News Release Details

AtriCure Reports Fourth Quarter and Full Year 2017 Financial Results

February 26, 2018 at 12:00 PM EST
<< BackAtriCure Reports Fourth Quarter and Full Year 2017 Financial Results
  • 2017 worldwide revenue of $174.7 million – an increase of 12.6% year over year
  • 2017 U.S. revenue of $138.4 million – an increase of 13.1% year over year
  • 2017 international revenue of $36.3 million – an increase of 11.0% year over year

MASON, Ohio--(BUSINESS WIRE)--Feb. 26, 2018-- 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 2017 financial results.

“We realized several accomplishments in 2017 underpinned by our continued focus on education, clinical science and innovation. We begin 2018 with a platform in place to continue expanding our minimally invasive presence through our DEEP trial restart, CONVERGE trial enrollment efforts and growth in the AtriClip franchise,” said Mike Carrel, President and Chief Executive Officer of AtriCure. “We are well positioned to continue executing on our strategy to deliver solid financial and operational results while progressing forward with our strategic initiatives and positively impacting patient lives.”

Fourth Quarter 2017 Financial Results

Revenue for the fourth quarter of 2017 was $46.1 million, an increase of $4.9 million or 11.9% (10.7% on a constant currency basis), compared to fourth quarter 2016 revenue. U.S. revenue increased 10.8% to $36.2 million, driven by increased sales of ablation-related open-heart products and AtriClip® products. International revenue was $9.9 million, an increase of $1.4 million or 16.3% (10.3% on a constant currency basis), compared to fourth quarter 2016 revenue.

Gross profit for the fourth quarter of 2017 was $32.7 million compared to $28.9 million for the fourth quarter of 2016. Gross margin for the fourth quarter of 2017 increased to 71.0% compared to 70.2% in the fourth quarter of 2016.

Operating expenses for the fourth quarter of 2017 decreased 4.8%, or $1.8 million, compared to the fourth quarter of 2016. The decrease in operating expenses was driven primarily by a decrease in research and development project-related expenses.

Loss from operations for the fourth quarter of 2017 was $2.1 million, compared to $7.7 million for the fourth quarter of 2016. Net loss per share was $0.08 for the fourth quarter of 2017 compared to $0.27 for the fourth quarter of 2016.

Adjusted EBITDA, a non-GAAP measure, was a loss of $0.3 million for the fourth quarter of 2017 and $1.4 million for the fourth quarter of 2016 (see reconciliation of GAAP results to non-GAAP results in the table accompanying this release).

2017 Financial Results

Revenue for 2017 was $174.7 million, an increase of $19.6 million or 12.6% (12.4% on a constant currency basis), compared to 2016 revenue. U.S. revenue increased 13.1% to $138.4 million, driven by growth across our key ablation and AtriClip® products. International revenue was $36.3 million, an increase of $3.6 million or 11.0% (9.6% on a constant currency basis). International revenue growth was driven primarily by increases in product sales in Japan, Australia, Germany, France, Turkey, Austria and the Benelux region.

Gross profit for 2017 was $126.2 million compared to $111.1 million for 2016. Gross margin for 2017 increased to 72.2% compared to 71.6% for 2016.

Loss from operations for 2017 was $25.0 million, compared to $31.1 million for 2016. Adjusted EBITDA, a non-GAAP measure, was a loss of $5.3 million for 2017, compared to a $9.2 million loss for 2016 (see reconciliation of GAAP results to non-GAAP results in the table accompanying this release). Net loss per share was $0.83 for 2017 compared to $1.05 for 2016.

2018 Financial Guidance

Management projects 2018 revenue of approximately $190 million to $196 million. Adjusted EBITDA, a non-GAAP measure, is projected to be positive for 2018.

Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Monday, February 26, 2018 to discuss its fourth quarter and full year 2017 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 9894077. 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 Afib. AtriCure’s AtriClip Left Atrial Appendage Exclusion System products are the most widely sold LAA management devices worldwide, with more than 125,000 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 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.

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.

 
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,
    2017   2016   2017   2016
United States Revenue:                        
Open-heart ablation   $ 16,671     $ 14,595     $ 64,517     $ 58,050  
Minimally invasive ablation     8,365       8,937       34,421       31,169  
AtriClip     10,645       8,404       37,281       30,321  
Total ablation and AtriClip     35,681       31,936       136,219       119,540  
Valve tools     510       730       2,168       2,845  
Total United States     36,191       32,666       138,387       122,385  
International Revenue:                        
Open-heart ablation     5,199       5,127       20,718       20,189  
Minimally invasive ablation     2,148       2,182       8,007       8,065  
AtriClip     2,426       1,103       7,251       3,986  
Total ablation and AtriClip     9,773       8,412       35,976       32,240  
Valve tools     98       79       353       484  
Total international     9,871       8,491       36,329       32,724  
Total revenue     46,062       41,157       174,716       155,109  
Cost of revenue     13,379       12,260       48,553       44,008  
Gross profit     32,683       28,897       126,163       111,101  
Operating expenses:                        
Research and development expenses     7,721       9,866       34,144       35,824  
Selling, general and administrative expenses     27,097       26,726       116,998       106,415  
Total operating expenses     34,818       36,592       151,142       142,239  
Loss from operations     (2,135 )     (7,695 )     (24,979 )     (31,138 )
Other expense, net     (497 )     (914 )     (1,899 )     (2,160 )
Loss before income tax expense     (2,632 )     (8,609 )     (26,878 )     (33,298 )
Income tax (benefit) expense     (52 )     16       14       40  
Net loss   $ (2,580 )   $ (8,625 )   $ (26,892 )   $ (33,338 )
Basic and diluted net loss per share   $ (0.08 )   $ (0.27 )   $ (0.83 )   $ (1.05 )

Weighted average shares used in computing net loss per share:

   
Basic and diluted     32,654       31,794       32,387       31,609  
                         
 
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
             
    December 31,   December 31,
    2017   2016

Assets

           
Current assets:            
Cash, cash equivalents, and short-term investments   $ 34,451     $ 44,009  
Accounts receivable, net     23,083       21,094  
Inventories     22,451       17,660  
Other current assets     2,273       2,954  
Total current assets     82,258       85,717  
Property and equipment, net     28,749       29,995  
Long-term investments           3,000  
Goodwill and intangible assets, net     156,021       157,388  
Other noncurrent assets     676       321  
Total assets   $ 267,704     $ 276,421  

Liabilities and Stockholders' Equity

           
Current liabilities:            
Accounts payable and accrued liabilities   $ 31,342     $ 27,140  
Other current liabilities and current maturities of capital leases and long-term debt     561       1,688  
Total current liabilities     31,903       28,828  
Capital leases     12,761       13,319  
Long-term debt     24,100       23,886  
Other noncurrent liabilities     37,774       41,946  
Total liabilities     106,538       107,979  
Stockholders' equity:            
Common stock     35       33  
Additional paid-in capital     386,963       367,851  
Accumulated other comprehensive income (loss)     34       (468 )
Accumulated deficit     (225,866 )     (198,974 )
Total stockholders' equity     161,166       168,442  
Total liabilities and stockholders' equity   $ 267,704     $ 276,421  
             
 
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
             
    Twelve Months Ended December 31,
    2017   2016
Cash flows from operating activities:            
Net loss   $ (26,892 )   $ (33,338 )

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

         
Share-based compensation expense     14,615       11,697  
Depreciation and amortization of intangible assets     9,128       9,299  
Amortization of deferred financing costs     264       218  

Loss on disposal of property and equipment and impairment of assets

    336       433  
Realized (gain) loss from foreign exchange on intercompany transactions     (173 )     407  
Amortization/accretion on investments     30       126  
Change in allowance for doubtful accounts     (172 )     149  
Change in fair value of contingent consideration     (4,078 )     969  
Changes in operating assets and liabilities            
Accounts receivable     (1,464 )     (1,982 )
Inventories     (4,477 )     (79 )
Other current assets     829       122  
Accounts payable and accrued liabilities     3,518       (2,987 )
Other noncurrent assets and liabilities     (408 )     (153 )
Net cash used in operating activities     (8,944 )     (15,119 )
Cash flows from investing activities:            
Purchases of available-for-sale securities     (16,455 )     (28,592 )
Sales and maturities of available-for-sale securities     26,600       24,202  
Purchases of property and equipment     (6,384 )     (7,692 )

Proceeds from sale of property and equipment

          3  
Net cash provided by (used in) investing activities     3,761       (12,079 )
Cash flows from financing activities:            
Proceeds from debt borrowings           25,000  
Payments on debt and capital leases     (1,689 )     (439 )
Payment of debt fees     (50 )     (120 )
Proceeds from stock option exercises     4,402       3,337  
Shares repurchased for payment of taxes on stock awards     (2,013 )     (1,701 )

Proceeds from issuance of common stock under employee stock purchase plan

    2,110       1,618  
Net cash provided by financing activities     2,760       27,695  
Effect of exchange rate changes on cash and cash equivalents     24       (53 )
Net (decrease) increase in cash and cash equivalents     (2,399 )     444  
Cash and cash equivalents - beginning of period     24,208       23,764  
Cash and cash equivalents - end of period   $ 21,809     $ 24,208  
             
Supplemental cash flow information:            
Cash paid for interest   $ 2,002     $ 1,506  
Cash paid for income taxes     37       30  
Non-cash investing and financing activities:            
Accrued purchases of property and equipment     650       340  
Assets acquired through capital lease     2       152  
Capital lease asset early termination           37  
             
                         
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,
    2017   2016   2017   2016
Net loss, as reported   $ (2,580 )   $ (8,625 )   $ (26,892 )   $ (33,338 )
Income tax (benefit) expense     (52 )     16       14       40  
Other expense, net (a)     497       914       1,899       2,160  
Depreciation and amortization expense     2,271       2,441       9,128       9,299  
Share-based compensation expense     3,668       2,901       14,615       11,697  
Change in fair value of contingent consideration     (4,078 )     969       (4,078 )     969  
Non-GAAP adjusted loss (adjusted EBITDA)   $ (274 )   $ (1,384 )   $ (5,314 )   $ (9,173 )
                         
                         
    Three Months Ended December 31,   Twelve Months Ended December 31,
    2017   2016   2017   2016
(a) Other includes:                        
Net interest expense   $ 503     $ 474     $ 2,037     $ 1,574  

(Gain) loss due to exchange rate fluctuation

   

(6

)

   

440

     

(138

)

   

586

 
Other expense, net   $ 497     $ 914     $ 1,899     $ 2,160  
                         

 

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