AtriCure (ATRC) Q4 2011 earnings summary

Executive summary

• 2011 marked FDA approval of the Synergy Ablation System for persistent and long-standing persistent AF during specified concomitant open-heart procedures, alongside revenue growth and expansion of training and sales capacity.

• The strategy centers on leveraging the approval, clinical research, surgeon education and international expansion to grow underpenetrated markets; profitability remained elusive, with a $5.5 million net loss.

Financial highlights

• FY2011 revenue was $64.4 million, up 9.1% reported and 8.5% on a constant-currency basis; U.S. revenue rose 3.0% and international revenue rose 34.7% reported.

• Gross profit increased to $47.0 million from $45.4 million, while gross margin declined to 73.0% from 76.9%; higher manufacturing costs, product mix and discontinued product costs weighed on margin.

• Operating expenses were $51.7 million, up from $48.6 million; operating loss widened to $4.7 million from $3.2 million, and net loss widened to $5.46 million from $3.79 million.

• SG&A increased 7.6% to $39.9 million, mainly from sales and marketing headcount and travel; R&D rose to $11.9 million as clinical and regulatory activity increased.

Outlook and guidance

• For 2012, anticipated growth drivers included expansion of U.S. open-heart markets through the AF approval and training initiatives, plus continued high growth in international markets; no numerical revenue target was stated.

• Expected 2012 trends included gross margin expansion and favorable operating trends; training and education were expected to support product use, cross-selling and market penetration.

• Planned clinical milestones included staged DEEP AF feasibility enrollment in H2 2012 and a 30-patient Stroke feasibility trial expected to begin enrollment in H2 2012; the Synergy post-approval study is planned for 350 patients.