MINNEAPOLIS, May 4 /PRNewswire-FirstCall/ -- ATS Medical, Inc. , developer, manufacturer and marketer of state-of-the-art cardiac surgery products and services, today reported that revenue for the first quarter of 2006 increased 38% to $9.7 million, compared with revenue of $7.1 million for the first quarter of 2005. Mechanical heart valve sales represented 86% of total revenue, while other products and services represented 14% of total revenue.
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Gross margins for the quarter increased to 48.6% from 39.1% for the comparable year-ago period. The operating loss for the period ended March 31, 2006 was $2.4 million versus an operating loss of $4.0 million for the first quarter of 2005. The net loss for the quarter was $2.7 million, or $0.09 per share, versus a net loss for the first quarter of 2005 of $4.0 million, or $0.13 per share.
“We were pleased to achieve record revenues for any first quarter in our Company’s history. More importantly, we remain confident in the direction of our business and the expanded growth potential that our emerging product platforms represent for ATS Medical shareholders,” said Michael Dale, Chairman, President and CEO. “Year-over-year sales of our Open Pivot(R) Heart Valve rose 25% and our sales of CryoCath products for the surgical cryoablation of cardiac arrhythmias more than doubled as compared to the first quarter of 2005.
“Our proposed acquisition of 3F Therapeutics is proceeding as planned and we anticipate asking for shareholder approval in July,” Mr. Dale continued. “We still expect to submit our PMA for the Model 1000 product by the end of the second quarter of this year, followed by a U.S. market introduction early in 2007,” said Mr. Dale.
During the quarter, ATS Medical achieved another milestone in the Company’s product portfolio diversification strategy with the launch of the ATS Simulus(TM) FLX-O annuloplasty ring. The Simulus represents ATS Medical’s entry into the $128 million worldwide annual market for mitral and tricuspid valve repair and is used in those cases where repair of the patient’s heart valve is preferable to the complete replacement of the valve. The Simulus product line is designed to maintain the normal physiologic function of the heart valve and has been designed with a focus on the ease of implantation for the cardiac surgeon. In addition, during the quarter, all remaining high-cost pyrolytic carbon inventory of Open Pivot Heart Valves was sold. As a result, ATS Medical is well positioned for continued strong gross margin improvement in the second quarter of this year.
Outlook
“For the full year 2006, we continue to believe we will increase sales by a minimum of 20% and surpass $40 million in annual revenue,” added Mr. Dale. “We expect continued gross margin improvements in the second quarter and the remainder of 2006 as our high-priced carbon inventory is now depleted.
“Upon closing of the 3F Therapeutics acquisition, our research and development program investments will increase significantly for the remainder of the year. We will continue the 3F product development programs as well as ATS programs including the PARSUS(TM) blood filtration technology and next generation heart valve related research. While we will generate a net loss for the year, we do believe we will substantially improve the enterprise value of ATS Medical through the 3F transaction as well as the continued execution of our strategy. We also firmly believe that our outlook for continued strong revenue growth in 2007 has improved,” Mr. Dale concluded.
Conference Call Today
ATS management will host a conference call and web cast today, May 4, 2006 at 4:00 p.m. ET to discuss its first quarter financial results, outlook for the remainder of 2006 and current corporate developments. The dial-in number for the conference call is 800-240-4186 for domestic participants and 303-262-2140 for international participants.
A taped replay of the conference call will also be available beginning approximately one hour after the call’s conclusion and will remain available through Midnight ET on Thursday, May 11, 2006 and can be accessed by dialing 800-405-2236 for domestic callers and 303-590-3000 for international callers, using the passcode 11058657#. A live webcast of the call can be accessed at http://www.atsmedical.com by clicking on the investors icon. The replay of the webcast will be available on the Company’s website for one year.
About ATS Medical
ATS Medical, Inc. manufacturers and markets products and services focused on cardiac surgery. The Company, global in scope, has been headquartered in Minneapolis since its founding in 1991. More than 100,000 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. ATS Medical’s focus on serving the cardiac surgery community is further strengthened by product and service offerings including ATS Simulus annuloplasty products for heart valve repair, Surgi-Frost(R) and Frost-Byte(R) products for surgical cryoablation of cardiac arrhythmias, RTI-Cardiovascular for allograft tissue services, QAS home monitoring services for anticoagulation therapy, and the development of PARSUS blood filtration technology. The ATS Medical web site is http://www.atsmedical.com .
Safe Harbor
This news 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 successful completion of the 3F Therapeutics acquisition, which is subject to the satisfaction of various conditions, including approval by the shareholders of ATS, as well as 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 Annual Report on Form 10-K for the year ended December 31, 2005.
ATS Medical, Inc. Condensed Consolidated Statement of Operations (in thousands except per share amounts) Three months ended March 31, 2006 2005 Net sales $9,730 $7,063 Cost of goods sold 4,998 4,301 Gross profit 4,732 2,762 Operating expenses: Sales and marketing 4,834 4,731 Research and development 405 302 General and administrative 1,942 1,689 Total operating expenses 7,181 6,722 Operating loss (2,449) (3,960) Interest income (expense) (299) 1 Net loss ($2,748) ($3,959) Net loss per share: Basic and diluted ($0.09) ($0.13) Weighted average number of shares outstanding: Basic and diluted 31,187 30,913 ATS Medical, Inc. Condensed Consolidated Balance Sheets (in thousands) March 31, December 31, 2006 2005 Assets Cash and short-term investments $18,472 $21,709 Accounts receivable 11,667 10,453 Inventories 20,157 21,286 Prepaid expenses 1,956 1,204 Total current assets 52,252 54,652 Property and equipment, net 7,983 8,330 Intangible assets 21,943 22,015 Other assets 444 446 Total assets $82,622 $85,443 Liabilities & shareholders’ equity Accounts payable $2,881 $3,598 Accrued compensation 1,497 2,394 Other accrued liabilities 1,493 1,410 Current maturities of long-term debt 983 833 Total current liabilities 6,854 8,235 Convertible senior notes payable 20,969 20,945 Notes payable 2,044 903 Shareholders’ equity 52,755 55,360 Total liabilities & shareholders’ equity $82,622 $85,443 ATS Medical, Inc. Consolidated Condensed Statements of Cash Flow (in thousands) Three months ended March 31, 2006 2005 Operating activities Net loss ($2,748) ($3,959) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 439 369 Stock compensation expense 199 4 Loss on disposal of equipment 5 17 Non-cash interest expense 103 7 Changes in operating assets and liabilities (2,468) (2,067) Net cash used in operating activities (4,470) (5,629) Investing activities Net maturities (purchases) of short-term investments (2,148) 3,396 Net purchases of furniture, machinery and equipment (97) (601) Net cash provided by (used in) investing activities (2,245) 2,795 Financing activities Advances on notes payable 1,500 - Repayments on note payable (209) (139) Net proceeds from sale of common stock 86 92 Net cash provided by (used in) financing activities 1,377 (47) Other items (47) (57) Decrease in cash and cash equivalents ($5,385) ($2,938)
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CONTACT: Michael Dale, President and CEO, +1-763-557-2224, or Jack Judd,CFO, +1-763-557-2222, or Investors, Douglas Sherk, +1-415-652-9100, orJennifer Beugelmans, +1-415-896-6820, or Media, Steve DiMattia,+1-646-277-8706, or Sheryl Seapy, +1-949-608-0841, all of ATS Medical, Inc.
Web site: http://www.atsmedical.com/
