- AtriCure — a leading innovator in treatments for atrial fibrillation and left atrial appendage management — is acquiring SentreHEART for up to $300 million
AtriCure — a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management — recently announced that it has entered into a definitive agreement to buy SentreHEART. SentreHEART is a privately-held developer of percutaneous left atrial appendage management solutions. Plus AtriCure also recently announced its full-year 2019 guidance.
As part of the deal to acquire SentreHEART, the transaction consideration consists of an upfront payment of approximately $40 million in cash and AtriCure common stock along with additional contingent consideration based on the achievement of certain clinical and reimbursement milestones over the next several years — all of which are value-creating events.
The contingent consideration includes $140 million based on milestones related to the aMAZE IDE clinical trial (PMA approval) and $120 million is based on a milestone related to reimbursement for the therapy involving SentreHEART devices. These considerations would be payable in a combination of cash and stock.
“We believe that SentreHEART is a strategic addition to AtriCure, significantly expanding our addressable markets with a product designed for electrophysiologists,” said AtriCure president and CEO Michael Carrel. “With our pursuit of labeling based on the aMAZE Trial, we are deepening our commitment to provide the broadest possible offering of ablation and left atrial appendage management solutions to our customers and their patients.”
AtriCure is known for providing innovative technologies for the treatment of Afib and related conditions. Afib affects over 33 million people worldwide. And electrophysiologists and cardiothoracic surgeons around the world use AtriCure technologies for the treatment of Afib and reduction of Afib related complications.
The AtriCure Isolator Synergy Ablation System is the first and only medical device to receive FDA approval for the treatment of persistent Afib. And AtriCure’s AtriClip Left Atrial Appendage (LAA) Exclusion System products are the most widely sold LAA management devices worldwide.
Carrel also pointed out that the transaction combines two companies that are dedicated to solving challenges associated with Afib. And the companies are confident that SentreHEART complements AtriCure’s current product portfolio and intellectual property.
“We believe that upon FDA approval, use of the LARIAT device will continue to advance AtriCure’s competitive position in the market,” added Carrel.
SentreHEART launched in 2005 and the company’s technology is currently being studied in the aMAZE Trial (an FDA-approved prospective/multicenter/randomized controlled trial evaluating the LARIAT Suture Delivery Device for LAA closure adjunctive to Pulmonary Vein Isolation (PVI) catheter ablation for the treatment of persistent and long-standing persistent Afib.
The aMAZE Trial’s objective is to demonstrate that the LARIAT device for LAA closure (plus a PVI ablation) will lead to a reduced incidence of recurrent Afib compared to PVI alone with a high safety profile. And the aMAZE Trial is expected to enroll up to 600 total patients at 65 sites with one-year follow up. Primary endpoint measures are freedom from episodes of Afib greater than 30 seconds at one-year post-treatment.
Future Outlook For 2019 And 2020
AtriCure is projecting total revenue for 2019 to be in the range of $224.5 million to $228.5 million, which includes a minimal contribution from SentreHEART and reflects approximately 11% to 13% organic growth. And revenue contribution from the SentreHEART business is expected to be nominal until after completion of the aMAZE Trial and PMA approval.
And for 2019, AtriCure now expects adjusted EBITDA (a non-GAAP measure) to be a loss due to integration and operating costs resulting from the transaction. Full-year adjusted EBITDA loss is expected to be in the range of $7 million to $9 million excluding acquisition costs. This adjusted EBITDA loss translates into an adjusted loss per share between $1.07 and $1.14.
For 2020, the company expects to have an adjusted EBITDA loss of less than $10 million as investments shift from completing the aMAZE Trial to preparing for FDA approval. And adjusted EBITDA and adjusted loss per share are non-GAAP measures.
“We have a strong balance sheet, which has been reinforced by our credit facility with Silicon Valley Bank. As a result, we believe that we can support both the upfront payment and ongoing investments in the combined business with minimal shareholder dilution,” added Andy Wade — SVP and CFO of AtriCure. “While this transaction will impact short and medium-term profitability, we do not need to raise additional capital to finish the aMAZE Trial or support post-trial commercialization efforts.”
Piper Jaffray & Co. is acting as exclusive financial advisor and Pepper Hamilton LLP is serving as legal counsel to AtriCure for this transaction. And Guggenheim Securities LLC is acting as exclusive financial advisor and Goodwin Procter LLP is serving as legal counsel to SentreHEART for this transaction.
