AtriCure, Inc. (Nasdaq: ATRC), a leading atrial fibrillation (“Afib”) medical device provider, today announced fourth quarter and full year 2013 financial results.
“We are pleased with our team’s performance in 2013 and momentum as we move into 2014. Our commitment to training and education, clinical trial support and innovation, coupled with our strategic acquisition of Estech, position AtriCure to execute our strategy. We are emerging as the leader in atrial fibrillation and are striving to expand the Afib market through improved patient outcomes and results,” said Mike Carrel, President and Chief Executive Officer of AtriCure. “We recently completed a successful financing which brought approximately $66 million in net proceeds to the company, bolstering our capital resources to fund our clinical programs and growth objectives.”
2013 Financial Results
Revenue
for 2013 was $81.9 million, an increase of $11.6 million or 16.6% (16.1%
on a constant currency basis), compared to 2012 revenue. Domestic
revenue increased 18.4% to $62.3 million, driven by strong sales of
ablation-related open-heart products and AtriClip products.
International revenue was $19.6 million, an increase of $2.0 million or
11.0% (9.1% on a constant currency basis) when compared to $17.6 million
for 2012. International revenue growth was driven primarily by an
increase in product sales in Europe and Asia.
Gross profit for 2013 was $59.6 million compared to $50.0 million for 2012. Gross margin for 2013 was 72.7% compared to 71.2% for 2012. The increase in gross margin was primarily due to volume-driven leverage of manufacturing overhead expenses, a higher mix of domestic sales, lower sales of capital equipment and the strong performance of our AtriClip Pro product.
Loss from operations for 2013 was $10.9 million as compared to $7.2 million for 2012. Adjusted EBITDA, a non-GAAP measure, was a loss of $5.8 million for 2013 as compared to a loss of $1.8 million for 2012 (see reconciliation table below). Net loss per share was $0.56 for 2013 and $0.47 for 2012.
Cash, cash equivalents and investments were $34.1 million at December 31, 2013 and cash used in operations during 2013 was $5.2 million.
Fourth Quarter 2014 Financial Results
Revenue
for the fourth quarter of 2013 was $21.9 million, an increase of $3.5
million or 19.2% (18.4% on a constant currency basis) compared to fourth
quarter 2012 revenue. Domestic revenue increased 20.0% to $16.4 million,
driven by strong sales of ablation-related open-heart products and
AtriClip products. International revenue was $5.5 million, an increase
of $0.8 million or 16.6% (13.7% on a constant currency basis) when
compared to $4.7 million for the fourth quarter of 2012. International
revenue growth was driven primarily by an increase in product sales in
Europe and Asia.
Gross profit for the fourth quarter of 2013 was $15.7 million compared to $13.0 million for the fourth quarter of 2012. Gross margin for the fourth quarter of 2013 and 2012 was 71.6% and 70.8%, respectively. The increase in gross margin was due primarily to volume-driven leverage of manufacturing overhead expenses, a higher mix of domestic sales and the strong performance of the AtriClip Pro product.
Operating expenses for the fourth quarter of 2013 increased 38.1%, or $5.7 million, compared to the fourth quarter of 2012. The increase in operating expenses was driven primarily by an increase in selling, marketing and training expenses, along with the addition of $1.2 million of expenses related to the acquisition of Estech.
Loss from operations for the fourth quarter of 2013 was $4.8 million compared to $1.9 million for the fourth quarter of 2012. Net loss per share was $0.24 for the fourth quarter of 2013 and $0.12 for the fourth quarter of 2012.
2014 Guidance
Management
projects that 2014 revenue will be in the range of $100 million to $103
million, which represents an increase of 22% to 26% over 2013. Organic
revenue growth is expected to be approximately 13% to 15% with the
remaining portion expected from the recently acquired Estech ablation
and valve products. We estimate Estech’s valve products, which are
distinct from the core ablation franchise, to generate revenue of
approximately $3 million for the year.
Adjusted EBITDA, a non-GAAP measure, is projected to be a loss in the range of $9 million to $10 million for 2014, of which approximately $3.5 million of expense will be related to the Estech transaction. AtriCure expects the Estech transaction to be dilutive to earnings in 2014 and accretive in 2015 and beyond.
Conference Call
AtriCure will
host a conference call at 4:30 p.m. Eastern Time on Thursday, February
27, 2014 to discuss its fourth quarter and full year 2013 financial
results. A live webcast of the conference call will be available online
from the investor relations page of AtriCure’s corporate website at www.atricure.com.
You may also access this call through an operator by calling (888) 713-4214 for domestic callers and (617) 213-4866 for international callers at least 15 minutes prior to the call start time using reservation code 59283031.
The webcast will be available on AtriCure’s website and a telephonic replay of the call will also be available through March 27, 2014. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The reservation code is 68935249.
About AtriCure, Inc.
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 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 (LAA) exclusion device is the most widely
implanted device for LAA management worldwide. The company believes
cardiothoracic surgeons are adopting its ablation and LAA management
devices for the treatment of Afib and reduction of Afib related
complications such as stroke. Afib affects more than 5.5 million people
worldwide.
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, 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
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 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, 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.
Use of Non-GAAP Financial Measures
To
supplement AtriCure’s condensed consolidated financial statements
prepared in accordance with U.S. generally accepted accounting
principles, 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.
Our 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 our 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, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Revenue: | ||||||||||||||||||||
Open-heart | $ | 9,931 | $ | 8,351 | $ | 37,843 | $ | 32,880 | ||||||||||||
Minimally invasive | 3,519 | 3,409 | 13,648 | 12,733 | ||||||||||||||||
AtriClip | 2,936 | 1,890 | 10,820 | 7,003 | ||||||||||||||||
Total domestic | 16,386 | 13,650 | 62,311 | 52,616 | ||||||||||||||||
International | 5,498 | 4,714 | 19,578 | 17,631 | ||||||||||||||||
Total revenue | 21,884 | 18,364 | 81,889 | 70,247 | ||||||||||||||||
Cost of revenue | 6,215 | 5,362 | 22,326 | 20,233 | ||||||||||||||||
Gross profit | 15,669 | 13,002 | 59,563 | 50,014 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development expenses | 3,648 | 2,967 | 13,440 | 12,147 | ||||||||||||||||
Selling, general and administrative expenses | 16,859 | 11,887 | 57,014 | 45,065 | ||||||||||||||||
Total operating expenses | 20,507 | 14,854 | 70,454 | 57,212 | ||||||||||||||||
Loss from operations | (4,838 | ) | (1,852 | ) | (10,891 | ) | (7,198 | ) | ||||||||||||
Other expense, net | (138 | ) | (138 | ) | (553 | ) | (286 | ) | ||||||||||||
Loss before income tax expense | (4,976 | ) | (1,990 | ) | (11,444 | ) | (7,484 | ) | ||||||||||||
Income tax expense | (4 | ) | (30 | ) | (18 | ) | (50 | ) | ||||||||||||
Net loss | $ | (4,980 | ) | $ | (2,020 | ) | $ | (11,462 | ) | $ | (7,534 | ) | ||||||||
Basic and diluted net loss per share | $ | (0.24 | ) | $ | (0.12 | ) | $ | (0.56 | ) | $ | (0.47 | ) | ||||||||
Weighted average shares used in computing net | ||||||||||||||||||||
loss per common share: | ||||||||||||||||||||
Basic and diluted | 20,785 | 16,332 | 20,431 | 16,190 | ||||||||||||||||
ATRICURE, INC. AND SUBSIDIARIES | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||||
(Unaudited) | ||||||||||||
December 31, | December 31, | |||||||||||
2013 | 2012 | |||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash, cash equivalents and short-term investments | $ | 26,211 | $ | 12,000 | ||||||||
Accounts receivable, net | 13,652 | 9,948 | ||||||||||
Inventories | 10,214 | 5,718 | ||||||||||
Other current assets | 2,410 | 873 | ||||||||||
Total current assets | 52,487 | 28,539 | ||||||||||
Property and equipment, net | 5,643 | 3,430 | ||||||||||
Long-term investments | 7,914 | - | ||||||||||
Intangible assets and goodwill | 45,685 | 32 | ||||||||||
Other assets | 218 | 430 | ||||||||||
Total assets | $ | 111,947 | $ | 32,431 | ||||||||
Liabilities and Stockholders' Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable and accrued liabilities | $ | 24,675 | $ | 10,176 | ||||||||
Current maturities of debt and capital leases | 2,038 | 2,029 | ||||||||||
Total current liabilities | 26,713 | 12,205 | ||||||||||
Long-term debt and capital leases | 4,412 | 6,407 | ||||||||||
Other liabilities | 8,218 | 1,319 | ||||||||||
Total liabilities | 39,343 | 19,931 | ||||||||||
Stockholders' equity: | ||||||||||||
Common stock | 23 | 17 | ||||||||||
Additional paid-in capital | 194,933 | 123,157 | ||||||||||
Accumulated other comprehensive (loss) income | (139 | ) | 77 | |||||||||
Accumulated deficit | (122,213 | ) | (110,751 | ) | ||||||||
Total stockholders' equity | 72,604 | 12,500 | ||||||||||
Total liabilities and stockholders' equity | $ | 111,947 | $ | 32,431 | ||||||||
ATRICURE, INC. AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In Thousands) | |||||||||||
(Unaudited) | |||||||||||
Twelve Months Ended December 31, | |||||||||||
2013 | 2012 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (11,462 | ) | $ | (7,534 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Share-based compensation expense | 3,080 | 3,468 | |||||||||
Depreciation and amortization of intangible assets | 2,020 | 1,899 | |||||||||
Amortization of deferred financing costs | 115 | 100 | |||||||||
(Gain) loss on disposal of equipment | (6 | ) | 40 | ||||||||
Amortization/accretion on investments | 49 | 12 | |||||||||
Change in allowance for doubtful accounts | (14 | ) | 1 | ||||||||
Changes in assets and liabilities | |||||||||||
Accounts receivable | (1,248 | ) | (417 | ) | |||||||
Inventories | (2,288 | ) | 865 | ||||||||
Other current assets | (1,257 | ) | 57 | ||||||||
Accounts payable and accrued liabilities | 5,559 | (229 | ) | ||||||||
Other non-current assets and liabilities | 230 | (198 | ) | ||||||||
Net cash used in operating activities | (5,222 | ) | (1,936 | ) | |||||||
Cash flows from investing activities: | |||||||||||
Purchases of available-for-sale securities | (21,243 | ) | (9,236 | ) | |||||||
Maturities of available-for-sale securities | 6,200 | 9,400 | |||||||||
Cash acquired through business combination | 3,708 | - | |||||||||
Purchases of property and equipment | (2,864 | ) | (2,985 | ) | |||||||
Net proceeds from the sale of equipment | 48 | 24 | |||||||||
Net cash used in investing activities | (14,151 | ) | (2,797 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Net proceeds from sale of stock | 26,872 | - | |||||||||
Proceeds from borrowings of debt | - | 10,000 | |||||||||
Payments on debt and capital leases | (2,055 | ) | (8,096 | ) | |||||||
Payment of debt fees and premium on retirement of debt | (99 | ) | (127 | ) | |||||||
Proceeds from stock option exercises | 1,718 | 659 | |||||||||
Shares repurchased for payment of taxes on stock awards | (398 | ) | (401 | ) | |||||||
Proceeds from issuance of common stock under employee stock purchase plan | 790 | 627 | |||||||||
Net cash provided by financing activities | 26,828 | 2,662 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (316 | ) | 65 | ||||||||
Net increase (decrease) in cash and cash equivalents | 7,139 | (2,006 | ) | ||||||||
Cash and cash equivalents - beginning of period | 7,753 | 9,759 | |||||||||
Cash and cash equivalents - end of period | $ | 14,892 | $ | 7,753 | |||||||
Supplemental cash flow information: | |||||||||||
Cash paid for interest | $ | 473 | $ | 607 | |||||||
Cash paid for income taxes | 30 | 14 | |||||||||
Noncash investing and financing activities: | |||||||||||
Accrued purchases of property and equipment | 282 | 10 | |||||||||
Assets acquired through capital lease | 68 | 65 | |||||||||
Capital lease asset early termination | 24 | 13 | |||||||||
Stock issuance for Estech acquisition | 39,720 | - | |||||||||
Contingent consideration for acquisition of Estech | 8,032 | - | |||||||||
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, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Net loss, as reported | $ | (4,980 | ) | $ | (2,020 | ) | $ | (11,462 | ) | $ | (7,534 | ) | ||||||||
Income tax expense | 4 | 30 | 18 | 50 | ||||||||||||||||
Other expense (a) | 138 | 138 | 553 | 286 | ||||||||||||||||
Depreciation and amortization expense | 555 | 379 | 2,020 | 1,899 | ||||||||||||||||
Share-based compensation expense | 1,008 | 527 | 3,080 | 3,468 | ||||||||||||||||
Non-GAAP adjusted loss (adjusted EBITDA) | $ | (3,275 | ) | $ | (946 | ) | $ | (5,791 | ) | $ | (1,831 | ) | ||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
(a) Other includes: | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Net interest expense | $ | (130 | ) | $ | (182 | ) | $ | (550 | ) | $ | (791 | ) | ||||||||
Grant income | - | 30 | - | 409 | ||||||||||||||||
Gain (loss) due to exchange rate fluctuation | 196 | (6 | ) | 269 | (83 | ) | ||||||||||||||
Non-employee stock option (expense) income | (204 | ) | 20 | (272 | ) | 179 | ||||||||||||||
Other expense | $ | (138 | ) | $ | (138 | ) | $ | (553 | ) | $ | (286 | ) | ||||||||
Contacts:
Andy Wade, 513-755-4564
Vice President
and Chief Financial Officer
awade@atricure.com
or
Investor
Relations Contact
Westwicke Partners
Lynn Pieper,
415-202-5678
lynn.pieper@westwicke.com