AtriCure (ATRC) Q4 2008 earnings summary

Executive summary

• FY08 revenue grew 14.4% to $55.3M, while operating expenses rose 4.5%; net loss narrowed to $10.2M from $11.3M.

• Growth came from minimally invasive products, international sales and new product launches; a Q4 workforce reduction targeted lower costs and a path to positive adjusted EBITDA.

Financial highlights

• Revenue was $55.257M vs. $48.309M in 2007; gross profit was $42.033M, with gross margin of 76.1% vs. 79.0%.

• Operating loss improved to $10.998M from $12.568M; net loss available to common stockholders was $10.167M, or $0.72/share, vs. $11.253M, or $0.84/share.

• Total operating expenses rose 4.5% to $53.031M; R&D declined to $10.609M from $10.987M, while SG&A increased to $42.422M from $39.753M.

• Minimally invasive product revenue increased 38%, international revenue increased 27%, and adjusted EBITDA excluding share-based compensation improved 33%.

• FY08 operating cash use was $5.710M, down from $8.116M; year-end cash and equivalents were $11.448M and restricted cash was $6.0M.

Outlook and guidance

• Cost actions implemented in Q4 were expected to lower 2009 costs by $5M YoY; positive EBITDA excluding share-based compensation was anticipated at a $57M–$60M annual revenue run rate.

• ABLATE enrollment was expected to finish in 2009, with the final PMA module targeted for H1 2010; EXCLUDE 510(k) submission was planned by year-end 2009, with U.S. clearance anticipated in H1 2010.

• Cryol commercial release was planned for Q2 2009 following FDA clearance in March; European clearance for the left atrial appendage system was expected in H2 2009.

• Cash and cash equivalents plus expected operating cash were viewed as sufficient for at least 12 months; additional financing could be needed if these sources fell short.