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AtriCure Reports Fourth Quarter and Full Year 2016 Financial Results
  • 2016 revenue of $155.1 million – up 19.5%
  • 2016 U.S. sales of $122.4 million – up 19.7%
  • 2016 International sales of $32.7 million – up 18.8%

MASON, Ohio--(BUSINESS WIRE)--Feb. 28, 2017-- AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, today announced fourth quarter and full year 2016 financial results.

“As we reflect back on 2016, we are pleased to have grown revenue 20% for the year while exceeding our bottom line expectations and making meaningful progress in continuing our transformation into the minimally invasive Afib market, a large underpenetrated and underserved market. Throughout the year, we hit several strategic milestones and begin 2017 poised to broaden our minimally invasive presence through enrollment in the CONVERGE clinical trial and the expansion of our AtriClip franchise,” said Mike Carrel, President and Chief Executive Officer of AtriCure. “We are also encouraged by the recently updated STS guidelines which include a Class 1 recommendation for surgical ablation of Afib. We believe the updated guidelines will further support long term adoption of the surgical treatment Afib worldwide. In the year ahead, we plan to drive toward consistent revenue growth while exercising operating expense control to achieve our goal of EBITDA profitability in 2018.”

2016 Financial Results

Revenue for 2016 was $155.1 million, an increase of $25.4 million or 19.5% (19.6% on a constant currency basis), compared to 2015 revenue. U.S. revenue increased 19.7% to $122.4 million, led by strong sales of ablation-related minimally invasive products and AtriClip® products. International revenue was $32.7 million, an increase of $5.2 million or 18.8% (18.9% on a constant currency basis). International revenue growth was driven primarily by increases in product sales in Asia, Germany, Italy and France.

Gross profit for 2016 was $111.1 million compared to $92.9 million for 2015. Gross margin for both 2016 and 2015 was 71.6%.

Loss from operations for 2016 was $31.1 million, compared to $26.7 million for 2015. Adjusted EBITDA, a non-GAAP measure, was a loss of $9.2 million for 2016, compared to a $11.4 million loss for 2015 (see reconciliation of GAAP results to non-GAAP results in the table accompanying this release). Net loss per share was $1.05 for 2016 and $0.97 for 2015.

Fourth Quarter 2016 Financial Results

Revenue for the fourth quarter of 2016 was $41.2 million, an increase of $5.3 million or 14.8% (15.0% on a constant currency basis), compared to fourth quarter 2015 revenue. U.S. revenue increased 13.1% to $32.7 million, driven by strong sales of ablation-related minimally invasive products and AtriClip® products. International revenue was $8.5 million, an increase of $1.5 million or 21.6% (22.7% on a constant currency basis). International revenue growth was driven primarily by increases in sales in Asia, Germany, the Benelux region and France.

Gross profit for the fourth quarter of 2016 was $28.9 million compared to $25.5 million for the fourth quarter of 2015. Gross margin for the fourth quarter of 2016 decreased to 70.2% compared to 71.2% in the fourth quarter of 2015.

Operating expenses for the fourth quarter of 2016 increased 1.2%, or $0.4 million, compared to the fourth quarter of 2015. The increase in operating expenses was driven primarily by an increase in selling, clinical, marketing, and training expenses.

Loss from operations for the fourth quarter of 2016 was $7.7 million, compared to $10.6 million for the fourth quarter of 2015. Net loss per share was $0.27 for the fourth quarter of 2016 and $0.36 for the fourth quarter of 2015. Adjusted EBITDA, a non-GAAP measure, was a loss of $1.4 million for the fourth quarter of 2016, compared to a $6.1 million loss for the fourth quarter of 2015.

2017 Financial Guidance

Management projects 2017 revenue growth of approximately 13% to 15% over full year 2016 at current exchange rates.

Adjusted EBITDA, a non-GAAP measure, is projected to be a loss in the range of $4 to $6 million for 2017. Net loss per share is expected to be in the range of $0.94 to $1.04. The Company continues to expect positive adjusted EBITDA for full year 2018.

Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Tuesday, February 28, 2017 to discuss its fourth quarter and full year 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 45358078. 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. is a medical device company that provides innovative solutions designed to decrease the global Afib epidemic. AtriCure’s Isolator® 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 is indicated for the occlusion of the left atrial appendage. AtriCure believes electrophysiologists and cardiothoracic surgeons are adopting its technologies for the treatment of Afib and reduction of Afib related complications. Afib affects more than 33 million people worldwide. 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 December 31, Twelve Months Ended December 31,
2016 2015 2016 2015
Domestic Revenue:
Open-heart ablation $ 14,595 $ 14,498 $ 58,050 $ 53,541
Minimally invasive ablation 8,937 7,149 31,169 21,564
AtriClip   8,404     6,661     30,321     24,377  
Total ablation and AtriClip 31,936 28,308 119,540 99,482
Valve tools   730     572     2,845     2,730  
Total domestic 32,666 28,880 122,385 102,212
International Revenue:
Open-heart ablation 5,127 3,891 20,189 16,287
Minimally invasive ablation 2,182 2,193 8,065 7,964
AtriClip   1,103     810     3,986     2,868  
Total ablation and AtriClip 8,412 6,894 32,240 27,119
Valve tools   79     89     484     424  
Total international 8,491 6,983 32,724 27,543
Total revenue 41,157 35,863 155,109 129,755
Cost of revenue   12,260     10,318     44,008     36,880  
Gross profit 28,897 25,545 111,101 92,875
Operating expenses:
Research and development expenses 9,866 7,767 35,824 25,742
Selling, general and administrative expenses   26,726     28,408     106,415     93,853  
Total operating expenses   36,592     36,175     142,239     119,595  
Loss from operations (7,695 ) (10,630 ) (31,138 ) (26,720 )
Other expense, net   (914 )   (268 )   (2,160 )   (456 )
Loss before income tax expense (8,609 ) (10,898 ) (33,298 ) (27,176 )
Income tax expense 16 16 40 36
Net loss $ (8,625 ) $ (10,914 ) $ (33,338 ) $ (27,212 )
Basic and diluted net loss per share $ (0.27 ) $ (0.36 ) $ (1.05 ) $ (0.97 )
Weighted average shares used in computing net loss per share:
Basic and diluted   31,794     30,634     31,609     28,058  
 
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
   
December 31, December 31,
2016 2015
Assets
Current assets:
Cash, cash equivalents, and short-term investments $ 44,009 $ 34,578
Accounts receivable, net 21,094 19,409
Inventories 17,660 17,659
Other current assets   2,954     3,106  
Total current assets 85,717 74,752
Property and equipment, net 29,995 31,279
Long-term investments 3,000 7,706
Goodwill and intangible assets, net 157,388 159,032
Other noncurrent assets   321     323  
Total assets $ 276,421   $ 273,092  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 27,140 $ 31,138
Other current liabilities and current maturities of capital leases and long-term debt 1,688     450  
Total current liabilities 28,828 31,588
Capital leases 13,319 13,710
Long-term debt 23,886
Other noncurrent liabilities   41,946     41,109  
Total liabilities 107,979 86,407
Stockholders' equity:
Common stock 33 32
Additional paid-in capital 367,851 352,900
Accumulated other comprehensive loss (468 ) (611 )
Accumulated deficit   (198,974 )   (165,636 )
Total stockholders' equity   168,442     186,685  
Total liabilities and stockholders' equity $ 276,421   $ 273,092  
 
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
   
Twelve Months Ended December 31,
2016 2015
Cash flows from operating activities:
Net loss $ (33,338 ) $ (27,212 )

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

Share-based compensation expense 11,697 8,997
Depreciation and amortization of intangible assets 9,299 6,278
Amortization of deferred financing costs 218 61
Loss on disposal of equipment and impairment of assets 433 276
Realized loss from foreign exchange on intercompany transactions 407 434
Amortization/accretion on investments 126 577
Change in allowance for doubtful accounts 149 144
Change in fair value of contingent consideration 969
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable (1,982 ) (900 )
Inventories (79 ) (2,950 )
Other current assets 122 (928 )
Accounts payable and accrued liabilities (2,987 ) 7,083
Other non-current assets and liabilities   (153 )   298  
Net cash used in operating activities (15,119 ) (7,842 )
Cash flows from investing activities:
Purchases of available-for-sale securities (28,592 ) (19,525 )
Sales and maturities of available-for-sale securities 24,202 40,602
Purchases of property and equipment (7,692 ) (13,445 )
Proceeds from sale of property and equipment 3
Increases in property under build-to-suit obligation (10,552 )
Cash paid for nContact business combination   (7,581 )
Net cash used in investing activities (12,079 ) (10,501 )
Cash flows from financing activities:
Proceeds from debt borrowings 25,000
Payments on capital leases (439 ) (263 )
Proceeds from build-to-suit obligation 10,552
Proceeds from economic incentive loan 340
Payment of debt fees (120 ) (62 )
Proceeds from stock option exercises 3,337 2,703
Shares repurchased for payment of taxes on stock awards (1,701 ) (782 )

Proceeds from issuance of common stock under employee stock purchase plan

1,618 1,539
Payment of stock issuance fees       (66 )
Net cash provided by financing activities 27,695 13,961
Effect of exchange rate changes on cash and cash equivalents   (53 )   (238 )
Net increase (decrease) in cash and cash equivalents 444 (4,620 )
Cash and cash equivalents - beginning of period   23,764     28,384  
Cash and cash equivalents - end of period $ 24,208   $ 23,764  
 
Supplemental cash flow information:
Cash paid for interest $ 1,506 $ 232
Cash paid for income taxes 30 20
Noncash investing and financing activities:
Accrued purchases of property and equipment 340 1,277
Assets acquired through capital lease 152 50
Capital lease asset early termination 37
Stock issuance in business combinations 69,054
Contingent consideration in business combinations 40,207
 
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,
2016 2015 2016 2015
Net loss, as reported $ (8,625 ) $ (10,914 ) $ (33,338 ) $ (27,212 )
Income tax expense 16 16 40 36
Other expense, net (a) 914 268 2,160 456
Depreciation and amortization expense 2,441 2,066 9,299 6,278
Share-based compensation expense 2,901 2,464 11,697 8,997
Change in fair value of contingent consideration   969         969      
Non-GAAP adjusted loss (adjusted EBITDA) $ (1,384 ) $ (6,100 ) $ (9,173 ) $ (11,445 )
 
 
Three Months Ended December 31, Twelve Months Ended December 31,
2016 2015 2016 2015
(a) Other includes:
Net interest expense $ 474 $ 193 $ 1,574 $ 102
Grant income (35 )
Loss due to exchange rate fluctuation 440 82 586 339
Non-employee stock option expense 57
Other       (7 )       (7 )
Other expense, net $ 914   $ 268   $ 2,160   $ 456  
 

Source: AtriCure, Inc.

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