- Third quarter 2009 revenue increases 17% compared to the third quarter 2008
MINNEAPOLIS, Nov. 2 /PRNewswire-FirstCall/ -- ATS Medical, Inc. (Nasdaq:
ATSI), manufacturer and marketer of state-of-the-art cardiac surgery products
and services, today reported financial results for its third quarter ended
October 3, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040202/ATSILOGO)
Third Quarter 2009 Results
Revenue for the quarter was $18.8 million, or 17.3% higher than the third
quarter of 2008. Revenue from the Company's heart valve therapy products,
consisting of mechanical valves, tissue valves and repair products, was up
20.5% on a year-over-year basis to $14.2 million. Revenue from the Company's
ATS CryoMaze® cryoablation products for the treatment of cardiac arrhythmias
was $4.5 million, an increase of 12.0% compared to the third quarter of 2008.
Excluding the impact of foreign currency fluctuations revenue growth for the
quarter was 19.4% overall, 23.0% for heart valve therapy products and 12.6%
for cryoablation products.
Gross profit margin for the third quarter of 2009 was 62.9% vs. 59.1% in the
third quarter of 2008, continuing the trend of significant margin improvement.
Year-over-year gross margin improvements were primarily the result of lower
mechanical valve and ATS CryoMaze product costs resulting from increased
production.
Operating loss for the third quarter of 2009 was $0.6 million compared with an
operating loss of $2.8 million in the third quarter of 2008. The net loss for
the third quarter of 2009 was $1.0 million, or $0.01 per share, compared with
$3.7 million, or $0.06 per share, in the third quarter of 2008.
The Company also reported non-GAAP earnings before interest, taxes,
depreciation and amortization (EBITDA) in the third quarter of 2009 of $1.1
million compared to an EBITDA loss of $1.6 million in the third quarter of
2008. A reconciliation of net loss to non-GAAP EBITDA for these periods is
provided in a schedule accompanying this press release. The Company ended the
third quarter with $12.1 million in cash and generated positive cash flow
during the quarter of $770,000.
"Our third quarter financial performance was strong, once again yielding
robust sales growth, margin expansion and profitability improvements, which
are particularly gratifying given the challenging global economic
environment," said Michael Dale, President and Chief Executive Officer.
"Importantly, in the third quarter we generated positive cash flow of more
than $700,000. The leverage we are experiencing in our business significantly
enhances our ability to capitalize on our strategic initiatives and related
new product development."
Product Highlights
Mechanical Heart Valves
-- Mechanical valve revenue was $11.6 million in the third quarter of
2009,
an increase of 10% over the third quarter of 2008.
-- The Company saw significant ATS Open Pivot® Mechanical Heart Valve
sales growth in Asia and continued to benefit from the recent launch
of
the AP360 valve in Japan.
-- Two significant long-term Open Pivot valve studies were made public in
Q3. The authors Van Nooten and Sezai both report very positive 15
year
experiences with the Open Pivot valve with excellent outcomes and low
complication rates. These papers are a strong addition to the growing
body of science supporting the lower propensity for thromboembolic
complications with the fundamentally superior Open Pivot design.
Tissue Heart Valves
-- Tissue valve revenue during the third quarter of 2009 was $1.4 million
compared to $0.3 million in the comparable quarter of 2008.
-- In September, the Company announced that Columbia University Medical
Center achieved a milestone 100 implants of the ATS 3f® Aortic
Bioprosthesis. The Columbia University surgeons have utilized the ATS
3f® Aortic Bioprosthesis predominantly in small aortic roots where
conventional stented tissue valves often involve a tradeoff in terms
of
clinical performance.
-- ATS sponsored a 3f Revolution Symposium at the EACTS meeting in Vienna
that included a faculty of key opinion leaders in aortic valve
surgery.
Professor Sven Martens from JW Goethe University in Frankfurt, Germany
presented his results with the ATS 3f® Enable(TM) valve demonstrating
excellent pressure gradients and good outcomes. Professor Thierry
Carrel from the University of Berne, in Berne Switzerland presented on
his surgical approach in performing a biological Bentall procedure
Heart Valve Repair
-- Heart valve repair revenue in the third quarter of 2009 was $1.2
million, an increase of 29% compared to the third quarter of 2008.
-- The Company announced FDA approval and first implants of a new ATS
Simulus semi-rigid band. The semi-rigid band expands the Company's
annuloplasty repair product portfolio to meet broader clinical
applications. The Company anticipates at least one additional repair
product launch prior to the end of 2009.
Surgical Ablation
-- Cryoablation revenues of $4.5 million in the third quarter of 2009
increased 12% over third quarter of 2008.
-- The third quarter saw the early stages of U.S. launch for the new ATS
CryoMaze® 10-S Surgical Cryoablation Probe, which offers increased
support throughout the length of the ablation segment. The increased
rigidity of the probe addresses the preference of some surgeons to
have
a cryoablation probe with the feel of a more substantial surgical
instrument. The ATS CryoMaze 10-S Probe has optimal shape retention
while remaining distinctly malleable by hand. This combination of
attributes makes the probe particularly useful in minimally invasive
cardiac arrhythmia procedures.
-- The Company received CE Mark for the new ATS CryoMaze 10-S Probe in
October. European launch of the 10-S Probe will begin in the fourth
quarter.
"Our focused R&D investments continue to deliver new products that are
specifically designed to meet the unique needs of our cardiac surgeon
customers around the world," commented Mr. Dale. "We have confidence that we
have the right portfolio of current and upcoming products to deliver continued
growth and expand our market presence in all segments."
2009 Guidance
For the full year 2009 the Company re-affirmed its previous revenue guidance
of $77 to $79 million. Additionally, the Company anticipates it may generate
net income in the fourth quarter of 2009.
Conference Call Today
ATS management will host a conference call today, November 2, 2009, at 5:00
p.m. ET to discuss its 2009 third quarter financial results and current
corporate developments. The dial-in number for the conference call is
866-700-0161 for domestic participants and 617-213-8832 for international
participants with a passcode of 96839682. A live webcast of the call can also
be accessed at www.atsmedical.com by clicking on the Investors icon.
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 888-286-8010 for
domestic participants and 617-801-6888 for international callers, using the
passcode 52986153.
Disclosure of Non-GAAP Financial Measures
ATS reports its financial results in accordance with generally accepted
accounting principles (GAAP). In addition, from time to time, we include other
measures in our releases which are not prepared in accordance with GAAP.
Investors should consider these non-GAAP financial measures in addition to,
not as a substitute for or as superior to, financial reporting measures
prepared in accordance with GAAP. Non-GAAP financial measures used by ATS may
be calculated differently from, and therefore may not be directly comparable
to, similarly titled measures used by other companies. In this release we have
included disclosures of earnings before interest, taxes, depreciation and
amortization (EBITDA), a non-GAAP financial measure, for the third quarter and
first nine months of 2009 and 2008. We use EBITDA in our internal analysis
and review of our operational performance. We believe that this non-GAAP
measure provides investors with useful information in comparing our
operational performance over different periods. By using this non-GAAP measure
we believe investors get a better picture of the performance of our underlying
business. We have also included as an attachment to this release a schedule
which reconciles net loss reported in accordance with GAAP to the EBITDA
amounts presented above.
About ATS Medical
ATS Medical, Inc. is dedicated to "Advancing The Standards" of cardiac surgery
through the development, manufacturing and marketing of innovative products
and services for the treatment of structural heart disease. ATS Medical serves
the cardiac surgery community by focusing on two distinct but operationally
synergistic market segments: heart valve disease therapy and surgical ablation
of cardiac arrhythmias.
ATS was originally founded to develop the ATS Open Pivot® heart valve as a new
mechanical heart valve standard of care. Today the Open Pivot heart valve is
the preferred mechanical heart valve in many markets around the world and the
fastest growing mechanical prosthesis in the market. Building on this legacy
and addressing the largest market segment in heart valve therapy, the ATS 3f®
brand encompasses an innovative tissue heart valve portfolio to address
conventional open surgery requirements as well as the growing demand for less
invasive, sutureless procedures. The ATS 3f® portfolio includes offerings at
various stages including early product development, pivotal clinical trials,
and market commercialization. Completing the portfolio in heart valve therapy
is the ATS Simulus® annuloplasty product line. Simulus products assist the
surgeon in repairing a patient's native heart valve as an alternative to
replacement. Continuing ATS Medical's focus on serving the cardiac surgery
community are the ATS CryoMaze® products for surgical cryoablation of cardiac
arrhythmias. ATS CryoMaze® products are used by surgeons to treat patients
suffering from cardiac arrhythmias, the largest and fastest growing form of
structural heart disease in populations over 60 years of age. The ATS Medical
web site is http://www.atsmedical.com.
Cautionary Statements
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 the results of clinical trials, the timing of regulatory approvals,
the integration of 3f Therapeutics and the surgical cryoablation business of
CryoCath Technologies, Inc., 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, 2008 and its most recent quarterly report on Form 10-Q.
ATS Medical, Inc.
Condensed Consolidated Statements of Operations
(in thousands except per share amounts)
---------------------------------------
Quarter Ended Nine Months Ended
------------- -----------------
October September October September
3, 27, 3, 27,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $18,827 $16,044 $57,011 $47,789
Cost of goods sold 6,983 6,570 20,153 19,077
----- ----- ------ ------
Gross profit 11,844 9,474 36,858 28,712
Operating expenses:
Sales and marketing 6,950 7,059 21,976 20,693
Research and development 2,226 1,843 6,087 6,351
General and administrative 2,438 2,431 7,345 8,199
Amortization of intangibles 812 891 2,412 2,672
--- --- ----- -----
Total operating expenses 12,426 12,224 37,820 37,915
------ ------ ------ ------
Operating loss (582) (2,750) (962) (9,203)
Interest expense, net (644) (700) (2,057) (1,976)
Other income (expense), net 383 (241) 501 637
--- ----- --- ---
Net loss before income taxes (843) (3,691) (2,518) (10,542)
Income tax expense (132) (55) (314) (284)
----- ---- ----- -----
Net loss ($975) ($3,746) ($2,832) ($10,826)
===== ======= ======= =========
Net loss per share:
Basic and diluted ($0.01) ($0.06) ($0.04) ($0.18)
======= ======= ======= =======
Weighted average number of shares
outstanding:
Basic and diluted 71,941 62,300 71,626 60,691
====== ====== ====== ======
ATS Medical, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
--------------
October 3, December 31,
2009 2008
---- ----
Assets
Cash and short-term investments $12,092 $20,895
Accounts receivable 14,416 14,532
Inventories, net 21,352 20,208
Prepaid expenses 2,160 958
----- ---
Total current assets 50,020 56,593
Property and equipment, net 6,613 7,031
Intangible assets 46,738 49,131
Other assets 1,526 2,226
----- -----
Total assets $104,897 $114,981
======== ========
Liabilities & shareholders' equity
Accounts payable $3,780 $4,054
Accrued compensation 2,349 3,537
Current maturities of bank notes
payable 2,646 2,646
Payable to CryoCath Technologies Inc. - 1,910
Payable to CarboMedics Inc. - 4,500
Other accrued liabilities 2,648 2,257
----- -----
Total current liabilities 11,423 18,904
Convertible senior notes payable 17,626 17,533
Bank notes payable 1,764 3,969
Shareholders' equity 74,084 74,575
------ ------
Total liabilities & shareholders'
equity $104,897 $114,981
======== ========
ATS Medical, Inc.
Consolidated Condensed Statements of Cash Flow
(in thousands)
--------------
Nine Months Ended
-----------------
October September
3, 27,
2009 2008
---- ----
Operating activities
Net loss ($2,832) ($10,826)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 3,828 4,331
Stock-based compensation expense 1,885 1,184
Deferred income taxes 201 144
Non-cash interest expense 601 499
Change in value of warrant
liability and derivative
liability bifurcated from
convertible senior notes (26) (286)
Changes in operating assets and
liabilities (8,045) (1,167)
------- -------
Net cash used in operating
activities (4,388) (6,121)
Investing activities
Maturities of short-term
investments, net of purchases - 4,189
Payments for business
acquisitions (2,000) (2,000)
Purchases of furniture, machinery
and equipment (990) (1,208)
Other 460 -
--- ---
Net cash provided by (used in)
investing activities (2,530) 981
Financing activities
Payments on notes payable (2,205) (1,323)
Net proceeds from issuance of
common stock 236 4,002
Other 29 108
-- ---
Net cash provided by (used in)
financing activities (1,940) 2,787
Effect of foreign exchange rate
changes 55 (615)
--- -----
Decrease in cash and cash
equivalents ($8,803) ($2,968)
======== =======
ATS Medical, Inc.
Selected Revenue Information
(in thousands)
--------------
Quarter Ended Nine Months Ended
------------- -----------------
October September October September
3, 27, 3, 27,
2009 2008 2009 2008
---- ---- ---- ----
Heart valve therapy $14,163 $11,755 $42,144 $34,529
Surgical arrhythmia 4,491 4,011 14,117 12,245
Surgical tools &
accessories 173 278 750 1,015
--- --- --- -----
Total revenue $18,827 $16,044 $57,011 $47,789
======= ======= ======= =======
ATS Medical, Inc.
Reconciliation of GAAP
Net Loss to Non-GAAP
EBITDA
(Unaudited, in thousands)
-------------------------
Quarter Ended Nine Months Ended
------------- -----------------
October September October September
3, 27, 3, 27,
2009 2008 2009 2008
---- ---- ---- ----
Net loss, as reported $(975) $(3,746) $(2,832) $(10,826)
Adjustments to net loss:
Interest expense 648 729 2,081 2,151
Income tax expense 132 55 314 284
Depreciation 476 494 1,416 1,659
Amortization of intangibles 812 891 2,412 2,672
--- --- ----- -----
Earnings (loss) before
interest, taxes,
depreciation and
amortization
(EBITDA) $1,093 $(1,577) $3,391 $(4,060)
====== ======== ====== =======
SOURCE ATS Medical, Inc.
Michael Dale, President, CEO, +1-763-553-7736, or Michael Kramer, CFO,
+1-763-557-2222, both of ATS Medical; or Investors, Parice Halbert, CFA of
Westwicke Partners, +1-443-213-0500, for ATS Medical
