EX-99.1

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Company generates non-GAAP operating profit excluding litigation settlement

MINNEAPOLIS, MN, February 23, 2009 — ATS Medical, Inc. (Nasdaq: ATSI), manufacturer and marketer of state-of-the-art cardiac surgery products and services, today reported financial results for the fourth quarter ended December 31, 2008.

Revenue from the Company’s heart valve therapy products, consisting of mechanical valves, tissue valves and repair products, was up 26% on a year-over-year basis to $13.0 million. The growth reflected a 23% increase in mechanical valve revenue, a 164% increase in tissue valve revenue and a 57% increase in valve repair revenue. Revenue from the Company’s ATS CryoMaze^™ cryoablation products for the treatment of cardiac arrhythmias grew 30% to $4.6 million. Total revenue growth excluding the impact of foreign currency fluctuations was approximately 30%.

Gross profit margin for the fourth quarter of 2008 was a record of 65.7%, representing significant improvement from 58.2% in the fourth quarter of 2007. Year-over-year gross profit margin improvements were due to lower mechanical valve product costs resulting from increased production as well as growth in the Company’s surgical ablation business.

The GAAP operating loss for the fourth quarter of 2008 was $7.3 million compared with a GAAP operating loss of $4.9 million in the fourth quarter of 2007. The GAAP operating loss in the fourth quarter of 2008 includes a one-time charge of $7.5 million related to the Company’s settlement of long standing litigation. Excluding the litigation settlement the Company earned a non-GAAP operating profit of $171,000. The GAAP net loss for the fourth quarter of 2008 was $8.5 million, or $0.13 per share, compared with $6.2 million, or $0.10 per share in the fourth quarter of 2007. Excluding the impact of the litigation settlement, the non-GAAP net loss per share for the fourth quarter would have been $0.02.

“The fourth quarter was a milestone quarter for ATS Medical as strong revenue growth and record gross profit margin performance enabled us to generate a non-GAAP operating profit excluding non-recurring charges,” said Michael Dale, Chairman, President and Chief Executive Officer. “Over the last six years the ATS team has worked tirelessly to build a strategically relevant, high growth, diversified, and ultimately profitable cardiac surgery franchise. Every ATS employee deserves credit and can take great pride in the achievement of this important accomplishment.”

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During the fourth quarter of 2008 the Company received FDA approval of the ATS 3f Aortic Bioprosthesis, the Company’s first tissue valve offering in the United States. The Company is conducting a limited commercial launch of the valve in the United States beginning in the first quarter of 2009.

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The Company expects its sutureless tissue valve, the ATS 3f Enable Aortic Bioprosthesis, to receive a CE Mark in 2009. The Enable valve is designed to allow less invasive surgery for the general population of aortic valve replacement patients.

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The Company announced the formation of its Cryoablation Scientific Advisory Board in January this year. This board met for the first time in December 2008 to develop a consensus around the preferred procedural approach to perform a complete Cox Maze III procedure. The objective was to recommend a standard set of lesions that would yield the best possible, reproducible patient outcomes. In January, the board publicly unveiled their recommended procedural steps at the ATS Frontiers in Cryoablation Symposium at the annual meeting of the Society of Thoracic Surgery in San Francisco. The board’s procedural recommendations will be the basis for clinical studies, training and marketing programs.

For the full year 2008 revenue increased 32.7% to $65.8 million compared to $49.6 million in 2007. Heart valve therapy revenue increased 23.4% and CryoMaze revenue increased 74.3%. Gross profit margin was 61.6% for the full year 2008 compared to 56.9% for 2007. The Company reported a GAAP net loss for 2008 of $19.3 million, or $0.31 per share, compared to a GAAP net loss of $23.0 million, or $0.44 per share, in 2007. The net loss for 2008 included a charge of $7.5 million related to the Company’s settlement of longstanding litigation. The net loss for 2007 included charges of $3.5 million for acquired in-process research and development related to the acquisition of our surgical cryoablation business and $0.8 million related to discontinuing our PARSUS development program.

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Revenue growth of 17.0% to 21.5% which translates into a revenue range of $77 to $80 million. The Company’s revenue guidance includes an unfavorable impact of approximately 2% related to declining foreign exchange rates.

ATS management will host a conference call today, February 23, 2009, at 5:00 p.m. ET to discuss its 2008 fourth quarter and full year financial results and current corporate developments. The dial-in number for the conference call is 866-953-6851 for domestic participants and 619-399-3475 for international participants. A live webcast of the call can also be accessed at www.atsmedical.com by clicking on the Investors icon.

A taped replay of the conference call will also be available beginning approximately one hour after the call’s conclusion and will remain available for seven days. The replay can be accessed by dialing 888-286-8010 for domestic participants and 617-801-6888 for international callers, using the passcode 88772935#.

ATS reports its financial results in accordance with generally accepted accounting principles (“GAAP”). In addition, from time to time, we include other measures in our releases which are not prepared in accordance with GAAP. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this release we have included adjusted versions of our operating profit (loss), net loss and net loss per share for the fourth quarter of 2008. These non-GAAP measures do not reflect the impact of a $7.5 million charge related to the Company’s settlement of long standing litigation because we believe that this charge will not be incurred on a regular basis. We use the adjusted operating loss, adjusted net loss and adjusted net loss per share measures in our internal analysis and review of our operational performance. We believe that these non-GAAP measures provide investors with useful information in comparing our performance over different periods, particularly when comparing one of these periods to a period in which we did not incur this kind of charge. By using these non-GAAP measures we believe investors get a better picture of the performance of our underlying business. We have also included as an attachment to this release a schedule which reconciles our operating loss, net loss and net loss per share prepared in accordance with GAAP to our adjusted operating loss, adjusted net loss and adjusted net loss per share presented above.

ATS Medical, Inc. is dedicated to ‘Advancing The Standards’ of cardiac surgery through the development, manufacturing and marketing of innovative products and services for the treatment of structural heart disease. ATS Medical serves the cardiac surgery community by focusing on two distinct but operationally synergistic market segments: heart valve disease therapy and surgical ablation of cardiac arrhythmias.

ATS was originally founded to develop the ATS Open Pivot^® heart valve as a new mechanical heart valve standard of care. Today the Open Pivot heart valve is the preferred mechanical heart valve in many markets around the world and the fastest growing mechanical prosthesis in the market. Building on this legacy and addressing the largest market segment in heart valve therapy, the ATS 3f^® brand encompasses an innovative tissue heart valve portfolio to address conventional open surgery requirements as well as the growing demand for less invasive, sutureless procedures. The ATS 3f^® portfolio includes offerings at various stages including early product development, pivotal clinical trials, and market commercialization. Completing the portfolio in heart valve therapy is the ATS Simulus^® annuloplasty product line. Simulus products assist the surgeon in repairing a patient’s native heart valve as an alternative to replacement. Continuing ATS Medical’s focus on serving the cardiac surgery community are the ATS CryoMaze^™ products for surgical cryoablation of cardiac arrhythmias. ATS CryoMaze^™ products are used by surgeons to treat patients suffering from cardiac arrhythmias, the largest and fastest growing form of structural heart disease in populations over 60 years of age. The ATS Medical web site is http://www.atsmedical.com.

This Press Release contains forward-looking statements that may include statements regarding intent, belief or current expectations of the Company and its management. Actual results could differ materially from those projected in the forward looking statements as a result of a number of important factors, including the results of clinical trials, the timing of regulatory approvals, the integration of 3f Therapeutics, the Enclose product line and the surgical cryoablation business of CryoCath Technologies, Inc., regulatory actions, competition, pricing pressures, supplier actions and management of growth. For a discussion of these and other risks and uncertainties that could affect the Company’s activities and results, please refer to the Company’s filings with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2007 and its most recent quarterly report on Form 10-Q.


ATS Medical, Inc.
Condensed Consolidated Statements
of Operations
(in thousands except per share amounts)
	Quarter Ended						Year Ended
	December 31,			December 31,			December 31,			December 31,
	2008			2007			2008			2007
Net sales	$	18,032		$	14,217		$	65,821		$	49,587
Cost of goods sold		6,190			5,937			25,267			21,348

Gross profit		11,842			8,280			40,554			28,239

Operating expenses:
Sales and marketing		6,680			7,019			27,373			24,633
Research and development		1,864			2,173			8,215			7,546
In-process research and development		—			—			—			3,500
General and administrative		2,310			3,099			10,509			10,417
Litigation settlement		7,500			—			7,500			—
Amortization of intangibles		817			885			3,489			2,516
Intangible asset impairment		—			—			—			755

Total operating expenses		19,171			13,176			57,086			49,367

Operating loss		(7,329	)		(4,896	)		(16,532	)		(21,128	)


Interest expense, net		(763	)		(555	)		(2,739	)		(1,822	)
Other income (expense), net		(224	)		(594	)		413			61

Net loss before income taxes		(8,316	)		(6,045	)		(18,858	)		(22,889	)
Income tax expense		(197	)		(116	)		(481	)		(119	)


Net loss		($8,513	)		($6,161	)		($19,339	)		($23,008	)


Net loss per share:
Basic and diluted		($0.13	)		($0.10	)		($0.31	)		($0.44	)


Weighted average number of shares outstanding:
Basic and diluted		63,580			59,412			61,440			52,589


ATS Medical, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
	December 31,		December 31,
	2008		2007
Assets
Cash and short-term investments	$	20,895	$	14,669
Accounts receivable		14,532		11,186
Inventories, net		20,208		18,743
Prepaid expenses		958		1,143

Total current assets		56,593		45,741

Property and equipment, net		7,031		7,739
Intangible assets		49,131		50,779
Other assets		2,226		1,638

Total assets	$	114,981	$	105,897



Liabilities & shareholders’ equity
Accounts payable	$	4,054	$	4,794
Accrued compensation		3,537		2,361
Other accrued liabilities		2,257		2,095
Current maturities of bank notes payable		2,646		2,457
Payable to CryoCath Technologies Inc.		1,910		—
Payable to CarboMedics Inc.		4,500		—
Warrant liability		—		3,913

Total current liabilities		18,904		15,620

Convertible senior notes payable		17,533		17,436
Bank notes payable		3,969		6,143
Payable to CryoCath Technologies Inc.		—		1,742

Shareholders’ equity		74,575		64,956

Total liabilities & shareholders’ equity	$	114,981	$	105,897


ATS Medical, Inc.
Consolidated Condensed Statements of Cash Flow
(in thousands)
	Year Ended
	December 31,			December 31,
	2008			2007
Operating activities
Net loss		($19,339	)		($23,008	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization		5,623			4,622
Stock based compensation expense		1,676			1,454
Acquired in-process research and development		—			3,500
Impairment of intangibles		—			755
Deferred income taxes		192			95
Non-cash interest expense		743			546
Change in value of common stock appreciation rights and convertible senior notes derivative liabilities		(294	)		554
Changes in operating assets and liabilities		(1,005	)		1,939

Net cash used in operating activities		(12,404	)		(9,543	)

Investing activities
Maturities of short-term investments, net of purchases		4,189			1,903
Payments for business acquisitions		(2,000	)		(21,074	)
Business acquisition costs		—			(1,791	)
Payments for technology licenses and other intangibles		—			(277	)
Purchases of furniture, machinery and equipment		(1,440	)		(748	)
Other		—			(36	)

Net cash provided by (used in) investing activities		749			(22,023	)

Financing activities
Advances on bank notes payable		—			8,600
Repayments on notes payable		(1,985	)		(2,327	)
Net proceeds from sales of common stock and warrants		23,943			31,196
Other		162			168

Net cash provided by financing activities		22,120			37,637

Effect of foreign exchange rate changes		(50	)		(203	)

Increase in cash and cash equivalents	$	10,415		$	5,868


ATS Medical, Inc.
Selected Revenue Information
(in thousands)
	Quarter Ended				Year Ended
	December 31,		December 31,		December 31,		December 31,
	2008		2007		2008		2007

Heart valve therapy	$	13,047	$	10,336	$	47,576	$	38,560
Surgical arrhythmia		4,643		3,576		16,888		9,690
Surgical tools & accessories		342		305		1,357		1,337

Total revenue	$	18,032	$	14,217	$	65,821	$	49,587


ATS Medical, Inc.
Reconciliation of GAAP Financial Measures
to Non-GAAP Financial Measures
(in thousands except per share amounts)
(unaudited)
	Quarter ended
	December 31,
	2008
Operating loss, as reported	$	(7,329	)
Adjustments to operating loss:
Litigation settlement		7,500


Operating income, as adjusted	$	171



Net loss, as reported	$	(8,513	)
Adjustments to net loss:
Litigation settlement		7,500


Net loss, as adjusted	$	(1,013	)



Net loss per share, as reported:
Basic and diluted	$	(0.13	)
Adjustments to net loss per share:
Litigation settlement		0.12

Net loss per share, as adjusted:
Basic and diluted	$	(0.02	)


Weighted average number of shares outstanding, basic and diluted		63,580


Contacts:		Investors:
Michael Dale, President/CEO 763-553-7736 Michael Kramer, CFO 763-557-2222		Parice Halbert, CFA Westwicke Partners 443-213-0500