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AtriCure buys nContact for up to $149M; guidance provided for 2015 and 2016

Oct. 04, 2015 11:47 PM ETAtriCure, Inc. (ATRC) StockATRCBy: Douglas W. House, SA News Editor
  • AtriCure (NASDAQ:ATRC) acquires privately held cardiac ablation solutions developer, nContact, in a cash-and-stock transaction valued at up to almost $150M. Under the terms of the deal, AtriCure will make an upfront payment of 3.7M shares of AtriCure stock at $24.60 per share (~$91M) plus ~$8M in cash. The agreement includes an additional $50M based on the completion of enrollment in the CONVERGE IDE clinical trial, the first head-to-head study to assess nContact's Convergent procedure versus catheter ablation in patients with persistent atrial fibrillation, and PMA approval. Shareholders of nContact are also entitled to receive sales-based contingent consideration on revenue in excess of an annual 25% growth rate through 2019. The deal is expected to close in the next few weeks.
  • AtriCure CEO MIke Carrel says, "nContact is an excellent strategic addition to AtriCure, as it expands and strengthens our presence in the Afib market. We expect the combined entity to provide improved market access and additional collaboration opportunities with cardiac surgeons and electrophysiologists."
  • The company expects the transaction to be immediately accretive to revenue but dilutive to EBITDA through 2017, then accretive thereafter. NContact posted revenues of $8.2M in 2014.
  • 2015 Guidance: Q3: Total Revenues: ~$31.6M; U.S. Revenues: $24.7M. 2015: Revenues: $128M - 129M. Product sales from nContact for the remainder of the year should be ~$1.5M. EBITDA loss will be $10M - 12M.
  • 2016 Guidance: Revenue growth: 25%; increased EBITDA loss.
  • Management will host a conference call on Monday, October 5 at 8:30 am ET to discuss the deal.

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