UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
On November 5, 2020, AtriCure, Inc. (the “Company”) issued a press release regarding its financial results for the third quarter ended September 30, 2020. The Company will hold a conference call on November 5, 2020 at 4:30 p.m. Eastern Time to discuss the financial results. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
In connection with the issuance of the press release described above, the Company is providing an updated version of its investor presentation. This presentation is available on www.atricure.com, is furnished as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference.
Information in the presentation contains forward-looking statements regarding future events and performance of the Company. All such forward-looking statements are based largely on the Company’s experience and perception of current conditions, trends, expected future developments and other factors, and on management’s expectations, and are subject to risks and uncertainties that could cause actual results to differ materially, including, but not limited to, those factors described in the presentation and in the Company’s filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any financial or other projections or other forward-looking statements, whether because of new information, future events or otherwise.
The information in each of “Item 2.02 – Results of Operations and Financial Condition” and “Item 7.01 – Regulation FD Disclosure” and in the press release attached as Exhibit 99.1 and the presentation attached as Exhibit 99.2, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section. The information in each of Item 2.02 and Item 7.01 of this Form 8-K and each of Exhibit 99.1 and Exhibit 99.2 shall not be deemed to be incorporated by reference into any filing (whether made before or after date hereof) or any other document under the Exchange Act or Securities Act of 1933, as amended, except as expressly set forth by specific reference in any such filing document.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| No. |
Description | |
| 99.1 | Press Release dated November 5, 2020 relating to financial results for the third quarter ended September 30, 2020 | |
| 99.2 | Investor Presentation updated as of November 5, 2020 | |
| 104 | Cover Page Interactive Data File--the cover page XBRL tags are embedded within the Inline XBRL document. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ATRICURE, INC. | ||||||
| Date: November 5, 2020 |
By: | /s/ Angela L. Wirick | ||||
| Angela L. Wirick | ||||||
| Chief Financial Officer | ||||||
Exhibit 99.1
For immediate release
November 5, 2020
AtriCure Reports Third Quarter 2020 Financial Results
| • | Worldwide revenue of $54.8 million – a decrease of 3.3% year over year |
| • | U.S. revenue of $44.7 million – a decrease of 3.1% year over year |
| • | International revenue of $10.1 million – a decrease of 4.1% year over year |
MASON, Ohio, November 5, 2020 – AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, today announced third quarter 2020 financial results.
“We are pleased with our third quarter performance and the improving trajectory of our business, which reflect the commitment of our team and underlying demand in our core markets,” said Michael Carrel, President and Chief Executive Officer of AtriCure. “We are continuing to make significant progress on our strategic initiatives and are on the forefront of meaningfully expanding our addressable market opportunity.”
Third Quarter 2020 Financial Results
Revenue for the third quarter of 2020 was $54.8 million, a decrease of $1.9 million or 3.3% (a decrease of 3.9% on a constant currency basis), compared to third quarter 2019 revenue, due to the global decline in surgical procedures as a result of the COVID-19 pandemic. U.S. revenue decreased 3.1% to $44.7 million, and international revenue decreased 4.1% to $10.1 million, (a decrease of 7.2% on a constant currency basis), compared to third quarter 2019 revenue.
Gross profit for the third quarter of 2020 was $40.3 million compared to $41.8 million for the third quarter of 2019. Gross margin for the third quarter of 2020 remained relatively consistent at 73.7% compared to 73.8% in the third quarter of 2019, reflecting normal manufacturing operations during both periods.
Loss from operations for the third quarter of 2020 was $4.0 million, compared to $8.6 million for the third quarter of 2019. Net loss per share was $0.11 for the third quarter of 2020 compared to $0.25 for the third quarter of 2019. Adjusted EBITDA was a positive $4.2 million for the third quarter of 2020 compared to a loss of $2.2 million for the third quarter of 2019. Adjusted loss per share for the third quarter of 2020 was $0.11 compared to an adjusted loss per share of $0.33 for the third quarter of 2019.
Constant currency revenue, adjusted EBITDA and adjusted loss per share are non-GAAP measures. We discuss these non-GAAP measures and provide reconciliations to GAAP measures later in this release.
2020 Financial Guidance
Management expects revenue to be $56 million to $60 million for the fourth quarter of 2020 and $205 million to $209 million for the full year 2020. Full year adjusted EBITDA loss is expected to be approximately $10 million.
Incrementally higher or lower impact from the on-going global pandemic could cause forecasts for fourth quarter and full year 2020 to differ materially than these projections.
Conference Call
AtriCure will host a conference call at 4:30 p.m. Eastern Time on Thursday, November 5, 2020 to discuss its third quarter 2020 financial results. The call may be accessed through an operator by calling (844) 884-9951 for domestic callers and (661) 378-9661 for international callers using conference ID number 8584906. A live audio webcast of the presentation may be accessed by visiting the Investors page of AtriCure’s corporate website at ir.atricure.com. A replay of the presentation will be available for 90 days following the presentation.
About AtriCure
AtriCure, Inc. provides innovative technologies for the treatment of Afib and related conditions. Afib affects more than 33 million people worldwide. Electrophysiologists and cardiothoracic surgeons around the globe use AtriCure technologies for the treatment of Afib and reduction of Afib related complications. AtriCure’s Isolator® Synergy™
Ablation System is the first and only medical device to receive FDA approval for the treatment of persistent Afib. AtriCure’s AtriClip Left Atrial Appendage Exclusion System products are the most widely sold LAA management devices worldwide. For more information, visit AtriCure.com or follow us on Twitter @AtriCure.
Forward-Looking Statements
This press release contains “forward-looking statements”– that is, statements related to future events that by their nature address matters that are uncertain. For details on the uncertainties that may cause our actual results to be materially different than those expressed in our forward-looking statements, visit http://www.atricure.com/fls as well as our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q which contain risk factors. We do not undertake to update our forward-looking statements. Actual results could differ materially.
Use of Non-GAAP Financial Measures
To supplement AtriCure’s condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, AtriCure provides certain non-GAAP financial measures in this release as supplemental financial metrics.
Revenue reported on a constant currency basis is a non-GAAP measure and is calculated by applying previous period foreign currency exchange rates, which are determined by the average daily Euro to Dollar exchange rate, to each of the comparable periods. Management analyzes revenue on a constant currency basis to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have a non-operating impact on revenue, the Company believes that evaluating growth in revenue on a constant currency basis provides an additional and meaningful assessment of revenue to both management and investors.
Adjusted EBITDA is calculated as Net loss before other income/expense (including interest), income tax expense (benefit), depreciation and amortization expense, share-based compensation expense, acquisition costs, and change in fair value of contingent consideration liabilities. Management believes in order to properly understand the short-term and long-term financial trends, investors may wish to consider the impact of these excluded items in addition to GAAP measures. The excluded items vary in frequency and/or impact on our continuing results of operations and management believes that the excluded items are typically not reflective of our ongoing core business operations and financial condition. Further, management uses adjusted EBITDA for both strategic and annual operating planning, and previously used adjusted EBITDA as a performance metric in the annual incentive plan. A reconciliation of adjusted EBITDA reported in this release to the most comparable GAAP measure for the respective periods appears in the table captioned “Reconciliation of Non-GAAP Adjusted Income (Loss) (Adjusted EBITDA)” later in this release.
Adjusted loss per share is a non-GAAP measure which calculates the net loss per share before non-cash adjustments to expenses related to the adjustment in value of contingent consideration liabilities. Management believes this metric provides a better measure of comparability of results between periods, as such adjustments can be significant and vary in value and are not reflective of our core business. A reconciliation of adjusted loss per share reported in this release to the most comparable GAAP measure for the respective periods appears in the table captioned “Reconciliation of Non-GAAP Adjusted Loss Per Share” later in this release.
The non-GAAP financial measures used by AtriCure may not be the same or calculated in the same manner as those used and calculated by other companies. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for AtriCure’s financial results prepared and reported in accordance with GAAP. We urge investors to review the reconciliation of these non-GAAP financial measures to the comparable GAAP financials measures included in this press release, and not to rely on any single financial measure to evaluate our business.
CONTACTS:
Angie Wirick
AtriCure, Inc.
Chief Financial Officer
(513) 755-5334
awirick@atricure.com
Lynn Pieper Lewis
Gilmartin Group
Investor Relations
(415) 937-5402
lynn@gilmartinir.com
ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| United States Revenue: |
||||||||||||||||
| Open ablation |
$ | 19,911 | $ | 19,754 | $ | 54,679 | $ | 59,311 | ||||||||
| Minimally invasive ablation |
6,979 | 9,006 | 18,295 | 25,860 | ||||||||||||
| Appendage management |
17,430 | 16,907 | 47,870 | 49,075 | ||||||||||||
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|
|
|
|
|
|
|
|
|||||||||
| Total ablation and appendage management |
44,320 | 45,667 | 120,844 | 134,246 | ||||||||||||
| Valve tools |
381 | 456 | 994 | 2,046 | ||||||||||||
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|
|
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|
|
|
|||||||||
| Total United States |
44,701 | 46,123 | 121,838 | 136,292 | ||||||||||||
| International Revenue: |
||||||||||||||||
| Open ablation |
4,907 | 5,850 | 13,766 | 18,942 | ||||||||||||
| Minimally invasive ablation |
1,692 | 2,058 | 4,346 | 6,122 | ||||||||||||
| Appendage management |
3,445 | 2,532 | 8,778 | 7,963 | ||||||||||||
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|
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|
|
|
|||||||||
| Total ablation and appendage management |
10,044 | 10,440 | 26,890 | 33,027 | ||||||||||||
| Valve tools |
12 | 51 | 78 | 167 | ||||||||||||
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|
|
|
|
|||||||||
| Total international |
10,056 | 10,491 | 26,968 | 33,194 | ||||||||||||
| Total revenue |
54,757 | 56,614 | 148,806 | 169,486 | ||||||||||||
| Cost of revenue |
14,423 | 14,817 | 41,934 | 43,925 | ||||||||||||
|
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|
|
|
|
|
|
|
|||||||||
| Gross profit |
40,334 | 41,797 | 106,872 | 125,561 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development expenses |
10,576 | 10,154 | 32,199 | 28,134 | ||||||||||||
| Selling, general and administrative expenses |
33,749 | 40,280 | 101,403 | 115,223 | ||||||||||||
|
|
|
|
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|
|
|
|
|||||||||
| Total operating expenses |
44,325 | 50,434 | 133,602 | 143,357 | ||||||||||||
|
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|
|
|
|
|
|
|
|||||||||
| Loss from operations |
(3,991 | ) | (8,637 | ) | (26,730 | ) | (17,796 | ) | ||||||||
| Other expense, net |
(962 | ) | (650 | ) | (2,847 | ) | (1,151 | ) | ||||||||
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|
|
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|
|
|
|||||||||
| Loss before income tax expense |
(4,953 | ) | (9,287 | ) | (29,577 | ) | (18,947 | ) | ||||||||
| Income tax expense (benefit) |
(4 | ) | 75 | 16 | 151 | |||||||||||
| Net loss |
$ | (4,949 | ) | $ | (9,362 | ) | $ | (29,593 | ) | $ | (19,098 | ) | ||||
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|||||||||
| Basic and diluted net loss per share |
$ | (0.11 | ) | $ | (0.25 | ) | $ | (0.71 | ) | $ | (0.51 | ) | ||||
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|||||||||
| Weighted average shares used in computing net loss per share: |
||||||||||||||||
| Basic and diluted |
44,012 | 37,842 | 41,442 | 37,387 | ||||||||||||
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ATRICURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
| September 30, 2020 |
December 31, 2019 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash, cash equivalents, and short-term investments |
$ | 233,069 | $ | 81,801 | ||||
| Accounts receivable, net |
25,448 | 28,046 | ||||||
| Inventories |
34,326 | 29,414 | ||||||
| Prepaid and other current assets |
3,369 | 3,899 | ||||||
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|
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|
|||||
| Total current assets |
296,212 | 143,160 | ||||||
| Property and equipment, net |
29,089 | 32,646 | ||||||
| Operating lease right-of-use assets |
2,363 | 4,032 | ||||||
| Long-term investments |
16,516 | 12,675 | ||||||
| Goodwill and intangible assets, net |
363,218 | 364,662 | ||||||
| Other noncurrent assets |
399 | 705 | ||||||
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|||||
| Total assets |
$ | 707,797 | $ | 557,880 | ||||
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| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued liabilities |
$ | 32,684 | $ | 47,698 | ||||
| Other current liabilities and current maturities of debt and leases |
12,070 | 2,218 | ||||||
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|
|||||
| Total current liabilities |
44,754 | 49,916 | ||||||
| Long-term debt |
49,985 | 59,634 | ||||||
| Finance lease liabilities |
11,172 | 11,774 | ||||||
| Operating lease liabilities |
1,324 | 2,796 | ||||||
| Contingent consideration and other noncurrent liabilities |
183,030 | 186,417 | ||||||
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|
|||||
| Total liabilities |
290,265 | 310,537 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
45 | 40 | ||||||
| Additional paid-in capital |
729,220 | 529,658 | ||||||
| Accumulated other comprehensive income (loss) |
57 | (158 | ) | |||||
| Accumulated deficit |
(311,790 | ) | (282,197 | ) | ||||
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|||||
| Total stockholders’ equity |
417,532 | 247,343 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 707,797 | $ | 557,880 | ||||
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ATRICURE, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
(In Thousands)
(Unaudited)
| Reconciliation of Non-GAAP Adjusted Income (Loss) (Adjusted EBITDA) |
|
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| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net loss, as reported |
$ | (4,949 | ) | $ | (9,362 | ) | $ | (29,593 | ) | $ | (19,098 | ) | ||||
| Income tax expense (benefit) |
(4 | ) | 75 | 16 | 151 | |||||||||||
| Other expense, net |
962 | 650 | 2,847 | 1,151 | ||||||||||||
| Depreciation and amortization expense |
2,479 | 2,393 | 7,381 | 6,983 | ||||||||||||
| Share-based compensation expense |
5,549 | 4,287 | 16,126 | 12,816 | ||||||||||||
| Contingent consideration adjustment |
192 | (3,062 | ) | (4,854 | ) | (6,934 | ) | |||||||||
| Acquisition costs |
— | 2,819 | 138 | 3,645 | ||||||||||||
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| Non-GAAP adjusted income (loss) (adjusted EBITDA) |
$ | 4,229 | $ | (2,200 | ) | $ | (7,939 | ) | $ | (1,286 | ) | |||||
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| Reconciliation of Non-GAAP Adjusted Loss Per Share |
|
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| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net loss, as reported |
$ | (4,949 | ) | $ | (9,362 | ) | $ | (29,593 | ) | $ | (19,098 | ) | ||||
| Contingent consideration adjustment |
192 | (3,062 | ) | (4,854 | ) | (6,934 | ) | |||||||||
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|||||||||
| Net loss excluding contingent consideration adjustment |
$ | (4,757 | ) | $ | (12,424 | ) | $ | (34,447 | ) | $ | (26,032 | ) | ||||
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| Basic and diluted adjusted net loss per share |
$ | (0.11 | ) | $ | (0.33 | ) | $ | (0.83 | ) | $ | (0.70 | ) | ||||
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| Weighted average shares used in computing adjusted net loss per share |
||||||||||||||||
| Basic and diluted |
44,012 | 37,842 | 41,442 | 37,387 | ||||||||||||
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AtriCure Investor Presentation Creating a World Class Afib Platform November 2020 © 2020 AtriCure, Inc. All rights reserved. Exhibit 99.2
This presentation contains “forward-looking statements,” which are statements related to future events that by their nature address matters that are uncertain. All forward-looking information is inherently uncertain and actual results may differ materially from assumptions, estimates or expectations reflected or contained in the forward-looking statements as a result of various factors. For details on the uncertainties that may cause AtriCure’s actual results to be materially different than those expressed in its forward-looking statements, see its Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC and available at http://www.sec.gov, which contain risk factors. Forward-looking statements address AtriCure’s expected future business, financial performance, financial condition as well as results of operations, and often contain words such as “intends,” “estimates,” “anticipates,” “hopes,” “projects,” “plans,” “expects,” “seek,” “believes,” "see," “should,” “will,” “would,” “target,” and similar expressions and the negative versions thereof. Such statements are based only upon current expectations of AtriCure. Any forward-looking statement speaks only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Forward-looking statements include statements that address activities, events or developments that AtriCure expects, believes or anticipates will or may occur in the future. Forward-looking statements are based on AtriCure’s experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances and are subject to numerous risks and uncertainties, many of which are beyond AtriCure’s control. These risks and uncertainties include, but are not limited to: whether CONVERGE will be approved by FDA and any other required regulatory authorities; whether any additional clinical trials will be initiated or required for CONVERGE prior to approval of FDA, or at all; whether AtriCure will be able to successfully implement its commercialization plans for CONVERGE, if approved; whether the market opportunity for CONVERGE is consistent with the Company’s expectations and market research; AtriCure’s ability to execute on the commercial launch of CONVERGE, if and when approved, on the timeline expected, or at all; whether AtriCure will be able to generate its projected net product revenue on the timeline expected, or at all; the effects of the COVID-19 outbreak on AtriCure’s business and results of operations, including the effects of suspension or halting of elective surgeries; other matters that could affect the availability or commercial potential of CONVERGE and AtriCure’s other products and product candidates; competition from new and existing products and procedures in the highly competitive medical device industry; and other important factors, including, AtriCure’s expectations regarding its financial performance and capital requirements, any of which could cause AtriCure's actual results to differ from those contained in the forward-looking statements or otherwise discussed in AtriCure’s reports filed with the SEC. With respect to the forward-looking statements, AtriCure claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. AtriCure undertakes no obligation to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise unless required by law. © 2020 AtriCure, Inc. All rights reserved. Forward Looking Statements
AtriCure Overview © 2020 AtriCure, Inc. All rights reserved. Large Markets Addressing an underserved and growing patient population Approximately 33 million Atrial Fibrillation patients globally, with majority having advanced forms of the disease1 Multi-billion dollar annual market opportunity Current standard of care for intervention (catheter ablation) does not adequately address this population Strong Portfolio Existing products and solutions driving consistent growth Strong history of double-digit revenue growth, driven by great products, clinical evidence, commitment to education, and societal guideline support Only PMA product for the concomitant surgical treatment of Afib The AtriClip® device is the most widely used Left Atrial Appendage (LAA) device with over 260,000 sold to date Expanding product portfolio from internal development and acquisitions Bright Future Novel therapies supported by growing body of clinical evidence PMA pivotal trials for hybrid approaches for Afib: CONVERGE, aMAZE Launched pain management business to address pain associated with surgery Early in market development process – evolution to minimally invasive therapies will drive growth, diversifying and accelerating in 2022 and beyond
Afib: a Serious and Costly Problem Atrial Fibrillation (Afib) is an irregular heartbeat (or arrhythmia) that affects more than 33 million people worldwide.1 Approximately 1.2 million Afib diagnoses annually in the US.2 © 2020 AtriCure, Inc. All rights reserved. Afib diagnosis means: Patients with Afib experience: Average annual outpatient hospital visits4 Risk of Stroke5 Greater risk of all cause Mortality7 Higher risk of Heart Failure6 73% 50+ 10+ Higher total annual direct medical costs3 Average annual physician encounters4 5x >5x 46%
Concomitant Open Procedures (Ablation/LAAM) Type of Afib matters! Afib is a progressive disease Referring Physician: GP, Cardiologist Two Distinct Patient Profiles © 2020 AtriCure, Inc. All rights reserved. STRUCTURAL HEART ISSUE Surgery required – Afib corrected at same time (Valve, CABG) NO STRUCTURAL ISSUE Afib is primary concern Intervention is better choice Medicine is effective Paroxysmal (occasional) Non-Paroxysmal (Persistent/ LS Persistent) GUIDELINES8 Surgical Ablation is RECOMMENDED LAA management is REASONABLE Standalone Hybrid Procedures (Ablation/LAAM) Catheter often first line of treatment
Significant Global Market Opportunity © 2020 AtriCure, Inc. All rights reserved. Total US market opportunity $3B+ annually International market $2B+ annually International Market Focus Penetration of large markets first Expand product availability Improve market access via reimbursement Continued build of dedicated sales and training expertise US Market Focus Continued build of dedicated sales and training expertise Clinical data supporting multiple label expansions New product development Enhance reimbursement Market opportunity based on internal estimates and research, as well as from publicly available information. See Supplemental Information for additional detail
~$350M Pain Management Procedures (Ablation) $2B+ and growing Standalone Hybrid Procedures (Ablation/LAAM) $700-800M Concomitant Open Procedures (Ablation/LAAM) US Market Opportunity © 2020 AtriCure, Inc. All rights reserved. Medicine is effective Steady Growth in penetration of Cardiac Surgery Market Estimated 300,000 total patients (Afib, non-Afib) annually with structural heart issue Only PMA product for the concomitant surgical treatment of Afib Boosting growth via adjacent new market Estimated 140,000 thoracic patients annually Expansive Growth from development of Standalone Afib Market Vastly underpenetrated market with 10-15% estimated annual market expansion Addressable market is more than 3 million patients; less than 1% treated today 25,000 long-standing persistent patients treated by catheter ablation only today Multiple approaches to treatment CONVERGENT + AtriClip, DEEP, LARIAT® Market opportunity based on internal estimates and research, as well as from publicly available information. See Supplemental Information for additional detail
History of Strong Financial Performance 5-year CAGR > 15% growth 71.6% Gross Margin 71.6% 73.0% 72.2% 73.8% © 2020 AtriCure, Inc. All rights reserved. Revenue Growth Consistent Revenue Growth Strong history of double-digit YoY growth Steady Improvement to Gross Margin $250M Cash & Investments at September 30, 2020 14.5% 15.4% 12.6% 19.5% 20.8%
Innovative and Expanding Product Portfolio © 2020 AtriCure, Inc. All rights reserved. Ablation 2000 to 2015: Foundation in surgical Afib tools Future pipeline expansion across franchises Appendage Management 2015 and Beyond: Building the future in minimally invasive therapies Innovation toward less invasive, simpler, and more efficient products EPI-SENSE® DEVICE ATRICLIP PRO•V® DEVICE ATRICLIP FLEX•V® DEVICE LARIAT® DEVICE cryoICE® CRYOABLATION PROBE ISOLATOR® SYNERGY™ CLAMP ATRICLIP® FLEX DEVICE ATRICLIP PRO® DEVICE cryoSPHERE® CRYOABLATION PROBE Future Product Launch: ISOLATOR SYNERGY ENCOMPASS™ CLAMP
CONVERGE Overview PRIMARY ENDPOINTS Effectiveness Primary efficacy endpoint is success or failure to be AF/AT/AFL free absent class I and III AADs except for a previously failed or intolerant class I or III AAD with no increase in dosage following the 3 month blanking period through the 12 months post procedure follow-up visit Safety Predetermined performance goal for the study is 12% freedom from MAE’s as adjudicated by the CEC for the procedural to 30-day post procedure time period STUDY DESIGN Summary Multi-center, prospective, open label randomized 2:1 (Hybrid Convergent procedure vs endocardial catheter ablation) pivotal study Number of Subjects and Sites 153 subjects 27 sites (25 US and 2 OUS) Study Duration 12 month and 18 month monitoring, then 3 and 5 year follow-up of all subjects SUPERIORITY TRIAL designed to support FDA approval of the EPi-Sense device © 2020 AtriCure, Inc. All rights reserved. Completed enrollment August 2018 Last PMA module submitted late 2019 Data released at virtual Heart Rhythm Society conference May 2020 PMA submission seeking approval for treatment of long-standing persistent Afib Q4 2020 Achieved statistical superiority for primary endpoints HIGHLIGHTS
Only multicenter, randomized controlled clinical trial (RCT) comparing the effectiveness of combined epicardial and endocardial ablation to endocardial catheter ablation alone for advanced Afib Demonstrates that the Hybrid Convergent procedure has a compelling safety profile and superior effectiveness when compared to endocardial catheter ablation alone for treatment of advanced Afib Provides high-quality evidence supporting the addition of an epicardial posterior wall ablation to pulmonary vein isolation Emphasizes the value of a team-based approach where collaboration between the electrophysiologists and cardiac surgeons helps achieve improved outcomes for patients with advanced Afib CONVERGE Trial Conclusions © 2020 AtriCure, Inc. All rights reserved.
aMAZE Overview © 2020 AtriCure, Inc. All rights reserved. SUPERIORITY TRIAL designed to evaluate safety and effectiveness of the LARIAT System to percutaneously isolate and ligate the Left Atrial Appendage for the treatment of persistent or longstanding persistent Afib Acquired SentreHEART® August 2019 Trial enrollment completed December 2019 Final Patient follow-up expected 1H 2021 Expect final submission to FDA in 2H 2021 Expect PMA in late 2022 HIGHLIGHTS STUDY DESIGN Summary Multi-center, prospective, open label randomized 2:1 Control Arm – PVI Treatment Arm – PVI + Ligation of LAA with Lariat System Number of Subjects and Sites 600 subjects; 65 sites, all U.S. Study Duration 12 month monitoring and then 5 year follow-up of all subjects PRIMARY ENDPOINTS Effectiveness - Freedom from episodes of Afib >30 seconds at 12 months post index pulmonary vein isolation Safety - Primary safety endpoint for the study is 10% freedom from MAE’s as adjudicated by the CEC for the period from the procedure through 30 days Time Frame: 12 months following pulmonary vein isolation catheter ablation procedure, measured by 24-hour Holter monitoring
Growth Drivers Q1 2019 launch of cryoSPHERE probe Dedicated commercial team ~$350M U.S. market opportunity* Continuing to gather data to support evidence development of the therapy Potential to contribute to combatting the opioid epidemic – 1 in 7 thoracic surgery patients become reliant upon opioids after their procedure9 SPOTLIGHT: Cryo Nerve Block for Pain Management © 2020 AtriCure, Inc. All rights reserved. Therapy Overview Long-lasting pain management therapy, designed for use in thoracic surgical procedures Temporarily stops the transmission of pain signals coming from the chest wall during surgery Nerve “scaffolds” remain intact allowing axons to regenerate and restore nerve function over time Applicability in a wide variety of thoracic surgical approaches (thoracotomy, video-assisted, robotic) and procedures (resection, transplant, thoracoabdominal, surgical rib fixation, pectus repair) * Market opportunity based on internal estimates and research, as well as from publicly available information.
Expecting An Exciting Future… Core double-digit growth business with accelerators in EP landscape (Hybrid Convergent + aMAZE) © 2020 AtriCure, Inc. All rights reserved. AtriCure Pillars Foundation of our past and strengthening our future Innovation Expanding pipeline to drive Open ablation penetration and build MIS market Clinical Science CONVERGE & aMAZE trials are complimentary and differentiated as the ONLY RCT for advanced Afib Education Significant investment in physician education, providing multiple training options Aligning Expertise with Opportunity Commercial Teams 54 U.S. Sales Managers Covering 1,000+ accounts 64 U.S. Clinical Specialists providing case support 30 U.S. Dedicated MIS+Lariat team members 14 U.S. Specialists Cryo Nerve Block Team 32 U.S. Education Support Physician + Field 39 International Sales and Clinical Support 2021 Anticipated approval for CONVERGE PMA 2022 CONVERGE contribution, anticipated approval for aMAZE PMA 2023 LARIAT contribution 2024 Full complement of therapies available for differentiated population of Afib patients
Thank You! © 2020 AtriCure, Inc. All rights reserved.
Supplemental Information Note that citations/references for any comments, statistics, or figures in this presentation are available upon request. © 2020 AtriCure, Inc. All rights reserved.
COVID-19 Response © 2020 AtriCure, Inc. All rights reserved. Operationally, financially, and strategically positioning AtriCure for long-term growth Delayed certain capital investments Temporarily reduced executive and board compensation Limited other non-essential operating expenses where possible Maintaining manufacturing, assembly, fulfillment – modified to adhere to safety recommendations Continuing case coverage support Utilizing online and mobile training venues to educate our customers Enabling employees to work from home as appropriate Providing personal protection and other measures to ensure the safety of those working in our offices Limiting non-essential travel Provide a safe work environment for our employees Deliver products and support to our customers Cost-reductions without sacrificing strategic initiatives Health & Safety Maintaining Operations Expense Management While our plans will continue to evolve in response to changes caused by the COVID-19 pandemic, we remain committed to the AtriCure Team and to the execution of our strategic initiatives.
US annual cardiac surgery volume steady over the past 5 years with shifts in procedure types10 Pre-Op Afib occurs frequently in cardiac surgery patients11 New onset Post-Op Afib is a well-documented complication of cardiac surgery, even if patients do not present with pre-op Afib12 US Concomitant Market Opportunity © 2020 AtriCure, Inc. All rights reserved. Estimated Afib Opportunity in Cardiac Surgery Annual Cardiac Surgeries13 300,000 Pre-Operative Afib Rate11 ~28% Cardiac Opportunity – Pre-Op Afib 85,000 ASP Mix (Ablation and Appendage Management)14 $4,500 Open Cardiac Surgery Opportunity – Afib $382M Estimated Non-Afib Opportunity in Cardiac Surgery Annual Cardiac Surgeries 300,000 Pre-Operative Non-Afib Rate ~72% Cardiac Opportunity – Pre-Op Afib 215,000 ASP Mix (Appendage Management ONLY)14 $1,750 Open Cardiac Surgery Opportunity – Non-Afib $376M
US Standalone Market Opportunity © 2020 AtriCure, Inc. All rights reserved. Market opportunity in analysis at left considers: Addition of ablation and LAAM to existing catheter ablation procedures Catheter ablation procedures have grown 10-15% annually16 Incremental penetration of advanced Afib patient population Today, long-standing persistent Afib population represents more than 3 million patients in the United States, expected to grow to more than 4.4 million by 202515 ASP Mix reflects both ablation and AtriClip, with potential future uplift from Lariat Estimated Standalone Afib Opportunity 2020 Projected 2025 Long-standing Persistent Afib Catheter Ablation17 25,000 45,000 ASP Mix (Ablation + Appendage Management)14 $15,000 $15,000 Immediate Standalone Afib Opportunity $375M $675M Additional penetration Long-standing Persistent Afib patients (estimated at 5% penetration) 150,000 175,000 ASP Mix (Ablation + Appendage Management)14 $15,000 $15,000 Incremental Standalone Afib Opportunity (estimated at 5% penetration) $2B+ $3B+
The CONVERGENT Approach © 2020 AtriCure, Inc. All rights reserved.
4 The LARIAT Procedure © 2020 AtriCure, Inc. All rights reserved. Procedure pics? Access: Routine percutaneous techniques for pericardial and transseptal access are performed using fluoroscopy and transesophageal echocardiography. Delivery: Two magnet-tipped guidewires (FindrWIRZ®) are attached to stabilize the LAA with minimal trauma and manipulation for delivery of the LARIAT. Delivery: The LARIAT snare is delivered over the epicardial FindrWIRZ to the apex of the LAA. Capture: The LARIAT snare is positioned to the base of the LAA using the EndoCATH® balloon for anatomic land marking of the optimal closure site. Closure: The LARIAT snare is closed and the FindrWIRZ and the EndoCATH are removed prior to release and tightening of the suture. Removal: The suture is released and tightened at the base of the LAA and the LARIAT is removed. The SureCUT® suture cutter is used to remotely cut the excess suture. 1 2 3 5 6
The Cox-Maze IV Procedure © 2020 AtriCure, Inc. All rights reserved.
Endnotes: © 2020 AtriCure, Inc. All rights reserved. Note Reference 1 Worldwide Epidemiology of Atrial Fibrillation: A Global Burden of Disease 2010 Study 2 The American Journal of Cardiology (2013), 112: 1142-1147 3 Kim MH et al., “Estimation of Total Incremental Health Care Costs in Patients with AF in the US,” Circulation: Cardiovascular Quality and Outcomes, 4 (2011):313-320 4 AF Stat, Avalere, “Health Services Utilization and Medical Costs Among Medicare Atrial Fibrillation Patients,” (2010) 5 J Geriatr Cardiol. 2016 Oct; 13(10): 880–882, doi: 10.11909/j.issn.1671-5411.2016.10.004 6 Santhanakrishnan R et al., “AF Begets Heart Failure and Vice Versa,” Circulation, 133 (2016):484-492 7 Odutayo, A. et al. (2016). Atrial fibrillation and risks of cardiovascular disease, renal disease, and deaths systematic review and meta analysis. BMJ 2016; 354:i4482 8 The Society of Thoracic Surgeons 2017 Clinical Practice Guidelines for the Surgical Treatment of Atrial Fibrillation 9 The Society of Thoracic Surgeons, Current News Release (1/30/2018): 1 in 7 Lung Surgery Patients at Risk for Opioid Dependence 10 STS Adult Cardiac Surgery Database, 2018/2019 Harvest Executive Summary 11 McCarthy, P.M. et al. (2019). Prevalence of atrial fibrillation before cardiac surgery and factors associated with concomitant ablation. J Thorac Cardiovasc Surg, PII: S0022-5223(19)31361-3, DOI: 10.1016/J.JTCVS.2019.06.062. 12 Lin et al, Stroke 2019 Jun; 50(6):1364-1371. doi: 10.1161/STROKEAHA.118.023921. Epub 2019 May 2. 13 Harvested from data previously available through the Society of Thoracic Surgeons 14 Average Selling Prices (ASPs) are management estimates based on a mix of products used for the various procedures Note Reference 15 Medical management estimate: Colilia, et al. Estimates of Current and Future Incidence and Prevalence of Atrial Fibrillation in the U.S. Adult Population. Am Journal of Cardiology 2013, 112: 1142-1147 Persistent patient estimate: Berisso et al Epidemiology of atrial fibrillation: European perspective Clin Epidemiol. 2014; 6: 213–220 16 Estimated based on various catheter company presentations 17 Estimated based on Advisory Board data, along with various scientific presentations Abbreviations Afib or AF Atrial Fibrillation FDA Food & Drug Administration PMA Pre-Market Approval AFL Atrial Flutter AT Atrial Tachycardia AAD Anti-Arrhythmic Drugs Abbreviations LAA Left Atrial Appendage LAAM LAA Management PVI Pulmonary Vein Isolation MAE Material Adverse Event CEC Clinical Events Committee EP Electrophysiologist Key Abbreviations: Double check references still link to presentation; add new references