Hansen Medical Bucks the Trend

It's kind of like drinking cold coffee. Quarter-over-quarter flat sales for a recently launched product may get some caffeine (revenue) in you, but they sure leave a bad taste in your mouth. Whether it's Apple's (Nasdaq: AAPL  ) iPhone, Amylin Pharmaceuticals' (Nasdaq: AMLN  ) diabetes drug Byetta, or Sirius XM Radio's (Nasdaq: SIRI  ) latest offering, the ramp-up in sales has to be steep in order to reach a large enough base to grow from once initial sales rates start to slow down.

Fortunately for Hansen Medical (Nasdaq: HNSN  ) , it seems to have tossed out the cold java and bucked its trend of flat sales. While it sold eight Sensei Robotic Catheter Systems in both the first and second quarters of this year, it was able to bump sales all the way up to 14 systems in the third quarter, and expects to sell between 15 and 18 systems next quarter.

The credit crunch doesn't seem to be having much of an effect on Hansen's ability to sell its products to hospitals. In fact, since the Sensei is much cheaper than competitor Stereotaxis' (Nasdaq: STXS  ) system, which requires hospitals to build a special room, the lack of capital access could help Hansen -- or at least not hurt it as much.

It wasn't just systems that were on the rise; sales of the disposable catheters used during the procedures were up from 401 in the first quarter, and 279 in the second quarter, to 423 catheters in the third quarter.

Because of lumpy sales from just a few customers, the catheter sales aren't a completely accurate picture of the number of procedures done, but even as an approximation it seems like there's a lot of Sensei machines sitting around. Hansen sold enough catheters this quarter to supply the 31 systems that were installed at the beginning of the quarter with just over one catheter per week.

That rate is going to have to pick up, since procedures don't just drive sales of catheters directly -- if doctors are using the machines they have, it's more likely that their colleagues at other institutions will buy a system. Fortunately, Hansen is working on expanding into other procedures, much like Intuitive Surgical (Nasdaq: ISRG  ) has moved from prostate surgeries into other types of robotic surgery.

Overall I'm still in a wait-and-see mode with Hansen. The apparent end of flat quarter-over-quarter sales is nice, but I'd like to see the utilization increase, via an increase in catheter sales as a proxy, before I buy in. Those with a little more confidence could find themselves with some substantial gains if Hansen lives up to its potential, especially since Hansen is trading about 30% below its IPO price.

Intuitive Surgical and Hansen Medical are Motley Fool Rule Breakers picks. The high-growth newsletter is always on the hunt for hot drug stocks and other cutting-edge picks. Click here to see all of our latest discoveries with a free 30-day trial subscription. 

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Apple is a Stock Advisor recommendation. The Fool has a disclosure policy.


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  • Report this Comment On October 27, 2008, at 7:11 PM, DemianBohemian wrote:

    It's quite amazing how you guys mention SIRI in so many articles that have nothing to do with SIRI. You do this day after day and sometimes several times a day. Why do you do this? Are you trying to remind the people that you sucked into XM as a stand alone company above $30.00 how bad your advice was? Are you trying to rub it in that they could have bought SIRI for under .50 a share, had they not lost their shirt listening to your dangerous advice?

    Or.........

    Are you just fishing for hits?

  • Report this Comment On October 28, 2008, at 9:56 AM, geekygirl1963 wrote:

    I have three Sirius satellite receivers (actually 4 but one died) and I love it. Its commercial free, includes lots of different stations for different kinds of music plus talk radio, and NFL games (broadcasts of both teams normal radio broadcast), NASCAR, soon NBA, etc. I prefer it to regular radio because it lacks the commercials. If you are a sirius subscriber, it comes with free access to Sirius channels on the web so you can listen at work or home when you aren't in the car. They also have a web based only subscription that you can get. There is a free three day trial - www.sirius.com

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