WEST CHESTER, Ohio, Aug. 8 /PRNewswire-FirstCall/ -- AtriCure, Inc. , a medical device company focused on developing, manufacturing and selling innovative surgical devices, announced today financial results for the second quarter ended June 30, 2006.
Second quarter 2006 consolidated revenue was $9.6 million, compared to $7.7 million for the second quarter 2005 and $8.6 million for the first quarter 2006. Second quarter 2006 revenue from domestic products used in open procedures was $5.6 million, revenue from domestic products used in the minimally invasive sole-therapy setting was $2.7 million, and international revenue was $1.3 million.
Gross profit for the second quarter 2006 was $7.9 million with gross margins of 81.5%, compared to $5.8 million with gross margins of 74.4% in the same period last year and $7.0 million with gross margins of 81.5% for the first quarter 2006.
Research and development expenses were $2.9 million for the second quarter 2006, compared with $2.0 million for the second quarter 2005 and $2.9 million for the first quarter 2006. The year over year increase in research and development expenses was attributable primarily to the expansion of product development initiatives and clinical trials.
Selling, general and administrative expenses were $8.5 million for the second quarter 2006, compared with $5.1 million for the second quarter 2005 and $7.5 million for the first quarter 2006. Selling, general and administrative expenses increased year over year primarily due to increases in headcount and higher general corporate expenditures as a result of being a public company. The sequential increase to selling, general and administrative expenses was primarily attributable to increased selling-related expenses and higher general corporate expenditures, including Sarbanes-Oxley related expenses.
Net loss for the second quarter 2006 totaled $3.2 million, or $0.26 per share, including the after-tax effect of approximately $0.3 million or $0.02 per share of stock-based compensation related to SFAS 123(R) and other non-cash-based compensation.
Cash, cash equivalents and investments at June 30, 2006 were $26.8 million.
In commenting on the quarter, David Drachman, President and Chief Executive Officer said, “In the second quarter of 2006, our organization achieved significant milestones across all operational functions. Our record-breaking quarter was the result of increased adoption of our products, evidenced by 65 domestic medical centers performing MIS procedures. Recently, our product development, regulatory, manufacturing and marketing teams successfully launched the Multifunctional Isolator(TM) Transpolar(TM) Pen System and the new Isolator(TM) Transpolar(TM) open clamp. We believe the launch of these new products will significantly strengthen our open and MIS market positions. Additionally, our regulatory and clinical team achieved a significant milestone by completing the treatment phase of our RESTORE-SR II feasibility study.”
In July, AtriCure received 510(k) clearance from the Food and Drug Administration (FDA) for its Isolator(TM) Transpolar(TM) Pen System for temporary pacing, sensing, stimulating and recording during the evaluation of cardiac arrhythmias in addition to its FDA-cleared use for the ablation of cardiac tissue. The multifunctional system provides physicians with enhanced flexibility and efficiency and is the only surgical device that is cleared for this broad range of indications.
In July, the Company also released its Isolator(TM) Transpolar(TM) open clamp that, through design enhancements, improves the surgeon’s access to anatomical structures, simplifies the ablation procedure and provides superior tactile feedback to the user. Additionally, the new open clamp isolates more tissue, potentially an important clinical benefit. The clamp currently has clearance from the FDA for the ablation of soft tissues in general, thoracic and other non-cardiac related surgical procedures.
Financial Guidance
For the full year 2006, the Company is reiterating its expectation of total revenue between $36.0 million and $38.0 million and loss per share to be between $1.30 and $1.50. The Company’s full year loss per share guidance includes the estimated impact of $0.08 to $0.10 per share of after-tax, stock-based compensation related to SFAS 123(R) and other non-cash-based compensation.
For the third quarter 2006, the Company expects total revenue to be between $8.0 million and $8.6 million.
Conference Call
AtriCure will host a Web cast and conference call at 8:30 am ET on August 9, 2006 to discuss second quarter 2006 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 www.atricure.com. The dial-in numbers are (800) 561-2718 for domestic callers and (617) 614-3525 for international callers. The reservation number for both is 78639154. A recording of the conference call will remain available on AtriCure’s Web site through September 9, 2006. A telephonic replay of the call will be available until September 9, 2006. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 60782728.
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 and cardiac tissues. Medical journals have described the adoption by leading cardiothoracic surgeons of the AtriCure 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. Atrial fibrillation affects more than 2.4 million people in the U.S. and predisposes them to a five fold increased risk of stroke.
The FDA has cleared the AtriCure bipolar ablation system for the ablation, or destruction, of soft tissues in general and non-cardiac related surgical procedures but to date has not cleared or approved the system for cardiac use or for the treatment of AF.
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 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 Revenues $9,649,038 $7,730,420 $18,285,846 $15,228,179 Cost of revenues (a) 1,785,417 1,978,129 3,385,158 3,897,641 Gross profit 7,863,621 5,752,291 14,900,688 11,330,538 Operating expenses: Research and development expenses (a) 2,928,171 1,970,558 5,838,664 3,707,394 Selling, general and administrative expenses 8,488,970 5,143,086 15,985,068 10,395,184 Total operating expenses 11,417,141 7,113,644 21,823,732 14,102,578 Loss from operations (3,553,520) (1,361,353) (6,923,044) (2,772,040) Preferred stock interest expense - (976,293) - (1,952,585) Interest income (expense), net 272,547 (5,192) 552,300 15,609 Other income 72,632 - 72,632 - Net loss available to common shareholders $(3,208,341) $(2,342,838) $(6,298,112) $(4,709,016) Basic and diluted loss per share $(0.26) $(1.24) $(0.52) $(2.50) Weighted average shares outstanding: Basic and diluted 12,118,032 1,888,079 12,107,116 1,884,837 (a) Includes the following expenses resulting from transactions with Enable Medical Corporation prior to the acquisition as of August 10, 2005: Cost of revenues $- $1,694,486 $- $3,315,956 Research and development expenses $- $679,583 $- $1,062,218 ATRICURE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 2006 2005 Assets Current assets: Cash and cash equivalents $19,814,470 $27,432,948 Short-term investments 5,174,928 6,369,234 Accounts receivable, net 5,599,078 4,865,065 Inventories, net 3,055,668 2,135,143 Other current assets 498,818 845,330 Total current assets 34,142,962 41,647,720 Property and equipment, net 3,272,035 3,359,549 Long-term investments 1,790,741 - Intangible assets 879,778 986,778 Goodwill 3,840,837 3,840,837 Other assets 213,595 205,531 Total assets $44,139,948 $50,040,415 Liabilities and shareholders’ equity Current liabilities: Accounts payable and accrued liabilities $5,475,706 $5,374,998 Current maturities of capital lease obligation and long-term debt 379,299 369,835 Total current liabilities 5,855,005 5,744,833 Capital lease obligation 26,480 38,855 Long-term debt 865,727 1,045,150 Other liabilities 56,250 28,125 Shareholders’ equity: Common stock 12,123 12,086 Additional paid-in capital 85,967,309 86,107,520 Unearned compensation - (599,591) Other comprehensive income (7,444) 826 Accumulated deficit (48,635,502) (42,337,389) Total shareholders’ equity 37,336,486 43,183,452 Total liabilities and shareholders’ equity $44,139,948 $50,040,415 ATRICURE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2006 2005 Cash flows from operating activities: Net loss $(6,298,112) $(4,709,016) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 884,655 632,870 Gain on disposal of equipment (20,000) - Stock compensation 468,927 344,785 Preferred stock interest - 1,952,585 Changes in assets and liabilities: Accounts receivable (714,012) (684,574) Inventory (920,526) (465,366) Other current assets 346,511 (79,247) Accounts payable and accrued liabilities (a) (18,002) 160,434 Other non-current assets and liabilities (a) 54,950 128,523 Net cash used in operating activities (6,215,609) (2,719,006) Cash flows from investing activities: Purchases of property & equipment (643,486) (884,023) Purchases of available-for-sale securities (5,479,649) - Maturities of available-for-sale securities 4,865,000 - Advance payments for acquisition of company - (500,000) Net cash used in investing activities (1,258,135) (1,384,023) Cash flow from financing activities: Payments on long-term debt (165,672) - Payments on capital lease obligations (16,660) - Proceeds from stock option exercises 37,598 18,532 Net cash provided by (used in) financing activities (144,734) 18,532 Net decrease in cash and cash equivalents (7,618,478) (4,084,497) Cash and cash equivalents - beginning of period 27,432,948 5,175,177 Cash and cash equivalents - end of period $19,814,470 $1,090,680 (a) Cash flows from operating activities in 2005 exclude non-cash costs related to the initial public offering in other assets and accrued liabilities. Contacts: AtriCure, Inc. David J. Drachman President and Chief Executive Officer (513) 755-5758 ddrachman@atricure.com The Ruth Group Stephanie Carrington / Nick Laudico (investors) (646) 536-7017 / 7030 scarrington@theruthgroup.comnlaudico@theruthgroup.com Jason Rando (media) (646) 536-7025 jrando@theruthgroup.com
AtriCure, Inc.
CONTACT: David J. Drachman, President and Chief Executive Officer ofAtriCure, Inc., +1-513-755-5758, ddrachman@atricure.com; or Investors -Stephanie Carrington, +1-646-536-7017, scarrington@theruthgroup.com, orNick Laudico, +1-646-536-7030, nlaudico@theruthgroup.com, or Media - JasonRando, +1-646-536-7025, jrando@theruthgroup.com, all of The Ruth Group, forAtriCure, Inc.
Web site: http://www.atricure.com/
