AtriCure (ATRC) Q4 2007 earnings summary

Executive summary

• FY2007 revenue grew 26.3% to $48.3M, with 79.0% gross margin; net loss narrowed to $11.3M from $13.7M.

• Growth strategy centered on minimally invasive AF procedures, new ablation platforms, international expansion and progress toward FDA approval for AF treatment.

Financial highlights

• Revenue rose $10.1M YoY to $48.3M; unit sales increased ~36% and currency added 2.5%, partly offset by lower worldwide ASPs and product mix.

• Gross profit was $38.2M and gross margin 79.0%, versus $30.6M and 80.1% in 2006; lower international ASPs weighed on the margin.

• Operating expenses increased 12% to $50.7M; operating loss improved to $12.6M from $14.8M, and net loss to $11.3M from $13.7M.

• Net loss per share improved to $0.84 from $1.13; net interest income declined to $0.7M, while grant income rose to $0.6M and FX transaction gain was $0.2M.

Outlook and guidance

• Planned 2008 launches included Coolrail linear ablation pen in H1 and a disposable cryoablation probe in H2; FDA clearance for Coolrail arrived in March 2008.

• FDA clearance for the left atrial appendage exclusion system was expected in late 2008 or 2009; ABLATE success could support a PMA filing as early as 2010.

• Management expected current cash and anticipated operating cash generation to cover working capital and capital expenditures for at least 12 months.

• New disposable platforms were expected to deliver gross margins of 80% or more; sustained growth and profitability depended on product adoption and clinical/regulatory progress.