MINNEAPOLIS, March 1 /PRNewswire-FirstCall/ -- ATS Medical, Inc. ,
manufacturer and marketer of state-of-the-art cardiac surgery
products and services, today reported financial results for its
fourth quarter and full year ended December 31, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20040202/ATSILOGO) Fourth
Quarter Results Revenue for the quarter was $18.7 million, or 3.7%
higher, than the fourth quarter of 2008. On a constant currency
basis, revenue growth for the fourth quarter was 2%. Without the
effects of four more selling days in the fourth quarter of 2008,
the impact of foreign currency translation and the discontinuance
of the distribution of certain products in the third quarter of
2009, the Company's adjusted revenue growth was 5.9%. A
reconciliation of the GAAP revenue growth percentage to this
non-GAAP adjusted revenue growth percentage for the fourth quarter
of 2009 is provided in a schedule accompanying this press release.
Revenue from the Company's heart valve therapy products, consisting
of mechanical valves, tissue valves and heart valve repair
products, was up 6.3% on a year-over-year basis in the fourth
quarter to $13.9 million. Mechanical heart valve revenue decreased
3.4% on a year-over-year basis in the fourth quarter to $11.3
million. Tissue heart valve revenue for the fourth quarter
increased 201% from the prior year's quarter to $1.5 million. U.S.
tissue heart valve revenue represented approximately 64% of the
Company's worldwide tissue heart valve revenue during the quarter.
Heart valve repair revenue was $1.1 million, an increase of 29.5%
over the fourth quarter of 2008. Revenue from the Company's ATS
CryoMaze ® cryoablation products for the treatment of cardiac
arrhythmias was $4.8 million, an increase of 2.6% compared to the
$4.6 million in fourth quarter of 2008. Gross profit margin for the
fourth quarter of 2009 was 64.3% vs. 65.7% in the fourth quarter of
2008. The year-over-year gross margin decline is primarily the
result of shifts in geographic and product mix. Operating loss for
the fourth quarter of 2009 was $2.8 million compared with an
operating loss of $7.3 million in the fourth quarter of 2008. The
GAAP net loss for the fourth quarter of 2009 was $3.5 million, or
$0.05 per share, compared with $8.5 million, or $0.13 per share, in
the fourth quarter of 2008. The operating and net losses for the
fourth quarter of 2009 and 2008 included charges related to
restructuring costs (2009) and legal settlement costs (2008) of
$1.1 million and $7.5 million, respectively. The Company also had a
non-GAAP loss before interest, taxes, depreciation and amortization
(EBITDA) in the fourth quarter of 2009 of $1.4 million compared to
an EBITDA loss of $6.3 million in the fourth quarter of 2008. A
reconciliation of reported net loss to non-GAAP EBITDA for these
periods is provided in a schedule accompanying this press release.
The Company ended the fourth quarter with $14.2 million in cash and
cash equivalents and generated positive cash flow from operations
during the quarter. "While revenue growth from our mechanical heart
valve and cryoablation products fell a bit below expectations in
the fourth quarter as market growth rates slowed, we made
significant progress on commercialization of the ATS 3f ®
Aortic Bioprosthesis and the development of our new product
pipeline, which we believe will enable us to return to double digit
growth by the end of 2010," said Michael Dale, President and Chief
Executive Officer. Full Year 2009 Results Revenue for the full year
2009 increased 15.0% to $75.7 million compared to $65.8 million for
2008. On a constant currency basis revenue growth for 2009 was
17.1%. Heart valve therapy revenue grew 17.7% from $47.6 million in
2008 to $56.0 million in 2009 driven primarily by the expanded
launch of the Company's tissue valve products. Revenue from our
CryoMaze cryoablation products increased 11.8% to $18.9 million in
2009. Operating loss for 2009 was $3.7 million compared with an
operating loss of $16.5 million for 2008. Net loss for 2009 was
$6.3 million, or $0.09 per share, compared to $19.3 million, or
$0.31 per share for 2008. Both the operating and net losses for
2009 and 2008 included non-recurring charges related to
restructuring costs (2009) and legal settlement costs (2008) of
$1.1 million and $7.5 million, respectively. The Company had
non-GAAP earnings before interest, taxes, depreciation and
amortization (EBITDA) of $2.0 million for the full year 2009
compared to an EBITDA loss of $10.3 million for the full year 2008.
A reconciliation of reported net loss to non-GAAP EBITDA for these
periods is provided in a schedule accompanying this press release.
Recent Product Highlights and Upcoming Events Mechanical Heart
Valves -- The Company plans to begin human feasibility studies of
its proprietary Forcefield technology applied to the
OpenPivot ® mechanical heart valve in the second half of 2010.
The Forcefield technology is designed to eliminate the need for
chronic anticoagulant therapy with certain implantable devices
through the use of electrical fields to modify the interaction
between the blood and the device. Tissue Heart Valves -- In
December 2009, the Company received CE Mark of its ATS 3f Enable
Bioprosthesis for commercialization in the European Union. The
Enable valve combines the ATS 3f Aortic Bioprosthesis with over
eight years of proven clinical performance and a self-expanding
Nitinol(TM) frame to hold the valve in its optimal position
eliminating the need for conventional sutures. This design allows
the Enable valve to be folded into a small diameter and placed
through a minimally invasive incision. Commercialization of the
first generation Enable valve will be limited to a controlled
market release at select surgical centers in Europe. -- The Company
expects to begin commercialization of its second generation Enable
valve in the second half of 2010. The second generation Enable will
provide the basis for expansion of the Enable platform into a full
market release. -- The Company is continuing to develop its
sutureless tissue valve technology for use in beating heart
procedures based in part on the characteristics of the next
generation Enable valves. First-in-human clinical studies of this
novel technology is targeted to occur during 2010. European
commercialization of a beating heart solution could occur within
one to two years thereafter. Heart Valve Repair -- The Company
expects to receive regulatory approval for an additional valve
repair product in the second quarter of 2010. The additional
product represents further expansion of the Company's annuloplasty
repair product portfolio to meet broader clinical applications.
Surgical Cryoablation -- The Company has completed protocol
development and will begin selecting investigation sites for the
CryoMaze study, a prospective, multi-center clinical study of its
CryoMaze cryoablation products to study the safety and efficacy of
the use of the products for the treatment of atrial fibrillation.
The study will have one year follow-up with interim data points to
validate the safety and efficacy of the CryoMaze products used to
create the lesions of the gold-standard Cox-Maze III lesion sets.
This is the first and only multicenter study to mandate the
Cox-Maze III lesion set for the treatment of atrial fibrillation
with an energy source. Analyst Day -- The Company announced it will
host an Analyst Day meeting in New York City on Monday, May 10,
2010, at which senior management and key opinion leading physicians
will speak about the Company's current and pipeline products.
Specific details of the event will be provided in advance of the
meeting and the meeting will be webcast. Debt Refinancing -- The
Company also announced today it has received a commitment letter
for term debt financing of approximately $30 million from one of
its directors, Mr. Theodore C. Skokos, and The Ted and Shannon
Skokos Foundation. This financing will be used to call and retire
the Company's convertible debt and senior bank debt instruments
totaling approximately $26 million as well as to provide general
corporate working capital. The Company expects to close the
financing during the second quarter of 2010. When the convertible
debt is retired the Company expects to recognize a non-cash debt
restructuring charge of approximately $4.5 to $5.0 million related
to the unamortized discount on the convertible debt. "2010 will be
an important year in many respects, perhaps most importantly
because we will bring to market our first sutureless heart valve
while also initiating our first human studies for both beating
heart valve replacement and our Forcefield technology. Each of
these solutions represents revolutionary initiatives that form the
basis of our company's aspiration to market leadership. Commercial
success in our markets is all about "advancing the standards" of
cardiac surgery and we are confident our current products and very
importantly our pipeline portfolio meets and exceeds these
measures," commented Mr. Dale. "We look forward to sharing more
details on our pipeline during our planned Analyst Day meeting in
the second quarter." 2010 Guidance For the full year 2010 the
Company expects revenue in the range of $81 to $83 million,
representing growth of approximately 7% to 10%. The low-end of the
revenue growth rate is approximately 1% less than preliminary
guidance the Company provided in January due to recent volatility
in the U.S. dollar to Euro exchange rate. Gross margin is expected
to be within a range of 65% to 67% based on current expectations
for product and geographic mix. Operating expenses are expected to
be between $59 and $62 million as we invest in our sales and
marketing infrastructure to support the U.S. and European roll-out
of our Enable tissue valve and in research and development as we
advance our robust product pipeline. Conference Call Today ATS
management will host a conference call today, March 1, 2010, at
5:00 p.m. ET to discuss its 2009 fourth quarter financial results
and current corporate developments. The dial-in number for the
conference call is 866-314-4483 for domestic participants and
617-213-8049 for international participants with a passcode of
32431390. A live webcast of the call can also be accessed at
http://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 61737878. 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 the adjusted percentage increase in revenue
(adjusted revenue growth) for the fourth quarter of 2009 as well as
earnings before interest, taxes, depreciation and amortization
(EBITDA) , for the fourth quarter and full year periods of 2009 and
2008. Both of these disclosures are non-GAAP financial measures. We
use both EBITDA and adjusted revenue growth rates in our internal
analysis and review of our operational performance. We believe that
these non-GAAP measures provide investors with useful information
in comparing our operational performance over different periods. By
using these non-GAAP measures we believe investors get a better
picture of the performance of our underlying business. We have also
included, as an attachment to this release, schedules which
reconcile the percentage increase in revenue and the net loss
reported in accordance with GAAP to the adjusted revenue growth
percentage and 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 ATS 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 based 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 impact of pending healthcare reforms,
regulatory actions, the terms of its outstanding debt obligations,
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)
--------------------------------------- (Unaudited) Quarter Ended
Year Ended December 31, December 31, ------------ ------------ 2009
2008 2009 2008 ---- ---- ---- ---- Net sales $18,699 $18,032
$75,710 $65,821 Cost of goods sold 6,668 6,190 26,821 25,267 -----
----- ------ ------ Gross profit 12,031 11,842 48,889 40,554
Operating expenses: Sales and marketing 8,641 6,680 30,617 27,373
Research and development 2,776 1,864 8,863 8,215 General and
administrative 2,560 2,310 9,905 10,509 Litigation settlement -
7,500 - 7,500 Amortization of intangibles 812 817 3,224 3,489 ---
--- ----- ----- Total operating expenses 14,789 19,171 52,609
57,086 ------ ------ ------ ------ Operating loss (2,758) (7,329)
(3,720) (16,532) Interest expense, net (639) (763) (2,696) (2,739)
Other income (expense), net (110) (224) 391 413 ---- ---- --- ---
Net loss before income taxes (3,507) (8,316) (6,025) (18,858)
Income tax (expense) benefit 26 (197) (288) (481) --- ---- ----
---- Net loss ($3,481) ($8,513) ($6,313) ($19,339) ======= =======
======= ======== Net loss per share: Basic and diluted ($0.05)
($0.13) ($0.09) ($0.31) ====== ====== ====== ====== Weighted
average number of shares outstanding: Basic and diluted 73,629
63,580 72,114 61,440 ====== ====== ====== ====== ATS Medical, Inc.
Condensed Consolidated Balance Sheets (in thousands) --------------
December 31, December 31, 2009 2008 ---- ---- Assets Cash and
short-term investments $14,235 $20,895 Accounts receivable 14,398
14,532 Inventories, net 20,814 20,208 Prepaid expenses 1,774 958
----- ----- Total current assets 51,221 56,593 Property and
equipment, net 7,659 7,031 Intangible assets 61,076 49,131 Other
assets 1,299 2,226 ----- ----- Total assets $121,255 $114,981
======== ======== Liabilities & shareholders' equity Accounts
payable $4,995 $4,054 Accrued compensation 2,076 3,537 Current
maturities of bank notes payable 2,646 2,646 Convertible senior
notes payable 17,659 - Payable to CryoCath Technologies Inc. 1,910
Payable to CarboMedics Inc. - 4,500 Other accrued liabilities 2,894
1,970 ----- ----- Total current liabilities 30,270 18,617
Convertible senior notes payable - 17,533 Bank notes payable 1,323
3,969 Other long-term liabilities 790 287 Shareholders' equity
88,872 74,575 ------ ------ Total liabilities & shareholders'
equity $121,255 $114,981 ======== ======== ATS Medical, Inc.
Consolidated Condensed Statements of Cash Flow (in thousands)
-------------- Year Ended December 31, ----------------------- 2009
2008 ---- ---- Operating activities Net loss ($6,313) ($19,339)
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization 5,262 5,623 Stock-based
compensation expense 2,557 1,676 Deferred income taxes 261 192
Non-cash interest expense 768 743 Change in value of warrant
liability and derivative liability bifurcated from convertible
senior notes (34) (294) Changes in operating assets and liabilities
(5,357) (1,005) ------ ------ Net cash used in operating activities
(2,856) (12,404) Investing activities Maturities of short-term
investments, net of purchases - 4,189 Payments for business
acquisitions (2,000) (2,000) Purchases of property and equipment
(2,414) (1,440) Other 460 - --- --- Net cash provided by (used in)
investing activities (3,954) 749 Financing activities Payments on
notes payable (2,646) (1,985) Net proceeds from issuance of common
stock 2,781 23,943 Other (20) 162 --- --- Net cash provided by
financing activities 115 22,120 Effect of foreign exchange rate
changes 35 (50) --- --- Increase (decrease) in cash and cash
equivalents ($6,660) $10,415 ======= ======= ATS Medical, Inc.
Selected Revenue Information (Unaudited, in thousands)
------------------------- Quarter Ended Year Ended December 31,
December 31, ------------ ------------ 2009 2008 2009 2008 ----
---- ---- ---- Heart valve therapy $13,871 $13,047 $56,015 $47,576
Surgical arrhythmia 4,764 4,643 18,881 16,888 Surgical tools &
accessories 64 342 814 1,357 --- --- --- ----- Total revenue
$18,699 $18,032 $75,710 $65,821 ======= ======= ======= ======= ATS
Medical, Inc. Reconciliation of GAAP Revenue Growth Percentage to
Non-GAAP Adjusted Revenue Growth Percentage (Unaudited) -----------
Quarter Ended December 31, 2009 ------------- GAAP revenue growth
percentage, as reported 3.7% (Fourth quarter 2009 compared to
fourth quarter 2008) Adjustments to GAAP revenue growth percentage
for: Four more selling days in the fourth quarter of 2008 2.9%
Impact of foreign currency translation (2.0%) Discontinuance of the
distribution of certain products in the third quarter of 2009 1.3%
--- Adjusted revenue growth percentage 5.9% === ATS Medical, Inc.
Reconciliation of GAAP Net Loss to Non-GAAP EBITDA (Unaudited, in
thousands) ------------------------- Quarter Ended Year Ended
December 31, December 31, ------------ ------------ 2009 2008 2009
2008 ---- ---- ---- ---- Net loss, as reported $(3,481) $(8,513)
$(6,313) $(19,339) Adjustments to net loss: Interest expense 642
772 2,723 2,923 Income tax expense (benefit) (26) 197 288 481
Depreciation 621 476 2,037 2,134 Amortization of intangibles 812
817 3,224 3,489 --- --- ----- ----- Earnings (loss) before
interest, taxes, depreciation and amortization (EBITDA) $(1,432)
$(6,251) $1,959 $(10,312) ======= ======= ====== ========
DATASOURCE: ATS Medical, Inc. CONTACT: Michael Dale, President/CEO,
+1-763-553-7736, or MichaelKramer, CFO, +1-763-557-2222, both of
ATS Medical, Inc.; or investors, PariceHalbert, CFA of Westwicke
Partners, +1-443-213-0500, for ATS Medical, Inc. Web Site:
http://www.atsmedical.com/
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