AtriCure (ATRC) FY 2025 Conference September 03, 2025 03:45 PM ET Speaker0Okay. Well, good afternoon, everyone. I'm Nathan Traybeck, one of the Medical Device Analysts at Wells Fargo. I'm happy to have management from AtriCure with us for our first day of the Healthcare Conference. With us we have Mike Carroll, President and CEO and Angie Wyrig, CFO.Thank you for joining us.Speaker1Thanks for having us.Speaker0Great. So let's kick things off with your recent performance and what it means for the rest of the ...

AtriCure (ATRC) FY Conference August 12, 2025 02:30 PM ET Speaker0Device here with Canaccord Genuity. Welcome to our forty fifth annual growth conference. With us next, we have the management team of AtriCure. We have Mike Corell, CEO, and Angie Wirich, CFO. We will start out with a brief PowerPoint presentation, then we'll shift it over to a fireside chat.With that, I'll invite Mike to the to the microphone.Speaker1Thanks, Bill, and thanks Canaccord for having us here. And, Bill has told me I've got ten mi ...

Core Insights - AtriCure reported Q2 2025 earnings that exceeded Wall Street expectations, with revenue of $136.1 million and a non-GAAP loss per share of $(0.02), showing significant improvement from the previous year [1][2] - The company experienced strong growth in open ablation, appendage management, and pain management product lines, although the minimally invasive ablation segment in the U.S. faced a decline [1][5][8] - Management raised its financial outlook for the year, anticipating GAAP revenue of $527–$533 million and adjusted EBITDA of $49–$52 million [12] Financial Performance - Q2 2025 non-GAAP EPS improved to $(0.02) from $(0.17) a year ago, marking an 88.2% improvement [2] - GAAP revenue increased by 17.1% year-over-year, from $116.3 million in Q2 2024 to $136.1 million in Q2 2025 [2] - Adjusted EBITDA rose to $15.4 million, a 97.4% increase from $7.8 million in Q2 2024 [2] - Gross profit was $101.5 million, up 16.9% from $86.8 million a year earlier, with a gross margin of 74.5% [2][9] Business Overview - AtriCure specializes in medical devices for treating atrial fibrillation, left atrial appendage management, and post-operative pain management [3] - The product portfolio includes cardiac ablation systems, devices for closing the left atrial appendage, and cryoablation probes [3] Recent Developments - The company focused on launching innovative devices to address the growing prevalence of atrial fibrillation and emphasized clinical validation through major trials like the LeAAPS study [4] - Open ablation devices saw double-digit growth, with U.S. sales up 13.7% and international sales up 20.8% [5] - The AtriClip FLEX·Mini device for appendage management experienced a revenue increase of 23.3% internationally, with U.S. growth at 15.7% [6] - Pain management solutions, particularly the cryoSPHERE MAX probe, reported a 41.1% increase in U.S. sales [7] Clinical and Strategic Focus - The LeAAPS clinical trial reached full enrollment, which is expected to support differentiated claims for AtriClip and potentially reduce stroke risk for patients [11] - Management identified the trial as a unique opportunity to build competitive barriers, as no other company's device is part of the study [11] Outlook - The company anticipates modestly positive cash flow for the year and improved adjusted loss per share guidance to $(0.34)–$(0.39) [12] - Key themes to monitor include the adoption pace of new products, margin trends, and progress on clinical trials [13]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents AtriCure, Inc.'s unaudited interim financial statements for the periods ended June 30, 2025, covering balance sheets, statements of operations, and cash flows, reflecting its single operating segment - The company operates as one operating segment: the development, manufacture, and sale of devices for surgical procedures, primarily for cardiac tissue ablation, LAA exclusion, and peripheral nerve ablation[22](index=22&type=chunk) Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $117,796 | $122,721 | | Total current assets | $271,257 | $267,826 | | Total Assets | $608,849 | $609,328 | | **Liabilities & Equity** | | | | Total current liabilities | $68,843 | $73,424 | | Long-term debt | $61,865 | $61,865 | | Total Liabilities | $144,358 | $148,359 | | Total Stockholders' Equity | $464,491 | $460,969 | Condensed Consolidated Statements of Operations Data (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $136,139 | $116,269 | $259,759 | $225,120 | | Gross Profit | $101,482 | $86,844 | $194,110 | $168,112 | | Loss from operations | $(6,192) | $(7,168) | $(12,146) | $(18,085) | | Net loss | $(6,190) | $(8,008) | $(12,937) | $(21,277) | | Basic and diluted net loss per share | $(0.13) | $(0.17) | $(0.27) | $(0.45) | Condensed Consolidated Statements of Cash Flows Data (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $10,591 | $(13,636) | | Net cash (used in) provided by investing activities | $(9,343) | $40,535 | | Net cash used in financing activities | $(6,906) | $(5,008) | | Net (decrease) increase in cash and cash equivalents | $(4,925) | $21,725 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, including a **15.4%** revenue increase for H1 2025, reduced net loss, improved operating cash flow, and strategic initiatives in product innovation and clinical trials - Worldwide revenue for the six months ended June 30, 2025, increased by **15.4%** (**15.3%** on a constant currency basis) to **$259.8 million**, driven by strong adoption of appendage management and pain management product lines[63](index=63&type=chunk) - The company is advancing key clinical trials, including completing enrollment for the LeAAPS trial (6,500 patients) and receiving FDA approval for the BoxX-NoAF trial protocol[66](index=66&type=chunk)[67](index=67&type=chunk) - Recent product innovations include FDA 510(k) clearance for the AtriClip PRO-Mini LAA Exclusion System and the cryoICE cryoXT probe for pain management, both expected to launch in the second half of 2025[69](index=69&type=chunk) - As of June 30, 2025, the company had **$117.8 million** in cash and cash equivalents, **$61.9 million** in outstanding debt, and **$61.9 million** in unused borrowing capacity under its ABL facility[80](index=80&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Revenue for Q2 2025 increased **17.1%** to **$136.1 million**, driven by pain and appendage management, while R&D and SG&A expenses rose due to IPR&D and personnel costs Revenue by Product - Three Months Ended June 30 (in thousands) | Product Line | 2025 | 2024 | Change % | | :--- | :--- | :--- | :--- | | Open ablation | $36,468 | $30,760 | 18.6% | | Minimally invasive ablation | $7,839 | $11,828 | (33.7)% | | Pain management | $21,168 | $15,006 | 41.1% | | Appendage management | $45,108 | $37,945 | 18.9% | | **Total United States** | **$110,583** | **$95,539** | **15.7%** | | **Total International** | **$25,556** | **$20,730** | **23.3%** | | **Total Revenue** | **$136,139** | **$116,269** | **17.1%** | Revenue by Product - Six Months Ended June 30 (in thousands) | Product Line | 2025 | 2024 | Change % | | :--- | :--- | :--- | :--- | | Open ablation | $69,776 | $60,060 | 16.2% | | Minimally invasive ablation | $16,319 | $24,146 | (32.4)% | | Pain management | $38,438 | $27,745 | 38.5% | | Appendage management | $87,199 | $73,837 | 18.1% | | **Total United States** | **$211,732** | **$185,788** | **14.0%** | | **Total International** | **$48,027** | **$39,332** | **22.1%** | | **Total Revenue** | **$259,759** | **$225,120** | **15.4%** | - Q2 2025 R&D expenses increased **43.4%** to **$29.3 million**, primarily due to a **$5.0 million** acquired in-process R&D (IPR&D) expense and a **$2.2 million** increase in clinical trial expenses for the LeAAPS trial[73](index=73&type=chunk) - Q2 2025 SG&A expenses increased **6.5%** to **$78.4 million**, driven by a **$6.1 million** increase in personnel costs from headcount growth, partially offset by lower marketing and travel costs[74](index=74&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held **$117.8 million** in cash, with **$10.6 million** positive operating cash flow for H1 2025, and **$61.9 million** available under its **$125 million** ABL facility - Net cash provided by operating activities improved by **$24.2 million** year-over-year, from a **$13.6 million** use in 2024 to a **$10.6 million** provision in 2025, reflecting improved operating results and lower working capital usage[16](index=16&type=chunk)[83](index=83&type=chunk) - Net cash used in investing activities was **$9.3 million** in H1 2025, compared to **$40.5 million** provided by investing activities in H1 2024. The change is due to a **$45.7 million** decrease in proceeds from sales of securities and a **$5.0 million** payment for acquired IPR&D in 2025[16](index=16&type=chunk)[84](index=84&type=chunk) - The company has an asset-based revolving credit facility (ABL Facility) of up to **$125 million**, with an option to increase by **$40 million**. As of June 30, 2025, **$61.9 million** was borrowed, and **$61.9 million** was available[86](index=86&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the company's quantitative and qualitative disclosures about market risk compared to its 2024 Annual Report on Form 10-K - As of June 30, 2025, there were no material changes to the company's quantitative and qualitative disclosures about market risk from those reported in the Form 10-K for the year ended December 31, 2024[91](index=91&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[92](index=92&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[94](index=94&type=chunk) [PART II. OTHER INFORMATION](index=23&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company faces a **$260 million** breach of contract lawsuit from former SentreHEART securityholders regarding alleged failure to obtain FDA approval for the LARIAT System, with no liability recognized as loss is not probable - On February 7, 2025, former securityholders of SentreHEART, Inc. filed a complaint against the company alleging breach of contract related to the merger agreement dated August 11, 2019[43](index=43&type=chunk) - The complaint seeks damages up to **$260 million** plus interest for alleged failure to use commercially reasonable efforts to achieve PMA and CPT reimbursement milestones[43](index=43&type=chunk) - The company has not recognized a liability for this matter because any potential loss is not currently considered probable or reasonably estimable[43](index=43&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred in the company's risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[96](index=96&type=chunk) [Other Information](index=23&type=section&id=Item%205.%20Other%20Information) No executive officers or directors adopted, terminated, or modified Rule 10b5-1(c) trading arrangements during the second quarter of 2025 - No executive officers or directors adopted, terminated, or modified a Rule 10b5-1(c) trading arrangement during the three months ended June 30, 2025[97](index=97&type=chunk) [Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the amended 2023 Stock Incentive Plan, CEO/CFO certifications, and XBRL data files

Core Insights - AtriCure reported revenue of $136.14 million for the quarter ended June 2025, reflecting a year-over-year increase of 17.1% and surpassing the Zacks Consensus Estimate of $130.15 million by 4.61% [1] - The company achieved an EPS of -$0.02, a significant improvement from -$0.17 in the same quarter last year, resulting in an EPS surprise of 86.67% against the consensus estimate of -$0.15 [1] Revenue Performance - U.S. Revenue in Pain Management reached $21.17 million, exceeding the average estimate of $18.36 million, marking a year-over-year increase of 41.1% [4] - International Revenue in Pain Management was $2.03 million, slightly below the average estimate of $2.24 million, but still showing a year-over-year growth of 63.8% [4] - U.S. Revenue for Total Ablation was $44.31 million, falling short of the average estimate of $62.64 million, representing a decline of 23.1% year-over-year [4] - International Revenue for Total Ablation was $12.72 million, compared to the average estimate of $14.37 million, with a year-over-year increase of 4.5% [4] - Total U.S. Revenue amounted to $110.58 million, surpassing the average estimate of $105.65 million, reflecting a year-over-year growth of 15.8% [4] - International Revenue for Appendage Management was $10.8 million, exceeding the average estimate of $10.33 million, with a year-over-year increase of 26.3% [4] - U.S. Revenue for Open Ablation was $36.47 million, slightly above the average estimate of $35.47 million, showing an 18.6% increase year-over-year [4] - International Revenue for Open Ablation reached $10.35 million, exceeding the average estimate of $10.15 million, with a year-over-year growth of 12.9% [4] - U.S. Revenue for Minimally Invasive Ablation was $7.84 million, below the average estimate of $8.81 million, reflecting a decline of 33.7% year-over-year [4] - International Revenue for Minimally Invasive Ablation was $2.37 million, surpassing the average estimate of $1.98 million, with a year-over-year increase of 34.5% [4] - U.S. Revenue for Appendage Management was $45.11 million, exceeding the average estimate of $43.01 million, representing an 18.9% year-over-year increase [4] - Total International Revenue was $25.56 million, surpassing the average estimate of $24.69 million, with a year-over-year growth of 23.3% [4] Stock Performance - AtriCure's shares have returned +1.4% over the past month, compared to the Zacks S&P 500 composite's +3.6% change, indicating a performance in line with the broader market [3]

Company Performance - AtriCure reported a quarterly loss of $0.02 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.15, and an improvement from a loss of $0.17 per share a year ago, resulting in an earnings surprise of +86.67% [1] - The company achieved revenues of $136.14 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 4.61% and showing a year-over-year increase from $116.27 million [2] - Over the last four quarters, AtriCure has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Outlook - AtriCure shares have increased approximately 8.7% since the beginning of the year, slightly outperforming the S&P 500's gain of 8.6% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is -$0.14 on revenues of $129.12 million, and for the current fiscal year, it is -$0.50 on revenues of $522.61 million [7] Industry Context - The Medical - Products industry, to which AtriCure belongs, is currently ranked in the bottom 28% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of AtriCure's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $136 million, reflecting a 17% year-over-year increase and a 10.1% sequential growth from Q1 2025 [4][18] - Adjusted EBITDA was $15.4 million, compared to $7.8 million in Q2 2024, indicating significant profitability improvement [23] - Cash generation for the quarter was nearly $18 million, with cash and investments totaling $117.8 million at the end of Q2 2025 [4][23] Business Line Data and Key Metrics Changes - Appendage management revenue grew over 20%, with U.S. sales of appendage management products reaching $45.1 million, up 18.9% year-over-year [6][19] - Pain management franchise grew nearly 43%, driven by the CryoSphere Max and CryoSphere Plus probes, with U.S. sales at $21.2 million, reflecting a 41.1% increase [14][20] - Open ablation product sales were $36.5 million, up 18.6% year-over-year, led by the Encompass clamp [19][11] Market Data and Key Metrics Changes - U.S. revenue was $110.6 million, a 15.7% increase from Q2 2024, with international sales showing strong growth across all franchises [18][21] - European sales accounted for $16.1 million, up 27.7%, while Asia Pacific and other international markets contributed $9.4 million, up 16.3% [21] Company Strategy and Development Direction - The company is focused on innovation, with new product launches such as the AtriClip Flex Mini and CryoStere Max driving growth [5][14] - The completion of the LEAPS clinical trial enrollment is expected to enhance the standard of care for stroke prevention in cardiac surgery [9][10] - The company anticipates continued growth in international markets, outpacing U.S. growth, driven by new product launches and increased adoption of existing products [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue guidance of $527 million to $533 million for 2025, reflecting growth of approximately 13% to 15% [24][27] - The company expects to maintain gross margins comparable to 2024, with adjusted EBITDA projected to be between $49 million and $52 million for the full year [27][24] - Management acknowledged challenges in the minimally invasive hybrid therapy market due to increased adoption of PFA catheter technology but remains optimistic about long-term growth opportunities [13][48] Other Important Information - The company is preparing for the launch of the Cryo XD probe for pain management in lower limb amputations, with initial procedures completed [15][16] - The company is also focused on expanding clinical and economic data to support the value of non-opioid pain management solutions [16] Q&A Session Summary Question: Impact of LEAPS trial completion on physician utilization - Management indicated that the completion of the LEAPS trial has had minimal impact on overall revenue, with continued growth in appendage management adoption [32][34] Question: Managing discussions with electrophysiologists regarding PFA failures - Management emphasized open and transparent discussions with electrophysiologists, focusing on the clinical benefits of PFA and the importance of follow-up solutions [37][39] Question: Guidance implications for top-line growth - Management clarified that guidance reflects a conservative approach, with expectations for continued strong performance driven by new product launches and international growth [43][45] Question: Trends in minimally invasive hybrid therapy - Management acknowledged significant pressure in the hybrid therapy segment but highlighted the overall strength of the business in achieving 17% growth [48][50] Question: Progress on Cryosphere MAX adoption - Management reported that Cryosphere MAX is in over half of U.S. accounts, with cautious optimism for similar uptake in Europe [55][57] Question: Key milestones for clinical initiatives - Management outlined upcoming milestones for LEAPS, BOX No AF, and PFA programs, with expectations for first patient enrollment in BOX No AF this year [66][70]

Financial Performance - Second quarter revenue reached $136.1 million, a 17.1% increase year-over-year (16.5% on a constant currency basis)[3, 10] - U S revenue increased by $15.0 million, or 15.7%, to $110.6 million compared to the second quarter of 2024[3] - International revenue grew by $4.8 million, or 23.3% (19.9% on a constant currency basis), reaching $25.6 million[3] - Gross profit for the second quarter was $101.5 million, compared to $86.8 million in the second quarter of 2024[4] - Adjusted EBITDA for the second quarter was $15.4 million, an increase of $7.6 million from the second quarter of 2024[5, 10] - Net loss improved by $1.8 million year-over-year, with a net loss of $6.2 million[10] Financial Guidance - Full year 2025 revenue is projected to be approximately $527 million to $533 million[6] - Full year 2025 Adjusted EBITDA is expected to be approximately $49 million to $52 million[6] - Full year 2025 adjusted loss per share is expected to be in the range of $0.34 to $0.39[6] Key Products and Developments - Growth was driven by key product lines, including the AtriClip® FLEX·Mini ™ device, the EnCompass® clamp, and the cryoSPHERE MAX ™ probe[3] - Enrollment was completed for all 6,500 patients in the LeAAPS trial[10]

Company Performance - Amneal Pharmaceuticals (AMRX) has shown a year-to-date return of 2.7%, outperforming the average loss of 4.1% in the Medical group [4] - The Zacks Consensus Estimate for AMRX's full-year earnings has increased by 4.9% in the past quarter, indicating improved analyst sentiment [4] - Amneal Pharmaceuticals holds a Zacks Rank of 2 (Buy), suggesting a positive earnings outlook [3] Industry Context - Amneal Pharmaceuticals is part of the Medical - Drugs industry, which consists of 163 stocks and is currently ranked 85 in the Zacks Industry Rank [6] - The Medical - Drugs industry has gained an average of 0.6% year-to-date, indicating that AMRX is performing better than its industry peers [6] - In comparison, AtriCure (ATRC), another outperforming stock, belongs to the Medical - Products industry, which has seen a 6.7% increase this year and is ranked 155 [6]

Company Overview - Astellas Pharma Inc. (ALPMY) is a notable stock in the Medical sector, which consists of 998 individual stocks and ranks 6 in the Zacks Sector Rank [2] - The company currently holds a Zacks Rank of 1 (Strong Buy), indicating strong potential for outperforming the market in the near term [3] Performance Analysis - Astellas Pharma's full-year earnings consensus estimate has increased by 15.3% over the past quarter, reflecting improved analyst sentiment and earnings outlook [4] - Year-to-date, Astellas Pharma has gained approximately 1%, while the average loss in the Medical group is about 2.4%, showcasing its better performance relative to the sector [4] Industry Context - Astellas Pharma belongs to the Medical - Drugs industry, which includes 164 companies and currently ranks 71 in the Zacks Industry Rank [6] - The Medical - Drugs industry has seen an average gain of 3% year-to-date, indicating that Astellas Pharma is slightly underperforming its industry peers [6] Comparative Analysis - Another stock, AtriCure (ATRC), has outperformed the sector with an 8.1% gain year-to-date and has a Zacks Rank of 2 (Buy) [5] - AtriCure is part of the Medical - Products industry, which has 83 stocks and ranks 140, with an average gain of 5.7% since the beginning of the year [7]