Q3 2024 Earnings Summary
- Strong Growth of EnCompass Clamp: AtriCure's EnCompass Clamp experienced approximately 50% growth in the U.S. in Q3, demonstrating strong demand and adoption of this innovative product.
- Expansion of Pain Management Franchise with cryoSPHERE+ and cryoSPHERE MAX Probes: The company anticipates continued acceleration in growth from their cryoSPHERE+ and cryoSPHERE MAX probes, driven by positive physician feedback on reduced freeze times and the potential to expand into the sternotomy market in 2025. The growth in pain management is primarily due to volume growth, as the new probes are at the same ASP as legacy devices. ,
- Advancement in PFA Technology Enhances Future Growth Opportunities: AtriCure is making significant progress in developing PFA technology for their devices, having entered into an exclusive licensing and co-development agreement. This positions the company to enhance its competitive position and address new market opportunities without impacting their profitability trajectory, as the investment is part of their overall R&D plan and does not change their outlook on overall spend or cash burn. , ,
- AtriCure is experiencing pressure on the pace of adoption of its Minimally Invasive Surgery (MIS) products and Hybrid AF therapy due to increased physician focus on Pulsed Field Ablation (PFA), which could negatively impact future revenue growth in these segments.
- The integration of PFA technology into AtriCure's surgical products faces uncertainty regarding efficacy and a potentially lengthy regulatory approval process, as it may require extensive clinical trials and FDA approval through the PMA pathway, delaying market entry and increasing costs.
- The company's substantial investment in PFA technology, including a $12 million cash charge in the fourth quarter of 2024, may impact profitability and cash flow, while the return on this investment remains uncertain due to challenges in efficacy and regulatory approval, potentially affecting financial performance.
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Cash Flow Outlook
Q: Will R&D spending on PFA affect cash flow outlook?
A: Management stated that the PFA investment is part of their overall R&D plan with no change in spend or cash burn expectations. Despite an upfront charge in Q4, they expect a modest cash burn for full year 2024 and anticipate being cash flow positive on a full-year basis in 2025. -
PFA Trends Impact
Q: Is PFA pressure the new normal for MIS business?
A: Management sees current pressures as the new normal for this year but expects improvement as new products enter the market. They anticipate increased patient treatments beginning in 2025 due to a large patient funnel. -
PFA Partnership Details
Q: Can you share details on the PFA partnership and timelines?
A: While not disclosing the partner or timelines, management is excited about progress made and confident in integrating PFA technology into cardiac surgery devices. More details will be shared in due time. -
EnCompass Clamp Growth
Q: Did EnCompass Clamp grow 50% year-over-year in the U.S.?
A: Yes, the EnCompass Clamp grew about 50% in the U.S. during the third quarter. They expect its European launch to impact growth in 2025. -
Competitive Dynamics in Appendage Management
Q: Is competition aiding market growth, and how are you responding?
A: Competition is creating greater market awareness, benefiting overall growth. Management acknowledges competitors gaining some share but remains confident in their products like FLEX V and new innovations like FLEX-Mini, and their investments in clinical evidence. -
Pain Management Growth
Q: What are expectations for sternotomy market with cryoSPHERE MAX?
A: They see potential in the sternotomy market but are not committing to revenue guidance yet. Reduced freeze times make it more approachable, but they prefer organic growth. -
HEAL-IST Study Update
Q: Any updates on the HEAL-IST study?
A: Enrollment is solid but training sites take time. They anticipate reporting data sometime in 2025.