Q1 2024 Earnings Summary
- ATRC reported strong Q1 2024 results with revenue of $108.9 million, a 16.4% increase from Q1 2023, and is maintaining its full-year revenue guidance of $459 million to $466 million (reflecting 15% to 17% growth) due to confidence in new product introductions and robust international momentum.
- Despite competitive pressures, ATRC's AtriClip franchise continues to grow, with 15.4% growth in U.S. open appendage management revenue in Q1 2024, and the company anticipates further expansion from upcoming product launches like the AtriClip Flex Mini and the progression of the LeAAPS clinical trial, which has 77 sites up and running and aims to expand the market significantly.
- ATRC is advancing innovation, including development of new technologies such as pulsed field ablation (PFA) clamps for open ablation, demonstrating its commitment to meet customer needs and maintain its market-leading position through a robust pipeline of products.
- Increased competition in the appendage management market: The entry of Medtronic's new device is causing customers to trial competitive products, leading to potential market share loss for AtriCure's AtriClip. Management acknowledges that physicians are trying new products and that competitors may gain some business.
- Decline in LARIAT system sales and pressure on MIS AtriClip products: The appendage management franchise revenue faced pressure due to a decline in LARIAT system sales and reduction in minimally invasive AtriClip products. The company notes a soft quarter for LARIAT sales, attributing it to a limited user base and increased competition. ,
- Cautious full-year guidance despite strong first-quarter results: Despite beating revenue expectations in the first quarter, the company maintained its full-year guidance. Management cites it being "early in the year" and deems it "prudent to keep the guide in place," which may indicate concerns over sustaining growth amid competitive pressures. ,
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Guidance and Revenue Outlook
Q: Why did you maintain guidance despite beating revenue expectations?
A: Management explained that although they beat revenue by $2 million and narrowly missed EBITDA by $1 million, they felt it was prudent to keep the guidance in place since it's still early in the year. They have confidence in growth drivers like new product introductions and international momentum but prefer to remain cautious at this stage. -
Competition Impact on AtriClip Business
Q: How is competition affecting the AtriClip line item and your expectations?
A: The company acknowledged seeing competition in the field, with physicians trialing a new competitor's product. Despite this, they haven't observed significant market share shifts and remain confident in their product's safety and efficacy. The open AtriClip business grew over 15% in the quarter. They expect each business area to converge around the corporate growth rate of 15%-17% for the full year. -
Future of the LARIAT Product
Q: Have you discontinued the LARIAT product in the U.S.?
A: Management stated they have not discontinued LARIAT but are evaluating next steps. While the product works exceptionally well, it didn't meet the primary endpoint in trials. They are not promoting it but continue to make it available to existing users. The product saw pressure due to new devices entering trials, affecting revenue, but it remains on the market under its original 510(k). -
Impact of PFA on EPi-Sense and Product Strategy
Q: Is PFA technology affecting EPi-Sense adoption, and what are your PFA product plans?
A: The company does not see PFA as a distraction; instead, it fosters valuable discussions with electrophysiologists. They are integrating PFA into their procedures, with some sites using PFA in convergent procedures. AtriCure is actively developing PFA technology across their product portfolio but did not provide specific timing details. -
LeAAPS Trial and Market Expansion
Q: How will the LeAAPS trial impact international growth in appendage management?
A: The LeAAPS trial is enrolling internationally, aiming to make managing the appendage a standard practice worldwide. Positive results could significantly expand the market by demonstrating stroke reduction benefits, influencing payer practices globally, and driving greater adoption of the AtriClip. -
Pricing Dynamics and Product Launches
Q: How is pricing affecting growth amid new product launches?
A: Most growth is driven by volume rather than price increases. New products like the cryoSPHERE+ are launching at similar prices to existing products, offering cost savings and better margins for the company. In Europe, they aim to maintain premium pricing for products like the EnCompass Clamp, contributing more significantly in 2025. -
International Sales Contributions
Q: What are your expectations for international sales this year?
A: AtriCure anticipates strong international growth, driven by catalysts like the steerable EPi-Sense device and the upcoming launch of the EnCompass Clamp in Europe. With lower penetration rates abroad and new product introductions, they expect international growth rates to potentially exceed U.S. growth rates. -
Pain Management Reimbursement Progress
Q: What is being done to gain reimbursement for pain management products?
A: The key to obtaining reimbursement is generating clinical data showing cost savings and reduced opioid use. AtriCure is funding studies to build this evidence, though they acknowledge it may take time, similar to the process for their cardiac surgery products. -
EPi-Sense Growth and New Centers
Q: Is EPi-Sense growth driven by new centers or existing ones?
A: The strong EPi-Sense growth is largely from existing customers, with new accounts adding minimal revenue this quarter. The company continues to add new centers but focuses on driving higher adoption within existing ones. -
EnCompass Clamp Adoption
Q: How is the adoption of the EnCompass Clamp progressing?
A: The EnCompass Clamp accounts for under 50% of U.S. open ablation revenue and is used in over 450 accounts, indicating early stages of adoption. There is significant room for growth by reaching new accounts and increasing usage among surgeons within existing ones.