October 19, 2009 / 12:05 PM / 10 years ago

UPDATE 2-Hansen Medical to restate results to correct errors

* Errors regarding timing of revenue recognition

* Says review is ongoing; impact on operations unknown

* Shares fall as much as 14.6 percent (Adds details, analyst comments)

By Jennifer Robin Raj

BANGALORE, Oct 19 (Reuters) - Medical robotics company Hansen Medical Inc HNSN.O said it plans to restate prior financial results to correct errors regarding the timing of revenue recognition on the sale of some of its Sensei Robotic Catheter Systems, sending shares down as much as 14 percent.

In a regulatory filing with the U.S. Securities and Exchange Commission, the company said its audit committee began an investigation following a whistleblower report received in August that alleged of improper revenue recognition in the quarter ended Dec. 31, 2008.

The investigation found there were instances where revenue recognition occurred prior to the completion of all its obligations to customers, the company said.

“The investigation may result in a determination that one or more distributors were not independently capable of installing systems at the time we first recognized revenue of systems purchased by such distributor(s),” the company said in a filing.

Hansen’s Sensei robotic catheter system helps to place mapping catheters within the heart easily, during complex cardiac arrhythmia procedures.

Through June 30, 2009, Hansen shipped 68 systems based on valid customer purchase orders for which revenue was recognized. Hansen has received full payment for all but two of these systems, the company said.

“It’s clearly a negative... It’s a matter of timing on revenue recognition. I don’t think we are going to see huge moves in when the revenue were,” said Needham & Co analyst Sameer Harish, adding that “this shouldn’t be a several year process, it should be in the order of months.”

The company said the review is ongoing and so it is not yet able to estimate the extent and timing of adjustments that will be required to its financial statements.

The ultimate findings of the ongoing review and the impact of these matters on Hansen’s results of operations as previously reported is not yet known, the company added.

“It is going to take them some time to go through it and we will likely see a delay in Q3 reporting,” analyst Harish said.

Harish has a “hold” rating on the stock.

The company plans to restate its financial statements for the year ended Dec. 31, 2008, for March, June and September quarters of 2008 and March and June quarters of 2009.

Shares of Hansen Medical were down more than 13 percent at $2.96 in morning trade. They had touched a low of $2.93 earlier in the session. (Reporting by Jennifer Robin Raj in Bangalore; Editing by Anil D’Silva)

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