UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_____________________________________________

FORM 10-Q

_____________________________________________

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____________to_____________

Commission File Number 000-51470

_____________________________________________

AtriCure, Inc.

(Exact name of Registrant as specified in its charter)

_____________________________________________

Delaware	34-1940305
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

7555 Innovation Way

Mason, OH 45040

(Address of principal executive offices)

(513) 755-4100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

_____________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 par value	ATRC	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller reporting company	¨

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: ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): YES ¨ NO x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 27, 2020
Common Stock, $.001 par value	44,931,713

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		29

‎

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Per Share Amounts)

(Unaudited)

	June 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	88,522	$	28,483
Short-term investments		143,976		53,318
Accounts receivable, less allowance for credit losses of $1,096 and $1,124		22,892		28,046
Inventories		32,809		29,414
Prepaid and other current assets		3,835		3,899
Total current assets		292,034		143,160
Property and equipment, net		30,236		32,646
Operating lease right-of-use assets		2,573		4,032
Long-term investments		15,339		12,675
Intangible assets, net		128,904		129,881
Goodwill		234,781		234,781
Other noncurrent assets		366		705
Total Assets	$	704,233	$	557,880
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	12,467	$	14,948
Accrued liabilities		17,884		32,750
Other current liabilities and current maturities of long-term debt and leases		7,701		2,218
Total current liabilities		38,052		49,916
Long-term debt		54,154		59,634
Finance lease liabilities		11,377		11,774
Operating lease liabilities		1,581		2,796
Contingent consideration and other noncurrent liabilities		182,207		186,417
Total Liabilities		287,371		310,537
Commitments and contingencies (Note 8)
Stockholders’ Equity:
Common stock, $0.001 par value, 90,000 shares authorized and 44,939 and 39,655 issued and outstanding		45		40
Additional paid-in capital		723,754		529,658
Accumulated other comprehensive loss		(96)		(158)
Accumulated deficit		(306,841)		(282,197)
Total Stockholders’ Equity		416,862		247,343
Total Liabilities and Stockholders’ Equity	$	704,233	$	557,880

See accompanying notes to condensed consolidated financial statements.
‎

2

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In Thousands, Except Per Share Amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Revenue	$	40,824	$	58,906	$	94,049	$	112,872
Cost of revenue		13,170		15,013		27,511		29,108
Gross profit		27,654		43,893		66,538		83,764
Operating expenses:
Research and development expenses		10,036		9,804		21,623		17,980
Selling, general and administrative expenses		24,903		37,928		67,654		74,943
Total operating expenses		34,939		47,732		89,277		92,923
Loss from operations		(7,285)		(3,839)		(22,739)		(9,159)
Other income (expense):
Interest expense		(1,231)		(879)		(2,459)		(1,741)
Interest income		263		636		668		1,356
Other		29		(9)		(94)		(116)
Loss before income tax expense		(8,224)		(4,091)		(24,624)		(9,660)
Income tax expense		12		10		20		76
Net loss	$	(8,236)	$	(4,101)	$	(24,644)	$	(9,736)
Basic and diluted net loss per share	$	(0.20)	$	(0.11)	$	(0.61)	$	(0.26)
Weighted average shares outstanding—basic and diluted		41,649		37,334		40,160		37,156
Comprehensive loss:
Unrealized gain on investments	$	174	$	17	$	111	$	83
Foreign currency translation adjustment		101		115		(49)		(38)
Other comprehensive income		275		132		62		45
Net loss		(8,236)		(4,101)		(24,644)		(9,736)
Comprehensive loss, net of tax	$	(7,961)	$	(3,969)	$	(24,582)	$	(9,691)

See accompanying notes to condensed consolidated financial statements.

‎

3

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In Thousands)

(Unaudited)

	Three-Month Period Ended June 30, 2019
								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Income (Loss)		Equity
Balance—March 31, 2019	38,658	$	39	$	492,177	$	(252,638)	$	(286)	$	239,292
Impact of equity compensation plans	108		—		6,225		—		—		6,225
Other comprehensive income	—		—		—		—		132		132
Net loss	—		—		—		(4,101)		—		(4,101)
Balance—June 30, 2019	38,766	$	39	$	498,402	$	(256,739)	$	(154)	$	241,548
	Three-Month Period Ended June 30, 2020
								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Income (Loss)		Equity
Balance—March 31, 2020	40,077	$	40	$	526,302	$	(298,605)	$	(371)	$	227,366
Issuance of common stock through public offering	4,574		5		188,953		—		—		188,958
Impact of equity compensation plans	288		—		8,499		—		—		8,499
Other comprehensive income	—		—		—		—		275		275
Net loss	—		—		—		(8,236)		—		(8,236)
Balance—June 30, 2020	44,939	$	45	$	723,754	$	(306,841)	$	(96)	$	416,862

	Six-Month Period Ended June 30, 2019
								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Income (Loss)		Equity
Balance—December 31, 2018	38,604	$	39	$	496,544	$	(247,003)	$	(199)	$	249,381
Impact of equity compensation plans	162		—		1,858		—		—		1,858
Other comprehensive income	—		—		—		—		45		45
Net loss	—		—		—		(9,736)		—		(9,736)
Balance—June 30, 2019	38,766	$	39	$	498,402	$	(256,739)	$	(154)	$	241,548
	Six-Month Period Ended June 30, 2020
								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital