MINNEAPOLIS, Aug. 2 /PRNewswire-FirstCall/ -- ATS Medical, Inc. , manufacturer and marketer of state-of-the-art cardiac surgery products and services, today reported the highest quarterly revenue in its history. Revenue for the second quarter ended June 30, 2006 was $10.9 million, surpassing the previous record of $9.9 million set in the fourth quarter of 2005. Revenue for the second quarter increased 17% from the comparable period a year ago, and 12% from the first quarter of 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040202/ATSILOGO )
Revenue generated from products and services other than the Company’s mechanical heart valve increased nearly threefold from the second quarter of 2005 to $1.8 million and worldwide mechanical heart valve sales increased 4.3%. Revenue from ATS Medical’s newest products represented 16.4% of total revenue, up from 14.3% in the first quarter of 2006.
Gross margins for the second quarter increased to 50.2% from 41.2% for the comparable second quarter of 2005. The operating loss for the period ended June 30, 2006 was $2.4 versus $3.1 million for the second quarter ended June 30, 2005. The net loss for the quarter was $2.8 million, or $0.09 per share compared with the net loss for the second quarter of 2005 of $3.1 million, or $0.10 per share.
“The continued development of our product portfolio that focuses on the unique needs of the cardiac surgery market led to a new record quarter,” said Michael Dale, Chairman, President & CEO. “Our team is executing well and, as a result, we nearly tripled the sales of new products added to our portfolio during the past 18 months to nearly $1.8 million. Sales of our CryoCath products for surgical cryoablation of cardiac arrhythmias more than doubled compared with the second quarter of 2005. Our second quarter performance underscores the cardiac surgery community’s continued embrace of our products and services, and illustrates ATS Medical’s emergence as a leading innovator and provider of proprietary technology to the cardiovascular surgeon.
“Since we updated our shareholders on the proposed acquisition of 3F Therapeutics, we’ve made further progress toward completing this transaction,” continued Mr. Dale. “As expected, we have filed amendments to our latest Form 10-K and Form 10-Q with the Securities and Exchange Commission (SEC) reflecting restated financials for 2005 and the first quarter of 2006, and we have filed an amendment to our Form S-4 related to the 3F Therapeutics acquisition responding to the SEC’s last round of comments. Our goal remains to hold our shareholder meeting and close this transaction during the third quarter.”
Outlook
“Despite the tough competitive environment, we remain on track to achieve our 2006 financial goals and are reiterating our guidance,” continued Mr. Dale. “We continue to believe that for the full year we will increase sales by a minimum of 20% and surpass $40 million in annual revenue. While the third quarter is impacted by seasonality in both the U.S. and European markets, we do expect gross margins for the second half of the year to continue to increase beyond the second quarter’s record level. We will continue to focus on 3F Therapeutics product development programs as well as ATS development 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.” Mr. Dale concluded.
Conference Call Today
ATS management will host a conference call and web cast today, August 2, 2006 at 5:00 p.m. ET to discuss its second quarter financial results, outlook for the remainder of 2006 and current corporate developments. The dial-in number for the conference call is 800-366-3908 for domestic participants and 303-205-0044 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 for seven days. The replay can be accessed by dialing 800-405-2236 for domestic callers and 303-590-3000 for international callers, using the passcode 11066362#. 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. manufactures 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(TM) 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 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 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, 2005, as amended.
ATS Medical, Inc. Condensed Consolidated Statements of Operations (in thousands except per share amounts) Three months ended Six months ended June 30, June 30, 2006 2005 2006 2005 Net sales $10,857 $9,307 $20,587 $16,370 Cost of goods sold 5,410 5,474 10,408 9,775 Gross profit 5,447 3,833 10,179 6,595 Operating expenses: Sales and marketing 5,112 4,711 9,946 9,442 Research and development 437 407 842 709 General and administrative 2,279 1,826 4,221 3,515 Total operating expenses 7,828 6,944 15,009 13,666 Operating loss (2,381) (3,111) (4,830) (7,071) Interest expense, net (478) (22) (789) (21) Change in value of derivative liability bifurcated from convertible senior notes 95 - 1,280 - Net loss ($ 2,764) ($3,133) ($4,339) ($7,092) Net loss per share: Basic and diluted ($0.09) ($0.10) ($0.14) ($0.23) Weighted average number of shares outstanding: Basic and diluted 31,225 30,993 31,206 30,952 ATS Medical, Inc. Condensed Consolidated Balance Sheets (in thousands) June 30, December 31, 2006 2005 Assets Cash and short-term investments $15,527 $21,709 Accounts receivable 12,694 10,453 Inventories 19,049 21,286 Prepaid expenses 2,657 1,204 Total current assets 49,927 54,652 Property and equipment, net 7,628 8,330 Intangible assets 22,074 22,015 Other assets 449 446 Total assets $80,078 $85,443 Liabilities & shareholders’ equity Accounts payable $2,595 $3,598 Accrued compensation 2,026 2,394 Other accrued liabilities 1,292 1,410 Current maturities of long-term debt 1,058 833 Total current liabilities 6,971 8,235 Convertible senior notes payable 17,572 18,776 Notes payable 1,761 903 Shareholders’ equity 53,774 57,529 Total liabilities & shareholders’ equity $80,078 $85,443 ATS Medical, Inc. Consolidated Condensed Statements of Cash Flow (in thousands) Six months ended June 30, 2006 2005 Operating activities Net loss ($4,339) ($7,092) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 875 750 Loss on disposal of equipment 5 17 Stock compensation expense 460 61 Non-cash interest expense 234 15 Change in value of convertible senior notes derivative liability (1,280) - Changes in operating assets and liabilities (3,053) (891) Net cash used in operating activities (7,098) (7,140) Investing activities Maturities of short-term investments, net of purchases 415 4,857 Payments for technology licenses (210) (1,555) Net purchases of furniture, machinery and equipment (178) (1,078) Net cash provided by investing activities 27 2,224 Financing activities Advances on notes payable 1,500 - Repayments on notes payable (417) (347) Net proceeds from sales of common stock 101 280 Net cash provided by (used in) financing activities 1,184 (67) Other items 120 (153) Decrease in cash and cash equivalents ($5,767) ($5,136)
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20040202/ATSILOGOAP Archive: http://photoarchive.ap.orgPRN Photo Desk, photodesk@prnewswire.comATS Medical, Inc.
CONTACT: Michael Dale, President-CEO of ATS Medical, Inc.,+1-763-553-7736; or Investors, Jennifer Beugelmans, +1-646-277-8704, orDoug Sherk, +1-415-896-6820, or Media, Steve DiMattia, +1-646-277-8706, allof EVC Group, Inc.
Web site: http://www.atsmedical.com/
