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8-K
ATRICURE, INC. filed this Form 8-K on 02/28/2019
Entire Document
 
Form 8-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) of the

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 28, 2019

 

 

ATRICURE, INC.

(Exact name of registrant as specified in charter)

 

 

 

Delaware

(State or other jurisdiction of incorporation)

000-51470

(Commission File Number)

34-1940305

(IRS Employer Identification No.)



 

 

7555 Innovation Way

Mason, OH

(Address of principal executive offices)

45040

(Zip Code)



Registrant's telephone number, including area code: (513) 755-4100

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 



 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 


 

Item 2.02.Results of Operations and Financial Condition.

On February 28, 2019, AtriCure, Inc. issued a press release regarding its financial results for the fourth quarter and full year ended December 31, 2018. The Company will hold a conference call on February 28, 2019 at 4:30 p.m. Eastern Time to discuss the financial results. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information in this Item 2.02 of Form 8-K and in the press release attached as Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in Item 2.02 of this Form 8-K and Exhibit 99.1 shall not be incorporated by reference in any filing or other document under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in any such filing or document.

Item 9.01Financial Statements and Exhibits.




 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.





 

 

 



 

ATRICURE, INC.



 

 

 

Dated:

February 28, 2019

By:

/s/ M. Andrew Wade



 

 

M. Andrew Wade



 

 

Senior Vice President and Chief Financial Officer




Exhibit 99.1

 

 

Picture 1

Exhibit 99.1

 

For immediate release

February 28, 2019





AtriCure Reports Fourth Quarter and Full Year 2018 Financial Results

·

2018 Worldwide revenue of $201.6 million – an increase of 15.4% year over year

·

2018 U.S. revenue of $162.1 million – an increase of 17.2% year over year

·

2018 International revenue of $39.5 million – an increase of 8.7% year over year



MASON, Ohio, February 28, 2019AtriCure, Inc.  (Nasdaq: ATRC), a leading innovator in treatments for atrial fibrillation (Afib) and related conditions, today announced fourth quarter and full year 2018 financial results.



“We are pleased with our fourth quarter performance, capping a year of strong, consistent revenue growth,” said Mike Carrel, President and Chief Executive Officer of AtriCure. “We are successfully building scalable infrastructure across the entire organization, positioning the company to efficiently expand and grow over the next decade. We remain committed to improving the lives of Afib patients globally, and we have created a strong foundation and culture based on this mission.”



Fourth Quarter 2018 Financial Results 

Revenue for the fourth quarter of 2018 was $52.9 million, an increase of $6.8 million or 14.8% (15.3% on a constant currency basis), compared to the fourth quarter of 2017. U.S. revenue increased 19.1% to $43.1 million, driven by increased sales across our key ablation and appendage management products. International revenue was $9.8 million, a decrease of $0.1 million or -0.9%  and an increase of 1.4%  on a constant currency basis, compared to the fourth quarter of 2017.



Gross profit for the fourth quarter of 2018 was $38.6 million compared to $32.7 million for the fourth quarter of 2017. Gross margin for the fourth quarter of 2018 increased to 73.0% compared to 71.0% in the fourth quarter of 2017, driven primarily by a higher concentration of higher margin sales in the United States and direct markets in Europe, and a lower contribution to revenue from lower margin sales in Asia and other distributor markets.

 

Operating expenses for the fourth quarter of 2018 increased 18.3%, or $6.4 million, compared to the fourth quarter of 2017. The increase in operating expenses was primarily due to increased costs associated with personnel resulting from additional head count and variable compensation, as well as research and development project spend and legal costs, partially offset by lower clinical trial, tradeshow and training costs. 



Loss from operations for the fourth quarter of 2018 was $2.6 million, compared to a loss of $2.1 million for the fourth quarter of 2017. Net loss per share was $0.09 for the fourth quarter of 2018 compared to $0.08 for the fourth quarter of 2017. The adjusted loss per share for the fourth quarter of 2018 was $0.21 compared to an adjusted loss per share for the fourth quarter of 2017 of $0.20. Adjusted loss per share is a non-GAAP measure which excludes the contingent consideration adjustment.



For the fourth quarter of 2018, adjusted EBITDA was positive  $0.3 million compared to an adjusted EBITDA loss of $0.3 million for the fourth quarter of 2017. Adjusted EBITDA is a non-GAAP measure.  



2018 Financial Results 

Revenue for 2018 was $201.6 million, an increase of $26.9 million or 15.4% (14.9% on a constant currency basis), compared to 2017 revenue. U.S. revenue increased 17.2% to $162.1 million, driven by growth across our open-heart ablation products and appendage management products. International revenue was $39.5 million, an increase of $3.2 million or 8.7% (6.1% on a constant currency basis). International revenue growth was driven primarily by increases in product sales in the United Kingdom, Germany, and Japan, partially offset by a decrease in sales in China.  

 

Gross profit for 2018 was $147.1 million compared to $126.2 million for 2017. Gross margin for 2018 increased to 73.0% compared to 72.2% for 2017.  

   

Loss from operations for 2018 was $17.1 million, compared to $25.0 million for 2017. Adjusted EBITDA was a loss of $2.7 million for 2018, compared to a loss of $5.3 million for 2017. Net loss per share was $0.62 for 2018 compared to $0.83 for 2017. The adjusted loss per share for 2018 was $0.94 compared to an adjusted loss per share of $0.96 for 2017.



2019 Financial Guidance

Revenue for 2019 is projected to be approximately $220 million to $228 million. Adjusted EBITDA, a non-GAAP measure, is projected to be positive, between $0 and $3 million for 2019. Net loss per share is projected to be in the range of $0.68 to $0.78.


 



Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Thursday, February 28, 2019 to discuss its fourth quarter 2018 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 5981957.  A live audio webcast of the presentation may be accessed by visiting the Investors page of AtriCure’s corporate website at ir.atricure.com. A replay of the presentation will be available for 90 days following the presentation.



About AtriCure

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 and long-standing persistent forms of Afib. AtriCure’s AtriClip® Left Atrial Appendage Exclusion System products are the most widely sold left atrial appendage management devices worldwide, with more than 170,000 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.



Revenue reported on a constant currency basis is a non-GAAP measure and is calculated by applying previous period foreign currency exchange rates, which are determined by the average daily Euro to Dollar exchange rate, to each of the comparable periods. Management analyzes revenue on a constant currency basis to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have a non-operating impact on revenue, the Company believes that evaluating growth in revenue on a constant currency basis provides an additional and meaningful assessment of revenue to both management and the company’s investors.



Adjusted EBITDA provides 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 adjusted EBITDA for its strategic planning. A reconciliation of adjusted EBITDA reported in this release to the most comparable GAAP measure for the respective periods can be found in a table later in this release.



Adjusted loss per share is a non-GAAP measure which calculates the net loss per share before non-cash adjustments to expenses related to the adjustment in value of the contingent consideration liability. Management believes this metric provides a better measure of comparability of results between periods, as such adjustments are not frequent in nature or similar in value, and can be significant.  A reconciliation of adjusted loss per share reported in this release to the most comparable GAAP measure for the respective periods can be found in a table later in this release. 



The non-GAAP financial measures used by AtriCure may not be the same or calculated the same as those used by other companies. 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.



CONTACTS:



Andy Wade

Lynn Pieper Lewis

AtriCure, Inc.

Gilmartin Group

Senior Vice President and Chief Financial Officer

Investor Relations

(513) 755-4564

(415)937-5402

awade@atricure.com

lynn@gilmartinir.com

 

 


 



 

 

 

 

 

 

 

 

 

 

 

 

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,



 

2018

 

2017

 

2018

 

2017

United States Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Open-heart ablation

 

$

18,650 

 

$

16,671 

 

$

72,250 

 

$

64,517 

Minimally invasive ablation

 

 

9,449 

 

 

8,365 

 

 

35,053 

 

 

34,421 

Appendage management

 

 

14,506 

 

 

10,645 

 

 

52,891 

 

 

37,281 

Total ablation and appendage management

 

 

42,605 

 

 

35,681 

 

 

160,194 

 

 

136,219 

Valve tools

 

 

507 

 

 

510 

 

 

1,952 

 

 

2,168 

Total United States

 

 

43,112 

 

 

36,191 

 

 

162,146 

 

 

138,387 

International Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Open-heart ablation

 

 

4,936 

 

 

5,199 

 

 

21,118 

 

 

20,718 

Minimally invasive ablation

 

 

2,369 

 

 

2,148 

 

 

9,176 

 

 

8,007 

Appendage management

 

 

2,448 

 

 

2,426 

 

 

8,988 

 

 

7,251 

Total ablation and appendage management

 

 

9,753 

 

 

9,773 

 

 

39,282 

 

 

35,976 

Valve tools

 

 

28 

 

 

98 

 

 

202 

 

 

353 

Total international

 

 

9,781 

 

 

9,871 

 

 

39,484 

 

 

36,329 

Total revenue

 

 

52,893 

 

 

46,062 

 

 

201,630 

 

 

174,716 

Cost of revenue

 

 

14,303 

 

 

13,379 

 

 

54,510 

 

 

48,553 

Gross profit

 

 

38,590 

 

 

32,683 

 

 

147,120 

 

 

126,163 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

8,455 

 

 

7,721 

 

 

34,723 

 

 

34,144 

Selling, general and administrative expenses

 

 

32,742 

 

 

27,097 

 

 

129,524 

 

 

116,998 

Total operating expenses

 

 

41,197 

 

 

34,818 

 

 

164,247 

 

 

151,142 

Loss from operations

 

 

(2,607)

 

 

(2,135)

 

 

(17,127)

 

 

(24,979)

Other expense, net

 

 

(744)

 

 

(497)

 

 

(3,784)

 

 

(1,899)

Loss before income tax expense

 

 

(3,351)

 

 

(2,632)

 

 

(20,911)

 

 

(26,878)

Income tax expense (benefit)

 

 

79 

 

 

(52)

 

 

226 

 

 

14 

Net loss

 

$

(3,430)

 

$

(2,580)

 

$

(21,137)

 

$

(26,892)

Basic and diluted net loss per share

 

$

(0.09)

 

$

(0.08)

 

$

(0.62)

 

$

(0.83)

Weighted average shares used in computing net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

36,480 

 

 

32,654 

 

 

34,087 

 

 

32,387 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 


 



 

 

 

 

 

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)



 

 

 

 

 



December 31,

 

December 31,



2018

 

2017

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash, cash equivalents, and short-term investments

$

124,402 

 

$

34,451 

Accounts receivable, net

 

25,195 

 

 

23,083 

Inventories

 

22,484 

 

 

22,451 

Prepaid and other current assets

 

2,592 

 

 

2,273 

Total current assets

 

174,673 

 

 

82,258 

Property and equipment, net

 

27,080 

 

 

28,749 

Goodwill and intangible assets, net

 

154,511 

 

 

156,021 

Other noncurrent assets

 

495 

 

 

676 

Total assets

$

356,759 

 

$

267,704 

Liabilities and Stockholders' Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued liabilities

$

35,499 

 

$

31,342 

Other current liabilities and current maturities of debt and capital leases

 

4,717 

 

 

561 

Total current liabilities

 

40,216 

 

 

31,903 

Capital leases

 

12,172 

 

 

12,761 

Long-term debt

 

35,571 

 

 

24,100 

Other noncurrent liabilities

 

19,419 

 

 

37,774 

Total liabilities

 

107,378 

 

 

106,538 

Stockholders' equity:

 

 

 

 

 

Common stock

 

39 

 

 

35 

Additional paid-in capital

 

496,544 

 

 

386,963 

Accumulated other comprehensive (loss) income

 

(199)

 

 

34 

Accumulated deficit

 

(247,003)

 

 

(225,866)

Total stockholders' equity

 

249,381 

 

 

161,166 

Total liabilities and stockholders' equity

$

356,759 

 

$

267,704 



 

 

 

 

 



 

 

 


 



 

 

 

 

 

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)



 

 

 

 

 



Twelve Months Ended December 31,



2018

 

2017

Cash flows from operating activities:

 

 

 

 

 

Net loss

$

(21,137)

 

$

(26,892)

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

 

 

 

 

 

Share-based compensation expense

 

16,495 

 

 

14,615 

Depreciation and amortization of intangible assets

 

8,754 

 

 

9,128 

Amortization of deferred financing costs

 

515 

 

 

264 

Loss on disposal of property and equipment and impairment of assets

 

323 

 

 

336 

Realized loss (gain) from foreign exchange on intercompany transactions

 

165 

 

 

(173)

(Accretion) amortization of investments

 

(362)

 

 

30 

Provision for allowance for doubtful accounts

 

598 

 

 

(172)

Change in fair value of contingent consideration

 

(10,825)

 

 

(4,078)

Payment of contingent consideration in excess of purchase accounting amount

 

(96)

 

 

 —

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(2,837)

 

 

(1,464)

Inventories

 

(146)

 

 

(4,477)

Other current assets

 

(367)

 

 

829 

Accounts payable and accrued liabilities

 

4,618 

 

 

3,518 

Other noncurrent assets and liabilities

 

131 

 

 

(408)

Net cash used in operating activities

 

(4,171)

 

 

(8,944)

Cash flows from investing activities:

 

 

 

 

 

Purchases of available-for-sale securities

 

(106,588)

 

 

(16,455)

Sales and maturities of available-for-sale securities

 

27,389 

 

 

26,600 

Purchases of property and equipment

 

(6,211)

 

 

(6,384)

Proceeds from sale of property and equipment

 

 

 

 —

Net cash (used in) provided by investing activities

 

(85,404)

 

 

3,761 

Cash flows from financing activities:

 

 

 

 

 

 Net proceeds from stock offering

 

82,873 

 

 

 —

Proceeds from debt borrowings

 

17,381 

 

 

 —

Payments on debt and capital leases

 

(1,755)

 

 

(1,689)

Payment of debt fees

 

(1,136)

 

 

(50)

Proceeds from stock option exercises

 

6,012 

 

 

4,402 

Shares repurchased for payment of taxes on stock awards

 

(4,457)

 

 

(2,013)

Proceeds from issuance of common stock under employee stock purchase plan

 

2,383 

 

 

2,110 

Payment of contingent consideration liability previously established in purchase accounting

 

(1,125)

 

 

 —

Net cash provided by financing activities

 

100,176 

 

 

2,760 

Effect of exchange rate changes on cash and cash equivalents

 

(179)

 

 

24 

Net increase (decrease) in cash and cash equivalents

 

10,422 

 

 

(2,399)

Cash and cash equivalents - beginning of period

 

21,809 

 

 

24,208 

Cash and cash equivalents - end of period

$

32,231 

 

$

21,809 



 

 

 

 

 

 

 


 





 

 

 

 

 

 

 

 

 

 

 

 

ATRICURE, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS

(In Thousands)

(Unaudited)



 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Adjusted Income (Loss) (Adjusted EBITDA)

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended December 31,

 

Twelve Months Ended December 31,



 

2018

 

2017

 

2018

 

2017

Net loss, as reported

 

$

(3,430)

 

$

(2,580)

 

$

(21,137)

 

$

(26,892)

Income tax expense (benefit)

 

 

79 

 

 

(52)

 

 

226 

 

 

14 

Other expense, net

 

 

744 

 

 

497 

 

 

3,784 

 

 

1,899 

Depreciation and amortization expense

 

 

2,223 

 

 

2,271 

 

 

8,754 

 

 

9,128 

Share-based compensation expense

 

 

4,829 

 

 

3,668 

 

 

16,495 

 

 

14,615 

Contingent consideration adjustment

 

 

(4,129)

 

 

(4,078)

 

 

(10,825)

 

 

(4,078)

Non-GAAP adjusted income (loss) (adjusted EBITDA)

 

$

316 

 

$

(274)

 

$

(2,703)

 

$

(5,314)











 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Adjusted Loss Per Share

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended December 31,

 

Twelve Months Ended December 31,



 

2018

 

2017

 

2018

 

2017

Net loss, as reported

 

$

(3,430)

 

$

(2,580)

 

$

(21,137)

 

$

(26,892)

Contingent consideration adjustment

 

 

(4,129)

 

 

(4,078)

 

 

(10,825)

 

 

(4,078)

Net loss excluding contingent consideration adjustment

 

$

(7,559)

 

$

(6,658)

 

$

(31,962)

 

$

(30,970)

Basic and diluted adjusted net loss per share

 

$

(0.21)

 

$

(0.20)

 

$

(0.94)

 

$

(0.96)

Weighted average shares used in computing adjusted net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

36,480 

 

 

32,654 

 

 

34,087 

 

 

32,387