ATS Medical Ups Outlook on Acquisition

Tuesday June 19, 7:10 pm ET ATS Medical Raises Full-Year Guidance on $28M Acquisition of CryoCath Business MINNEAPOLIS (AP) -- ATS Medical Inc., which makes products used in cardiac surgery, said Tuesday it will acquire a division of CryoCath Technologies Inc. and has raised its full-year revenue outlook.

ATS Medical will acquire Canada-based CryoCath's surgical cryoablation business for about $28 million, which includes a group of products designed to use extreme cold to destroy diseased tissue.

The purchase price includes a $22 million payment and the transaction's close, $2 million after certain manufacturing goals are met, and up to $4 million in payments based on future sales of certain products.

As a result of the deal, ATS Medical said it is increasing its full-year 2007 revenue forecast to $49 million to $51 million, from a previously announced range of $46 million to $47 million. Analysts expect 2007 revenue of $46.4 million, according to a poll by Thomson Financial.

The company also said it expects 2008 revenue of $65 million to $70 million. Analysts polled by Thomson Financial estimate revenue of $57.5 million.

The transaction will allow the company to attain profitability in the second half of 2008, which is ahead of forecasts, the company said. Analysts expect the company to lose 34 cents a share in 2007 and 18 cents a share in 2008, according to Thomson Financial.

The acquisition is expected to close within 10 days, and will be financed with a $8.6 million senior secured term loan and a private placement of 9.8 million shares of common stock $1.65 per share to venture capital firm Alta Partners. Alta will also receive a warrant to purchase 1.96 million shares of ATS common stock at $1.65 per share.

When the deal closes, ATS will have about 59.1 million common shares outstanding.