Q2 2024 Earnings Summary
- Open ablation franchise shows significant growth potential due to an underpenetrated market (only 30% to 40% penetrated) and strong demand for the EnCompass Clamp, which is expected to sustain growth as adoption deepens across existing and new accounts.
- Pain management franchise demonstrates strong growth, driven by the introduction of the CryoSPHERE Plus probe, which reduces freeze time by 25%, leading to both new account growth and expanded adoption within existing accounts. The upcoming launch of CryoSPHERE Max, expected to reduce freeze time by 50%, presents further upside potential. ,
- Launch of the new AtriClip FLEX Mini device, the smallest profile in the market, is anticipated to drive robust growth in the open appendage management franchise, maintaining leadership despite competition and improving average selling price. International expansion, including approval of AtriClip in China, opens up access to a market with over 200,000 cardiac surgeries per year. , ,
- AtriCure reduced its full-year 2024 revenue guidance due to pressures from Pulse Field Ablation (PFA) technologies distracting electrophysiologists, leading to softness in its U.S. minimally invasive surgery (MIS) ablation and MIS appendage management sales. The company expects these pressures to persist through the rest of the year at a minimum.
- Increased competition in the open appendage management market from Medtronic is causing AtriCure to face competition in one of its biggest franchises, potentially impacting market share despite the company's optimism.
- AtriCure is already approximately 100% penetrated in the number of cardiac surgery centers in the U.S. with its open AtriClip devices, so future growth may be limited to existing accounts rather than expansion into new ones.
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Guidance Reduction Due to PFA Impact
Q: Have pressures on CONVERGE and AtriClip bottomed out?
A: Management noted that pressures began late in the first quarter and became pronounced in the second quarter due to the distraction caused by PFA technology adoption at sites. They adjusted guidance down by a few million, anticipating these pressures to persist through the rest of the year. Recovery is expected beyond 2024, with the impact affecting both the MIS ablation business and the MIS AtriClip used in hybrid procedures, which are part of the overall appendage management revenue. -
Impact of PFA on Business
Q: What's different now with the PFA impact?
A: The distraction from PFA adoption at customer sites was more pronounced than expected. Sites are focused on installing PFA systems and adjusting workflows, which took more time away from hybrid procedures than anticipated. This impact is viewed as temporary, and management expects long-term growth to increase as PFA failures bring more patients into the treatment funnel. -
AtriClip Competition and Flex Mini Launch
Q: How is competition affecting AtriClip sales?
A: AtriClip continues to show strong growth, with no accounts lost to competitors. Some sites trialed competitive products but have returned to predominantly using AtriClip. Management is excited about the new Flex Mini device, which recently received FDA clearance and is expected to launch in the second half of the year. -
AtriClip Clearance in China
Q: What's the opportunity with AtriClip in China?
A: The company received clearance for the AtriClip device in China, accessing a market with over 200,000 cardiac surgeries per year. While significant revenue impact isn't expected this year, contributions are anticipated in 2025 and 2026 as they expand beyond ablation products previously sold in China. -
International Sales and China Performance
Q: How sustainable is international sales growth, especially in China?
A: Management is optimistic about sustained accelerated growth internationally due to significant underpenetration in markets. European franchises are performing well, and the EnCompass clamp is expected to launch in Europe later this year. In China, the business is solid with no significant disruptions, and the AtriClip will complement existing ablation technology. -
Pain Management Growth and CryoSPHERE Products
Q: What's driving growth in pain management?
A: Growth is driven by both new account adoption and expanded use within existing accounts. The introduction of the CryoSPHERE Plus probe has reinvigorated the market by reducing procedure time, addressing prior hesitations. The upcoming CryoSPHERE Max is expected to further enhance growth. -
Open Ablation Outlook and EnCompass Penetration
Q: Can open ablation still grow mid-double digits?
A: Management feels positive about the open ablation franchise, believing the EnCompass clamp will sustain growth. They estimate the U.S. market is only 30–40% penetrated, indicating significant room for expansion. Efforts focus on deeper adoption within accounts and broadening to more accounts. -
CONVERGE Modality Compatibility
Q: Is CONVERGE catheter energy agnostic?
A: Yes, the EPi-Sense device used in CONVERGE is compatible with any catheter-based energy source, including RF and cryoablation. -
Effect of PFA Distraction on MIS Ablation
Q: Is PFA distracting EPs from MIS ablation?
A: The primary impact of PFA is the distraction caused by sites adopting the new technology, which affects time and focus on MIS ablation and hybrid procedures. This leads to temporary softness in MIS AtriClip sales due to a slower MIS ablation quarter. -
Same-Store Sales for AtriClip
Q: Is AtriClip growth from existing accounts?
A: Yes, with nearly 100% penetration in U.S. cardiac surgery centers, growth in AtriClip sales is driven by increased usage within existing accounts.