Acquisition Expands Addressable Market
Opportunity and Complements Offerings for the Treatment of Atrial
Fibrillation
Announces Updates to 2019 Outlook
Conference Call Monday, August 12th at 8:30am
ET
AtriCure, Inc. (Nasdaq: ATRC), a leading innovator in treatments
for atrial fibrillation (Afib) and left atrial appendage (LAA)
management, today announced that it has entered into a definitive
agreement to acquire SentreHEART, Inc., a privately held developer
of percutaneous left atrial appendage management solutions. The
company also announced updated full year 2019 guidance.
Under the terms of the agreement to acquire SentreHEART, the
transaction consideration consists of an upfront payment of
approximately $40 million in cash and AtriCure common stock, plus
additional contingent consideration based on the achievement of
certain clinical and reimbursement milestones over the next several
years, all of which are value-creating events. Of the contingent
consideration, $140 million is based on milestones related to the
aMAZE™ IDE clinical trial, including PMA approval, and $120 million
is based on a milestone related to reimbursement for the therapy
involving SentreHEART devices. All contingent consideration would
be payable in a combination of cash and stock.
“We believe that SentreHEART is a strategic addition to
AtriCure, significantly expanding our addressable markets with a
product designed for electrophysiologists,” said Michael Carrel,
President and Chief Executive Officer of AtriCure. “With our
pursuit of labeling based on the aMAZE Trial, we are deepening our
commitment to provide the broadest possible offering of ablation
and left atrial appendage management solutions to our customers and
their patients.”
Mr. Carrel continued, “This transaction combines two companies
dedicated to solving the challenges associated with Afib. We are
confident that SentreHEART complements our current product
portfolio and intellectual property, augments our commitment to
clinical science with the aMAZE Trial, and will leverage our
growing commercial channel into the electrophysiology market. We
believe that upon FDA approval, use of the LARIAT® device will
continue to advance AtriCure’s competitive position in the
market.”
SentreHEART was founded in 2005 and is based in Redwood City,
California. The company’s technology is currently being studied in
the aMAZE Trial, an FDA-approved, prospective, multicenter,
randomized controlled trial evaluating the LARIAT Suture Delivery
Device for LAA closure adjunctive to Pulmonary Vein Isolation (PVI)
catheter ablation for the treatment of persistent and longstanding
persistent Afib. The objective of the aMAZE Trial is to demonstrate
that the LARIAT device for LAA closure, plus a PVI ablation, will
lead to a reduced incidence of recurrent Afib compared to PVI
alone, with a high safety profile. The aMAZE Trial is expected to
enroll up to 600 total patients at 65 sites with one-year follow
up. Primary endpoint measures are freedom from episodes of Afib
greater than 30 seconds at one-year post treatment. More
information about the aMAZE Trial can be found at: https://amazetrial.com/en/. To date, 535 patients
have been enrolled in the trial, with full enrollment anticipated
in early 2020.
Subject to customary closing conditions, the transaction is
expected to close in the next several days. AtriCure shareholder
approval is not required.
2019 and Future Outlook
AtriCure projects total revenue for 2019 to be in the range of
$224.5 million to $228.5 million, which includes minimal
contribution from SentreHEART, and reflects approximately 11% to
13% organic growth. Revenue contribution from the SentreHEART
business is expected to be nominal until after completion of the
aMAZE Trial and PMA approval.
For 2019, AtriCure now expects adjusted EBITDA, a non-GAAP
measure, to be a loss due to integration and operating costs
resulting from the transaction. Full-year adjusted EBITDA loss is
expected to be in the range of $7 million to $9 million, excluding
acquisition costs. This adjusted EBITDA loss translates into an
adjusted loss per share between $1.07 and $1.14. For 2020, the
company expects to have an adjusted EBITDA loss of less than $10
million, as investments shift from completing the aMAZE Trial to
preparing for FDA approval. Adjusted EBITDA and adjusted loss per
share are non-GAAP measures. A discussion of non-GAAP financial
measures and reconciliations regarding non-GAAP financial measures
to their respective GAAP financial measures is provided later in
this press release.
“We have a strong balance sheet, which has been reinforced by
our credit facility with Silicon Valley Bank. As a result, we
believe that we can support both the upfront payment and ongoing
investments in the combined business with minimal shareholder
dilution,” said Andy Wade, Senior Vice President and Chief
Financial Officer. “While this transaction will impact short and
medium-term profitability, we do not need to raise additional
capital to finish the aMAZE Trial or support post-trial
commercialization efforts.”
Conference Call
AtriCure will host a conference call at 8:30 am Eastern Time on
Monday, August 12, 2019 to discuss the transaction. A live webcast
of the conference call will be available online on the Investors
page of AtriCure’s corporate website at www.atricure.com. You may
also access this call through an operator by calling (844) 884-9951
for domestic callers and (661) 378-9661 for international callers,
using participant passcode 7188965. A replay of the webcast will be
available on AtriCure’s website for 90 days.
Advisors
Piper Jaffray & Co. is acting as exclusive financial advisor
and Pepper Hamilton LLP is serving as legal counsel to AtriCure for
this transaction. Guggenheim Securities LLC is acting as exclusive
financial advisor and Goodwin Procter LLP is serving as legal
counsel to SentreHEART for this transaction.
About AtriCure, Inc.
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 (LAA)
Exclusion System products are the most widely sold LAA management
devices worldwide. For more information, visit AtriCure.com or
follow us on Twitter @AtriCure.
About SentreHEART, Inc.
SentreHEART is a privately-owned medical device company based in
Redwood City, California. Founded in 2005, SentreHEART has
developed innovative technology for remote delivery of suture for
closure of anatomic structures including the LAA. The company is
committed to clinical evidence development and is currently
sponsoring the FDA-approved prospective, multi-center, randomized
controlled trial known as the aMAZE Trial. Information about the
aMAZE Trial can be found at: https://amazetrial.com/en/
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include statements that address
activities, events or developments that AtriCure expects, believes
or anticipates will or may occur in the future, such as earnings
estimates (including projections and guidance), statements
regarding the closing of the acquisition of SentreHEART described
herein, clinical trial enrollment and approval statements, and
other predictions of financial, clinical, and operational
performance. Such statements generally include words such as
“believes,” “plans,” “estimates,” “hopes,” “projects,” “seek,”
“see,” “would,” “should,” “intends,” “targets,” “will,” “expects,”
“suggests,” “anticipates,” “outlook,” “continues” or similar
expressions and the negative versions thereof. You should not place
undue reliance upon these forward-looking statements as predictions
of future events. Forward-looking statements speak only as of the
date they are made. 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: the parties' ability to satisfy the SentreHEART merger
agreement conditions; AtriCure's ability to realize anticipated
synergies from the acquisition of SentreHEART; AtriCure's ability
to successfully integrate SentreHEART’s operations and technology;
the rate and degree of market acceptance of AtriCure’s products;
AtriCure’s ability to develop and market new and enhanced products;
AtriCure’s ability to retain and attract key employees; the timing
of and ability to obtain and maintain regulatory clearances and
approvals for products; the timing of and ability to obtain
reimbursement of procedures utilizing AtriCure’s products;
AtriCure’s ability to continue to be in compliance with applicable
U.S. federal and state and foreign government laws and regulations;
AtriCure’s ability to consummate other acquisitions or, if
consummated, to successfully integrate acquired businesses into
AtriCure’s operations; AtriCure’s ability to recognize the benefits
of acquisitions generally, including potential synergies and cost
savings; failure of an acquisition or acquired company to achieve
its plans and objectives generally; risk that proposed or
consummated acquisitions may disrupt operations or pose
difficulties in employee retention or otherwise affect financial or
operating results; AtriCure’s ability to raise any capital that may
be required to accomplish the foregoing; competition from existing
and new products and procedures, including the development of drug
or catheter-based technologies; and AtriCure’s ability to
effectively react to other risks and uncertainties described from
time to time in AtriCure’s SEC filings, such as fluctuation of
quarterly financial results, fluctuations in exchange rates for
future sales denominated in foreign currency, which represent a
majority of AtriCure’s sales outside of the United States, reliance
on third party manufacturers and suppliers, litigation or other
proceedings, government regulation, including tax law changes, and
stock price volatility. AtriCure does not guarantee any
forward-looking statement, and actual results may differ materially
from those projected. AtriCure undertakes no obligation to publicly
update any forward-looking statement, whether as a result of new
information, future events or otherwise. A further list and
description of risks, uncertainties and other matters can be found
in our Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q.
Use of Non-GAAP Financial Measures
AtriCure uses certain non-GAAP financial measures in this
release as supplemental financial metrics. These non-GAAP financial
measures include adjusted EBITDA and adjusted loss per share.
Adjusted EBITDA is calculated as Net Loss before other income /
expense (including interest), income tax expense, depreciation and
amortization expense, share based compensation expense, acquisition
costs, and change in fair value of contingent consideration
liabilities. Due to the nonrecurring nature of the acquisition
costs, the Company has modified the calculation of adjusted EBITDA
to exclude acquisition costs, and intends to use this calculation
going forward. Prior to the SentreHEART transaction, the Company’s
most recent acquisition occurred in October 2015 and acquisition
costs were included in the calculation of adjusted EBITDA at that
time. The Company believes it is now appropriate to modify the
calculation of adjusted EBITDA to exclude acquisition costs because
the Company has concluded that acquisition costs are generally
nonrecurring and are not reflective of the operational results of
the Company’s core business, and the Company believes this approach
is more comparable to peer company reporting. Management believes
that in order to properly understand 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.
Adjusted loss per share is calculated as Net Loss excluding the
change in fair value of contingent consideration liabilities,
divided by weighted average shares outstanding (basic and diluted).
Management believes this metric provides a better measure of
comparability of results between periods, as such adjustments are
not frequent in nature or similar in value and can be
significant.
The non-GAAP financial measures used by AtriCure may not be the
same or calculated the same as those used 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.
Adjusted EBITDA and adjusted loss per share outlook exclude the
impact of certain income and expense items that management believes
are not part of underlying operations. AtriCure does not provide a
reconciliation to the closest corresponding GAAP financial measure
for its adjusted EBITDA and adjusted loss per share outlook; such
reconciliation is not available without unreasonable effort on a
forward-looking basis, due to the high variability and complexity
of estimates for certain items, primarily the change in fair value
of contingent consideration liabilities, as well as amortization
expense resulting from the transaction. These items could
significantly impact our future financial results. Please see the
“Forward-Looking Statements” section of this release for a
discussion of certain risks to AtriCure’s outlook.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190812005146/en/
Andy Wade AtriCure, Inc. Senior Vice President and Chief
Financial Officer (513) 755-4564 awade@AtriCure.com
Lynn Pieper Lewis Gilmartin Group Investor Relations (415)
937-5402 lynn@gilmartinir.com
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