AtriCure, Inc. (NASDAQ: ATRC) Earnings Report for Q3 2024

AtriCure, Inc., a leader in atrial fibrillation treatment and left atrial appendage management, reported an 18% year-over-year revenue growth for Q3 2024, totaling $116 million. The company also revised its annual revenue guidance to between $459 million and $462 million, a 15% to 16% increase from 2023. They achieved an adjusted EBITDA of nearly $8 million and continue to innovate products, underpinning confidence in their growth in both U.S. and international markets.

Key Takeaways

• Q3 revenue increased to $116 million (18% year-over-year).
• Full-year revenue guidance raised to $459-$462 million (15-16% growth).
• Adjusted EBITDA was positive at nearly $8 million, up 68% from Q3 2023.
• Pain management franchise grew 36%; open ablation and appendage management grew by 16% and 18%, respectively.
• International sales up 33% in Europe and 12% in Asia Pacific.
• Advancing PFA technology with a $12 million R&D charge expected in Q4.

Company Outlook

• Revenue expected between $459-$462 million for 2024 with gross margin similar to 2023.
• Adjusted EBITDA outlook remains at $26 million to $29 million with a projected loss per share of $0.74 to $0.80.
• Positive cash flow is anticipated continuing into 2025.

Bearish Highlights

• Gross margin slightly decreased to 74.9% and operating expenses increased by 14.9% year-over-year due to higher R&D costs.
• The net loss per share improved but still remained at $0.17.

Bullish Highlights

• U.S. open business grew by 20%; Flex Mini product is expected to drive future growth.
• International business continues to thrive, with significant sales growth in Europe and Asia Pacific.
• Success in product innovation with launches including AtriClip FLEX Mini and cryoSPHERE MAX probes.

Misses

• Despite revenue growth, there was a slight decline in gross margin due to unfavorable product mix, and a net loss per share reported.

Q&A Highlights

• CEO Michael Carrel discussed integrating PFA technology into surgical products, noting the need for more clinical studies and regulation clarity.
• The FDA is expected to require a PMA pathway for epicardial PFA technology with details forthcoming.
• Growth in cryoSPHERE probes driven mainly by volume, with minimal impact from average selling price changes.

AtriCure's Q3 performance indicates solid revenue growth and strategic technology advancements. The company has positive projections for continued innovation and market demand, positioning itself for ongoing success within the medical device sector.

InvestingPro Insights

Recent data from InvestingPro reflects AtriCure's strong revenue growth and market analyst support. As of Q3 2024, AtriCure's twelve-month revenue growth stood at 17.56%, closely matching the reported quarterly increase. Despite favorable revenue trends, the company is not expected to achieve profitability this year. Moderate debt levels may provide flexibility for ongoing R&D and innovation investments. With a focus on international expansion, particularly in Europe and Asia, AtriCure's investor confidence is supported by a strong return of 33.77% over the past three months. While AtriCure does not offer dividends, its financial position remains stable with liquid assets exceeding short-term obligations, aligning with management expectations for positive cash flow through 2025.

Full Transcript

Operator

Good afternoon. And welcome to AtriCure's Third Quarter 2024 Earnings Conference Call. This call is being recorded for replay purposes. All participants are in listen-only mode. We will facilitate a Q&A session following remarks from AtriCure's management. I would now like to turn the call over to Marissa Bych from the Gilmartin Group for a few introductory comments.

Marissa Bych

Thank you. By now you should have received a copy of the earnings press release. If you have not, please call 513-644-4484 for assistance. Please note the company's remarks include forward-looking statements. These statements are subject to numerous risks and uncertainties, including described in AtriCure's SEC filings. Results may differ materially from those projected. AtriCure has no obligation to update any forward-looking statements. We refer to non-GAAP financial measures such as constant currency revenue, adjusted EBITDA, and adjusted loss per share. A reconciliation is included in our press release available on our website. Now, I will turn the call over to Mike Carrel, President and CEO.

Michael Carrel

Thank you for joining us, everyone. I'm pleased to share our strong Q3 results. We achieved total revenue of $116 million, reflecting 18% growth driven by demand across our innovative product portfolio for atrial fibrillation and postoperative pain. Additionally, we generated nearly $8 million in adjusted EBITDA and record positive cash flow of over $16 million this quarter.

Given our strong performance, we're raising our full-year 2024 revenue guidance to $459-$462 million, indicating a growth of approximately 15-16% over 2023. We reaffirm our commitment to deliver an adjusted EBITDA of $26-$29 million.

Updates on Business Performance

Our pain management franchise grew 36% globally, propelled by the U.S. launch of the cryoSPHERE+ probe. We've observed excellent adoption contributing nearly half of our pain management sales in this quarter.
Additionally, we've launched the cryoSPHERE MAX probe designed to enhance procedure efficiency by further reducing freeze times. Recent data presented on Cryo Nerve Block Therapy indicates significant cost savings and reduction in opioid reliance.

Our open ablation franchise grew 16%, driven by nearly 50% growth in Encompass clamp sales in the U.S. We completed our first cases in Europe.
The appendage management franchise achieved 18% worldwide revenue growth, benefiting from open chest devices. We've launched the AtriClip FLEX Mini, offering enhanced access and visibility.
Internationally, we received expanded CE mark indications for AtriClip devices. Our LeAAPS trial is on track to enroll 6,500 patients by mid-2025.

Looking ahead, we’ve entered an exclusive partnership in PFA technology set to enhance our cardiac surgery devices, a $12 million R&D charge will occur in Q4, excluding adjusted EBITDA guidance.

Conclusion

The third quarter showcases robust performance and a strong trajectory as we anticipate continued growth and innovation moving into Q4 2024.

Operator

Thank you. Your line is open for questions.

Additional Q&A

Q&A continues, with various discussion points about competitive dynamics, product launches, and future growth expectations, highlighting AtriCure's proactive technologies and market strategies.

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