AtriCure Reports Fourth Quarter and Full Year 2013 Financial Results

  AtriCure Reports Fourth Quarter and Full Year 2013 Financial Results

  *2013 revenue of $81.9 million – up 16.6%
  *2013 U.S. sales of $62.3 million – up 18.4%
  *Fourth quarter revenue of $21.9 million – up 19.2%

Business Wire

WEST CHESTER, Ohio -- February 27, 2014

AtriCure, Inc. (Nasdaq: ATRC), a leading atrial fibrillation (“Afib”) medical
device provider, today announced fourth quarter and full year 2013 financial
results.

“We are pleased with our team’s performance in 2013 and momentum as we move
into 2014. Our commitment to training and education, clinical trial support
and innovation, coupled with our strategic acquisition of Estech, position
AtriCure to execute our strategy. We are emerging as the leader in atrial
fibrillation and are striving to expand the Afib market through improved
patient outcomes and results,” said Mike Carrel, President and Chief Executive
Officer of AtriCure. “We recently completed a successful financing which
brought approximately $66 million in net proceeds to the company, bolstering
our capital resources to fund our clinical programs and growth objectives.”

2013 Financial Results
Revenue for 2013 was $81.9 million, an increase of $11.6 million or 16.6%
(16.1% on a constant currency basis), compared to 2012 revenue. Domestic
revenue increased 18.4% to $62.3 million, driven by strong sales of
ablation-related open-heart products and AtriClip products. International
revenue was $19.6 million, an increase of $2.0 million or 11.0% (9.1% on a
constant currency basis) when compared to $17.6 million for 2012.
International revenue growth was driven primarily by an increase in product
sales in Europe and Asia.

Gross profit for 2013 was $59.6 million compared to $50.0 million for 2012.
Gross margin for 2013 was 72.7% compared to 71.2% for 2012. The increase in
gross margin was primarily due to volume-driven leverage of manufacturing
overhead expenses, a higher mix of domestic sales, lower sales of capital
equipment and the strong performance of our AtriClip Pro product.

Loss from operations for 2013 was $10.9 million as compared to $7.2 million
for 2012. Adjusted EBITDA, a non-GAAP measure, was a loss of $5.8 million for
2013 as compared to a loss of $1.8 million for 2012 (see reconciliation table
below). Net loss per share was $0.56 for 2013 and $0.47 for 2012.

Cash, cash equivalents and investments were $34.1 million at December 31, 2013
and cash used in operations during 2013 was $5.2 million.

Fourth Quarter 2014 Financial Results
Revenue for the fourth quarter of 2013 was $21.9 million, an increase of $3.5
million or 19.2% (18.4% on a constant currency basis) compared to fourth
quarter 2012 revenue. Domestic revenue increased 20.0% to $16.4 million,
driven by strong sales of ablation-related open-heart products and AtriClip
products. International revenue was $5.5 million, an increase of $0.8 million
or 16.6% (13.7% on a constant currency basis) when compared to $4.7 million
for the fourth quarter of 2012. International revenue growth was driven
primarily by an increase in product sales in Europe and Asia.

Gross profit for the fourth quarter of 2013 was $15.7 million compared to
$13.0 million for the fourth quarter of 2012. Gross margin for the fourth
quarter of 2013 and 2012 was 71.6% and 70.8%, 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 AtriClip Pro product.

Operating expenses for the fourth quarter of 2013 increased 38.1%, or $5.7
million, compared to the fourth quarter of 2012. The increase in operating
expenses was driven primarily by an increase in selling, marketing and
training expenses, along with the addition of $1.2 million of expenses related
to the acquisition of Estech.

Loss from operations for the fourth quarter of 2013 was $4.8 million compared
to $1.9 million for the fourth quarter of 2012. Net loss per share was $0.24
for the fourth quarter of 2013 and $0.12 for the fourth quarter of 2012.

2014 Guidance
Management projects that 2014 revenue will be in the range of $100 million to
$103 million, which represents an increase of 22% to 26% over 2013. Organic
revenue growth is expected to be approximately 13% to 15% with the remaining
portion expected from the recently acquired Estech ablation and valve
products. We estimate Estech’s valve products, which are distinct from the
core ablation franchise, to generate revenue of approximately $3 million for
the year.

Adjusted EBITDA, a non-GAAP measure, is projected to be a loss in the range of
$9 million to $10 million for 2014, of which approximately $3.5 million of
expense will be related to the Estech transaction. AtriCure expects the Estech
transaction to be dilutive to earnings in 2014 and accretive in 2015 and
beyond.

Conference Call
AtriCure will host a conference call at 4:30 p.m. Eastern Time on Thursday,
February 27, 2014 to discuss its fourth quarter and full year 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) 713-4214
for domestic callers and (617) 213-4866 for international callers at least 15
minutes prior to the call start time using reservation code 59283031.

The webcast will be available on AtriCure’s website and a telephonic replay of
the call will also be available through March 27, 2014. The replay dial-in
numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for
international callers. The reservation code is 68935249.

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, AtriCure’s ability to consummate acquisitions
or, if consummated, to successfully integrate acquired businesses into
AtriCure’s operations, AtriCure’s ability to recognize the benefits of
acquisitions, including potential synergies and cost savings, failure of an
acquisition or acquired company to achieve its plans and objectives generally,
risk that proposed or consummated acquisitions may disrupt operations or pose
difficulties in employee retention or otherwise affect financial or operating
results, 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            Twelve Months Ended
                        December 31,                  December 31,
                        2013           2012           2013          2012
                                                                    
Revenue:
Open-heart              $  9,931       $ 8,351        $ 37,843      $ 32,880
Minimally                  3,519         3,409          13,648        12,733
invasive
AtriClip                  2,936       1,890        10,820      7,003  
Total domestic             16,386        13,650         62,311        52,616
International             5,498       4,714        19,578      17,631 
Total revenue              21,884        18,364         81,889        70,247
Cost of revenue           6,215       5,362        22,326      20,233 
Gross profit               15,669        13,002         59,563        50,014
                                                                    
Operating
expenses:
Research and
development                3,648         2,967          13,440        12,147
expenses
Selling,
general and               16,859      11,887       57,014      45,065 
administrative
expenses
Total operating           20,507      14,854       70,454      57,212 
expenses
                                                                    
Loss from                  (4,838  )     (1,852 )       (10,891 )     (7,198 )
operations
                                                                    
Other expense,            (138    )    (138   )      (553    )    (286   )
net
                                                                    
Loss before
income tax                 (4,976  )     (1,990 )       (11,444 )     (7,484 )
expense
                                                                    
Income tax                (4      )    (30    )      (18     )    (50    )
expense
                                                                    
Net loss                $  (4,980  )   $ (2,020 )     $ (11,462 )   $ (7,534 )
                                                                    
Basic and
diluted net             $  (0.24   )   $ (0.12  )     $ (0.56   )   $ (0.47  )
loss per share
                                                                    
Weighted
average shares
used in
computing net
loss per common
share:
Basic and                 20,785      16,332       20,431      16,190 
diluted
                                                                             

                                                           
                                                                  
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
(Unaudited)
                                                                  
                                                 December 31,     December 31,
                                                 2013             2012
Assets
                                                                  
Current assets:
Cash, cash equivalents and short-term            $ 26,211         $ 12,000
investments
Accounts receivable, net                           13,652           9,948
Inventories                                        10,214           5,718
Other current assets                              2,410          873      
Total current assets                               52,487           28,539
                                                                  
Property and equipment, net                        5,643            3,430
Long-term investments                              7,914            -
Intangible assets and goodwill                     45,685           32
Other assets                                      218            430      
Total assets                                     $ 111,947       $ 32,431   
                                                                  
Liabilities and Stockholders' Equity
                                                                  
Current liabilities:
Accounts payable and accrued liabilities         $ 24,675         $ 10,176
Current maturities of debt and capital            2,038          2,029    
leases
Total current liabilities                          26,713           12,205
                                                                  
Long-term debt and capital leases                  4,412            6,407
Other liabilities                                 8,218          1,319    
Total liabilities                                  39,343           19,931
                                                                  
Stockholders' equity:
Common stock                                       23               17
Additional paid-in capital                         194,933          123,157
Accumulated other comprehensive (loss)             (139     )       77
income
Accumulated deficit                               (122,213 )      (110,751 )
Total stockholders' equity                        72,604         12,500   
Total liabilities and stockholders'              $ 111,947       $ 32,431   
equity
                                                                  

                                         
                                              
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
                                                              
                                              Twelve Months Ended December 31,
                                              2013               2012
                                                                 
Cash flows from operating activities:
Net loss                                      $   (11,462  )     $  (7,534  )
Adjustments to reconcile net loss to
net cash used in operating
activities:
Share-based compensation expense                  3,080             3,468
Depreciation and amortization of                  2,020             1,899
intangible assets
Amortization of deferred financing                115               100
costs
(Gain) loss on disposal of equipment              (6       )        40
Amortization/accretion on investments             49                12
Change in allowance for doubtful                  (14      )        1
accounts
Changes in assets and liabilities
Accounts receivable                               (1,248   )        (417    )
Inventories                                       (2,288   )        865
Other current assets                              (1,257   )        57
Accounts payable and accrued                      5,559             (229    )
liabilities
Other non-current assets and                     230             (198    )
liabilities
Net cash used in operating activities             (5,222   )        (1,936  )
                                                                 
Cash flows from investing activities:
Purchases of available-for-sale                   (21,243  )        (9,236  )
securities
Maturities of available-for-sale                  6,200             9,400
securities
Cash acquired through business                    3,708             -
combination
Purchases of property and equipment               (2,864   )        (2,985  )
Net proceeds from the sale of                    48              24      
equipment
Net cash used in investing activities             (14,151  )        (2,797  )
                                                                 
Cash flows from financing activities:
Net proceeds from sale of stock                   26,872            -
Proceeds from borrowings of debt                  -                 10,000
Payments on debt and capital leases               (2,055   )        (8,096  )
Payment of debt fees and premium on               (99      )        (127    )
retirement of debt
Proceeds from stock option exercises              1,718             659
Shares repurchased for payment of                 (398     )        (401    )
taxes on stock awards
Proceeds from issuance of common
stock under employee stock purchase              790             627     
plan
Net cash provided by financing                    26,828            2,662
activities
                                                                 
Effect of exchange rate changes on               (316     )       65      
cash and cash equivalents
                                                                 
Net increase (decrease) in cash and               7,139             (2,006  )
cash equivalents
Cash and cash equivalents - beginning            7,753           9,759   
of period
Cash and cash equivalents - end of            $   14,892        $  7,753   
period
                                                                 
Supplemental cash flow information:
Cash paid for interest                        $   473            $  607
Cash paid for income taxes                        30                14
Noncash investing and financing
activities:
Accrued purchases of property and                 282               10
equipment
Assets acquired through capital lease             68                65
Capital lease asset early termination             24                13
Stock issuance for Estech acquisition             39,720            -
Contingent consideration for                      8,032             -
acquisition of Estech
                                                                            

                                                           
                                                                    
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 December     Twelve Months Ended
                      31,                             December 31,
                      2013             2012           2013          2012
                                                                    
Net loss, as          $  (4,980  )     $ (2,020 )     $ (11,462 )   $ (7,534 )
reported
Income tax               4               30             18            50
expense
Other expense            138             138            553           286
(a)
Depreciation
and                      555             379            2,020         1,899
amortization
expense
Share-based
compensation            1,008         527          3,080       3,468  
expense
Non-GAAP
adjusted loss         $  (3,275  )     $ (946   )     $ (5,791  )   $ (1,831 )
(adjusted
EBITDA)
                                                                    
                                                                    
                      Three Months Ended December     Twelve Months Ended
                      31,                             December 31,
(a) Other             2013             2012           2013          2012
includes:
                                                                    
Net interest          $  (130    )     $ (182   )     $ (550    )   $ (791   )
expense
Grant income             -               30             -             409
Gain (loss)
due to                   196             (6     )       269           (83    )
exchange rate
fluctuation
Non-employee
stock option            (204    )      20           (272    )    179    
(expense)
income
Other expense         $  (138    )     $ (138   )     $ (553    )   $ (286   )
                                                                    

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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