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AtriCure Reports Fourth Quarter and Full Year 2012 Financial Results



  AtriCure Reports Fourth Quarter and Full Year 2012 Financial Results

                                  Highlights

  * 2012 revenue of $70.2 million – up 9.1%
  * 2012 international sales of $17.6 million – up 14.0%
  * 4^th quarter revenue of $18.4 million – up 9.5%

Business Wire

WEST CHESTER, Ohio -- February 28, 2013

AtriCure, Inc. (Nasdaq: ATRC), a medical device company and a leader in the
development of technologies and solutions for the treatment of atrial
fibrillation, or AF, and systems for the exclusion of the left atrial
appendage, today announced fourth quarter and full year 2012 financial
results.

Revenue for the fourth quarter of 2012 was $18.4 million, reflecting 9.5%
growth (10.1% growth on a constant currency basis) over the fourth quarter of
2011. Revenue from U.S. product sales was $13.7 million, reflecting growth of
10.2%, and revenue from product sales to international customers was $4.7
million, reflecting growth of 7.8% (10.1% growth on a constant currency
basis).

“We are pleased to report fourth quarter and full year 2012 results which
provide a strong growth platform from which we can continue to build in 2013
and beyond. I continue to be impressed with the resiliency and talent of the
team at AtriCure – we have a great brand and customer service ethic which
permeate every aspect of the company,” said Mike Carrel, President and Chief
Executive Officer of AtriCure.

Mr. Carrel continued, “AtriCure is emerging as the education leader in the
field of atrial fibrillation, and I am confident in our ability to further
develop and expand the market. With our recently completed financing in
January, we have strengthened our balance sheet to successfully build and grow
our business, and in 2013 expect to continue our investments in training and
education, clinical science, international expansion and other commercial
investments. We are transforming AtriCure into a commercially focused
organization with a clear eye toward accelerating revenue growth, leveraging
our operating structure and eventually driving profitability.”

2012 Financial Results

Revenue for 2012 was $70.2 million, an increase of $5.8 million or 9.1%,
compared to 2011 revenue. Domestic revenue increased 7.5% to $52.6 million,
driven by strong sales of ablation-related open-heart products and AtriClip
products. International revenue was $17.6 million, an increase of $2.2 million
or 14.0% (18.9% on a constant currency basis) when compared to $15.5 million
for 2011. International revenue growth was driven primarily by an increase in
product sales in direct European markets, Russia and Asia.

Gross profit for 2012 was $50.0 million compared to $47.0 million for 2011.
Gross margin for 2012 was 71.2% compared to 73.0% for 2011. The decrease in
gross margin was due primarily to an increased mix of revenue from
international sales, slight pressure on prices, primarily in our clamp and
clip products, an increase in capital equipment sales and our investment in
manufacturing and quality systems to transition and maintain the manufacturing
of PMA approved products and to support our expanding operations.

Operating expenses for 2012 increased 10.6%, or $5.5 million, to $57.2 million
from $51.7 million for 2011. The increase in operating expenses was driven
primarily by a combination of increased selling, marketing and training
expenses as well as non-recurring severance and other charges during the year.

Loss from operations for 2012 was $7.2 million as compared to $4.7 million for
2011. Adjusted EBITDA, a non-GAAP measure, was a loss of $1.8 million for 2012
as compared to income of $0.1 million for 2011 (see reconciliation table
below). Net loss per share was $0.47 for 2012 and $0.35 for 2011.

Cash, cash equivalents and investments were $12.0 million at December 31, 2012
and cash used in operations during 2012 was $1.9 million.

Fourth Quarter 2012 Financial Results

Revenue for the fourth quarter of 2012 was $18.4 million, an increase of $1.6
million or 9.5%, compared to fourth quarter 2011 revenue. Domestic revenue
increased 10.2% to $13.7 million, driven by strong sales of ablation-related
open-heart products and AtriClip products. International revenue was $4.7
million, an increase of $0.3 million or 7.8% (10.1% on a constant currency
basis) when compared to $4.4 million for the fourth quarter of 2011.
International revenue growth was driven primarily by an increase in sales in
European markets.

Gross profit for the fourth quarter of 2012 was $13.0 million compared to
$11.7 million for the fourth quarter of 2011. Gross margin for the fourth
quarter of 2012 and 2011 was 70.8% and 70.0%, respectively. The increase in
gross margin was due primarily to a decrease in manufacturing scrap partially
offset by some pricing pressure in the clamp and AtriClip products.

Operating expenses for the fourth quarter of 2012 increased 10.6%, or $1.4
million, compared to the fourth quarter of 2011. The increase in operating
expenses was driven primarily by an increase in selling, marketing and
training expenses.

Loss from operations for the fourth quarter of 2012 was $1.9 million compared
to $1.7 million for the fourth quarter of 2011. Net loss per share was $0.12
for the fourth quarter of 2012 and $0.13 for the fourth quarter of 2011.

2013 Guidance

Management projects that 2013 revenue will be in the range of $76.5 - $78.0
million, an increase of 9 - 11% from 2012.

Adjusted EBITDA, a non-GAAP measure, is projected to be a loss in the range of
$3.0 to $5.0 million including the impact of the Medical Device Tax which is
estimated to be in the range of $0.8 - $1.0 million for 2013. Management
expects to continue making investments targeted at future revenue growth.

Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Thursday,
February 28, 2013 to discuss its fourth quarter 2012 financial results. A live
webcast of the conference call will be available online from the investor
relations page of AtriCure’s corporate website at www.atricure.com.

You may also access this call through an operator by calling (888) 713-4217
for domestic callers and (617) 213-4869 for international callers at least 15
minutes prior to the call start time using reservation code 53242423.

The webcast will be available on AtriCure’s website and a telephonic replay of
the call will also be available through April 7, 2013. The replay dial-in
numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for
international callers. The reservation code is 18558054.

About AtriCure, Inc.

AtriCure, Inc. is a medical device company providing innovative Atrial
Fibrillation (Afib) solutions designed to produce superior outcomes that
reduce the economic and social burden of Atrial Fibrillation. AtriCure’s
Synergy Ablation System is the first and only device approved for the
treatment of Persistent and Longstanding Persistent forms of Afib in patients
undergoing certain open concomitant procedures. AtriCure’s AtriClip Left
Atrial Appendage (LAA) exclusion device is the most widely implanted device
for LAA management worldwide. The company believes cardiothoracic surgeons are
adopting its ablation and LAA management devices for the treatment of Afib and
reduction of Afib related complications such as stroke. Afib affects more than
5.5 million people worldwide.

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 (including projections and guidance), 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 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.

A further list and description of risks, uncertainties and other matters can
be found in our Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q.

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
(In Thousands, Except Per Share Amounts)
(Unaudited)
                                                                   
                   Three Months Ended December      Twelve Months Ended
                   31,                              December 31,
                   2012             2011            2012            2011
                                                                     
Revenue            $  18,364        $  16,763       $  70,247       $ 64,402
Cost of revenue       5,362            5,023           20,233         17,406  
Gross profit          13,002           11,740          50,014         46,996
                                                                     
Operating
expenses:
Research and
development           2,967            2,964           12,147         11,857
expenses
Selling, general
and                   11,887           10,471          45,065         39,870  
administrative
expenses
Total operating       14,854           13,435          57,212         51,727  
expenses
                                                                     
Loss from             (1,852  )        (1,695  )       (7,198  )      (4,731 )
operations
                                                                     
Other expense         (138    )        (380    )       (286    )      (694   )
                                                                     
Loss before
income tax            (1,990  )        (2,075  )       (7,484  )      (5,425 )
expense
                                                                     
Income tax            (30     )        (5      )       (50     )      (31    )
expense
                                                                     
Net loss           $  (2,020  )     $  (2,080  )    $  (7,534  )    $ (5,456 )
                                                                     
Basic and
diluted net loss   $  (0.12   )     $  (0.13   )    $  (0.47   )    $ (0.35  )
per share
                                                                     
Weighted average
shares used in
computing net
loss per common
share:
Basic and             16,332           15,861          16,190         15,672  
diluted
                                                                              

ATRICURE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
                                                                 
                                                   December 31,   December 31,
                                                   2012           2011
Assets
                                                                   
Current assets:
Cash, cash equivalents and short-term              $ 12,000       $ 14,183
investments
Accounts receivable                                  9,948          9,514
Inventories                                          5,718          6,563
Other current assets                                 873            933       
Total current assets                                 28,539         31,193
                                                                   
Property and equipment, net                          3,430          2,351
Intangible assets                                    32             45
Other assets                                         430            270       
Total assets                                       $ 32,431       $ 33,859    
                                                                   
Liabilities and Stockholders' Equity
                                                                   
Current liabilities:
Accounts payable and accrued liabilities           $ 10,176       $ 9,266
Current maturities of debt and capital lease         2,029          1,543     
obligations
Total current liabilities                            12,205         10,809
                                                                   
Long-term debt and capital lease obligations         6,407          4,926
Other liabilities                                    1,319          2,509     
Total liabilities                                    19,931         18,244
                                                                   
Stockholders' equity:
Common stock                                         17             16
Additional paid-in capital                           123,157        118,853
Other comprehensive income (loss)                    77             (37      )
Accumulated deficit                                  (110,751 )     (103,217 )
Total stockholders' equity                           12,500         15,615
                                                                   
Total liabilities and stockholders' equity         $ 32,431       $ 33,859    
                                                                              

ATRICURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
                                                              
                                              Twelve Months Ended December 31,
                                              2012              2011
                                                                 
Cash flows from operating activities:
Net loss                                      $   (7,534  )     $  (5,456   )
Adjustments to reconcile net loss to net
cash used in operating activities:
Share-based compensation                          3,468            2,939
Depreciation and amortization                     1,899            1,922
Write-off of deferred financing costs and         -                153
discount on long-term debt
Amortization of deferred financing costs          100              119
and discount on long-term debt
Loss (gain) on disposal of assets                 40               (243     )
Amortization/accretion on investments             12               61
Change in allowance for doubtful accounts         1                28
Changes in assets and liabilities
Accounts receivable                               (417    )        (199     )
Inventories                                       865              (923     )
Other current assets                              57               (17      )
Accounts payable and accrued liabilities          (229    )        (188     )
Other non-current assets and liabilities          (198    )        (182     )
Net cash used in operating activities             (1,936  )        (1,986   )
                                                                 
Cash flows from investing activities:
Purchases of available-for-sale securities        (9,236  )        (12,649  )
Maturities of available-for-sale securities       9,400            16,506
Purchases of equipment                            (2,985  )        (1,522   )
Net proceeds from the sale of assets              24               389       
Net cash (used in) provided by investing          (2,797  )        2,724
activities
                                                                 
Cash flows from financing activities:
Proceeds from borrowings of debt                  10,000           7,500
Payments on debt and capital leases               (8,096  )        (4,046   )
Proceeds from stock option exercises              659              1,588
Payment of debt fees                              (127    )        (81      )
Proceeds from issuance of common stock            627              669
under employee stock purchase plan
Shares repurchased for payment of taxes on        (401    )        (783     )
stock awards
Net cash provided by financing activities         2,662            4,847
                                                                 
Effect of exchange rate changes on cash and       65               (57      )
cash equivalents
                                                                 
Net (decrease) increase in cash and cash          (2,006  )        5,528
equivalents
Cash and cash equivalents - beginning of          9,759            4,231     
period
Cash and cash equivalents - end of period     $   7,753         $  9,759     
                                                                             

ATRICURE, INC.
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
(In Thousands)
(Unaudited)
                                                                 
                                                                    
Reconciliation of Non-GAAP Adjusted Earnings (Adjusted EBITDA)
                                                                    
                 Three Months Ended December      Twelve Months Ended December
                 31,                              31,
                 2012             2011            2012             2011
                                                                    
Net loss, as     $  (2,020  )     $  (2,080  )    $  (7,534  )     $  (5,456 )
reported
Income tax          30               5               50               31
expense
Other expense       138              380             286              694
(a)
Depreciation
and                 379              430             1,899            1,922
amortization
expense
Share-based
compensation        527              690             3,468            2,939   
expense
Non-GAAP
adjusted
(loss)           $  (946    )     $  (575    )    $  (1,831  )     $  130     
earnings
(adjusted
EBITDA)
                                                                    
                                                                    
                 Three Months Ended December      Twelve Months Ended December
                 31,                              31,
(a) Other        2012             2011            2012             2011
includes:
                                                                    
Net interest     $  (182    )     $  (161    )    $  (791    )     $  (798   )
expense
Grant income        30               (57     )       409              51
(expense)
(Loss) gain
due to              (6      )        (124    )       (83     )        30
exchange rate
fluctuation
Non-employee
stock option        20               (38     )       179              23      
income
(expense)
Other expense    $  (138    )     $  (380    )    $  (286    )     $  (694   )
                                                                              

Contact:

AtriCure, Inc.
Andy Wade, Vice President and Chief Financial Officer, 513-755-4564
awade@atricure.com
OR
Investor Relations Contact:
Westwicke Partners
Lynn Pieper, 415-202-5678
lynn.pieper@westwicke.com
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