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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 September 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 November 4, 2020

Common Stock, $.001 par value

45,023,214

 

 


Table of Contents

Table of Contents

 

 

Page

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

2

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019

3

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019

4

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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 6.

Exhibits

27

Signatures

28


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)

September 30,

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

33,381

$

28,483

Short-term investments

199,688

53,318

Accounts receivable, less allowance for credit losses of $1,096 and $1,124

25,448

28,046

Inventories

34,326

29,414

Prepaid and other current assets

3,369

3,899

Total current assets

296,212

143,160

Property and equipment, net

29,089

32,646

Operating lease right-of-use assets

2,363

4,032

Long-term investments

16,516

12,675

Intangible assets, net

128,437

129,881

Goodwill

234,781

234,781

Other noncurrent assets

399

705

Total Assets

$

707,797

$

557,880

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

13,554

$

14,948

Accrued liabilities

19,130

32,750

Other current liabilities and current maturities of long-term debt and leases

12,070

2,218

Total current liabilities

44,754

49,916

Long-term debt

49,985

59,634

Finance lease liabilities

11,172

11,774

Operating lease liabilities

1,324

2,796

Contingent consideration and other noncurrent liabilities

183,030

186,417

Total Liabilities

290,265

310,537

Commitments and contingencies (Note 8)

 

 

Stockholders’ Equity:

Common stock, $0.001 par value, 90,000 shares authorized and 45,021 and 39,655 issued and

outstanding

45

40

Additional paid-in capital

729,220

529,658

Accumulated other comprehensive income (loss)

57

(158)

Accumulated deficit

(311,790)

(282,197)

Total Stockholders’ Equity

417,532

247,343

Total Liabilities and Stockholders’ Equity

$

707,797

$

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

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Revenue

$

54,757

$

56,614

$

148,806

$

169,486

Cost of revenue

14,423

14,817

41,934

43,925

Gross profit

40,334

41,797

106,872

125,561

Operating expenses:

Research and development expenses

10,576

10,154

32,199

28,134

Selling, general and administrative expenses

33,749

40,280

101,403

115,223

Total operating expenses

44,325

50,434

133,602

143,357

Loss from operations

(3,991)

(8,637)

(26,730)

(17,796)

Other income (expense):

Interest expense

(1,232)

(1,113)

(3,691)

(2,854)

Interest income

246

577

914

1,933

Other

24

(114)

(70)

(230)

Loss before income tax expense

(4,953)

(9,287)

(29,577)

(18,947)

Income tax expense (benefit)

(4)

75

16

151

Net loss

$

(4,949)

$

(9,362)

$

(29,593)

$

(19,098)

Basic and diluted net loss per share

$

(0.11)

$

(0.25)

$

(0.71)

$

(0.51)

Weighted average shares outstanding—basic and diluted

44,012

37,842

41,442

37,387

Comprehensive loss:

Unrealized gain (loss) on investments

$

(85)

$

33

$

26

$

116

Foreign currency translation adjustment

238

(255)

189

(293)

Other comprehensive income (loss)

153

(222)

215

(177)

Net loss

(4,949)

(9,362)

(29,593)

(19,098)

Comprehensive loss, net of tax

$

(4,796)

$

(9,584)

$

(29,378)

$

(19,275)

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 September 30, 2019

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Accumulated

Comprehensive

Stockholders’

Shares

Amount

Capital

Deficit

Income (Loss)

Equity

Balance—June 30, 2019

38,766 

$

39 

$

498,402 

$

(256,739)

$

(154)

$

241,548 

Issuance of common stock for SentreHEART acquisition

699 

1 

21,991 

21,992 

Impact of equity compensation plans

82 

4,265 

4,265 

Other comprehensive loss

(222)

(222)

Net loss

(9,362)

(9,362)

Balance—September 30, 2019

39,547 

$

40 

$

524,658 

$

(266,101)

$

(376)

$

258,221 

Three-Month Period Ended September 30, 2020

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Accumulated

Comprehensive

Stockholders’

Shares

Amount

Capital

Deficit

Income (Loss)

Equity

Balance—June 30, 2020

44,939 

$

45 

$

723,754 

$

(306,841)

$

(96)

$

416,862 

Impact of equity compensation plans

82

5,466

5,466

Other comprehensive income

153

153

Net loss

(4,949)

(4,949)

Balance—September 30, 2020

45,021

$

45 

$

729,220

$

(311,790)

$

57

$

417,532

Nine-Month Period Ended September 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 

Issuance of common stock for SentreHEART acquisition

699 

1 

21,991 

21,992 

Impact of equity compensation plans

244 

6,123 

6,123 

Other comprehensive loss

(177)

(177)

Net loss

(19,098)

(19,098)

Balance—September 30, 2019

39,547 

$

40 

$

524,658 

$

(266,101)

$

(376)

$

258,221 

Nine-Month Period Ended September 30, 2020