WEST CHESTER, Ohio, Feb. 16 /PRNewswire-FirstCall/ -- AtriCure, Inc. , a medical device company focused on developing, manufacturing and selling innovative surgical devices, announced today financial results for the fourth quarter and full year ended December 31, 2005.
Fourth quarter 2005 consolidated revenue was $8.6 million, a 49.4% increase over $5.7 million for the fourth quarter of 2004 and a 19.4% sequential increase over $7.2 million for the third quarter of 2005. Full year 2005 consolidated revenue was $31.0 million, a 61.6% increase over $19.2 million for the full year 2004, including $6.4 million in worldwide MIS product revenue. Fourth quarter 2005 revenue from domestic open-heart products was $5.2 million, revenue from domestic minimally invasive sole-therapy products was $2.1 million and domestic revenue from the bipolar pen and other revenue was $0.7 million. International revenue for the fourth quarter of 2005 was $0.6 million.
Gross profit for the fourth quarter 2005 was $6.4 million with a gross margin of 75.0%, including a $266,000 write-off related to production equipment for discontinued products. Gross profit for the same period in the prior year was $4.2 million with a gross margin of 72.7%. For the full year 2005, gross profit was $22.9 million with a gross margin of 74.0%, as compared to gross profit of $14.0 million with a gross margin of 72.8% for the full year 2004. The year-over-year and quarter-over-quarter increases to gross margin are primarily the result of new product launches, such as the Isolator(TM) bipolar pen and Isolator(TM) Long products, and the third quarter acquisition of Enable Medical.
Research and development expenses were $2.8 million for the fourth quarter 2005, compared with $1.5 million for the fourth quarter 2004 and $2.6 million for the third quarter 2005. Research and development expenses for the full year 2005 were $9.1 million, compared to $4.4 million for the full year 2004. The year-over-year and quarter-over-quarter increases were attributable primarily to the recruitment of additional full-time engineers and the expansion of product development initiatives and clinical trials.
Selling, general and administrative expenses were $7.9 million for the fourth quarter 2005, compared with $5.2 million for the fourth quarter of 2004 and $6.3 million for the third quarter of 2005. Selling, general and administrative expenses for the full year were $24.6 million, compared to $15.2 million for the full year 2004. The year-over-year and quarter-over- quarter increases were attributable primarily to the expansion of the sales and marketing organization, the establishment of a European subsidiary and an increase in expenses associated with being a public company.
The Company reported a fourth quarter net loss of $4.0 million, or $0.33 per share.
Cash, cash equivalents and short-term investments at December 31, 2005 were $33.8 million.
David Drachman, President and Chief Executive Officer, said, “We are extremely pleased with our fourth quarter and full year results. Our revenue growth of 49.4% for the fourth quarter and 61.6% for the full year reflects our leadership position in the surgical treatment of atrial fibrillation based on the adoption of our products by leading cardiothoracic surgeons. During the year, we saw substantial penetration of our products in the open-heart market and made considerable strides towards establishing our minimally invasive sole-therapy platform. We believe our progress in 2005 and ongoing clinical investigation is positioning our minimally invasive platform to become a standard treatment alternative for those patients who suffer from atrial fibrillation. We expect our RESTORE-II clinical trial will provide evidence to stimulate the broad adoption of our MIS platform.”
Financial Guidance
The Company believes it is currently experiencing a negative impact upon its business from newspaper articles published in December relating to two pioneering institutions that have been proponents and investigators of the Company’s products. In the wake of these articles, the Company understands that certain external educational, training, and clinical trial activities involving its products have diminished. While AtriCure continues to evaluate and monitor the effects of these developments on its business, the Company currently estimates revenue for the first quarter of 2006 will range from $8.0 million to $8.6 million, and expects to provide guidance for the full year of 2006 by the Company’s first quarter 2006 earnings conference call.
Conference Call
AtriCure will host a Web cast and conference call at 9:00 am ET on February 17, 2006 to discuss fourth quarter 2005 results. A live Web cast of the conference call will be available online from the investor relations page of AtriCure’s corporate Web site at http://www.atricure.com. The dial-in numbers are (866) 356-3093 for domestic callers, and (617) 597-5381 for international callers. The reservation number for both is 94539581. A recording of the conference call will remain available on AtriCure’s Web site through May 18, 2006. A telephonic replay of the call will be available until March 2, 2006. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 59820347.
About AtriCure, Inc.
AtriCure, Inc. is a medical device company focused on developing, manufacturing and selling innovative surgical devices to create precise lesions, or scars, in soft tissues. Medical journals have described the adoption by leading cardiothoracic surgeons of the AtriCure, Inc. bipolar ablation system as a standard treatment alternative during open-heart surgical procedures to safely, rapidly and reliably create lesions in cardiac, or heart, tissue to block the abnormal electrical impulses that cause atrial fibrillation, a rapid, irregular quivering of the upper chambers of the heart.
The Isolator(TM) bipolar ablation system is composed of a radiofrequency ASU generator and a sterile, single use device intended to ablate soft tissue during Thoracic, General, ENT, Gynecological and Urological surgical procedures. The Isolator(TM) bipolar pen is a sterile, single use device intended to ablate cardiac tissue during cardiac surgery using radiofrequency (RF) energy. Use of the Isolator(TM) bipolar pen and Isolator(TM) bipolar ablation system for the surgical treatment of atrial fibrillation is investigational and has not been approved by the U.S. Food and Drug Administration.
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, 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, 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.
ATRICURE, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 Revenues $8,559,060 $5,730,262 $30,956,987 $19,157,032 Cost of revenues (a) 2,143,581 1,564,435 8,056,680 5,201,562 Gross profit 6,415,479 4,165,827 22,900,307 13,955,470 Operating expenses: Research and development expenses (a) 2,788,229 1,503,636 9,108,600 4,422,014 Selling, general and administrative expenses 7,923,639 5,197,677 24,594,489 15,169,157 Total operating expenses 10,711,868 6,701,313 33,703,089 19,591,171 Loss from operations (4,296,389) (2,535,486) (10,802,782) (5,635,701) Preferred stock interest expense -- (976,293) (2,332,254) (3,905,169) Other interest income (expense), net 291,584 25,901 414,136 105,926 Other income -- -- 84,868 -- Loss before income taxes (4,004,805) (3,485,878) (12,636,032) (9,434,944) Income tax expense (4,707) 48 (46,932) (16,924) Net loss available to common shareholders $(4,009,512) $(3,485,830) $(12,682,964) $(9,451,868) Basic and diluted loss per share $(0.33) $(1.86) $(2.10) $(5.17) Weighted average shares outstanding: Basic and diluted 12,068,358 1,878,923 6,025,300 1,828,452 (a) Includes the following expenses resulting from transactions with Enable Medical Corporation prior to the acquisition as of August 10, 2005: Cost of revenues $-- $1,327,267 $4,259,269 $4,941,341 Research and development expenses $-- $391,641 $1,201,583 $1,228,659 ATRICURE, INC. CONDENSED BALANCE SHEETS (Unaudited) December 31, December 31, 2005 2004 Assets Current assets: Cash and cash equivalents $27,432,948 $5,175,177 Short-term investments 6,369,234 -- Accounts receivable, less allowance for doubtful accounts of $261,707 and $56,779 as of December 31, 2005 and December 31, 2004, respectively 4,865,065 3,520,621 Inventory 2,135,143 1,087,408 Prepaid expenses and other current assets 845,330 112,740 Total current assets 41,647,720 9,895,946 Property and equipment, net 3,359,549 2,410,051 Deferred offering costs -- 412,005 Intangible assets 986,778 -- Goodwill 3,840,837 -- Other assets 205,531 12,618 Total assets $50,040,415 $12,730,620 Liabilities and shareholders’ equity Current liabilities: Accounts payable (a) $1,243,365 $733,444 Accrued liabilities 4,131,633 2,572,329 Current maturities of capital lease obligation 31,753 -- Current maturities of long-term debt 366,207 -- Total current liabilities 5,772,958 3,305,773 Capital lease obligation 38,855 -- Long-term debt 1,045,150 -- Redeemable preferred stock: Preferred stock, $0.001 par value; designated Series A, 2,182,521 shares authorized, issued and outstanding as of December 31, 2004 -- 7,979,396 Preferred stock, $0.001 par value; designated Series B, 4,059,720 shares authorized; 3,829,499 issued and outstanding as of December 31, 2004 -- 28,776,745 Total redeemable preferred stock -- 36,756,141 Shareholders’ equity (deficit): Common stock, $0.001 par value, 90,000,000 and 10,526,315 shares authorized as of December 31, 2005 and December 31, 2004, respectively; 12,086,482 and 1,880,169 issued and outstanding as of December 31, 2005 and December 31, 2004, respectively 12,086 1,880 Additional paid-in capital 86,107,520 3,281,447 Unearned compensation (599,591) (981,612) Other comprehensive income 826 -- Accumulated deficit (42,337,389) (29,633,009) Total shareholders’ equity (deficit) 43,183,452 (27,331,294) Total liabilities and shareholders’ equity $50,040,415 $12,730,620 (a) Includes the following liabilities resulting from transactions with Enable Medical Corporation prior to the acquisition as of August 10, 2005: Accounts payable $-- $434,869 ATRICURE, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Year Ended December 31, 2005 2004 Cash flows from operating activities: Net loss $(12,682,964) $(9,451,868) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,554,238 962,355 Loss on disposal of equipment 36,813 16,561 Write-off of tooling 266,195 -- Stock compensation 673,199 1,014,204 Preferred stock interest 2,332,254 3,905,169 Changes in assets and liabilities: Accounts receivable 92,432 (1,892,795) Inventory (193,559) (448,413) Prepaid expenses and other current assets (709,880) 97,482 Other assets (a) 409,985 (417,453) Accounts payable 27,911 454,730 Accrued liabilities (a) 577,467 1,959,957 Net cash used in operating activities (7,615,909) (3,800,071) Cash flows from investing activities: Purchases of property & equipment (1,951,733) (1,513,273) Purchases of available-for-sale securities (6,368,408) -- Cash paid for acquisition, net (6,420,681) -- Net cash used in investing activities (14,740,822) (1,513,273) Cash flow from financing activities: Proceeds from long-term debt borrowings 1,500,000 -- Payments on long-term debt (88,643) -- Payments on capital lease obligations (16,063) -- Proceeds from stock offering 43,176,994 -- Proceeds from stock option exercise and warrants 42,214 89,183 Net cash provided by financing activities 44,614,502 89,183 Net increase (decrease) in cash and cash equivalents 22,257,771 (5,224,161) Cash and cash equivalents - beginning of period 5,175,177 10,399,338 Cash and cash equivalents - end of period $27,432,948 $5,175,177 (a) Cash flows from operating activities excludes non-cash costs related to the initial public offering in other assets and accrued liabilities Contacts: AtriCure, Inc. The Ruth Group Thomas Etergino Stephanie Carrington / Nick Laudico (investors) Chief Financial Officer (646) 536-7017 / 7030 513-755-4561 scarrington@theruthgroup.comtetergino@atricure.comnlaudico@theruthgroup.com Jason Rando (media) (646) 536-7025 jrando@theruthgroup.com
AtriCure, Inc.
CONTACT: Thomas Etergino, Chief Financial Officer of AtriCure, Inc.,+1-513-755-4561, tetergino@atricure.com; or investors: StephanieCarrington, +1-646-536-7017, scarrington@theruthgroup.com, or Nick Laudico,+1-646-536-7030, nlaudico@theruthgroup.com, or media: Jason Rando,+1-646-536-7025, jrando@theruthgroup.com, all of The Ruth Group
Web site: http://www.atricure.com/
