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AtriCure Reports Second Quarter 2009 Financial Results
Posted by: gurufocus (IP Logged)
Date: August 4, 2009 08:25AM

Press Release: AtriCure Reports Second Quarter 2009 Financial Results

WEST CHESTER, Ohio--(BUSINESS WIRE)--AtriCure, Inc. (Nasdaq: ATRC), a medical device company and a leader in cardiac surgical ablation systems, today announced second quarter 2009 revenues of $13.8 million and an operating loss improvement of 43.4 percent to a record $1.0 million. For the first half of 2009, adjusted EBITDA was a record $1.0 million, an improvement of $4.2 million over the first half of 2008 adjusted EBITDA loss of $3.2 million.

“We are encouraged by our second quarter results and confident that the decisive actions we took during the fourth quarter of 2008, which were aimed at aligning costs with revenues in order to accelerate profitability, are gaining momentum. Notwithstanding our significant strides toward profitability, our investments in innovation, FDA approvals and our long-term growth prospects have never been stronger,” said David J. Drachman, President and Chief Executive Officer. “We are increasingly confident in our ability to execute our strategic priorities and we believe strongly that successful execution will result in the restoration of our historical high-growth trends and increased shareholder value.”

Financial Results

Revenues for the second quarter of 2009 were $13.8 million, a 7.3 percent decrease over second quarter 2008 revenues of $14.9 million and a sequential increase of 0.8 percent as compared to first quarter 2009 revenues. The decrease in revenues was primarily due to a reduction in revenues from the sale of capital equipment. Revenues from domestic open-heart products were $7.3 million for the second quarter of 2009 as compared to $7.4 million for the second quarter of 2008 and revenues from domestic minimally invasive products declined from $5.1 million for the second quarter of 2008 to $4.0 million for the second quarter of 2009. International revenues grew 12.5 percent, or 21.8 percent on an exchange rate neutral basis, to a record $2.6 million for the second quarter of 2009.

Gross profit for the second quarter of 2009 was $10.7 million and gross margin was 77.4 percent, compared to gross profit of $11.4 million and gross margin of 76.5 percent for the second quarter of 2008. The increase in gross margin was primarily due to a reduced mix of revenues from the sale of capital equipment and a reduction in product cost, partially offset by an increased mix of international sales.

Operating expenses were $11.7 million or an 11.3 percent reduction for the second quarter of 2009, driven primarily by a reduction in headcount-related expenses, partially offset by an increase in share-based compensation expense and an increase in costs associated with clinical trials and product development activities. The operating loss for the second quarter of 2009 improved 43.4 percent to a record low of $1.0 million. The net loss per share was $0.10 as compared to $0.11 for the second quarter of 2008. The second quarter 2009 net loss per share includes a $0.02 loss per share due to the termination of a credit facility and borrowings and costs associated with a new credit facility.

Adjusted EBITDA was $0.4 million, an improvement of $1.0 million as compared to the second quarter of 2008. Cash, cash equivalents and short-term investments were $15.7 million at June 30, 2009 and cash generated from operations during the quarter was $1.2 million.

Earnings Call Information

Management will host a conference call at 10:00 a.m. Eastern Time on Tuesday, August 4, 2009 to discuss its second quarter 2009 financial results. A live web cast of the conference call will be available online from the investor relations page of AtriCure’s web site at www.atricure.com.

Pre-registration is available and recommended for this call at the following URL:

[www.theconferencingservice.com]

You may also access this call through an operator by calling 888-679-8034 for domestic callers and 617-213-4847 for international callers at least 15 minutes prior to the call start time using reservation code 72757548.

The webcast will be available on AtriCure’s web site and a telephonic replay of the call will also be available through September 4, 2009. The replay dial-in numbers are 888-286-8010 for domestic callers and 617-801-6888 for international callers, using reservation code 83888704.

About AtriCure, Inc.

AtriCure, Inc. is a medical device company and a leader in developing, manufacturing and selling innovative cardiac surgical ablation systems designed to create precise lesions, or scars, in cardiac, or heart, tissue. Medical journals have described the adoption by leading cardiothoracic surgeons of the AtriCure Isolator® bipolar ablation system as a treatment alternative during open-heart surgical procedures to create lesions in cardiac tissue to block the abnormal electrical impulses that cause atrial fibrillation, or AF, a rapid, irregular quivering of the upper chambers of the heart. Additionally, medical journals and leading cardiothoracic surgeons have described the AtriCure Isolator system as a promising treatment alternative for patients who may be candidates for sole-therapy minimally invasive procedures. AF affects more than 5.5 million people worldwide and predisposes them to a five-fold increased risk of stroke. The FDA has cleared the AtriCure Isolator system and AtriCure’s multifunctional pen and CoolrailTM linear ablation device, for the ablation, or destruction, of cardiac tissue during surgical procedures. Additionally, the FDA has cleared AtriCure’s multifunctional pen for temporary pacing, sensing, stimulating and recording during the evaluation of cardiac arrhythmias and AtriCure’s Cryo1 system for the cryosurgical treatment of cardiac arrhythmias. To date, the FDA has not cleared or approved AtriCure’s products for the treatment of AF.

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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
       
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
 
Revenues $ 13,777,950 $ 14,858,514 $ 27,451,853 $ 28,388,659
Cost of revenues   3,107,816     3,494,908     6,052,474     6,725,788  
Gross profit 10,670,134 11,363,606 21,399,379 21,662,871
 
Operating expenses:
Research and development expenses 3,138,339 2,593,694 6,055,172 5,026,847
Selling, general and administrative expenses 8,565,233 10,595,334 17,497,376 22,357,756
Goodwill impairment   -     -     6,812,389     -  
Total operating expenses   11,703,572     13,189,028     30,364,937     27,384,603  
 
Loss from operations (1,033,438 ) (1,825,422 ) (8,965,558 ) (5,721,732 )
 
Other (expense) income   (420,663 )   232,806     (484,705 )   523,685  
 
Loss before income tax benefit (1,454,101 ) (1,592,616 ) (9,450,263 ) (5,198,047 )
 
Income tax benefit   11,033     -     42,273     -  
 
Net loss $ (1,443,068 ) $ (1,592,616 ) $ (9,407,990 ) $ (5,198,047 )
 
Basic and diluted net loss per share $ (0.10 ) $ (0.11 ) $ (0.65 ) $ (0.37 )
 
Weighted average shares outstanding:
basic and diluted   14,456,542     14,184,973     14,377,019     14,167,468  
 
ATRICURE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
June 30, December 31,
2009 2008
Assets
 
Current assets:
Cash, cash equivalents and short-term investments $ 15,735,542 $ 11,448,451
Accounts receivable 7,357,227 6,511,594
Inventories 5,932,089 6,361,242
Other current assets   1,568,396     1,781,825  
Total current assets 30,593,254 26,103,112
 
Property and equipment, net 3,380,239 3,682,819
 
Intangible assets 428,403 569,153
 
Goodwill - 6,812,389
 
Restricted cash and cash equivalents - 6,000,000
 
Other assets   386,610     201,359  
Total assets $ 34,788,506   $ 43,368,832  
 
Liabilities and Stockholders\' Equity
 
Current liabilities:
Accounts payable and accrued liabilities $ 6,824,720 $ 8,072,596
Current maturities of debt and capital lease obligations   2,201,947     34,004  
Total current liabilities 9,026,667 8,106,600
 
Long-term debt and capital lease obligations 3,580,519 6,036,605
   
Other liabilities   66,057     106,470  
Total liabilities 12,673,243 14,249,675
 
Stockholders\' equity:
Common stock 14,723 14,275
Additional paid-in capital 108,874,126 106,636,653
Other comprehensive income (loss)   109,386     (56,789 )
Accumulated deficit   (86,882,972 )   (77,474,982 )
Total stockholders\' equity   22,115,263     29,119,157  
Total liabilities and stockholders\' equity $ 34,788,506   $ 43,368,832  


Stocks Discussed: ATRC,
 
ATRICURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
   
Six Months Ended June 30,
2009 2008
 
Cash flows from operating activities:
Net loss $ (9,407,990 ) $ (5,198,047 )
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 1,044,518 1,258,499
Amortization of intangible assets 140,750 140,750
Amortization of deferred financing costs and
discount on long-term debt 189,638 24,462
Loss on disposal of equipment 3,083 -
Goodwill impairment 6,812,389 -
Change in provision for allowance for doubtful accounts 35,933 12,397
Share-based compensation expense 1,971,013 1,142,123
Changes in assets and liabilities, excluding effects
of acquired business:
Accounts receivable (855,135 ) (2,192,408 )
Inventories 437,382 (556,362 )
Other current assets 83,162 92,879
Accounts payable and accrued liabilities (1,492,756 ) (1,234,568 )
Other non-current assets and liabilities   (163,289 )   150  
Net cash used in operating activities (1,201,302 ) (6,510,125 )
 
Cash flows from investing activities:
Purchases of property & equipment (757,958 ) (1,092,423 )
Purchases of available-for-sale securities (2,009,267 ) (1,903,974 )
Maturities of available-for-sale securities - 7,000,000
Change in restricted cash and cash equivalents   6,000,000     (417,292 )
Net cash provided by investing activities 3,232,775 3,586,311
 
Cash flows from financing activities:
Payments on debt and capital leases (6,377,799 ) (221,139 )
Proceeds from borrowings of debt 6,500,000 -
Payment of debt fees (123,233 )
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