		$	53,675			$	61,159

 

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HANSEN MEDICAL, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except gross margin and per share data)

(Unaudited)

 

						Three Months Ended								Twelve months ended
						December 31, 2014				December 31, 2013				December 31, 2014				December 31, 2013
Cost of revenue reconciliation:
GAAP cost of revenues						$	5,030			$	4,504			$	16,491			$	13,481
Share-based compensation expense			<a>				(267	)			(94	)			(1,046	)			(402	)
Write-off of discontinued product line			<b>				(706	)			—				(706	)			—
Executive transition and employee separation			<c>				(39	)			0				(39	)			0
Non-GAAP cost of revenue						$	4,018			$	4,410			$	14,700			$	13,079
Gross margin reconciliation:
GAAP gross margin							0	%			20	%			15	%			21	%
Share-based compensation expense							5	%			2	%			6	%			2	%
Write-off of discontinued product line							14	%			0	%			4	%			0	%
Executive transition and employee separation							1	%			0	%			0	%			0	%
Non-GAAP gross margin							20	%			22	%			25	%			23	%
Loss from operations reconciliation:
GAAP loss from operations						$	(10,692	)		$	(10,653	)		$	(46,284	)		$	(48,903	)
Share-based compensation expense			<a>				537				1,281				2,832				4,889
Write-off of discontinued product line			<b>				706				—				706				—
Executive transition and employee separation			<c>				281				(73	)			975				324
Office relocation			<d>				110				—				110				—
Loss on settlement of litigation			<e>				—				—				—				4,500
Non-GAAP loss from operation						$	(9,058	)		$	(9,445	)		$	(41,661	)		$	(39,190	)
Net loss reconciliation:
GAAP net loss						$	(11,917	)		$	(11,888	)		$	(54,246	)		$	(55,722	)
Share-based compensation expense			<a>				537				1,281				2,832				4,889
Write-off of discontinued product line			<b>				706				—				706				—
Executive transition and employee separation			<c>				281				(73	)			975				324
Office relocation			<d>				110				—				110				—
Loss on settlement of litigation			<e>				—				—				—				4,500
Loss on extinguishment of debt			<f>				—				—				—				1,935
Warrant exchange			<g>				—				—				2,914				—
Non-GAAP net loss						$	(10,283	)		$	(10,680	)		$	(46,709	)		$	(44,074	)
Diluted loss per share reconciliation:
GAAP diluted loss per share						$	(0.09	)		$	(0.12	)		$	(0.46	)		$	(0.70	)
Non-GAAP diluted loss per share						$	(0.08	)		$	(0.11	)		$	(0.40	)		$	(0.56	)
Shares used in per share calculation (diluted):
Weight-average shares used to compute diluted net loss per share							133,008				96,774				117,204				79,052

Notes

 

<a>	Stock-based compensation expense, a non-cash charge.

<b>	The Company incurred significant cost for write-off of discontinued Lynx catheter product line during fiscal year 2014, a one time charge.

<c>	The executive transition and employee separation represented a one time charge resulting from the Company’s strategy to maintain a lean workforce.

<d>	The office relocation was a one time charge to relocate Company’s London office to a lower cost facility.

<e>	Loss on settlement of litigation in first quarter of 2013 represented a one time charge.

<f>	Loss on extinguishment of debt in third quarter of 2013 represented a one time charge, resulting from early repayment of the Oxford loan obligation.

<g>	Warrant exchange represented a one time charge, resulting from fair value differences due to early exchanges of Series B & C Warrants and issuance of Series D Warrant during the third quarter of 2014.

 

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