AtriCure, Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Top Line: Total revenue $116 million, 18% growth. Adjusted EBITDA $8 million for the quarter, second consecutive quarter of positive cash flow.
• Product Launches: Launched cryoSPHERE+ probe, AtriClip FLEX Mini, and cryoSPHERE MAX; Encompass clamp launched in Europe; expanded CE mark for AtriClip in Europe.
• Clinical Evidence: Robust data on Cryo Nerve Block Therapy reducing hospital stays and costs; LeAAPS trial enrolling nearly 3,700 patients with plan to enroll 6,500 by mid-2025.
• Partnerships: Entered exclusive license and development agreement for PFA technology to integrate into cardiac surgery devices.

Segment Performance

• Pain Management: Grew 36% worldwide in Q3 2024, with revenue of $16.3 million. The cryoSPHERE+ probe launch contributed nearly half of pain management sales, and the cryoSPHERE MAX probe was recently launched. Revenue contribution percentage not explicitly stated but significant given growth.
• Open Ablation: Achieved 16% worldwide revenue growth. The Encompass clamp in the U.S. saw nearly 50% growth, and first cases completed in Europe.
• Appendage Management: Worldwide revenue growth of 18%, with open appendage management devices in the U.S. achieving 20% growth in Q3. AtriClip FLEX Mini launched, and international expansion with an expanded CE mark indication for AtriClip devices.
• Hybrid AF Therapy: Resilient but facing pressure on MIS adoption due to PFA focus, but expects broad tailwinds from PFA awareness expanding treatable patients.

Guidance

• Raised full-year 2024 revenue guidance to $459 million to $462 million, reflecting 15%-16% growth over 2023.
• Reaffirmed adjusted EBITDA guidance $26 million to $29 million.
• Anticipated a $12 million cash charge in Q4 2024 for PFA IP R&D, but expects positive cash flow in Q4 and modest burn for full year 2024.

Risks

• Market distraction from new PFA products impacting momentum of MIS ablation and MIS clip growth.
• Gross margin affected by less favorable geographic and product mix.
• Regulatory and reimbursement challenges in international markets for new products.

Question and Answer

Q: Thoughts on trends from PFA and impact on MIS ablation and MIS clip business?

A: Michael Carrel noted PFA causing distraction in 2024 but expects large patient funnel to lead to more treatable patients in future; Angela Wirick mentioned Q4 2023 was strong for U.S. hybrid and MIS AtriClip.

Q: Details on PFA partnership?

A: Michael Carrel said they're excited about the partnership, made progress on development, but no timelines on first in human, clinical trials, or partner revealed yet.

Q: Encompass clamp growth in EU and impact?

A: Michael Carrel said EU team excited, launched in EAX meeting, no Q4 impact but expected in 2025; Angela Wirick noted European open ablation growth strong due to distributor ordering.

Q: Product catalysts in 2025?

A: Angela Wirick mentioned Encompass clamp expansion in Europe, full year of cryoSPHERE MAX and cryoSPHERE+ in pain management, expansion of AtriClip in China and Europe.

Q: Cash flow outlook?

A: Angela Wirick said 2025 likely cash flow positive, though Q1 tends to be heavy burn.