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AtriCure Reports Third Quarter 2016 Financial Results
  • Revenue of $38.3 million – up 22.0%
  • U.S. sales of $30.6 million – up 24.0%
  • International sales of $7.8 million – up 14.9%

MASON, Ohio--(BUSINESS WIRE)--Oct. 27, 2016-- AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, today announced third quarter 2016 financial results.

“We are pleased to report solid third quarter results led by sales in the U.S. and driven by all areas of our business,” said Mike Carrel, President and Chief Executive Officer of AtriCure. “Our focus on improving patient outcomes continues to guide our clinical and commercial efforts, and we are well-positioned to reach EBITDA profitability in 2018 and for sustainable success.”

Third Quarter 2016 Financial Results

Revenue for the third quarter of 2016 was $38.3 million, an increase of $6.9 million or 22.0% (22.0% on a constant currency basis), compared to third quarter 2015 revenue. U.S. revenue increased 24.0% to $30.6 million, driven by strong sales of ablation-related open-heart products, ablation-related minimally invasive products, and AtriClip® products. International revenue was $7.8 million, an increase of $1.0 million or 14.9% (14.7% on a constant currency basis). International revenue growth was driven primarily by increases in product sales in Japan, Italy, Russia and France.

Gross profit for the third quarter of 2016 was $27.5 million compared to $22.5 million for the third quarter of 2015. Gross margin for the third quarter of 2016 increased to 71.7%, compared to 71.5% in the third quarter of 2015.

Operating expenses for the third quarter of 2016 increased 18.0%, or $5.2 million, compared to the third quarter of 2015. The increase in operating expenses was driven primarily by an increase in selling, clinical, product development, marketing and training expenses, with most of these areas impacted by the changes in our operating structure to support our acquisition of nContact in late 2015.

Loss from operations for the third quarter of 2016 was $6.3 million, compared to $6.1 million for the third quarter of 2015. Net loss per share was $0.21 for the third quarter of 2016 and $0.22 for the third quarter of 2015. Adjusted EBITDA, a non-GAAP measure, was a loss of $1.0 million for the third quarter of 2016, compared to a $2.2 million loss for the third quarter of 2015.

2016 Financial Guidance

Management projects 2016 revenue growth of approximately 20% to 22% over full year 2015 revenue, which is a range of approximately $156 million to $158 million.

Adjusted EBITDA, a non-GAAP measure, is projected to be a loss in the range of $12 to $14 million for 2016 as the Company continues to make strategic investments to drive the long-term growth plan, including several clinical trials, modest expansion of the U.S. field sales team, and ongoing product development efforts. This adjusted EBITDA range translates into an EPS loss of between $1.10 and $1.16. Significant improvements in the adjusted EBITDA loss are expected for 2017, turning to a positive adjusted EBITDA for 2018.

Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Thursday, October 27, 2016 to discuss its third quarter 2016 financial results. The call may be accessed through an operator by calling (844) 884-9951 for domestic callers and (661) 378-9661 for international callers using conference ID number 91346855. A live webcast of the conference call will be available online on the Investors page of AtriCure’s corporate website at www.atricure.com. A replay of the webcast will be available for 90 days following the call.

About AtriCure, Inc.

AtriCure, Inc. provides innovative technologies for the treatment of Afib and related conditions. Afib affects more than 33 million people worldwide. Electrophysiologists and cardiothoracic surgeons around the globe use AtriCure technologies for the treatment of Afib and reduction of Afib related complications. AtriCure’s Isolator® Synergy™ Ablation System is the first and only medical device to receive FDA approval for the treatment of persistent Afib. AtriCure’s AtriClip Left Atrial Appendage Exclusion System products are the most widely sold LAA management devices worldwide, with more than 75,000 implanted to date. For more information, visit AtriCure.com or follow us on Twitter @AtriCure.

Forward-Looking Statements

This press release contains “forward-looking statements”–that is, statements related to future events that by their nature address matters that are uncertain. For details on the uncertainties that may cause our actual results to be materially different than those expressed in our forward-looking statements, visit http://www.atricure.com/fls as well as our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q which contain risk factors. We do not undertake to update our forward-looking statements. This document also includes forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.

Use of Non-GAAP Financial Measures

To supplement AtriCure’s condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America, 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. 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 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 September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Domestic Revenue:
Open-heart ablation $ 14,766 $ 13,041 $ 43,455 $ 39,043
Minimally invasive ablation 7,517 5,011 22,232 14,415
AtriClip   7,721     5,927     21,917     17,716  
Total ablation and AtriClip 30,004 23,979 87,604 71,174
Valve tools   571     686     2,115     2,158  
Total domestic 30,575 24,665 89,719 73,332
International Revenue:
Open-heart ablation 5,152 4,092 15,062 12,396
Minimally invasive ablation 1,533 1,945 5,883 5,771
AtriClip   994     598     2,883     2,058  
Total ablation and AtriClip 7,679 6,635 23,828 20,225
Valve tools   86     123     405     335  
Total international 7,765 6,758 24,233 20,560
Total revenue 38,340 31,423 113,952 93,892
Cost of revenue   10,868     8,945     31,748     26,562  
Gross profit 27,472 22,478 82,204 67,330
Operating expenses:
Research and development expenses 8,271 6,504 25,958 17,975
Selling, general and administrative expenses   25,487     22,101     79,689     65,445  
Total operating expenses   33,758     28,605     105,647     83,420  
Loss from operations (6,286 ) (6,127 ) (23,443 ) (16,090 )
Other expense, net   (495 )   (8 )   (1,246 )   (188 )
Loss before income tax expense (6,781 ) (6,135 ) (24,689 ) (16,278 )
Income tax expense 2 6 24 20
Net loss $ (6,783 ) $ (6,141 ) $ (24,713 ) $ (16,298 )
Basic and diluted net loss per share $ (0.21 ) $ (0.22 ) $ (0.78 ) $ (0.60 )
Weighted average shares used in computing net loss per share:
Basic and diluted   31,706     27,462     31,547     27,190  
     
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
 
September 30, December 31,
2016 2015
Assets
Current assets:
Cash, cash equivalents, and short-term investments $ 41,343 $ 34,578
Accounts receivable, net 21,066 19,409
Inventories 18,985 17,659
Other current assets   3,016     3,106  
Total current assets 84,410 74,752
Property and equipment, net 30,742 31,279
Long-term investments 6,017 7,706
Goodwill and intangible assets, net 157,799 159,032
Other noncurrent assets   348     323  
Total assets $ 279,316   $ 273,092  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 25,998 $ 31,138
Other current liabilities and current maturities of capital leases   492     450  
Total current liabilities 26,490 31,588
Capital leases 13,423 13,710
Long-term debt 25,023
Other noncurrent liabilities   40,946     41,109  
Total liabilities 105,882 86,407
Stockholders' equity:
Common stock 33 32
Additional paid-in capital 364,199 352,900
Accumulated other comprehensive loss (449 ) (611 )
Accumulated deficit   (190,349 )   (165,636 )
Total stockholders' equity   173,434     186,685  
Total liabilities and stockholders' equity $ 279,316   $ 273,092  
     
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 
Nine Months Ended September 30,
2016 2015
Cash flows from operating activities:
Net loss $ (24,713 ) $ (16,298 )

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

Share-based compensation expense 8,796 6,533
Depreciation and amortization of intangible assets 6,858 4,212
Amortization of deferred financing costs 152 46
Loss on disposal of property and equipment 107 83
Realized (gain) loss from foreign exchange on intercompany transactions (23 ) 333
Amortization/accretion on investments 96 472
Change in allowance for doubtful accounts 142 55
Changes in operating assets and liabilities
Accounts receivable (1,777 ) 571
Inventories (1,234 ) (2,461 )
Other current assets 136 (449 )
Accounts payable and accrued liabilities (4,228 ) 2,738
Other non-current assets and liabilities   (192 )   403  
Net cash used in operating activities (15,880 ) (3,762 )
Cash flows from investing activities:
Purchases of available-for-sale securities (27,395 ) (19,525 )
Sales and maturities of available-for-sale securities 14,602 29,174
Purchases of property and equipment (6,102 ) (8,287 )
Proceeds from sale of property and equipment 3
Increases in property under build-to-suit obligation       (9,128 )
Net cash used in investing activities (18,892 ) (7,766 )
Cash flows from financing activities:
Proceeds from debt borrowings 25,000
Payments on capital leases (343 ) (36 )
Increases in build-to-suit obligation 9,128
Proceeds from tax incentive loan 340
Payment of debt fees (120 ) (62 )
Proceeds from stock option exercises 2,595 2,421
Shares repurchased for payment of taxes on stock awards (1,078 ) (650 )

Proceeds from issuance of common stock under employee stock purchase plan

  987     906  
Net cash provided by financing activities 27,041 12,047
Effect of exchange rate changes on cash and cash equivalents   74     (189 )
Net (decrease) increase in cash and cash equivalents (7,657 ) 330
Cash and cash equivalents - beginning of period   23,764     28,384  
Cash and cash equivalents - end of period $ 16,107   $ 28,714  
 
Supplemental cash flow information:
Cash paid for interest $ 1,043 $ 4
Cash paid for income taxes 30 20
Noncash investing and financing activities:
Accrued purchases of property and equipment 243 2,442
Assets acquired through capital lease 125 50
Capital lease asset early termination 28
         
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 30, Nine Months Ended September 30,
2016 2015 2016 2015
Net loss, as reported $ (6,783 ) $ (6,141 ) $ (24,713 ) $ (16,298 )
Income tax expense 2 6 24 20
Other expense, net (a) 495 8 1,246 188
Depreciation and amortization expense 2,358 1,519 6,858 4,212
Share-based compensation expense   2,927     2,392     8,796     6,533  
Non-GAAP adjusted loss (adjusted EBITDA) $ (1,001 ) $ (2,216 ) $ (7,789 ) $ (5,345 )
 
 
Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
(a) Other includes:
Net interest expense (income) $ 463 $ (40 ) $ 1,100 $ (91 )
Grant income (35 )
Loss due to exchange rate fluctuation 32 48 146 257
Non-employee stock option expense               57  
Other expense, net $ 495   $ 8   $ 1,246   $ 188  

Source: AtriCure, Inc.

AtriCure, Inc.
Andy Wade, 513-755-4564
Senior Vice President and Chief Financial Officer
awade@atricure.com
or
Investor Relations Contact
Gilmartin Group
Lynn Pieper Lewis, 415-937-5402
lynn@gilmartinir.com