Perky Sales for AtriCure But Margin Down and Expenses Up Means Losses Increase

Atrial Fibrillation specialist AtriCure, Inc. has announced financial results for the second quarter of 2014. While the sales picture looks healthy, a combination of mix-driven margin decline and increased sales and marketing costs conspire to see losses mount compared with a year ago.

Background

AtriCure, Inc. taps into demand created by a condition that affects an estimated 5.5 million people around the world. It offers atrial fibrillation (Afib) solutions that it says are designed to produce superior outcomes that reduce the economic and social burden of atrial fibrillation. AtriCure’s Synergy Ablation System is the first and only surgical device approved for the treatment of Persistent and Longstanding Persistent forms of Afib in patients undergoing certain open concomitant procedures. Furthermore the company says its AtriClip Left Atrial Appendage (LAA) exclusion device is the most widely sold device worldwide that is indicated for the occlusion of the LAA. 

So to the financials then, which make interesting reading. Q2 revenue came in at $26.5 million, an increase of $6.1 million or 29.8% (28.9% on a constant currency basis) compared to second quarter 2013 revenue.

Underlining the fact that growth is not based on opening up overseas territories, domestic revenue increased at a similar 28.8% rate to $19.9 million, driven by strong sales of ablation-related open-heart, ablation-related minimally invasive, and AtriClip products. International revenue was $6.6 million, an increase of $1.6 million or 32.9% (29.1% on a constant currency basis) when compared to $5.0 million for the second quarter of 2013. International revenue growth was driven primarily by increases in product sales in Europe and Asia.

Gross profit for the second quarter of 2014 was $18.8 million, compared to $15.1 million for the second quarter of 2013. Gross margin for the second quarter of 2014 and 2013 was 70.8% and 74.0%, respectively. The decrease in gross margin has been attributed to lower product margins on the acquired Estech products, along with increased mix of international sales and heavier placement of loaned equipment.

As is often the case for companies in growth phase, operating expenses for the second quarter of 2014 increased 29.1%, or $4.9 million, compared to the second quarter of 2013, primarily due to an increase in selling, marketing, clinical, product development and training expenses.

Down at the bottom of the income statement then, what this all works up to is a loss from operations for the second quarter of 2014 was $2.9 million, compared to $1.6 million for the second quarter of 2013.

The outlook, as forecast by management, projects 2014 revenue will be in the range of $103 million to $105 million, which represents an increase of 26% to 28% over 2013. This is in line with previously stated expectations of revenue in the range of $101 million to $104 million.

Company comments

“We are pleased with our performance in the second quarter in which we delivered solid revenue growth while integrating Estech that further positions us as a leader in the treatment of Afib. We also continued to execute on our clinical trials and deliver data that prove the benefit of our innovative products to patients,” said Mike Carrel, President and Chief Executive Officer of AtriCure. “Our goal is unchanged – to drive sustainable growth by simultaneously investing in training and education, clinical trials and innovative products.”

Source: AtriCure, Inc., Business Wire

 

 

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