AtriCure (ATRC) FY Conference Summary Company Overview - **Company**: AtriCure (ATRC) - **Date of Conference**: June 09, 2025 - **Key Speaker**: Angie Weirich, Chief Financial Officer Key Points and Arguments Industry and Market Dynamics - AtriCure operates in the cardiac surgery and electrophysiology markets, focusing on atrial fibrillation (AFib) treatment and pain management solutions [3][4][19] - The company emphasizes the importance of preventative care in cardiac surgery, highlighting the LEAPS clinical trial and BOXNOAF trial as significant initiatives [3][4][22] Product Portfolio and Innovations - AtriCure's product portfolio includes PFA catheters and the AtriClip device, which are critical in the treatment of AFib and appendage management [4][20] - The company launched the AtriClip Flex Mini and Cryosphere Max probes, contributing to a 14% overall growth in the first quarter [39][28] - AtriCure is focused on expanding its appendage management franchise, with a new generation of AtriClip devices that are smaller and less invasive [20][21] Financial Performance and Growth Projections - AtriCure projects a top-line growth of 11% to 13% for the year, with a strong start at 14% [37][39] - The company is committed to improving profitability alongside double-digit revenue growth, despite facing challenges in the minimally invasive business segment [5][12][38] - The international business is growing rapidly but poses a margin headwind, with potential impacts of 10 to 40 points on margin depending on the country [49][50] Competitive Landscape - AtriCure faces competition from other less invasive treatments, particularly in the PFA catheter space, which has led to distractions for electrophysiologists (EPs) [6][13][40] - The CONVERGE clinical trial is positioned as a durable option for long-standing persistent AFib patients, despite initial challenges in adoption post-launch [10][12][14] Strategic Focus and Future Outlook - The company is prioritizing resource allocation towards its appendage management and pain management segments, while maintaining a cautious approach to the CONVERGE product line [24][28] - AtriCure is exploring new markets, including below-the-knee amputations, with the Cryo XT device set to launch later this year [29][30] - The long-term revenue target is set at $1 billion by 2030, with a focus on accelerating growth through clinical trials and market expansion [69][70] Operational Efficiency and Cost Management - AtriCure is focused on leveraging SG&A expenses and improving gross margins through new product launches and operational efficiencies [58][60] - The company has made significant investments in R&D, particularly in the LEAPS clinical trial, which is expected to yield long-term benefits [61][73] Capital Allocation and M&A Strategy - AtriCure is currently focused on organic growth opportunities rather than acquisitions, emphasizing the importance of maintaining profitability [81][82] - The company is cautious about pursuing M&A that could negatively impact its bottom line trajectory [82] Additional Important Insights - The company is seeing an increase in new accounts despite the competitive pressures from PFA technology [17][24] - AtriCure's approach to training and education for healthcare practitioners has evolved, focusing on impactful methods to enhance customer engagement [62][63] - The management remains optimistic about the future, aiming to continue expanding its addressable market and driving revenue growth [84]

Core Viewpoint - AtriCure (ATRC) shows potential for significant upside, with a mean price target of $49.89 indicating a 54.7% increase from its current price of $32.25 [1] Price Targets and Estimates - The mean estimate consists of nine short-term price targets with a standard deviation of $6.37, suggesting variability among analysts [2] - The lowest estimate of $40 indicates a 24% increase, while the highest estimate suggests an 86.1% surge to $60 [2] - Analysts' consensus on price targets should be approached with caution, as their reliability has been questioned [3][7] Earnings Estimates and Analyst Agreement - Analysts are optimistic about AtriCure's earnings, with a positive trend in earnings estimate revisions indicating potential stock upside [4][11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 25.1%, with four estimates moving higher and no negative revisions [12] - AtriCure holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] Analyst Behavior and Price Target Reliability - Analysts often set overly optimistic price targets due to business incentives, which can lead to inflated estimates [8] - A tight clustering of price targets, indicated by a low standard deviation, suggests a high degree of agreement among analysts regarding price movement direction [9] - While price targets should not be the sole basis for investment decisions, they can provide a starting point for further research [10]

Creating a World Class Platform Investor Presentation April 2025 © 2025 AtriCure, Inc. All rights reserved. Forward Looking Statements and Non-GAAP Financial Measures This presentation and oral statements made in connection with this presentation contain "forward-looking statements," which are statements related to future events that by their nature address matters that are uncertain. Forward-looking statements address, among other things, AtriCure's expected market opportunity, guidance, future business, f ...

Revenue and Profitability - Worldwide revenue for Q1 2025 was $123,620, representing a 13.6% increase compared to $108,851 in Q1 2024[63] - Gross profit for Q1 2025 was $92,628, with a gross margin of 74.9%, up from 74.7% in Q1 2024[70] - Revenue for the three months ended March 31, 2025, was $123,620 million, a 13.6% increase from $108,851 million in the same period of 2024[70] - Gross profit increased to $92,628 million, representing a gross margin of 74.9%, compared to 74.7% in the prior year[70][71] - Net loss for the quarter was $6,747 million, an improvement from a net loss of $13,269 million in the prior year[70] Expenses - Research and development expenses increased by $2,683, or 13.5%, primarily due to clinical trial expenses related to the LeAAPS trial[72] - Selling, general and administrative expenses rose by $3,714, or 5.1%, driven by increased personnel costs[73] - Research and development expenses rose by $2,683 million, or 13.5%, primarily due to increased clinical trial costs and personnel expenses[72] - Selling, general and administrative expenses increased by $3,714 million, or 5.1%, driven by higher personnel costs[73] Clinical Trials and Product Development - The Left Atrial Appendage Exclusion for Prophylactic Stroke Reduction (LeAAPS) trial has over 5,100 patients enrolled, with completion expected in H2 2025[66] - The Left Atrial Appendage Exclusion for Prophylactic Stroke Reduction (LeAAPS) clinical trial has enrolled over 5,100 patients, with completion expected in the second half of 2025[66] - The AtriClip PRO-Mini LAA Exclusion System is expected to launch later in 2025 following FDA 510(k) clearance[69] - The FDA granted 510(k) clearance for the AtriClip PRO-Mini LAA Exclusion System, expected to launch later in 2025[69] - The cryoICE cryoXT™ probe received FDA clearance and is expected to launch later in 2025, designed for Cryo Nerve Block therapy[69] - The company continues to invest in research and development of new products and pursue regulatory approvals globally[64] Cash Flow and Debt - Cash and cash equivalents as of March 31, 2025, were $99,885, with outstanding debt of $61,865[74] - Net cash used in operating activities decreased by $9,990 from 2024 to 2025, reflecting improved operating results[77] - The company had unused borrowing capacity of $61,885 million as of March 31, 2025[74][81] - As of March 31, 2025, the company has borrowed $61,865 under its asset-based revolving credit facility, with unused borrowing availability of $61,885[81] - The company has a $125,000 asset-based revolving credit facility with an option to increase by an additional $40,000[80] Market and Economic Conditions - International sales increased by 20.8% (23.9% on a constant currency basis), driven by growth in appendage management, open ablation, and pain management[70] - The company is closely monitoring macroeconomic conditions, including inflationary pressures and rising interest rates, that may impact liquidity and access to capital resources[83] - Future capital requirements will depend on market acceptance of products, regulatory costs, and potential acquisitions[83] - The company anticipates that substantially all revenue will relate to products currently sold or in development[61] - The company anticipates that substantially all of its revenue for the foreseeable future will relate to products currently sold or in development[61]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $124 million, reflecting a 14% growth compared to Q1 2024, with adjusted EBITDA of $9 million, representing over 200% improvement from the previous year [5][26] - U.S. revenue was $101.1 million, a 12.1% increase from Q1 2024, while international revenue totaled $22.5 million, up 20.8% [20][24] - Gross margin for Q1 2025 was 74.9%, an increase of 27 basis points from the previous year [24] Business Line Data and Key Metrics Changes - Appendage management revenue grew 19%, driven by 23% growth in open AtriClip devices and 7% in minimally invasive (MIS) devices [8][9] - Open ablation franchise sales increased by 14%, with a notable 47% growth in Encompass clamp sales [12][13] - Pain management franchise saw a 39% growth, largely due to the adoption of CryoStur Max and CryoStur Plus probes [17][18] Market Data and Key Metrics Changes - International sales in Europe accounted for $14.2 million, up 25.1%, while Asia Pacific and other markets contributed $8.3 million, up 14% [24] - The U.S. experienced a decline in MIS ablation sales by approximately 31% due to increased use of PFA catheters [22][23] Company Strategy and Development Direction - The company aims to maintain leadership in multibillion-dollar markets through investments in product development and clinical research [6][7] - AtriCure is focused on expanding the utilization of the AtriClip Flex Mini and Pro Mini devices, which are expected to drive future growth [10][11] - The company is also developing a PFA-enabled version of the Encompass clamp, with expectations for clinical trials later this year [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit revenue growth and expanding profitability through the rest of the decade [6][7] - The company anticipates continued pressure in the U.S. MIS market but expects long-term adoption of hybrid AF therapy as physicians identify suitable patient segments [16][19] - AtriCure expects to generate positive cash flow for the remainder of 2025, with a modest gain for the year overall [27][28] Other Important Information - The company is reiterating its full-year revenue guidance of $517 million to $527 million, reflecting an 11% to 13% growth over 2024 [28][29] - AtriCure's LEAPS trial is expected to provide significant differentiation in the market by demonstrating the benefits of managing the appendage with AtriClip devices [12][100] Q&A Session Summary Question: Impact of tariffs on gross margin - Management expects a modest impact on gross margin due to the majority of suppliers being based in the U.S., with potential effects in the tens of basis points [36][38] Question: Acceleration in appendage management - The acceleration is attributed to the launch of the Flex Mini device, which has received positive feedback and increased adoption among physicians [39] Question: Guidance for revenue growth - Management is cautious about adjusting guidance upward at this early stage of the year, despite strong performance in key areas [42][43] Question: Pain management growth sources - Growth is driven by increased adoption of CryoStur Max, with significant improvements in existing accounts [45][47] Question: Confidence in MIS business recovery - Management believes there are signs of recovery, with many accounts starting to refer more patients as they experience failures with PFA [50][52] Question: Future contributions from new products - Management anticipates multiple years of growth from new product launches, including the Flex Mini and Encompass clamp [62][63] Question: Launch strategy for Cryo XT - The launch will be methodical, similar to previous product introductions, with expectations for gradual adoption [75][76] Question: Competitive landscape for AtriClip - Competition is seen as beneficial for market awareness, and AtriCure is focused on innovation and clinical evidence to maintain its competitive edge [88][90] Question: Longevity of Encompass clamp growth - There is significant room for growth in the U.S. market, with ongoing expansion into non-AFib patients expected to drive future sales [92][93] Question: Timeline for MIS market recovery - Management anticipates continued pressure this year but expects to see positive trends next year [96][98] Question: Differentiation from LEAPS trial - The LEAPS trial is expected to provide a unique stroke label for AtriCure, setting it apart from competitors [100]

Core Insights - AtriCure reported revenue of $123.62 million for Q1 2025, a 13.6% increase year-over-year, with an EPS of -$0.14 compared to -$0.25 a year ago, exceeding the Zacks Consensus Estimate of $123.43 million by 0.16% and delivering an EPS surprise of 44% [1] Revenue Performance - U.S. Revenue in Pain Management reached $17.27 million, surpassing the average estimate of $16.17 million by analysts, reflecting a year-over-year increase of 35.6% [4] - Total U.S. Revenue was $101.15 million, exceeding the average estimate of $100.60 million, with a year-over-year change of 12.1% [4] - International Revenue in Pain Management was $1.79 million, slightly below the estimated $1.92 million, but showed a significant year-over-year increase of 90.9% [4] - Total International Revenue was $22.47 million, slightly below the average estimate of $22.70 million, with a year-over-year change of 20.8% [4] Segment Performance - International Revenue from Minimally Invasive Ablation was $2.01 million, below the estimated $2.37 million, representing a year-over-year decrease of 4.8% [4] - International Revenue from Appendage Management was $9.67 million, slightly above the average estimate of $9.60 million, with a year-over-year increase of 26.5% [4] - U.S. Revenue from Open Ablation was $33.31 million, close to the average estimate of $33.41 million, reflecting a year-over-year increase of 13.7% [4] - U.S. Revenue from Minimally Invasive Ablation was $8.48 million, significantly below the estimated $10.82 million, showing a year-over-year decrease of 31.2% [4] - U.S. Revenue from Appendage Management was $42.09 million, exceeding the average estimate of $40.21 million, with a year-over-year increase of 17.3% [4] Stock Performance - AtriCure's shares have returned 4.4% over the past month, outperforming the Zacks S&P 500 composite, which declined by 0.8% [3]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $124 million, representing a 14% growth compared to the same period in 2024 [6][21] - Adjusted EBITDA for Q1 2025 was $9 million, an improvement of over 200% from Q1 2024 [6][26] - Gross margin for Q1 2025 was 74.9%, up 27 basis points from Q1 2024 [25] Business Line Data and Key Metrics Changes - Appendage management revenue grew 19%, with open AtriClip devices growing 23% and minimally invasive (MIS) devices growing 7% [10] - Open ablation franchise saw a 14% growth, with Encompass clamp sales increasing by over 47% [14] - Pain management franchise experienced a 39% growth, driven by the adoption of CryoStur Max and CryoStur Plus probes [18] Market Data and Key Metrics Changes - U.S. revenue was $101.1 million, a 12.1% increase from Q1 2024 [21] - International revenue totaled $22.5 million, up 20.8% on a reported basis [25] - European sales accounted for $14.2 million, reflecting a 25.1% increase [25] Company Strategy and Development Direction - The company aims to remain a leader in multibillion-dollar markets through investments in product development and clinical research [7][8] - A focus on double-digit revenue growth and expanding profitability through the rest of the decade is emphasized [7] - The company is expanding its Cryo nerve block therapy to address postoperative pain and reduce opioid dependency [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive cash flow for the remainder of 2025, with a modest gain expected for the year [27][28] - The company anticipates continued pressure in the U.S. MIS ablation and appendage management revenue in the near term [29] - Management highlighted the importance of maintaining relationships with electrophysiologists (EPs) to navigate competitive pressures from PFA technologies [81] Other Important Information - The company received FDA clearance for the AtriClip Pro Mini device, which is expected to enhance minimally invasive procedures [12] - The LEAPS trial is progressing rapidly, with total enrollment reaching 5,500 patients, aiming for 6,500 by Q3 2025 [13] Q&A Session Summary Question: Impact of tariffs on gross margin - Management expects a modest impact on gross margin due to tariffs, primarily because most suppliers are based in the U.S. [36] Question: Acceleration in appendage management - The acceleration is attributed to the launch of the Flex Mini device, which has received positive feedback from physicians [39] Question: Guidance for revenue growth - Management refrained from raising the low end of the revenue guidance range, citing it is early in the year [43] Question: Pain management growth sources - Growth is driven by increased adoption of CryoStur Max and improved procedure efficiency [47] Question: Confidence in MIS business recovery - Management believes there are signs of recovery, but anticipates continued pressure in the near term [100] Question: Future of Encompass clamp - The Encompass clamp is expected to continue driving growth, with significant market penetration still available [93]

Revenue Performance - First quarter 2025 revenue was $123.6 million, a 13.6% increase year-over-year (14.1% on a constant currency basis) [4] - U.S. revenue reached $101.1 million, up $10.9 million or 12.1% compared to Q1 2024, driven by key product lines [4] - International revenue increased by $3.9 million or 20.8% (23.9% on a constant currency basis) to $22.5 million [4] - Full year 2025 revenue is projected to be approximately $517 million to $527 million [6] Profitability Metrics - Gross profit for Q1 2025 was $92.6 million, with a gross margin of 74.9%, an increase of 27 basis points from Q1 2024 [4] - Adjusted EBITDA for Q1 2025 was $8.8 million, an increase of $6.0 million from the same period in 2024 [5] - Management expects full year 2025 adjusted EBITDA of approximately $44 million to $46 million [6] Net Loss and Adjusted Loss - Basic and diluted net loss per share for Q1 2025 was $0.14, compared to $0.28 for Q1 2024 [4] - The company reported a net loss of $6.7 million for Q1 2025, an improvement of $6.5 million year-over-year [8] - Reported net loss for Q1 2025 was $6,747 million, an improvement from a net loss of $13,269 million in Q1 2024 [25] - Non-GAAP adjusted net loss for Q1 2025 was $6,747 million, compared to $11,907 million in Q1 2024 [25] - Basic and diluted adjusted net loss per share decreased to $0.14 in Q1 2025 from $0.25 in Q1 2024 [25] - Weighted average shares used in computing adjusted net loss per share increased to 47,393 thousand in Q1 2025 from 46,719 thousand in Q1 2024 [25] Market Growth - Significant growth was noted in major geographic markets across key product lines, particularly in appendage management and pain management [4]

Atrial Fibrillation (Afib) Overview - Atrial fibrillation (Afib) affects over 59 million people globally, with over 4 million in the U.S. suffering from long-standing persistent Afib[18]. - Afib is responsible for approximately 15% to 20% of the estimated 800,000 strokes annually in the U.S., highlighting the condition's significant healthcare cost burden[24]. - The increasing awareness and improved diagnostic screening for Afib are expected to lead to a higher number of diagnosed patients over time[21]. Market Opportunities - The market for cardiac ablation products represents a significant growth opportunity, with an estimated 300,000 potential candidates for surgical ablation annually, of which less than 20% are currently treated[23]. - Approximately 500,000 Afib patients are treated by catheter ablation each year in the U.S., with an expected growth rate of over 10% annually[25]. - The market for pain management ablation products is significant, with approximately 150,000 thoracic procedures and 250,000 cardiothoracic procedures performed annually in the U.S.[25]. - The company’s AtriClip system is believed to be safer and more effective for left atrial appendage (LAA) management, addressing a significant market opportunity due to the high incidence of strokes related to Afib[24]. - The company’s products are sold through direct sales and distributors in various international markets, primarily transacted in U.S. Dollars[20]. Product Development and Innovation - The EPi-Sense System, approved in 2021, is the only FDA-approved minimally invasive procedure for treating long-standing persistent Afib, demonstrating the company's commitment to innovative solutions[33]. - The AtriClip LAA Exclusion System is designed to exclude the left atrial appendage, providing electrical isolation benefits and reducing the risk of blood clots[35]. - The AtriClip FLEX-Mini device, launched in 2024, sets a new standard as the smallest profile for a surgical LAA device on the market[37]. - In 2022, the company launched the EnCompass clamp in the U.S., designed to improve efficiency in cardiac soft tissue ablation, and received 510(k) clearance for the EnCapture clamp in 2024[29]. - The cryoSPHERE MAX probe, launched in 2024, reduces freeze times by 50% compared to the first generation cryoSPHERE probe, enhancing pain management capabilities[34]. Clinical Trials and Research - The company continues to invest in clinical trials to validate long-term results of its products, including the ICE-AFIB trial for the cryoICE system[32][40]. - The HEAL-IST clinical trial aims to enroll up to 142 patients across 40 sites in the US, UK, and EU, focusing on the safety and efficacy of a hybrid ablation procedure for Inappropriate Sinus Tachycardia[48]. - The CONVERGE trial demonstrated a 29% absolute difference in efficacy at 12 months (78% relative improvement) for the hybrid therapy arm compared to endocardial catheter ablation alone in long-standing persistent Afib patients[49]. - The ICE-AFIB study completed twelve-month patient follow-up, analyzing the safety and efficacy of the cryoICE system for persistent Afib treatment[57]. - The CEASE-AF trial demonstrated superior freedom from atrial arrhythmias for staged hybrid ablation compared to endocardial catheter ablation, with results accepted for presentation at the 2025 EHRA meeting[57]. Financial Performance and Risks - The company reported net losses of $44,698 in 2024, $30,438 in 2023, and $46,466 in 2022, with an accumulated deficit of $401,755 as of December 31, 2024[167]. - The company faces significant financial risks due to fluctuating quarterly results, which may be impacted by the pace of product adoption and external economic conditions[166]. - A prolonged economic downturn could adversely impact procedure volumes and hospital staffing, leading to reduced revenue[118]. - The company may need to raise capital in the future, which could dilute stockholder ownership and cause a decline in stock price[180]. - The company has a compliance program in place to mitigate risks associated with anti-corruption laws, but potential violations could lead to severe penalties and impact financial statements[163]. Regulatory and Compliance Challenges - The company is an FDA-registered medical device manufacturer and certified to ISO 13485:2016, conducting regular audits of its quality systems and suppliers[87]. - Regulatory challenges, including compliance with FDA requirements, could hinder product approval and market adoption[116]. - The company has not received FDA clearance to promote certain products for the treatment of Afib, which could hinder its ability to grow and maintain its business[145]. - The company is subject to medical device reporting regulations, and failure to report adverse events could result in significant regulatory fines or penalties[144]. - A serious failure to comply with regulatory requirements could result in sanctions such as warning letters, fines, and even criminal prosecution, adversely affecting the company's operations and financial condition[143]. Employee and Organizational Culture - The company has approximately 1,300 employees as of December 31, 2024, with a voluntary turnover rate consistently below 12% over the last five years, outperforming the industry average for medical device companies[89]. - The company has been recognized as a Top Workplace nine times in the past ten years and has been voted a Great Place to Work for three consecutive years[91]. - The company has invested in various employee development programs, including leadership development and competency-based courses, to enhance talent management and retention[93]. - The company has implemented a DE&I framework aimed at attracting diverse talent and fostering an inclusive workplace, earning recognition for providing opportunities for women innovators in 2024[94][95]. - The company maintains a strong safety culture with multiple safety programs and evaluations, ensuring a safe workplace for all employees[99].

Core Viewpoint - AtriCure (ATRC) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - AtriCure is expected to earn -$0.61 per share for the fiscal year ending December 2025, reflecting a year-over-year change of 9% [8]. - Over the past three months, the Zacks Consensus Estimate for AtriCure has increased by 2.8%, indicating a positive trend in earnings estimates [8]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) [7]. - The system has a strong track record, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - AtriCure's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].