AtriCure Reports Fourth Quarter 2019 and Full Year 2019 Financial Results

  • 2019 Worldwide revenue of $230.8 million – an increase of 14.5% year over year
  • 2019 U.S. revenue of $185.8 million – an increase of 14.6% year over year
  • 2019 International revenue of $45.0 million – an increase of 13.9% year over year

AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, today announced fourth quarter 2019 and full year 2019 financial results.

"We achieved several critical accomplishments throughout 2019, highlighted by the submission of our final module for the CONVERGE IDE clinical trial to FDA coupled with enrollment completion in our aMAZE IDE clinical trial in the fourth quarter of 2019," said Michael Carrel, President and Chief Executive Officer of AtriCure. "Looking ahead to the next decade, we are confident that we have built a strong foundation for success."

Fourth Quarter 2019 Financial Results

Revenue for the fourth quarter of 2019 was $61.3 million, an increase of $8.4 million or 15.9% (16.4% on a constant currency basis), compared to fourth quarter 2018 revenue. U.S. revenue was $49.5 million, an increase of $6.4 million or 14.9%, compared to fourth quarter 2018 revenue. International revenue increased 20.5% (an increase of 22.8% on a constant currency basis) to $11.8 million. Both U.S. and international revenue growth were driven by increased sales across appendage management and open ablation product lines.

Gross profit for the fourth quarter of 2019 was $44.8 million compared to $38.6 million for the fourth quarter of 2018. Gross margin was 73.0% for both the fourth quarter of 2019 and 2018.

Operating expenses for the fourth quarter of 2019 increased 45.9%, or $18.9 million, compared to the fourth quarter of 2018. The increase in operating expense was driven by a $6.1 million year over year change in non-cash charges related to the contingent consideration liability and approximately $5.8 million related to the absorption of SentreHEART headcount, aMAZE clinical trial expenses, and acquisition related costs. Other expense drivers include increased personnel costs resulting from additional headcount and variable compensation and research and development project spend.

Loss from operations for the fourth quarter of 2019 was $15.3 million, compared to $2.6 million for the fourth quarter of 2018. Net loss per share was $0.42 for the fourth quarter of 2019 compared to a net loss per share of $0.09 for the fourth quarter of 2018.

Adjusted EBITDA was a loss of $5.4 million for the fourth quarter of 2019 compared to positive $0.3 million for the fourth quarter of 2018. Adjusted loss per share for the fourth quarter of 2019 was $0.37 compared to $0.21 for the fourth quarter of 2018. Adjusted EBITDA and adjusted loss per share are non-GAAP measures.

2019 Financial Results

Revenue for 2019 was $230.8 million, an increase of $29.2 million or 14.5% (15.2% on a constant currency basis), compared to 2018 revenue. US revenue increased 14.6% to $185.8 million, driven by growth across our open ablation products and appendage management products. International revenue was $45.0 million, an increase of $5.5 million or 13.9% (17.6% on a constant currency basis). International revenue growth was driven by primarily by increases in product sales in China, the United Kingdom, Germany, Australia and Japan.

Gross profit for 2019 was $170.3 million compared to $147.1 million for 2018. Gross margin for 2019 increased to 73.8% compared to 73.0% for 2018.

Loss from operations for 2019 was $33.1 million, compared to $17.1 million for 2018. Adjusted EBITDA was a loss of $6.7 million for 2019, compared to $2.7 million for 2018. Net loss per share was $0.94 for 2019 compared to $0.62 for 2018. The adjusted loss per share for 2019 was $1.07 compared to an adjusted loss per share of $0.94 for 2018.

2020 Financial Guidance

Revenue is projected to be approximately $254 million to $261 million, reflecting growth of approximately 10% to 13% over full year 2019. Adjusted EBITDA is projected to be a loss of approximately $10 million for 2020. Adjusted net loss per share is projected to be in the range of $1.14 to $1.24.

Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Tuesday, February 18, 2020 to discuss its fourth quarter 2019 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 1287627. 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. 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, which are determined by the average daily Euro to Dollar exchange rate, 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 is calculated as Net loss before other income/expense (including interest), income tax expense, depreciation and amortization expense, share-based compensation expense, acquisition costs, and change in fair value of contingent consideration liabilities. Due to the nonrecurring nature of acquisition costs, the Company has modified the calculation of adjusted EBITDA to exclude acquisition costs. Acquisition costs are expenses incurred to effect a business combination and include advisory, legal, accounting, valuation and other professional fees; finder fees; and costs of registering and issuing debt and equity securities. Prior to the SentreHEART transaction, the Company’s most recent acquisition occurred in October 2015 and acquisition costs related to the transactions were included in the calculation of adjusted EBITDA at that time. The Company believes it is appropriate to modify the calculation of adjusted EBITDA to exclude acquisition costs because the Company has concluded that acquisition costs are generally nonrecurring and are not reflective of the operational results of the Company’s core business, and the Company believes this approach is more comparable to peer company reporting. Management believes in order to properly understand the 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 results of operations and management believes that the excluded items are typically not reflective of our ongoing core business operations and financial condition. Further, management uses adjusted EBITDA for both strategic and annual operating planning, and previously used adjusted EBITDA as a performance metric in the annual incentive plan. A reconciliation of adjusted EBITDA reported in this release to the most comparable GAAP measure for the respective periods can be found in the table captioned "Reconciliation of Non-GAAP Adjusted Loss (Adjusted EBITDA)" later in this release.

Adjusted loss per share is a non-GAAP measure which calculates the net loss per share before non-cash adjustments to expenses related to the adjustment in value of contingent consideration liabilities. Management believes this metric provides a better measure of comparability of results between periods, as such adjustments can be significant and vary in value and are not reflective of our core business. A reconciliation of adjusted loss per share reported in this release to the most comparable GAAP measure for the respective periods can be found in the table captioned "Reconciliation of Non-GAAP Adjusted Loss Per Share" 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,

 

 

2019

 

2018

 

2019

 

2018

United States Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Open ablation

 

$

20,894

 

 

$

18,650

 

 

$

80,205

 

 

$

72,250

 

Minimally invasive ablation

 

 

8,982

 

 

 

9,449

 

 

 

34,842

 

 

 

35,053

 

Appendage management

 

 

19,091

 

 

 

14,506

 

 

 

68,166

 

 

 

52,891

 

Total ablation and appendage management

 

 

48,967

 

 

 

42,605

 

 

 

183,213

 

 

 

160,194

 

Valve tools

 

 

570

 

 

 

507

 

 

 

2,616

 

 

 

1,952

 

Total United States

 

 

49,537

 

 

 

43,112

 

 

 

185,829

 

 

 

162,146

 

International Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Open ablation

 

 

6,003

 

 

 

4,936

 

 

 

24,945

 

 

 

21,118

 

Minimally invasive ablation

 

 

2,227

 

 

 

2,369

 

 

 

8,349

 

 

 

9,176

 

Appendage management

 

 

3,513

 

 

 

2,448

 

 

 

11,476

 

 

 

8,988

 

Total ablation and appendage management

 

 

11,743

 

 

 

9,753

 

 

 

44,770

 

 

 

39,282

 

Valve tools

 

 

41

 

 

 

28

 

 

 

208

 

 

 

202

 

Total international

 

 

11,784

 

 

 

9,781

 

 

 

44,978

 

 

 

39,484

 

Total revenue

 

 

61,321

 

 

 

52,893

 

 

 

230,807

 

 

 

201,630

 

Cost of revenue

 

 

16,547

 

 

 

14,303

 

 

 

60,472

 

 

 

54,510

 

Gross profit

 

 

44,774

 

 

 

38,590

 

 

 

170,335

 

 

 

147,120

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

13,096

 

 

 

8,455

 

 

 

41,230

 

 

 

34,723

 

Selling, general and administrative expenses

 

 

47,004

 

 

 

32,742

 

 

 

162,227

 

 

 

129,524

 

Total operating expenses

 

 

60,100

 

 

 

41,197

 

 

 

203,457

 

 

 

164,247

 

Loss from operations

 

 

(15,326

)

 

 

(2,607

)

 

 

(33,122

)

 

 

(17,127

)

Other expense, net

 

 

(722

)

 

 

(744

)

 

 

(1,873

)

 

 

(3,784

)

Loss before income tax expense

 

 

(16,048

)

 

 

(3,351

)

 

 

(34,995

)

 

 

(20,911

)

Income tax expense

 

 

48

 

 

 

79

 

 

 

199

 

 

 

226

 

Net loss

 

$

(16,096

)

 

$

(3,430

)

 

$

(35,194

)

 

$

(21,137

)

Basic and diluted net loss per share

 

$

(0.42

)

 

$

(0.09

)

 

$

(0.94

)

 

$

(0.62

)

Weighted average shares used in computing net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

38,190

 

 

 

36,480

 

 

 

37,589

 

 

 

34,087

 

 

 

 

 

 

 

 

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2019

 

2018

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash, cash equivalents, and short-term investments

 

$

81,801

 

 

$

124,402

 

Accounts receivable, net

 

 

28,046

 

 

 

25,195

 

Inventories

 

 

29,414

 

 

 

22,484

 

Prepaid and other current assets

 

 

3,899

 

 

 

2,592

 

Total current assets

 

 

143,160

 

 

 

174,673

 

Property and equipment, net

 

 

32,646

 

 

 

27,080

 

Operating lease right-of-use assets

 

 

4,032

 

 

 

 

Long-term investments

 

 

12,675

 

 

 

 

Goodwill and intangible assets, net

 

 

364,662

 

 

 

154,511

 

Other noncurrent assets

 

 

705

 

 

 

495

 

Total assets

 

$

557,880

 

 

$

356,759

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

47,698

 

 

$

35,499

 

Other current liabilities and current maturities of debt and leases

 

 

2,218

 

 

 

4,717

 

Total current liabilities

 

 

49,916

 

 

 

40,216

 

Finance lease liabilities

 

 

11,774

 

 

 

12,172

 

Long-term debt

 

 

59,634

 

 

 

35,571

 

Operating lease liabilities

 

 

2,796

 

 

 

 

Contingent consideration and other noncurrent liabilities

 

 

186,417

 

 

 

19,419

 

Total liabilities

 

 

310,537

 

 

 

107,378

 

Stockholders' equity:

 

 

 

 

 

 

Common stock

 

 

40

 

 

 

39

 

Additional paid-in capital

 

 

529,658

 

 

 

496,544

 

Accumulated other comprehensive loss

 

 

(158

)

 

 

(199

)

Accumulated deficit

 

 

(282,197

)

 

 

(247,003

)

Total stockholders' equity

 

 

247,343

 

 

 

249,381

 

Total liabilities and stockholders' equity

 

$

557,880

 

 

$

356,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

 

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(35,194

)

 

$

(21,137

)

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

 

 

 

 

 

 

Share-based compensation expense

 

 

17,977

 

 

 

16,495

 

Depreciation and amortization of intangible assets

 

 

9,366

 

 

 

8,754

 

Amortization of deferred financing costs

 

 

375

 

 

 

515

 

Non-cash lease expense

 

 

751

 

 

 

 

Loss on disposal of property and equipment and impairment of assets

 

 

604

 

 

 

323

 

Realized loss from foreign exchange on intercompany transactions

 

 

181

 

 

 

165

 

Accretion of investments

 

 

(922

)

 

 

(362

)

Provision for doubtful accounts

 

 

582

 

 

 

598

 

Change in fair value of contingent consideration

 

 

(4,916

)

 

 

(10,825

)

Payment of contingent consideration in excess of purchase accounting amount

 

 

 

 

 

(96

)

Changes in operating assets and liabilities, net of amounts acquired:

 

 

 

 

 

 

Accounts receivable

 

 

(3,201

)

 

 

(2,837

)

Inventories

 

 

(5,151

)

 

 

(146

)

Other current assets

 

 

(1,199

)

 

 

(367

)

Accounts payable and accrued liabilities

 

 

5,898

 

 

 

4,618

 

Other noncurrent assets and liabilities

 

 

(962

)

 

 

131

 

Net cash used in operating activities

 

 

(15,811

)

 

 

(4,171

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of available-for-sale securities

 

 

(73,249

)

 

 

(106,588

)

Sales and maturities of available-for-sale securities

 

 

100,485

 

 

 

27,389

 

Purchases of property and equipment

 

 

(12,182

)

 

 

(6,211

)

Proceeds from sale of property and equipment

 

 

39

 

 

 

6

 

Cash paid for SentreHEART business combination

 

 

(17,240

)

 

 

 

Net cash used in investing activities

 

 

(2,147

)

 

 

(85,404

)

Cash flows from financing activities:

 

 

 

 

 

 

Net proceeds from stock offering

 

 

 

 

 

82,873

 

Proceeds from debt borrowings

 

 

20,000

 

 

 

17,381

 

Payments on debt and finance leases

 

 

(629

)

 

 

(1,755

)

Payment of debt fees

 

 

(329

)

 

 

(1,136

)

Proceeds from exercise of stock options and employee stock purchase plan

 

 

3,864

 

 

 

8,395

 

Shares repurchased for payment of taxes on stock awards

 

 

(9,033

)

 

 

(4,457

)

Payments of contingent consideration liability previously established in purchase accounting

 

 

 

 

 

(1,125

)

Proceeds from economic incentive loan

 

 

500

 

 

 

 

Net cash provided by financing activities

 

 

14,373

 

 

 

100,176

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(163

)

 

 

(179

)

Net (decrease) increase in cash and cash equivalents

 

 

(3,748

)

 

 

10,422

 

Cash and cash equivalents - beginning of period

 

 

32,231

 

 

 

21,809

 

Cash and cash equivalents - end of period

 

$

28,483

 

 

$

32,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Adjusted Income

(Loss) (Adjusted EBITDA)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2019

 

2018

 

2019

 

2018

 

Net loss, as reported

 

$

(16,096

)

 

$

(3,430

)

 

$

(35,194

)

 

$

(21,137

)

 

Income tax expense (benefit)

 

 

48

 

 

 

79

 

 

 

199

 

 

 

226

 

 

Other expense, net

 

 

722

 

 

 

744

 

 

 

1,873

 

 

 

3,784

 

 

Depreciation and amortization expense

 

 

2,383

 

 

 

2,223

 

 

 

9,366

 

 

 

8,754

 

 

Share-based compensation expense

 

 

5,161

 

 

 

4,829

 

 

 

17,977

 

 

 

16,495

 

 

Contingent consideration adjustment

 

 

2,018

 

 

 

(4,129

)

 

 

(4,916

)

 

 

(10,825

)

 

Acquisition costs

 

 

333

 

 

 

 

 

 

3,978

 

 

 

 

 

Non-GAAP adjusted (loss) income (adjusted EBITDA)

 

$

(5,431

)

 

$

316

 

 

$

(6,717

)

 

$

(2,703

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Adjusted Loss Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2019

 

2018

 

2019

 

2018

 

Net loss, as reported

 

$

(16,096

)

 

$

(3,430

)

 

$

(35,194

)

 

$

(21,137

)

 

Contingent consideration adjustment

 

 

2,018

 

 

 

(4,129

)

 

 

(4,916

)

 

 

(10,825

)

 

Net loss excluding contingent consideration adjustment

 

$

(14,078

)

 

$

(7,559

)

 

$

(40,110

)

 

$

(31,962

)

 

Basic and diluted adjusted net loss per share

 

$

(0.37

)

 

$

(0.21

)

 

$

(1.07

)

 

$

(0.94

)

 

Weighted average shares used in computing adjusted net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

38,190

 

 

 

36,480

 

 

 

37,589

 

 

 

34,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200218005881/en/

Contacts

Andy Wade
AtriCure, Inc.
Senior Vice President and Chief Financial Officer
(513) 755-4564
awade@atricure.com

Lynn Pieper Lewis
Gilmartin Group
Investor Relations
(415) 937-5402
lynn@gilmartinir.com