Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - AtriCure, Inc. | d8k.htm |
| EX-10.1 - COMMITMENT LETTER WITH SILICON VALLEY BANK - AtriCure, Inc. | dex101.htm |
Exhibit 99.1
Contact:
AtriCure, Inc.
Julie A. Piton
Vice President and Chief Financial Officer
(513) 755-4561
jpiton@atricure.com
AtriCure Reports Record Second Quarter 2010 Financial Results
Highlights
| • | Revenue of $14.2 million – strengthening U.S. revenues of $11.8 million |
| • | Positive cash from operations during the quarter of $1.1 million |
| • | Loss from operations improves 58 percent – record low of $0.4 million |
| • | Obtained commitment to expand borrowing capacity under existing credit facility |
| • | Obtained FDA clearance and initiated launch of the AtriClipTM system in the U.S. |
| • | Positive progress toward ABLATE submission and an AF indication |
WEST CHESTER, Ohio – August 4, 2010 – 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 $14.2 million for its second quarter of 2010 and a record low loss from operations and net loss per share. Revenue from product sales in the United States was $11.8 million. International revenue was $2.3 million, which included a one-time unfavorable impact of $0.4 million associated with transitioning a large international market from a distributor stocking model to a direct selling model.
“As a direct result of the skillfulness and resolve of the men and women of AtriCure, we have made substantial progress toward achieving our strategic priorities and are encouraged by our second quarter operating and financial performance. The increasing strength of our product portfolio and sales force is driving market share gains. Additionally, our commitment to align costs with revenue resulted in record financial performance for operating loss, net loss and net loss per share,” said David J. Drachman, President and Chief Executive Officer. “As a result of recent meetings with the FDA, we intend to file our final PMA module for our ABLATE clinical trial, which is in support of an atrial fibrillation indication, during the first quarter of 2011. Furthermore, our recently approved AtriClip system introduces AtriCure into an emerging market that is highly valued in cardiac medicine and represents a large near and long term growth platform.”
Second Quarter Financial Results
Revenue for the second quarter of 2010 was $14.2 million, a $0.4 million increase when compared to second quarter 2009 revenue of $13.8 million. Domestic revenue increased 5.5 percent to $11.8 million. Revenue from domestic open-heart products for the second quarter of 2010 increased to $7.6 million from $7.3 million. Revenue from domestic minimally invasive products increased from $4.0 million for the second quarter of 2009 to $4.3 million for the second quarter of 2010. International revenue was $2.3 million for the second quarter of 2010 as compared to $2.6 million for the second quarter of 2009. International revenue for the quarter was negatively impacted by $0.4 million as compared to the second quarter of 2009 due to transitioning a large international market from a stocking distributor model to AtriCure’s direct sales and marketing organization.
Gross profit for the second quarter of 2010 was $11.2 million as compared to $10.7 million for the second quarter of 2009. Gross margin for the second quarter of 2010 was 79.1 percent compared to gross margin of 77.4 percent for the second quarter of 2009. The improvement in gross margin was primarily due to an increased mix of revenue from U.S. sales and a reduction in product costs, partially offset by revenue from new products, which have a lower gross margin than existing disposable products.
Operating expenses on a GAAP basis for the second quarter of 2010 were consistent with second quarter 2010 operating expenses of $11.7 million. Operating expenses included a reduction of $0.7 million in research and development expenses, due primarily to reductions in product development expenditures and clinical trial enrollment expenses. Selling, general and administrative expenses increased $0.7 million, due primarily to an increase in sales and marketing headcount related expenses.
Loss from operations improved 58.1 percent to $0.4 million, driven by increased revenue and gross margin expansion. Adjusted EBITDA for the second quarter of 2010 improved 85.8 percent to $0.8 million as compared with $0.4 million for the second quarter of 2009.
Cash, cash equivalents and investments were $12.0 million at June 30, 2010.
Recent Business Developments
During June 2010, AtriCure’s AtriClip system received 510(k) clearance for occlusion of the left atrial appendage for use under direct visualization during concomitant open-heart procedures. The AtriClip system is designed to safely and effectively exclude the left atrial appendage. David Drachman commented, “There is a large and emerging market for safe and effective left atrial appendage exclusion devices and we are highly encouraged by the initial customer interest and feedback. We believe the AtriClip system presents a large and exciting new market opportunity as well as a near-term growth catalyst. We estimate the annual U.S. market opportunity for the AtriClip system, when used during open-heart procedures, to be more than $150 million.”
As a result of recent meetings with the FDA related to AtriCure’s ABLATE clinical trial, AtriCure plans to file its final clinical PMA module during the first quarter of 2011. This submission will not require the enrollment of additional patients in either ABLATE or the ABLATE continued access protocol. The ABLATE clinical trial is a pivotal trial in support of an atrial fibrillation indication for patients undergoing concomitant cardiac procedures.
Credit Facility Expansion
In August 2010, AtriCure signed a commitment letter with Silicon Valley Bank that provides for increased borrowing capacity under the revolving loan portion of the facility and increases the total facility from $10 million to $14 million. The company estimates that the amendment to the facility will increase available borrowing capacity by approximately $5.5 million, providing for total incremental borrowing availability of approximately $7.5 million.
Earnings Call Information
Management will host a conference call at 10:00 a.m. Eastern Time on Wednesday, August 4, 2010 to discuss its second quarter 2010 financial results. A live web cast of the conference call will be available online from the investor relations page of AtriCure’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=PMBRCEER8
You may also access this call through an operator by calling (888) 680-0894 for domestic callers and (617) 213-4860 for international callers at least 15 minutes prior to the call start time using reservation code 98919872.
The webcast will be available on AtriCure’s web site and a telephonic replay of the call will also be available through September 4, 2010. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The reservation code is 47564921.
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 AtriCure’s products for the treatment of AF or a reduction in the risk of stroke.
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) 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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Revenue |
$ | 14,192,312 | $ | 13,777,950 | $ | 28,144,112 | $ | 27,451,853 | ||||||||
| Cost of revenue |
2,963,673 | 3,107,816 | 6,236,309 | 6,052,474 | ||||||||||||
| Gross profit |
11,228,639 | 10,670,134 | 21,907,803 | 21,399,379 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development expenses |
2,422,443 | 3,138,339 | 5,080,371 | 6,055,172 | ||||||||||||
| Selling, general and administrative expenses |
9,239,056 | 8,565,233 | 18,950,578 | 17,497,376 | ||||||||||||
| Goodwill impairment |
— | — | — | 6,812,389 | ||||||||||||
| Total operating expenses |
11,661,499 | 11,703,572 | 24,030,949 | 30,364,937 | ||||||||||||
| Loss from operations |
(432,860 | ) | (1,033,438 | ) | (2,123,146 | ) | (8,965,558 | ) | ||||||||
| Other expense |
(331,537 | ) | (420,663 | ) | (652,392 | ) | (484,705 | ) | ||||||||
| Loss before income tax (expense) benefit |
(764,397 | ) | (1,454,101 | ) | (2,775,538 | ) | (9,450,263 | ) | ||||||||
| Income tax (expense) benefit |
(109 | ) | 11,033 | 1,681 | 42,273 | |||||||||||
| Net loss |
$ | (764,506 | ) | $ | (1,443,068 | ) | $ | (2,773,857 | ) | $ | (9,407,990 | ) | ||||
| Basic and diluted net loss per share |
$ | (0.05 | ) | $ | (0.10 | ) | $ | (0.18 | ) | $ | (0.65 | ) | ||||
ATRICURE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash, cash equivalents and short-term investments |
$ | 11,980,217 | $ | 15,722,098 | ||||
| Accounts receivable |
7,720,511 | 7,248,087 | ||||||
| Inventories |
5,988,966 | 4,869,708 | ||||||
| Other current assets |
5,651,610 | 3,511,335 | ||||||
| Total current assets |
31,341,304 | 31,351,228 | ||||||
| Property and equipment, net |
2,943,284 | 3,008,699 | ||||||
| Intangible assets |
146,903 | 287,653 | ||||||
| Other assets |
322,043 | 334,756 | ||||||
| Total assets |
$ | 34,753,534 | $ | 34,982,336 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued liabilities |
$ | 11,930,173 | $ | 9,579,119 | ||||
| Current maturities of debt and capital lease obligations |
2,210,699 | 2,227,431 | ||||||
| Total current liabilities |
14,140,872 | 11,806,550 | ||||||
| Long-term debt and capital lease obligations |
1,675,923 | 2,669,666 | ||||||
| Other liabilities |
3,197,608 | 3,416,360 | ||||||
| Total liabilities |
19,014,403 | 17,892,576 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
15,558 | 15,353 | ||||||
| Additional paid-in capital |
112,574,466 | 110,900,087 | ||||||
| Other comprehensive income |
(107,066 | ) | 144,290 | |||||
| Accumulated deficit |
(96,743,827 | ) | (93,969,970 | ) | ||||
| Total stockholders’ equity |
15,739,131 | 17,089,760 | ||||||
| Total liabilities and stockholders’ equity |
$ | 34,753,534 | $ | 34,982,336 | ||||
ATRICURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2010 | 2009 | |||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (2,773,857 | ) | $ | (9,407,990 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
1,236,654 | 1,185,268 | ||||||
| Amortization of deferred financing costs and discount on long-term debt |
154,102 | 189,638 | ||||||
| Loss on disposal of equipment |
— | 3,083 | ||||||
| Change in allowance for doubtful accounts |
(14,377 | ) | 35,933 | |||||
| Goodwill impairment |
— | 6,812,389 | ||||||
| Share-based compensation |
1,438,976 | 1,971,013 | ||||||
| Changes in assets and liabilities |
||||||||
| Accounts receivable |
(638,572 | ) | (855,135 | ) | ||||
| Inventories |
(1,247,449 | ) | 437,382 | |||||
| Other current assets |
530,643 | 83,162 | ||||||
| Accounts payable and accrued liabilities |
(348,209 | ) | (1,492,756 | ) | ||||
| Other non-current assets and liabilities |
(222,081 | ) | (163,289 | ) | ||||
| Net cash used in operating activities |
(1,884,170 | ) | (1,201,302 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Purchases of equipment |
(1,037,008 | ) | (757,958 | ) | ||||
| Purchases of available-for-sale securities |
(3,608,774 | ) | (2,009,267 | ) | ||||
| Maturities of available-for-sale securities |
5,298,491 | — | ||||||
| Change in restricted cash and cash equivalents |
— | 6,000,000 | ||||||
| Net cash provided by investing activities |
652,709 | 3,232,775 | ||||||
| Cash flows from financing activities: |
||||||||
| Payments on debt and capital leases |
(1,113,078 | ) | (6,377,799 | ) | ||||
| Proceeds from borrowings of debt |
— | 6,500,000 | ||||||
| Payment of debt fees |
(65,597 | ) | (123,233 | ) | ||||
| Proceeds from stock option exercises |
34,754 | — | ||||||
| Proceeds from issuance of common stock under employee stock purchase plan |
225,084 | 120,410 | ||||||
| Net cash (used in) provided by financing activities |
(918,837 | ) | 119,378 | |||||
| Effect of exchange rate changes on cash and cash equivalents |
98,979 | 128,745 | ||||||
| Net (decrease) increase in cash and cash equivalents |
(2,051,319 | ) | 2,279,596 | |||||
| Cash and cash equivalents - beginning of period |
8,905,425 | 11,448,451 | ||||||
| Cash and cash equivalents - end of period |
$ | 6,854,106 | $ | 13,728,047 | ||||
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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net loss, as reported |
$ | (764,506 | ) | $ | (1,443,068 | ) | $ | (2,773,857 | ) | $ | (9,407,990 | ) | ||||
| Goodwill impairment, net of tax |
— | — | — | 6,812,389 | ||||||||||||
| Non-GAAP adjusted net loss |
$ | (764,506 | ) | $ | (1,443,068 | ) | $ | (2,773,857 | ) | $ | (2,595,601 | ) | ||||
| Basic and diluted net loss per share, as reported |
$ | (0.05 | ) | $ | (0.10 | ) | $ | (0.18 | ) | $ | (0.65 | ) | ||||
| Goodwill impairment, net of tax |
— | — | — | 0.47 | ||||||||||||
| Non-GAAP adjusted basic and diluted net loss per share |
$ | (0.05 | ) | $ | (0.10 | ) | $ | (0.18 | ) | $ | (0.18 | ) | ||||
| Reconciliation of Operating Expenses and Loss from Operations to Non-GAAP Operating Expenses and Loss from Operations
|
| |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Operating expenses, as reported |
$ | 11,661,499 | $ | 11,703,572 | $ | 24,030,949 | $ | 30,364,937 | ||||||||
| Goodwill impairment |
— | — | — | 6,812,389 | ||||||||||||
| Non-GAAP adjusted operating expenses |
$ | 11,661,499 | $ | 11,703,572 | $ | 24,030,949 | $ | 23,552,548 | ||||||||
| Loss from operations, as reported |
$ | (432,860 | ) | $ | (1,033,438 | ) | $ | (2,123,146 | ) | $ | (8,965,558 | ) | ||||
| Goodwill impairment |
— | — | — | 6,812,389 | ||||||||||||
| Non-GAAP adjusted loss from operations |
$ | (432,860 | ) | $ | (1,033,438 | ) | $ | (2,123,146 | ) | $ | (2,153,169 | ) | ||||
| Reconciliation of Non-GAAP Adjusted Earnings (Adjusted EBITDA)
|
| |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net loss, as reported |
$ | (764,506 | ) | $ | (1,443,068 | ) | $ | (2,773,857 | ) | $ | (9,407,990 | ) | ||||
| Income tax (expense) benefit |
109 | (11,033 | ) | (1,681 | ) | (42,273 | ) | |||||||||
| Other expense (a) |
331,537 | 420,663 | 652,392 | 484,705 | ||||||||||||
| Depreciation and amortization expense |
605,941 | 603,675 | 1,236,654 | 1,185,268 | ||||||||||||
| Share-based compensation expense |
626,946 | 860,278 | 1,438,976 | 1,971,013 | ||||||||||||
| Goodwill impairment |
— | — | — | 6,812,389 | ||||||||||||
| Non-GAAP adjusted earnings (adjusted EBITDA) |
$ | 800,027 | $ | 430,515 | $ | 552,484 | $ | 1,003,112 | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (a) Other includes: |
||||||||||||||||
| Interest expense |
$ | (208,586 | ) | $ | (262,821 | ) | $ | (464,946 | ) | $ | (303,306 | ) | ||||
| Loss due to exchange rate fluctuation |
(95,746 | ) | (81,869 | ) | (159,952 | ) | (130,256 | ) | ||||||||
| Non-employee stock option expense |
(27,205 | ) | (75,973 | ) | (27,494 | ) | (51,143 | ) | ||||||||
| Other expense |
$ | (331,537 | ) | $ | (420,663 | ) | $ | (652,392 | ) | $ | (484,705 | ) | ||||
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