AtriCure Reports Third Quarter 2009 Financial Results
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Third Quarter Highlights
- Non-GAAP operating loss improves 63% to a record $0.7 million
- Record adjusted EBITDA of $0.7 million
- Record non-GAAP net loss per share of $0.06
- Year-to-date cash provided by operations of $0.3 million
- European approval and initial launch of the AtriClip(TM) System
- Settlement reserve established related to DOJ investigation
WEST CHESTER, Ohio--(BUSINESS WIRE)-- AtriCure, Inc. (Nasdaq: ATRC), a medical device company and a leader in cardiac surgical ablation systems, today announced revenues of $13.3 million for its seasonally light third quarter. The company reported positive adjusted EBITDA, a non-GAAP measure, of $0.7 million for the quarter, representing the third consecutive quarter of positive adjusted EBITDA and year-to-date adjusted EBITDA of $1.7 million.
"We are pleased with our financial results for our seasonally light third quarter, particularly our profitability and cash flow metrics. We continue to demonstrate effective execution of our strategic priorities, as evidenced by both our financial performance and other key milestone achievements, including the launch of the AtriClip System, which we believe represents a significant growth opportunity for AtriCure," said David J. Drachman, President and Chief Executive Officer. "Further, we believe reaching a tentative settlement to bring closure to the ongoing Department of Justice investigation will allow us to focus on the business and executing our strategic priorities, including restoration of growth trends and increased shareholder value."
Financial Results
Revenues for the third quarter of 2009 were $13.3 million, a 10.3 percent decrease over third quarter 2008 revenues of $14.8 million and a sequential decrease of 3.6 percent for what historically has been a seasonally light quarter. Revenues from open heart products for the third quarter of 2009 were $6.5 million as compared with $6.7 million for the third quarter of 2008. Revenues from domestic minimally invasive products declined from $5.7 million for the third quarter of 2008 to $4.2 million for the third quarter of 2009. Third quarter 2008 revenues benefited from the inclusion of sales associated with the OR Lab(TM) system, which was introduced during 2008. International revenues grew 9.6 percent, or 11.1 percent on an exchange rate neutral basis, to $2.6 million for the third quarter of 2009.
Gross profit for the third quarter of 2009 was $10.0 million and gross margin was 75.3 percent, compared to gross profit of $11.4 million and gross margin of 77.1 percent for the third quarter of 2008. The decrease in gross margin was primarily due to an increased mix of revenues from international sales and the introduction of new products, which initially carry a higher product cost.
Operating expenses for the third quarter of 2009 were $14.4 million as compared to $13.2 million for the third quarter of 2008. Non-GAAP operating expenses, neutralizing the impact of the $3.8 million settlement reserve, were $10.7 million, a $2.5 million or 19.3 percent reduction when compared to third quarter 2008 operating expenses. The reduction in non-GAAP operating expenses was driven primarily by a reduction in headcount-related expenses. Loss from operations was $4.4 million. Non-GAAP loss from operations was a record $0.7 million, an improvement of $1.2 million, or 63.4 percent, as compared with the third quarter of 2008. The net loss per share was $0.32. Non-GAAP net loss per share was a record $0.06 as compared to $0.12 for the third quarter of 2008.
Adjusted EBITDA was $0.7 million, an improvement of $1.2 million as compared to the third quarter of 2008. Year-to-date adjusted EBITDA was a record $1.7 million as compared to a negative adjusted EBITDA of $3.7 million for the first nine months of 2008.
Cash, cash equivalents and investments were $16.4 million at September 30, 2009 and cash generated from operations during the quarter was $1.5 million. Year-to-date, cash provided by operations was $0.3 million.
European Approval of the AtriClip System
During September 2009, the AtriClip Gillinov-Cosgrove Left Atrial Appendage Exclusion System, or the AtriClip System, received European approval. The AtriClip System is designed to safely and effectively exclude the left atrial appendage and is being launched in Europe through a phased approach during the fourth quarter of 2009 with a full commercial release planned for the first quarter of 2010.
Earnings Call Information
Management will host a conference call at 10:00 a.m. Eastern Time on Wednesday, November 4, 2009 to discuss its third quarter 2009 financial results. A live web cast of the conference call will be available online from the investor relations page of AtriCure's 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=PBCKCNK4F
You may also access this call through an operator by calling 888-713-4214 for domestic callers and 617-213-4866 for international callers at least 15 minutes prior to the call start time using reservation code 74683077.
The webcast will be available on AtriCure's web site and a telephonic replay of the call will also be available through December 4, 2009. The replay dial-in numbers are 888-286-8010 for domestic callers and 617-801-6888 for international callers, using reservation code 62781958.
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. Medical journals have described the adoption by leading cardiothoracic surgeons of the AtriCure Isolator(R) bipolar ablation system as a treatment alternative during open-heart surgical procedures to create lesions in cardiac tissue to block the abnormal electrical impulses that cause atrial fibrillation, or AF, a rapid, irregular quivering of the upper chambers of the heart. Additionally, medical journals and leading cardiothoracic surgeons have described the AtriCure Isolator system as a promising treatment alternative for patients who may be candidates for 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. The FDA has cleared the AtriCure Isolator system and AtriCure's multifunctional pen and CoolrailTM linear ablation device, for the ablation, or destruction, of cardiac tissue during surgical procedures. Additionally, the FDA has cleared AtriCure's multifunctional pen for temporary pacing, sensing, stimulating and recording during the evaluation of cardiac arrhythmias and AtriCure's Cryo1TM system for the cryosurgical treatment of cardiac arrhythmias. To date, the FDA has not cleared or approved AtriCure's products for the treatment of AF.
Forward-Looking Statements
This press release contains "forward-looking statements" 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 AtriCure's products. Forward-looking statements are based on AtriCure'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 AtriCure's control. These risks and uncertainties include the rate and degree of market acceptance of AtriCure's products, AtriCure'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 AtriCure's products, competition from existing and new products and procedures or AtriCure's ability to effectively react to other risks and uncertainties described from time to time in AtriCure's SEC filings, such as fluctuation of quarterly financial results, reliance on third party manufacturers and suppliers, litigation (including the purported class action lawsuits, qui tam complaint or Department of Justice investigation) 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 AtriCure'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 AtriCure's financial results prepared and reported in accordance with GAAP.
ATRICURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September Nine Months Ended September 30,
30,
2009 2008 2009 2008
Revenues $ 13,281,336 $ 14,802,001 $ 40,733,189 $ 43,190,660
Cost of 3,278,090 3,396,038 9,330,564 10,121,826
revenues
Gross profit 10,003,246 11,405,963 31,402,625 33,068,834
Operating
expenses:
Research and
development 2,580,766 3,008,619 8,635,938 8,035,466
expenses
Selling,
general and 8,087,896 10,215,477 25,585,272 32,573,233
administrative
expenses
Goodwill - - 6,812,389 -
impairment
Settlement 3,766,623 - 3,766,623 -
reserve
Total
operating 14,435,285 13,224,096 44,800,222 40,608,699
expenses
Loss from (4,432,039 ) (1,818,133 ) (13,397,597 ) (7,539,865 )
operations
Other
(expense) (268,372 ) 48,155 (753,077 ) 571,840
income
Loss before
income tax (4,700,411 ) (1,769,978 ) (14,150,674 ) (6,968,025 )
benefit
Income tax 3,441 - 45,714 -
benefit
Net loss $ (4,696,970 ) $ (1,769,978 ) $ (14,104,960 ) $ (6,968,025 )
Basic and
diluted net $ (0.32 ) $ (0.12 ) $ (0.98 ) $ (0.49 )
loss per share
Weighted
average shares
outstanding:
basic and 14,614,217 14,208,232 14,456,954 14,181,155
diluted
ATRICURE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2009 2008
Assets
Current assets:
Cash, cash equivalents and short-term $ 15,286,029 $ 11,448,451
investments
Accounts receivable 6,502,970 6,511,594
Inventories 5,478,423 6,361,242
Other current assets 3,873,104 1,781,825
Total current assets 31,140,526 26,103,112
Property and equipment, net 3,086,345 3,682,819
Long-term investments 1,112,368 -
Intangible assets 358,028 569,153
Goodwill - 6,812,389
Restricted cash and cash equivalents - 6,000,000
Other assets 376,717 201,359
Total assets $ 36,073,984 $ 43,368,832
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 9,172,751 $ 8,072,596
Current maturities of debt and capital lease 2,202,603 34,004
obligations
Total current liabilities 11,375,354 8,106,600
Long-term debt and capital lease obligations 3,094,303 6,036,605
Other liabilities 3,313,273 106,470
Total liabilities 17,782,930 14,249,675
Stockholders' equity:
Common stock 14,992 14,275
Additional paid-in capital 109,650,270 106,636,653
Other comprehensive income (loss) 205,734 (56,789 )
Accumulated deficit (91,579,942 ) (77,474,982 )
Total stockholders' equity 18,291,054 29,119,157
Total liabilities and stockholders' equity $ 36,073,984 $ 43,368,832
ATRICURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
2009 2008
Cash flows from operating activities:
Net loss $ (14,104,960 ) $ (6,968,025 )
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,787,727 2,073,193
Amortization of deferred financing costs 275,537 92,271
and discount on long-term debt
Goodwill impairment 6,812,389 -
Settlement reserve 3,766,623 -
Share-based compensation 2,737,842 1,781,283
Other 8,908 (2,858 )
Changes in assets and liabilities,
excluding effects of acquired business:
Accounts receivable 84,201 (1,557,358 )
Inventories 914,171 (154,548 )
Other current assets (177,754 ) 16,827
Accounts payable and accrued liabilities (1,668,753 ) 64,098
Other non-current assets and liabilities (105,938 ) (230,423 )
Net cash provided by (used in) operating 329,993 (4,885,540 )
activities
Cash flows from investing activities:
Purchases of property & equipment (1,006,163 ) (1,584,279 )
Purchases of available-for-sale securities (5,824,661 ) (1,900,756 )
Maturities of available-for-sale securities - 8,894,670
Change in restricted cash and cash equivalents 6,000,000 (6,000,000 )
Cash paid for acquisition - (417,292 )
Net cash used in investing activities (830,824 ) (1,007,657 )
Cash flows from financing activities:
Payments on debt and capital leases (6,928,044 ) (713,801 )
Proceeds from borrowings of debt 6,500,000 6,000,000
Payment of debt fees (207,013 ) (269,107 )
Proceeds from stock option exercises 9,585 239,065
Proceeds from issuance of common stock under
employee 120,410 -
stock purchase plan
Net cash (used in) provided by financing (505,062 ) 5,256,157
activities
Effect of exchange rate changes on cash and 131,036 (83,368 )
cash equivalents
Net decrease in cash and cash equivalents (874,857 ) (720,408 )
Cash and cash equivalents - beginning of period 11,448,451 13,000,652
Cash and cash equivalents - end of period $ 10,573,594 $ 12,280,244
ATRICURE, INC.
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
(Unaudited)
Reconciliation of Net Loss and Net Loss per Share to Non-GAAP Net Loss and Net
Loss per Share
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Net loss, as $ (4,696,970 ) $ (1,769,978 ) $ (14,104,960 ) $ (6,968,025 )
reported
Goodwill
impairment, - - 6,812,389 -
net of tax
Settlement 3,766,623 - 3,766,623 -
reserve
Non-GAAP
adjusted net $ (930,347 ) $ (1,769,978 ) $ (3,525,948 ) $ (6,968,025 )
loss
Basic and
diluted net
loss per $ (0.32 ) $ (0.12 ) $ (0.98 ) $ (0.49 )
share, as
reported
Goodwill
impairment, - - 0.47 -
net of tax
Settlement 0.26 - 0.26 -
reserve
Non-GAAP
adjusted
basic and $ (0.06 ) $ (0.12 ) $ (0.24 ) $ (0.49 )
diluted net
loss per
share
Weighted
averages
shares 14,614,217 14,208,232 14,456,954 14,181,155
outstanding,
basic and
diluted
Reconciliation of Operating Expenses and Loss from Operations to Non-GAAP
Operating Expenses and Loss from Operations
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Operating
expenses, as $ 14,435,285 $ 13,224,096 $ 44,800,222 $ 40,608,699
reported
Goodwill - - 6,812,389 -
impairment
Settlement 3,766,623 - 3,766,623 -
reserve
Non-GAAP
adjusted $ 10,668,662 $ 13,224,096 $ 34,221,210 $ 40,608,699
operating
expenses
Loss from
operations, $ (4,432,039 ) $ (1,818,133 ) $ (13,397,597 ) $ (7,539,865 )
as reported
Goodwill - - 6,812,389 -
impairment
Settlement 3,766,623 - 3,766,623 -
reserve
Non-GAAP
adjusted $ (665,416 ) $ (1,818,133 ) $ (2,818,585 ) $ (7,539,865 )
loss from
operations
Reconciliation of Non-GAAP Adjusted Earnings (Loss) (Adjusted EBITDA)
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Net loss, as $ (4,696,970 ) $ (1,769,978 ) $ (14,104,960 ) $ (6,968,025 )
reported
Income tax (3,441 ) - (45,714 ) -
benefit
Other
expense 268,372 (48,155 ) 753,077 (571,840 )
(income) (a)
Depreciation
and 602,459 673,944 1,787,727 2,073,193
amortization
expense
Share-based
compensation 766,829 639,160 2,737,842 1,781,283
expense
Goodwill - - 6,812,389 -
impairment
Settlement 3,766,623 - 3,766,623 -
reserve
Non-GAAP
adjusted
earnings $ 703,872 $ (505,029 ) $ 1,706,984 $ (3,685,389 )
(loss)
(Adjusted
EBITDA)
Three Months Ended September 30, Nine Months Ended September 30,
(a) Other 2009 2008 2009 2008
includes:
Interest
(expense) $ (233,243 ) $ (93,917 ) $ (434,063 ) $ 57,341
income
Write-off of
deferred - - (102,485 ) -
financing
costs
Grant income - 74,187 - 222,562
Gain (loss)
gain due to
exchange 4,482 19,261 (125,775 ) 76,884
rate
fluctuation
Non-employee
stock option (39,611 ) 48,624 (90,754 ) 215,053
(expense)
income
Other
(expense) $ (268,372 ) $ 48,155 $ (753,077 ) $ 571,840
income
Source: AtriCure, Inc.
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