Recent Business Highlights

System Sales: During the first quarter, the company recognized revenue on 10 Sensei Robotic Systems. Through March 31, 2009, the company has recognized revenue on a total of 65 systems (which the company refers to as its installed base), including 43 in the United States and 22 in international markets.

Catheter Sales: The company shipped about 600 Artisan(R) Control Catheters in the first quarter, a record for a single quarter.

Equity Financing: In April 2009, the company completed a successful public offering of common stock, selling about 11.7 million shares with net proceeds to the company of about $35.1 million.

Luna Litigation: Also in April 2009, a jury awarded the company about $36.3 million in damages, finding in favor of the company on its breach of contract, breach of the covenant of good faith and fair dealing, and misappropriation of trade secrets claims against Luna Innovations Incorporated. The jury verdict and recovery of damages remain subject to post-trial motions and appeals, as well as collection risks.

Clinical Findings: Clinical study results published in Pacing and Clinical Electrophysiology demonstrate reduced procedure time, radiation exposure and RF energy and improved efficacy when comparing procedures performed with Sensei systems with manual procedures for ablation of paroxysmal atrial fibrillation.

Advanced Cardiac Therapeutics Relationship: The company recently announced an equity investment in privately-held Advanced Cardiac Therapeutics, Inc. and secured the exclusive rights to certain intellectual property for robotic applications.

Sensei system sales are off to a good start in 2009 and I continue to be pleased with the rate of adoption of our technology, said Frederic Moll, president and chief executive officer of Hansen Medical. While our pipeline of potential customers remains solid, the sluggish global economy has extended the length of the average sales cycle for Sensei systems and resulted in some price elasticity of demand. However, based on the enthusiasm expressed for our technology by a growing group of clinicians and what we believe is a superior value proposition versus the competition, I remain confident in our ability to expand our business in 2009, said Dr. Moll.

2009 First Quarter Financial Results

Cost of goods sold for the first quarter of 2009 was $5.2 million and included non-cash stock compensation expense of $223,000. Gross profit for the quarter was $1.9 million, yielding a gross margin of 26.4%. This compares to gross profit of $1.3 million and gross margin of 20.9% for the same period in 2008, which included non-cash stock compensation expense of $161,000. The company expects that cost of goods sold for 2009, both as a percentage of revenue and on a dollar basis, will continue to vary from quarter to quarter as manufacturing levels fluctuate and as revenues fluctuate due to changes in system and catheter sales volumes, product mix and average sales prices per system and per catheter.

Research and development expenses for the first quarter of 2009, including non-cash stock compensation expense of $620,000, were $5.7 million, compared to $5.2 million for the same period in 2008, which included non-cash stock compensation expense of $570,000. The increase in research and development expenses was primarily due to increased outside services, materials and overhead expenses, partially offset by decreases in employee-related expenses due primarily to lower average headcount and a one week furlough. In 2009, the company expects research and development expenses to decline modestly from levels in 2008 as it carefully manages expenses related to development efforts for the EP market and other applications and realizes savings from the company’s recently completed reduction in force and the one week per quarter furlough.

Selling, general and administrative expenses for the first quarter of 2009, including non-cash stock compensation expense of $1.8 million, were $10.1 million, compared to $8.1 million for the same period in 2008, which included non-cash stock compensation expense of $1.3 million. The increase in selling, general and administrative expenses was primarily due to increased litigation costs, executive severance costs and commissions, partially offset by decreased employee-related expenses related to lower average headcount and one week furlough. In 2009, the company expects selling, general and administrative expenses to decline slightly from 2008 levels as a result of careful expense management and savings realized from the recently completed reduction in force and a one week per quarter furlough.

Other expense, net, for the first quarter of 2009 was $445,000, compared to other income, net, of $352,000 for the same period in 2008. The change was primarily due to higher interest expense due to the company’s borrowings under its equipment line of credit, in addition to lower interest income related to lower balances of average cash, cash equivalents and short-term investments.

Net loss for the first quarter of 2008, including non-cash stock compensation expense of $2.0 million, was $11.6 million, or $(0.53) per basic and diluted share, based on average basic and diluted shares outstanding of 21.8 million shares.

Cash, cash equivalents and short-term investments as of March 31, 2009 were $29.3 million, compared to $35.2 million as of December 31, 2008. The lower cash balance is primarily due to the company’s normal operating expenses. Subsequent to the end of the first quarter, in April 2009, the company successfully completed a secondary public offering of common stock, selling about 11.7 million shares with net proceeds to the company, after estimated expenses, of about $35.1 million.