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AtriCure Reports Third Quarter 2020 Financial Results

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  • Worldwide revenue of $54.8 million – a decrease of 3.3% year over year

  • U.S. revenue of $44.7 million – a decrease of 3.1% year over year

  • International revenue of $10.1 million – a decrease of 4.1% year over year

AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, today announced third quarter 2020 financial results.

"We are pleased with our third quarter performance and the improving trajectory of our business, which reflect the commitment of our team and underlying demand in our core markets," said Michael Carrel, President and Chief Executive Officer of AtriCure. "We are continuing to make significant progress on our strategic initiatives and are on the forefront of meaningfully expanding our addressable market opportunity."

Third Quarter 2020 Financial Results

Revenue for the third quarter of 2020 was $54.8 million, a decrease of $1.9 million or 3.3% (a decrease of 3.9% on a constant currency basis), compared to third quarter 2019 revenue, due to the global decline in surgical procedures as a result of the COVID-19 pandemic. U.S. revenue decreased 3.1% to $44.7 million, and international revenue decreased 4.1% to $10.1 million, (a decrease of 7.2% on a constant currency basis), compared to third quarter 2019 revenue.

Gross profit for the third quarter of 2020 was $40.3 million compared to $41.8 million for the third quarter of 2019. Gross margin for the third quarter of 2020 remained relatively consistent at 73.7% compared to 73.8% in the third quarter of 2019, reflecting normal manufacturing operations during both periods.

Loss from operations for the third quarter of 2020 was $4.0 million, compared to $8.6 million for the third quarter of 2019. Net loss per share was $0.11 for the third quarter of 2020 compared to $0.25 for the third quarter of 2019. Adjusted EBITDA was a positive $4.2 million for the third quarter of 2020 compared to a loss of $2.2 million for the third quarter of 2019. Adjusted loss per share for the third quarter of 2020 was $0.11 compared to an adjusted loss per share of $0.33 for the third quarter of 2019.

Constant currency revenue, adjusted EBITDA and adjusted loss per share are non-GAAP measures. We discuss these non-GAAP measures and provide reconciliations to GAAP measures later in this release.

2020 Financial Guidance

Management expects revenue to be $56 million to $60 million for the fourth quarter of 2020 and $205 million to $209 million for the full year 2020. Full year adjusted EBITDA loss is expected to be approximately $10 million.

Incrementally higher or lower impact from the on-going global pandemic could cause forecasts for fourth quarter and full year 2020 to differ materially than these projections.

Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Thursday, November 5, 2020 to discuss its third quarter 2020 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 8584906. 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. 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 provides 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 investors.

Adjusted EBITDA is calculated as Net loss before other income/expense (including interest), income tax expense (benefit), depreciation and amortization expense, share-based compensation expense, acquisition costs, and change in fair value of contingent consideration liabilities. 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 appears in the table captioned "Reconciliation of Non-GAAP Adjusted Income (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 appears 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 in the same manner as those used and calculated 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. We urge investors to review the reconciliation of these non-GAAP financial measures to the comparable GAAP financials measures included in this press release, and not to rely on any single financial measure to evaluate our business.

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

(Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2020

2019

2020

2019

United States Revenue:

Open ablation

$

19,911

$

19,754

$

54,679

$

59,311

Minimally invasive ablation

6,979

9,006

18,295

25,860

Appendage management

17,430

16,907

47,870

49,075

Total ablation and appendage management

44,320

45,667

120,844

134,246

Valve tools

381

456

994

2,046

Total United States

44,701

46,123

121,838

136,292

International Revenue:

Open ablation

4,907

5,850

13,766

18,942

Minimally invasive ablation

1,692

2,058

4,346

6,122

Appendage management

3,445

2,532

8,778

7,963

Total ablation and appendage management

10,044

10,440

26,890

33,027

Valve tools

12

51

78

167

Total international

10,056

10,491

26,968

33,194

Total revenue

54,757

56,614

148,806

169,486

Cost of revenue

14,423

14,817

41,934

43,925

Gross profit

40,334

41,797

106,872

125,561

Operating expenses:

Research and development expenses

10,576

10,154

32,199

28,134

Selling, general and administrative expenses

33,749

40,280

101,403

115,223

Total operating expenses

44,325

50,434

133,602

143,357

Loss from operations

(3,991

)

(8,637

)

(26,730

)

(17,796

)

Other expense, net

(962

)

(650

)

(2,847

)

(1,151

)

Loss before income tax expense

(4,953

)

(9,287

)

(29,577

)

(18,947

)

Income tax expense (benefit)

(4

)

75

16

151

Net loss

$

(4,949

)

$

(9,362

)

$

(29,593

)

$

(19,098

)

Basic and diluted net loss per share

$

(0.11

)

$

(0.25

)

$

(0.71

)

$

(0.51

)

Weighted average shares used in computing net loss per share:

Basic and diluted

44,012

37,842

41,442

37,387

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)

September 30,

December 31,

2020

2019

Assets

Current assets:

Cash, cash equivalents, and short-term investments

$

233,069

$

81,801

Accounts receivable, net

25,448

28,046

Inventories

34,326

29,414

Prepaid and other current assets

3,369

3,899

Total current assets

296,212

143,160

Property and equipment, net

29,089

32,646

Operating lease right-of-use assets

2,363

4,032

Long-term investments

16,516

12,675

Goodwill and intangible assets, net

363,218

364,662

Other noncurrent assets

399

705

Total assets

$

707,797

$

557,880

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities

$

32,684

$

47,698

Other current liabilities and current maturities of debt and leases

12,070

2,218

Total current liabilities

44,754

49,916

Long-term debt

49,985

59,634

Finance lease liabilities

11,172

11,774

Operating lease liabilities

1,324

2,796

Contingent consideration and other noncurrent liabilities

183,030

186,417

Total liabilities

290,265

310,537

Stockholders' equity:

Common stock

45

40

Additional paid-in capital

729,220

529,658

Accumulated other comprehensive income (loss)

57

(158

)

Accumulated deficit

(311,790

)

(282,197

)

Total stockholders' equity

417,532

247,343

Total liabilities and stockholders' equity

$

707,797

$

557,880

ATRICURE, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS

(In Thousands)

(Unaudited)

Reconciliation of Non-GAAP Adjusted Income (Loss) (Adjusted EBITDA)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Net loss, as reported

$

(4,949

)

$

(9,362

)

$

(29,593

)

$

(19,098

)

Income tax expense (benefit)

(4

)

75

16

151

Other expense, net

962

650

2,847

1,151

Depreciation and amortization expense

2,479

2,393

7,381

6,983

Share-based compensation expense

5,549

4,287

16,126

12,816

Contingent consideration adjustment

192

(3,062

)

(4,854

)

(6,934

)

Acquisition costs

2,819

138

3,645

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

$

4,229

$

(2,200

)

$

(7,939

)

$

(1,286

)

Reconciliation of Non-GAAP Adjusted Loss Per Share

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Net loss, as reported

$

(4,949

)

$

(9,362

)

$

(29,593

)

$

(19,098

)

Contingent consideration adjustment

192

(3,062

)

(4,854

)

(6,934

)

Net loss excluding contingent consideration adjustment

$

(4,757

)

$

(12,424

)

$

(34,447

)

$

(26,032

)

Basic and diluted adjusted net loss per share

$

(0.11

)

$

(0.33

)

$

(0.83

)

$

(0.70

)

Weighted average shares used in computing adjusted net loss per share

Basic and diluted

44,012

37,842

41,442

37,387

View source version on businesswire.com: https://www.businesswire.com/news/home/20201105006027/en/

Contacts

Angie Wirick
AtriCure, Inc.
Chief Financial Officer
(513) 755-5334
awirick@atricure.com

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