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Hansen Medical, Inc. (HNSN)
Q3 2009 Earnings Call
November 17, 2009 10:00 am ET
Lasse Glassen – Financial Relations Board
Frederic H. Moll, M.D. – President, Chief Executive Officer & Director
Steven M. Van Dick – Chief Financial Officer & Vice President Finance and Administration
Previous Statements by HNSN
» Hansen Medical Inc. Q2 2009 Earnings Call Transcript
» Hansen Medical Inc. Q1 2009 Earnings Call Transcript
» Hansen Medical, Inc. Q4 2008 Earnings Call Transcript
Welcome to Hansen Medical’s 2009 third quarter conference call. With us today are Hansen Medical’s Co-Founder, President and Chief Executive Officer Fred Moll and the company’s Chief Financial Officer Steve Van Dick. Before I turn the call over to management please remember that our prepared remarks and responses to questions will contain forward-looking statements.
Words such as may, will, should, expects, believes, estimates, targets, projects, goals, could, scheduled, planned, opportunity, guidance and variations of these words and similar expressions are intended to identify forward-looking statements that are subject to a number of risks and uncertainties. Examples of such statements include statements about our expected operational and financial results, the expected numbers, locations and timing of placement of our Sensei systems and recognition of revenue on systems, the timing and results of our clinical studies, receipt and timing of future regulatory approvals, the expect results of our cost reduction initiatives and the timing of expected product introductions.
Actual results may differ materially from those set forth in these statements due to risks and uncertainties inherent in our business including potential safety and regulatory issues that could slow or suspend our sales, our ability to effectively sell, service and support our products, the rate of adoption of our systems and the rate of the use of our catheters at customers that have purchased our systems, our ability to successfully manage our manufacturing and operating expenses, our reliance on third party manufacturers and suppliers that could adversely affect our ability to manufacture products on a timely basis, scope and validity of intellectual property applicable to our products, competition from other companies, the effects of credit, financial and general economic conditions on potential purchasers of our systems, the ability to obtain additional financing to support our operations, additional cost and resources necessary to address existing shareholder litigation regarding our restatement, potential claims and proceedings related to our restatement such as additional shareholder litigation or actions by our government entity and other risks as detailed in the risk factor section of our periodic SEC filings including our quarterly report on Form 10K for the quarter ended September 30, 2009 as filed with the SEC on November 16, 2009.
We undertake no obligation to revise or update information herein to reflect events or circumstances in the future even if new information becomes available. With that, it’s now my pleasure to turn the call over to Hansen Medical’s President and Chief Executive Officer Fred Mull.
Frederic H. Moll, M.D.
We apologize for holding this call on such short notice, it wasn’t until yesterday afternoon that we completed the previously announced restatement of our financials and filed our quarterly report on Form 10Q for the quarter ended September 30, 2009. On today’s call I will provide a summary of the financial restatement along with our third quarter business overview. Following my comments Steve Van Dick our Chief Financial Officer will provide additional details on our third quarter results. After our prepared remarks, we will open the call to questions.
As previously announced, following an anonymous whistle blower report, Hansen Medical’s audit committee with the assistance of independent counsel investigated the whistle blower report and reviewed our historical revenue recognition practices on the sale of our Sensei Robotic Catheter Systems. This investigation has resulted in the restatement of our financial statements that we filed yesterday.
In total, the restatement impacted revenue recognition on 24 systems sold between the fourth quarter of 2007 through the second quarter of 2009. In the case of 13 of these systems revenue should have been deferred and recognized in a later period than the period in which it was originally recognized. In the case of 10 systems these systems remained as deferred revenue on our balance sheet as of September 30, 2009. Revenue on one system during this period was reversed pending clarification and quantification of our obligations under a letter of intent regarding a potential research study.
With that being said I’d like to highlight several points. First, all of these systems on which we recognized revenue prior to the restatement were shipped under valid purchase orders to legitimate customers. We have received full payment from our customers on all but one of these systems. We expect this system will be paid in full next month. As a result, the restatement is a cash neutral event and it has no impact on our previously reported cash flow.
Second, for the systems that remain as deferred revenue on our balance sheet, we expect to recognize revenue in future periods once outstanding obligations are met. Third, the irregularities that were identified during the investigation occurred outside of Hansen Medical’s accounting department. Finally, while these events are unfortunate, it does indicate that our whistle blower procedures are functioning properly and is an effective tool in helping us uncover issues within our operations. That being said, we’re pleased that the financial restatement is complete and our periodic filings with the SEC remain current.