Q3 2024 AtriCure Inc Earnings Call
Speaker Change: Good afternoon and welcome to A-Trick here's third quarter, 2024 earnings conference call.
Speaker Change: This call is being recorded for replay for Bristol's.
Speaker Change: and at this time, all participants are in listen only mode. We will be facilitating a question and answer session following prepared remarks from AgerCures Management.
Speaker Change: Now, let's turn the call over to Marissa Bych from the Guild Martin group for a few introductory comments.
Marissa Bych: Thank you.
Speaker Change: By now you should have received a copy of the earnings press release. If you have not received a copy, please call 513-644-4484 to have one email to you.
Speaker Change: Before we begin today, let me remind you that the companies remarks include forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond HRCIRC control, including risks and uncertainties described from time to time in HRC-C filings.
Speaker Change: These statements include, but are not limited to, financial expectations and credits, expectations regarding the potential market opportunity for teachers, franchises and growth initiatives, future products to approvals, clearances, competition, reimbursement and clinical trial outcomes.
Speaker Change: Additionally, we refer to non-GAAP financial measures, specifically constant currency revenue, adjusted EBITDA, and adjusted loss per share. A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our press release, which is available on our website. And with that, I would like to turn the call over to Mike Carrel, President and CEO.
Mike Carrel: We achieved total revenue of $116 million, or approximately 18% growth, showing broad-based demand across our portfolio of innovative products for patients with atrial fibrillation and postoperative pain.
Mike Carrel: In addition to our top-line performance, we continue to make progress to expand profitability, producing nearly $8 million of positive adjusted EBITDA for the quarter.
Mike Carrel: We also generated over $16 million in positive cash flow this quarter, marking our second consecutive quarter of positive cash flow.
Mike Carrel: As a result of the strength in our third quarter results we are raising our full year 2024 revenue guidance and now expect a range of 459 to 462 million dollars reflecting growth of approximately 15 to 16 percent over full year 2023.
Mike Carrel: Turning to updates on our business and highlights in the quarter, starting with our pain management franchise which grew 36% worldwide, marking another quarter of acceleration in sales.
Mike Carrel: Our performance was led by growth in our international markets and bolstered by the U.S. launch of our CryoSphere Plus probe.
Mike Carrel: Additionally, we are seeing a growing body of evidence supporting the economic value of cryo-nerve block therapy.
Mike Carrel: At the most recent AATS Thoracic Surgical Oncology Summit in New York City, Dr. Dan Miller
Mike Carrel: As we look back on the past five years, our progress in establishing this therapy has been remarkable, with new innovation leading to re-acceleration of growth. Our success in thoracic procedures also gives us confidence in an even broader opportunity for our pain management products as we continue to explore additional applications to expand our addressable markets.
Mike Carrel: We are adding accounts and new surgeons with the ENCOMPASS CLAM and recently completed our first cases in Europe. This device has accelerated treatment in our core market of cardiac surgery and we look forward to driving sustainable growth with this product worldwide.
Mike Carrel: Next, our appendage management franchise achieved worldwide revenue growth of 18% with outsized contribution from open chest devices.
Mike Carrel: And on the innovation front, we completed the first cases with our new Atriclip Flex Mini device following the US launch in the third quarter.
Mike Carrel: The LEAPS trial is expected to show a clear benefit when using atrial flip devices to manage the appendage in patients who undergo cardiac surgery without preoperative AFib diagnosis, a market of well over 1 million patients globally.
Mike Carrel: Finally, our hybrid AF therapy remains resilient despite the market effects of broadening PFA adoption. In the third quarter we saw continued positive trends with a number of accounts performing our conversion procedure as well as new account activations.
Mike Carrel: We know that hybrid therapy plays a vital role in practice and remains the only therapy with differentiated and durable results for long-standing, persistent AF patients.
Mike Carrel: Furthermore, recent product introductions and continued efforts to advance standards of care in each of our markets globally have made our entire team excited for the future of atrial care. And with that, I'll turn the call over to Andrew Wirick, our Chief Financial Officer.
Andrew Wirick: Thank you, Mike.
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa
Andrew Wirick: increased to 17.9% on a recorded basis.
Andrew Wirick: and 17.8% on a constant currency basis when compared to the third quarter of 2023, demonstrating ongoing strong performance in key markets around the world and the impact of our diverse range of products. On a sequential basis, the 0.3% decline in worldwide revenue from the second quarter to the third quarter of 2024 reflects normal seasonal variation and underlying procedures.
Andrew Wirick: U.S. sales of appendage management products were $37.4 million, up 15.6% over the third quarter of 2023.
Andrew Wirick: Within U.S. Appendage Management Revenue, our Open Appendage Management products, driven by our Atriclip Plex V device, realized a third sequential quarter of acceleration, reaching 20% growth over third quarter of 2023.
Andrew Wirick: International markets once again delivered excellent results with revenue of $20.5 million, up 23.3% on a reported basis and 22.4% on a constant currency basis as compared to the third quarter of 2023.
Andrew Wirick: Similar to the first half of 2024, our international business grew across key product lines and in nearly all major markets. Looking forward, we expect continued strength in our international business as we focus on growing adoption of our therapies, as well as new product introductions.
Andrew Wirick: Our gross margin this quarter was 74.9%, a decrease of 27 basis points from the third quarter 2023, driven primarily by less favorable geographic and product mix.
Andrew Wirick: The expansion of R&D expense was offset by timing of product development costs as we've completed development and clearance efforts for three major product releases in the U.S. thus far in 2024, the Cryosphere Plus Probe, Atriclip Plex Mini, and most recently our Cryosphere Max Probe.
Andrew Wirick: Our overall capital position remains strong as we ended the third quarter with $130.3 million in cash and investments, representing positive cash generation of $16.3 million for the quarter.
Andrew Wirick: As Mike mentioned earlier, we have advanced our plans to bring PFA technology to market in our devices by entering into an exclusive licensing and co-development agreement with an expert in this field.
Andrew Wirick: As part of this arrangement, we will incur a cash charge for the acquired IPR&D of $12 million in the fourth quarter, which is excluded from our Adjusted EBITDA and Adjusted EPS guidance.
Andrew Wirick: Absent this payment, we expect positive cash generation in the fourth quarter, and a modest burn overall for full year 2024.
Andrew Wirick: Considering our third quarter results.
Andrew Wirick: From a margin perspective, we are reaffirming our full-year 2024 gross margin to be roughly consistent with 2023, with the potential for varying impacts from geographic and product mix.
Speaker Change: Our team's continued dedication to AHRQ's mission, supported by investments in innovation, clinical science, education, and awareness, has led to tens of thousands of patients treated. This same dedication has created multiple avenues of growth for our company and will continue to propel us into the future. Now, I'll turn the call back to Mike.
Mike Carrel: Thank you, Angie.
Mike Carrel: Our strong revenue growth in the third quarter is a testament to the resilience and diversification of the portfolio of therapies we have built.
Mike Carrel: With the strength of our team worldwide, the quality of our products, and the clinical data behind our therapies, there is little doubt in my mind that HR Care is well-positioned to drive compelling growth and expand profitability for years to come. And with that, we'll turn it over to the operators.
Speaker Change: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 11 again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster.
Speaker Change: And our first question comes from Robbie Marcus with J.P. Morgan. Your line is open.
Speaker Change: Hi, this is Lillian for Robbie. Thanks for taking the question. Just wanted to get your thoughts on the trends that you're seeing from PFA.
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: is that they eventually have non-responders, a great deal of non-responders. And so what we do anticipate is that that funnel is going to lead to a lot more patients needing to be treated.
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: from patients that were involved in some of the original PFA trials here in the U.S.
Speaker Change: Got it. That's helpful. And then as a follow up, I was hoping you could give a bit more color on the PFA partnership. Is there anything you can share on who this partner is that you're working with? And what sort of timeline should we expect for a launch here? Thanks so much.
Speaker Change: Great, thanks so much.
Speaker Change: Yeah, it was about 50% growth of the encompass clamp in the third quarter.
Speaker Change: Okay, and then as we think about Encompass OUS.
Speaker Change: Yeah, first I'll start and I'm in the European teams really excited about the encompassed clamp. I was over at the Major Cardiac Surgery Society meeting over there called EX, just in the early part of October . Our booth was packed.
Speaker Change: Okay, and then just on this PFA partnership, I know you'll give us more details in the future, but I'm kind of curious, you know, I think, you know, you've had plans of kind of getting to that cash flow consistently positive, you know, now you're talking about an investment in this PFA for the cardiac devices.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Matthew O'Brien with Piper Sandler. Your line is open.
Speaker Change: Unknown Attendee Hey, this is so on format. Thanks for taking our questions. I guess just, you know, another third great quarter of the US open business. Is it safe to say that, you know, a bigger competitor coming into this market is perhaps aiding in general market growth? Any thoughts on what that underlying market grew in relation to your 20% domestic growth here in the quarter?
Speaker Change: Yeah, I mean, as we talked about earlier, it's a great question. So when we looked at the market and competition coming in, we always said competition is a good thing.
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa
Speaker Change: I can't give a specific underlying growth, but I know that the competition is getting some share. Obviously, they're getting some sales that are out there, but we still feel like our product is, our original product, the FlexV, is an exceptional product and was the best product on the market before the Flex Mini. And the Flex Mini that we talked about on this call has been
Speaker Change: ME-LISD is an important study relative to a patient population. For those that don't recall, it's for patients that have inappropriate sinus tachycardia. It's important not necessarily for our long-term growth, but for the hybrid aspect of our business.
Speaker Change: We do believe it's really where a surgeon is working with an electrophysiologist to solve this very difficult patient.
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: Helpful. Thank you.
Speaker Change: Thank you. And our next question comes from Marie Tibble with BTIG. Your line is open.
Speaker Change: Hi, thanks for taking the questions this evening and congrats on a nice quarter. I wanted to see if I could kind of understand a rundown of product catalysts, other market catalysts that we might see throughout 2025. Definitely not looking for guidance, but just trying to understand tailwinds, headwinds, things that might be anniversary as you think about the
Speaker Change: Products launching here now and products that you've enjoyed throughout 2024, just how to think about those catalysts in 2025.
Speaker Change: Great question, Marie. I'd say if we start at the top with our open franchise
Speaker Change: When we think about our pain management franchise, you'll have a full year of the Cryosphere Max as well as the Cryosphere Plus Probe, both offering reduced freeze times, which we think are accelerating our growth. We've obviously seen that this past quarter in the US.
Speaker Change: and will continue our efforts to expand pain management throughout our international markets. We've seen some nice activity in Europe, in particular on that front. Within our hybrid franchise, I'd say this is one more likely to see pressure, no, no catalyst per se at this
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa
Speaker Change: And I look forward to this discussion. Thanks so much.
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Unknown
Speaker Change: They are incredibly safe.
Speaker Change: Gotcha. Thank you so much.
Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone.
Speaker Change: Again, that is star 1-1 to ask a question.
Speaker Change: Unknown Attendee Hi.
Speaker Change: Congrats on the strong quarter. Maybe a question for pain management. I think you both had talked about Cryosphere Max really being more of a product to break into the sternotomy market, you know, as opposed to Plusser, the original Cryosphere. So...
Speaker Change: What, I guess, what are your expectations for the sternotomy market in 2025 now that the MAX has been launched?
Speaker Change: being able to reduce the time in half.
Speaker Change: That is going to be definitely something that is much more operable for a surgeon to kind of add it to their procedure at that time. That was one of the primary reasons we did it, but it also affects pretty much every other usage of the technology. Today we're already seeing in our PD's
Speaker Change: Okay, great, great. And then maybe.
Speaker Change: Thank you. And our next question comes from Danielle Antalfi with UBS. Your line is open.
Danielle Antalfi: Hey, good afternoon, guys. Thanks so much for taking the question. Congrats on a really strong quarter here.
Speaker Change: Yeah, I mean the competition is out there and as I think I had referred to in one of the questions earlier Danielle
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Michael Carrel, Marissa Bych, Michael
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa
Speaker Change: It's a really good, it's really good for us and for the market overall.
Speaker Change: Okay, that's helpful. And then just a quick question on another great quarter for Encompass. I mean, this clamp just has really seemed to open up the cabbage market, especially for you guys. Just curious about what you can say as far as where we are from a penetration perspective at this point with cabbage, now that you've got what's it been like two years, I guess, rolling out Encompass here in the US. Thanks so much.
Speaker Change: Yeah, I mean, it's a great question. And I do think that we're making impact on
Speaker Change: Our next question comes from
Speaker Change: Mike, can you hear me all right?
Speaker Change: So Mike, there was a point in time specifically picking off on hybrid or convergent.
Speaker Change: The whole argument was like, look, hybrid prevents oesophageal fistulas. You know, you can do backbone ablation. So this is additive to existing catheter ablation, right? That was the whole argument.
Speaker Change: Unknown Attendee I guess.
Speaker Change: Help us understand what is the clinical need from a surgical product?
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Michael Carrel, Marissa Bych, Michael
Speaker Change: Fair enough. Mike, appreciate the transparency. Angie, one question for you. What was ASP contribution for the new line of cryosphere probes? I guess just for pain management, what was the net ASP impact in the quarter? Thank you for taking my questions.
Speaker Change: Mr. Raj, good question. Almost nothing. The majority of the revenue was the Cryosphere Plus. Cryosphere Max, not a big contributor in the third quarter. Cryosphere Plus is at the same ASP as our legacy Cryosphere devices. So when you see 29.6% growth in the quarter, that is all volume growth.
Speaker Change: Many thanks.
Speaker Change: Thank you. I'm showing no further questions at this time. I would now like to turn it back to Mike Carrel for closing remarks.
Mike Carrel: Great. Again, everyone, thank you for joining us today and we look forward to talking to you after the fourth quarter call. Have a great evening. Bye now.
Speaker Change: Good afternoon, and welcome to Atric here's third quarter 2024 earnings conference call.
Speaker Change: This call is being recorded for replay purposes.
Speaker Change: And at this time, all participants are in listen-only mode.
Speaker Change: We will be facilitating a question and answer session following prepared remarks from Atricures Management.
Speaker Change: I would now like to turn the call over to Marissa Bych from the Gilmartin Group for a few introductory comments.
Marissa Bych: Great, thank you.
Speaker Change: Additionally, we refer to non-GAAP financial measures, specifically constant currency revenue, adjusted EBITDA, and adjusted loss per share.
Speaker Change: A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our press release, which is available on our website.
Speaker Change: Great, good afternoon and thank you for joining us everyone. I'm happy to share there are third quarter results which reflect another strong quarter for Atricare.
Speaker Change: We achieved total revenue of $116 million, or approximately 18% growth, showing broad-based demand across our portfolio of innovative products for patients with atrial fibrillation and postoperative pain.
Speaker Change: As a result of the strength in our third quarter results we are raising our full year 2024 revenue guidance and now expect a range of 459 to 462 million dollars reflecting growth of approximately 15 to 16 percent over full year 2023.
Speaker Change: Turning to updates on our business and highlights in the quarter, starting with our pain management franchise, which grew 36% worldwide, marking another quarter of acceleration in sales.
Speaker Change: Our performance was led by growth in our international markets and bolstered by the U.S. launch of our CryoSphere Plus probe.
Speaker Change: We are also excited about the recent launch of our Cryostar MaxPro, which builds upon the success of Cryostar Plus.
Speaker Change: Additionally, we are seeing a growing body of evidence supporting the economic value of cryo-nerve block therapy.
Speaker Change: With new innovation leading to re-acceleration of growth, our success in thoracic procedures also gives us confidence in an even broader opportunity for our pain management products as we continue to explore additional applications to expand our addressable markets.
Speaker Change: We are adding accounts and new surgeons with the ENCOMPASS CLAMP and recently completed our first cases in Europe. This device has accelerated treatment in our core market of cardiac surgery and we look forward to driving sustainable growth with this product worldwide.
Speaker Change: In the United States, we saw a third consecutive quarter of acceleration in sales of open appendage management devices, achieving 20% growth in the third quarter.
Speaker Change: And on the innovation front, we completed the first cases with our new Atriclip Flex Mini device following the US launch in the third quarter.
Speaker Change: The H-Eclipse Flex Mini is the smallest profile clip on the market, offering enhanced access and visibility of the appendage.
Speaker Change: The LEAPS trial is expected to show a clear benefit when using atrial flip devices to manage the appendage in patients who undergo cardiac surgery without preoperative AFib diagnosis, a market of well over 1 million patients globally.
Speaker Change: To date, we have enrolled nearly 3,700 patients and we are on track to complete enrollment of 6,500 patients in this study by mid-2025.
Speaker Change: Finally, our hybrid AF therapy remains resilient despite the market effects of broadening PFA adoption.
Speaker Change: In the third quarter, we saw continued positive trends with a number of accounts performing our conversion procedure, as well as new account activations.
Speaker Change: We know that hybrid therapy plays a vital role in practice and remains the only therapy with differentiated and durable results for long-standing, persistent AF patients.
Speaker Change: Therefore, we are excited to announce that we have entered into an exclusive license and development agreement with an expert in the PFA field to accelerate the introduction of PFA technology to our cardiac surgery devices.
Speaker Change: Furthermore, recent product introductions and continued efforts to advance standards of care in each of our markets globally have made our entire team excited for the future of atrial care. And with that, I'll turn the call over to Andrew Wirick, our Chief Financial Officer.
Andrew Wirick: U.S. sales of appendage management products were $37.4 million, up 15.6% over the third quarter of 2023.
Andrew Wirick: Within U.S. Appendage Management Revenue, our Open Appendage Management products, driven by our Atroclip FlexV device, realized a third sequential quarter of acceleration, reaching 20% growth over third quarter of 2023.
Andrew Wirick: International markets once again delivered excellent results with revenue of $20.5 million, up 23.3% on a reported basis and 22.4% on a constant currency basis as compared to the third quarter of 2023.
Andrew Wirick: Looking forward, we expect continued strength in our international business as we focus on growing adoption of our therapies, as well as new product introductions.
Andrew Wirick: Our gross margin this quarter was 74.9%, a decrease of 27 basis points from the third quarter 2023, driven primarily by less favorable geographic and product mix.
Andrew Wirick: The expansion of R&D expense was offset by timing of product development costs as we have completed development and clearance efforts for three major product releases in the U.S. thus far in 2024, the Cryosphere Plus Probe, Atriclip Plex Mini, and most recently our Cryosphere Max Probe.
Andrew Wirick: SG&A expenses increased 18.9% primarily from personnel and travel costs due to the measured expansion of our teams globally, as well as one-time consulting costs associated with our planned facilities expansion.
Andrew Wirick: Our basic and diluted net loss per share, as well as the adjusted loss per share, was $0.17 in the third quarter 2024, as compared to $0.20 in the third quarter 2023.
Andrew Wirick: Our overall capital position remains strong as we enter the third quarter with $130.3 million in cash and investments, representing positive cash generation of $16.3 million for the quarter.
Speaker Change: As Mike mentioned earlier, we have advanced our plans to bring PFA technology to market in our devices by entering into an exclusive licensing and co-development agreement with an expert in this field.
Speaker Change: As part of this arrangement, we will incur a cash charge for the acquired IPR&D of $12 million in the fourth quarter, which is excluded from our Adjusted EBITDA and Adjusted EPS guidance.
Speaker Change: Absent this payment, we expect positive cash generation in the fourth quarter and a modest burnover off of full year 2024.
Speaker Change: Considering our third quarter results.
Speaker Change: From a margin perspective, we are reaffirming our full-year 2024 gross margin to be roughly consistent with 2023, with the potential for varying impacts from geographic and product mix.
Speaker Change: Our team's continued dedication to AHRQ's mission, supported by investments in innovation, clinical science, education and awareness, has led to tens of thousands of patients treated. This same dedication has created multiple avenues of growth for our company and will continue to propel us into the future. Now, I'll turn the call back to Mike.
Mike Carrel: Thank you, Angie.
Mike Carrel: As we enter the second half of 2024, we saw strong growth on the top and bottom line. Continued innovation with the HRPLEX Mini and CryoStern Max launches.
Mike Carrel: With the strength of our team worldwide, the quality of our products, and the clinical data behind our therapies, there is little doubt in my mind that Atricare is well positioned to drive compelling growth and expand profitability for years to come. And with that, we'll turn it over to the operators.
Speaker Change: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 11 again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster.
Speaker Change: And our first question comes from Robbie Marcus with J.P. Morgan. Your line is open.
Speaker Change: Hi, this is Lillian for Robbie. Thanks for taking the question.
Speaker Change: Just wanted to get your thoughts on the trends that you're seeing from PFA.
Speaker Change: Is this the new normal to expect with pressure to both MIS ablation and the MIS clip business?
Speaker Change: An incredible amount of new patients coming into the funnel, so that the top of the funnel patients
Speaker Change: is very large. And with our experience in Europe, what we can see is that they eventually have non-responders, a great deal of non-responders. And so what we do anticipate is that that funnel is going to lead to a lot more patients needing to be treated once they don't respond to PFA or that second or third ablation. They're going to kind of fall down that funnel. Now we do believe that in 2025 we'll start to see some of those. We've seen some of it already a little bit from patients that were involved in some of the original PFA trials here in the U.S. We do anticipate that that'll probably begin to start up in 2025. Not ready to kind of give any kind of month or quarter that you're going to start to see any kind of spike necessarily, but we do anticipate that with that huge volume and the top of the funnel, you're going to see a lot more patients come out that need another ablation, epicardially,
Speaker Change: Got it, that's helpful. And then as a follow-up, I was hoping you could give a bit more color on the PFA partnership. Is there anything you can share on who this partner is that you're working with and what sort of timeline should we expect for a launch here? Thanks so much.
Speaker Change: Great, thanks so much.
Speaker Change: Yeah, it was about 50% growth of the encompass clamp in the third quarter.
Speaker Change: Okay, and then as we think about Encompass OUS.
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: Yeah, first I'll start and I mean the European team is really excited about the Encompass clamp.
Speaker Change: Yeah, Bill, just would add it relative to the international numbers and open ablation more impacted by kind of our markets outside of Europe, our European growth and open ablation was very strong. This is more kind of the distributor ordering in the third quarter that impacted open growth.
Speaker Change: Okay and then just on this PFA partnership I know you'll give us more details in the future but I'm kind of curious you know I think you know you've had plans of kind of getting to that cash flow consistently positive you know now you're talking about an investment in this PFA for the cardiac devices
Speaker Change: You know, does that change the kind of inner near term and immediate term outlook is maybe you're Increasing the R&D spend or is this just shifting priorities within an R&D and thanks for taking my questions
Speaker Change: Great, thanks for taking my questions.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Matthew O'Brien with Piper Sandler. Your line is open.
Speaker Change: Unknown Attendee Hey, this is Phil on format. Thanks for taking our questions. I guess just, you know, another third great quarter of the US open business. Is it safe to say that, you know, a bigger competitor coming into this market is perhaps aiding in general market growth? Any thoughts on what that underlying market grew in relation to your 20% domestic growth here in the quarter?
Speaker Change: Yeah, I mean, as we talked about earlier, it's a great question. So when we looked at the market and competition coming in, we always said competition is a good thing.
Speaker Change: I can't give a specific underlying growth, but I know that the competition is getting some share. Obviously, they're getting some sales that are out there, but we still feel like our product is, our original product, the FlexV, is an exceptional product and was the best product on the market before the Flex Mini. And the Flex Mini that we talked about on this call has been
Speaker Change: Receiving great reviews. It is a much smaller profile product on the market. I've been out on the road talking to a lot of customers getting feedback and just looking at them as they kind of use it for the first time, and it's been just incredible feedback.
Speaker Change: I mean ELSD is an important study relative to a patient population. For those that don't recall, it's for patients that have inappropriate sinus tachycardia. It's important not necessarily for our long-term growth but for the hybrid aspect of our business.
Speaker Change: Helpful. Thank you.
Speaker Change: Thank you. And our next question comes from Marie Tibble with BTIG. Your line is open.
Speaker Change: Products launching here now and products that you've enjoyed throughout 2024, just how to think about those catalysts in 2025.
Speaker Change: The expansion of the encompass clamp in Europe, you'll see obviously a full year's worth of activity over there. That being said, we still think that this is a catalyst
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: When we think about our pain management franchise, you'll have a full year of the Cryosphere Max, as well as the Cryosphere Plus Probe, both offering reduced freeze times, which we think are accelerating our growth. We've obviously seen that this past quarter in the US.
Speaker Change: Really helpful rundown, and we appreciate that. My follow-up on the PSA partnership, at the risk of sounding a little naive, is this for the MIS product? Is it also for the open product?
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Unknown
Speaker Change: They are incredibly safe.
Speaker Change: are customers or physicians of choice as to how they want to treat their patients best.
Speaker Change: Thank you so much.
Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone.
Speaker Change: Again, that is star 1-1 to ask a question.
Speaker Change: Our next question comes from Mike Madsen with Needham. Your line is open.
Speaker Change: Unknown Attendee Hi.
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change: Yeah, and the ceramic market is something that we anticipate could be a potential market for us But we're not going to commit to any kind of revenue or guidance on it quite yet. We do think that
Speaker Change: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee
Speaker Change: Okay, great, great. And then maybe one on cash flow, had a couple of quarters positive cash flow.
Speaker Change: Angie, I think you said, you know, excluding the cash charge next quarter would have positive cash flow. So I'm just kind of wondering how you guys are thinking about that moving forward into 2025. Do you think ATTR is, you know, consistently cash flow positive moving forward?
Speaker Change: I think on a full year basis 2025 likely to be cash flow positive. The first quarter tends to be very heavy burned, just structurally with some of the payments that are made in the first quarter around variable compensation, etc. Tends to be a heavy cash burn. You've seen that for a number of years now, but on the balance and I would just end by saying really happy with the progress that we're making in this area and expect to continue to be able to enhance our cash flow going forward.
Speaker Change: Thank you. And our next question comes from Danielle Antalfi with UBS. Your line is open.
Speaker Change #100: Unknown Attendee Hey, good afternoon, guys. Thanks so much for taking the question. Congrats on a really strong quarter here.
Speaker Change #101: Yeah, I mean the competition is out there and as I think I had referred to in one of the questions earlier Danielle
Speaker Change #102: Unknown Speaker 22 The quality of what we bring to the market relative to this, both in terms of the innovations with the Flex Mini and with the Flex D original product, they are just outstanding products.
Speaker Change #102: and the fact that we've invested in clinical evidence.
Speaker Change #102: which you can see.
Speaker Change #103: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa
Speaker Change #103: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Unknown
Speaker Change #103: for the long term for this franchise.
Speaker Change #103: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change #103: Okay, that's helpful. And then just a quick question on another great quarter for Encompass. I mean, this this clamp just
Speaker Change #103: has really seemed to open up the cabbage market, especially for you guys. Just curious about what you can say as far as where we are from a penetration perspective at this point with cabbage, now that you've got what's it been like two years, I guess, rolling out in compost here in the US. Thanks so much.
Speaker Change #104: Yeah, I mean, it's a great question. And I do think that we're making impact on
Speaker Change #105: Thank you. Once again, if you would like to ask a question at this time, please press star one one on your telephone.
Speaker Change #106: Our next question comes from
Speaker Change #107: Suraj Kalia with Oppenheimer & Co. Your line is open.
Suraj Kalia: Mike, can you hear me all right?
Suraj Kalia: So Mike, there was a point in time specifically picking off on hybrid or convergent.
Speaker Change #109: Unknown Attendee The whole argument was like, look, hybrid prevents esophageal fistulas, you know, you can do back wall ablation. So this is additive to existing catheter ablation, right? That was the whole argument.
Speaker Change #110: I guess, help us understand what is the clinical need from a surgical product for a new energy modality? It isn't very obvious to me in terms of how you're thinking through this. Also, what is going to be the regulatory pathway? Would you all have to do new clinical trials for this new energy modality?
Speaker Change #110: We do believe that with obviously all of the excitement around this energy source.
Speaker Change #111: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change #111: Unknown Attendee, Michael Carrel, Marissa Bych, Unknown Attendee, Michael Carrel, Marissa Bych,
Speaker Change #112: That's different on the MIS side, and so, you know, there will be a different use case for it from that standpoint. So that's some of the thought process behind it. I think we have to have it. I think it's an important energy to study and to learn about. I believe that the FDA has made it very clear that the PFA technology epicardially will likely have to go down a PMA type pathway. And so we're anticipating that's why I say we'll give timelines and guidelines in the future about what that might look like once we're kind of at that point. And so that's why I believe that the PFA technology epicardially will have to go down a PMA type pathway. And so that's why I believe that the PFA technology epicardially will have to go down a PMA type pathway.
Suraj Kalia: Fair enough. Mike, appreciate the transparency. Angie, one question for you. What was ASP contribution for the new line of cryosphere probes? I guess just for pain management, what was the net ASP impact in the quarter? Thank you for taking my questions.
Angie: Suraj, good question. Almost nothing. The majority of the revenue was the Cryosphere Plus. Cryosphere Max, not a big contributor in the third quarter. Cryosphere Plus is at the same ASP as our legacy Cryosphere devices, so when you see 29.6% growth in the quarter, that is all volume growth.
Speaker Change #114: Many thanks.
Speaker Change #115: Thank you. I'm showing no further questions at this time. I would now like to turn it back to Mike Carrel for closing remarks.
Mike Carrel: Great. Again everyone, thank you for joining us today and we look forward to talking to you after the fourth quarter call. Have a great evening. Bye now.