Health & Fitness
Health and Fitness
Health and Fitness 
Wed, February 16, 2011
AtriCure Reports Record Fourth Quarter 2010 Financial Results
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 record financial results. Revenue was $16.4 million, reflecting a new high and 20.1 percent growth on a constant currency basis over the fourth quarter of 2009. Revenue from product sales in the United States was $13.1 million, reflecting growth of 20.8 percent and international revenue was $3.3 million, reflecting 17.6 percent growth on a constant currency basis, or 11.2 percent on a GAAP basis. Revenue from sales of the AtriClip system in the United States was $1.3 million. The fourth quarter represents the first quarter the company generated positive net income as well as record adjusted EBITDA, a non-GAAP measure, of $1.0 million.
"We are pleased with our record fourth quarter financial results which reflect our focus and commitment to sustained high growth and profitability. During 2010 the AtriCure team executed on our strategic priorities, including the introduction of new products, sales force expansion and FDA approvals"
aWe are pleased with our record fourth quarter financial results which reflect our focus and commitment to sustained high growth and profitability. During 2010 the AtriCure team executed on our strategic priorities, including the introduction of new products, sales force expansion and FDA approvals,a said David J. Drachman, President and Chief Executive Officer. aWe are also encouraged by our clinical and regulatory progress. During the fourth quarter we filed the final clinical PMA module for our ABLATE clinical trial which we believe positions us to achieve an atrial fibrillation approval during mid-year 2012. Also during the fourth quarter, we initiated enrollment in our DEEP AF clinical trial and we continue to be highly encouraged by this novel approach to treating patients with AF.a
Fourth Quarter Financial Results
Revenue for the fourth quarter of 2010 was $16.4 million, a $2.6 million or 18.8 percent increase compared to fourth quarter 2009 revenue. Domestic revenue increased 20.8 percent to $13.1 million. Revenue from domestic open-heart products for the fourth quarter of 2010, which included $1.3 million in revenue from the AtriClip system, increased to $8.7 million from $6.7 million. Revenue from domestic minimally invasive products was $4.3 million for the fourth quarter of 2010. International revenue was $3.3 million for the fourth quarter of 2010 compared to $3.0 million for the fourth quarter of 2009. International revenue growth of 17.6 percent on a constant currency basis was driven by increased sales from our European markets, reflecting growth in both our direct and distributor markets.
Gross profit for the fourth quarter of 2010 was $12.3 million compared to $10.4 million for the fourth quarter of 2009. Gross margin for the fourth quarter of 2010 was 75.1 percent compared to gross margin of 75.2 percent for the fourth quarter of 2009. Operating expenses for the fourth quarters of 2010 and 2009 were $12.5 million. Research and development expenses increased $0.7 million to $3.5 million, reflecting increased spending in support of product development, regulatory and clinical trial activities. Selling, general and administrative expenses decreased $0.5 million to $9.0 million due primarily to a $0.6 million reduction in share-based compensation associated with a non-recurring expense during the fourth quarter of 2009.
Loss from operations improved $1.9 million from $2.1 million for the fourth quarter of 2009 to $0.2 million for the fourth quarter of 2010, driven by an increase in sales.
During the quarter the Company received $0.5 million in non-recurring grant income, which is recorded as a component of other income.
Adjusted EBITDA, a non-GAAP measure, was a record $1.0 million and the Company reported positive net income for the first time as a public company.
Cash, cash equivalents and investments were $12.6 million at December 31, 2010 and cash provided by operations during the quarter was $1.5 million.
Conference Call
AtriCure will host a conference call at 10:00 a.m. Eastern Time on Wednesday, February 16, 2011 to discuss its fourth 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://www.theconferencingservice.com/prereg/key.process?key=PHLHU9MX6 ]
You may also access this call through an operator by calling (888) 679-8040 for domestic callers and (617) 213-4851 for international callers at least 15 minutes prior to the call start time using reservation code 29481290.
The webcast will be available on AtriCurea™s web site and a telephonic replay of the call will also be available through March 16, 2011. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The reservation code is 12529818.
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 ablation 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 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.
| ATRICURE, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Revenue | $ | 16,388,963 | $ | 13,800,370 | $ | 59,006,188 | $ | 54,533,558 | ||||||||
| Cost of revenue | 4,082,993 | 3,420,181 | 13,618,454 | 12,750,745 | ||||||||||||
| Gross profit | 12,305,970 | 10,380,189 | 45,387,734 | 41,782,813 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 3,513,406 | 2,778,951 | 11,530,820 | 11,414,889 | ||||||||||||
| Selling, general and administrative expenses | 9,030,330 | 9,526,734 | 37,048,715 | 35,112,006 | ||||||||||||
| Goodwill impairment | - | - | - | 6,812,389 | ||||||||||||
| Settlement reserve | - | 188,782 | - | 3,955,405 | ||||||||||||
| Total operating expenses | 12,543,736 | 12,494,467 | 48,579,535 | 57,294,689 | ||||||||||||
| Loss from operations | (237,766 | ) | (2,114,278 | ) | (3,191,801 | ) | (15,511,876 | ) | ||||||||
| Other income (expense) | 268,597 | (288,674 | ) | (580,772 | ) | (1,041,751 | ) | |||||||||
| Income (loss) before income tax benefit | 30,831 | (2,402,952 | ) | (3,772,573 | ) | (16,553,627 | ) | |||||||||
| Income tax (expense) benefit | (19,287 | ) | 12,925 | (19,050 | ) | 58,639 | ||||||||||
| Net income (loss) | $ | 11,544 | $ | (2,390,027 | ) | $ | (3,791,623 | ) | $ | (16,494,988 | ) | |||||
| Basic and diluted net income (loss) per share | $ | 0.00 | $ | (0.16 | ) | $ | (0.25 | ) | $ | (1.13 | ) | |||||
Weighted average shares outstanding: basic and diluted | 15,206,758 | 14,880,498 | 15,095,250 | 14,563,710 | ||||||||||||
| ATRICURE, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| December 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash, cash equivalents and short-term investments | $ | 12,570,737 | $ | 15,722,098 | ||||
| Accounts receivable | 9,480,064 | 7,248,087 | ||||||
| Inventories | 5,680,033 | 4,869,708 | ||||||
| Other current assets | 2,917,571 | 3,511,335 | ||||||
| Total current assets | 30,648,405 | 31,351,228 | ||||||
| Property and equipment, net | 2,723,227 | 3,008,699 | ||||||
| Intangible assets | 89,375 | 287,653 | ||||||
| Other assets | 254,707 | 334,756 | ||||||
| Total assets | $ | 33,715,714 | $ | 34,982,336 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 10,841,921 | $ | 9,579,119 | ||||
| Current maturities of debt and capital lease obligations | 2,193,356 | 2,227,431 | ||||||
| Total current liabilities | 13,035,277 | 11,806,550 | ||||||
| Long-term debt and capital lease obligations | 661,624 | 2,669,666 | ||||||
| Other liabilities | 3,282,883 | 3,416,360 | ||||||
| Total liabilities | 16,979,784 | 17,892,576 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 15,664 | 15,353 | ||||||
| Additional paid-in capital | 114,402,234 | 110,900,087 | ||||||
| Other comprehensive income | 79,625 | 144,290 | ||||||
| Accumulated deficit | (97,761,593 | ) | (93,969,970 | ) | ||||
| Total stockholders' equity | 16,735,930 | 17,089,760 | ||||||
| Total liabilities and stockholders' equity | $ | 33,715,714 | $ | 34,982,336 | ||||
| ATRICURE, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| Twelve Months Ended December 31, | ||||||||
| 2010 | 2009 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (3,791,623 | ) | $ | (16,494,988 | ) | ||
Adjustments to reconcile net loss to net cash used in (provided by) operating activities: | ||||||||
| Depreciation and amortization | 2,363,284 | 2,413,800 | ||||||
Amortization of deferred financing costs and discount on long-term debt | 296,379 | 359,064 | ||||||
| Share-based compensation | 2,771,850 | 3,885,596 | ||||||
| (Gain) loss on disposal of equipment | (36,604 | ) | 5,517 | |||||
| Change in allowance for doubtful accounts | (16,404 | ) | (9,581 | ) | ||||
| Goodwill impairment | - | 6,812,389 | ||||||
| Settlement reserve | - | 3,955,405 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (2,299,937 | ) | (685,986 | ) | ||||
| Inventories | (850,147 | ) | 1,504,706 | |||||
| Other current assets | 525,107 | 169,163 | ||||||
| Accounts payable and accrued liabilities | 656,210 | (1,409,466 | ) | |||||
| Other non-current assets and liabilities | 348,451 | (85,671 | ) | |||||
| Net cash (used in) provided by operating activities | (33,434 | ) | 419,948 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of equipment | (1,813,812 | ) | (1,360,459 | ) | ||||
| Purchases of available-for-sale securities | (11,124,852 | ) | (8,015,866 | ) | ||||
| Maturities of available-for-sale securities | 9,598,491 | 1,201,877 | ||||||
| Change in restricted cash and cash equivalents | - | 6,000,000 | ||||||
| Net proceeds from the sale of equipment | 5,238 | 2,000 | ||||||
| Net cash used in investing activities | (3,334,935 | ) | (2,172,448 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments on debt and capital leases | (2,227,431 | ) | (7,493,269 | ) | ||||
| Proceeds from borrowings of debt | - | 6,500,000 | ||||||
| Payment of debt fees | (67,619 | ) | (235,110 | ) | ||||
| Proceeds from stock option exercises | 353,356 | 33,335 | ||||||
Proceeds from issuance of common stock under employee stock purchase plan | 498,520 | 281,035 | ||||||
| Net cash used in financing activities | (1,443,174 | ) | (914,009 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 136,827 | 123,483 | ||||||
| Net decrease in cash and cash equivalents | (4,674,716 | ) | (2,543,026 | ) | ||||
| Cash and cash equivalents - beginning of period | 8,905,425 | 11,448,451 | ||||||
| Cash and cash equivalents - end of period | $ | 4,230,709 | $ | 8,905,425 | ||||
| ATRICURE, INC. | ||||||||||||||||
| RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Reconciliation of Net Income (Loss) and Net Income (Loss) per Share to Non-GAAP Net Income (Loss) and Net Income (Loss) per Share | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net income (loss), as reported | $ | 11,544 | $ | (2,390,027 | ) | $ | (3,791,623 | ) | $ | (16,494,988 | ) | |||||
| Goodwill impairment, net of tax | - | - | - | 6,812,389 | ||||||||||||
| Settlement reserve | - | 188,782 | - | 3,955,405 | ||||||||||||
| Non-GAAP adjusted net income (loss) | $ | 11,544 | $ | (2,201,245 | ) | $ | (3,791,623 | ) | $ | (5,727,194 | ) | |||||
| Basic and diluted net income (loss) per share, as reported | $ | 0.00 | $ | (0.16 | ) | $ | (0.25 | ) | $ | (1.13 | ) | |||||
| Goodwill impairment, net of tax | - | - | - | 0.47 | ||||||||||||
| Settlement reserve | - | 0.01 | - | 0.27 | ||||||||||||
| Non-GAAP adjusted basic and diluted net income (loss) per share | $ | 0.00 | $ | (0.15 | ) | $ | (0.25 | ) | $ | (0.39 | ) | |||||
| Weighted averages shares outstanding, basic and diluted | 15,206,758 | 14,880,498 | 15,095,250 | 14,563,710 | ||||||||||||
| Reconciliation of Operating Expenses and Loss from Operations to Non-GAAP Operating Expenses and Loss from Operations | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Operating expenses, as reported | $ | 12,543,736 | $ | 12,494,467 | $ | 48,579,535 | $ | 57,294,689 | ||||||||
| Goodwill impairment | - | - | - | 6,812,389 | ||||||||||||
| Settlement reserve | - | 188,782 | - | 3,955,405 | ||||||||||||
| Non-GAAP adjusted operating expenses | $ | 12,543,736 | $ | 12,305,685 | $ | 48,579,535 | $ | 46,526,895 | ||||||||
| Loss from operations, as reported | $ | (237,766 | ) | $ | (2,114,278 | ) | $ | (3,191,801 | ) | $ | (15,511,876 | ) | ||||
| Goodwill impairment | - | - | - | 6,812,389 | ||||||||||||
| Settlement reserve | - | 188,782 | - | 3,955,405 | ||||||||||||
| Non-GAAP adjusted loss from operations | $ | (237,766 | ) | $ | (1,925,496 | ) | $ | (3,191,801 | ) | $ | (4,744,082 | ) | ||||
| Reconciliation of Non-GAAP Adjusted Earnings (Adjusted EBITDA) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net income (loss), as reported | $ | 11,544 | $ | (2,390,027 | ) | $ | (3,791,623 | ) | $ | (16,494,988 | ) | |||||
| Income tax benefit | 19,287 | (12,925 | ) | 19,050 | (58,639 | ) | ||||||||||
| Other (expense) income (a) | (268,597 | ) | 288,674 | 580,772 | 1,041,751 | |||||||||||
| Depreciation and amortization expense | 587,585 | 626,073 | 2,363,284 | 2,413,800 | ||||||||||||
| Share-based compensation expense | 627,751 | 1,147,754 | 2,771,850 | 3,885,596 | ||||||||||||
| Goodwill impairment | - | - | - | 6,812,389 | ||||||||||||
| Settlement reserve | - | 188,782 | - | 3,955,405 | ||||||||||||
| Non-GAAP adjusted earnings (adjusted EBITDA) | $ | 977,570 | $ | (151,669 | ) | $ | 1,943,333 | $ | 1,555,314 | |||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| (a) Other includes: | 2010 | 2009 | 2010 | 2009 | ||||||||||||
| Interest expense | $ | (179,652 | ) | $ | (224,689 | ) | $ | (839,354 | ) | $ | (658,752 | ) | ||||
| Grant income | 542,235 | - | 594,762 | - | ||||||||||||
| Loss due to exchange rate fluctuation | (645 | ) | (14,819 | ) | (171,221 | ) | (140,594 | ) | ||||||||
| Non-employee stock option expense | (93,341 | ) | (49,166 | ) | (164,959 | ) | (139,920 | ) | ||||||||
| Write-off of deferred financing costs | - | - | - | (102,485 | ) | |||||||||||
| Other expense | $ | 268,597 | $ | (288,674 | ) | $ | (580,772 | ) | $ | (1,041,751 | ) | |||||