ATS Medical Reports Weak – Analyst Blog

ATS Medical Inc. (ATSI) recently reported fourth quarter and fiscal 2009 results. For the fourth quarter, loss per share was 3 cents, higher than the Zacks Consensus Estimate of 1 cent and the year-ago figure of 2 cents. For fiscal 2009, loss per share was 7 cents, compared to the Zacks Consensus Estimate and the year-ago loss per share of 5 cents and 19 cents, respectively.

 

 

Total revenues in the fourth quarter increased 3.7% year over year to $18.7 million. Excluding a favorable foreign currency translation (FX), total revenues increased 2.0% year over year.

 

In terms of business segments, Heart valve therapy revenues increased 6.3% year over year to $13.9 million. Growth was fueled by higher Tissue valve and Heart valve repair revenues, partly offset by lower Mechanical valve revenues. ATS Medical witnessed a decline in its core Mechanical heart valve revenues by 3.4% year over year to $11.3 million.

 

Tissue valve and Heart valve repair revenues increased 201% and 29.5% year over year to $1.5 million and $1.1 million, respectively.

 

Surgical arrhythmia revenues increased 2.6% year over year to $4.8 million. Surgical tools & accessories revenues declined 81.3% year over year to $0.064 million.

 

ATS Medical reported a gross margin of 64.3% in the quarter, a decline of 140 basis points (bps) year over year. The decline can be primarily attributed to a shift in geographic and product mix.

 

 

Total revenues in fiscal 2009 increased 15.0% year over year to $75.7 million. Excluding FX, total revenues increased 17.1% year over year.

 

Heart valve therapy sales increased 17.7% year over year to $56.0 million. Surgical arrhythmia revenues increased 11.8% year over year to $18.9 million. Surgical tools & accessories revenues declined 40.0% year over year to $0.814 million.

 

 

ATS Medical ended fiscal 2009 with cash and short-term investments of $14.2 million, a sequential increase of 17.7%. The company generated a positive cash flow of $1.5 million during the reported quarter.

 

 

ATS Medical has provided guidance for fiscal 2010. Revenues are expected in the range of $81 to $83 million, an increase of roughly 7% to 10% year over year. Gross margin is expected between 65% and 67%. Operating expenses should be in the range of $59 to $62 million.

 

Minneapolis, Minnesota-based ATS Medical develops, manufactures and markets medical devices needed for cardiovascular surgery. ATS Medical‘s core product, ATS Open Pivot − a mechanical bileaflet heart valve − is used to treat heart valve failure. The company also operates in the tissue valve market.

 

ATS Medical’s main competitor is St. Jude Medical Inc. (STJ). Other competitors include Medtronic Inc. (MDT), Carbomedics and Edwards Lifesciences (EW).

 

Presently, we have a “Neutral” recommendation on ATS Medical.