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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.
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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
Tissue Heart Valves
Heart Valve Repair
Surgical Cryoablation
Analyst Day
Debt Refinancing
"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 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.
-- 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.
SOURCE ATS Medical, Inc.
