ATS Medical, Inc. (ATS Medical), a cardiovascular devices company, has reported net sales of $65.8 million for the full year of 2008, compared with the net sales of $49.6 million in the previous year-end. It has posted net loss of $19.3 million, or $0.31 loss per share, for the full year of 2008, compared with the net loss of $23 million, or $0.44 loss per share, in the previous year-end.
Fourth quarter 2008 results
Revenue from the company’s heart valve therapy products, consisting of mechanical valves, tissue valves and repair products, was up 26% on a year-over-year basis to $13.0 million. The growth reflected a 23% increase in mechanical valve revenue, a 164% increase in tissue valve revenue and a 57% increase in valve repair revenue. Revenue from the company’s ATS CryoMaze cryoablation products for the treatment of cardiac arrhythmias grew 30% to $4.6 million. Total revenue growth excluding the impact of foreign currency fluctuations was approximately 30%.
Gross profit margin for the fourth quarter of 2008 was a record of 65.7%, representing significant improvement from 58.2% in the fourth quarter of 2007. Year-over-year gross profit margin improvements were due to lower mechanical valve product costs resulting from increased production as well as growth in the company’s surgical ablation business.
The GAAP operating loss for the fourth quarter of 2008 was $7.3 million against a GAAP operating loss of $4.9 million in the fourth quarter of 2007. The GAAP operating loss in the fourth quarter of 2008 includes a one-time charge of $7.5 million related to the company’s settlement of long standing litigation. Excluding the litigation settlement the company earned a non-GAAP operating profit of $171,000. The GAAP net loss for the fourth quarter of 2008 was $8.5 million, or $0.13 per share, against $6.2 million, or $0.10 per share in the fourth quarter of 2007. Excluding the impact of the litigation settlement, the non-GAAP net loss per share for the fourth quarter would have been $0.02.
“The fourth quarter was a milestone quarter for ATS Medical as strong revenue growth and record gross profit margin performance enabled us to generate a non-GAAP operating profit excluding non-recurring charges,” said Michael Dale, Chairman, president and chief executive officer. “Over the last six years the ATS team has worked tirelessly to build a strategically relevant, high growth, diversified, and ultimately profitable cardiac surgery franchise. Every ATS employee deserves credit and can take great pride in the achievement of this important accomplishment.”
Recent and upcoming product highlights
Tissue Heart Valves
During the fourth quarter of 2008 the company received FDA approval of the ATS 3f Aortic Bioprosthesis, the company’s first tissue valve offering in the US. The company is conducting a limited commercial launch of the valve in the US beginning in the first quarter of 2009.
The company expects its sutureless tissue valve, the ATS 3f Enable Aortic Bioprosthesis, to receive a CE Mark in 2009. The Enable valve is designed to allow less invasive surgery for the general population of aortic valve replacement patients.
The company announced the formation of its Cryoablation scientific advisory board in January this year. This board met for the first time in December 2008 to develop a consensus around the preferred procedural approach to perform a complete Cox Maze III procedure. The objective was to recommend a standard set of lesions that would yield the best possible, reproducible patient outcomes. In January, the board publicly unveiled their recommended procedural steps at the ATS Frontiers in Cryoablation Symposium at the annual meeting of the Society of Thoracic Surgery in San Francisco. The board’s procedural recommendations will be the basis for clinical studies, training and marketing programs.
For the full year 2009 the company expects:
Revenue growth of 17.0% to 21.5% which translates into a revenue range of $77 to $80 million. The company’s revenue guidance includes an unfavorable impact of about 2% related to declining foreign exchange rates.
Gross margin in the range of 64% to 66%
The company expects to generate an operating profit on an annual basis.
The company expects to generate net income in the fourth quarter of 2009.