AtriCure's CEO Discusses Q1 2012 Results - Earnings Call Transcript

ArtiCure, Inc. (ATRC)

Q1 2012 Earnings Conference Call

May 3, 2012 10:00 AM ET

Executives

David Drachman - President and Chief Executive Officer

Sarah Luken - Investor Relations Associate and Executive Assistant

Analysts

Rick Wise - Leerink Swann

Matt Dolan – Roth Capital

Tom Gunderson - Piper Jaffray

Jason Mills – Canaccord Genuity

Charley Jones – Barrington Research

Larry Haimovitch – HMTC

Presentation

Operator

Good afternoon, and welcome to the AtriCure’s First Quarter 2012 Earnings Conference Call. My name is, Karen, and I’ll 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 towards the end of today’s call. As a reminder, this call is being recorded for replay purposes.

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 J. Drachman

Thank you, Karen. Good morning, and welcome to our first quarter earnings conference call. At this time, I would like to turn the call over to Sarah Luken our Investor Relations Associate and Executive Assistant, for a few introductory comments.

Sarah Luken

Thank you, Dave, and good afternoon, everyone. By now, you should have received a copy of the earnings press release. If you have not received a copy, please call me at 513-304-8931, and I 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 activities, events or developments that AtriCure expects, believes or anticipates, will or may occur in the future, such as revenue and earnings 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 may refer to non-GAAP financial metrics. A reconciliation of these non-GAAP measures is included in our press release, which is available on our website.

I would like to remind everyone on the call today, that the Food and Drug Administration, or FDA, has not approved certain AtriCure products for the treatment of atrial fibrillation or AF, or for stroke reduction. The company and others acting on its behalf may not promote these non-approved products to train doctors for the surgical treatment of AF, or stroke reduction unless the product is so indicated.

These restrictions do not prevent doctors from choosing 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, including for the treatment of AF in accordance with the product specific indications.

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

David J. Drachman

Alright. Thank you. Good morning and welcome to AtriCure’s First Quarter 2012 Conference Call. On today’s call, we will provide a review of business trends, the strategy for capitalizing on our AF approval, first quarter financial results and our clinical trial progress. We will conclude our prepared remarks with our outlook for near term, and long term growth prospects, then we will open the call for your questions.

Before we begin, I would like to address the announcement yesterday, that Julie Piton has resigned as the company’s Chief Financial Officer, to pursue other opportunities. During Julie’s tenure, AtriCure has developed a strong accounting and financing with broad capabilities, including an Executive Director of Finance who has assumed responsibility for financial reporting and controls, as well as a corporate controller. Based on our internal assessment, and input from the diligence conducted by external consultants, we are confident, that the company is well positioned as we search for a successor. Board of Directors and I would like to thank Julie for her contributions, and wish her well.

Turning to business trends, we believe that our first quarter results are a strong indicator that our strategic priorities are resulting, in new growth opportunities. We are experiencing a resurgence in U.S. revenue growth, when combined with continued strength, from our international market. We believe the result is accelerating growth during the second half of 2012. Our research indicates a stabilization of procedure volumes in the U.S. which together, with our premium product’s recent AF approval, strong international sales performance, and clinical leadership provides our best in class, sales marketing and professional education organization, with a powerful growth platform.

Turning to review of our strategic plan, we capitalized on our AF approval. We believe that our recent AF approval is a large growth opportunity, and that AtriCure’s position to capitalize on this underpenetrated market, to education activities designed to increase disease awareness, improved patient outcomes and optimize patient care.

Our research suggests that in the U.S. 85,000 patients, per year, undergo coronary bypass and the valve procedures, with a pre-existing history of atrial fibrillation. Of these 85,000 AF patients, only 25% are currently receiving ablation treatment. Our growth strategy is designed to first improve patient outcomes, gain market share, and increase penetration above the 25% level. We believe all these are achievable. As a result of our AF approval, of our synergy ablation system, we are rapidly expanding our surgeon training and certification programs. As the first company with the U.S. surgical AF approval and the only company with an ablation system approved for both persistent, and longstanding persistent AF, combined with our investments in training, are leading to both increased utilization and market share gains. To date we have trained approximately 210 cardiac surgeons in approximately 120 sites.

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