Q2 2025 AtriCure Inc Earnings Call
Good afternoon and welcome to AtriCure's second quarter 2025 earnings conference call.
This call is being recorded for replay purposes. And at this time, all participants are in listen. Only mode.
We will be facilitating, a question and answer session following remarks by Atria's management.
Oh, now I would like to turn the call over to Marissa Bych from the Guilford Martin Group for a few introductory comments.
Thank you.
By now, you should have received a copy of the earnings press release.
If you have not received a copy, please call 513-644-4484 to have one 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, Inc. franchises and growth initiatives.
Future product approvals and clearances, competition, reimbursement, and clinical trial outcomes.
If you're curious, results may differ materially from those projected.
Hey, Trick. You're undertaking no obligation to publicly update any forward-looking statements.
Additionally, we refer to non-GAAP financial measures, specifically constant currency revenue, adjusted EBITDA, and adjusted loss per share.
The 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.
With that, I would like to turn the call over to Mike Carroll, President and Chief Executive Officer.
Good afternoon, and thank you for joining us. We are pleased to report an outstanding second quarter, with total revenue of $136 million, reflecting a 17% year-over-year increase.
Our growth was broad-based, reinforcing the strength and durability of our business. And AtriCure has a significant market opportunity across all of our franchises.
We also delivered a sizable increase in profitability and cash generation with over 15 million dollars in adjusted Eva, nearly 18 million dollars in cash generation in the second quarter.
Our pipeline of innovation and clinical science initiatives continues to thrive and generate results as well.
Using our Cryo XT device for pain management performed in this quarter.
Additionally, we began testing our PFA device for cardiac surgery.
However, most notable is the completion of enrollment in our groundbreaking LEAPS clinical trial. I will touch upon these milestones in greater detail later in my remarks. But each reflects our resolve to deliver innovative therapies to address unmet clinical needs for patients around the world. As we sustain strong growth and improve shareholder returns.
Now, on to updates from each of our franchises.
Starting with appendage management, worldwide revenue grew over 20%, driven by open left atrial appendage management, with growth of 29%.
In the United States, we saw an acceleration in revenue from the increasing adoption of our HR Cook Flex mini device.
This quarter, Flex reached just over 20% of our U.S. appendage management revenue, showing the demand from physicians for this lower-profile solution internationally. We are expanding access to AtriCure devices and continuing to invest.
Physician awareness to support long-term growth.
We also are excited to announce the birth clinical use of our latest innovation in the atrial platform, the AtriClip PRO Mini device.
Building on the success of the Flex Mini in open chest procedures, the Pro Mini leverages our third generation AtriClip platform, which is the smallest surgical left atrial appendage implant available, enhancing visualization and precision during minimally invasive procedures.
The Pro Mini is another example of our ongoing commitment to innovation across our franchises.
Turning to our leaps trial.
We are thrilled to announce that we completed the enrollment earlier this month.
This is a major milestone, not only for HR.
But for all cardiac surgery and patients treated, this marks the largest global medical device clinical trial ever conducted in this space, with total enrollment exceeding 6,500 patients.
Leaps is designed to evaluate the use of atrial devices for stroke prevention in cardiac surgery for patients who do not have a prior AIB diagnosis.
This is a large and underserved patient population, with more than 70% of the nearly 2 million patients who undergo cardiac surgery annually not having a prior AIB diagnosis.
We believe the rapid pace of enrollment reflects the strong momentum behind our clinical evidence strategy, interest from surgeons, and the broader clinical community, and expanding the standard of care for these patients.
I would like to pause and recognize the team here for their truly outstanding trial execution, as well as our partners in hospitals who are instrumental in this landmark study.
Your collective efforts achieved full enrollment, well ahead of our initial projections, and place us closer to definitive clinical evidence supporting left atrial appendage management in cardiac surgery.
Now, we shift our focus to robust patient follow-up. As we await the study outcomes, we expect results from our LEAF clinical trial to support a stroke prevention indication that is exclusive to AtriClip surgical devices and help shape future treatment guidelines.
Within our ablation franchises, open ablation posted a healthy growth of 15% this quarter.
Performance was once again led by our Encompass clamp, reflecting deep continued adoption across a broad customer base. This quarter also marked the third anniversary of the Encompass clamp launch.
The durability of Encompass growth is a clear testament to our ability to deliver meaningful and consistent innovation, providing clinicians with effective and time-saving solutions.
On the topic of innovation, we are also progressing development of our PFA-enabled Encompass platform.
During the quarter, we achieved the first milestone in our PFA partnership, with the delivery of generators to begin. Robust preclinical testing is putting us one step closer to first human use, which we expect to happen later this year.
We look forward to providing more updates on our development milestones as they occur.
Turning to clinical initiatives, we are preparing sites for activation in our box. No AF trial.
Identity to use our ablation technologies in this broader patient population.
Building on momentum from our LEAPS trial, we believe Box NOAF will transform the standard of care in cardiac surgery toward preventive approaches for patients without AIB.
Box. No, AF is a foundational study for HR, and we expect the first patient to be enrolled in the trial later this year.
In our minimally invasive hybrid therapy market, dynamics remain challenging in the U.S. due to increased adoption of the PFA catheter technology. We continue to see durable interest in our MIS offerings in Europe, where PFA has been on the market longer. In clinical understanding and patient segmentation, we are more advanced.
We believe patients with long-standing persistent A-fib remain undertreated, and hybrid therapy is uniquely positioned to address this need.
Now, turning to our pain management franchise, which grew nearly 43% in the quarter.
The acceleration and growth continue to be driven by sales of our latest innovations, the Cryos and Cryosphere Plus probes.
We are realizing significant expansion within existing accounts, along with new position users. We are also encouraged by feedback from surgeons using CryoSphere Max, as sternotomy procedures were reduced. Procedure time is particularly impactful.
Additionally, we are expanding access to our next-generation prior ablation technology outside the U.S.
With the launch of Cryosphere Maxx in Europe.
This launch represents another step in bringing superior pain management solutions to patients and providers globally.
In addition to growth in thoracic and cardiac procedures, we're encouraged by the opportunity for Crown nerve block therapy and extremity amputations.
Following the 5, 10-K clearance, early in the second quarter, we completed an initial procedure.
With our Cryo XD probe or pain management in the lower limb, amputations.
While feedback from surgeons using this device has been excellent.
We are even more excited by the reports of rapid patient recovery in the days following the procedure. We believe Cryo, XD unlocks a meaningful expansion opportunity for Atria, and we're focused on preparing for commercial launch later this year.
Parallel to our innovation and market expansion efforts, we continue to invest in clinical and economic data to support the value of crowd nerve block therapies.
As non-opioid pain management becomes an increasing priority across healthcare, these efforts are helping drive broader awareness and adoption.
We remain committed to expanding access to innovative non-opioid solutions that improve patient outcomes and align with the goals of hospitals.
Surgeons and payers.
In closing, I want to thank our entire team for an outstanding quarter.
Our financial results were stellar, with accelerating growth and meaningful improvement in profitability, providing a strong foundation for the second half of 2025 and beyond. I am confident that our focus on delivering exceptional patient outcomes, building our clinical and commercial momentum, and executing on our strategic priorities will transform standards of care in each of our markets. And with that, I will turn it over to Angie Wirick, our Chief Financial Officer. Angie.
Thanks, Mike. Our second quarter 2025 worldwide revenue of $136.1 million increased 17.1% on a reported basis and 16.5% on a constant currency basis when compared to the second quarter of 2024. On a sequential basis, worldwide revenue grew 10.1% from the first quarter to the second quarter.
Second quarter of 2025.
Second quarter 2025 U.S. revenue was $110.6 million, a 15.7% increase from the second quarter of 2024 and an acceleration over our first quarter results.
Open ablation product sales were $36.5 million, an increase of 18.6%. Over 2024, we expect continued strong adoption of our Encompass clamp in both new and existing accounts.
Us sales of appendage management products were 45.1 million up 18.9% over the second quarter of 2024 on increasing adoption of our. Recently launched atriclip Flex mini device driving open appendage management growth to 30% for the quarter.
1% growth over the second quarter of 2024.
The cryosphere. MaxProbe contributed just over 50% of our pain management sales in the quarter, emphasizing the benefit of reduced procedure times and driving adoption.
Finally, with continued pressure on hybrid therapy procedures because of PSK PFA catheter adoption, we saw a decline in our minimally invasive ablation sales, which ended the quarter at $7.8 million.
In International revenue, there was $25.6 million, or 23.3% on a reported basis, and 19.9% on a constant currency basis, as compared to the second quarter of 2024.
European sales accounted for 16.1%, while Asia-Pacific and other international markets accounted for $9.4 million, up 16.3%.
International growth was driven broadly across franchises, and most major markets and we expect good momentum in our international business to continue for the remainder of 2025.
Gross margin was 74.5% for the second quarter of 2025, which represents an approximately 15 basis point decrease in comparison to the second quarter of 2024.
This decrease was primarily driven by less favorable Geographic and product mix largely within our international business.
Now, moving on to details of our operating expenses for the quarter total: operating expenses increased by $13.7 million, or 14.5%, from $94 million in the second quarter of 2024 to $107.7 million in the second quarter of 2025.
Our total reported operating expenses included a $5 million milestone payment under the PFA co-development agreement.
Excluding this milestone payment, total operating expenses increased by $8.7 million, or 9.2%.
Growth in research and development expenses was approximately 19%, excluding the PFA Milestone payment.
Driven by an acceleration in LEAPS enrollment during the quarter and continued progress on our R&D pipeline.
SG&A expenses increased 6.5%, primarily from thoughtful expansion of our team globally to support our growth.
With strong topline growth and modest expansion of our operating expenses in the quarter, we saw outstanding results on the bottom line with adjusted EVA of $15.4 million this quarter compared to $7.8 million for the second quarter of 2024.
Our loss per share was $0.13 in the second quarter of 2025 compared to a loss per share of $0.17 in the second quarter of 2024. While the adjusted loss per share for each period was $0.02 and $0.17, respectively.
We ended the second quarter with $117.8 million in cash and investments, generating $17.9 million in cash during the second quarter, including the PFA milestone payment.
We continue to expect positive cash generation for the full year. Further strengthening our already robust Capital position.
And finally, turning to our outlook for 2025.
Give an ongoing strength from our many growth catalysts.
And our second quarter results.
We now expect to achieve 527 million to 533 million in revenue for the year.
Reflecting growth of approximately 13% to 15% over 2024.
Like our results to date. Our international business will outpace growth in the U.S., driven broadly across franchises.
On a US franchise level, we expect strength from new product launches in our pain management and appendage management franchises, along with the continuing adoption of our Encompass plants and open ablation to drive growth for the remainder of the year. We now anticipate continued modest sequential declines in our US hybrid franchise.
Franchised for the remainder of 2025.
In terms of quarterly Cadence, we expect our third quarter will experience typical summer seasonality.
resulting in a low single-digit sequential decline in revenue from the second to third quarter, followed by a strong rebound in the fourth quarter.
From a margin perspective, we are maintaining our expectation. That 2025 gross margin will be comparable to 2024 with potential for varying impacts from cost savings initiatives and product mix offset by Geographic mix.
Positive adjusted EBITDA is expected to be approximately $49 million to $52 million for the full year 2025.
These projections are adjusted, but we anticipate margins in the range of 9% to 11% for the remainder of 2025, with expectations that the third quarter will be at the lower end of this range, while the fourth quarter will be at the higher end.
And finally, the corresponding adjusted loss per share is approximately 34 cents to 39 cents.
In closing, we are truly pleased with our results and the unwavering effort from our team around the world. This quarter highlights the breadth of our business and many growth catalysts, with continued improvement in profitability. We are extremely confident in the outlook for the remainder of 2025 and beyond. At this point, I'll turn the call back to Mike for closing comments.
Thank you, Angie. The completion of another well-executed quarter of strong revenue, growth, and profitability reflects our team's persistence and devotion to our patients, partners, and shareholders.
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 continue growth.
The future of aged care is bright, and I look forward to providing updates as the year progresses. I'll turn it over to the operator for questions.
To ask a question, please press *1, 1 on your telephone and wait for your name to be announced.
Do a draw. Your question. Please press star 1 1 again.
In the interest of time, we ask that you please limit yourself to 1 question and 1 follow-up. Stand by while we compile the Q&A roster.
Our first question comes from Bill Ponek with Chords. Annuity, your line is open.
Hey, it's Zachary from Dale. Thank you for taking my question. Um, my first question is for appendage management. So, you completed LEAP's enrollment a few weeks ago. What are you seeing in terms of how the completion of that trial has impacted physician utilization of the products post-enrollment? Because you were getting paid for the implants. So, what are you seeing? Like, have docs been using the devices at the same rate? Has utilization decreased? Can you provide any color on that?
Sure. Um, from a leap standpoint, it's such a minimus and small part of our overall kind of atrocity. If you think about the total trial size, I mean, it is only 6,500 patients. Half those patients get a clip; half the patients do not get a clip, so it really has no impact on our revenue. Actually, many of those people were clipping or putting atrial clips on every one of their patients before, so it kind of all washes out, the revenue impact of...
Kind of not having leaves is pretty much a complete wash from that standpoint. Now, as you saw saw we're seeing an overall increase in adoption, people are just managing the appendage, a lot more. Uh, you saw that in the growth rate in the US with, um, almost 30% growth overall, you're seeing it on the global number, on the open side of our business. It's just been, um, really. Um, interesting to kind of see, as I talked about on the call, many, many, um, months ago or quarters ago, when competition came in, we thought that it would actually help the overall market and create more awareness. And what we're seeing is that actually happening, we've had 6 successive quarters of sequential growth um and increasing growth on that platform, um, some of that's due to Innovation. But some of it's also doing to just having competition in the space. Raises awareness, more people want to treat, they know they must treat when they've got the patient's chest um, open like that. So it's really the the leaps ending has zero impact on the overall Revenue fees.
Got it. Thank you. And then my follow-up question is: what is the interaction, like with your discussion with EPS about PFA failures? How are you managing?
Uh, those discussions, because on one hand, they are your customer base, so you don't want to, you know, totally alienate them. But it's how are you managing, explaining that, you know, as the funnel grows, there's going to be PFA failures but also balancing their adoption of PFA.
Do see non-responders or failures from that standpoint. And so there I, I would say very collaborative type of conversations that are not ones in, which we're having a discussion, whereas this or that it's more, this is additive when you have a difficult patient population and as I and the funnel is beginning to build. And again, we're seeing some customers begin to come back and actually start to refer many more patients. Unfortunately, it's not having an overall impact on the numbers yet. Long term, I think that, we still believe that there's a huge market for the long-standing persistent patient in which we have 3, major randomized, controlled trials, done around the globe that have demonstrated adding an AIC cardio ablation is beneficial and additive to anything that you use whether it's chriop, PFA or RF, obviously more and more people have gone to the PFA route and we think that we're we're going, we are additive and will continue to be so and it's just a lot of good. It's dialogue and not an argument between the 2. It's more of a scientific discussion.
Great. Thanks, guys. And congrats on the quarter.
Thank you. Our next question comes from Lily Lazada with J.P. Morgan. Your line is open.
Hi, thanks so much for taking the question, and congrats on the nice quarter. Um,
Maybe just starting with guidance. I think the guide implies a deceleration on the top line, relative to the 17% growth you put up this quarter. So is there anything to read into that other than just conservatism? Um, and then similarly on EBITDA, that came in a good amount above, but I think the guide implies adjusted EBITDA will be flat to slightly down the next two quarters. So, any reason that can't be higher? And was there anything one-time that drove the strength in the quarter?
Thanks, Lily. I'll I'll take that. I'd say on both top and bottom line. Our philosophy relative to guidance is really unchanged from what you've seen for major care over. You know, a very long period of time, which is, we want to put out numbers guide to numbers that we feel like we can execute against and you can see, you know, the ability to do better. So a beat and raise kind of strategy as we're looking at the rest of the year, obviously, the momentum throughout the business, um, you know, with our new product launches in the US, as well as our, our international business, which continues to fire, you know, on every cylinder. We feel really good about the outlook for the year. I'd say, maybe a change from kind of where we started the year would be our expectations for a bit more pressure in the second half of 2025 with our hybrid business. All that together though, um, you saw on the second quarter of 17% growth but our our guide range gives us great opportunity to outperform that number relative to the question of anything, 1, time in the quarter, on an expense side there. There wasn't anything, uh, same
Philosophy on the bottom line, as we're taking on the top line.
Great, that's helpful. Um, and then just to follow up on the Mis Point. You know, it sounds like those pressures might be more significant than you had expected last quarter. So, can you talk a little bit about the trends that you're seeing there? And at what point do you think that this business can see a bottom? Thanks so much.
Yeah, I'd like to see that. Yes, we're feeling a lot of pressure with PFA and those accounts. As I mentioned, we do see some bright spots with some accounts coming back and beginning to use it. But, you know, if you look at the overall number that we saw for the quarter with the 17% overall growth, we feel really good about the overall platform. We're delivering. We understand that there's a lot of pressure, and we just don't want to get ahead of ourselves. We want to be very clear with investors that, look at this as upside at this point in time. This is something that is going to be under pressure. There is clear clinical value, no doubt about it—all the data suggests that. But the timing for when it's going to kind of bounce back, I think it's just too difficult for us to give any true indication on that particular front. That being said, you can see the power of the rest of our business is able to get us to a 17% number on the top line, far ahead of any expectations that were out there in the market. You can see it's across every one of the other new product launches. We've had a series of new product launches that came out last year. We're still getting benefit from Encompass. On top of that, we've had the Pearl Mini just come out, and we've got XT that'll...
Pick in at the end of this year. So we we feel like um the Cadence of new products, new markets that we're going after far obviously, overcomes obviously the pressure that we're feeling there, but we do recognize it and, um, you know, we're going to continue to focus on it and hopefully, we'll get some upside with it. Um, maybe not this year, but, you know, it could happen. Um, but for sure, obviously in the future, but we just want to set the expectation really low on that for all investors at this point in time. Um, and we can do that because of the strength of the rest of our business as you're seeing,
Great. Thanks so much.
Thank you. Our next question comes from Marissa Bych.
Marie, the line is open.
Um, wanted to ask a little bit about pain management. Um, certainly looks like CryoSphere Max is just doing um, extremely well, and I wanted to understand where you are in terms of the conversion of accounts to CryoSphere Max as we, um, in the U.S., and as we head into Europe, um, if we should expect a similarly strong uptake. And then I have a quick follow-up on, on, on pain management as well.
Thanks. Marie in terms of the progress with our cryosphere Max device. Um, as we exited the second quarter, it was in a little over half of our us accounts. Uh, pretty similar parody to it representing a little over half of the revenue, in the quarter in the US payment management franchise relative to expectations in Europe. I think with the kind of the premium ASP. I'd say we are cautiously optimistic. Clearly, the time savings has a benefit um, a clinical benefit to the users and we can see that with the pace of adoption in the US. Um, but economics matter a bit more in those markets as you know. So I think we're cautiously optimistic that long term. You know, this is a big driver of growth, I think in the near term with the uplift in pricing, probably a little bit slower, um, kind of ramped than what we've seen in the US.
Okay, that makes a lot of sense. Angie, and then my follow-up is on CryoSphere XT. Um, I heard you say that you're preparing for a launch later this year. My understanding was that this is not being included in the Outlook. I think it wasn't being included as of last quarter, so I want to confirm that that's still true. That anything that we see from that launch could be upside. And anything you're telling us about what you need to do to prepare for that launch? Thanks for taking the questions.
Yeah, on the guidance side, you are correct. This is an upside to the guide that we gave for the year. We expect pretty minimal revenue contribution in 2025 and have said this is a more meaningful contribution when we think about 2026 and going forward from there. Relative to what we need to do to prepare, I think our teams are in a great spot. There was, you know, training earlier this year when we got the 510(k) clearance. I know the team is going to have another run at that training again, and it's a little bit more detailed. They've also been intimately involved in some of the first use cases and have seen, from a physician experience and a patient experience, the impact that it's having. So, we feel well prepared relative to kind of what we need to do on the line.
The only thing I'd add um relative to that is I think if you look at how we typically launched a new therapy so when we launched cryosphere the first time back in 2019, in a big way, we definitely take our time because we want to learn from the first customers that begin to use it kind of adjust and kind of iterate our approach to the market. Relative to that. That's kind of how we see the rest of this year going is a lot of learning which is why we're not baking any kind of Revenue into the numbers this year, as we begin to learn, Angie described it really well about our team is prepared, they'll be trained very well but there's nothing like getting real world experience that we anticipate getting kind of in the latter part of this year. As we're kind of getting ready for a bigger launched in 2026 where it will be in our Revenue at that time.
Thank you both. Nice job.
Thank you. Our next question comes from John McCauley with stifel, your line is open.
Hi Mike. Hi Angie. I wanted to focus on some clinical initiatives that you mentioned on the call, specifically the non-AF LEAPs and also your PFO/PFA program.
Just want to sort of clarify and level set again just the next key milestones for those programs, and what we can expect next for these sorts of trials and initiatives.
Here. So I'll start with leaps because that's the 1, that we just kind of closed out. Um, obviously, uh, we enrolled a lot faster than we expected, which means, we'll, hopefully, see data, um, faster. But right now, we're in follow-up mode, um, we have up to 5 years for follow-up. We obviously anticipate that the events that will take place in that trial will come sooner than that. Um, we anticipate that we're going to have to get to the full number of events within that trial, uh, which is about 469 or so, um, overall events that have to occur. We're tracking those, we will get an interim, look at 50% of the events and 75. Um, I don't anticipate that we'll necessarily quote win at that particular point because obviously, the trial is powered for the full piece of it, but we will get some look. Looks at it. So the leaps you're not going to get any near-term pieces to that um, relative to that or don't expect anything kind of in the near term relative to anything and the Box on the way up. Um, we are up and running and we are getting sites uh, through the IRB process right now. Um, we anticipate that we'll have our first enrollment this year. Um, and we'll have
And we have a, um, a list of sites that is far in excess of that. So now it's really just kind of getting through the IRB process with all these sites. And as you saw with leaps, it's the same great clinical team. We have their executing, this trial. So we anti and many of the same sites because it's a very similar if not the same patient population. Um, and so we feel like we're going to be able to execute that really well, as we kind of roll that out but the next big milestone for you to look for is first, um, first patient, treated uh, which we do anticipate happening, um, this year.
Uh, PFA front is first in human. You'll anticipate seeing a person's Human by the end of this year with our encompassed clamp. Um, so I'd say that's kind of the next big milestone relative to that.
Great. That's helpful. And and just Switching gears to, to the sg&a. Spend, uh, I think it's 3/4 in a row now of of mid single digit growth there. As opposed to strong double digits, mid teens and the top line just want to sort of level set clarify, exactly how we should be thinking about uh that growth rate. Going forward just in the context of again sort of strong double digit Topline and how much leverage should we be expecting? Their
and I think our performance doesn't
Thus far, you know, the past couple quarters is what you should continue to expect. I think we've, um, you know, are longer term Outlook is that we're operating in kind of a single digit growth rate. So, well below Topline growth while while still investing in commercial resources, you know, while still attacking, you know, our underpenetrated Market opportunities and in each area. Um, where we see momentum, um, seeing starting to see the benefit of operating in size and scale, um, particularly in back office functions. So I'd say think single digit kind of mid to Upper single digit growth on that particular line item going forward.
Thanks for taking my questions.
Sure.
Thank you. Our next question. Comes from Dan. Stir with citizens, jmpp. Your line is open.
Yeah, great. Thanks for taking the questions, and congrats on the really strong quarter. So, just first question on appendage management: you know, another really great quarter. It's nice to see growth accelerating even with the quarter year-over-year comp.
But I just wanted to ask, you know, are there any more puts and takes on what drove growth here? Is this really just Flex Mini, or are you seeing any indication of a halo effect from Flex Mini for your other offerings? Thanks.
Yeah, Flex Vinnie was definitely the growth driver in the quarter in in the US outside. The US were Flex money isn't available. We're seeing growth across our HR clip platform, um, we do still see some growth in the flex V, which if you recall was kind of the, the dominant clip that had been sold in the US markets. Um, most of the growth that we would have seen normally as has been given over to flex mini. Um, but are still seeing, you know, a bit of a halo effect on our flexi product,
um, at this point, Danny
Great. Thanks for that and uh, just 1 follow up on pain management.
You know really impressive as well? Um, you know, given the performance of the first 2 quarters. How should we be thinking about, you know, the back half year?
Adoption is clearly very healthy, but just with the more difficult comps, how should we be thinking about our models? Thanks.
Yeah, great question would say this is an area of the business that we expect to well out perform the overall company, guidance, uh range I think you know to say that we can continue at 40%. I think that's possible but with set expectations a bit lower than that as you said the comps from from last year with the new product. Introductions you know more healthily contributing to the back half of 2024 are a consideration here, but feel good about the momentum, you know, of this business. So think of this as something where you're where you're talking about, you know well higher than the overall company growth rate, probably a bit less on a percentage basis than what we've been performing.
so far this year,
Great, thank you for the questions.
Thank you.
Our next question comes from Mike Matson with namin company. Your line is open.
The the previous investments in the sales team kind of reaching full potential as well, just would really like to hear all of those levers there.
The good news is, I think you hit on all the levers, but I'll try to kind of maybe extrapolate or talk a little bit more detail about it. I'd say the number one piece is that when you come out with great innovation and you listen to what is kind of holding you up.
In this case, it was time and the procedure, uh, and going from a 2-minute freeze down to 1 minute freeze really made the procedure much more approachable for surgeons, both in terms of surgeons that were not using it and surgeons that were using it, now wanting to use it on more of their cases. That is the number one driver. We happen to get a little bit of a price benefit because they're moving to Max, but we're not moving, but we're getting more of the benefit because the volume is seriously increasing, uh, because of the speed at which they're able to do that in the thoracic cases. We've had a really small amount that's happening in sonomy because of that. So we're definitely seeing some activity there that we hadn't seen. Um, I wouldn't say that's been a meaningful number or meaningfully contributing to it at this point in time. Um, and as I mentioned in my comments, um, we're encouraged, but we're not putting that really into our numbers in any way, shape, or form. Um, but it's obviously an encouraging piece, and we're hearing positive, um, pieces from that standpoint. So I'd say that number one is just great innovation leads to.
To um listen to the customers. Cutting down that time and cross your max is really kind of hit the mark on that front.
Yeah, maybe one thing to add. You asked the question about kind of price versus volume.
Particular franchise in the US our growth is 41%. When we look at volume growth, we're a little over 30% volume growth. I think when you look at that in the span of kind of what this franchise has done, that's an exceptional quarter for us. Um, both new and existing accounts are seeing growth. And we had a really strong second quarter of kind of new account, adoption as well.
Okay, great. Yeah, that's that's very helpful. Um, and then maybe just a quick 1 R, andd spend, um, you know, looking at the second half of 2025
Um, you know, Leafs enrollment is complete, you know, obviously still expenses associated with that but then you know you have these other trials starting up and you know just kind of curious. I know there's acceleration in this quarter but how you view that trending um maybe just spend a year over year basis.
Yeah. R&D, at, um, percentage growth in whoever year, I think we would expect to be in line, maybe slightly higher than kind of topline growth, just given momentum behind clinical trial enrollment and product development efforts. Um, so you'll see less of a ramp than we've thought. You know, I've seen over kind of the course of the LEAPS trial, um, but with the new BoxinOaf, um, the new clinical trials starting as well as, um, us really.
Advancing our PFA development efforts, we still expect pretty robust growth in R&D year-over-year.
On the quarter.
Thank you. Our next question comes from Danielle and Tali with UBS. Your line is open.
Hey good afternoon, Mike and Auntie. Um thanks so much for taking the question. Congrats on another strong quarter. Um, just a a question on the open ablation business. I mean, that's been your guys um, that plus pended to management has been your bread and butter for
For ever now. And you know this is now the second consecutive year you're tracking. I know this isn't you don't give guidance by business but so far year to date at about 15% growth last year. You grew open by 15%. My can you talk about the, the runway there? Because I know you guys sort of frame this as more High single low, double digit grower longer term. I mean, you haven't seen momentum slowed there at all over the last few years. And so, you know, I appreciate we're now 2 years into Encompass, but it just feels like maybe we're missing something and there's more momentum there and longer Runway than, than maybe we had thought, previously, would love to hear your thoughts on that.
For those surgeons to do something where they don't have to get behind the heart, but they can get a really robust lesion. They can do it very quickly in under 10 minutes, and when they do that and they add the atrial clip with it, they actually get a great result with this. Um, and there are more and more studies that we anticipate coming out here in the next 6 to 12 months, to show the efficacy benefits of that as well. And, uh, and so the opportunity I'll call in the next 3 year. Venture is mostly around that cabbage patient where going from 35 40% to 80 90% of aib only patients in the US and now those numbers are significantly lower even to this date um on in in the um oh US market, they've gone from about 10% to 20% so massive Market opportunity just in a fit patients obviously box. No AF is designed
to Triple the size of that overall Market.
So we anticipate that there is growth for, I've talked about it before, it's more than a decade worth of really strong growth sitting in front of us. With box noaf, we anticipate being able to demonstrate that there is real clinical benefit
So, using an Encompass clamp to do a box lesion, adding an atrial clip that you're going to benefit from, both short-term with post-op AIB and longer-term clinical benefit. That patient is not going to develop AIB, which most patients do develop. So, we look at the runway, and it's not short-term. We have great short-term runway just in AIB, and we've got a longer-term runway that's going to kick in with box noise. Um, and we try to talk a little bit about that at the analyst day, but hopefully that gives you context to why we're so excited about the overall market here and why we've got a long-term growth prospect.
Yeah, I I totally I guess 1 of my other. It's just a follow-up question on that in the open ablation business. And, and 1 of the gating factors for Technologies, has has always been capacity and I guess I'm just curious about where you guys think you are from a treating surgeon perspective? Like, do you think, you know, I know a few years ago and and really still education, physician awareness education, your your, um, training days, things like that are a big driver. Um, is are you still adding new surgeons, or do you feel like you're sort of at, you know, where you're going to be with, um, from a treating surgeon? I'm thinking specifically, again, you're open ablation business. Thanks so much. We're adding surgeons, um, every day, I mean it's uh, that that cabbage surgeon, that wasn't doing any treatment before. Our net new customers Force, they may be in a site that was doing mitro valve and treating in a different
The surgeon was maybe doing some of the microvalves, but we are absolutely adding a lot of new surgeons that were just not treating before. That's the market opportunity that sits in front of us: adding those surgeons who were afraid to treat before and now feel like it's an approachable procedure for them to take care of. They are getting both, and we've reduced the time.
With a great procedure. And
CMS has decided to reimburse for it so they don't have to worry about the hospital cost relative to that as well because it's a profitable procedure for them to add this and why did CMS add that? Because they know these patients live longer and have better lives if there are bladed at the time of cardiac surgery. So again we're going to add more surgeons. There's still a long Runway here to go.
Thank you.
Our next question.
Everyone is open.
Hey, Mike. Can you hear me? All right.
We can hear you.
Perfect. Congrats on a nice quarter. So Mike, uh, to 2.
For your uh, PFA clamp mic.
How should we think about the core focus of your of your climate device?
Are you all focusing on some differentiated waveform? Is it going to be dual energy? Is that going to be product stratification? How should we think about? You know, when you all or at least the uh the road map for your PFA, surgical clamp?
No relative to, um, being able to do that because that's what most surgeons are now beginning to use and really like that. Clamp and the procedure, the second differentiator is that we're going to have a combination of both PFA and RFA, in 1, clamp, the ability to deliver it, um, at different times, uh, in the same generator to make it very simple and easy for them to do. Um, and I think we think that's going to be a differentiator as well, in terms of being able to kind of combine, the 2 energy sources, um, relative to that. So you've got both the ergonomic of the
Encompass clamp that already exists, but now you're adding PFA to that, and you're adding PFA plus RF into the same clamp. We think that that's a differentiator from that standpoint.
As volume price split.
For the pain management component of the business, maybe if I could on the appendage management.
I mean, be no, uh, mini prices.
Significantly higher than the base model, Flex We is also significantly higher. I think I heard Mike say a 20% contribution of...
uh, many in the quarter, forgive me, if I'm if I heard that wrong but just if you could split out the different buckets,
So that we can strip out price. Uplift versus unit uplift. Thank you for taking my questions. All right, so so sir, Roger correct, the HR clip Flex mini was about 20% a little over 20% contribution of our us appendage management Revenue in the quarter. I think we also talked about open appendage management. This is an open product, um, grew about 30% in the second quarter that 30%, if you looked at a unit, um, based growth is about 20%. So, clearly some uplift on pricing, but 20% volume growth, and that franchise is excellent at this point in time given where we're at, um, in terms of you know, penetration of that particular Market. Um, we did see a little bit of growth in Flex v, um, as well. But we were seeing more, um, shifting over to and more robust adoption in the flex mini clip.
Thank you. I'm showing no further questions at this time. I would now like to turn it back to Mike Carroll for closing remarks.
Great, everyone. Thanks again.
Uh, hopefully, you got a sense.
that we've got in front of us, and we look forward to talking to you on the
right now.
This concludes today's conference call, thank you for participating. You may now disconnect