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AtriCure Reports Fourth Quarter and Full Year 2014 Financial Results
  • 2014 revenue of $107.5 million – up 31.2%
  • 2014 U.S. sales of $80.2 million – up 28.7%
  • 2014 International sales of $27.3 million – up 39.2%; 39.8% constant currency
  • Fourth quarter 2014 revenue of $29.4 million – up 34.4%

WEST CHESTER, Ohio--(BUSINESS WIRE)--Feb. 23, 2015-- AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in surgical treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, today announced fourth quarter and full year 2014 financial results.

“Our fourth quarter and full year 2014 results reflect strong performance, with meaningful progress and momentum as we continue to expand treatment of atrial fibrillation and improve patient lives,” said Mike Carrel, President and Chief Executive Officer of AtriCure.

“Entering 2015, our foundation is strong, and we plan to continue to solidify the future of our market building strategy with thoughtful investments into our growth initiatives - clinical data and validation, education and training, and new products and indications. This gives us great confidence for many exciting years ahead of us, with strong commercial execution and market expansion.”

2014 Financial Results

Revenue for 2014 was $107.5 million, an increase of $25.6 million or 31.2% (31.4% on a constant currency basis), compared to 2013 revenue. Domestic revenue increased 28.7% to $80.2 million, driven by strong sales of ablation-related open-heart products, ablation-related minimally invasive products, and AtriClip products. International revenue was $27.3 million, an increase of $7.7 million or 39.2% (39.8% on a constant currency basis) when compared to $19.6 million for 2013. International revenue growth was driven primarily by increases in product sales in Europe and Asia.

Gross profit for 2014 was $75.8 million compared to $59.6 million for 2013. Gross margin for 2014 was 70.5% compared to 72.7% for 2013. The decrease in gross margin was primarily due to lower margins on products obtained through the December 2013 Estech acquisition, an increased mix of international sales, and heavier placement of loaned equipment.

Loss from operations for 2014 was $16.4 million as compared to $10.9 million for 2013. Adjusted EBITDA, a non-GAAP measure, was a loss of $12.0 million for 2014 as compared to a loss of $5.8 million for 2013. Net loss per share was $0.61 for 2014 and $0.56 for 2013.

Fourth Quarter 2014 Financial Results

Revenue for the fourth quarter of 2014 was $29.4 million, an increase of $7.5 million or 34.4% (36.5% on a constant currency basis) compared to fourth quarter 2013 revenue. Domestic revenue increased 34.9% to $22.1 million, driven by strong sales of ablation-related open-heart products, ablation-related minimally invasive products, and AtriClip products. International revenue was $7.3 million, an increase of $1.8 million or 33.1% (41.3% on a constant currency basis) when compared to $5.5 million for the fourth quarter of 2013. International revenue growth was driven primarily by an increase in product sales in Europe and Asia.

Gross profit for the fourth quarter of 2014 was $20.4 million compared to $15.7 million for the fourth quarter of 2013. Gross margin for the fourth quarter of 2014 and 2013 was 69.4% and 71.6%, respectively. The decrease in gross margin was primarily due to lower margins on products obtained through the December 2013 Estech acquisition, an increased mix of international sales, and heavier placement of loaned equipment.

Operating expenses for the fourth quarter of 2014 increased 22.9%, or $4.7 million, compared to the fourth quarter of 2013. The increase in operating expenses was driven primarily by an increase in selling, marketing, clinical, product development, and training expenses.

Loss from operations for the fourth quarter of 2014 was $4.8 million, compared to $4.8 million for the fourth quarter of 2013. Adjusted EBITDA, a non-GAAP measure, was a loss of $1.6 million for the fourth quarter of 2014, compared to a $3.3 million loss for the fourth quarter of 2013. Net loss per share was $0.20 for the fourth quarter of 2014 and $0.24 for the fourth quarter of 2013.

2015 Guidance

Management projects that 2015 revenue will be in the range of $122.5 million to $124.5 million, which represents an increase of 14% to 16% over 2014 (16% to 18% on a constant currency basis).

Adjusted EBITDA, a non-GAAP measure, is projected to be a loss in the range of $7 million to $9 million for 2015 as we continue to make strategic investments to drive our long-term growth plan.

Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Monday, February 23, 2015 to discuss its fourth quarter and full year 2014 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 (866) 318-8619 for domestic callers and (617) 399-5138 for international callers at least 15 minutes prior to the call start time using participant passcode 24418587.

The webcast will be available on AtriCure’s website and a telephonic replay of the call will be available through March 2, 2015. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The participant passcode is 54221769.

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 surgical 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 Management (LAAM) exclusion device is the most widely sold device worldwide that’s indicated for the occlusion of the left atrial appendage. The company believes cardiothoracic surgeons are adopting its ablation and LAAM devices for the treatment of Afib and reduction of Afib related complications such as stroke. Afib affects more than 33.5 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, AtriCure’s ability to retain and attract key employees, 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 continue to be in compliance with applicable U.S. federal and state and foreign government laws and regulations, 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, including the development of drug or catheter-based technologies, 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, fluctuations in exchange rates for future sales denominated in foreign currency, which represent a majority of AtriCure’s sales outside of the United States, 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 December 31, Twelve Months Ended December 31,
2014 2013 2014 2013
 
Domestic Revenue:
Open-heart ablation $ 12,164 $ 9,931 $ 44,662 $ 37,843
Minimally invasive ablation 4,276 3,519 16,050 13,648
AtriClip   4,819     2,936     16,675     10,820  
Total ablation and AtriClip 21,259 16,386 77,387 62,311
Valve tools   838     -     2,816     -  
Total domestic 22,097 16,386 80,203 62,311
 
International Revenue:
Open-heart ablation 4,270 3,529 16,445 13,064
Minimally invasive ablation 2,108 1,599 7,881 5,354
AtriClip   768     370     2,158     1,160  
Total ablation and AtriClip 7,146 5,498 26,484 19,578
Valve tools   172     -     767     -  
Total international 7,318 5,498 27,251 19,578
 
Total revenue 29,415 21,884 107,454 81,889
Cost of revenue   8,995     6,215     31,704     22,326  
Gross profit 20,420 15,669 75,750 59,563
 
Operating expenses:
Research and development expenses 4,997 3,648 18,600 13,440

Selling, general and administrative expenses

  20,202     16,859     73,510     57,014  
Total operating expenses   25,199     20,507     92,110     70,454  
 
Loss from operations (4,779 ) (4,838 ) (16,360 ) (10,891 )
 
Other (expense) income, net   (568 )   (138 )   182     (553 )
 
Loss before income tax expense (5,347 ) (4,976 ) (16,178 ) (11,444 )
 
Income tax benefit (expense)   3     (4 )   (33 )   (18 )
 
Net loss $ (5,344 ) $ (4,980 ) $ (16,211 ) $ (11,462 )
 
Basic and diluted net loss per share $ (0.20 ) $ (0.24 ) $ (0.61 ) $ (0.56 )
 

Weighted average shares used in computing net loss per share:

Basic and diluted   26,935     20,785     26,374     20,431  
 
               
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
(Unaudited)
 
December 31, December 31,
2014 2013
Assets
 
Current assets:
Cash, cash equivalents and short-term investments $ 59,649 $ 26,211
Accounts receivable, net 17,558 13,652
Inventories 14,257 10,214
Other current assets   2,044     2,410  
Total current assets 93,508 52,487
 
Property and equipment, net 11,552 5,643
Long-term investments 8,894 7,914
Goodwill and intangible assets, net 44,264 45,685
Other noncurrent assets   186     218  
Total assets $ 158,404   $ 111,947  
 
Liabilities and Stockholders' Equity
 
Current liabilities:
Accounts payable and accrued liabilities $ 21,662 $ 24,675

Other current liabilities and maturities of debt and capital leases

  3,981     2,038  
Total current liabilities 25,643 26,713
 
Long-term debt and capital leases 74 4,412
Other noncurrent liabilities   149     8,218  
Total liabilities 25,866 39,343
 
Stockholders' equity:
Common stock 28 23
Additional paid-in capital 271,282 194,933
Accumulated other comprehensive loss (348 ) (139 )
Accumulated deficit   (138,424 )   (122,213 )
Total stockholders' equity 132,538 72,604
   
Total liabilities and stockholders' equity $ 158,404   $ 111,947  
 
           
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 
Twelve Months Ended December 31,
2014 2013
 
Cash flows from operating activities:
Net loss $ (16,211 ) $ (11,462 )

Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation expense 7,571 3,080
Depreciation and amortization of intangible assets 4,774 2,020
Amortization of deferred financing costs 113 115
Loss (gain) on disposal of equipment 118 (6 )

Loss from foreign exchange on intercompany transactions

544 -
Amortization/accretion on investments 500 49
Change in allowance for doubtful accounts (34 ) (14 )
Change in fair value of contingent consideration (8,032 ) -
Other 95 -
Changes in operating assets and liabilities
Accounts receivable (4,168 ) (1,248 )
Inventories (4,343 ) (2,288 )
Other current assets 307 (1,257 )
Accounts payable and accrued liabilities (2,791 ) 5,559

Other non-current assets and liabilities

  (43 )   230  
Net cash used in operating activities (21,600 ) (5,222 )
 
Cash flows from investing activities:
Purchases of available-for-sale securities (41,107 ) (21,243 )
Sales and maturities of available-for-sale securities 19,614 6,200
Purchases of property and equipment (9,207 ) (2,864 )
Net proceeds from the sale of equipment 77 48

Cash acquired through business combination

  -     3,708  
Net cash used in investing activities (30,623 ) (14,151 )
 
Cash flows from financing activities:
Net proceeds from sale of stock 65,830 26,872
Payments on debt and capital leases (6,382 ) (2,055 )
Proceeds from construction financing obligation 3,699 -
Payment of debt fees and premium on retirement of debt (181 ) (99 )
Proceeds from stock option exercises 1,916 1,718

Shares repurchased for payment of taxes on stock awards

(331 ) (398 )

Proceeds from issuance of common stock under employee stock purchase plan

  1,320     790  
Net cash provided by financing activities 65,871 26,828
 

Effect of exchange rate changes on cash and cash equivalents

  (156 )   (316 )
 
Net increase in cash and cash equivalents 13,492 7,139

Cash and cash equivalents - beginning of period

  14,892     7,753  

Cash and cash equivalents - end of period

$ 28,384   $ 14,892  
 
Supplemental cash flow information:
Cash paid for interest $ 115 $ 473
Cash paid for income taxes 146 30
Noncash investing and financing activities:
Accrued purchases of property and equipment

547

282
Assets acquired through capital lease 47 68
Capital lease asset early termination 38 24
Stock issuance for Estech acquisition - 39,720
Contingent consideration for acquisition of Estech - 8,032
 
               
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 31, Twelve Months Ended December 31,
2014 2013 2014 2013
 
Net loss, as reported $ (5,344 ) $ (4,980 ) $ (16,211 ) $ (11,462 )
Income tax (income) expense (3 ) 4 33 18
Other expense (benefit), net (a) 568 138 (182 ) 553
Depreciation and amortization expense 1,303 555 4,774 2,020
Share-based compensation expense 1,867 1,008 7,571 3,080
Change in fair value of contingent consideration   -     -     (8,032 )   -  
Non-GAAP adjusted income (loss) (adjusted EBITDA) $ (1,609 ) $ (3,275 ) $ (12,047 ) $ (5,791 )
 
 
Three Months Ended December 31, Twelve Months Ended December 31,
(a) Other includes: 2014 2013 2014 2013
 
Net interest income (expense) $ 17 $ (130 ) $ (209 ) $ (550 )
Grant income - - 731 -
(Loss) gain due to exchange rate fluctuation (493 ) 196 (523 ) 269
Non-employee stock option (expense) income   (92 )   (204 )   183     (272 )
Other (expense) income, net $ (568 ) $ (138 ) $ 182   $ (553 )
 

Source: AtriCure, Inc.

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