Business Wire | Jul 28, 2020 04:01PM EDT

AtriCure Reports Second Quarter 2020 Financial Results

Jul. 28, 2020

MASON, Ohio--(BUSINESS WIRE)--Jul. 28, 2020--AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, today announced second quarter 2020 financial results.

"Amidst tremendous uncertainty in this challenging environment, our team at AtriCure has shown both resiliency and leadership without missing a beat. We are continuing to support our clinician partners in creative and evolving ways while maintaining our patient-first culture," said Michael Carrel, President and Chief Executive Officer of AtriCure. "We are pleased by our second quarter results, which as expected, experienced a trough in April, then a rapid return in May, followed by steady volumes through June. In addition, we achieved significant milestones on our strategic initiatives with the release of the CONVERGE clinical trial data in May as well as further progress on aMAZE, continued success with Cryo Nerve Block, and ongoing training and education programs."

Mr. Carrel continued, "While we are encouraged by the improvement in our business throughout the second quarter, we have begun to experience more regional variability and procedure slowdowns in July in response to the recent resurgence of COVID-19 cases and related restrictions. Despite the continued uncertainty, as we look forward, we are extremely confident about our future. We were able to strengthen our balance sheet this quarter, allowing us to continue to invest in our people as well as our pillars to ensure that AtriCure is well positioned for durable growth over the next several years with a robust pipeline of clinical and product innovation."

Second Quarter 2020 Financial Results

Revenue for the second quarter of 2020 was $40.8 million, a decrease of $18.1 million or 30.7% (a decrease of 30.6% on a constant currency basis), compared to second quarter 2019 revenue. U.S. revenue decreased 28.6% to $33.7 million, and international revenue decreased 39.0% to $7.1 million, (a decrease of 38.5% on a constant currency basis), compared to second quarter 2019 revenue.

Gross profit for the second quarter of 2020 was $27.7 million compared to $43.9 million for the second quarter of 2019. Gross margin for the second quarter of 2020 decreased to 67.7% compared to 74.5% in the second quarter of 2019.

Loss from operations for the second quarter of 2020 was $7.3 million, compared to $3.8 million for the second quarter of 2019. Net loss per share was $0.20 for the second quarter of 2020 compared to $0.11 for the second quarter of 2019.

Adjusted EBITDA was a loss of $6.1 million for the second quarter of 2020 compared to positive $1.4 million for the second quarter of 2019. Adjusted loss per share for the second quarter of 2020 was $0.38 compared to an adjusted loss per share of $0.17 for the second quarter of 2019. Constant currency revenue, adjusted EBITDA and adjusted loss per share are non-GAAP measures. We discuss these non-GAAP measures and provide reconciliations to GAAP measures later in this release.

2020 Financial Guidance

As previously reported, AtriCure is not providing 2020 financial guidance due to the continued uncertainties from the impact of COVID-19.

Conference Call

AtriCure will host a conference call at 4:30 p.m. Eastern Time on Tuesday, July 28, 2020 to discuss its second quarter 2020 financial results. The call may be accessed through an operator by calling (844) 884-9951 for domestic callers and (661) 378-9661 for international callers using conference ID number 6338708. A live audio webcast of the presentation may be accessed by visiting the Investors page of AtriCure's corporate website at ir.atricure.com. A replay of the presentation will be available for 90 days following the presentation.

About AtriCure

AtriCure, Inc. provides innovative technologies for the treatment of Afib and related conditions. Afib affects more than 33 million people worldwide. Electrophysiologists and cardiothoracic surgeons around the globe use AtriCure technologies for the treatment of Afib and reduction of Afib related complications. AtriCure's Isolator(r) Synergy(tm) Ablation System is the first and only medical device to receive FDA approval for the treatment of persistent Afib. AtriCure's AtriClip Left Atrial Appendage Exclusion System products are the most widely sold LAA management devices worldwide. For more information, visit AtriCure.com or follow us on Twitter @AtriCure.

Forward-Looking Statements

This press release contains "forward-looking statements"- that is, statements related to future events that by their nature address matters that are uncertain. For details on the uncertainties that may cause our actual results to be materially different than those expressed in our forward-looking statements, visit http://www.atricure.com/fls as well as our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q which contain risk factors. We do not undertake to update our forward-looking statements. Actual results could differ materially.

Use of Non-GAAP Financial Measures

To supplement AtriCure's condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, AtriCure uses certain non-GAAP financial measures in this release as supplemental financial metrics.

Revenue reported on a constant currency basis is a non-GAAP measure and is calculated by applying previous period foreign currency exchange rates, which are determined by the average daily Euro to Dollar exchange rate, to each of the comparable periods. Management analyzes revenue on a constant currency basis to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have a non-operating impact on revenue, the Company believes that evaluating growth in revenue on a constant currency basis provides an additional and meaningful assessment of revenue to both management and the Company's investors.

Adjusted EBITDA is calculated as Net loss before other income/expense (including interest), income tax expense, depreciation and amortization expense, share-based compensation expense, acquisition costs, and change in fair value of contingent consideration liabilities. Management believes in order to properly understand the short-term and long-term financial trends, investors may wish to consider the impact of these excluded items in addition to GAAP measures. The excluded items vary in frequency and/or impact on our continuing results of operations and management believes that the excluded items are typically not reflective of our ongoing core business operations and financial condition. Further, management uses adjusted EBITDA for both strategic and annual operating planning, and previously used adjusted EBITDA as a performance metric in the annual incentive plan. A reconciliation of adjusted EBITDA reported in this release to the most comparable GAAP measure for the respective periods can be found in the table captioned "Reconciliation of Non-GAAP Adjusted (Loss) Income (Adjusted EBITDA)" later in this release.

Adjusted loss per share is a non-GAAP measure which calculates the net loss per share before non-cash adjustments to expenses related to the adjustment in value of contingent consideration liabilities. Management believes this metric provides a better measure of comparability of results between periods, as such adjustments can be significant and vary in value and are not reflective of our core business. A reconciliation of adjusted loss per share reported in this release to the most comparable GAAP measure for the respective periods can be found in the table captioned "Reconciliation of Non-GAAP Adjusted Loss Per Share" later in this release.

The non-GAAP financial measures used by AtriCure may not be the same or calculated the same as those used by other companies. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for AtriCure's financial results prepared and reported in accordance with GAAP.



ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

(Unaudited)



Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

United States Revenue:

Open ablation $ 15,550 $ 20,561 $ 34,768 $ 39,557

Minimally invasive ablation 4,755 9,092 11,316 16,854

Appendage management 13,021 16,498 30,440 32,168

Total ablation and 33,326 46,151 76,524 88,579 appendage management

Valve tools 338 1,014 613 1,590

Total United States 33,664 47,165 77,137 90,169

International Revenue:

Open ablation 3,744 6,792 8,859 13,092

Minimally invasive ablation 1,109 1,935 2,654 4,064

Appendage management 2,271 2,977 5,333 5,431

Total ablation and 7,124 11,704 16,846 22,587 appendage management

Valve tools 36 37 66 116

Total international 7,160 11,741 16,912 22,703

Total revenue 40,824 58,906 94,049 112,872

Cost of revenue 13,170 15,013 27,511 29,108

Gross profit 27,654 43,893 66,538 83,764

Operating expenses:

Research and development 10,036 9,804 21,623 17,980 expenses

Selling, general and 24,903 37,928 67,654 74,943 administrative expenses

Total operating expenses 34,939 47,732 89,277 92,923

Loss from operations (7,285 ) (3,839 ) (22,739 ) (9,159 )

Other expense, net (939 ) (252 ) (1,885 ) (501 )

Loss before income tax (8,224 ) (4,091 ) (24,624 ) (9,660 )expense

Income tax expense 12 10 20 76

Net loss $ (8,236 ) $ (4,101 ) $ (24,644 ) $ (9,736 )

Basic and diluted net loss $ (0.20 ) $ (0.11 ) $ (0.61 ) $ (0.26 )per share

Weighted average sharesused in computing net loss per share:

Basic and diluted 41,649 37,334 40,160 37,156



ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)



June 30, December 31,

2020 2019

Assets

Current assets:

Cash, cash equivalents, and short-term investments $ 232,498 $ 81,801

Accounts receivable, net 22,892 28,046

Inventories 32,809 29,414

Prepaid and other current assets 3,835 3,899

Total current assets 292,034 143,160

Property and equipment, net 30,236 32,646

Operating lease right-of-use assets 2,573 4,032

Long-term investments 15,339 12,675

Goodwill and intangible assets, net 363,685 364,662

Other noncurrent assets 366 705

Total assets $ 704,233 $ 557,880

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities $ 30,351 $ 47,698

Other current liabilities and current maturities of 7,701 2,218 debt and leases

Total current liabilities 38,052 49,916

Long-term debt 54,154 59,634

Finance lease liabilities 11,377 11,774

Operating lease liabilities 1,581 2,796

Contingent consideration and other noncurrent 182,207 186,417 liabilities

Total liabilities 287,371 310,537

Stockholders' equity:

Common stock 45 40

Additional paid-in capital 723,754 529,658

Accumulated other comprehensive loss (96 ) (158 )

Accumulated deficit (306,841 ) (282,197 )

Total stockholders' equity 416,862 247,343

Total liabilities and stockholders' equity $ 704,233 $ 557,880





ATRICURE, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS

(In Thousands)

(Unaudited)





Reconciliation of Non-GAAPAdjusted (Loss) Income (Adjusted EBITDA)



Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Net loss, as reported $ (8,236 ) $ (4,101 ) $ (24,644 ) $ (9,736 )

Income tax expense 12 10 20 76

Other expense, net 939 252 1,885 501

Depreciation and 2,458 2,362 4,902 4,590 amortization expense

Share-based compensation 6,193 4,375 10,577 8,529 expense

Contingent consideration (7,504 ) (2,205 ) (5,046 ) (3,872 )adjustment

Acquisition costs 39 713 138 827

Non-GAAP adjusted (loss) $ (6,099 ) $ 1,406 $ (12,168 ) $ 915 income (adjusted EBITDA)







Reconciliation of Non-GAAP Adjusted Loss Per Share



Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Net loss, as reported $ (8,236 ) $ (4,101 ) $ (24,644 ) $ (9,736 )

Contingent consideration (7,504 ) (2,205 ) (5,046 ) (3,872 )adjustment

Net loss excludingcontingent consideration $ (15,740 ) $ (6,306 ) $ (29,690 ) $ (13,608 )adjustment

Basic and diluted adjusted $ (0.38 ) $ (0.17 ) $ (0.74 ) $ (0.37 )net loss per share

Weighted average sharesused in computing adjusted net loss per share

Basic and diluted 41,649 37,334 40,160 37,156

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CONTACT: Andy Wade AtriCure, Inc. Chief Financial Officer (513) 755-4564 awade@atricure.com

CONTACT: Lynn Pieper Lewis Gilmartin Group Investor Relations (415) 937-5402 lynn@gilmartinir.com