AtriCure Reports Third Quarter 2013 Financial Results

  AtriCure Reports Third Quarter 2013 Financial Results

  *Revenue of $20.1 million – up 24.8%; 24.0% constant currency
  *U.S. sales of $15.8 million – up 28.1%
  *International sales of $4.3 million – up 14.2%; 10.8% constant currency

Business Wire

WEST CHESTER, Ohio -- October 29, 2013

AtriCure, Inc. (Nasdaq: ATRC), a leading Atrial Fibrillation medical device
provider, today announced financial results for the third quarter of 2013.

“We are pleased with our performance in the third quarter. Our results reflect
our third consecutive quarter of double digit year over year revenue growth,
driven by overall strength and our U.S. business which was up 28% versus the
prior year. We are seeing the results of our training and education efforts in
capturing market share, and we are gaining momentum with the AtriClip,” said
Mike Carrel, President and Chief Executive Officer of AtriCure. “Based on
continued strength across all of our product lines, we are updating our
outlook for 2013 to reflect anticipated revenue growth of 14% from 2012.”

Third Quarter 2013 Financial Results
Revenue for the third quarter of 2013 was $20.1 million, an increase of $4.0
million or 24.8% (24.0% on a constant currency basis), compared to third
quarter 2012 revenue. Domestic revenue increased 28.1% to $15.8 million,
driven by strong sales of ablation-related open-heart products and AtriClip
products. International revenue was $4.3 million, an increase of $0.5 million
or 14.2% (10.8% on a constant currency basis) when compared to $3.8 million
for the third quarter of 2012. International revenue growth was driven
primarily by increased sales to direct customers and certain distributors.

Gross profit for the third quarter of 2013 was $14.7 million compared to $11.5
million for the third quarter of 2012. Gross margin for the third quarter of
2013 and 2012 was 72.9% and 71.6%, respectively. The increase in gross margin
was due primarily to volume-driven leverage of manufacturing overhead
expenses, a higher mix of domestic sales and the strong performance of the new
AtriClip Pro product.

Operating expenses for the third quarter of 2013 increased 22.9%, or $3.2
million, compared to the third quarter of 2012. The increase in operating
expenses was driven primarily by an increase in selling, marketing and
training expenses.

Loss from operations for the third quarter of 2013 was $2.6 million compared
to $2.5 million for the third quarter of 2012. Net loss per share was $0.13
for the third quarter of 2013 and $0.16 for the third quarter of 2012.

Cash, cash equivalents and investments were $34.4 million at September 30,
2013 and cash provided by operations during the third quarter of 2013 was $0.7
million.

2013 Guidance
Management projects that 2013 revenue will be approximately $80.0 million, an
increase of 14% from 2012. This compares to the previous outlook for 2013
revenue in the range of $77.0 - $78.5 million, an increase of 10% - 12% from
2012.

Adjusted EBITDA, a non-GAAP measure, is projected to be a loss in the range of
$4.5 to $5.5 million including the impact of the medical device excise tax
which is estimated to be in the range of $0.6 - $0.8 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 Tuesday,
October 29, 2013 to discuss its third quarter 2013 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) 713-4211
for domestic callers and (617) 213-4864 for international callers at least 15
minutes prior to the call start time using reservation code 83850169.

The webcast will be available on AtriCure’s website and a telephonic replay of
the call will also be available through November 29, 2013. The replay dial-in
numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for
international callers. The reservation code is 29085641.

About AtriCure, Inc.
AtriCure, Inc. is a leading atrial fibrillation solutions partner, providing
innovative products, professional education and support for clinical science
to reduce the economic and social burden of atrial fibrillation. AtriCure's
Synergy Ablation System is the first and only device approved by the Food and
Drug Administration (FDA) for the surgical treatment of Persistent and
Longstanding Persistent forms of Afib in patients undergoing certain open
heart procedures concomitantly (simultaneously). AtriCure's AtriClip™ Left
Atrial Appendage (LAA) occlusion device is the most widely implanted device
for LAA management worldwide.Afib affects more than two million people
worldwide and is estimated to cost more than $6.5 billion annually in
healthcare expenses. The number affected by Afib is expected to grow to 12
million by 2050.

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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
                                                                    
                                                                    
                        Three Months Ended             Nine Months Ended
                        September 30,                  September 30,
                        2013            2012           2013         2012
                                                                    
Revenue:
Open-heart              $  9,637        $ 7,656        $ 27,912     $ 24,529
Minimally                  3,486          3,112          10,129       9,324
invasive
AtriClip                  2,709        1,593        7,884      5,113  
Total United               15,832         12,361         45,925       38,966
States
International             4,314        3,778        14,080     12,917 
Total revenue              20,146         16,139         60,005       51,883
Cost of revenue           5,461        4,590        16,111     14,871 
Gross profit               14,685         11,549         43,894       37,012
                                                                    
Operating
expenses:
Research and
development                3,237          2,905          9,792        9,180
expenses
Selling,
general and               14,062       11,173       40,155     33,178 
administrative
expenses
Total operating           17,299       14,078       49,947     42,358 
expenses
                                                                    
Loss from                  (2,614  )      (2,529 )       (6,053 )     (5,346 )
operations
                                                                    
Other expense             (130    )     (27    )      (415   )    (148   )
                                                                    
Loss before
income tax                 (2,744  )      (2,556 )       (6,468 )     (5,494 )
expense
                                                                    
Income tax                (4      )     (11    )      (14    )    (20    )
expense
                                                                    
Net loss                $  (2,748  )    $ (2,567 )     $ (6,482 )   $ (5,514 )
                                                                    
Basic and
diluted net             $  (0.13   )    $ (0.16  )     $ (0.32  )   $ (0.34  )
loss per share
                                                                    
Weighted
average shares
used in
computing net
loss per common
share:
Basic and                 20,725       16,278       20,311     16,143 
diluted
                                                                             



ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
(Unaudited)
                                                           
                                                                  
                                                September 30,     December 31,
                                                2013              2012
Assets
                                                                  
Current assets:
Cash, cash equivalents and short-term           $  29,685         $ 12,000
investments
Accounts receivable, net                           11,031           9,948
Inventories                                        7,062            5,718
Other current assets                              779            873      
Total current assets                               48,557           28,539
                                                                  
Property and equipment, net                        4,135            3,430
Intangible assets                                  23               32
Long-term investments                              4,678            -
Other assets                                      244            430      
Total assets                                    $  57,637        $ 32,431   
                                                                  
Liabilities and Stockholders' Equity
                                                                  
Current liabilities:
Accounts payable and accrued                    $  14,238         $ 10,176
liabilities
Current maturities of long-term debt              2,037          2,029    
and capital lease obligations
Total current liabilities                          16,275           12,205
                                                                  
Long-term debt and capital lease                   4,922            6,407
obligations
Other liabilities                                 195            1,319    
Total liabilities                                  21,392           19,931
                                                                  
Stockholders' equity:
Common stock                                       21               17
Additional paid-in capital                         153,420          123,157
Other comprehensive income                         37               77
Accumulated deficit                               (117,233 )      (110,751 )
Total stockholders' equity                        36,245         12,500   
Total liabilities and stockholders'             $  57,637        $ 32,431   
equity
                                                                             

                                          
                                               
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
                                                               
                                                                   
                                               Nine Months Ended September 30,
                                               2013                2012
                                                                   
Cash flows from operating activities:
Net loss                                       $  (6,482  )        $  (5,514 )
Adjustments to reconcile net loss to
net cash used in operating activities:
Share-based compensation expense                  2,072               2,941
Depreciation and amortization of                  1,465               1,520
intangible assets
Amortization of deferred financing                69                  81
costs
Loss (gain) on disposal of equipment              30                  (12    )
Amortization/accretion on investments             (4      )           16
Change in allowance for doubtful                  (14     )           (21    )
accounts
Changes in assets and liabilities
Accounts receivable                               (1,049  )           125
Inventories                                       (1,313  )           (319   )
Other current assets                              117                 122
Accounts payable and accrued                      2,744               (510   )
liabilities
Other non-current assets and                     207               (174   )
liabilities
Net cash used in operating activities             (2,158  )           (1,745 )
                                                                   
Cash flows from investing activities:
Purchases of available-for-sale                   (9,186  )           (8,538 )
securities
Maturities of available-for-sale                  4,900               8,100
securities
Purchases of property and equipment               (1,930  )           (2,372 )
Net proceeds from the sale of                    2                 24     
equipment
Net cash used in investing activities             (6,214  )           (2,786 )
                                                                   
Cash flows from financing activities:
Net proceeds from sale of stock                   26,872              -
Proceeds from debt borrowings                     -                   10,000
Payments on debt and capital leases               (1,547  )           (7,568 )
Payment of debt fees                              (99     )           (78    )
Proceeds from stock option exercises              1,277               562
Shares repurchased for payment of                 (279    )           (372   )
taxes on stock awards
Proceeds from issuance of common stock           326               372    
under employee stock purchase plan
Net cash provided by financing                    26,550              2,916
activities
                                                                   
Effect of exchange rate changes on               (110    )          59     
cash and cash equivalents
                                                                   
Net increase (decrease) in cash and               18,068              (1,556 )
cash equivalents
Cash and cash equivalents - beginning            7,753             9,759  
of period
Cash and cash equivalents - end of             $  25,821          $  8,203  
period
                                                                             

                                                           
                                                                    
ATRICURE, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
(In Thousands)
(Unaudited)
                                                                    
                                                                    
Reconciliation of Non-GAAP Adjusted Loss (Adjusted EBITDA)
                                                                    
                      Three Months Ended September     Nine Months Ended
                      30,                              September 30,
                      2013             2012            2013         2012
                                                                    
Net loss, as          $  (2,748  )     $  (2,567 )     $ (6,482 )   $ (5,514 )
reported
Income tax               4                11             14           20
expense
Other expense            130              27             415          148
(a)
Depreciation
and                      508              467            1,465        1,520
amortization
expense
Share-based
compensation            734            1,111        2,072      2,941  
expense
Non-GAAP
adjusted loss         $  (1,372  )     $  (951   )     $ (2,516 )   $ (885   )
(adjusted
EBITDA)
                                                                    
                                                                    
                      Three Months Ended September     Nine Months Ended
                      30,                              September 30,
(a) Other             2013             2012            2013         2012
includes:
                                                                    
Net interest          $  (121    )     $  (187   )     $ (420   )   $ (609   )
expense
Grant income             -                117            -            379
Gain (loss)
due to                   17               (42    )       73           (77    )
exchange rate
fluctuation
Non-employee
stock option            (26     )       85           (68    )    159    
(expense)
income
Other expense         $  (130    )     $  (27    )     $ (415   )   $ (148   )
                                                                             

Contact:

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