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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

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


Table of Contents

 

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


Table of Contents

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


Table of Contents

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