What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-04 · 99 added, 83 removed, 378 unchanged (33% of the section changed)

45 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Revenue $ 84,529 $ 71,376 $ 159,105 $ 130,651

26 unchanged sentences

(In Thousands)

Three Months Ended March 31, 2021

Three-Month Period Ended June 30, 2021

Deficit Accumulated

2 unchanged sentences

Stockholders’

Balance—December 31, 2020

Balance—March 31, 2021

45,623 $ 46 $ 738,484 $ ( 347,269 ) $ ( 18 ) $ 391,243

2 unchanged sentences

Net loss — — — ( 16,251 ) — ( 16,251 )

Balance—June 30, 2021

45,881 $ 46 $ 748,644 $ ( 363,520 ) $ ( 87 ) $ 385,083

Three-Month Period Ended June 30, 2022

Deficit Accumulated

Comprehensive

Income (Loss)

Stockholders’

Balance—March 31, 2022

46,268 $ 46 $ 761,580 $ ( 295,336 ) $ ( 3,465 ) $ 462,825

Three Months Ended March 31, 2022

Impact of equity compensation plans 155 — 9,605 — — 9,605

Other comprehensive loss — — — — ( 879 ) ( 879 )

Net loss — — — ( 14,841 ) — ( 14,841 )

Balance—June 30, 2022

46,423 $ 46 $ 771,185 $ ( 310,177 ) $ ( 4,344 ) $ 456,710

Six-Month Period Ended June 30, 2021

Deficit Accumulated

7 unchanged sentences

Net loss — — — ( 33,168 ) — ( 33,168 )

Balance—March 31, 2022

Balance—June 30, 2021

45,881 $ 46 $ 748,644 $ ( 363,520 ) $ ( 87 ) $ 385,083

Six-Month Period Ended June 30, 2022

Deficit Accumulated

Comprehensive

Income (Loss)

Stockholders’

Balance—December 31, 2021

46,016 $ 46 $ 764,811 $ ( 280,153 ) $ ( 948 ) $ 483,756

Impact of equity compensation plans 407 — 6,374 — — 6,374

Other comprehensive loss — — — — ( 3,396 ) ( 3,396 )

Net loss — — — ( 30,024 ) — ( 30,024 )

Balance—June 30, 2022

46,423 $ 46 $ 771,185 $ ( 310,177 ) $ ( 4,344 ) $ 456,710

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

(In Thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

8 unchanged sentences

Change in fair value of contingent consideration — 5,100

Other non-cash adjustments to income 320 254

Other non-cash adjustments 654 472

Changes in operating assets and liabilities:

7 unchanged sentences

Cash flows from investing activities:

Purchases of available-for-sale securities ( 3,941 ) ( 94,817 )

Sales and maturities of available-for-sale securities 51,749 147,884

3 unchanged sentences

Payments on leases ( 437 ) ( 399 )

Proceeds from stock option exercises 355 4,588

Proceeds from stock option exercises and employee stock purchase plan 3,374 9,010

Shares repurchased for payment of taxes on stock awards ( 11,573 ) ( 16,500 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 302 ) ( 115 )

Net (decrease) increase in cash and cash equivalents ( 15,513 ) 43,436

Net increase in cash and cash equivalents 10,902 25,675

Cash and cash equivalents—beginning of period 43,654 41,944

15 unchanged sentences

Basis of Presentation —The accompanying interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC).

All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim financial statements are unaudited, but in the opinion of the Company’s management, contain all normal, recurring adjustments considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America (GAAP) applicable to interim periods.

3 unchanged sentences

The accompanying interim financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.

All intercompany accounts and transactions have been eliminated in consolidation.

There have been no changes in the Company's significant accounting policies for the three months ended March 31, 2022 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.

There have been no changes in the Company's significant accounting policies for the six months ended June 30, 2022 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.

Use of Estimates —The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including intangible assets, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.

4 unchanged sentences

Accordingly, the Company has determined that it has a single operating segment.

The Company’s long-lived assets are located primarily in the United States, except for $ 1,321 as of March 31, 2022 and $ 1,399 as of December 31, 2021 located primarily in Europe.

The Company’s long-lived assets are located primarily in the United States, except for $ 1,516 as of June 30, 2022 and $ 1,399 as of December 31, 2021 located primarily in Europe.

Net Loss Per Share —Basic and diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common shares outstanding during the period.

Since the Company has experienced net losses for all periods presented, net loss per share excludes the effect of 1,567 and 1,955 stock options, restricted shares, restricted stock units and performance award shares as of March 31, 2022 and 2021 because they are anti-dilutive.

Since the Company has experienced net losses for all periods presented, net loss per share excludes the effect of 1,548 and 1,807 stock options, restricted shares, restricted stock units and performance award shares as of June 30, 2022 and 2021 because they are anti-dilutive.

Therefore, the number of shares calculated for basic net loss per share is also used for the diluted net loss per share calculation.

11 unchanged sentences

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of March 31, 2022:

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of June 30, 2022:

Quoted Prices in

11 unchanged sentences

Total assets $ 31,735 $ 145,290 $ — $ 177,025

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three months ended March 31, 2022.

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three and six months ended June 30, 2022.

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of December 31, 2021:

14 unchanged sentences

The Company’s contingent consideration arrangements arising from the SentreHEART acquisition obligate the Company to pay certain defined amounts to former shareholders of SentreHEART if specified milestones are met related to the aMAZE IDE clinical trial, including PMA approval and reimbursement for the therapy involving SentreHEART’s devices.

The Company has assessed the projected probability of payment during the contractual achievement periods to be remote, resulting in no remaining fair value as of March 31, 2022 and December 31, 2021.

The Company has assessed the projected probability of payment during the contractual achievement periods to be remote, resulting in no remaining fair value as of June 30, 2022 and December 31, 2021.

Inventories consist of the following:

10 unchanged sentences

The following table provides a summary of the Company’s intangible assets:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Estimated Useful Life Cost Accumulated

2 unchanged sentences

$ 55,712 $ 14,663 $ 55,712 $ 12,720

Total $ 55,712 $ 13,692 $ 55,712 $ 12,720

Amortization expense of intangible assets was $ 972 and $ 238 for the three months ended March 31, 2022 and 2021.

Amortization expense of intangible assets was $ 971 and $ 727 for the three months ended June 30, 2022 and 2021 and $ 1,943 and $ 965 for the six months ended June 30, 2022 and 2021.

Future amortization expense is projected as follows:

2022 (excluding the three months ended March 31, 2022)

2022 (excluding the six months ended June 30, 2022)

2027 and thereafter

6 unchanged sentences

Accrued taxes and value-added taxes payable 1,572 1,452

Accrued royalties 774 754

Other accrued liabilities 1,393 1,234

2 unchanged sentences

The Company has a Loan and Security Agreement, as amended and modified effective November 1, 2021 (Loan Agreement), with Silicon Valley Bank (SVB).

The Loan Agreement includes a $ 60,000 term loan, a $ 30,000 revolving line of credit, and an option to make available an additional $ 30,000 in term loan borrowings.

The Loan Agreement includes a $ 60,000 term loan, a $ 30,000 revolving line of credit, and an option for an additional $ 30,000 in term loan borrowings.

The Loan Agreement has a five year term, expiring November 2026.

2 unchanged sentences

The term loan accrues interest at the Prime Rate plus 1.25 % and is subject to an additional 3.00 % fee on the term loan principal amount at maturity.

The Company is accruing the 3.00 % fee over the term of the Loan Agreement, with $ 150 included in the outstanding loan balance as of March 31, 2022.

The Company is accruing the 3.00 % fee over the term of the Loan Agreement, with $ 240 included in the outstanding loan balance as of June 30, 2022.

Additionally, the unamortized original financing costs related to the term loan of $ 286 are netted against the outstanding loan balance in the Condensed Consolidated Balance Sheets and are amortized ratably over the term of the Loan Agreement.

The revolving line of credit is subject to an annual facility fee of 0.20 % of the revolving line of credit, and any borrowings thereunder bear interest at the Prime Rate.

The revolving line of credit is subject to an annual facility fee of 0.20 %, and any borrowings thereunder bear interest at the Prime Rate.

Borrowing availability under the revolving credit facility is based on the lesser of $ 30,000 or a borrowing base calculation as defined by the Loan Agreement.

As of March 31, 2022, the Company had no borrowings under the revolving credit facility and had borrowing availability of approximately $ 28,750 .

Financing costs related

As of June 30, 2022, the Company had no borrowings under the revolving credit facility and had borrowing availability of $ 28,750 .

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

to the revolving line of credit are included in other assets in the Condensed Consolidated Balance Sheets and amortized ratably over the twelve-month period of the annual fee.

The Loan Agreement also provides for certain prepayment and early termination fees, as well as establishes a minimum liquidity covenant and dividend restrictions, along with other customary terms and conditions.

1 unchanged sentence

Future maturities of long-term debt, excluding the term loan final fee, are projected as follows:

2022 (excluding the three months ended March 31, 2022)

2022 (excluding the six months ended June 30, 2022)

Total long-term debt $ 60,000

The Company has operating and finance leases for offices, manufacturing and warehouse facilities and computer equipment.

The Company has operating and finance leases for office, manufacturing and warehouse facilities and equipment.

The Company’s leases have remaining lease terms of less than one year to nine years .

Options to renew or extend leases beyond their initial term have been excluded from measurement of the ROU assets and lease liabilities for the majority of leases as exercise is not reasonably certain.

Options to renew or extend leases beyond their initial term have been excluded from measurement of the ROU assets and lease liabilities as exercise is not reasonably certain.

The weighted average remaining lease term and the discount rate for the reporting periods are as follows:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Operating Leases

4 unchanged sentences

Weighted average discount rate 6.92 % 6.91 %

A $ 1,250 letter of credit issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of March 31, 2022.

A $ 1,250 letter of credit issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of June 30, 2022.

The components of lease expense are as follows:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Operating lease cost $ 284 $ 203 $ 570 $ 481

3 unchanged sentences

Total finance lease cost $ 523 $ 442 $ 883 $ 887

Short-term lease expense was not significant for the three months ended March 31, 2022 and 2021.

Short-term lease expense was not significant for the three and six months ended June 30, 2022 and 2021.

ATRICURE, INC.

3 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Three Months Ended

March 31, 2022 Three Months Ended

March 31, 2021

Six Months Ended

June 30, 2022 Six Months Ended

June 30, 2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 251 $ 331

Operating cash flows from finance leases 189 203

Financing cash flows from finance leases 217 198

No right-of-use assets were obtained in exchange for lease obligations during the three months ended March 31, 2022 and 2021.

Operating cash flows for operating leases $ 505 $ 494

Operating cash flows for finance leases 375 403

Financing cash flows for finance leases 437 399

Right-of-use assets obtained in exchange for lease obligations:

Operating leases — 1,221

Finance leases — —

Supplemental balance sheet information related to leases was as follows:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Operating Leases

10 unchanged sentences

Total finance lease liabilities $ 10,539 $ 10,977

Maturities of lease liabilities as of March 31, 2022 were as follows:

Future m aturities of lease liabilities as of June 30, 2022 were as follows:

Operating Leases Finance Leases

2022 (excluding the three months ended March 31, 2022)

$ 610 $ 1,223

2022 (excluding the six months ended June 30, 2022)

2023 1,160 1,652

11 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Royalty Agreements.

Royalty Agreement.

The Company has a royalty agreement in place with terms that include payment of royalties of 5 % of specified product sales.

1 unchanged sentence

Parties to the royalty agreement have the right at any time to terminate the agreement immediately for cause.

Royalty expense of $ 794 and $ 722 was recorded as a component of Cost of Revenue in the accompanying Condensed and Consolidated Statement of Operations for the three months ended March 31, 2022 and 2021.

Royalty expense of $ 877 and $ 842 was recorded for the three months ended June 30, 2022 and 2021 and $ 1,670 and $ 1,564 for the six months ended June 30, 2022 and 2021 as a component of Cost of Revenue in the accompanying Condensed and Consolidated Statement of Operations.

Purchase Agreements.

9 unchanged sentences

The Company provided the USDOJ with documents and answers to the written interrogatories.

In March 2021, USDOJ informed the Company that its investigation was based on a lawsuit brought on behalf of the United States and the various state and local government under the qui tam provisions of federal and certain state and local False Claims Acts.

In March 2021, USDOJ informed the Company that its investigation was based on a lawsuit brought on behalf of the United States and various state and local governments under the qui tam provisions of federal and certain state and local False Claims Acts.

Although the USDOJ and all of the state and local governments declined to intervene, the relator continues to pursue the case.

4 unchanged sentences

While a loss related to this claim is possible, the Company does not believe such loss is probable or estimable at this time.

The Company develops, manufactures and sells devices designed primarily for the surgical ablation of cardiac tissue, the exclusion of the left atrial appendage, and blocking pain by temporarily ablating peripheral nerves.

The Company develops, manufactures and sells devices designed primarily for surgical ablation of cardiac tissue, exclusion of the left atrial appendage, and blocking pain by temporarily ablating peripheral nerves.

These devices are developed and marketed to a broad base of medical centers globally.

The Company recognizes revenue when control of promised goods is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods.

In the quarter ended March 31, 2022, the Company changed the presentation of its disaggregated revenue within the notes to the Condensed Consolidated Financial Statements to align with current product line offerings.

Specifically, pain management revenue, representing sales of the cryoSPHERE ® product, was historically presented within open ablation revenue and is now a separately stated revenue product type.

Valve revenue, historically presented as a separate product type revenue, is now included in open ablation revenue.

Revenue amounts for comparative prior fiscal periods have been reclassified to conform to the current period presentation.

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

Revenue reclassified by product type for 2021 is as follows:

Three Months Ended

March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021

United States Revenue:

Open ablation $ 17,439 $ 19,503 $ 17,893 $ 17,561

Minimally invasive ablation 8,385 9,702 9,990 11,303

Pain management 3,898 5,709 6,253 6,927

Total ablation 29,722 34,914 34,136 35,791

Appendage management 20,587 25,156 23,401 25,424

Total United States $ 50,309 $ 60,070 $ 57,537 $ 61,215

International Revenue:

Open ablation $ 4,434 $ 5,526 $ 6,690 $ 6,544

Minimally invasive ablation 1,274 1,575 1,849 1,711

Pain management — 11 11 39

Total ablation 5,708 7,112 8,550 8,294

Appendage management 3,258 4,194 4,373 3,709

Total International $ 8,966 $ 11,306 $ 12,923 $ 12,003

Total revenue $ 59,275 $ 71,376 $ 70,460 $ 73,218

United States revenue by product type is as follows:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Open ablation $ 22,070 $ 19,503 $ 41,044 $ 36,942

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Open ablation $ 6,213 $ 5,526 $ 12,705 $ 9,960

4 unchanged sentences

Total International $ 13,264 $ 11,306 $ 25,568 $ 20,272

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Revenue attributed to customer geographic locations is as follows:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

United States $ 71,265 $ 60,070 $ 133,537 $ 110,379

10 unchanged sentences

The Company is unable to estimate the annual effective tax rate with sufficient precision to use the effective tax rate method, which requires a full-year projection of income.

The effective tax rate for the three months ended March 31, 2022 and 2021 was ( 0.37 %) and ( 0.18 %).

The effective tax rate for the three months ended June 30, 2022 and 2021 was ( 0.30 %) and ( 0.41 %).

The effective tax rate for the six months ended June 30, 2022 and 2021 was ( 0.34 %) and ( 0.29 %).

The Company’s worldwide effective tax rate differs from the US statutory rate of 21% primarily due to the Company’s valuation allowance.

Federal, state and local returns of the Company are routinely subject to review by various taxing authorities.

The Company has not accrued any interest and penalties related to unrecognized income tax benefits as a result of offsetting of net operating losses.

The Company has not accrued any interest and penalties related to unrecognized income tax benefits as a result of offsetting net operating losses.

However, if required, the Company will recognize interest and penalties within income tax expense and within the related tax liability.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

EQUITY COMPENSATION PLANS

4 unchanged sentences

The Compensation Committee of the Board of Directors, as the administrator of the 2014 Plan, has the authority to determine the terms of any awards, including the number of shares subject to each award, the exercisability of the awards and the form of consideration.

As of March 31, 2022, 12,899 shares of common stock had been reserved for issuance under the 2014 Plan, and 1,152 shares were available for future grants.

As of June 30, 2022, 12,899 shares of common stock had been reserved for issuance under the 2014 Plan, and 1,076 shares were available for future grants.

At the Company's 2022 Annual Meeting of Stockholders, stockholders approved an amendment to the 2014 Plan increasing the shares authorized under the 2014 Plan by 1,100 .

Employee Stock Purchase Plan

1 unchanged sentence

The offering period (currently six months ) and the offering price are subject to change.

Participants may not purchase a value of more than $ 25 of the Company’s common stock in a calendar year and may not purchase more than 3 shares during an offering period.

As of March 31, 2022, there were 305 shares available for future issuance under the ESPP.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Participants may not purchase more than $ 25 of the Company’s common stock in a calendar year or more than 3 shares during an offering period.

As of June 30, 2022, there were 228 shares available for future issuance under the ESPP.

Share-Based Compensation Expense Information

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Cost of revenue $ 487 $ 598 $ 1,058 $ 1,017

2 unchanged sentences

Total $ 7,524 $ 7,141 $ 14,573 $ 13,745

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

COMPREHENSIVE LOSS AND ACCUMULATED OTHER COMPREHENSIVE LOSS

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Total accumulated other comprehensive (loss) income at beginning of period $ ( 3,465 ) $ ( 18 ) $ ( 948 ) $ 312

6 unchanged sentences

Balance at beginning of period $ ( 239 ) $ ( 41 ) $ ( 61 ) $ 258

Other comprehensive loss before reclassifications ( 261 ) ( 298 )

Other comprehensive income (loss) before reclassifications ( 527 ) 36 ( 787 ) ( 262 )

Amounts reclassified from accumulated other comprehensive loss to other income (expense) 97 27 179 26

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements