Earnings Call: AtriCure Reports Strong Growth and Raises Full-Year Guidance

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Earnings Call: AtriCure Reports Strong Growth and Raises Full-Year Guidance

AtriCure, Inc. (NASDAQ: ATRC), a leading innovator in the management of atrial fibrillation and left atrial appendage treatments, reported revenues reaching $116 million in the third quarter of 2024, marking an 18% year-over-year increase. The company also raised its full-year revenue guidance to between $459 million and $462 million, representing a 15% to 16% increase compared to the previous year. With approximately $8 million in positive adjusted EBITDA and ongoing product innovation, AtriCure maintains its confidence in its growth trajectory in both domestic and international markets.

Key Points:

  • AtriCure's third-quarter revenue increased to $116 million, representing an 18% year-over-year rise.
  • Full-year revenue guidance was raised to between $459 million and $462 million, reflecting a 15% to 16% increase from 2023.
  • Adjusted EBITDA for the quarter was positive at approximately $8 million, a 68% increase compared to the third quarter of 2023.
  • The company's pain management segment grew by 36%, while open ablation and appendage management segments grew by 16% and 18%, respectively.
  • AtriCure's international sales saw significant growth, with a 33% increase in Europe and a 12% increase in the Asia Pacific and other markets.
  • The company is advancing its PFA technology with a special licensing agreement expected to result in $12 million in R&D expenditures in the fourth quarter.

Company Outlook: AtriCure expects its 2024 revenues to be between $459 million and $462 million, with gross margins similar to 2023. The adjusted EBITDA expectation remains between $26 million and $29 million, while the adjusted loss per share is forecasted to be between $0.74 and $0.80. The company anticipates maintaining positive cash flow throughout 2025.

Negative Highlights:

  • The gross margin for the quarter fell to 74.9%, a decrease of 27 basis points from the previous year.
  • Operating expenses rose to $94.2 million, an increase of 14.9% year-over-year, primarily due to rising R&D costs.
  • Despite improvements, the net loss per share remained at $0.17.

Positive Highlights:

  • AtriCure’s U.S. open business segment grew by 20%, with the Flex Mini product expected to drive future growth.
  • The company's international business continues to expand, with significant sales growth in Europe and Asia Pacific.
  • Product innovation is ongoing with the successful launches of new devices such as the AtriClip FLEX Mini and cryoSPHERE MAX probes.

Shortcomings: Despite overall growth, the gross margin experienced a minor decline due to adverse product mix. The company reported a net loss per share even with improvements compared to the previous year.

Q&A Highlights: CEO Michael Carrel discussed the integration of PFA technology into surgical products, acknowledging the need for further clinical studies and regulatory pathways. The FDA is expected to require a PMA pathway for epicardial PFA technology, with more details to follow. Growth in cryoSPHERE probes was primarily volume-driven, with average selling price changes having minimal impact.

AtriCure's third-quarter performance showcases the company's robust revenue growth and strategic advancements in technology and market expansion. With increasing guidance for the full year and continuous innovation, AtriCure is positioning itself for sustainable success in the global medical device industry.

InvestingPro Insights: AtriCure's strong third-quarter performance and raised revenue guidance reflect recent market data and analyst opinions. According to InvestingPro data, the company's revenue growth for the trailing twelve months as of the third quarter of 2024 was 17.56%, closely aligning with the reported 18% year-over-year growth. This consistent growth trajectory supports AtriCure's optimistic full-year revenue projections.

Despite positive revenue trends, InvestingPro Insights emphasizes that AtriCure is not expected to be profitable this year, consistent with the reported net loss per share. However, the insight also notes that AtriCure operates with moderate debt, which could provide financial flexibility while continuing to invest in R&D and product innovation.

The company’s focus on international expansion, particularly in Europe and Asia Pacific, is yielding results. Recent data from InvestingPro shows a strong return of 33.77% over the last three months, reflecting investors' confidence in AtriCure's growth strategy and market position.

It is important to note that AtriCure does not pay dividends to shareholders, but maintains a strong financial position. An InvestingPro Insight indicates that the company's liquid assets exceed its short-term liabilities, aligning with management's expectations of sustaining positive cash flow throughout 2025.

Investors seeking a deeper understanding of AtriCure's financial health and growth prospects can explore additional insights provided by InvestingPro. There are six more InvestingPro Insights available for AtriCure, which can offer valuable context regarding the company’s performance and outlook.