Q1 2025 AtriCure Inc Earnings Call

Operator: Good afternoon, and welcome to AtriCure's first quarter 2025 earnings conference. This call is being recorded for replay purposes. And at this time, all participants are listening.

Good afternoon, and welcome to <unk> first quarter 2025 earnings conference call.

This call is being recorded for replay purposes.

At this time, all participants are in listen only mode.

Operator: will be facilitating a question and answer following prepared remarks from AtriCure.

We will be facilitating a question and answer session. Following prepared remarks from <unk> management.

Marissa Bych: I would now like to turn the call over to Marissa Bych from the Gilmartin Group for a few introductory comments. Thank you. By now, you should have received a copy of the earnings press release.

Marissa: I'd now like to turn the call over to Marissa.

Speaker Change: From the Gilmartin group for a few introductory comments.

Speaker Change: Thank you.

Speaker Change: By now you should have received a copy of the earnings press release.

Marissa Bych: If you have not received a copy, please call 513-644-4484 to have one emailed to you. Before we begin today, let me remind you that the company's remarks include forward looking statements. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure's control, including risks and uncertainties described from time to time in AtriCure's SEC filings. These statements include, but are not limited to, financial expectations and guidance, expectations regarding the potential market opportunity for AtriCure's franchises and growth initiative, Future Product Approvals and Clearances, Competition, Reimbursement, and Clinical Trial Outcomes. AtriCure's results may differ materially from those projected.

Speaker Change: If you have not received a copy please call 5136444484 to have one emailed to you.

Speaker Change: Before we begin today, let me remind you that the Companys remarks include forward looking statements.

Speaker Change: Forward looking statements are subject to numerous risks and uncertainties.

Speaker Change: Any of which are beyond <unk> control, including risks and uncertainties described from time to time in <unk> SEC filings.

Speaker Change: These statements include but are not limited to financial expectations and guidance expectations regarding the potential market opportunity for <unk> franchises and growth initiatives.

Speaker Change: Future product approvals and clearances.

Speaker Change: Competition reimbursement and clinical trial outcomes.

Speaker Change: <unk> results may differ materially from those projected.

Marissa Bych: AtriCure undertakes no obligation to publicly update any forward-looking states. Additionally, we refer to non-GAAP financial measures, specifically constant currency revenue, adjusted EBITDA, and adjusted loss per share.

<unk> undertakes no obligation to publicly update any forward looking statements.

Speaker Change: Additionally, we refer to non-GAAP financial measures, specifically constant currency revenue adjusted EBITDA and adjusted loss per share.

Marissa Bych: 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: 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.

Mike Carroll: With that, I would like to turn the call over to Mike Carroll, President and CEO. Great. Good afternoon, everyone, and thank you for joining us. Our first quarter performance reflects the strength of our broad platform of products and continued focus of our team on expanding patient treatment worldwide. For the quarter, we achieved total revenue of one hundred twenty four million dollars of 14 percent growth, led by outstanding performance in both our pain management and appendage management franchises. We also drove increasing profitability, reporting nine million dollars of adjusted EBITDA for the first quarter, which represents an improvement of more than 200 percent from the first quarter of twenty twenty four.

Speaker Change: With that I would like to turn the call over to Mike Carrel, President and CEO.

Speaker Change: Great. Good afternoon, everyone and thank you for joining us.

Speaker Change: Our first quarter performance reflects the strength of our broad platform of products and continued focus of our team on expanding patient treatment worldwide.

Speaker Change: For the quarter, we achieved total revenue of $124 million, a 14% growth led by outstanding performance in both our pain management, an appendage management franchises. We also drove increasing profitability reporting $9 million of adjusted EBITDA for the first quarter, which represents an improvement of more than 200% from the first quarter of 2024.

Mike Carroll: In addition to our strong financial performance.

Speaker Change: In addition to our strong financial performance.

Mike Carroll: We're excited to host our Analyst and Investor Day at our company headquarters in Mason, Ohio on March 26. At this event, we outlined our vision to remain the leader in each of the multi-billion dollar markets we serve with investments in product development, clinical research, and therapy development being fundamental to our strategy. Complementing this vision is our goal to deliver double-digit revenue growth and expanding profitability and cash flow through the rest of the decade. While we were thrilled to share our vision and our goals for the business, we were even more excited to bring perspectives of four key opinion leaders in the field of cardiac surgery and electrophysiology.

Speaker Change: We're excited to host our analyst and Investor day at our company headquarters in Mason, Ohio on March 26.

Speaker Change: At this event, we outlined our vision to remain the leader in each of the multibillion dollar markets, we serve with investments in product development.

Speaker Change: Research and therapy development being fundamental to our strategy.

Speaker Change: Complementing this vision is our goal to deliver double digit revenue growth and expanding profitability and cash flow through the rest of this decade.

Speaker Change: While we were thrilled to share our vision and our goals for the business. We were even more excited to bring perspectives are four key opinion leaders in the field of cardiac surgery and electrophysiology.

Mike Carroll: These physicians delivered first-hand insights on our groundbreaking LEAPS trial for the reduction of stroke in non-AFib patients in cardiac surgery using our AtriClip platform, our upcoming Box No-AF trial studying prophylactic ablation to reduce post-operative AFib, and the importance of AtriCure's hybrid AF therapy as the only FDA-approved and effective solution for patients with longstanding persistent AFib. Each KOL echoed what we have been saying for years. Afib is a debilitating and devastating disease that remains undertreated. Further, their views and the evidence presented support the use of our ablation and left atrial appendage management products to reduce the risk of AFib and stroke concomitant to cardiac surgery and in standalone treatment of AFib.

Speaker Change: These physicians delivered firsthand insight on our groundbreaking leaps trial for the reduction of stroke, and non afib patients and cardiac surgery, using our <unk> platform, our upcoming box no AF trial, setting prophylactic ablation to reduce postoperative afib and the importance of <unk> hybrid <unk> therapy.

Speaker Change: The only FDA approved and effective solution for patients with long standing persistent afib.

Speaker Change: Each kols.

Speaker Change: Echoed what we have been saying for years.

Speaker Change: Afib is a debilitating and devastating disease that remains undertreated.

Speaker Change: Further their views and the evidence presented support the use of our ablation and left atrial appendage management products to reduce the risk of afib in stroke and continent to cardiac surgery and in Standalone treatment of Afib.

Mike Carroll: We also highlighted the science and market behind the vast opportunity of our cryo nerve block therapy for patients undergoing thoracotomy, sternotomy, and now amputation. Pain after surgery slows recovery, increases healthcare costs, and reduces quality of life. We articulated our vision for how crown-nerve block therapy can help nearly one million patients globally and our strategies to expand even further in the coming years with both new products and approaches.

Speaker Change: We also highlighted the science and market behind the vast opportunity of our cryo nerve block therapy for patients undergoing thoracotomy sternotomy and now amputations.

Speaker Change: Pain after surgery slows recovery increases health care costs and reduces quality of life we.

Speaker Change: We articulate our vision for our crown nerve block therapy can help nearly 1 million patients globally and our strategy is to expand even further in the coming years with both new products and approaches.

Mike Carroll: Now I'd like to turn and provide updates on our business and the highlights from the first quarter, beginning with our appendage management franchise. Worldwide appendage management revenue grew 19%, driven by 23% growth in our open AtriClip devices and 7% growth in MIS appendage management devices. We continue to see accelerated growth in our open appendage management business in the United States. where our latest generation of the AtriClip, the Flex Mini, is quickly being adopted. The AtriCure Flex Mini device features the smallest profile of any open chest LAEA closure device on the market today and continues to garner positive feedback from physicians to increase visibility and procedure.

Speaker Change: Now I'd like to turn and provide updates on our business and the highlights from the first quarter, beginning with our appendage management franchise worldwide Appendage management revenue grew 19% driven by 23% growth in our open clip devices and 7% growth in <unk>.

Speaker Change: S Appendage management devices, we continue to see accelerated growth in our open appendage management business in United States.

Speaker Change: Where our latest generation of the <unk>. The flex many is quickly being adopted.

Speaker Change: The Asia group Flex many device features the smallest profile of any open chest L. A closure device on the market today and continues to garner positive feedback from physicians to increase visibility and procedures.

Mike Carroll: Following our launch in late in the third quarter of 2024, we experienced an acceleration in the adoption of AtriCleflex Mini this quarter, with the number of accounts purchasing more than doubling and contributing over 15% of our US open appendage management revenue. We are focused on further expanding the utilization of AtriCure Plex Mini as the year progresses and believe this device will be a strong tailwind for growth well into the future.

Speaker Change: Following are launched.

Speaker Change: Late in the third quarter of 2024, we experienced an acceleration of adoption of <unk> flex. Many this quarter with a number of accounts purchasing more than doubling.

Speaker Change: And contributing over 15% of our U S open appendage management revenue.

Speaker Change: We are focused on further expanding the utilization of <unk> flex many as the year progresses and believe this device will be a strong tailwind for growth well into the future.

Mike Carroll: Also during the first quarter, we received 510k clearance for a minimally invasive AtriClip Pro Mini device. Like the AtriClip Flex Mini, our Pro Mini device offers significant benefits to surgeons while maintaining the exceptional performance of our AtriClip platform.

Speaker Change: Also during the first quarter, we received 500 10-K clearance for our minimally invasive <unk> pro many device.

Speaker Change: Like the age of flip flex many are preliminary device offer significant benefits to surgeons, while maintaining the exceptional performance of our <unk> platform.

Mike Carroll: The AtriClip Pro Mini is 60% smaller than the next lowest profile device, enabling enhanced visualization and precise placement, which is particularly important in minimally invasive procedures. Once again, early physician feedback has been remarkable and we expect to launch the AtriClip Pro Mini device in the coming weeks.

Speaker Change: The Asia clip pro many is 60% smaller than the next lowest profile device, enabling enhanced visualization and precise placement, which is particularly important important in minimally invasive procedures.

Speaker Change: Once again early physician feedback has been remarkable and we expect to launch the <unk> device in the coming weeks.

Mike Carroll: Next, I'd like to provide an update on our groundbreaking and market-expanding LEAPS trial. We continue to enroll at an extremely fast pace, with even more sites around the world actively engaged in the study this quarter. Earlier today, we reached the total enrollment of 5,500 patients and plan to complete full enrollment of 6,500 patients in the third quarter.

Speaker Change: Next I'd like to provide an update on our groundbreaking and market expanding leaps trial.

Speaker Change: We continue to enroll and extremely fast pace with even more sites around the world actively engaged in the study this quarter.

Speaker Change: Earlier today, we reached a total enrollment of 5500 patients and plan to complete full enrollment of 6500 patients in the third quarter.

Mike Carroll: As many of you heard from Dr. Whitlock and our analysts in Investor Day, there's only one chance to manage the appendage in patients with no additional risk, and that is at the time of cardiac surgery. More than half of cardiac surgery patients have risk factors for atrial fibrillation or stroke, and we believe our LEAPS trial will ultimately show the benefit of managing the appendage with an atrial clip device for the millions of patients globally that undergo cardiac surgery every year.

Speaker Change: As many of you heard from Dr. Whitlock at our analyst and Investor Day, There is only one chance to manage the appendage in patients for <unk>.

Speaker Change: With no additional risk and that is at the time of cardiac surgery.

Speaker Change: More than half of cardiac surgery patients have risk factors for atrial fibrillation stroke, and we believe our leaps trial will ultimately show the benefit of managing the appendage with an <unk> device for the millions of patients globally that undergo cardiac surgery every year.

Mike Carroll: Now touching on our AFib Ablation Franchises. We experienced growth of 14% in our open ablation franchise in the first quarter, including more than 47% growth in sales of the encompass clamp. Adoption of the Encompass clamp has remained incredibly strong, particularly the short version of the clamp, which further improves Ease of use. During the first quarter, we saw approximately 25% growth in the number of accounts from the first quarter of 2024, including new sites in Europe. We remain diligent in our efforts to expand treatment in cardiac surgery, reaching new physicians, and driving increased use across procedures.

Speaker Change: Now touching on our Afib ablation franchises we.

Speaker Change: We experienced growth of 14% and our open ablation franchise in the first quarter, including more than 47% growth in sales of the encompass clamp.

Speaker Change: Adoption of the encompass clamp has remained incredibly strong, particularly the short version of the plant, which further improves ease.

Speaker Change: Ease of use.

During the first quarter, we saw approximately 25% growth in the number of accounts from the first quarter of 2024, including new sites in Europe, we remain diligent in our efforts to expand treatment in cardiac surgery, reaching new physicians and driving increased use across procedures.

Mike Carroll: As we discussed in detail at the Analyst and Investor Day, we are also developing a PFA-enabled version of the ENCOMPASS clamp and expect first in human later this year, followed by a clinical trial to study this new device. As a leader in the treatment of AFib in cardiac surgery, we believe it is important to provide the option of PFA for our surgical ablation devices and expect that we will be successful in further reducing procedure time when coupled with our Encompass plan.

Speaker Change: As we discussed in detail at the analyst and Investor Day. We are also developing a PFA enabled version of CFA enabled version of the encompass clamp and expect first in human later this year followed by a clinical trial to study this new device.

Speaker Change: As a leader in the treatment of Afib in cardiac surgery. We believe it is important to provide the option of PFA for our surgical ablation devices and expect that we will be successful in further reducing procedure time, when coupled with our encompass clamp.

Mike Carroll: Our commitment to addressing the global AFib epidemic is now evolving to include the preventative treatment of AFib in cardiac surgery. It is widely understood that cardiac surgery patients experience an elevated risk for developing AFib following their procedure. Post-operative AFib is damaging to the patient, their family, and the health care system overall.

Speaker Change: Our commitment to addressing the global Afib epidemic is now evolving to include the preventative treatment of Afib in cardiac surgery.

Speaker Change: It is widely understood the cardiac surgery patients experienced an elevated risk for developing afib following the procedure.

Speaker Change: Post operative Afib is damaging to the patient their family and the health care system overall.

Mike Carroll: Our previously announced boxed NOAAF trial will evaluate the benefits of treating patients without preoperative AFib with our Encompass clamp and the AtriFlip device. The study has been approved by the FDA, and we will begin initiating clinical trial sites and enrolling our first patients later this year. We expect that completing the Box No-AF trial will greatly expand our market for the devices worldwide and pioneer a new standard in cardiac surgery.

Speaker Change: Our previously announced box no AF trial will evaluate the benefits of treating patients without preoperative afib with our encompass clamp and the HFF devices.

Speaker Change: The study has been approved by the FDA and we will begin initiating clinical trial sites and enrolling our first patients later this year.

Speaker Change: We expect the completing the box no AF trial will greatly expand our market for the devices worldwide and pioneer a new standard in cardiac surgery.

Mike Carroll: Turning to minimally invasive AFib treatment, which includes the hybrid AFib therapy. While the excitement around PFA is understandable and is for pressure on our near-term growth, it remains clear that patients with long-standing persistent AFib require a more robust procedure to address their disease. As shown in the three-year follow-up of CONVERGE and CEASE-AF randomized trials, these differences get stronger and more pronounced as time progresses, demonstrating hybrid AF therapy to be incredibly durable over time. Hybrid AF therapy procedure revenue experienced another outstanding quarter in Europe with nearly 50% growth, while we face downward pressure in the United States.

Speaker Change: Turning to minimally invasive afib treatment, which includes the hybrid afib therapy.

Speaker Change: While the excitement around PFA is understandable and has put pressure on our near term growth. It remains clear that patients with long standing persistent afib require a more robust procedure to address their disease.

Speaker Change: As shown in the three year follow up of converged and cease AF randomized trials. These differences get stronger and more pronounced as time progresses demonstrated hybrid <unk> therapy to be incredibly durable overtime.

Speaker Change: Hybrid <unk> therapy procedure revenue experienced another outstanding quarter in Europe, with nearly 50% growth, while we faced downward pressure in the United States.

Mike Carroll: We expect this pressure to continue in the near term in the US, but remain steadfast in our belief that, with time, EPs will begin to identify segments of the population of patients for hybrid AF therapy, leading to long-term adoption and success of this procedure in treating patients with advanced AFib.

Speaker Change: We expect this pressure to continue in the near term in the U S remained steadfast in our belief that <unk>.

Speaker Change: <unk> EPS will begin to identify segments of that.

Speaker Change: Ill population of patients for hybrid <unk> therapy, leading to long term adoption and success of this procedure and treating patients with advanced Afib.

Mike Carroll: And finally, our pain management franchise saw an acceleration in growth to 39% in the first quarter. Pain management performance reflects the rapid adoption of our latest CryoSter Max and CryoSter Plus probes. Well, we are experiencing broader use within existing accounts, as well as interest from new accounts. To that end, total accounts with 12% in the first quarter, showing our continued development of cryo-nerve block therapy worldwide. While we deepen our penetration in thoracic surgery procedures, we are also excited to expand our addressable market with the recent FDA 510K clearance of our Cryo XT probe, designed specifically for extremity amputation.

Speaker Change: And finally, our pain management franchise saw an acceleration in growth to 39% in the first quarter.

Speaker Change: Pain management performance reflects the rapid adoption of our latest craft or Max and crowd surplus probes.

While we are experiencing broader use within existing accounts as well as interest from new accounts to that and total accounts grew 12% in the first quarter showing our continued development of cryo nerve block therapy worldwide.

Speaker Change: While we deepen our penetration and thoracic surgery procedures. We're also excited to expand our addressable market with the recent FDA 500, 10-K clearance of our cryo ex T probe designed specifically for extremity amputations more than a 180000 of which take place annually in the United States.

Mike Carroll: More than 180,000 of which take place annually in the United States. We expect to launch our Cryo XT probe later this year. Based on our research and experience to date, the Cryo-X T-Probe will offer a new solution for preventing or treating phantom and residual limb pain in an easy-to-use and opioid-free device. Traditional opioid-based therapies present a litany of issues related to misuse, addiction, and elevated healthcare costs. Through our organic development efforts and pain management, our goal is to reach every patient suffering from post-operative pain and reduce the dependency on pharmacological solutions for managing that pain.

Speaker Change: We expect to launch our <unk> probe later this year.

Speaker Change: Based on our research and experience to date.

Speaker Change: <unk> will offer a new solution for preventing or treating phantom and residual limb pain.

Speaker Change: And an easy to use an opioid free device.

Speaker Change: Traditional opioid based therapies present, a litany of issues related to misuse addiction, and elevated health care costs.

Speaker Change: Through our organic development efforts and pain management. Our goal is to reach every patient suffering from post operative pain and reduce the dependency on pharmacological solutions for managing that pain.

Mike Carroll: Our pain management franchise remains an exciting and truly innovative component of our business, and we expect continued strength throughout 2025 and well beyond.

Speaker Change: Our pain management franchise remains an exciting and truly innovative component of our business and we expect continued strength throughout 2025 and well beyond.

Mike Carroll: So in closing, our results reflect another robust quarter of progress throughout our business. from strong worldwide growth to exceptional activity in new product launches and clearances, the continued advancement of research and development programs, and execution of our plans to improve profitability. I am truly proud of the efforts of the entire AtriCure team in delivering an outstanding start to the year and remain confident in our shared vision to establish our products and therapies as the standard of care in each of our markets.

Speaker Change: So in closing our results reflect another robust quarter of progress throughout our business from.

Speaker Change: From strong worldwide growth to exceptional activity and new product launches and clearances. The continued advancement of research and development programs and execution of our plans to improve profitability.

Angi: I am truly proud of the efforts of the entire <unk> team and delivering an outstanding start to the year and remain confident in our shared vision to establish our products and therapies as the standard of care in each of our markets and with that I'll turn the call over to Andrew <unk>, Our Chief Financial Officer Angi.

Angela Wirick: And with that, I'll turn the call over to Angie Wirick, our Chief Financial Officer. Thanks, Mike. Our first quarter 2025 worldwide revenue of $123.6 million increased 13.6% on a reported basis and 14.1% on a constant currency basis when compared to the first quarter of 2024. We experienced robust growth across most of our franchises and geographies, demonstrating in total the strength of our business and a solid foundation to begin the year. First quarter 2025 US revenue was $101.1 million, a 12.1% increase from the first quarter of 2024. Open Ablation product sales were $33.3 million compared to $29.3 million, up 13.7% over the first quarter of 2024.

Andrew: Thanks, Mike our first quarter 2025 worldwide revenue of $123 $6 million increased 13, 6% on a reported basis and 14, 1% on a constant currency basis, when compared to the first quarter of 2024.

Andrew: We experienced robust growth across most of our franchises and geographies demonstrating in total the strength of our business and a solid foundation to begin the year.

Andrew: First quarter 2025 U S revenue was $101 1 million, a 12, 1% increase from the first quarter of 2024.

Andrew: Open ablation product sales were $33 $3 million compared to $29 3 million up 13, 7% over the first quarter of 2024.

Angela Wirick: Growth and Open Ablation was once again led by our Encompass clamps in both new and existing accounts. U.S. sales of appendage management products were $42.1 million, up 17.3% over the first quarter of 2024. We saw strong demand for our new AtriClip Flex Mini device in the first quarter, driving our U.S. open appendage management products to an overall growth rate of 23.5%. Minimally invasive ablation sales were $8.5 million, a decline of approximately 31% over the first quarter of 2024. As Mike mentioned earlier, our MIS ablation sales continue to experience pressure as more patients are treated with PFA catheters, resulting in fewer referrals for hybrid AF therapy.

Andrew: Growth in open ablation was once again led by our encompass plants in both new and existing accounts.

Andrew: U S sales of appendage management products were $42 1 million up 17, 3% over the first quarter of 2024.

Andrew: We saw strong demand for our new <unk> Flex city device in the first quarter driving our U S. Open appendage management products to an overall growth rate of 23, 5%.

Andrew: Minimally invasive ablation sales were $8 5 million a decline of approximately 31% over the first quarter of 2024.

Andrew: As Mike mentioned earlier, our mis ablation sales continue to experience pressure as more patients are treated with PSA catheters, resulting in fewer referrals for hybrid <unk> therapy.

Angela Wirick: Finally, U.S. pain management sales were $17.3 million, up 35.6% over the first quarter of 2024, and propelled by outsized contribution from our Cryosphere Max Probe, which drove roughly one-third of the first quarter revenue. The Cryosphere Max Probe launched in the fourth quarter of 2024, and we are extremely pleased with the pace of adoption of this device early in the year. International revenue total $22.5 million up 20.8% on a reported basis and up 23.9% on a constant currency basis as compared to the first quarter of 2024. European sales accounted for $14.2 million of 25.1% and Asia Pacific and other international markets accounted for $8.3 million in international sales of 14%.

Finally U S pain management sales were $17 3 million up 35, 6% over the first quarter of 2024 and propelled by outsized contribution from our cryo sphere, Max crowd, which drove roughly one third of the first quarter revenue.

Andrew: <unk> launched in the fourth quarter of 2024, and we are extremely pleased with the pace of adoption of this device early in the year.

Andrew: Okay.

Andrew: International revenue totaled $22 5 million up 28% on a reported basis and up 23, 9% on a constant currency basis as compared to the first quarter of 2024.

Andrew: European sales accounted for $14 2 million up 25, 1% and Asia Pacific and other international markets accounted for $8 3 million and international sales up 14%.

Angela Wirick: Overall, our international business performance remains very strong as we continue driving therapy adoption across all key franchises and geographies. Gross margin for the first quarter of 2025 was 74.9% of 27 basis points from the first quarter of 2024. The increase was driven primarily by product mix along with operational efficiency.

Andrew: Overall, our international business performance remains very strong as we continue driving therapy adoption across all key franchises and geographies.

Andrew: Gross margin for the first quarter of 2025 was 74, 9% up 27 basis points from the first quarter of 2024, the increase was driven primarily by product mix along with operational efficiencies.

Angela Wirick: Moving on to operating expenses for the quarter total operating expenses increased $6.4 million or 6.9% from $92.2 million in the first quarter of 2024 to $98.6 million in the first quarter of 2025.

Andrew: Moving on to operating expenses for the quarter total operating expenses increased $6 4 million or six 9% from $92 2 million in the first quarter of 2024 to $98 6 million in the first quarter of 2025.

Angela Wirick: Continued robust enrollment in our LEAPS clinical trial along with increased headcount focused on product development and clinical trial initiatives resulted in a 14% increase in research and development expense from the first quarter 2024. Within SG&A, we continue to drive leverage with a modest increase of 5% from the first quarter of 2024.

Andrew: Continued robust enrollment in our lead clinical trial, along with increased head count focused on product development and clinical trial initiatives resulted in a 14% increase in research and development expense from the first quarter 2024.

Andrew: Within SG&A, we continue to drive leverage with a modest increase of 5% from the first quarter of 2024.

Angela Wirick: Further down the P&L first quarter adjusted EBITDA was $8.8 million compared to $2.8 million for the first quarter of 2024, representing more than a 200% increase. Overall, trends this quarter reflect our investment strategy of prioritizing the cultivation of future growth drivers while expanding operating margins and profitability. Our loss per share was $0.14 in the first quarter 2025 compared to a loss per share of $0.28 in the first quarter 2024, while the adjusted loss per share each period was $0.14 and $0.25, respectively.

Andrew: Further down the P&L first quarter, adjusted EBITDA was $8 8 million compared to $2 8 million for the first quarter of 2024.

Andrew: Representing more than a 200% increase.

Andrew: Overall trends this quarter reflect our investment strategy of prioritizing the cultivation of future growth drivers, while expanding operating margins and profitability.

Andrew: Our loss per share was <unk> 14 in the first quarter 2025 compared to a loss per share of <unk> 28 in the first quarter 2024, while the adjusted loss per share each period was 14 and 25, respectively.

Angela Wirick: From a balance sheet perspective, we ended the first quarter with approximately $100 million in cash and investment. Our cash burn for the quarter declined $8 million from the first quarter of 2024 and reflects our normal pattern of cash usage driven by share vesting, variable compensation and operational needs. We expect to generate positive cash flow for the remainder of 2025, resulting in a modest gain for the year in total. Overall, we remain in a very solid capital position to fund the current and future operating needs of the business.

Andrew: From a balance sheet perspective, we ended the first quarter with approximately $100 million in cash and investments.

Andrew: Our cash burn for the quarter declined $8 million from the first quarter of 2024 and reflects our normal pattern of cash usage, driven by share vesting variable compensation and operational needs.

Andrew: We expect to generate positive cash flow for the remainder of 2025, resulting in a modest gain for the year in total.

Andrew: Overall, we remain in a very solid capital position to fund the current and future operating needs of the business.

Angela Wirick: And lastly, we'll close with our outlook for 2025. We are reiterating our expectations for full year revenue of $517 to $527 million, reflecting growth of 11 to 13% over the full year 2024 results. Consistent with our first quarter results, we anticipate performance throughout the rest of the year will be driven by our pain management, appendage management, and open ablation franchises. For the second quarter, we expect normal seasonality implying mid-single-digit sequential growth. Within this outlook for the second quarter, we do anticipate minimal sequential improvement in U.S. MIS ablation and MIS appendage management revenue from the first quarter of 2025.

Andrew: And lastly, we will close with our outlook for 2025, we are reiterating our expectations for full year revenue of $517 million to $527 million, reflecting growth of 11% to 13% over the full year 2024 results.

Andrew: Consistent with our first quarter results, we anticipate performance throughout the rest of the year will be driven by our pain management appendage management and open ablation franchises.

For the second quarter, we expect normal seasonality, implying mid single digit sequential growth within this outlook for the second quarter, we do anticipate minimal sequential improvement in U S. Mis ablation and MS Appendage management revenue from the first quarter of 2025.

Angela Wirick: From a gross margin perspective, we continue to expect 2025 gross margin to be consistent with 2024 with the potential for varying impacts from cost savings initiatives, products, and geographic mix. With our strong first quarter performance in mind, we are raising our expectations for full year 2025 adjusted EBITDA to $44 to $46 million, translating to an adjusted loss per share of approximately 50 cents to 55 cents. Based on normal top line cadence and timing of R&D spend, we would expect improvements to adjusted EBITDA to be spread across the remaining quarters with a slightly greater improvement in the third and fourth quarter of 2025 against the comparable quarter in 2024.

Andrew: From a gross margin perspective, we continue to expect 2025 gross margin to be consistent with 2024 with the potential for varying impacts from cost savings initiatives product and geographic mix.

Andrew: With our strong first quarter performance in mind, we are raising our expectations for full year 2025, adjusted EBITDA to $44 million to $46 million translating to an adjusted loss per share of approximately 50 to 55.

Andrew: Based on normal top line cadence and timing of R&D spend we would expect improvements to adjusted EBITDA to be spread across the remaining quarters with a slightly greater improvement in the third and fourth quarter of 2025.

Andrew: The comparable quarter in 2024.

Angela Wirick: And finally, we understand that tariffs and trade restrictions are top of mind for many investors. Our guidance for 2025 considers the potential modest impacts based on current information. However, the situation remains fluid. We are proud to produce every AtriCure device in the United States and source the majority of our components from suppliers in the United States.

Andrew: And finally, we understand that tariffs and trade restrictions at top of mind for many investors.

Andrew: Our guidance for 2025 considers the potential modest impacts based on current information. However, the situation remains fluid.

Andrew: We are proud to produce every eight secure device in the United States and source the majority of our components from suppliers in the United States.

Angela Wirick: In closing, our first quarter results reflect the collective strength of our franchises, distinct value of product and therapy innovation at AtriCure, and strong discipline of our team to execute our plans.

Andrew: In closing our first quarter results reflect the collective strength of our franchises distinct value of product in therapy innovation at <unk> and strong discipline of our team to execute our plans and excited for the year ahead, which will be marked by continued financial and operational progress throughout our business with that I'll turn the.

Angela Wirick: I'm excited for the year ahead, which will be marked by continued financial and operational progress throughout our business.

Mike Carroll: With that, I'll turn the call back to Mike. Thank you, Angie. The completion of another well-executed quarter reflects our team's persistence and unrivaled devotion to our patients, our people, and our partnership. We have a best-in-class product and clinical pipeline. That, coupled with our existing platforms, will increase our ability to impact patients around the world and propel our business to achieve the vision we outlined.

Mike Carrel: Call back to Mike.

Speaker Change: Thank you Angie the completion of another well executed quarter reflects our team's persistence and unrivaled devotion to our patients our people and our partners.

Speaker Change: We have a best in class product and clinical pipeline that coupled with our existing platforms will increase our ability to impact patients around the world and propel our business to achieve the vision we outlined the.

Mike Carroll: The future of AtriCure is bright, and I look forward to providing more updates as the year progresses.

Speaker Change: The future issues bright and.

Operator: And with that, I'll turn it over to questions. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: And I look forward to providing more updates as the year progresses and with that I'll turn it over to questions.

Speaker Change: To ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: In the interest of time, we ask that you please limit yourself to one question and one follow-up.

Speaker Change: In the interest of time, we ask that you. Please limit yourself to one question and one follow up please standby, while we compile the Q&A roster.

Operator: Stand by while we compile the Our first question comes from William Plovanic with Canaccord Genuity. Great, thanks. Good evening. And thanks for taking my questions. Just, I know you did address this, but I just wanted to clarify on the tariff. You know, it has been a big topic on a lot of the other companies' calls this earnings season. And I think you mentioned 100% U.S. manufacturing, some sourcing, no U.S. like if we stick where we are this does not have any impact or a small impact and can you change the OUS sources elsewhere in the U.S.

Our first question comes from.

William: William <unk> with Canaccord Genuity your line is open.

Speaker Change: Great. Thanks, Good evening and thanks for taking my questions.

Speaker Change: I know you did address this but I just wanted to clarify on the tariff.

Speaker Change: It has been a big topic on a lot of the other companies' calls this earnings season.

Speaker Change: I think you mentioned, 100% U S manufacturing some sourcing O U S.

Speaker Change: Yes.

Speaker Change: If we stick where we are this.

Speaker Change: Does not have any impact or small impact and can you change the <unk>.

William Plovanic: to mitigate all of it if you had to in the future and then I just have a follow-up. Yeah, we understand the question here. As we said, in the prepared remarks, we expect a very modest impact to gross margin. The majority of our suppliers are within the United States. When you think further into the supply chain, and a couple that are outside the US, we do expect a pretty modest impact. You're talking in the kind of tens of basis points to overall full year gross margin, you know, the effects felt in the later part of the year.

Speaker Change: Sources elsewhere in the U S to mitigate all of it if you had to in the future and then I just have a follow up thanks.

Speaker Change: Yes, we understand the question here as we said in our prepared remarks, we expect a very modest impact.

Speaker Change: Kept gross margin the majority of our suppliers are within the United States. When you think further into the supply chain and a couple that are outside the U S. We do expect a pretty modest.

Speaker Change: Impact you're talking in the tens of basis points to overall full year gross margin.

William Plovanic: From a top line perspective, fairly well insulated majority of our revenue is within the US. I think we're all keeping eyes on the situation in China, but that's a very small component of our overall business. And again, just would reiterate, it's contemplated within the guide that we gave, based on kind of what we know today.

Speaker Change: The effects felt in the later part of the year from a topline perspective fairly well insulated majority of our revenue is within the U S. I think we're all keeping eyes on the situation in China, but thats, a very small component of our overall business and again just would reiterate it's contemplated within the guide that we gave based on kind of what we know today.

William Plovanic: Okay, that's great. And then just on appended management, that seemed to accelerate. You know, is that just because physicians want to make sure they're included in the trial? Or are you seeing it? You talked about just starting more doctors using it. Just trying to get a handle on that because that's that's a nice acceleration. And we've seen the LA market in general kind of accelerate. Thanks.

Speaker Change: Okay. That's great and then just on independent management team to accelerate.

Speaker Change: Is that just because physicians want to make sure. They are included in the trial or are you seeing I think you've talked about just garnering more doctors using it.

Speaker Change: Trying to get a handle on that because that's a nice acceleration and we've seen the la market in general kind of accelerate things.

Mike Carroll: Yeah, that's purely based on the fact that we launched our Flex Mini that opened the new kind of profile that's about 60% smaller than anything else on the market right now. And the feedback we're getting is fantastic. It's great visualization with it when they're placing it. And so we're having massive adoption of that going on. We're probably about growing about twice as fast as we had expected from the launch. We're getting a lot of net new accounts coming on board and then net new surgeons treating more as well. Thank you.

Speaker Change: Yes, that's purely based on the fact that we launched our flex many that opened the new kind of a profile that's about 60% smaller than anything else in the market right now and the feedback we're getting is fantastic, it's great visualization with it when they're placing it.

Speaker Change: And so we are having massive adoption of that going on probably about.

Speaker Change: Growing about twice as fast as we had expected from the launch.

Speaker Change: Getting a lot of net new accounts coming onboard and then net new surgeons treating more as well.

Matthew O'brien: Our next question comes from Matthew O'Brien with Piper Sandler, your Thanks for taking the question. Just maybe on the guide real quick. Why not take up the low end of the range just a little bit?

Speaker Change: Thank you. Our next question comes from Matthew O'brien with Piper Sandler Your line is open.

Matthew O'brien: Afternoon. Thanks for taking my question just maybe on the guide real quick why not take up the low end of the range just a little bit I know, it's early in the year, but.

Angela Wirick: I know it's early in the year, but on the top line, just given the strength you're seeing in a couple of key areas, and then, Angie, can you just be a little bit more specific on where the source of the EBITDA upside comes? It's always great to see there. And then I do Yeah, on the question relative to the guide, it's early in the year, Matt, I think it's as simple as that. Relative to the upside on the bottom line in this quarter, SG&A, the leverage that we're seeing within SG&A, feel confident that we'll continue to execute and be able to deliver and beat the numbers that we put out there for our guidance for the rest of the year.

Matthew O'brien: On the top line just given the strength you're seeing in couple of key areas and then.

Matthew O'brien: Andrew can you just be a little bit more specific on where the source of the EBITDA upside comes it's always great to see there and then I do have a follow up.

Andrew: Yes on the the question relative to the guide it's early in the year, Matt I think it's as simple as that.

Matthew O'brien: Relative to the upside on the bottom line in this quarter.

Matthew O'brien: SG&A the leverage that we're seeing within SG&A feel confident that we'll continue to execute and be able to deliver and beat the numbers that we put out there for our guidance for the rest of the year I think our team deserves a lot of kudos here, I think really controlling and evaluating discretionary spending.

Angela Wirick: I think our team deserves a lot of kudos here, I think really controlling and evaluating discretionary spend and you also seeing the benefit of AtriCure operating at a bigger size and scale at this point. Understood. Thanks.

Matthew O'brien: You're also seeing the benefit of <unk> operating at a bigger size and scale at this point.

Mike Carroll: And then on the pain management side, again, very good quarter here, Mike, you've been talking about talking a little bit about just, you know, further penetration into existing accounts. I don't know if that's we're starting to see more on the orthopedic side or other areas. Can you just maybe tease out a little bit more in terms of where some of that, that improvement is coming from, from a volume perspective, and then just just anything on price. I don't know if price is a big, you know, updraft for you guys. And I don't think so. But just anything there.

Matthew O'brien: Okay.

Matthew O'brien: Understood. Thanks, and then on the <unk>.

Matthew O'brien: Pain management side again, very good quarter here, Mike you've been talking about.

Matthew O'brien: You were talking a little bit about just.

Matthew O'brien: Further penetration into existing accounts I don't know if thats were starting to see more on the PD side or other areas can you just maybe tease out a little bit more in terms of where some of that improvement.

Matthew O'brien: The improvement is coming from from a volume perspective, and then just just anything on price I don't know if prices are big.

Matthew O'brien: Updraft for you guys or not I don't think so but just anything there. Thanks.

Mike Carroll: Yeah, price is not a big updraft, as you kind of alluded to. With the Crossterm Act and the reduction in time, what we're seeing is just much more adoption in pretty much all of our accounts. We're getting people that were hesitant to do it before. If they can cut the time in half, they're now starting to adopt the therapy and thoracotomies. They just think that it's the benefit to the time is that much more worth it for them at this point. And I'd say that's probably the biggest reason you're starting to see some of that growth.

Matthew O'brien: Yes prices out of big Updraft, as you kind of alluded to.

Matthew O'brien: With the craft or maximum reduction in time, what we're seeing is just much more adoption and pretty much all of our accounts. We're getting people that were hesitant to do it before if they can cut the time and have they are now starting to adopt the therapy and thoracotomy. They just think that it's the the benefit to the time is that much more worth it for them at this point.

Mike Carroll: That means new surgeons.

I'd say thats, probably the biggest reason you're starting to see some of that growth that means new surgeons. It also means surgeons that may have pumped it on a case or two here or there are now not punting on any of their cases and doing it in most of their cases.

Mike Carroll: It also means surgeons that may have punted on a case or two here or there are now not punting on any of their cases and doing it in most of their cases. Thank you.

John McAulay: Our next question comes from John McAulay with CFL. Your line is Hi, Mike. Hi, Angela.

Matthew O'brien: Thank you.

Speaker Change: Our next question comes from John Mccauley with Stifel. Your line is open.

John McAulay: I just wanted to take a deeper dive on Converge and MIS this quarter specifically, seems to have declined again on a sequential basis, but you're talking about, I think I heard you say a slight improvement in the second quarter. Can you just talk a little bit about your confidence that bottomed out here and and we can begin to start to see sequential improvement again. I mean, what we're seeing in accounts in the United States, we saw it in Europe a little bit where you definitely saw kind of a bottoming out relative. We do think there's going to be pressure for the rest of the year, but we have many accounts that are now starting to see failures.

Speaker Change: Hi, Mike Hi, Angie.

Speaker Change: Just wanted to take a deeper dive on converge.

Speaker Change: MS. This quarter, specifically seems a decline again on a sequential basis, but youre talking about I think I heard you say a slight improvement in the second quarter can you just talk a little bit about.

Speaker Change: Your confidence that.

Speaker Change: It's bottomed out here.

Speaker Change: And we can begin to start to see sequential improvement again.

Speaker Change: Sure I mean, what we're seeing in accounts in the United States, we saw it in Europe, a little bit where you definitely saw kind of a bottoming out relative we do think there is any pressure for the rest of the year, but we have many accounts that are now starting to see failures PSA has been out there now for about a year and.

Mike Carroll: PFA has been out there now for about a year. And so you're starting to see many of those failures at nine months and 12 months start to come through. And they're asking themselves, do I do another ablation at this point? Or if I've already done a full ablation with the back wall and the PBI, what more is there for me to do? Maybe I can get the benefit of doing Converge with the AtriClip and kind of getting a much more robust, long-term, more durable solution. And so you're starting to see some of that come to fruition here at many accounts.

Speaker Change: And so you're starting to see many of those failures at nine months and 12 months start to come through and they are asking themselves do I do another ablation at this point or if I've already done a full ablation with the back wall of the PVA. What more is there for me to do maybe I can get the benefit of doing converge with the age of equipment coming getting a much more robust long term more durable solution and so you're starting to see some.

Mike Carroll: Many accounts that, if you look back three years ago, were really robust accounts for us, died down quite a bit during kind of the PFA kind of initial onslaught, and you're now starting to see them refer more patients. That's really why we've got confidence as we kind of look out for the rest of the year. That being said, we do see pressure. I mean, PFA is out there. They're doing a lot of it. It's taking up a lot of time and a lot of mental mind share for EPs right now. But as you saw with Europe, you saw that there was a big bounce back.

Speaker Change: Of that come to fruition here at many accounts. Many accounts that if you look back three years ago were really robust account force died down quite a bit during kind of the PFA kind of initial onslaught and youre now starting to see them refer more patients. That's really why we've got confidence as to kind of look out for the rest of the year that being said, we do see pressure on the PFA.

Speaker Change: Out there they are doing a lot of it it's taking up a lot of time and a lot of mental mindshare for EPS right now, but as you saw with Europe. You saw that there was a big bounce back we anticipate that is going to happen maybe not this year, but we do think it's going to happen in the future.

John McAulay: We anticipate that is going to happen. Maybe not this year, but we do think it's going to happen in the future. That's helpful.

John McAulay: And just one more on AtriClip here, Strong Quarter. I heard you say that I think it was 15% of US sales are Flex Mini and, and you're still sort of working up that adoption curve.

Speaker Change: That's helpful.

Speaker Change: Just one more.

Speaker Change: On <unk> very strong quarter I heard you say that I think it was 15% of U S sales or flex many in and you're still sort of working up the adoption curve could you just sort of frame out what the longer term goal might be there and what would be a reasonable expectation of contribution from flexibility in the future.

Mike Carroll: Could you just sort of frame out what the longer term goal might be there and what would be a regional expectation of contribution from Flex Mini? I think with any new product launch, our long term goal is for that to take dominant market share. I mean, we obviously leave, have left our existing AtriClip products on the market for a couple different reasons. I think difference in approach with an open ended clip with our Flex-V versus the Flex-Mini as well as, you know, a competitively priced option with the original AtriClip device that would expect very similar to what you saw with the launch of the Flex-V, you know, six plus years ago.

Speaker Change: I think with any new product launch our long term goal is for that to take dominant market share I mean, we obviously leave.

Speaker Change: <unk> left our existing HSN products on the market for a couple of different reasons I think difference in approach with an open ended click with our flex fee versus the flex many as well as <unk>.

Competitively priced option with the original HR clip device that would expect.

Speaker Change: Similar to what you saw with the launch of the Flex V. Six plus years ago over a number of years that became the dominant product in the market and I think that would be one of our goals longer term with the flex many.

Mike Carroll: Over a number of years, that became the dominant product in the market. And I think that would be one of our goals longer term with the Flex-Mini.

Lily Lozada: Thank you. Our next question comes from Lily Lozada with J.P. Morgan. Your line is Hi, thanks for taking the question. Maybe just to follow up on the question on MIS. I think that international business declined for the first time in a long time. And it sounds like things were starting to turn around there with failures coming back. So are you starting to see greater pressure internationally as well from PFA? And how should we be thinking about the international MIS business trending over the rest of the year?

Speaker Change: Yes.

Art: Thank you art.

Art: Our next question comes from Lilly Lozada with JP Morgan Your line is open.

Lilly Lozada: Hi, Thanks for taking the question.

Lilly Lozada: Maybe just a follow up on the question on MMS I think the international business the.

Lilly Lozada: Declines for the first time in a long time and it sounds like things were starting to turnaround there with.

Lilly Lozada: Failure is coming back so.

Lilly Lozada: So are you starting to see greater pressure internationally as well from PSA and how should we be thinking about the international business trending over the rest of the year yes.

Mike Carroll: Yeah, that really has two different components to it. One is that there was just one country, the Netherlands, which was kind of the old approach, the TT approach, and then also some sales. There's a little bit in Japan, where they have historically used even in an open case, they do some more minimally invasive products. And they switched to using more of those open products. You saw a little bit of that in the overall MIS number, but does not reflect the growth of convergent in Europe in particular, which is really where we're seeing a lot of that growth.

It really is two different components to it.

Lilly Lozada: One is that there was just one country, the Netherlands, which was kind of the old approach. The TT approach and then also some sales.

Lilly Lozada: There's a little bit in Japan, where they have historically used even in an open case that use them are minimally invasive products.

Lilly Lozada: And they switch to using more of those open products you saw a little bit of that in the overall misnomer, but does not reflect that.

Lilly Lozada: The growth of convergent in Europe in particular, which is really where we're seeing a lot of that growth.

Angela Wirick: Yeah, the the convergent procedure for the international business in totality Lilly was up 27%. This quarter, it was about 50% growth in Europe and slightly below that. Obviously, once you move outside of Europe offset by pressure being down 20 plus percent in our legacy, minimally invasive products like Mike described. Got it, that's helpful.

Speaker Change: Yes, the the convergent procedure for the international business in totality Lilly was up 27%. This quarter. It was about 50% growth in Europe and slightly below that obviously once you move outside of Europe, offset by pressure being down 20% and our legacy.

Mike Carrel: Minimally invasive products like Mike described.

Mike Carroll: Then maybe staying on the topic of the international business, it looks like the open ablation business accelerated and I know you're launching Encompass there. That's obviously been really impactful in the US. So should we expect the same sort of momentum in the international business and open as this rolls out? And how are you thinking about the impact there?

Speaker Change: Got it that's helpful.

Speaker Change: And then maybe staying on the topic of the international business It looks like.

Speaker Change: The open ablation business accelerated and I know youre launching in content there.

Speaker Change: <unk>, obviously been really impactful in the U S.

Speaker Change: So should we expect the same sort of momentum in the international business and open at this rolled out and how are you thinking about the impact there. Thanks so much.

Mike Carroll: Thanks so much. Yeah, we've said before, we are very hopeful that the Encompass Clamp, the success that we've seen in the US can be replicated outside the US. We think that this is an area that can drive growth for a number of quarters and if not years to come there. It's a early inning still in Europe as the team works through getting the Encompass Clamp on shelf at each one of our hospital customers. The feedback is exceptional. Like we've heard in the United States, they're excited to be able to incorporate this into their treatment and again expect this to be a driver of growth on a long term basis.

Speaker Change: Yeah. We've said before we are very helpful. At the encompass clamp the success that we've seen in the U S can be replicated outside the U S. We think that this is ed.

Speaker Change: Area that can drive growth for a number of quarters, if not years to come there I'd say early innings still in Europe as the team works through getting the encompass clamp on shelf at each one of our hospital customers. The feedback is exceptional like we've heard in the United States, they're excited to be able to incorporate this into their.

Speaker Change: Our treatment and again expect us to be a driver of growth on a long term basis.

Marie Thibault: Thank you. Our next question comes from Marie Thibault. TIG, your line is now.

Speaker Change: Thank you. Our next question comes from Murray <unk> with BTG. Your line is now open.

Murray <unk>: Hi, maybe I could ask a high level question on some of the newer products you've seen tremendous uptake reflects many of the new cryo and then of course encompass clamp and the short version continued to perform well as we think about those new products. How many quarters would you say you still have sort of tailwind from these new launches coming should we think about it 234 quarters.

Speaker Change: Is this multiyear.

Mike Carroll: I think it's a great question, Marie, and one I love answering because I think we've got the latter part of your question, which is we've got multiple years with a tailwind on this. If you look at, and you referred to it before, where we saw a lot of acceleration with the Flex-V product into the market, and we saw that continued acceleration, we've got more and more adoption. We think the same thing is going to happen with Flex Mini. It's much more approachable for so many different surgeons to be able to utilize it. Combine that now with getting Pro Mini out there, we think that there's just a lot of demand and that's going to be for many years to come.

Murray <unk>: And to understand sort of the tailwind from from some of these launches.

Speaker Change: I think it's a great question Maria and I love answering because I think we've got the latter part of your question, which is we've got multiple years with a tailwind on this.

Speaker Change: Look at Andrew referred to before where we saw a lot of acceleration with the flex V product into the market.

Speaker Change: And we saw that continued acceleration or is that more and more adoption. We think the same thing can happen with flex. Many it's much more approachable for so many different surgeons to be able to utilize it combine that now with getting permitting out there. We think that it's there's just a lot of demand and that's going to be for many years to come encompass and we're still while we've made tremendous improvements over the last three.

Mike Carroll: Encompass, I mean, we're still, while we've made tremendous improvements over the last three years in terms of adoption, so if you really think back, we were at about 25%, 22% to 25% before we rolled out Encompass, we're now probably 35%, 40% or so that have kind of adopted it in a fib surgery. And when you think about that, we've obviously got 60% still to go. We've made a lot of movement in the last three years, more movement than we'd ever made before relative to that, and then moving kind of the cardiac surgeon to kind of make that change.

Speaker Change: <unk> in terms of adoption. So if you really think back.

Speaker Change: We were at about 25%, 22% to 5% before we rollout encompass we're now probably 35%, 40% or so that have kind of.

Speaker Change: Adopted in Afib surgery, and when you think about that we've obviously got 60% still to go we have a lot of movement in the last three years more movement than we'd ever made before relative to that.

Mike Carroll: We're seeing that, and we're seeing that begin to really kind of get a really nice traction. On top of that, Encompass is a core platform for the boxed NOAA FPs, which is a prophylactic treatment, because that really is utilizing kind of the Encompass clamp plus the Atrial Clip at that point in time, and we anticipate that that's obviously going to have a lot of tailwinds for many years to come. So you combine all of those on the ablation and cardiac side, I'd say you've got many years to come.

Speaker Change: And then moving kind of the cardiac surgeon to kind of make that changed we're seeing that and we're seeing that begin to really kind of get a really nice traction on top of that encompasses a core platform for the box, new Isps, which as a prophylactic treatment because that really is utilizing kind of the encompass clamp.

Speaker Change: The <unk> at that point in time, and we anticipate that Thats, obviously going to have a lot of tailwind for many years to come. So you combine all of those on the ablation cardiac side I'd say, you've got many years to come Max is just rolling out I think that youre starting to see that impact on the door economies right now maybe someday I think we're getting some traction within sternotomy.

Mike Carroll: Max is just rolling out. I think that you're starting to see that impact on the thoracotomies right now. Maybe someday, I think we're getting some traction within sternotomy. I don't want to get too far ahead of ourselves on this call today, but I definitely, we're getting more attention to it because we've reduced the time so much that that might extend it for many years to come as well. Okay, that's encouraging.

Speaker Change: I don't want to get too far ahead of ourselves on this call today, but I definitely we're getting more attention to it because we reduced the time so much that that might extend it for many years to come as well.

Mike Carroll: Let me ask my follow-up here then on Cryo-XT.

Matthew O'brien: Okay. That's encouraging let me ask my follow up here, then on Cryo X P. Congrats on that FDA clearance, how should we think about your sales force Buildout will you need a separate sales force to target some of those surgeons are those.

Mike Carroll: Congrats on that FDA clearance. How should we think about your sales force build-out? Will you need a separate sales force to target some of those surgeons or are those, you know, folks you can be talking to the operating room directors and things to get the XT in the hands of those surgeons? Great question. At this point, we don't plan on adding an additional sales force. We probably are going to need additional clinical support out in the field as we kind of get into those accounts. We have a lot of coverage, as you know, we're in pretty much 100% of the accounts in the United States.

Speaker Change: Folks you can be talking to the operating room directors and things to get that.

Matthew O'brien: The XP and the handle the surgeons.

Speaker Change: Yeah, Great question at this point, we don't plan on adding in additional sales force, we probably are going to need additional clinical support out in the field as we kind of get into those accounts. We have a lot of coverage as you know we're in pretty much 100% of the accounting United States. So we already have coverage clinical people, but we are we are going to have to add clinical people as we roll that out but not necessarily.

Mike Carroll: So we already have coverage clinical people, but we are, we're going to have to add clinical people as we roll that out, but not necessarily a brand new sales force for the new call point, because we've already got relationships with a lot of those people already, through the work that we're doing in the hospital with the OR staff, as you kind of mentioned as well.

Speaker Change: A brand new sales force for the new call point, because we've already got relationships with allows us people already through the work that we're doing in the hospital with the or staff as you kind of mentioned as well.

Operator: For more information visit www.cdc.gov Thank you.

Danny Stauder: Our next question comes from Danny Stauder with Citizens JMP. Your line is Yeah, great. Thanks.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from Danny starter with citizens JMP. Your line is open.

Danny Stauder: Just had a quick one on pain management. I think you noted that accounts grew 12%. think you'd put that number last quarter at about 800 customers utilizing cryo nerve block.

Danny: Great. Thanks, just had a quick one on pain management.

Speaker Change: You had noted that accounts grew 12% and I think you would put that number last quarter at about 800 customers utilizing cryo nerve block.

Mike Carroll: Do you have a relative target number for accounts in 2025?

Mike Carroll: And can you give us any more color on us versus international any expectations of us? Thank Yeah, Danny, the 800 accounts was for our open business. In the fourth quarter last year, we were just under 600 CryoNerveBlock accounts, about 800 for the full year. We saw another quarter, I think we're at 19 straight quarters now of adding accounts who have are using CryoNerveBlock products, around 600 or so. The goal here would be, you know, you're talking about 1,200 or 1,300 accounts in total in the universe in the United States. And then about half of that we think are good targets when you move outside of the US.

Speaker Change: Do you have a relative target number for accounts in 2025 and could you give us any more color on U S versus international in your expectations.

Speaker Change: Thank you.

Speaker Change: Yeah, Dan maybe 800 accounts was for our open business in the fourth quarter last year. We were just under 600 cryo nerve block accounts about 800 for the full year. We saw another quarter. I think we are at 19 straight quarters now of adding accounts, who are using cryo nerve block products.

Speaker Change: 600, or so the goal here would be you know youre talking about the 12.

Speaker Change: <unk> under the chemicals in total in the in the universe in the United States and then about half of that we think are good targets. When you move outside of the U S.

Mike Carroll: The launch from both perspectives, both the US and the international launch is progressing incredibly well. You know, the team is going where they've got good momentum. The tactic tends to be find a physician who uses it has great outcomes and have them help us kind of spread the word within their account. They can see it within the recovery of patients when they compare to their physician partners. And we're going to continue to drive deeper adoption within our existing accounts, as well as broaden to the base of customers who haven't yet adopted.

Speaker Change: The launch from both perspectives, both the U S and the international launch is progressing incredibly well.

Speaker Change: The team is going where they've got good momentum the tactic tends to be find a physician who uses it has great outcomes and have them.

Speaker Change: Help us kind of spread the word within their account they can see it within the recovery of patients when they compare to their physician partners and we're going to continue to drive deeper adoption within our existing accounts as well as broadened the base of customers who haven't yet adopted.

Mike Carroll: Great, thank you.

Mike Carroll: And then just following up on the Cryo XT product, how should we think about the launch of this product compared to your two more recent? Is it safe to assume the launch, the ramp speed will be a little bit slower just given this new area or just, you know, how you think about a little bit more color would be great. It's a really good question. I'd say for this year, we don't have, it's all upside. We don't have any dollars really in the plan relative to XT for this year. We anticipate doing a kind of, I'll call it a beginning of a slow launch into this area because it is such a new therapy.

Speaker Change: Great. Thank you and then just following up on the Cryo ex T product how should we think about the launch of this product compared to year two more recent launches.

Speaker Change: Is it safe to assume the.

Speaker Change: Launch.

<unk> will be a little bit slower just given this new area or just how you think about a little bit more color would be great.

Speaker Change: Yes, it's a really good question I would say for this year. We don't have it's all upside we don't have any dollars really in the plan relative to equity for this year, we anticipate doing a kind of a I'll call a beginning of a slow launch into this area because it is such a new therapy.

Mike Carroll: I think it's going to be not, not as much like the, these two launches, but really like the original cryosphere launch where you saw at first we were really methodical over that first six to 12 months of just making sure every case went perfectly well. Learning from those cases, a lot like Encompass as well, where in that first six months, we were doing a lot of learning about how to best optimize the procedure, et cetera, how to work in the operating room with the staff. And then from that we anticipate some acceleration coming off of that.

Speaker Change: It's going to be not not as much like that these two launches, but really like the original cryo sphere launch where you saw at first were really methodical over that first six to 12 months of just making sure every case went perfectly well learning from those cases, a lot like encompass as well we're in that first six months, we are doing a lot of learning about how to best optimize the procedure et.

Speaker Change: Cetera, how to work in the operating room with the staff and then from that we anticipate some acceleration coming off of that so you should start to see some major contribution sometime middle to the end of next year with it even though we are going to get some accounts this year and if it goes a little bit faster there could be some upside this year and the beginning part of next year.

Mike Carroll: So you should start to see some major contributions sometime middle to the end of next year with it, even though we are going to get some accounts this year. And if it goes a little bit faster, there could be some upside this year and the beginning part of next year.

Mike Matson: Thank you. Our next question comes Mike Matson with Needham & Company, your line is open. Yeah, thanks. Thanks for taking my questions. I guess just want to ask one on the US Minimally Invasive Business. So given the kind of sequential decline in the headwinds there, you you know, are you doing anything different in terms of your sales force or how you're going about kind of marketing the product? I mean, are you, you know, are you maybe pulling back a little and just kind of waiting things out? Are you trying to maybe push harder there? Or just kind of maintain the status quo?

Speaker Change: Thank you. Our next question comes from Mike Matson with Needham <unk> Company. Your line is open.

Mike Matson: Yeah. Thanks, Thanks for taking my questions.

Speaker Change: I guess just last one on the U S minimally invasive business so.

Speaker Change: Given the kind of sequential decline in the headwinds there.

Speaker Change: Or are you doing anything different in terms of your sales force or how youre going about marketing the product.

Speaker Change: Are you maybe pulling back a little and just kind of waiting things out or are you trying to maybe push harder there or just kind of maintain the status quo.

Mike Carroll: It's a great question. I think the most important thing for us to do is to make sure we continue to be relevant and have great relationships within the EP community. We can't push them away from PFA. It's here. They're using it on as many cases as they possibly can. And so I think we're kind of in the process of making sure that we're relevant and we're learning with them. We're having conversations about what does that process and that recipe and formula look like, meaning are they going to do a PFA and then a second PFA before they go to converge?

Speaker Change: It's a great question I think the most important thing for us to do is to make sure. We continue to be relevant and have great relationships within the EP community. We kept push them away from PFA is here they are using it on as many cases as they possibly can and so I think we're kind of in the process of making sure that we're relevant and we're learning with them.

Speaker Change: We're having conversations about what does that process and that recipe and formula look like meaning are they going to do a PSA and then a second bofa before they go to converge or are they going to go one PFA and go directly to converged. They did everything in that procedure I think you've heard multiple of those at the analyst day with Dr. <unk> and Dr. Sue each had a little bit different rare.

Mike Carroll: Are they going to go one PFA and go directly to converge? Did they do everything in that procedure? I think you heard multiple of those at the analyst day with Dr. Mercati and Dr. Seuss. They each had a little bit different recipe, but effectively working with them to try to figure out what's that formula going to look like when they start to see those failures and make sure that we're relevant. Many of those people were touching and getting access to our Epi-Ease product, which really gives them access to the epicardial area for EP for different procedures.

Speaker Change: But effectively working with them to try to figure out what's that formula going to look like when they start to see those failures and make sure that we're relevant that.

Speaker Change: That means we've got to maintain our team, which is a very seasoned and excellent team that has great relation with EPS I was just that HRS. This past weekend of course TFA was the topic of conversation in many of your reports.

Speaker Change: But we had a it was the busiest HRS we've ever had we had a tech suite, where we had over 70 people visit.

Speaker Change: Many of those people are touching and getting access to our <unk> product, which really kind of gives them access to the <unk> area for EP for different procedures building those types of relationships and making sure. We're staying in front of the customers is the most important thing and we do anticipate as I mentioned that it's going to come back for us, but if we're not there then we're not going to be there to catch that.

Mike Matson: Building those types of relationships and making sure we're staying in front of the customers is the most important thing. We do anticipate, as I mentioned, that it's going to come back for us, but if we're not there, then we're not going to be there to catch that. We have to make sure that we're maintaining those relationships, staying in the field, and building relevant and value-added relationships with those customers. Yeah, thanks.

Speaker Change: So we have to make sure that we're maintaining those relationships staying in the field and building relevant and value added relationships with those customers.

Mike Matson: And just the FEEs products, I mean, I see it highlighted on our website, but I don't think you said much about that at the investor day. Maybe I missed it.

David: Yeah. Thanks, David.

Speaker Change: The Ftes products I mean, I see it.

Speaker Change: However, in our website, but I think you said much about that at the Investor day, and maybe I missed it but can.

Mike Carroll: But can you just tell us more about that product and kind of how it fits in what, you know, to what degree it could maybe help that, that part of the business? Yeah, it's a great question. It's not a big revenue driver for us. But what it is, is it's a product to get access, kind of the sub-syphoid area and the epicardium of the heart. So that's really kind of where it is to kind of get to the pericardium there. It's a really unique and novel device. Like you said, you can see it on our website, and you can get access to it.

Speaker Change: Can you just tell us more about that product and kind of how it helps us in what.

Speaker Change: To what degree could maybe help that that part of the business.

Speaker Change: Yes, it's a great question, it's not a big revenue driver for us, but what it is is it's a product to get access kind of subsidized board area and the epicardium.

Speaker Change: The heart, so thats really kind of where it is going to get through the pericardium there.

Speaker Change: A really unique and novel device.

Mike Carroll: We use it as a point to talk to EPs to be relevant with them. And they're starting to use it a little bit. And especially with some of the high profile KOLs on the market.

Speaker Change: Like you said you can see it on our website and you can get access to it we use it as a point to talk to EPS to be relevant with them and they are starting to use it a little bit and especially with some of the high profile kols on the market.

Operator: Great.

Operator: Thank you so much. Thank you.

Danielle Antalffy: Our next question comes from Danielle Antalffy with UBS. Your line is open. Hey, good afternoon, guys. Thanks so much for taking the question. Congrats on a on a good quarter, especially on EBITDA. Just two questions for me. Number one on the clip, you know, it looks like that business has now completely grown through competitive headwinds.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Danielle <unk> with UBS. Your line is open.

Danielle: Hey, good afternoon, guys. Thanks, so much for taking the question congrats on a on a good quarter, especially on EBITDA.

Speaker Change: Just two questions from me number one on the it looks like that business is now completely grown through competitive headwinds I guess, Mike I'd Love to hear you talk a little bit about how you what you've learned about the competitive mode around the April.

Mike Carroll: I guess, Mike, I'd love to hear you talk a little bit about how you what you've learned about the competitive moat around the AtriClips and whether, you know, a major competitor launching a product there. And I have one follow Yeah, I mean, I think when the competition first came into the market, the first thing I said was, competition helps the market, it creates awareness, it helps people understand that this is a very important thing to be doing for these patients. And I think all you're seeing right now is that it's the result of that consistency, and watching the market continue to grow on that front.

Danielle: A major.

Speaker Change: Competitor launching a product there and I have one follow up.

Speaker Change: Yes, I think when the competition first came into the market. The first thing I said was competition helps the market. It creates awareness. It helps people understand that this is a very important thing to be doing for these patients.

Speaker Change: I think all you're seeing right now is that it's the result of that consistency and watching the market continued to grow on that front number one number two it's also to have great products like even when there is no competition invest in innovation things like the flex many device we started investing in building their product well before we knew those competition.

Mike Carroll: Number one. Number two, it's also to have great products, like even when there's no competition, invest in innovation, things like the Flex Mini device, we started investing and building that product well before we knew there was competition coming to the market, we listened to customers to come out with something super innovative. And I think when you combine that with competition coming in, that's obviously been something that's been a tailwind for us in the market as well. So when you combine those two things, I think that's what you're seeing the market today.

Speaker Change: Coming into the market, we listened to customers to come out with something Super innovative and I think when you combine that with competition coming in that's obviously been something that's been a tailwind for us in the market as well. So when you combine those two things I think thats, what youre seeing in the market today longer term its lease when you actually get clinical evidence and data that demonstrates that.

Mike Carroll: Longer term, it's leaks. When you actually get clinical evidence and data that demonstrates that your product and your product alone can reduce stroke in all patients basically that are basically going into the operating room, that is a huge advantage that we will have over any competition coming into the market, whether they're there today or in the future. So I think the combination of those three things, competition is good. It makes us all better. It makes it that validates your market. Innovation within that is super important. And then getting clinical evidence to further differentiate and create, as you mentioned, the moat.

Speaker Change: Your product and your product alone can reduce stroke and <unk>.

Speaker Change: All patients basically that are basically going into the operating room that is a huge advantage that we will have over any competition coming into the market, whether theyre today or in the future. So I think the combination of those three things competition is good it makes us all better.

Speaker Change: Makes it that that validate your market innovation within that.

Speaker Change: Is super important and then getting clinical evidence to further differentiate and create as you mentioned the moat.

Danielle Antalffy: Gotcha. Okay, thank you.

Danielle Antalffy: And then my follow ups on the open business. I mean, Encompass in the US has been a tailwind here for for a few years now. And I guess I'm just curious about how long you think that runway is from from here.

Speaker Change: Got you Okay. Thank you and then my follow up on the open business and confidence in the U S has been.

Speaker Change: A tailwind here for a few years now and I guess I'm just curious about how long you think that runway is from from here I don't know if its back to talk about it from penetration into the different procedure areas perspective number of users, but anything you can say to that because.

Mike Carroll: I don't know if it's best to talk about it from penetration into the different procedure areas, perspective number of users, but anything you can say to that because Thanks so much. Another good question. It's interesting. We're not in the first inning, so I'm not going to say like Encompass is like at that first inning. That was probably a year or so ago. But we still have a long way to go. While we've made improvements in 25 to 40 percent or so penetration in the United States, we still have 60 percent to go just for AFib patients.

Speaker Change: It's the gift that keeps on giving Alan how much longer it's David.

Speaker Change: Thank you.

Speaker Change: Another good question.

Speaker Change: It's interesting we're not in the first inning, so I'm not going to say like encompasses like at that first thing that was probably a year or so ago, but we still have a long way to go while we've made improvements from 25% to 40% or so penetration United States. We still have 60% to go just for Afib patients and as we talked about the analyst day, we're not going to expand that market by two or threefold with a box new.

Mike Carroll: And as we talked about the analyst day, we're not going to expand that market by two or threefold with the Box-New-AF trial, of which the Encompass clamp is the kind of foundation of that procedure. So I think we've got a long way to go with the Encompass clamp, both in AFib patients today and then longer term in the non-AFib patients for postoperative AFib and kind of prophylactically treating them, as I mentioned in my comments.

Speaker Change: Hey, a trial of which the encompass clamp is the foundation of that procedure. So I think we've got a long way to go with the encompass clamp both in Afib patients today, and then longer term in the non afib patients for post operative Afib and kind of prophylactic, we're treating them as I mentioned in my comments. So I think the company is going to be the gift that keeps giving for many years.

Mike Carroll: So I think the Encompass is going to be the gift that keeps giving for many years to come. Thank you.

Suraj Kalia: Our next question comes from Suraj Kalia with Oppenheimer.

Speaker Change: To come.

Suraj Kalia: Your line is Hey, Mike, and can you hear me all right? We can. Perfect. Hey, Mike, your points on PFA. so-called turnaround and being a tailwind for you all on the open side, on the MIS side, well taken.

Speaker Change: Thank you. Our next question comes from Suraj Kalia with Oppenheimer. Your line is open.

Suraj Kalia: Hey, Mike and you can you hear me all right.

Speaker Change: We can we can.

Mike: Hey, Mike your points on PSC.

Mike: So call it turnaround and being a tailwind for you all on the open side.

Mike Carroll: And I know that was one of the salient points made by a panel of clinicians also at the investor day, Mike, when should we expect to see, you know, the slope of the MIS curve, the first derivative chain sign, i.e. things reversing back into into positive territory? Is it this year sometime later or is it next?

Syed: Syed well taken.

Speaker Change: And I know that was one of the salient points made by a panel of clinicians also at the Investor Day, Mike when should we expect to see.

Speaker Change: Global Mis curb the first derivative chain sign I E.

Speaker Change: Things are reversing back into into positive territory.

Speaker Change: Is it this.

Mike Carroll: Yeah, I'd love to tell you that I can be an absolute, the best forecaster in the world and tell you that it's going to be in a particular quarter or not. I think what we're anticipating is that we're going to still, even though we've got a lot of bright spots coming through, because there are definitely bright spots and customers coming back. There are still people just getting into PFA, etc. We anticipate this year to be a pressure year for us. And, you know, I think it's too early to tell for next year, but likely next year should be something where you'll see some more upside.

Speaker Change: This year I'm later or is.

Speaker Change: Is it next year.

Speaker Change: Yes, I'd love to tell you that I can be an absolute.

Speaker Change: The best forecast from the World and tell you that it's going to be in a particular quarter or not I think what we're anticipating is that we're going to still even though we've got a lot of bright spots coming through it because there are definitely bright spots and customers coming back.

Speaker Change: There are still people just getting into PFA et cetera, we anticipate this year to be a pressure year for us.

Speaker Change: And I think it's too early to tell for next year, but likely next year should be something where youll see some more upside.

Suraj Kalia: Fair enough.

Suraj Kalia: And Mike, as my follow up, obviously, again, on the Investor Day, you'll emphasize your investments, Intracurious Investments and in LEAPS and other trials. Mike, we have seen in some other areas, maybe a dumb analogy, but you know, like painful diabetic neuropathy and some other medtech categories, with companies that put in the resources to do RCDs, gotten an indication only to have other companies piggyback you know, and, and kind of dilute the the net impact.

Speaker Change: Fair enough.

Speaker Change: Mike as my follow up obviously again on the Investor Day Youll emphasized your investments.

Speaker Change: Investments.

Speaker Change: In leaps in.

Speaker Change: In other trials.

Speaker Change: Mike we have seen in some other areas, maybe a dumb analogy, but.

Speaker Change: Painful diabetic neuropathy and some other med tech categories. The companies that put in the resources to do our Cds gotten an indication only two other companies piggyback.

Mike Carroll: Would LEAPS specifically give AtriCure an AF application indication? and basically set AtriCure aside versus versus others in the field. Yeah, so the LEAPS trial very specifically, will create great differentiation by giving us a stroke label. And so that is what's going to basically be the differentiation and nobody else will be able to have that label. And as Dr. Whitlock talked about at the meeting, there's really no class effect to that because we will be the only ones that will have gone through a 6,500 patient randomized control data trial with our clip being the only one used in that trial.

Speaker Change: And kind of dilute.

Speaker Change: The net impact would leaps specifically give a secure an ear population indication.

Speaker Change: And basically set a procure aside versus versus others in the field.

Speaker Change: Yes, so the Leafs trial very specifically.

Speaker Change: We'll create great differentiation by giving us a stroke label.

Speaker Change: And so that is what's going to basically be the differentiation and nobody else.

Speaker Change: We will be able to have that label and.

Speaker Change: As Dr. Whitlock talked about at the at the meeting there is really no class effect to that because we will be the only one who will go through a 6500 patient randomized control data.

Mike Carroll: So you're not going to be able to look across and say, oh, other methods of closure are similar. You can't do that because that has proven not to be the case. And so we will have proven it out with our AtriClip and feel like that's going to be a really big differentiator in the market, not only with customers, but also with regulators throughout the world as well.

Speaker Change: While with our clip being the only one used in that trial, so youre not going to be able to look across and say Oh. Other methods of closure are similar you can't do that because that has proven not to be the case.

Speaker Change: So we will have proven it out with our HR group and feel like that's going to be a really big differentiator in the market not only with customers, but also with regulators throughout the world as well.

Operator: Thank you.

Mike Carroll: I'm showing no further questions at the I would now like to turn it back to Mike Carrel for closing remarks. Well, again, everyone, thank you for joining us today. As you can tell, we continue to be excited about the future of the business. We do really appreciate many of you making the trip to Mason, Ohio, getting a chance to meet many of the colleagues that we've got here and see the products firsthand, go through some of the demos and meet some of the physicians that are utilizing our products today. So we just want to again, thank you for coming out.

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.

Speaker Change: Great.

Mike Carrel: Again, everyone. Thank you for joining us today as you can tell we continue to be excited about the future of the business. We do really appreciate many of you, making the trip to Mason, Ohio, getting a chance to meet many of the colleagues that we have got to hear that and see the products firsthand go through some of the demos and meet some of the physicians that are utilizing utilizing our products. Today. So we just wanted to again thank you for.

Operator: Thank you for coming out today. Have a great evening. Bye now.

Speaker Change: Coming out thank you for coming out today have a great evening bye now.

Operator: This concludes today's conference. Thank you for participating. You may now.

Mike Carrel: Yeah.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Okay.