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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