Announces Preliminary Results for Third Quarter 2015, Updates Outlook
for 2015 and Provides 2016 Outlook
Company to Host Conference Call Monday, October 5 at 8:30am ET
Acquisition expands available market opportunity
Complementary
product lines to provide additional solutions for serious forms of
Atrial Fibrillation
WEST CHESTER, Ohio--(BUSINESS WIRE)--Oct. 4, 2015--
AtriCure,
Inc. (Nasdaq:
ATRC), a leading innovator in treatments for atrial fibrillation
(Afib) and left atrial appendage management, today announced that it has
entered into a definitive merger agreement under which AtriCure has
agreed to acquire nContact, Inc., a privately held developer of
innovative cardiac ablation solutions.
The transaction consideration consists of an upfront payment of
approximately 3.7 million shares of AtriCure common stock, valued at
$24.60 per share, and approximately $8 million in cash, subject to
closing adjustments. The transaction also includes up to $50 million in
additional contingent consideration based on completion of enrollment of
the CONVERGE IDE trial and PMA approval. Additionally, nContact
shareholders are entitled to additional sales-based contingent
consideration on revenue in excess of an annual growth rate of greater
than 25% through 2019. All contingent consideration can be paid in
either cash or AtriCure common stock, or a combination of both.
“nContact is an excellent strategic addition to AtriCure, as it expands
and strengthens our presence in the Afib market. We expect the combined
entity to provide improved market access and additional collaboration
opportunities with cardiac surgeons and electrophysiologists,” said Mike
Carrel, President and Chief Executive Officer of AtriCure. “This
acquisition reinforces our commitment to the Afib market, product
innovation and clinical science. We are excited to be able to offer this
therapy to our combined customer base, further the CONVERGE IDE trial,
and continue our mission to grow the market with new solutions.”
The transaction will combine two companies committed to solving the
challenges associated with the most serious forms of Afib and is
expected to:
-
Expand AtriCure’s addressable market with the addition of a proven
technology that treats an under-served population of patients as well
as expand AtriCure’s customer account base
-
Complement and expand AtriCure’s current product portfolio and
minimally invasive (MIS) intellectual property portfolio
-
Enhance AtriCure’s commitment to clinical science with the CONVERGE
IDE clinical trial
-
Accelerate and sustain AtriCure’s revenue growth rate
-
Drive continued margin expansion and operating leverage opportunities
nContact, based in Morrisville, North Carolina, develops and markets a
portfolio of innovative devices that provide for less invasive ablation
options for the treatment of cardiac arrhythmias. The company’s
technology is used in the Convergent procedure, a multi-disciplinary
therapy in which a closed-chest surgical epicardial ablation is
performed, and then complemented by an endocardial catheter ablation
performed by an electrophysiologist. nContact is currently conducting
the CONVERGE IDE clinical trial, the first head-to-head study to
evaluate the Convergent procedure versus catheter ablation in patients
with persistent Afib. In addition to the ongoing IDE trial, individual
center results have been published in numerous peer reviewed papers.
Subject to customary closing conditions, the transaction is expected to
close in the next several weeks. AtriCure shareholder approval is not
required.
Financial Impact
AtriCure expects that the transaction will be accretive to its revenue
growth rate going forward. As a result of the transaction, AtriCure
expects to increase sales and marketing expenditures as well as clinical
trial expenditures in order to accelerate efforts in those areas. The
company expects the transaction to be dilutive to EBITDA through 2017
and accretive in 2018 and beyond. nContact had 2014 revenues of $8.2
million and is growing approximately 25% this year.
Preliminary Results for the Third Quarter 2015
Preliminary revenue for the third quarter of 2015 is expected to be
approximately $31.6 million, reflecting constant currency growth of
approximately 21.2% over the third quarter of 2014. Based on this
preliminary estimate, revenue from U.S. customers is expected to be
$24.7 million, reflecting growth of 23.1%, and revenue from
international customers is expected to be $6.9 million, reflecting
growth of 15.5% on a constant currency basis. Preliminary revenue for
the nine months ending September 30, 2015 is expected to be $94 million,
reflecting year-over-year constant currency growth of 23.9% over the
nine months ending September 30, 2014.
“We are pleased to report preliminary third quarter results, which
reflect strong and sustained growth through the first nine months of the
year. Our U.S. sales continue to perform extremely well, and while
international sales continue to be impacted by the weak Euro and
softness in certain Eastern European markets, we remain excited about
our prospects for continued growth going forward,” said Mr. Carrel. “In
addition, with this acquisition and the success we have seen in our core
business, we are confident that we can sustain organic revenue growth of
approximately 18% through the end of the decade. This is up from the 15%
long term growth expectations we have previously communicated.”
These preliminary, unaudited financial results for the third quarter of
2015 are based on current expectations and are subject to quarter-end
closing adjustments; actual results may differ.
2015 Outlook
The company is narrowing its expectations for 2015 revenue to the range
of $128 million to $129 million, which represents an increase of 19% to
20% over 2014 (21% to 23% on a constant currency basis), excluding the
impact of this transaction. The company expects nContact product sales
of approximately $1.5 million for the remainder of 2015.
Management projects adjusted EBITDA, a non-GAAP measure, to be a loss in
the range of $10 million to $12 million for 2015, including the impact
of the transaction. This compares to previous expectations of 2015
adjusted EBITDA to be a loss in the range of $7 million to $8 million.
The difference between the projected Adjusted EBITDA amount, a non-GAAP
metric, and net loss, the most directly comparable financial measure, is
primarily driven by depreciation, amortization, share-based
compensation, and other minor non-cash items.
2016 Outlook
For 2016, AtriCure projects consolidated revenue growth of 25%, which
includes the expectation for approximately 18% organic growth. For 2016,
adjusted EBITDA loss is expected to increase due to acquisition and
integration costs resulting from the nContact transaction, with the
impact slowing in 2017. The company expects to be adjusted EBITDA
positive for full year 2018.
Conference Call
AtriCure will host a conference call at 8:30 a.m. Eastern Time on
Monday, October 5th to discuss the transaction. A live
webcast of the conference call will be available online on the Investor
page of AtriCure’s corporate website at www.atricure.com.
You may also access this call through an operator by calling
855-307-9214 for domestic callers and 330-863-3275 for international
callers, using participant passcode 54265701.
The webcast will be available on AtriCure’s website and a telephonic
replay of the call will be available through October 13, 2015. The
replay dial-in numbers are 855-859-2056 for domestic callers and
404-537-3406 for international callers. The participant passcode is
54265701.
Advisors
Piper Jaffray & Co. is acting as exclusive financial advisor, and
Keating Muething & Klekamp PLL is serving as legal counsel, to AtriCure.
Perella Weinberg Partners LP is acting as exclusive financial advisor,
and Wyrick Robbins Yates & Ponton LLP is serving as legal counsel, to
nContact.
About AtriCure
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 million people worldwide.For
more information visit AtriCure.com or follow us on Twitter @AtriCure.
About nContact
nContact’s mission is to transform the underserved arrhythmia market
through the advancement of less invasive ablation alternatives for
cardiac arrhythmias. The Company is conducting the CONVERGE IDE Clinical
Trial, the first head-to-head study to evaluate the Convergent Procedure
to catheter ablation in persistent atrial fibrillation patients. The
Company’s lead technology, Epi-Sense® Coagulation System with VisiTrax®,
has CE Mark approval in Europe for the coagulation of cardiac tissue in
the treatment of atrial fibrillation and atrial flutter. The Epi-Sense
Coagulation System with VisiTrax is indicated for endoscopic coagulation
of cardiac tissue in the U.S. nContact was founded in 2005 and is
headquartered in Morrisville, North Carolina, USA. For more information,
visit www.ncontactinc.com.
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151004005081/en/
Source: AtriCure, Inc.
AtriCure, Inc.
Andy Wade, 513-755-4564
Senior Vice
President and Chief Financial Officer
awade@AtriCure.com
or
Investor
Relations Contact
Westwicke Partners
Lynn Pieper,
415-202-5678
lynn.pieper@westwicke.com
