AtriCure's CEO Discusses Q2 2011 Results - Earnings Call Transcript

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AtriCure, Inc. (ATRC)

Q2 2011 Earnings Conference Call

August 2, 2011 10:00 ET

Executives

David Drachman – President and Chief Executive Officer

Julie Piton – Vice President - Finance and Administration and Chief Financial Officer

Analysts

Tom Gunderson – Piper Jaffray

Jason Mills – Canaccord

Matt Dolan – Roth Capital

Charley Jones – Barrington Research

Jan Wald – Morgan Keegan

Larry Haimovitch – HMTC

Presentation

Operator

Good morning and welcome to AtriCure Second Quarter 2011 Earnings Conference Call. My name is Regina and I will be your coordinator for the call today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session toward the end of today’s call. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

And I would now like to turn the call over to Mr. David Drachman, President and Chief Executive Officer of AtriCure. Mr. Drachman, please proceed.

David Drachman – President and Chief Executive Officer

Thank you, (Regina). Good morning and welcome to our second quarter earnings conference call. Joining me on the call today is Julie Piton, Vice President of Finance and Administration and Chief Financial Officer. At this time, I would like to turn the call over to Julie for a few introductory comments.

Julie Piton – Vice President - Finance and Administration and Chief Financial Officer

Thank you, Dave, and good morning, everyone. By now, you should have received a copy of the earnings press release. If you have not received a copy, please call Sarah Luken at 513-755-4136 and she will fax or e-mail you a copy.

Before we begin today, let me remind you that the company’s remarks may include forward-looking statements. These statements include, but are not limited to those that address activity, events, or developments that AtriCure expects, believes, or anticipates will or may occur in the future such as revenue and earning estimates, other predictions of financial performance, launches of new products and market acceptance of new products.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure’s control, including, but not limited to the rate and degree of market acceptance of AtriCure’s products, governmental approvals and other risks and uncertainties described from time-to-time in AtriCure’s SEC filings.

AtriCure’s results may differ materially from those projected on today’s call and AtriCure undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, we will refer to non-GAAP financial metrics. A reconciliation of these non-GAAP measures is included in our press release, which is also available on our website.

I would like to remind everyone on the call today that the Food and Drug Administration, or FDA, has not cleared our products for the treatment of atrial fibrillation or AF or for stroke reduction. The company and others acting on its behalf may not promote any of its products or train doctors for the surgical treatment of AF or for stroke reduction. These restrictions do not prevent doctors from student to use the products for the treatment of AF or stroke reduction or prevent AtriCure from engaging in sales and marketing efforts that focus only on the general attributes of the products for the current cleared uses. AtriCure educates and trains doctors in the proper use of its products and related technologies.

With that, I would like to turn the call back to Dave.

David Drachman – President and Chief Executive Officer

Thank you, Julie. Second quarter 2011 revenue was a record $16.8 million, an increase of $2.6 million or 18% over first quarter 2010. U.S. revenue was $12.7 million, up 7% and international revenue was a record $4.1 million, up 75%. These results reflect our commitment to execution, the impact of our outstanding product portfolio, and strong performance from Europe and Asia. Additionally during the quarter, we advanced our clinical regulatory and product initiatives, all of which positioned us to continue to achieve our near and long-term strategic priorities.

In reviewing the quarter in more detail, U.S. revenue increased 7% to $12.7 million driven by sales of the AtriClip system. U.S. ablation revenue decreased approximately $400,000 or 4% compared to the second quarter of 2010, which reflects a reduction in sales of our products used in minimally invasive procedures, partially offset by an increase in revenue from the sale of open-heart ablation products. The reduction in revenue from products used in minimally invasive procedures is partially a result of our plan to focus our U.S. sales organization and capitalizing on our first mover advantage with the AtriClip system, which is resulting in opportunities to increase adoption and share gains from open-heart ablation products.

In addition, during the second half of 2010 we made a proactive decision to limit our physician ablation training activities to FDA regulated clinical trials, which we believe has had the most significant impact on the physician adoption a product used in minimally invasive and hybrid procedures.

Sequentially revenue from minimally invasive products increased approximately $400,000. However, we continue to anticipate a decline in revenue from products used in minimally invasive procedures during 2011. But we project a return to growth with the commencement of our DEEP AF pivotal trials, which we anticipate initiating during the second half of 2012. We believe the transitioning from to [60s pivotal] site to approximately 35 pivotal investigational sites will expand our presence in the marketplace.

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