AtriCure Q1 2025 Earnings Report

AtriCure EPS Results

• Actual EPS: -$0.14
• Consensus EPS: -$0.25
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: -$0.28

AtriCure Revenue Results

• Actual Revenue: $123.62 million
• Expected Revenue: $122.92 million
• Beat/Miss: Beat by +$703.00 thousand
• YoY Revenue Growth: +13.50%

AtriCure Announcement Details

• Quarter: Q1 2025
• Date: 4/29/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, April 29, 2025
• Conference Call Time: 4:30PM ET

AtriCure (NASDAQ:ATRC) develops, manufactures, and sells devices for surgical ablation of cardiac tissue, exclusion of the left atrial appendage, and temporarily blocking pain by ablating peripheral nerves to medical centers in the United States, Europe, the Asia-Pacific, and internationally. The company offers Isolator Synergy Clamps, single-use disposable radio frequency products; multifunctional pens and linear ablation devices, such as the MAX Pen device that enables surgeons to evaluate cardiac arrhythmias, perform temporary cardiac pacing, sensing, and stimulation, and ablate cardiac tissue with the same device; and the Coolrail device, which enables users to make longer linear lines of ablation. It also provides cryoICE Cryoablation System that enables the user to make linear ablations of varied lengths; EPi-Sense Systems, a single-use disposable device used for the treatment of symptomatic, drug-refractory, and long-standing persistent atrial fibrillation; cryoSPHERE probe, which provides temporary pain relief by applying cryothermic energy to targeted intercoastal peripheral nerves in the ribcage; AtriClip System, an implantable device coupled to a single-use disposable applier; and LARIAT System, a suture-based solution for soft-tissue closure. In addition, the company sells Lumitip dissectors to separate tissues to provide access to key anatomical structures that are targeted for ablation; Glidepath guides for placement of clamps; Subtle Cannula's to support access for EPi-Sense catheters; and various reusable cardiac surgery instruments. It markets and sells its products through independent distributors and direct sales personnel. The company was incorporated in 2000 and is headquartered in Mason, Ohio.

AtriCure Q1 2025 Earnings Call Transcript

Key Takeaways

• AtriCure reported 14% revenue growth to $124 million in Q1 2025 and a more than 200% increase in adjusted EBITDA to $9 million, driven by strength in pain and appendage management.
• Worldwide appendage management revenue rose 19%, led by rapid adoption of the AtriClip Flex Mini, and the company received 510(k) clearance for the AtriClip Pro Mini for minimally invasive procedures.
• The LEAPS trial reached 5,500 enrolled patients (target 6,500 by Q3) to evaluate stroke reduction, and the FDA-approved BOX No AF trial will study prophylactic AFib treatment in cardiac surgery.
• Open ablation revenue grew 14% with a 47% surge in Encompass clamp sales, and AtriCure plans first-in-human studies of a PFA-enabled Encompass clamp later this year.
• Pain management revenue accelerated 39% on momentum from CryoSurge probes, and the Cryo XT probe received FDA clearance for extremity amputations to address postoperative phantom limb pain.

Presentation

[Operator]

Good afternoon and welcome to AtriCure's First Quarter twenty twenty five Earnings Conference Call. This call is being recorded for replay purposes. And at this time, all participants are in listen only mode. We will be facilitating a question and answer session following prepared remarks from AtriCure's management. I would now like to turn the call over to Marissa Beisch from the Gilmartin Group for a few introductory comments.

[Marissa Bych, Principal at Gilmartin Group]

Thank you. By now, you should have received a copy of the earnings press release. If you have not received a copy, please call (513) 644-4484 to have one emailed to you. Before we begin today, let me remind you that the company's remarks include forward looking statements. Forward looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure's control, including risks and uncertainties described from time to time in AtriCure's SEC filings.

[Marissa Bych, Principal at Gilmartin Group]

These statements include, but are not limited to, financial expectations and guidance, expectations regarding the potential market opportunity for AtriCure's franchises and growth initiatives, future product approvals and clearances, competition, reimbursement, and clinical trial outcomes. Results may differ materially from those projected. AtriCure undertakes no obligation to publicly update any forward looking statements. Additionally, we refer to non GAAP financial measures, specifically constant currency revenue, adjusted EBITDA and adjusted loss per share. A reconciliation of these non GAAP financial measures with the most directly comparable GAAP measures is included in our press release, which is available on our website.

[Marissa Bych, Principal at Gilmartin Group]

With that, I would like to turn the call over to Mike Carroll, President and CEO.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Great. Good afternoon, everyone, and thank you for joining us. Our first quarter performance reflects the strength of our broad platform of products and continued focus of our team on expanding patient treatment worldwide. For the quarter, we achieved total revenue of $124,000,000 or 14% growth, led by outstanding performance in both our pain management and appendage management franchises. We also drove increasing profitability, reporting $9,000,000 of adjusted EBITDA for the first quarter, which represents an improvement of more than 200% from the first quarter of twenty twenty four.

[Michael H. Carrel, CEO, President & Director at AtriCure]

In addition to our strong financial performance, we're excited to host our Analyst and Investor Day at our company headquarters in Mason, Ohio on March 26. At this event, we outlined our vision to remain the leader in each of the multibillion dollar markets we serve, with investments in product development, clinical research and therapy development being fundamental to our strategy. Complementing this vision is our goal to deliver double digit revenue growth and expanding profitability and cash flow through the rest of this decade. While we were thrilled to share our vision and our goals for the business, we were even more excited to bring perspectives of four key opinion leaders in the field of cardiac surgery and electrophysiology. These physicians delivered firsthand insights on our groundbreaking LEAPS trial for the reduction of stroke in non AFib patients in cardiac surgery using our AtriClip platform, our upcoming BOX No AF trial studying prophylactic ablation to reduce postoperative AFib, and the importance of AtriCure's hybrid AF therapy as the only FDA approved and effective solution for patients with long standing persistent AFib.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Each KOL echoed what we have been saying for years. Afib is a debilitating and devastating disease that remains undertreated. Further, their views and the evidence presented support the use of autoblation and left atrial appendage management products to reduce the risk of AFib and stroke concomitant to cardiac surgery and in standalone treatment of AFib. We also highlighted the science and market behind the vast opportunity of our Cryo nerve block therapy for patients undergoing thoracotomy, sternotomy and now amputations. Pain after surgery slows recovery, increases healthcare costs and reduces quality of life.

[Michael H. Carrel, CEO, President & Director at AtriCure]

We articulated our vision for our crown nerve block therapy can help nearly one million patients globally and our strategy is to expand even further in the coming years with both new products and approaches. Now I'd like to turn and provide updates on our business and the highlights in the first quarter, beginning with our appendage management franchise. Worldwide appendage management revenue grew 19%, driven by 23% growth in our open AtriClip devices and 7% growth in MIS appendage management devices. We continue to see accelerated growth in our open appendage management business in The United States, where our latest generation of the AtriClip, the Flex Mini is quickly being adopted. The AtriClip Flex Mini device features the smallest profile of any open chest LAA closure device on the market today and continues to garner positive feedback from physicians on the increased visibility and procedures.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Following our launch late in the third quarter of twenty twenty four, we experienced an acceleration in adoption of AtriClip Flex Mini this quarter with a number of accounts purchasing more than doubling and contributing over 15% of our U. S. Open appendage management revenue. We are focused on further expanding the utilization of AtriClip Flex Mini as the year progresses and believe this device will be a strong tailwind for growth well into the future. Also during the first quarter, we received five ten clearance for a minimally invasive AtriClip Pro Mini device.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Like the AtriClip Flex Mini, our Pro Mini device offers significant benefits to surgeons while maintaining the exceptional performance of our AtriClip platform. The AtriClip Pro Mini is 60% smaller than the next lowest profile device, enabling enhanced visualization and precise placement, which is particularly important in minimally invasive procedures. Once again, early physician feedback has been remarkable, and we expect to launch the AtriClip Pro Mini device in the coming weeks. Next, I'd like to provide an update on our groundbreaking and market expanding LEAPS trial. We continue to enroll an extremely fast pace with even more sites around the world actively engaged in the study this quarter.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Earlier today, we reached the total enrollment of 5,500 patients and plan to complete full enrollment of 6,500 patients in the third quarter. As many of you heard from Doctor. Whitlock at our Analyst and Investor Day, there's only one chance to manage the appendage in patients with no additional risk and that is at the time of cardiac surgery. More than half of cardiac surgery patients have risk factors for atrial fibrillation or stroke, And we believe our LEAPS trial will ultimately show the benefit of managing the appendage with an AtriClip device for the millions of patients globally that undergo cardiac surgery every year. Now touching on our AFib ablation franchises.

[Michael H. Carrel, CEO, President & Director at AtriCure]

We experienced growth of fourteen percent in our open ablation franchise in the first quarter, including more than 47% growth in sales of the Encompass clamp. Adoption of the Encompass clamp has remained incredibly strong, particularly the short version of the clamp, which further improves ease of use. During the first quarter, we saw approximately 25% growth in the number of accounts from the first quarter of twenty twenty four, including new sites in Europe. We remain diligent in our efforts to expand treatment in cardiac surgery, reaching new physicians and driving increased use across procedures. As we discussed in detail at the Analyst and Investor Day, we are also developing a PFA enabled version of the Encompass clamp and expect first in human later this year, followed by a clinical trial to study this new device.

[Michael H. Carrel, CEO, President & Director at AtriCure]

As a leader in the treatment of Afib in cardiac surgery, we believe it is important to provide the option of PFA for our surgical ablation devices and expect that we will be successful in further reducing procedure time when coupled with our Encompass plan. Our commitment to addressing the global Afib epidemic is now evolving to include the preventative treatment of Afib in cardiac surgery. It is widely understood that cardiac surgery patients experience an elevated risk for developing Afib following their procedure. Postoperative Afib is damaging to the patient, their family and the healthcare system overall. Our previously announced FOX no AF trial will evaluate the benefits of treating patients without preoperative Afib with our Encompass clamp and the AtriFlip devices.

[Michael H. Carrel, CEO, President & Director at AtriCure]

The study has been approved by the FDA and we will begin initiating clinical trial sites and enrolling our first patients later this year. We expect that completing the BOX No AF trial will greatly expand our market for the devices worldwide and pioneer a new standard in cardiac surgery. Turning to minimally invasive AFib treatment, which includes the hybrid AFib therapy. While the excitement around PFA is understandable and has put pressure on our near term growth, it remains clear that patients with long standing persistent AFib require a more robust procedure to address their disease. As shown in the three year follow-up of CONVERGE and CEIS AF randomized trials, these differences get stronger and more pronounced as time progresses, demonstrating hybrid AF therapy to be incredibly durable over time.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Hybrid AF therapy procedure revenue experienced another outstanding quarter in Europe with nearly 50% growth, while we face downward pressure in The United States. We expect this pressure to continue in the near term in The U. S, but remain steadfast in our belief that with time EPs will begin to identify segments of the population of patients for hybrid AF therapy, leading to long term adoption and success of this procedure in treating patients with advanced AFib. And finally, our pain management franchise saw an acceleration in growth to 39% in the first quarter. Pain management performance reflects the rapid adoption of our latest CryoStur Max and CryoStur Plus probes, where we are experiencing broader use within existing accounts as well as interest from new accounts.

[Michael H. Carrel, CEO, President & Director at AtriCure]

To that end, total accounts grew 12% in the first quarter, showing our continued development of CryoNeural Block therapy worldwide. While we deepen our penetration in thoracic surgery procedures, we are also excited to expand our addressable market with the recent FDA five ten clearance of our Cryo XT probe, designed specifically for extremity amputations, more than 180,000 of which take place annually in The United States. We expect to launch our Cryo XT probe later this year. Based on our research and experience to date, the Cryo XT probe will offer a new solution for preventing or treating phantom and residual limb pain in an easy to use and opioid free device. Traditional opioid based therapies present a litany of issues related to misuse, addiction, and elevated healthcare costs.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Through our organic development efforts in pain management, our goal is to reach every patient suffering from postoperative pain and reduce the dependency on pharmacological solutions for managing that pain. Our pain management franchise remains an exciting and truly innovative component of our business, and we expect continued strength throughout 2025 and well beyond. So in closing, our results reflect another robust quarter of progress throughout our business. From strong worldwide growth to exceptional activity in new product launches and clearances, the continued advancement of research and development programs and execution of our plans to improve profitability. I am truly proud of the efforts of the entire AtriCure team in delivering an outstanding start to the year and remain confident in our shared vision to establish our products and therapies as the standard of care in each of our markets.

[Michael H. Carrel, CEO, President & Director at AtriCure]

And with that, I'll turn the call over to Angie Wyrick, our Chief Financial Officer. Angie?

[Angela Wirick, CFO at AtriCure]

Thanks, Mike. Our first quarter twenty twenty five worldwide revenue of $123,600,000 increased 13.6% on a reported basis and 14.1% on a constant currency basis when compared to the first quarter of twenty twenty four. We experienced robust growth across most of our franchises and geographies, demonstrating in total the strength of our business and a solid foundation to begin the year. First quarter twenty twenty five U. S.

[Angela Wirick, CFO at AtriCure]

Revenue was $101,100,000 a 12.1% increase from the first quarter of twenty twenty four. Open ablation product sales were $33,300,000 compared to $29,300,000 up 13.7% over the first quarter of twenty twenty four. Growth in open ablation was once again led by our Encompass clamps in both new and existing accounts. U. S.

[Angela Wirick, CFO at AtriCure]

Sales of appendage management products were $42,100,000 up 17.3% over the first quarter of twenty twenty four. We saw strong demand for our new AtriClip Flex Mini device in the first quarter, driving our U. S. Open appendage management products to an overall growth rate of 23.5%. Minimally invasive ablation sales were $8,500,000 a decline of approximately 31% over the first quarter of twenty twenty four.

[Angela Wirick, CFO at AtriCure]

As Mike mentioned earlier, our MIS ablation sales continue to experience pressure as more patients are treated with PFA catheters, resulting in fewer referrals for hybrid AF therapy. Finally, U. S. Pain Management sales were $17,300,000 up 35.6% over the first quarter of twenty twenty four and propelled by outsized contribution from our Cryosphere MAX probe, which drove roughly one third of the first quarter revenue. The Cryosphere MAX probe launched in the fourth quarter of twenty twenty four, and we are extremely pleased with the pace of adoption of this device early in the year.

[Angela Wirick, CFO at AtriCure]

International revenue totaled $22,500,000 up 20.8% on a reported basis and up 23.9% on a constant currency basis as compared to the first quarter of twenty twenty four. European sales accounted for $14,200,000 up 25.1%, and Asia Pacific and other international markets accounted for $8,300,000 international sales, up 14%. Overall, our international business performance remains very strong as we continue driving therapy adoption across all key franchises and geographies. Gross margin for the first quarter of twenty twenty five was 74.9%, up 27 basis points from the first quarter of twenty twenty four. The increase was driven primarily by product mix along with operational efficiencies.

[Angela Wirick, CFO at AtriCure]

Moving on to operating expenses for the quarter. Total operating expenses increased $6,400,000 or 6.9% from $92,200,000 in the first quarter of twenty twenty four to $98,600,000 in the first quarter of twenty twenty five. Continued robust enrollment in our LEAFS clinical trial, along with increased headcount focused on product development and clinical trial initiatives, resulted in a 14% increase in research and development expense from the first quarter twenty twenty four. Within SG and A, we continue to drive leverage with a modest increase of 5% from the first quarter of twenty twenty four. Further down the P and L, first quarter adjusted EBITDA was $8,800,000 compared to $2,800,000 for the first quarter of twenty twenty four, representing more than a 200% increase.

[Angela Wirick, CFO at AtriCure]

Overall, trends this quarter reflect our investment strategy of prioritizing the cultivation of future growth drivers while expanding operating margins and profitability. Our loss per share was $0.14 in the first quarter twenty twenty five compared to a loss per share of $0.28 in the first quarter twenty twenty four, while the adjusted loss per share each period was $0.14 and $0.25 respectively. From a balance sheet perspective, we ended the first quarter with approximately $100,000,000 in cash and investments. Our cash burn for the quarter declined $8,000,000 from the first quarter of twenty twenty four and reflects our normal pattern of cash usage driven by share vesting, variable compensation, and operational needs. We expect to generate positive cash flow for the remainder of 2025, resulting in a modest gain for the year in total.

[Angela Wirick, CFO at AtriCure]

Overall, we remain in a very solid capital position to fund the current and future operating needs of the business. And lastly, we'll close with our outlook for 2025. We are reiterating our expectations for full year revenue of $517,000,000 to $527,000,000 reflecting growth of 11% to 13% over the full year 2024 results. Consistent with our first quarter results, we anticipate performance throughout the rest of the year will be driven by our pain management, appendage management, and open ablation franchises. For the second quarter, we expect normal seasonality, implying mid single digit sequential growth.

[Angela Wirick, CFO at AtriCure]

Within this outlook for the second quarter, we do anticipate minimal sequential improvement in U. S. MIS ablation and MIS appendage management revenue from the first quarter of twenty twenty five. From a gross margin perspective, we continue to expect twenty twenty From five gross margin to be consistent with 2024, with the potential for varying impacts from cost savings initiatives, product, and geographic mix. With our strong first quarter performance in mind, we are raising our expectations for full year 2025 adjusted EBITDA to $44,000,000 to $46,000,000 translating to an adjusted loss per share of approximately $0.50 to $0.55 Based on normal top line cadence and timing of R and D spend, we would expect improvements to adjusted EBITDA to be spread across the remaining quarters, with a slightly greater improvement in the third and fourth quarter of twenty twenty five against the comparable quarter in 2024.

[Angela Wirick, CFO at AtriCure]

And finally, we understand that tariffs and trade restrictions are top of mind for many investors. Our guidance for 2025 considers the potential modest impacts based on current information. However, the situation remains fluid. We are proud to produce every AtriCure device in The United States and source the majority of our components from suppliers in The United States. In closing, our first quarter results reflect the collective strength of our franchises, distinct value of product and therapy innovation at AtriCure, and strong discipline of our team to execute our plans.

[Angela Wirick, CFO at AtriCure]

I'm excited for the year ahead, which will be marked by continued financial and operational progress throughout our business. With that, I'll turn the call back to Mike.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Thank you, Angie. The completion of another well executed quarter reflects our team's persistence and unrivaled devotion to our patients, our people and our partners. We have a best in class product and clinical pipeline. That coupled with our existing platforms will increase our ability to impact patients around the world and propel our business to achieve the vision we outlined. The future days feel bright, and I look forward to providing more updates as the year progresses.

[Michael H. Carrel, CEO, President & Director at AtriCure]

And with that, we'll turn it over to questions.

[Operator]

To withdraw your question, please press star 11 again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q and A roster. Our first question comes from William Slovonic with Canaccord Genuity. Your line is open.

[William Plovanic, Managing Director - Equity Research at Canaccord Genuity - Global Capital Markets]

Great. Thanks. Good evening and thanks for taking my questions. Just I know you did address this, but I just wanted to clarify on the tariff. It has been a big topic on a lot of the other companies' calls this earnings season.

[William Plovanic, Managing Director - Equity Research at Canaccord Genuity - Global Capital Markets]

And I think you mentioned 100% U. S. Manufacturing, some sourcing OUS. If we stick where we are, this does not have any impact or a small impact. And can you change the OUS sources elsewhere in The US to mitigate all of it if you had to in the future?

[William Plovanic, Managing Director - Equity Research at Canaccord Genuity - Global Capital Markets]

And then I just have a follow-up. Thanks.

[Angela Wirick, CFO at AtriCure]

Yeah, Bill, we understand the question here. As we said in the prepared remarks, we expect a very modest impact to gross margin. The majority of our suppliers are within The United States. When you think further into the supply chain and a couple that are outside The U. S, we do expect a pretty modest impact.

[Angela Wirick, CFO at AtriCure]

You're talking in the kind of tens of basis points to overall full year gross margin. The effects felt in the later part of the year. From a top line perspective, fairly well insulated majority of our revenue is within The U. S. I think we're all keeping eyes on the situation in China, but that's a very small component of our overall business.

[Angela Wirick, CFO at AtriCure]

And again, just would reiterate, it's contemplated within the guide that we gave based on kind of what we know today.

[William Plovanic, Managing Director - Equity Research at Canaccord Genuity - Global Capital Markets]

Okay. That's great. And then just on appended management, that seemed to accelerate. Is that just because physicians want to make sure they're included in the trial? Or are you seeing I think you talked about just garnering more doctors using it.

[William Plovanic, Managing Director - Equity Research at Canaccord Genuity - Global Capital Markets]

Just trying to get a handle on that because that's a nice acceleration. And we've seen the LAA market in general accelerate. Thanks.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Yeah, that's purely based on

[Michael H. Carrel, CEO, President & Director at AtriCure]

the fact that we launched our Flex Mini that opened the new kind of profile that's about 60% smaller than anything else in the market right now. And the feedback we're getting is fantastic. It's great visualization with it when they're placing it. And so we're having massive adoption of that going on. We're probably about growing about twice as fast as we had expected from the launch.

[Michael H. Carrel, CEO, President & Director at AtriCure]

We're getting a lot of net new accounts coming on board and then net new surgeons treating more as well.

[Operator]

Thank you. Our next question comes from Matthew O'Brien with Piper Sandler. Your line is open.

[Matt O'Brien, Analyst at Piper Sandler Companies]

Afternoon. Thanks for taking the question. Just maybe on the guide real quick. Why not pick up the low end of the range just a little bit? I know it's early in the year, but on the top line, just given the strength you're seeing in a couple of key areas.

[Matt O'Brien, Analyst at Piper Sandler Companies]

Then Angie, can you just be a little bit more specific on where the source of the EBITDA upside comes? It's always great to see there. And then I do have a follow-up.

[Angela Wirick, CFO at AtriCure]

Yes. On the question relative to the guide, it's early in the year, Matt. I think it's as simple as that. Relative to the upside on the bottom line in this quarter, SG and A, the leverage that we're seeing within SG and A, feel confident that we'll continue to execute and be able to deliver and beat the numbers that we put out there for our guidance for the rest of the year. I think our team deserves a lot of kudos here, I think, really controlling and evaluating discretionary spend.

[Angela Wirick, CFO at AtriCure]

You're also seeing the benefit of AtriCure operating at a bigger size and scale at this point.

[Matt O'Brien, Analyst at Piper Sandler Companies]

Understood, thanks. And then on the pain management side, again, very good quarter here. Mike, you've been talking about you were talking a little bit about just further penetration into existing accounts. I don't know if that's we're starting to see more on the orthopedic side or other areas. Can you just maybe tease out a little bit more in terms of where some of that improvement is coming from, from a volume perspective?

[Matt O'Brien, Analyst at Piper Sandler Companies]

And then just anything on price. I don't know if price is a big updraft

[Matt O'Brien, Analyst at Piper Sandler Companies]

for

[Matt O'Brien, Analyst at Piper Sandler Companies]

you guys or not. I don't think so, but just anything there. Thanks.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Yes, price is not a big updraft, you kind of alluded to. With the CrowdStrike Max and reduction in time, what we're seeing is just much more adoption in pretty much all of our accounts. We're getting people that were hesitant to do it before, if they can cut the time in half, they're now starting to adopt the therapy and thoracotomies. They just think that it's the benefit to the time is that much more worth it for them at this point. And I'd say that's probably the biggest reason you're starting to see some of that growth.

[Michael H. Carrel, CEO, President & Director at AtriCure]

That means new surgeons. It also means surgeons that may have punted on a case or two here or there are now not punting on any of their cases and doing it in most of their cases.

[Operator]

Thank you. Our next question comes from John McAuley with Stifel. Your line is open.

[John McAulay, AVP at Stifel Financial Corp]

Hi, Mike. Hi, Angie. I just wanted to take a deeper dive on CONVERGE and MIS this quarter specifically. It seems to have declined again on a sequential basis, but you're talking about I think I heard you say a slight improvement in the second quarter. Can you just talk a little bit about your confidence that it's bottomed out here and we can begin to start to see sequential improvement again?

[Michael H. Carrel, CEO, President & Director at AtriCure]

Sure. I mean, what we're seeing in accounts in The United States, we saw it in Europe a little bit where you definitely saw kind of a bottoming out relative. We do think there's been pressure for the rest of the year. But we have many accounts, they're now starting to see failures. PFA has been out there now for about a year.

[Michael H. Carrel, CEO, President & Director at AtriCure]

And so you're starting to see many of those failures at nine months and twelve months start to come through. They're asking themselves, do I do another ablation at this point? Or if I've already done a full ablation with the back wall and the PVI, what more is there for me to do? Maybe I can get the benefit of doing CONVERGE with the AtriClip and kind of getting a much more robust, long term, more durable solution. And so you're starting to see some of that come to fruition here at many accounts.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Many accounts that if you look back three years ago, were really robust accounts for us, died down quite a bit during kind of the PFA kind of initial onslaught. And you're now starting to see them refer more patients. That's really why we've got confidence as we kind of look out for the rest of the year. That being said, we do see pressure. I mean, PFA is out there.

[Michael H. Carrel, CEO, President & Director at AtriCure]

They're doing a lot of it. It's taking up a lot of time and a lot of mental mindshare for EPs right now. But as you saw with Europe, you saw that there was a big bounce back. We anticipate that is going to happen, maybe not this year, but we do think it's going to happen in the future.

[John McAulay, AVP at Stifel Financial Corp]

That's helpful. And just one more on AtriClip here, strong quarter. I heard you say that I think it was 15% of U. S. Sales are Flex Mini and you're still sort of working up that adoption curve.

[John McAulay, AVP at Stifel Financial Corp]

Could you just sort of frame out what the longer term goal might be there and what would be a regional expectation of contribution from Flex Mini in the future?

[Angela Wirick, CFO at AtriCure]

I think with any new product launch, our long term goal is for that to take dominant market share. I mean, we obviously leave have left our existing Clip products on the market for a couple of different reasons. I think difference in approach with an open ended clip with our FlexV versus the Flex Mini as well as competitively priced option with the original AtriClip device, but would expect very similar to what you saw with the launch of the Flex V six plus years ago. Over a number of years that became the dominant product in the market, and I think that would be one of our goals longer term with the Flex Mini.

[Operator]

Thank you. Our next question comes from Lily Lozada with JPMorgan. Your line is open.

[Lilia-Celine Lozada, Analyst at JP Morgan]

Hi. Thanks for taking the question. Maybe just to follow-up on the question on MIS. I think that international business declined for the first time in a long time, and it sounds like things were starting to turn around there with failures coming back. So are you starting to see greater pressure internationally as well from PSA?

[Lilia-Celine Lozada, Analyst at JP Morgan]

And how should we be thinking about the international MIS business trending over the rest of the year?

[Michael H. Carrel, CEO, President & Director at AtriCure]

Yes, that really has two different components to it. One is that there was just one country, The Netherlands, which was kind of the old approach, the TT approach, and then also some sales. There's a little bit in Japan where they have historically used even in an open case, they do some more minimally invasive products, and they switch to using more of those open products. You saw a little bit of that in the overall MIS number, but does not reflect, the growth of Convergent in Europe in particular, which is really where we're seeing a lot of that growth.

[Angela Wirick, CFO at AtriCure]

Yes, the Convergent procedure for the international business in totality, Lilly, was up 27%. This quarter, it was about 50% growth in Europe and slightly below that. Obviously, once you move outside of Europe, offset by pressure being down 20 plus percent in our legacy minimally invasive products like Mike described.

[Lilia-Celine Lozada, Analyst at JP Morgan]

Got it. That's helpful. Then maybe staying on the topic of the international business, it looks like the open ablation business accelerated, and I know you're launching Encompass there. That's obviously been really impactful in The U. S.

[Lilia-Celine Lozada, Analyst at JP Morgan]

So, should we expect the same sort of momentum in the international business in open as this rolls out? And how are you thinking about the impact there? Thanks so much.

[Angela Wirick, CFO at AtriCure]

Yeah, we've said before, are very hopeful that the Encompass clamp, the success that we've seen in The U. S. Can be replicated outside The U. S. We think that this is an area that can drive growth for a number of quarters and if not years to come there.

[Angela Wirick, CFO at AtriCure]

It's early innings still in Europe as the team works through getting the Encompass clamp on shelf at each one of our hospital customers. The feedback is exceptional, like we've heard in The United States, they're excited to be able to incorporate this into their treatment and again expect this to be a driver of growth on a long term basis.

[Operator]

Thank you. Our next question comes from Marie Thibault with BTIG. Your line is now open.

[Marie Thibault, Managing Director at BTIG]

Hi. Maybe I could ask a high level question on some of the newer products. You've seen tremendous uptake with Flex Mini, the new cryo, and then, of course, Encompass Clamp and the short version continue to perform well. As we think about those new products, how many quarters would you say you still have sort of tailwind from these new launches coming? Should we think about it two, three, four quarters?

[Marie Thibault, Managing Director at BTIG]

Is this multi year? I'm just trying to understand sort of the tailwinds from some of these launches.

[Michael H. Carrel, CEO, President & Director at AtriCure]

I think it's a great question, Maria, and one I love answering because I think we've got the latter part of your question, which is we've got multiple years with the tailwinds on this. If you look at Angie referred to it before, where we saw a lot of acceleration, we did the FlexV product into the market. And we saw that continued acceleration as we got more and more adoption. We think the same thing is going happen with Flex Mini. It's much more approachable for so many different surgeons to be able to utilize it.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Combine that now with getting ProMini out there, we think that it's there's just a lot of demand and that's going be for many years to come. Encompass and we're still while we've made tremendous improvements over the last three years in terms of adoption. So if you really think back, we were at about 25%, twenty two % to 25% before we rolled out Encompass. We're now probably 35%, forty % or so that have kind of adopted it in a fib surgery. And when you think about that, we've obviously got 60% still to go.

[Michael H. Carrel, CEO, President & Director at AtriCure]

We made a lot of movement in the last three years, more movement than we'd ever made before relative to that. And then moving kind of the cardiac surgeon to kind of make that change. We're seeing that and we're seeing that begin to really kind of get a really nice traction. On top of that, Encompass is a core platform for the box no AFPs, which is a prophylactic treatment, because that really is utilizing kind of the Encompass clamp plus the AtriClip at that point in time. And we anticipate that that's obviously going to have a lot of tailwinds for many years to come.

[Michael H. Carrel, CEO, President & Director at AtriCure]

So you combine all of those on the ablation and cardiac side, I'd say you've got many years to come. Max is just rolling out. I think that you're starting to see that impact on the thoracotomies right now. Maybe someday, I think we're getting some traction within sternotomy. I don't want to get too far ahead of ourselves on this call today, but I definitely we're getting more attention to it because we reduced the time so much that that might extend it for many years to come as well.

[Marie Thibault, Managing Director at BTIG]

Okay, that's encouraging. Let me ask my follow-up here then on Cryo XT. Congrats on that FDA clearance. How should we think about your sales force build out? Will you need a separate sales force to target some of those surgeons?

[Marie Thibault, Managing Director at BTIG]

Or are those folks you can be talking to the operating room directors and things to get the XT in the hands of those surgeons?

[Michael H. Carrel, CEO, President & Director at AtriCure]

Great question. At this point, we don't plan on adding an additional sales force. We probably are going to need additional clinical support out in the field as we kind of get into those accounts. We have a lot of coverage as you know, we're in pretty much 100% of the accounts in The United States. So we already have coverage clinical people, but we are going to have to add clinical people as we roll that out.

[Michael H. Carrel, CEO, President & Director at AtriCure]

But not necessarily a brand new sales force for the new call point, because we've already got relationships with a lot of those people already through the work that we're doing in the hospital with the OR staff, as you kind of mentioned as well.

[Operator]

Thank you. Our next question comes from Danny Stauder with Citizens JMP. Your line is open.

[Daniel Stauder, Director - Equity Research at Citizen JMP]

Yes, great. Thanks. Just had a quick one on pain management. I think you noted that accounts grew 12%. I think you'd put that number last quarter at about 800 customers utilizing Cryo Nerve Block.

[Daniel Stauder, Director - Equity Research at Citizen JMP]

Do you have a relative target number for accounts in 2025? And could you give us any more color on US versus international and the expectations of US? Thank you.

[Angela Wirick, CFO at AtriCure]

Yeah, Danny, the 800 accounts was for our open business. In the fourth quarter last year, we were just under 600. CryoNerve block accounts, about 800 for the full year. We saw another quarter I think we're 19 straight quarters now of adding accounts who are using CryoNerve Block products, around 600 or so. The goal here would be you're talking about 1,200 accounts in total in the universe in The United States.

[Angela Wirick, CFO at AtriCure]

And then about half of that, we think, are good targets when you move outside of The US. The launch from both perspectives, both The US and the international launch, is progressing incredibly well. The team is going where they've got good momentum. Tactic tends to be find a physician who uses it, has great outcomes, and have them help us spread the word within their account. They can see it within the recovery of patients when they compare to their physician partners, and we're going to continue to drive deeper adoption within our existing accounts, as well as broaden to the base of customers who haven't yet adopted.

[Daniel Stauder, Director - Equity Research at Citizen JMP]

Great. Thank you. And then just following up on the Cryo XT product. How should we think about the launch of this product compared to your two more recent launches? Is it safe to assume the launch the ramp speed will be a little bit slower just given this new area?

[Daniel Stauder, Director - Equity Research at Citizen JMP]

Or just how you think about it a little bit more color would be great.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Yes, it's a really good question. I'd say for this year, don't have it's all upside. We don't have any dollars really in the plan relative to XT for this year. We anticipate doing a kind of I'll call it a beginning of a slow launch into this area because it is such a new therapy. I think it's going to be not as much like these two launches, but really like the original Cryosphere launch, where you saw at first, we were really methodical over that first six to twelve months of just making sure every case went perfectly well, learning from those cases, a lot like Encompass as well, where in that first six months, we were doing a lot of learning about how to best optimize the procedure, etcetera, how to work in the operating room with the staff.

[Michael H. Carrel, CEO, President & Director at AtriCure]

And then from that, we anticipate some acceleration coming off of that. So you should start to see some major contribution sometime middle to the end of next year with it, even though we are going get some accounts this year. And if it goes a little bit faster, there could be some upside this year and the beginning part of next year.

[Operator]

Thank you. Our next question comes from Mike Matson with Needham and Company. Your line is open.

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

Yes, thanks for taking my questions. I guess just want to ask one on The U. S. Minimally invasive business. So you know, given the the kind of sequential decline and the headwinds there, you you are you doing anything different in terms of your Salesforce or how you're going about kinda marketing the product?

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

I mean, are you, you know, are you maybe pulling back a little and just kind of waiting things out? Or are you trying to maybe push harder there or just kind of maintain the status quo?

[Michael H. Carrel, CEO, President & Director at AtriCure]

It's a great question. I think the most important thing for us to do is to make sure we continue to be relevant and have great relationships within the EP community. We can't push them away from PFA. It's here. They're using it on as many cases as they possibly can.

[Michael H. Carrel, CEO, President & Director at AtriCure]

And so I think we're kind of in the process of making sure that we're relevant and we're learning with them. Having conversations about what does that process and that recipe and formula look like? Meaning, are they going to do a PFA and then a second PFA before they go to CONVERGE? Are they going to go one PFA and go directly to CONVERGE? Do they did everything in that procedure?

[Michael H. Carrel, CEO, President & Director at AtriCure]

I think you heard multiple of those from at the Analyst Day with Doctor. Makati and Doctor. Sood. They each had a little bit different recipe, but effectively working with them to try to figure out what's that formula they're going look like when they start to see those failures and make sure that we're relevant. That means we've got to maintain our team, which is a very seasoned and excellent team that has great relationship with EPs.

[Michael H. Carrel, CEO, President & Director at AtriCure]

I was just at HRS this past weekend. Of course, PFA was the topic of conversation in many of your reports. But we had a it was the busiest HRS we ever had. We had a tech suite where we had over 70 people visit. Many of those people are touching and getting access to our EpiEase product, which really kind of gives them access to the epicardial area for EP for different procedures.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Building those types of relationships and making sure we're staying in front of the customers is the most important thing. And we do anticipate, as I mentioned, that it's going to come back for us. But if we're not there, then we're not going to be there to catch that. And so we have to make sure that we're maintaining those relationships, staying in the field and building relevant and value added relationships with those customers.

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

Yeah. Thanks. And just the FBE's products. So I mean, I see it highlighted on our website, but I don't think you said much about that at the Investor Day. Maybe I missed it.

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

But can you just tell us more about that product and kind of how how it fits in? What you know, to what degree it could maybe help that that part of the business?

[Michael H. Carrel, CEO, President & Director at AtriCure]

Yeah. It's a great question. It's it's not a big revenue driver for us. But what it is, is it's a product to get access kind of the subsyphoid area and the epicardium of the heart. So that's really kind of what it is to kind of get to the pericardium there.

[Michael H. Carrel, CEO, President & Director at AtriCure]

It's a really unique and novel device. Like you said, you can see it on our website, And you can get access to it. We use it as a point to talk to EPs to be relevant with them. And they're starting to use it a little bit. And especially with some of the high profile KOLs on the market.

[Operator]

Thank you. Our next question comes from Danielle Antalffy with UBS. Your line is open.

[Danielle Antalffy, Analyst at UBS Group]

Hey, good afternoon, guys. Thanks so much for taking the question. Congrats on a good quarter, especially on EBITDA. Just two questions for me. Number one, on the clip.

[Danielle Antalffy, Analyst at UBS Group]

It looks like that business has now completely grown through competitive headwinds. I guess, Mike, I'd love to hear you talk a little bit about how you what you've learned about the competitive moat around the AtriClip and whether a major competitor launching a product there. And I have one follow-up.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Yeah, I mean, I think when the competition first came into the market, the first thing I said was competition helps the market, it creates awareness. It helps people understand that this is a very important thing to be doing for these patients. And I think all you're seeing right now is that it's the result of that consistency and watching the market continue to grow on that front, number one. Number two, it's also to have great products, like even when there's no competition, invest in innovation, things like the Flex Mini device. We started investing in building that product well before we knew there was competition coming to the market.

[Michael H. Carrel, CEO, President & Director at AtriCure]

We listened to customers to come out with something super innovative. And I think when you combine that with competition coming in, that's obviously been something that's been a tailwind for us in the market as well. So when you combine those two things, I think that's what you're seeing in the market today. Longer term, it's lease. When you actually get clinical evidence and data that demonstrates that your product and your product alone can reduce stroke in all patients basically that are basically going into the operating room.

[Michael H. Carrel, CEO, President & Director at AtriCure]

That is a huge advantage that we will have over any competition coming into the market, whether they're today or in the future. So I think the combination of those three things, competition is good, it makes us all better, it makes it that validates your market, innovation within that is super important, and then getting clinical evidence to further differentiate and create, as you mentioned, the moat.

[Danielle Antalffy, Analyst at UBS Group]

Gotcha. Okay, thank you. And then my follow-up is on the open business. I mean, Encompass in The U. S.

[Danielle Antalffy, Analyst at UBS Group]

Has been a tailwind here for a few years now. And I guess I'm just curious about how long you think that runway is from here. I don't know if it's best to talk about it from penetration into the different procedure areas, perspective, number of users, but anything you can say to to that because it's it's, you know, it's it's the gift that keeps keeps on giving. I wanna know how much longer it's given. Thanks so Another

[Michael H. Carrel, CEO, President & Director at AtriCure]

good question. It's interesting. We're not in the first innings. I'm not gonna say like Encompass is like at that first inning. That was probably a year or so ago.

[Michael H. Carrel, CEO, President & Director at AtriCure]

But we still have a long way to go. While we've made improvements in 25% to 40% or so penetration in United States, we still have 60% to go just for AFib patients. And as we talked about the Analyst Day, we're now going to expand that market by two or threefold with the BOXINO AF trial of which the Encompass clamp is the kind of foundation of that procedure. So I think we've got a long way to go with the Encompass clamp, both in AFib patients today and then longer term in the non AFib patients for postoperative AFib and kind of prophylactically treating them, as I mentioned in my comments. So I think the Encompass is going to be the gift that keeps giving for many years to come.

[Operator]

Thank you. Our next question comes from Suraj Kalia with Oppenheimer. Your line is open.

[Suraj Kalia, Managing Director at Oppenheimer & Co. Inc.]

Hey, Mike, Angie, can you hear me all right?

[Angela Wirick, CFO at AtriCure]

We can.

[Michael H. Carrel, CEO, President & Director at AtriCure]

We can.

[Suraj Kalia, Managing Director at Oppenheimer & Co. Inc.]

Perfect. Hey, Mike, your points on PSA, so called turnaround, and being tailwind for you all on the open side, on the MIS side, well taken. And I know that was one of the salient points made by a panel of clinicians also at the Investor Day. Mike, when should we expect to see, you know, the slope of the MIS curve, the first derivative change sign, I. E, things reversing back into positive territory.

[Suraj Kalia, Managing Director at Oppenheimer & Co. Inc.]

Is it this year's time later or is it next year?

[Michael H. Carrel, CEO, President & Director at AtriCure]

Yeah, I'd love to tell

[Michael H. Carrel, CEO, President & Director at AtriCure]

you that I can be an absolute, the best forecaster in the world and tell you that it's going to be in a particular quarter or not. I think what we're anticipating is that we're going to still even though we've got a lot of bright spots coming through, because there are definitely bright spots and customers coming back. There are still people just getting into PFA, etcetera. We anticipate this year to be a pressure year for us. And

[Michael H. Carrel, CEO, President & Director at AtriCure]

I think

[Michael H. Carrel, CEO, President & Director at AtriCure]

it's too early to tell for next year, but likely next year should be something where you'll see some more upside.

[Suraj Kalia, Managing Director at Oppenheimer & Co. Inc.]

Fair enough. And Mike, as my follow-up, obviously, again, on the Investor Day, you all emphasized your investments, it includes investments in leaps and other trials. Mike, we have seen in some other areas, maybe a dumb analogy, but, you know, like painful diabetic neuropathy and some other med tech categories, the companies that put in the resources to do RCDs, gotten an indication only to have other companies piggyback, you know, and kinda dilute the the the net impact. Would LEAPS specifically give AtriCure an AF ablation indication and basically set AtriCure aside versus others in the field?

[Michael H. Carrel, CEO, President & Director at AtriCure]

Yes. So the LEAPS trial very specifically will create great differentiation by giving us a stroke label. And so that is what's going to basically be the differentiation there. And nobody else will be able to have that label. And as Doctor.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Whitlock talked about at the meeting, there's really no class effect to that, because we will be the only ones who have gone through a six thousand five hundred patient randomized control data trial with our clip being the only one used in that trial. So you're not going to be able to look across and say, oh, other methods of closure are similar. You can't do that because that has proven not to be the case. And so we will have proven it out with our AtriClip and feel like that's going to be a really big differentiator in the market, not only with customers, but also with regulators throughout the world as well.

[Operator]

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Mike Carroll for closing remarks.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Great. Well, again, everyone, thank you for joining us today. As you can tell, we continue to be excited about the future of the business. We do really appreciate many of you making the trip to Mason, Ohio, getting a chance to meet many of the colleagues that we've got here and see the products firsthand, go through some of the demos and meet some of the physicians that are utilizing our products today. So we just want to again thank you for coming out.

[Michael H. Carrel, CEO, President & Director at AtriCure]

Thank you for coming out today. Have a great evening. Bye now.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Michael H. Carrel, CEO, President & Director
• Angela Wirick, CFO

Analysts

• Marissa Bych, Principal at Gilmartin Group
• William Plovanic, Managing Director - Equity Research at Canaccord Genuity - Global Capital Markets
• Matt O'Brien, Analyst at Piper Sandler Companies
• John McAulay, AVP at Stifel Financial Corp
• Lilia-Celine Lozada, Analyst at JP Morgan
• Marie Thibault, Managing Director at BTIG
• Daniel Stauder, Director - Equity Research at Citizen JMP
• Mike Matson, Senior Equity Research Analyst at Needham & Company
• Danielle Antalffy, Analyst at UBS Group
• Suraj Kalia, Managing Director at Oppenheimer & Co. Inc.