Lily Lozada

Lily Lozada questioned AtriCure's profitability, specifically the 14% adjusted EBITDA guidance already achieved in Q4 2025, and the future progression towards long-range plan (LRP) targets. She also asked for details on EnCompass Clamp performance, including patients treated in 2025, penetration relative to total opportunity, and the impact of its inclusion in star ratings.

Answer

Angie Wirick, CFO of AtriCure, expressed satisfaction with the 14% adjusted EBITDA and positive net income in Q4 2025, noting the company is significantly ahead of LRP estimates. She expects a step-down in 2026 from the Q4 exit rate but anticipates well exceeding the 2028 goal for adjusted EBITDA, driven by efficiency, size, and scale. Priorities remain investing in game-changing clinical trials (LeAAPS, BoxX-NoAF) and product portfolio development, aiming for 20% EBITDA margin by decade-end. Mike Carrel, President and CEO, stated that globally, 50,000 patients were treated with EnCompass in 2025 out of 2 million cardiac surgery patients, indicating significant underpenetration. He highlighted that both LeAAPS and BoxX-NoAF are international trials aimed at market expansion and reimbursement globally. He did not quantify the impact of star ratings but emphasized its significance as only the second time a therapeutic treatment became a quality metric in cardiac surgery in 25 years, spotlighting growth opportunities.

Lily Lozada asked about AtriCure's profitability, specifically if the 14% Adjusted EBITDA guidance was conservative given they hit it in the current quarter, and what dynamics to consider for future progression. She also inquired about the number of patients treated with EnCompass in 2025, its penetration relative to the total opportunity, and the meaningfulness of its inclusion in Star Ratings.

Answer

CFO Angie Wirick expressed satisfaction with the 14% Adjusted EBITDA and positive net income, noting that while 2026 full-year EBITDA might step down from the Q4 exit rate, AtriCure is significantly ahead of its long-range plan. She attributed this to efficiency, size, and scale, and reiterated priorities for investing in game-changing clinical trials (LEAPS, BOX X NoAF) and product portfolio development. President and CEO Mike Carrel stated that globally, about 2 million patients undergo cardiac surgery, and AtriCure treated approximately 50,000 in 2025, indicating significant underpenetration. He highlighted that both LEAPS and BOX X NoAF are international trials aimed at global market expansion and reimbursement. Carrel did not directly quantify the Star Ratings impact but implied it would be significant for continued growth.

Lily Lozada asked about the progress in getting sales representatives up the productivity curve and the expected pace of improvement throughout 2026. She also inquired about the drivers behind the 2026 gross margin guidance of 84%-86%, given recent quarters in the +86% range.

Answer

Jared Oasheim (CFO) explained that reps are progressing through onboarding and training, leading to an increase in active territories (53 by year-end) and rising revenue units per territory. He noted more accounts are achieving one implant per month. For gross margin, Jared Oasheim highlighted strong 2025 results from U.S. ASPs (north of $31,000) and manufacturing efficiencies. For 2026, the guidance assumes U.S. ASPs around $31,000, with potential for further cost per unit reduction not yet included.

Lily Lozada asked for more details on the observed improvements in sales force efficiency and the pace at which representatives are increasing their productivity, and how this trend is expected to continue through 2026. She also questioned the 2026 gross margin guidance of 84%-86%, given recent quarters exceeding 86%, and asked for key drivers.

Answer

CFO Jared Oasheim explained that throughout 2025, new representatives progressed through onboarding and training, leading to growth in active territories (53 by year-end) and increased revenue units per territory. He noted more accounts achieving one implant per month. This positive momentum is expected to drive continued sales productivity growth in 2026. Regarding gross margin, Mr. Oasheim stated that while 2025 ASPs exceeded expectations (north of $31,000), the 2026 guidance assumes a more conservative $31,000 ASP. Manufacturing efficiencies could further reduce cost per unit, but this isn't fully baked into the initial guide.