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AtriCure Reports Third Quarter 2010 Financial Results

^{Published on 2010-11-03 00:20:35 - Market Wire}
 

WEST CHESTER, Ohio--([ BUSINESS WIRE ])--AtriCure, Inc. (Nasdaq: ATRC), a medical device company and a leader in cardiac surgical ablation systems and systems for the exclusion of the left atrial appendage, today announced revenue of $14.5 million for its seasonally impacted third quarter of 2010. Revenue from product sales in the United States was $11.6 million, reflecting growth of 8.1 percent and international revenue was $2.9 million, reflecting 19.2 percent growth on a constant currency basis or 12.7 percent on a GAAP basis. Revenue from the AtriClip system in the United States was $1.0 million during the first quarter of full commercial launch.

aWe are encouraged by our third quarter momentum and financial results. We believe that our strategic investments in new products, sales force expansion and FDA approvals will continue to accelerate growth. Importantly, we believe that initial sales from the AtriClip system and our new product and regulatory progress affirms the power of our strategic plan,a said David J. Drachman, President and Chief Executive Officer. aDuring the quarter we made positive progress on our ABLATE clinical module submission, and anticipate filing the final module in support of a PMA during the first quarter of 2011 and receiving an atrial fibrillation approval during 2012. Furthermore, we continue to anticipate initial patient enrollment in our DEEP AF clinical trial during the fourth quarter of 2010.a

Third Quarter Financial Results
Revenue for the third quarter of 2010 was $14.5 million, a $1.2 million increase when compared to third quarter 2009 revenue of $13.3 million. Domestic revenue increased 8.1 percent to $11.6 million. Revenue from domestic open-heart products for the third quarter of 2010, which includes $1.0 million in revenue from the AtriClip system, increased to $7.9 million from $6.5 million. Revenue from domestic minimally invasive products decreased from $4.2 million for the third quarter of 2009 to $3.7 million for the third quarter of 2010, reflecting fewer procedures. International revenue was $2.9 million for the third quarter of 2010 as compared to $2.6 million for the third quarter of 2009. International growth of 19.2 percent on a constant currency basis was driven primarily by European markets, reflecting growth in both our direct and distributor markets.

Gross profit for the third quarter of 2010 was $11.2 million as compared to $10.0 million for the third quarter of 2009. Gross margin for the third quarter of 2010 was 77.2 percent compared to gross margin of 75.3 percent for the third quarter of 2009. The improvement in gross margin was primarily driven by an increase in gross margin from international sales, driven by a more favorable product mix and a benefit from growth in direct markets. These increases to gross margin were partially offset by an increased mix of revenue from Cryo1 and the AtriClip system, which carry a lower gross margin than our other disposable products.

Operating expenses for the third quarter of 2010 were $12.0 million as compared with third quarter 2009 operating expenses of $14.4 million on a GAAP basis and $10.7 million excluding the settlement reserve. The increase in non-GAAP adjusted operating expenses of $1.3 million was primarily due to increased costs related to clinical activities of $0.4 million and a $1.0 million increase in selling, general and administrative expenses. The increase in selling, general and administrative expenses was due primarily to increased sales and marketing headcount related expenses of $0.8 million, reflecting an expansion of the worldwide sales and marketing organization, and costs to exit a distributor relationship of $0.3 million.

Adjusted EBITDA was $0.4 million and net loss was $1.0 million for the third quarter of 2010. Cash, cash equivalents and investments were $11.5 million at September 30, 2010 and cash provided by operations during the quarter was $0.3 million.

Conference Call
AtriCure will host a conference call at 10:00 a.m. Eastern Time on Tuesday, November 2, 2010 to discuss its third quarter 2010 financial results. A live web cast of the conference call will be available online from the investor relations page of AtriCurea™s corporate web site at [ www.atricure.com ].

Pre-registration is available and recommended for this call at the following URL: [ https://cossprereg.btci.com/prereg/key.process?key=PDADX9N4K ]

You may also access this call through an operator by calling (888) 713-4211 for domestic callers and (617) 213-4864 for international callers at least 15 minutes prior to the call start time using reservation code 28142510.

The webcast will be available on AtriCurea™s web site and a telephonic replay of the call will also be available through December 2, 2010. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The reservation code is 86093298.

About AtriCure, Inc.
AtriCure, Inc. is a medical device company and a leader in developing, manufacturing and selling innovative cardiac surgical ablation systems designed to create precise lesions, or scars, in cardiac, or heart, tissue and systems for the exclusion of the left atrial appendage. The Company believes cardiothoracic surgeons are adopting its products for the treatment of atrial fibrillation, or AF, during concomitant open-heart surgical procedures and sole-therapy minimally invasive procedures. AF affects more than 5.5 million people worldwide and predisposes them to a five-fold increased risk of stroke. AtriCure is conducting clinical trials in support of an AF indication. However, to date, the FDA has not cleared or approved AtriCurea™s products for the treatment of AF or a reduction in the risk of stroke.

Forward-Looking Statements
This press release contains aforward-looking statementsa within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that address activities, events or developments that AtriCure expects, believes or anticipates will or may occur in the future, such as earnings estimates, other predictions of financial performance, launches by AtriCure of new products and market acceptance of AtriCurea™s products. Forward-looking statements are based on AtriCurea™s experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances and are subject to numerous risks and uncertainties, many of which are beyond AtriCurea™s control. These risks and uncertainties include the rate and degree of market acceptance of AtriCurea™s products, AtriCurea™s ability to develop and market new and enhanced products, the timing of and ability to obtain and maintain regulatory clearances and approvals for its products, the timing of and ability to obtain reimbursement of procedures utilizing AtriCurea™s products, competition from existing and new products and procedures or AtriCurea™s ability to effectively react to other risks and uncertainties described from time to time in AtriCurea™s SEC filings, such as fluctuation of quarterly financial results, reliance on third party manufacturers and suppliers, litigation (including the purported class action lawsuits) or other proceedings, government regulation and stock price volatility. AtriCure does not guarantee any forward-looking statement, and actual results may differ materially from those projected. AtriCure undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures
To supplement AtriCurea™s condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles, or GAAP, AtriCure uses certain non-GAAP financial measures in this release as supplemental financial metrics. Non-GAAP financial measures provide an indication of performance excluding certain items. Our management believes that in order to properly understand short-term and long-term financial trends, investors may wish to consider the impact of these excluded items in addition to GAAP measures. The excluded items vary in frequency and/or impact on our continuing operations and our management believes that the excluded items are typically not reflective of our ongoing core business operations. Further, management uses results of operations before these excluded items as a basis for its strategic planning. The non-GAAP financial measures used by AtriCure may not be the same or calculated the same as those used by other companies. Reconciliations of the non-GAAP financial measures used in this release to the most comparable GAAP measures for the respective periods can be found in tables later in this release. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for AtriCurea™s financial results prepared and reported in accordance with GAAP.