AtriCure, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 revenue was $465 million (17% growth), adjusted EBITDA increased from $19M in 2023 to $31M in 2024.
• Reaffirmed 2025 revenue guidance of $517M to $527M and adjusted EBITDA guidance of $42M to $44M (an increase of nearly 40% over 2024).
• Hosted Analyst and Investor Day on March 26, featuring leading physicians and electrophysiologists to review product portfolio and pipeline.
• Pain management franchise growth due to new cryoSPHERE+ and cryoSPHERE MAX probes, driving increased account adoption.
• Open appendage management saw growth from AtriClip FLEX-Mini launch and China approval, with evidence supporting its efficacy in guidelines.
• Open ablation franchise expanded with EnCompass Clamp sales and BoxX-NoAF trial approval for prophylactic ablation in cardiac surgery patients.

Segment Performance

• Pain Management: Grew 32% worldwide in 2024 and 43% in the fourth quarter. Driven by launches of cryoSPHERE+ and cryoSPHERE MAX probes, which reduced freeze times. Added nearly 100 new accounts globally in 2024.
• Open Appendage Management: Full year worldwide revenue growth 16%, with 21% growth in open AtriClip devices and 3% in MIS appendage management devices. Achieved approval in China and expansion of indication in CE-Mark countries.
• Open Ablation: Grew 16% worldwide in 2024, 17% in the fourth quarter, driven by EnCompass Clamp sales (over 50% growth in EnCompass). Launched EnCompass Clamp in Europe in Q4 2024.
• Minimally Invasive Afib Treatment: Global growth 5% in 2024, 22% growth in international markets, 3% growth in US. International growth in Europe due to increased adoption of hybrid convergent procedure, but US facing pressure from PFA adoption.

Guidance

• Reaffirmed 2025 revenue guidance: $517 million to $527 million.
• Expected full year 2025 adjusted EBITDA: $42 million to $44 million, an increase of nearly 40% over 2024.
• Anticipates modest cash flow generation for 2025, with net cash burn expected in Q1 2025 followed by positive cash generation for the rest of the year.

Risks

• Forward-looking statements subject to numerous risks and uncertainties, including market opportunity, competition, reimbursement, and clinical trial outcomes.
• Impact of PFA adoption on minimally invasive Afib treatment in the US, putting downward pressure on the franchise.
• Geographical and product mix impact on gross margin, as seen in 2024 where international revenue contributed a different mix affecting margins.

Question and Answer

Q: Lily Lozada asks about the conversion from legacy products to EnCompass and how long open business growth can continue.

A: Michael Carrel responds that conversion from legacy products to EnCompass is mostly complete, with growth from net new users or expanded use within the base, targeting coronary bypass market patients with pre-op Afib.

Q: William Plovanic asks about EnCompass rollout in OUS and EBITDA guidance change.

A: Michael Carrel says EnCompass OUS launch is in early stages, with growth expected in the back half of 2025. Angie Wirick notes EBITDA guidance increase due to stronger 2024 bottom line and efficiencies.

Q: Matthew O'Brien asks about revenue guide and EBITDA leverage.

A: Angela Wirick explains international growth outpacing US, with EnCompass Clamp as a buffer, and R&D/SG&A growing below top line due to efficiency.

Q: Marie Thibault asks about FLEX-Mini conversion and revenue growth drivers.

A: Angela Wirick states FLEX-Mini launch is early, expecting multi-year conversion like FLEX-V, with growth assuming majority volume-based.

Q: Rick Wise asks about gross margin and R&D charge.

A: Angela Wirick says gross margin around 75%, R&D charge in Q4 was upfront payment for PFA platform, with organic R&D growing and $10M milestones expected in 2025.

Q: Mike Matson asks about PFA agreement and BoxX-NoAF trial.

A: Michael Carrel says PFA will go through PMA process, with details at Analyst Day; BoxX-NoAF trial studies prophylactic ablation for post-op AFib, using AtriClip and ablation.

Q: Danny Stauder asks about MIS outlook and pain management new indications.

A: Angela Wirick says MIS U.S. hybrid ablation and AtriClip devices decline in 2025; Michael Carrel mentions new pain management device for post-amputation pain in development.

Q: Danielle Antalffy asks about open ablation runway and MIS Europe dynamics.

A: Michael Carrel says open ablation has significant runway in pre-op and post-op AFib markets, with Europe showing MIS growth due to PFA non-responders leading to need for epicardial treatment.

Q: Suraj Kalia asks about deeper account penetration and PFA repeat touch-ups.

A: Michael Carrel explains deeper account penetration through increased user space and adoption, with Convergent procedure addressing non-responders to endocardial ablations by attacking epicardium.

Q: Matthew O'Brien asks about LeAAPS trial enrollment and revenue impact.

A: Michael Carrel says LeAAPS trial enrollment to finish later in 2025, with no revenue impact as de minimis to overall revenue, and trial is event-driven with 5-year follow-up.