[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements, management's discussion and analysis, and disclosures on market risk and internal controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the period [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20September%2030%2C%202021%20and%20December%2031%2C%202020) This statement summarizes the company's assets, liabilities, and stockholders' equity at the end of the reporting period Condensed Consolidated Balance Sheet Highlights (In Thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :-------------------------------------- | :----------- | :----------- | | Total Assets | $612,969 | $714,539 | | Total Liabilities | $124,500 | $302,145 | | Total Stockholders' Equity | $488,469 | $412,394 | | Current Assets | $195,707 | $306,737 | | Long-term investments | $105,097 | $14,178 | | Intangible assets, net | $43,963 | $128,199 | | Contingent consideration and other noncurrent liabilities | $2,282 | $187,424 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20for%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202021%20and%202020) This statement details the company's revenues, expenses, and resulting net income or loss over the reporting period Key Financials for Three Months Ended September 30 (In Thousands, Except Per Share Amounts) | Metric | Sep 30, 2021 | Sep 30, 2020 | | :------------------------------------------- | :----------- | :----------- | | Revenue | $70,460 | $54,757 | | Gross profit | $52,226 | $40,334 | | Change in fair value of contingent consideration | $(189,900) | $192 | | Intangible asset impairment | $82,300 | — | | Net income (loss) | $97,108 | $(4,949) | | Basic net income (loss) per share | $2.15 | $(0.11) | | Diluted net income (loss) per share | $2.11 | $(0.11) | Key Financials for Nine Months Ended September 30 (In Thousands, Except Per Share Amounts) | Metric | Sep 30, 2021 | Sep 30, 2020 | | :------------------------------------------- | :----------- | :----------- | | Revenue | $201,111 | $148,806 | | Gross profit | $150,844 | $106,872 | | Change in fair value of contingent consideration | $(184,800) | $(4,854) | | Intangible asset impairment | $82,300 | — | | Net income (loss) | $63,940 | $(29,593) | | Basic net income (loss) per share | $1.42 | $(0.71) | | Diluted net income (loss) per share | $1.39 | $(0.71) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202021%20and%202020) This statement outlines the changes in the company's equity accounts over the reporting period Stockholders' Equity Changes (Nine Months Ended September 30, 2021) (In Thousands) | Metric | Amount | | :------------------------------------ | :------- | | Balance—December 31, 2020 | $412,394 | | Impact of equity compensation plans | $12,660 | | Other comprehensive loss | $(525) | | Net income | $63,940 | | Balance—September 30, 2021 | $488,469 | - Accumulated deficit improved from **$(330,352) thousand at December 31, 2020, to $(266,412) thousand at September 30, 2021**, primarily due to net income[7](index=7&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Nine%20Months%20Ended%20September%2030%2C%202021%20and%202020) This statement reports the cash generated and used by operating, investing, and financing activities during the period Cash Flow Summary (Nine Months Ended September 30) (In Thousands) | Cash Flow Activity | 2021 | 2020 | | :------------------------------------------ | :----------- | :----------- | | Net cash used in operating activities | $(14,081) | $(23,823) | | Net cash provided by (used in) investing activities | $22,427 | $(154,218) | | Net cash (used in) provided by financing activities | $(10,149) | $182,939 | | Net (decrease) increase in cash and cash equivalents | $(2,058) | $4,898 | | Cash and cash equivalents—end of period | $39,886 | $33,381 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures and explanations of the accounting policies and financial data presented [1. Description of Business and Summary of Significant Accounting Policies](index=7&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the company's business operations and the key accounting principles applied in the financial statements - AtriCure, Inc is a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, selling products globally through direct sales and distributors[23](index=23&type=chunk) - The company reclassified the change in contingent consideration from selling, general and administrative expenses to a separate line item in the condensed consolidated statement of operations, with **no impact on net income or financial position**[25](index=25&type=chunk) - Inventories are valued at the **lower of cost or net realizable value** using the first-in, first-out (FIFO) method[29](index=29&type=chunk) - Depreciation of generators and related equipment, included in cost of revenue, was **$1,735 thousand** for the nine months ended September 30, 2021, down from $1,898 thousand in the prior year[33](index=33&type=chunk) - Intangible assets include In Process Research and Development (IPR&D), which is treated as an **indefinite-lived asset** until technological feasibility is achieved, after which it is amortized[37](index=37&type=chunk) - The company has established a **full valuation allowance** against substantially all net deferred income tax assets, as it is more-likely-than-not that the benefit will not be recognized[41](index=41&type=chunk) [2. Fair Value](index=11&type=section&id=2.%20FAIR%20VALUE) This note explains the methodology for measuring financial assets and liabilities at fair value across a three-level hierarchy - Financial assets and liabilities are classified into **Level 1** (quoted prices), **Level 2** (observable inputs), and **Level 3** (unobservable inputs) based on the fair value hierarchy[55](index=55&type=chunk) - Cash, government obligations, accounts receivable, and accounts payable are classified as **Level 1**, while cash equivalents and corporate bonds are classified as **Level 2**[56](index=56&type=chunk) - Contingent consideration liabilities from the SentreHEART acquisition were measured using unobservable (**Level 3**) inputs via the probability-weighted scenario method[61](index=61&type=chunk) - As of September 30, 2021, the fair value of the SentreHEART contingent consideration was re-measured to **$0**, resulting in a **$189,900 thousand credit** to operating expenses due to clinical trial data results[62](index=62&type=chunk)[65](index=65&type=chunk) [3. Intangible Assets](index=14&type=section&id=3.%20INTANGIBLE%20ASSETS) This note provides details on the company's intangible assets, including amortization, impairment, and reclassifications - Following PMA approval of the EPi-Sense System, the related IPR&D asset of **$44,021 thousand** was reclassified to technology assets and is being amortized over a **fifteen-year life**[67](index=67&type=chunk)[38](index=38&type=chunk) - An impairment loss of **$82,300 thousand** was recorded in Q3 2021 for the aMAZE IPR&D asset, reducing its carrying value to **$0** due to clinical trial data results[67](index=67&type=chunk)[38](index=38&type=chunk) Amortization Expense of Intangible Assets (In Thousands) | Period | 2021 | 2020 | | :-------------------------------- | :----- | :----- | | Three months ended September 30 | $971 | $467 | | Nine months ended September 30 | $1,936 | $1,444 | Projected Future Amortization Expense (In Thousands) | Year | Amount | | :-------------------------- | :------- | | 2021 (remaining) | $972 | | 2022 | $3,653 | | 2023 | $2,953 | | 2024 | $2,953 | | 2025 | $2,953 | | 2026 and thereafter | $30,479 | | Total | $43,963 | [4. Accrued Liabilities](index=15&type=section&id=4.%20ACCRUED%20LIABILITIES) This note itemizes the components of the company's accrued liabilities at the end of the reporting periods - The significant decrease in accrued legal settlement from **$6,000 thousand to $10 thousand** reflects the substantial payment of a settlement agreement with former nContact stockholders[72](index=72&type=chunk)[93](index=93&type=chunk) Accrued Liabilities (In Thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :----------------------------------------- | :----------- | :----------- | | Accrued compensation and employee-related expenses | $26,670 | $17,730 | | Sales returns and allowances | $2,611 | $1,889 | | Accrued taxes and value-added taxes payable | $1,487 | $1,256 | | Accrued royalties | $783 | $703 | | Other accrued liabilities | $285 | $406 | | Accrued legal settlement | $10 | $6,000 | | Total | $31,846 | $27,984 | [5. Indebtedness](index=15&type=section&id=5.%20INDEBTEDNESS) This note describes the terms of the company's loan and security agreements, including credit facilities and debt maturities - The company has a Loan and Security Agreement with Silicon Valley Bank (SVB), including a **$60,000 thousand term loan** and a **$20,000 thousand revolving line of credit**, maturing August 1, 2024[73](index=73&type=chunk)[141](index=141&type=chunk) - Term loan principal payments commenced September 1, 2021, and as of September 30, 2021, there were **no borrowings under the revolving credit facility**[74](index=74&type=chunk)[75](index=75&type=chunk)[141](index=141&type=chunk) - Effective November 1, 2021, the company entered into the Sixth Amendment with SVB, providing a new **$60,000 thousand term loan** and a **$30,000 thousand revolving line of credit**, expiring November 2026[76](index=76&type=chunk)[143](index=143&type=chunk) Projected Future Maturities of Long-Term Debt (Post-Refinancing) (In Thousands) | Year | Amount | | :--- | :------- | | 2021 (remaining) | — | | 2022 | — | | 2023 | $3,333 | | 2024 | $20,000 | | 2025 | $20,000 | | 2026 | $16,667 | | Total long-term debt | $60,000 | [6. Leases](index=16&type=section&id=6.%20LEASES) This note provides information on the company's operating and finance leases, including terms, discount rates, and liabilities Weighted Average Lease Terms and Discount Rates | Lease Type | Sep 30, 2021 | Dec 31, 2020 | | :------------------------------------ | :----------- | :----------- | | Operating Leases - Remaining Lease Term (years) | 3.3 | 3.2 | | Operating Leases - Discount Rate | 5.60% | 5.68% | | Finance Leases - Remaining Lease Term (years) | 8.9 | 9.7 | | Finance Leases - Discount Rate | 6.91% | 6.91% | Total Lease Liabilities (In Thousands) | Lease Type | Sep 30, 2021 | Dec 31, 2020 | | :-------------------------- | :----------- | :----------- | | Total operating lease liabilities | $2,613 | $2,107 | | Total finance lease liabilities | $11,191 | $11,792 | Maturities of Lease Liabilities as of September 30, 2021 (In Thousands) | Year | Operating Leases | Finance Leases | | :-------------------------- | :--------------- | :--------------- | | 2021 (remaining) | $252 | $406 | | 2022 | $967 | $1,629 | | 2023 | $682 | $1,652 | | 2024 | $609 | $1,674 | | 2025 | $348 | $1,625 | | 2026 and thereafter | — | $8,172 | | Total payments | $2,858 | $15,158 | | Less imputed interest | $(245) | $(3,967) | | Total | $2,613 | $11,191 | [7. Commitments and Contingencies](index=18&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's contractual commitments, legal proceedings, and other potential liabilities - The company is committed to funding renovation of a recently purchased building for additional manufacturing capacity, with an estimated cost of **$5,500 thousand**[90](index=90&type=chunk) - An ongoing Civil Investigative Demand (CID) from the U.S. Department of Justice (USDOJ) since December 2017 is investigating potential **False Claims Act violations**[91](index=91&type=chunk) - In February 2021, the company entered into a settlement agreement with former nContact stockholders for **$6,000 thousand**, which was substantially paid as of September 30, 2021[93](index=93&type=chunk) Royalty Expense (In Thousands) | Period | 2021 | 2020 | | :-------------------------------- | :----- | :----- | | Three months ended September 30 | $792 | $699 | | Nine months ended September 30 | $2,356 | $1,880 | [8. Revenue](index=19&type=section&id=8.%20REVENUE) This note details the company's revenue recognition policies and disaggregates revenue by product category - Revenue is primarily generated from the sale of medical devices and recognized when **control of goods is transferred** to customers, generally upon shipment or delivery[94](index=94&type=chunk)[27](index=27&type=chunk) - Sales are categorized into **open ablation, minimally invasive ablation, appendage management, and valve tools**[94](index=94&type=chunk) - A provision for sales returns and allowances is estimated using the **expected value method** based on historical experience[96](index=96&type=chunk)[27](index=27&type=chunk) - Commissions and royalties associated with product sales are **recognized as expense when incurred**[98](index=98&type=chunk) [9. Income Tax Provision](index=19&type=section&id=9.%20INCOME%20TAX%20PROVISION) This note explains the calculation of the company's income tax provision and the factors affecting its effective tax rate - The company uses the **discrete method** to compute its provision for income taxes in interim periods, as it is unable to reliably estimate the annual effective tax rate[99](index=99&type=chunk) - The worldwide effective tax rate differs from the US statutory rate of 21% primarily due to a **full valuation allowance** against net deferred income tax assets[99](index=99&type=chunk) Effective Tax Rate | Period | 2021 | 2020 | | :-------------------------------- | :----- | :----- | | Three months ended September 30 | 0.04% | 0.08% | | Nine months ended September 30 | 0.21% | (0.05)% | [10. Equity Compensation Plans](index=20&type=section&id=10.%20EQUITY%20COMPENSATION%20PLANS) This note describes the company's stock-based compensation plans and the associated expenses recognized - The 2014 Stock Incentive Plan allows for grants of **stock options, restricted stock awards/units (RSAs), performance share awards (PSAs), and stock appreciation rights**[102](index=102&type=chunk) - PSAs granted in 2021 have two equally weighted performance targets: the company's **revenue compound annual growth rate (CAGR)** and **relative total shareholder return (TSR)**[104](index=104&type=chunk) - The 2018 Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase common stock at a **15% discount**[105](index=105&type=chunk) Share-Based Compensation Expense (In Thousands) | Period | 2021 | 2020 | | :-------------------------------- | :----- | :----- | | Three months ended September 30 | $6,794 | $5,549 | | Nine months ended September 30 | $20,539 | $16,126 | [11. Segment and Geographic Information](index=21&type=section&id=11.%20SEGMENT%20AND%20GEOGRAPHIC%20INFORMATION) This note provides a breakdown of the company's revenue by geographic location and product type - The company operates as a **single operating segment**, developing, manufacturing, and selling devices for cardiac tissue ablation and related procedures[110](index=110&type=chunk) Total Revenue by Geographic Location (Nine Months Ended September 30) (In Thousands) | Region | 2021 | 2020 | | :------------------ | :----------- | :----------- | | United States | $167,916 | $121,838 | | Europe | $20,551 | $16,775 | | Asia | $11,695 | $9,367 | | Other international | $949 | $826 | | Total international | $33,195 | $26,968 | | Total revenue | $201,111 | $148,806 | United States Revenue by Product Type (Nine Months Ended September 30) (In Thousands) | Product Type | 2021 | 2020 | | :-------------------------------------- | :----------- | :----------- | | Open ablation | $69,693 | $54,679 | | Minimally invasive ablation | $28,077 | $18,295 | | Appendage management | $69,144 | $47,870 | | Total ablation and appendage management | $166,914 | $120,844 | | Valve tools | $1,002 | $994 | | Total United States | $167,916 | $121,838 | International Revenue by Product Type (Nine Months Ended September 30) (In Thousands) | Product Type | 2021 | 2020 | | :-------------------------------------- | :----------- | :----------- | | Open ablation | $16,629 | $13,766 | | Minimally invasive ablation | $4,698 | $4,346 | | Appendage management | $11,825 | $8,778 | | Total ablation and appendage management | $33,152 | $26,890 | | Valve tools | $43 | $78 | | Total international | $33,195 | $26,968 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, liquidity, and critical accounting policies [Overview](index=23&type=section&id=Overview) This section provides a high-level summary of the company's business, products, and market focus - AtriCure is a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, with products used in **open-heart and minimally invasive procedures**[119](index=119&type=chunk) - Key products include the FDA-approved **Isolator Synergy™ Ablation System**, the **EPi-Sense system**, and **AtriClip® products** for LAA exclusion[120](index=120&type=chunk) - The company anticipates that **substantially all future revenue** will come from its currently sold or developing products[121](index=121&type=chunk) [Recent Developments](index=24&type=section&id=Recent%20Developments) This section highlights significant recent events, including product approvals, clinical trial results, and market conditions - The company experienced a significant decrease in demand in 2020 and early 2021 due to COVID-19, but has observed **stabilization and improvements** in cardiac surgery procedure volumes[122](index=122&type=chunk) - In July 2021, the company received 510(k) clearance for the new **ENCOMPASS clamp**, initiating a limited product launch to drive deeper market penetration[124](index=124&type=chunk) - **PMA approval for the EPi-Sense system** in April 2021 has enabled education and training on Hybrid AF™ therapy for long-standing persistent atrial fibrillation[125](index=125&type=chunk) - Data from the aMAZE clinical trial in July 2021 **did not achieve statistical superiority**, leading to a pause in enrollment for the Continued Access Protocol (CAP)[126](index=126&type=chunk) - The company maintains a strong liquidity position with **$224,843 thousand in cash and investments** as of September 30, 2021[124](index=124&type=chunk) [Results of Operations (Three Months Ended September 30, 2021 vs. 2020)](index=25&type=section&id=Results%20of%20Operations%20(Three%20months%20ended%20September%2030%2C%202021%20compared%20to%20three%20months%20ended%20September%2030%2C%202020)) This section analyzes the company's financial performance for the third quarter of 2021 compared to the same period in 2020 - Revenue increased by **28.7%** (28.6% on a constant currency basis) due to an upturn in cardiac surgery procedure volumes and increased product adoption[128](index=128&type=chunk) - U.S. sales growth: open ablation increased **19.4%**, minimally invasive (MIS) ablation increased **43.1%**, and appendage management sales rose **34.3%**[128](index=128&type=chunk) - Gross margin improved by approximately **40 basis points**, reflecting a favorable product mix partially offset by inventory charges and unfavorable geographic mix[129](index=129&type=chunk) - Selling, general and administrative expenses increased by **$16,316 thousand or 48.6%**, primarily due to higher personnel costs, training, and marketing activities[130](index=130&type=chunk) Key Financial Performance (Three Months Ended September 30) (In Thousands, Except Percentages) | Metric | 2021 Amount | 2021 % of Revenues | 2020 Amount | 2020 % of Revenues | | :------------------------------------------- | :---------- | :----------------- | :---------- | :----------------- | | Revenue | $70,460 | 100.0% | $54,757 | 100.0% | | Gross profit | $52,226 | 74.1% | $40,334 | 73.7% | | Research and development expenses | $11,284 | 16.0% | $10,576 | 19.3% | | Selling, general and administrative expenses | $49,873 | 70.8% | $33,557 | 61.3% | | Change in fair value of contingent consideration | $(189,900) | (269.5)% | $192 | 0.4% | | Intangible asset impairment | $82,300 | 116.8% | — | 0.0% | | Income (loss) from operations | $98,669 | 140.0% | $(3,991) | (7.3)% | | Net income (loss) | $97,108 | 137.8% | $(4,949) | (9.0)% | [Results of Operations (Nine Months Ended September 30, 2021 vs. 2020)](index=26&type=section&id=Results%20of%20Operations%20(Nine%20months%20ended%20September%2030%2C%202021%20compared%20to%20nine%20months%20ended%20September%2030%2C%202020)) This section analyzes the company's financial performance for the first nine months of 2021 compared to the same period in 2020 - Revenue increased by **35.1%** (34.4% on a constant currency basis), with U.S. sales growing across all product lines: MIS ablation **+53.5%**, appendage management **+44.4%**, and open ablation **+27.5%**[134](index=134&type=chunk) - Gross margin increased by over **300 basis points**, driven by a return to normal production activity, leverage from higher revenue, and favorable mix[135](index=135&type=chunk) - Selling, general and administrative expenses increased by **$44,682 thousand or 42.1%**, primarily due to additional headcount, variable compensation, and marketing activities[136](index=136&type=chunk) Key Financial Performance (Nine Months Ended September 30) (In Thousands, Except Percentages) | Metric | 2021 Amount | 2021 % of Revenues | 2020 Amount | 2020 % of Revenues | | :------------------------------------------- | :---------- | :----------------- | :---------- | :----------------- | | Revenue | $201,111 | 100.0% | $148,806 | 100.0% | | Cost of revenue | $50,267 | 25.0% | $41,934 | 28.2% | | Gross profit | $150,844 | 75.0% | $106,872 | 71.8% | | Research and development expenses | $34,698 | 17.3% | $32,199 | 21.6% | | Selling, general and administrative expenses | $150,939 | 75.1% | $106,257 | 71.4% | | Change in fair value of contingent consideration | $(184,800) | (91.9)% | $(4,854) | (3.3)% | | Intangible asset impairment | $82,300 | 40.9% | — | 0.0% | | Income (loss) from operations | $67,707 | 33.7% | $(26,730) | (18.0)% | | Net income (loss) | $63,940 | 31.8% | $(29,593) | (19.9)% | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, sources and uses of cash, and ability to fund future operations - As of September 30, 2021, the company had cash, cash equivalents, and investments totaling **$224,843 thousand**, with outstanding debt of **$58,333 thousand**[138](index=138&type=chunk) - Net cash used in operating activities reflects net income offset by **non-cash adjustments** (e.g., contingent consideration revaluation and intangible asset impairment)[139](index=139&type=chunk) - Effective November 1, 2021, the company secured an Amended Loan and Security Agreement with SVB, providing a **$60,000 thousand term loan** and a **$30,000 thousand revolving line of credit**[143](index=143&type=chunk) - Management believes current cash, investments, and access to the credit facility will be **sufficient to meet anticipated cash needs** for at least the next twelve months[147](index=147&type=chunk) Cash Flow Summary (Nine Months Ended September 30, 2021) (In Thousands) | Cash Flow Activity | Amount | | :------------------------------------------ | :----------- | | Net cash used in operating activities | $(14,081) | | Net cash provided by investing activities | $22,427 | | Net cash used in financing activities | $(10,149) | [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section identifies the accounting policies that are most critical to the portrayal of the company's financial condition - The financial statements are prepared in accordance with GAAP, requiring management to make **estimates and judgments** that affect reported amounts[149](index=149&type=chunk) - Key areas requiring significant estimates include **sales returns, accounts receivable, inventories, intangible assets, contingent liabilities, and share-based compensation**[149](index=149&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) This section discloses any recently issued accounting standards that could materially impact the company's financial statements - There were **no material changes** to the information provided in Note 2, 'Recent Accounting Pronouncements' in the Company's Form 10-K for the fiscal year ended December 31, 2020[151](index=151&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states there have been no material changes to the company's market risk disclosures since its last annual report - There were **no material changes** to the information provided under Item 7A, 'Quantitative and Qualitative Disclosures About Market Risk' in the Company's Form 10-K for the year ended December 31, 2020[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and reports on changes in internal financial reporting controls [Evaluation of Disclosure Controls and Procedures](index=29&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms management's assessment of the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective as of September 30, 2021**[153](index=153&type=chunk) - Control systems, by their inherent limitations, can only provide **reasonable, not absolute, assurance** and can be circumvented[154](index=154&type=chunk) [Changes in Internal Control Over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any significant changes to the company's internal controls over financial reporting during the quarter - **No material changes** in internal control over financial reporting occurred during the three months ended September 30, 2021[155](index=155&type=chunk) - The company **routinely enhances its information systems** through upgrades or new implementations[155](index=155&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains information on legal proceedings, risk factors, other corporate actions, and filed exhibits [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the financial statement notes for detailed information regarding the company's legal proceedings - Information regarding legal proceedings is incorporated by reference from **Note 7 – Commitments and Contingencies** in Part I, Item 1 of this report[157](index=157&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to previous SEC filings for a comprehensive discussion of risk factors - **No material changes** have occurred with respect to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[158](index=158&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) This section provides details on the Sixth Amendment to the Loan and Security Agreement with Silicon Valley Bank - Effective November 1, 2021, the company and SVB entered into the Sixth Amendment to the Loan and Security Agreement, providing a **$60,000 thousand term loan** and a **$30,000 thousand revolving line of credit**[159](index=159&type=chunk) - The Amended Loan and Security Agreement has a **five-year term, expiring November 2026**, with principal payments commencing 24 months after inception[159](index=159&type=chunk) - The term loan accrues interest at the **Prime Rate plus 1.25%** and the revolving line of credit bears interest at the **floating Prime Rate**[159](index=159&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including agreements, certifications, and XBRL documents - Exhibit 10.1 is the AtriCure, Inc **2018 Employee Stock Purchase Plan** (Amended and Restated effective January 1, 2022)[162](index=162&type=chunk) - Exhibit 10.2 is the **Sixth Amendment to Loan and Security Agreement** dated November 1, 2021, among AtriCure, Inc and Silicon Valley Bank[162](index=162&type=chunk) - Includes **Rule 13a-14(a) Certifications** of Principal Executive Officer and Principal Accounting and Financial Officer, as well as XBRL documents[162](index=162&type=chunk)

AtriCure, Inc. (NASDAQ:ATRC) Q2 2021 Earnings Conference Call August 4, 2021 4:30 PM ET Company Participants Lynn Lewis – Investor Relations Mike Carrel – President and Chief Executive Officer Angie Wirick – Chief Financial Officer Conference Call Participants Rick Wise – Stifel Matthew O'Brien – Piper Sandler Mike Matson – Needham & Company Bill Plovanic – Canaccord Marie Thibault – BTIG Suraj Kalia – Oppenheimer & Company Danielle Antalffy – SVB Leerink Operator Good afternoon, and welcome to AtriCure's S ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financials show assets at **$701.1M**, revenue at **$130.7M**, net loss at **$33.2M**, with aMAZE trial failure risking IPR&D impairment [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (in thousands) | Account | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$701,075** | **$714,539** | | Cash and investments | $229,635 | $258,396 | | Goodwill & Intangibles, net | $362,015 | $362,980 | | **Total Liabilities** | **$315,992** | **$302,145** | | Contingent consideration | $192,517 | $187,424 | | Long-term debt | $43,669 | $53,435 | | **Total Stockholders' Equity** | **$385,083** | **$412,394** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q2 2021 vs Q2 2020 Performance (in thousands, except per share) | Metric | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Revenue | $71,376 | $40,824 | | Gross Profit | $54,078 | $27,654 | | Gross Margin | 75.8% | 67.7% | | Loss from Operations | $(15,077) | $(7,285) | | Net Loss | $(16,251) | $(8,236) | | Net Loss Per Share | $(0.36) | $(0.20) | H1 2021 vs H1 2020 Performance (in thousands, except per share) | Metric | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Revenue | $130,651 | $94,049 | | Gross Profit | $98,618 | $66,538 | | Gross Margin | 75.5% | 70.7% | | Loss from Operations | $(30,962) | $(22,739) | | Net Loss | $(33,168) | $(24,644) | | Net Loss Per Share | $(0.74) | $(0.61) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total Stockholders' Equity decreased from **$412.4 million** at the end of 2020 to **$385.1 million** as of June 30, 2021, primarily due to a **net loss of $33.2 million** for the six-month period, partially offset by equity compensation plans[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,849) | $(27,635) | | Net cash provided by (used in) investing activities | $47,528 | $(95,481) | | Net cash (used in) provided by financing activities | $(7,889) | $183,240 | | **Net increase in cash and cash equivalents** | **$25,675** | **$60,039** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company is an innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, selling products globally through a direct sales force and distributors[19](index=19&type=chunk) - Following PMA approval for the EPi-Sense System in Q2 2021, the related In-Process Research and Development (IPR&D) asset of **$44.0 million** was reclassified to a technology asset and is now being amortized over an estimated fifteen-year life[56](index=56&type=chunk) - In July 2021, the company was informed that the aMAZE clinical trial did not meet its primary efficacy endpoint, which may lead to a material impairment of the related IPR&D asset and adjustments to the SentreHEART contingent consideration liability in the second half of 2021[95](index=95&type=chunk) Revenue by Geography for Six Months Ended June 30 (in thousands) | Region | 2021 | 2020 | | :--- | :--- | :--- | | United States | $110,379 | $77,137 | | International | $20,272 | $16,912 | | **Total Revenue** | **$130,651** | **$94,049** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 revenue growth, gross margin improvement, increased operating expenses, strong liquidity, and the aMAZE trial's primary endpoint failure [Overview](index=20&type=section&id=Overview) - AtriCure is a leading innovator in treatments for atrial fibrillation (Afib) and left atrial appendage (LAA) management, with products used in both open-heart and minimally invasive procedures[99](index=99&type=chunk) - The company's Isolator Synergy™ Ablation System is FDA-approved for treating persistent Afib, and the EPi-Sense system is approved for long-standing persistent Afib, while other products like AtriClip are 510(k) cleared[100](index=100&type=chunk) [Recent Developments](index=21&type=section&id=Recent%20Developments) - The business experienced a significant decrease in demand in 2020 due to COVID-19 deferring non-emergent procedures, but has seen regions begin to stabilize with improved procedure volumes in 2021[102](index=102&type=chunk) - Strategic initiatives continue despite the pandemic, focusing on product innovation (ENCOMPASS clamp 510(k) clearance), clinical science (EPi-Sense PMA approval), and training[104](index=104&type=chunk)[106](index=106&type=chunk) - In July 2021, the aMAZE clinical trial met its safety endpoint but did not achieve statistical superiority on its primary efficacy endpoint, with the company currently analyzing data to determine next steps[107](index=107&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) - Q2 2021 revenue increased **74.8%** year-over-year, driven by recovery from COVID-19 impacts, with U.S. revenue growing **78.4%** and international revenue growing **57.9%**[110](index=110&type=chunk) - Q2 2021 gross margin increased to **75.8%** from **67.7%** in Q2 2020, benefiting from higher revenue and normal production activity compared to the prior year's pandemic-related fixed cost burden[112](index=112&type=chunk) - Selling, general and administrative (SG&A) expenses for Q2 2021 increased **128.7%** year-over-year, primarily due to a **$16.6 million** increase in personnel expenses and a **$10.1 million** fluctuation in the contingent consideration liability[113](index=113&type=chunk) - For the first six months of 2021, revenue increased **38.9%** year-over-year, with U.S. sales up **43.1%** and international sales up **19.9%**[116](index=116&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2021, the company had **$229.6 million** in cash, cash equivalents, and investments, with **$60.0 million** in outstanding debt[119](index=119&type=chunk) - Net cash used in operating activities for the first six months of 2021 was **$13.8 million**, an improvement from the **$27.6 million** used in the same period of 2020[16](index=16&type=chunk)[120](index=120&type=chunk) - The company has a Loan and Security Agreement with Silicon Valley Bank providing for a **$60.0 million** term loan and a **$20.0 million** revolving line of credit, with **$8.75 million** available under the revolver as of June 30, 2021[122](index=122&type=chunk) - Management believes current cash, investments, and expected cash flows will be sufficient to meet anticipated cash needs for at least the next twelve months[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to the market risk disclosures from its Annual Report on Form 10-K for the fiscal year ended December 31, 2020 - There were no material changes to the market risk disclosures from the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020[131](index=131&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the company's management concluded that disclosure controls and procedures were effective[132](index=132&type=chunk) - No changes occurred in the company's internal control over financial reporting during the three months ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, these controls[134](index=134&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) USDOJ declined intervention in a False Claims Act lawsuit, now unsealed, and the company settled an earnout dispute for **$6.0 million** - In March 2021, the USDOJ informed the company it was electing not to intervene in a False Claims Act lawsuit related to off-label promotion, which has been unsealed, with its ultimate impact not yet predictable[75](index=75&type=chunk) - In February 2021, the company settled a dispute with former nContact stockholders over contingent consideration for **$6.0 million**, with the majority of this settlement paid by June 30, 2021[76](index=76&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors include EPi-Sense commercial success, ongoing COVID-19 impacts, and potential harm from information system disruptions or security breaches - A new risk factor emphasizes that the company's success depends in part on the commercial acceptance of the EPi-Sense® System, which received FDA approval in April 2021 for treating long-standing persistent Afib[137](index=137&type=chunk)[138](index=138&type=chunk) - The COVID-19 pandemic, including new variants, continues to pose a significant risk by potentially reducing the number of elective procedures, disrupting clinical trials, and negatively impacting financial results[139](index=139&type=chunk)[140](index=140&type=chunk) - The company identifies disruptions of critical information systems and material security breaches as a key risk, acknowledging that cyber-attacks are becoming more sophisticated and could harm business, customer relations, and financial condition[146](index=146&type=chunk)[147](index=147&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Sarbanes-Oxley Act certifications from the Principal Executive Officer and Principal Accounting and Financial Officer, as well as XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and various XBRL documents[150](index=150&type=chunk) [Signatures](index=29&type=section&id=Signatures)

AtriCure, Inc. (NASDAQ:ATRC) Q1 2021 Earnings Conference Call April 27, 2021 4:30 PM ET Company Participants Lynn Lewis - Investor Relations, Gilmartin Group Mike Carrel - President and Chief Executive Officer Angie Wirick - Chief Financial Officer Conference Call Participants Rick Wise - Stifel David Saxon - Needham Danielle Antalffy - SVB Leerink Matthew O'Brien - Piper Sandler Bill Plovanic - Canaccord Suraj Kalia - Oppenheimer and Company Marie Thibault - BTIG Operator Good afternoon and welcome to Atri ...

AtriCure, Inc. (NASDAQ:ATRC) Q4 2020 Earnings Conference Call February 23, 2021 4:30 PM ET Company Participants Lynn Lewis - Gilmartin Group Mike Carrel - President & Chief Executive Officer Angie Wirick - Chief Financial Officer Conference Call Participants Mike Matson - Needham & Company Matthew O'Brien - Piper Sandler Marie Thibault - BTIG Suraj Kalia - Oppenheimer Rebecca Wang - SVB Leerink Operator Good afternoon and welcome to AtriCure's Fourth Quarter and Full Year 2020 Earnings Conference Call. My n ...