MINNEAPOLIS, Nov. 5 /PRNewswire-FirstCall/ -- ATS Medical, Inc. , manufacturer and marketer of state-of-the-art cardiac surgery products and services, today reported financial results for the third quarter of 2007. Revenue for the quarter was $12.2 million, up 33.3% from $9.1 million reported in the third quarter of 2006.
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Third quarter revenue generated from the Company’s surgical arrhythmia therapy products increased 229.8% on a year-over-year basis to $3.3 million. Surgical arrhythmia therapy product revenue is reflective of the Company’s second quarter 2007 acquisition of this product line from CryoCath Technologies, Inc. Previously the Company distributed these products and recognized revenue of $999,000 during the third quarter of 2006 under this arrangement. Revenue from the Company’s heart valve therapy product lines, consisting of mechanical heart valves, tissue heart valves and repair products, increased 6.1% on a year-over-year basis to $8.5 million. Revenues from products and services other than the Company’s mechanical heart valves represented 35.8% of total revenue during the third quarter of 2007 compared with 20.2% in the third quarter of 2006 and 19.3% in the second quarter of 2007.
Gross profit for the third quarter of 2007 was 56.3% compared with 57.3% for the third quarter of 2006, and 55.3% for the second quarter of 2007. Gross profit for the third quarter of 2007 included $62,000 in higher cost of goods sold related to surgical arrhythmia therapy inventory purchased prior to the product line’s acquisition and $187,000 in period costs related to the Company’s tissue manufacturing operations, which were acquired at the end of the third quarter of 2006.
“Our strong revenue growth during the third quarter reflects continued progress toward our objective of building a diversified but innovative cardiac surgery business,” said Michael Dale, Chairman, President and Chief Executive Officer. “As we look ahead to 2008 we expect to harvest the fruits of our significant investments in atrial fibrillation and heart valve therapy in the form of multiple new product introductions. In each instance, these new products will provide additional leverage of our sales and distribution organization and contribute materially to our profitability objective for 2008.”
“Our recent FDA approvals illustrate our commitment to successfully developing and bringing to market new products that will contribute positively to our top and bottom-line growth,” continued Mr. Dale. “These milestones exemplify our progress in achieving our long-term strategy to bring to fruition our pipeline of innovative products focused on the needs of the cardiac surgeon, leverage our tenured sales force to grow sales and ultimately achieve profitability for our shareholders.”
Additional Financial Results
The operating loss for the third quarter was $3.5 million compared with an operating loss of $17.1 million in the third quarter of 2006. The operating loss for the third quarter of 2006 included a non-recurring charge for acquired in-process research and development (IPR&D) of $14.4 million in connection with the acquisition of 3f Therapeutics during the third quarter of 2006.
The net loss for the quarter was $3.3 million, or $0.06 per share compared with a $17.3 million or $0.55 per share net loss in the third quarter of 2006. Excluding the non-recurring IPR&D charge recognized in the third quarter of 2006, the Company’s adjusted operating loss for that period would have been $2.7 million and its adjusted net loss would have been $2.9 million or $0.09 per share.
Year-to-Date Results
For the nine months ended September 30, 2007 the Company reported net sales of $35.4 million, an increase of 19.1% from $29.7 million in the first nine months of 2006. Net loss for the first nine months of 2007 was $16.8 million or $0.33 per share compared to a net loss of $21.6 million or $0.69 in 2006. The net losses for 2007 and 2006 included charges for acquired in-process research and development of $3.5 million and $14.4 million, respectively.
2007 Outlook
For the full year 2007 the Company expects revenue in the range of $49 to $50 million dollars, which represents growth of approximately 22.5% compared with 2006.
Conference Call Today
ATS management will host a conference call today, November 5, 2007 at 5:00 p.m. ET to discuss its third quarter financial results and current corporate developments. The dial-in number for the conference call is 800-240-6709 for domestic participants and 303-262-2140 for international participants. A live webcast of the call can also be accessed at http://www.atsmedical.com by clicking on the Investors icon.
A taped replay of the conference call will also be available beginning approximately one hour after the call’s conclusion and will remain available for seven days. The replay can be accessed by dialing 800-405-2236 for domestic participants and 303-590-3000 for international callers, using the passcode 11098124#.
Disclosure of Non-GAAP Financial Measures
ATS reports its financial results in accordance with generally accepted accounting principles (“GAAP”). In addition, from time to time, we include other measures in our releases which are not prepared in accordance with GAAP. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this release we have included adjusted versions of our operating loss, net loss and net loss per share for the third quarter of 2006. These non-GAAP measures do not reflect the impact of a $14.4 million acquired in-process research and development charge incurred as a result of the acquisition of 3F Therapeutics, Inc. because we believe that these charges will not be incurred on a regular basis. We use the adjusted operating loss, adjusted net loss and adjusted net loss per share measures in our internal analysis and review of our operational performance. We believe that these non- GAAP measures provide investors with useful information in comparing our performance over different periods, particularly when comparing one of these periods to a period in which we did not incur this kind of charge. By using these non-GAAP measures we believe investors get a better picture of the performance of our underlying business. We have also included as an attachment to this release a schedule which reconciles our operating loss, net loss and net loss per share prepared in accordance with GAAP to our adjusted operating loss, adjusted net loss and adjusted net loss per share presented above.
About ATS Medical
ATS Medical, Inc. provides innovative products and services focused on cardiac surgery. The company, global in scope, is headquartered in Minneapolis, Minnesota. More than 140,000 ATS Open Pivot(R) Heart Valves, which utilize a unique pivot design resulting in exceptional performance and low risk profile, have been implanted in patients worldwide. The ATS 3f(R) brand encompasses multiple tissue heart valve product offerings at varying steps from market introductions to clinical trials to development projects that incorporate less invasive valve replacement technology. ATS Medical’s focus on serving the cardiac surgery community is further strengthened by offerings that include ATS Simulus(R) annuloplasty products for heart valve repair, ATS CryoMaze(TM) surgical ablation products, and RTI-Cardiovascular for allograft tissue services. The ATS Medical web site is http://www.atsmedical.com.
Safe Harbor
This Press Release contains forward-looking statements that may include statements regarding intent, belief or current expectations of the Company and its management. Actual results could differ materially from those projected in the forward looking statements as a result of a number of important factors, including the results of clinical trials, the timing of regulatory approvals, the integration of 3f Therapeutics and the surgical cryoablation business of CryoCath Technologies, Inc., regulatory actions, competition, pricing pressures, supplier actions and management of growth. For a discussion of these and other risks and uncertainties that could affect the Company’s activities and results, please refer to the Company’s filings with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2006 and its most recent quarterly report on Form 10-Q.
CONTACT: Michael Dale, President-CEO, +1-763-553-7736, or Michael Kramer,
CFO, +1-763-557-2222, both of ATS Medical; or Investors, Jennifer
Beugelmans, +1-646-201-5447, or Doug Sherk, +1-415-896-6820, or Media,
Jennifer Saunders, +1-646-201-5431, for ATS Medical
Web site: http://www.atsmedical.com//
