First Quarter 2008 Revenue Increases 37.5% to $14.8 Million
Gross Profit Margin at 60.3% Sets Quarterly Record
Company Raises Revenue Guidance
MINNEAPOLIS, May 5 /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 the first quarter ended March 29, 2008. Revenue for the quarter was $14.8 million, up 37.5% from $10.8 million reported in the first quarter of 2007.
Revenue growth was strong across all regions with domestic and international revenue increasing 36.2% and 38.3%, respectively. Contributing to the strong first quarter revenue growth was a 160.5% increase in revenues from the Company's ATS CryoMaze(TM) cryoablation products for the treatment of cardiac arrhythmias. Revenue from this product line rose to $3.8 million. Revenue from the Company's heart valve therapy products, consisting of mechanical valves, tissue valves and repair products, was up 18.8% on a year-over-year basis to $10.7 million. The growth reflected a 17.4% increase in mechanical valve revenue and a 70.4% increase in valve repair revenue. Revenue from products and services other than the Company's mechanical valves represented 34% of total revenue during the first quarter of 2008 compared with 23% in the first quarter of 2007.
Gross profit margin for the first quarter of 2008 set another quarterly record of 60.3% compared with 57.8% for the first quarter of 2007. Gross margin improvements were the result of lower product costs and increased contribution of new products. The prior record gross margin was 58.2% in the fourth quarter of 2007.
"Our strong first quarter revenue growth and milestone achievement of
gross profit exceeding 60% for the first time demonstrates continued
progress towards our twin goals of attaining positive cash flow and
profitability," said Michael Dale, Chairman, President and Chief Executive
Officer. "While sales of our existing mechanical heart valve and
cryoablation products have been strong, we are very excited about the
outlook for incremental future revenues from our most recent introductions
as well as products in the pipeline. In particular, we believe our new
CryoMaze products and supporting clinical plans have the potential to
expand less invasive treatments of atrial fibrillation with excellent
Recent and Upcoming New Product Highlights
-- Minimally invasive surgical ablation: The Company is co-sponsoring a
symposium titled "Frontiers in Cryoablation" with Intuitive Surgical
(Nasdaq: ISRG) at the American Association of Thoracic Surgeons meeting
in San Diego, California on Sunday, May 11. The symposium will include
a panel of world renowned cardiac and thoracic surgeons to discuss both
robotic and non-robotic approaches to treating atrial fibrillation on a
minimally invasive basis.
-- ATS CryoMaze surgical ablation system: Several new products are under
development to enhance the utility of the Company's existing products
and tools for the treatment of cardiac arrhythmias. The Company
anticipates launching a next generation ablation clamp with probe in
Tissue Heart Valves
-- ATS 3f(R) Aortic Bioprosthesis: The Company's first generation tissue
valve has been launched on a targeted basis in France, Scandinavia and
Canada during early 2008.
As announced previously, the Food and Drug Administration (FDA) has
asked ATS to provide additional information and clarification in
support of its PMA for the ATS 3f Aortic Bioprosthesis. The Company
submitted answers to the FDA in March 2008. Management continues to
expect that the ATS 3f Aortic Bioprosthesis will be approved in the
second half of 2008.
-- ATS 3f Enable(TM) Aortic Bioprosthesis: Enrollment continues to
progress with excellent clinical results in the Company's European
clinical trial of its Enable sutureless tissue valve designed to
provide a less invasive approach for aortic valve replacement. The
Company recently implanted the 50th patient in this pivotal trial and
expects to reach enrollment of 100 patients around mid year. The first
regulatory approval for commercialization is expected in mid 2009.
-- ATS Open Pivot AP360(TM) Mechanical Heart Valve: The Company commenced
a limited launch of its ATS AP360 Heart Valve in the first quarter.
The AP360 is the Company's most competitive Open Pivot product, with
the same hemodynamic features as its existing supra annular AP valve
but with a revised cuff design to enable easier suturing. Initial
physician response has been excellent and the company expects to see
measurable revenue growth from this new offering in the second quarter.
-- ATS Simulus(R) Semi-Rigid and Adjustable Flexible Rings: Initial launch
and implants have been completed; surgeon feedback has been very
positive and contributed to revenue growth of 28.0% in the first
quarter of 2008 compared to Q4 2007 and 70.4% compared to the first
quarter of 2007. The ATS Simulus Flexible rings and bands are fast
becoming the annuloplasty device of choice among surgeons performing
surgical robotic mitral valve repair because of the ease of suture
"Our first quarter performance was especially strong with most of the upside coming from our existing products," continued Mr. Dale. "We began the launch of our new products, specifically the 3f Aortic Bioprosthesis and the Open Pivot AP360 Mechanical Heart Valve, towards the end of the quarter so we've yet to see an appreciable revenue impact from these introductions. We expect meaningful revenue from these products to begin in the second quarter and grow sequentially throughout the year. We are confident that the combination of robust growth from existing products and increasing contribution from new products will result in another landmark year for ATS. Furthermore, as top line growth continues, we fully expect the increased leverage will enable enhanced financial performance."
Additional Financial Results
The operating loss for the first quarter of 2008 was $3.6 million compared with an operating loss of $4.4 million in the first quarter of 2007. The net loss for the first quarter of 2008 was $2.4 million, or $0.04 per share, compared with $4.8 million, or $0.11 per share in the first quarter of 2007.
Revised 2008 Revenue Outlook
For the full year 2008 the Company now expects revenue to be in a range of $62 to $66 million versus its previous guidance of $60 to $64 million.
Conference Call Today
ATS management will host a conference call today, May 5, 2008 at 5:00 p.m. ET to discuss its first quarter financial results and current corporate developments. The dial-in number for the conference call is 800-218-4007 for domestic participants and 303-262-2142 for international participants. 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 800-405-2236 for domestic participants and 303-590-3000 for international callers, using the passcode 11112192#.
About ATS Medical
ATS Medical, Inc. provides innovative products and services focused on cardiac surgery. The company, global in scope, is headquartered in Minneapolis, Minnesota. More than 145,000 ATS Open Pivot(R) Heart Valves, which utilize a unique pivot design resulting in exceptional performance and low risk profile, have been implanted in patients worldwide. The ATS 3f(R) brand encompasses multiple tissue heart valve product offerings at varying steps from market introductions to clinical trials to development projects that incorporate less invasive valve replacement technology. ATS Medical's focus on serving the cardiac surgery community is further strengthened by offerings that include ATS Simulus(R) annuloplasty products for heart valve repair and ATS CryoMaze(TM) surgical ablation products. The ATS Medical web site is http://www.atsmedical.com.
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, 2007 and its most recent quarterly
report on Form 10-Q.
ATS Medical, Inc.
Condensed Consolidated Statements of Operations
(in thousands except per share amounts)
March 29, March 31,
Net sales $14,845 $10,796
Cost of goods sold 5,897 4,553
Gross profit 8,948 6,243
Sales and marketing 6,487 5,923
Research and development 2,206 1,657
General and administrative 3,004 2,616
Amortization of intangibles 891 415
Total operating expenses 12,588 10,611
Operating loss (3,640) (4,368)
Interest expense, net (619) (445)
Other income (expense) 1,918 (6)
Net loss before income taxes (2,341) (4,819)
Income tax expense (70) (1)
Net loss ($2,411) ($4,820)
Net loss per share:
Basic and diluted ($0.04) ($0.11)
Weighted average number of shares outstanding:
Basic and diluted 59,739 42,052
ATS Medical, Inc.
Condensed Consolidated Balance Sheets
March 29, December 31,
Cash and short-term investments $11,926 $14,669
Accounts receivable 11,488 11,186
Inventories 19,266 18,743
Prepaid expenses 1,016 1,143
Total current assets 43,696 45,741
Property and equipment, net 7,646 7,739
Intangible assets 49,888 50,779
Other assets 1,530 1,638
Total assets $102,760 $105,897
Liabilities & shareholders' equity
Accounts payable $4,959 $4,794
Accrued compensation 2,195 2,361
Other accrued liabilities 2,092 2,000
Current maturities of bank notes payable 2,646 2,457
Warrant liability 2,393 3,913
Total current liabilities 14,285 15,525
Convertible senior notes payable 17,456 17,436
Bank notes payable 5,954 6,143
Payable to CryoCath Technologies Inc. 1,782 1,742
Deferred income taxes 143 95
Shareholders' equity 63,140 64,956
Total liabilities & shareholders' equity $102,760 $105,897
ATS Medical, Inc.
Consolidated Condensed Statements of Cash Flow
March 29, March 31,
Net loss ($2,411) ($4,820)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 1,496 904
Stock compensation expense 327 316
Deferred income taxes 48 -
Non-cash interest expense 155 112
Change in value of common stock
appreciation rights and convertible
senior notes derivative liabilities (1,535) (19)
Changes in operating assets and liabilities (576) (1,279)
Net cash used in operating activities (2,496) (4,786)
Maturities (purchases) of short-term
investments, net 2,481 2,567
Payments for technology licenses and
other intangibles - (23)
Purchases of furniture, machinery and
equipment (488) (90)
Net cash provided by investing activities 1,993 2,454
Repayments on notes payable - (283)
Net proceeds from sales of common stock
and warrants 51 15,464
Other 29 76
Net cash provided by financing activities 80 15,257
Other items 161 (52)
Increase (decrease) in cash and
cash equivalents ($262) $12,873
ATS Medical, Inc.
Selected Revenue Information
Revenue for the Quarter Ended
March 29, March 31,
Heart valve therapy $10,681 $8,992
Surgical arrhythmias 3,848 1,477
Surgical tools & accessories 316 327
Total revenue $14,845 $10,796
|SOURCE ATS Medical, Inc.|
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