AtriCure(ATRC) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (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] 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 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] - 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][67] - 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] - 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] Results of Operations 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] - 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] Liquidity and Capital Resources 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][83] - 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][84] - 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] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Legal Proceedings 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] - 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] - The company has not recognized a liability for this matter because any potential loss is not currently considered probable or reasonably estimable[43] Risk Factors 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] Other Information 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] Exhibits This section lists exhibits filed with the Form 10-Q, including the amended 2023 Stock Incentive Plan, CEO/CFO certifications, and XBRL data files