Full Press Release Details
Senior Vice President and Chief Financial
Investor Relations Contact
Fourth Quarter and Full Year 2014 Financial Results
WEST CHESTER, Ohio February 23, 2015
AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in surgical treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, today announced fourth quarter and full year 2014 financial results.
Our fourth quarter and full year 2014 results reflect strong performance, with meaningful progress and momentum as we continue to expand treatment of
atrial fibrillation and improve patient lives, said Mike Carrel, President and Chief Executive Officer of AtriCure.
our foundation is strong, and we plan to continue to solidify the future of our market building strategy with thoughtful investments into our growth initiatives - clinical data and validation, education and training, and new products and
indications. This gives us great confidence for many exciting years ahead of us, with strong commercial execution and market expansion.
2014 Financial Results
Revenue for 2014 was
$107.5 million, an increase of $25.6 million or 31.2% (31.4% on a constant currency basis), compared to 2013 revenue. Domestic revenue increased 28.7% to $80.2 million, driven by strong sales of ablation-related open-heart products, ablation-related
minimally invasive products, and AtriClip products. International revenue was $27.3 million, an increase of $7.7 million or 39.2% (39.8% on a constant currency basis) when compared to $19.6 million for 2013. International revenue growth was driven
primarily by increases in product sales in Europe and Asia.
Gross profit for 2014 was $75.8 million compared to $59.6 million for 2013. Gross margin for 2014 was 70.5%
compared to 72.7% for 2013. The decrease in gross margin was primarily due to lower margins on products obtained through the December 2013 Estech acquisition, an increased mix of international sales, and heavier placement of loaned equipment.
Loss from operations for 2014 was $16.4 million as compared to $10.9 million for 2013. Adjusted EBITDA, a non-GAAP measure, was a loss of $12.0 million for
2014 as compared to a loss of $5.8 million for 2013. Net loss per share was $0.61 for 2014 and $0.56 for 2013.
Fourth Quarter 2014 Financial
Revenue for the fourth quarter of 2014 was $29.4 million, an increase of $7.5 million or 34.4% (36.5% on a constant currency basis)
compared to fourth quarter 2013 revenue. Domestic revenue increased 34.9% to $22.1 million, driven by strong sales of ablation-related open-heart products, ablation-related minimally invasive products, and AtriClip products. International revenue
was $7.3 million, an increase of $1.8 million or 33.1% (41.3% on a constant currency basis) when compared to $5.5 million for the fourth quarter of 2013. International revenue growth was driven primarily by an increase in product sales in Europe and
Gross profit for the fourth quarter of 2014 was $20.4 million compared to $15.7 million for the fourth quarter of 2013. Gross margin for the fourth
quarter of 2014 and 2013 was 69.4% and 71.6%, respectively. The decrease in gross margin was primarily due to lower margins on products obtained through the December 2013 Estech acquisition, an increased mix of international sales, and heavier
placement of loaned equipment.
Operating expenses for the fourth quarter of 2014 increased 22.9%, or $4.7 million, compared to the fourth quarter of
2013. The increase in operating expenses was driven primarily by an increase in selling, marketing, clinical, product development, and training expenses.
Loss from operations for the fourth quarter of 2014 was $4.8 million, compared to $4.8 million for the fourth quarter of 2013. Adjusted EBITDA, a non-GAAP
measure, was a loss of $1.6 million for the fourth quarter of 2014, compared to a $3.3 million loss for the fourth quarter of 2013. Net loss per share was $0.20 for the fourth quarter of 2014 and $0.24 for the fourth quarter of 2013.
Management projects that 2015
revenue will be in the range of $122.5 million to $124.5 million, which represents an increase of 14% to 16% over 2014 (16% to 18% on a constant currency basis).
Adjusted EBITDA, a non-GAAP measure, is projected to be a loss in the range of $7 million to $9 million for 2015 as we continue to make strategic investments
to drive our long-term growth plan.
AtriCure will host a conference call at 4:30 p.m. Eastern Time on Monday, February 23, 2015 to discuss its fourth quarter and full year 2014 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
(866) 318-8619 for domestic callers and (617) 399-5138 for international callers at least 15 minutes prior to the call start time using participant passcode 24418587.
The webcast will be available on AtriCure s website and a telephonic replay of the call will be available
through March 2, 2015. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The participant passcode is 54221769.
About AtriCure, Inc.
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 33.5 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, 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.
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)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Domestic Revenue: | ||||||||||||||||
| Open-heart ablation | $ | 12,164 | $ | 9,931 | $ | 44,662 | $ | 37,843 | ||||||||
| Minimally invasive ablation | 4,276 | 3,519 | 16,050 | 13,648 | ||||||||||||
| AtriClip | 4,819 | 2,936 | 16,675 | 10,820 | ||||||||||||
| Total ablation and AtriClip | 21,259 | 16,386 | 77,387 | 62,311 | ||||||||||||
| Valve tools | 838 | 2,816 | ||||||||||||||
| Total domestic | 22,097 | 16,386 | 80,203 | 62,311 | ||||||||||||
| International Revenue: | ||||||||||||||||
| Open-heart ablation | 4,270 | 3,529 | 16,445 | 13,064 | ||||||||||||
| Minimally invasive ablation | 2,108 | 1,599 | 7,881 | 5,354 | ||||||||||||
| AtriClip | 768 | 370 | 2,158 | 1,160 | ||||||||||||
| Total ablation and AtriClip | 7,146 | 5,498 | 26,484 | 19,578 | ||||||||||||
| Valve tools | 172 | 767 | ||||||||||||||
| Total international | 7,318 | 5,498 | 27,251 | 19,578 | ||||||||||||
| Total revenue | 29,415 | 21,884 | 107,454 | 81,889 | ||||||||||||
| Cost of revenue | 8,995 | 6,215 | 31,704 | 22,326 | ||||||||||||
| Gross profit | 20,420 | 15,669 | 75,750 | 59,563 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 4,997 | 3,648 | 18,600 | 13,440 | ||||||||||||
| Selling, general and administrative expenses | 20,202 | 16,859 | 73,510 | 57,014 | ||||||||||||
| Total operating expenses | 25,199 | 20,507 | 92,110 | 70,454 | ||||||||||||
| Loss from operations | (4,779 | ) | (4,838 | ) | (16,360 | ) | (10,891 | ) | ||||||||
| Other (expense) income, net | (568 | ) | (138 | ) | 182 | (553 | ) | |||||||||
| Loss before income tax expense | (5,347 | ) | (4,976 | ) | (16,178 | ) | (11,444 | ) | ||||||||
| Income tax benefit (expense) | 3 | (4 | ) | (33 | ) | (18 | ) | |||||||||
| Net loss | $ | (5,344 | ) | $ | (4,980 | ) | $ | (16,211 | ) | $ | (11,462 | ) | ||||
| Basic and diluted net loss per share | $ | (0.20 | ) | $ | (0.24 | ) | $ | (0.61 | ) | $ | (0.56 | ) | ||||
| Weighted average shares used in computing net loss per share: | ||||||||||||||||
| Basic and diluted | 26,935 | 20,785 | 26,374 | 20,431 |
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
| December 31, 2014 | December 31, 2013 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash, cash equivalents and short-term investments | $ | 59,649 | $ | 26,211 | ||||
| Accounts receivable, net | 17,558 | 13,652 | ||||||
| Inventories | 14,257 | 10,214 | ||||||
| Other current assets | 2,044 | 2,410 | ||||||
| Total current assets | 93,508 | 52,487 | ||||||
| Property and equipment, net | 11,552 | 5,643 | ||||||
| Long-term investments | 8,894 | 7,914 | ||||||
| Goodwill and intangible assets, net | 44,264 | 45,685 | ||||||
| Other noncurrent assets | 186 | 218 | ||||||
| Total assets | $ | 158,404 | $ | 111,947 | ||||
| Liabilities and Stockholders Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 21,662 | $ | 24,675 | ||||
| Other current liabilities and maturities of debt and capital leases | 3,981 | 2,038 | ||||||
| Total current liabilities | 25,643 | 26,713 | ||||||
| Long-term debt and capital leases | 74 | 4,412 | ||||||
| Other noncurrent liabilities | 149 | 8,218 | ||||||
| Total liabilities | 25,866 | 39,343 | ||||||
| Stockholders equity: | ||||||||
| Common stock | 28 | 23 | ||||||
| Additional paid-in capital | 271,282 | 194,933 | ||||||
| Accumulated other comprehensive loss | (348 | ) | (139 | ) | ||||
| Accumulated deficit | (138,424 | ) | (122,213 | ) | ||||
| Total stockholders equity | 132,538 | 72,604 | ||||||
| Total liabilities and stockholders equity | $ | 158,404 | $ | 111,947 |
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Twelve Months Ended December 31, | ||||||||
| 2014 | 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (16,211 | ) | $ | (11,462 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share-based compensation expense | 7,571 | 3,080 | ||||||
| Depreciation and amortization of intangible assets | 4,774 | 2,020 | ||||||
| Amortization of deferred financing costs | 113 | 115 | ||||||
| Loss (gain) on disposal of equipment | 118 | (6 | ) | |||||
| Loss from foreign exchange on intercompany transactions | 544 | |||||||
| Amortization/accretion on investments | 500 | 49 | ||||||
| Change in allowance for doubtful accounts | (34 | ) | (14 | ) | ||||
| Change in fair value of contingent consideration | (8,032 | ) | ||||||
| Other | 95 | |||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (4,168 | ) | (1,248 | ) | ||||
| Inventories | (4,343 | ) | (2,288 | ) | ||||
| Other current assets | 307 | (1,257 | ) | |||||
| Accounts payable and accrued liabilities | (2,791 | ) | 5,559 | |||||
| Other non-current assets and liabilities | (43 | ) | 230 | |||||
| Net cash used in operating activities | (21,600 | ) | (5,222 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of available-for-sale securities | (41,107 | ) | (21,243 | ) | ||||
| Sales and maturities of available-for-sale securities | 19,614 | 6,200 | ||||||
| Purchases of property and equipment | (9,207 | ) | (2,864 | ) | ||||
| Net proceeds from the sale of equipment | 77 | 48 | ||||||
| Cash acquired through business combination | 3,708 | |||||||
| Net cash used in investing activities | (30,623 | ) | (14,151 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from sale of stock | 65,830 | 26,872 | ||||||
| Payments on debt and capital leases | (6,382 | ) | (2,055 | ) | ||||
| Proceeds from construction financing obligation | 3,699 | |||||||
| Payment of debt fees and premium on retirement of debt | (181 | ) | (99 | ) | ||||
| Proceeds from stock option exercises | 1,916 | 1,718 | ||||||
| Shares repurchased for payment of taxes on stock awards | (331 | ) | (398 | ) | ||||
| Proceeds from issuance of common stock under employee stock purchase plan | 1,320 | 790 | ||||||
| Net cash provided by financing activities | 65,871 | 26,828 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (156 | ) | (316 | ) | ||||
| Net increase in cash and cash equivalents | 13,492 | 7,139 | ||||||
| Cash and cash equivalents - beginning of period | 14,892 | 7,753 | ||||||
| Cash and cash equivalents - end of period | $ | 28,384 | $ | 14,892 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | 115 | $ | 473 | ||||
| Cash paid for income taxes | 146 | 30 | ||||||
| Noncash investing and financing activities: | ||||||||
| Accrued purchases of property and equipment | 547 | 282 | ||||||
| Assets acquired through capital lease | 47 | 68 | ||||||
| Capital lease asset early termination | 38 | 24 | ||||||
| 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
Reconciliation of Non-GAAP Adjusted Loss (Adjusted EBITDA)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net loss, as reported | $ | (5,344 | ) | $ | (4,980 | ) | $ | (16,211 | ) | $ | (11,462 | ) | ||||
| Income tax (income) expense | (3 | ) | 4 | 33 | 18 | |||||||||||
| Other expense (benefit), net (a) | 568 | 138 | (182 | ) | 553 | |||||||||||
| Depreciation and amortization expense | 1,303 | 555 | 4,774 | 2,020 | ||||||||||||
| Share-based compensation expense | 1,867 | 1,008 | 7,571 | 3,080 | ||||||||||||
| Change in fair value of contingent consideration | (8,032 | ) | ||||||||||||||
| Non-GAAP adjusted income (loss) (adjusted EBITDA) | $ | (1,609 | ) | $ | (3,275 | ) | $ | (12,047 | ) | $ | (5,791 | ) | ||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| (a) Other includes: | ||||||||||||||||
| Net interest income (expense) | $ | 17 | $ | (130 | ) | $ | (209 | ) | $ | (550 | ) | |||||
| Grant income | 731 | |||||||||||||||
| (Loss) gain due to exchange rate fluctuation | (493 | ) | 196 | (523 | ) | 269 | ||||||||||
| Non-employee stock option (expense) income | (92 | ) | (204 | ) | 183 | (272 | ) | |||||||||
| Other (expense) income, net | $ | (568 | ) | $ | (138 | ) | $ | 182 | $ | (553 | ) |