ATRC - Earnings call transcript Q2 2022

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Operator

Good afternoon and welcome to the AtriCure Second Quarter 2022 Earnings Conference Call. My name is Michelle and I will be your coordinator for today’s call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Marissa Bych from the Gilmartin Group for her introductory remarks. Please go ahead.

Marissa Bych

you. Thank should copy you press the received release. have now, of a earnings By

not please a have you received If have copy, to one you. call e-mailed to XXX-XXX-XXXX

include you Before the me begin, remind we company’s let remarks forward-looking statements. that

regarding not market AtriCure’s hybrid including procedure statements clearances for and SEC potential projected. the many which no uncertainties, to adoption may include, filings. and approvals, risks AtriCure initiatives, the uncertainties These and growth those are risks obligation to guidance, results publicly opportunity franchises time product are materially including AtriCure’s of of AF described control, statements and subject from numerous update from undertakes limited AtriCure’s statements. time differ Forward-looking expectations any are and the and reimbursement. future expectations to, to forward-looking financial beyond in but AtriCure’s

Officer. specifically non-GAAP non-GAAP currency of per to these refer included our Mike website. to basis, we press our comparable with EBITDA is on would available I financial Chief share. and adjusted constant that, With the Additionally, measures in reported and Executive President loss financial call over turn most the adjusted measures, on directly GAAP Carrel, release, a to reconciliation which measures is Mike? A like revenue

Mike Carrel

of remarkable achievement reflecting therapies. of a second of the the XXXX, you for generated strength XX% quarter exceptional care innovative for of quarter AtriCure we Good We $XX.X hope continue us million our the report growth another the am with the thank in joining standard afternoon everybody revenue, and second In I today. as for to is of quarter. quarter doing XXXX, comparable pleased given over great. patients changing we

call, decline, second continued those the in we product earlier by pressures cardiac discussed transitioned increasing volumes once glad the as to to involving we procedure on leading our residual was our pandemic elective impacts quarter lines I that first on to again key performance Our into quarter, hospital and procedures am pressures business. the On staffing-related throughout across year. adoption modest driven have share products.

We are in therapies gaining execute our momentum across platforms remain our and confident XXXX ability and objectives. to our

result, a XX% $XXX to guidance XX%. reflecting full million of million, $XXX XXXX our growth to are revenue year As to increasing we approximately

would I business, Now with highlighting initiatives Convergent Hybrid starting review therapy our the like growth next several to the over our EPi-Sense with driving system. AF decade,

As procedures, our PMA the we’ve approval. quarters, expand has following elective new previous quickly affected staffing more mentioned program impact ability in of the advancement on COVID to and adoption

these trained on experience. on proud this over EPi-Sense AF second XXX we XX% the educated patients. cardiologists immensely and more However, have the Today, and electrophysiologists both June hand-on year, mobile therapy. bullish labs, over term. didactic our physicians on program driven on extended AF of the our conducted steadily have benefits More and Hybrid a long impact nearly heart technique, we in past on XXXX training quarter, and we since the the and that we of hybrid training our in many and progress have including and remain of would the training to receive specifically, in the product our We physician first sequential treat efforts revenue addition like difficult share progress then, surgeons have traditional teams to where most thoughts basis. programs on year-over-year U.S. XX% of growth I are environment education focusing our and Convergent prospects increased for

both accounts per have result, of the as well a number As as we account. the volumes average grown Convergent procedure

years. notably hospitals Hopkins Mayo the and Cleveland and many coming in in well-recognized country, several excited in cardiology We John more that anticipate Clinic, the are now also UCLA, Convergent Clinic, is leading Northwestern

by encouraged While to patients. care from strong have and started persistent hybrid approach to these institutions and interest to are even experience many outreach believes procedure it AF for with patients. the adoption, programs we longstanding credibility us each also are the gives in more varying help further their these stages teams therapy, of AF of After

As a establish care as expect Hybrid result, to over provide of we expansive our the opportunity will Convergent decade. standard for AtriCure the journey therapy AF an coming growth the

year, EnCompass the United ablation franchise, our system technology Turning now full-scale to States open of proven in in our and the a procedures. EnCompass approach following open-heart and to The launch to commercial ablation our XXX(k) ablation Clamp faster Clamp this earlier leverages we the of clearance synergy offer simpler announced XXXX.

adoption quarter EnCompass growth the the quarter The continued from second revenue Clamp. to increasingly to penetrate surgery domestic and of our ablation market We are many of quarter, XXXX, this appendage technology differentiated education growth per to into Complementing hybrid performance franchise. in this ability and quarter an reception consistent physician a excellent XX% XX% product With the come. second and our excited and cardiac open upon to quarter last worldwide are this AtriClip and is momentum conversion EnCompass with our our both Sales new over our management year. and we programs, from Clamp confident years ablation outstanding further the platforms second over open for line launch. representing the and exited of adoption mix revenue procedure additional seeing with world-class strong unique accelerated

clinical trial a approval We ample on AF most the in are LEAPS therapy in as cardiac quarter, demand trial. are cardiac to innovation our worldwide devices do preoperative FDA addressable the have prophylactic nearly AFib advancing of move use without of Last surgery Over million efforts AtriClip aid markets not forward landmark grow to an extend easier-to-use examining we patients in less surgery with and X the markets, existing announced with cardiac patients clinical invasive Moreover, opportunity devices. in increased diagnosis. diagnosis. ahead hybrid we this X/X notably we is product pursuing There our studies focus penetration and surgery. a preoperative

patient for by followed preparing team enrollment initiation Our year. this later begun has trial

reminder, trial sites up X,XXX a involve the As patients XXX to will at worldwide.

should We for participate accounts the from work, of have all seminal change patients. standard which cardiac this surgery strong care interest to in

LEAPS trial number to all of device the will truly distinction addressable extension closer for a the our years While and a meaningful an market of progress management AtriClip the to us puts for complete, franchise. appendage take

traction from a pain Now Nerve in shifting base. long-lasting block franchise, another and patients. Block pain We where pain to our of United our States, for reached $XX revenue surgery, to of freezing to quarter Cryo within both providing one our account a after cryoSPHERE exceeding form sequential growth management fastest-growing thoracic million method probe unique increasing The the nerves marking relief be signals quarterly therapies. transmitting of continues uses

quarter starting believe still also great with globally interest and XXXX, are we and Australia. Despite the growing Nerve ended therapy this since We second in are progress in launch we of Europe to expand as and the Block more for therapy our adoption we to of again, thus, and overall undergoing explore stages of work and our market patients pain in thoracic technology surgery early opportunity. opportunities expanding management impact applications Cryo new

the Finally, and from product inappropriate last for ablation cultivating with affects the upon and for will relationships IST On approval rate markets driving have in distressing efforts using physician patients this therapy. currently, new study focus with to world, of the call, across technology treatment an elevated characterized leveraging trial, HEAL-IST our are is the procedures. dedicated platforms, around symptoms heart these tachycardia, by and sinus we device this adoption developed. or we addition of or unique existing along palpitations, people suffering hybrid approved HEAL-IST inability to by treatments announced building millions It those IST, development condition. in are we for to of no sleep heart FDA contributing for our there a debilitating the exercise.

the are underway, been We that cases performed the in initial States. trial and excited have share to United Belgium is

mission, areas represents improve patients’ demonstrate another Cryo therapy, While robust nearly we patient-focused advance lives our recognition therapy X,XXX for CONVERGE innovative clinical Foundational quarter decade. disruptive by driven and Cincinnati, built Nerve Ohio; we and in patient-focused growth. our as the humbled with summary, we accelerated insights is all workplaces our innovation this HEAL-IST, In the opportunity Netherlands just a culture are team our unique and Block AtriCure. to catalysts I’m have are I’m our AtriCure incredibly been LeAAPS, beginning expansion, this AtriCure to and results Simultaneously, for past and strength investing to we dramatically and many alongside Minnesota; locations and as proud many this Amsterdam, that launches technology teammates of our technology success EnCompass of the new as by over science. has Minneapolis, top year. market and to such work

truly special results call the Angie I Chief to say AtriCure turn simply will Financial team. we our now Together, more have our from a you that, over For to created and details I discuss the will to Wirick, Officer, quarter. thank company.

Angie Wirick

Mike. you, Thank

second of basis on Our XXXX. XXXX the XX.X% reported constant $XX.X compared quarter worldwide million quarter increased currency revenue basis when second and of a on a to XX.X%

experienced our saw management second geographies, in On growth in earlier, noted we pain quarter. XX.X% worldwide outstanding Mike product a a growth solid bolstered and basis, of we by very As from first key and across the sequential revenue lines management. and results appendage

early and EPi-Sense with half $X.X surgery growth from XXXX. up invasive $XX.X which XX.X% And over million XX.X% quarter, For growth combination were XX.X% over XX.X% $XX.X growth strength consistent $XX.X per management was million, of million, invasive was now million management U.S. from quarter the quarter open from XXXX. second up the sales, of sales, We XXXX. with revenues second XXXX. of an of Open steady sales product for concomitant million, The minimally and a U.S. nearly Difficulty] of over of the compared revenue procedure. XXXX, to penetration estimate on sequential quarter up [Technical year-over-year to second the pain of U.S. new million, sustained the of sales the showing revenue were approximately $XX.X quarter procedure ablation from compared management appendage incremental Pain finally, $XX.X XX% and launch basis. up market. EnCompass X.X% expectations products ablation increase adoption the second our quarter XX% were million, the XXXX, were cardiac $XX.X minimally a ablation excludes increased roughly sales

MIS pre-pandemic offset ablation However, trending which as in legacy revenues, are our decline below approximately growth levels. revenue was you said, XX% by

this the confident we several contribution EPi-Sense of not Convergent our in outlook While progress of front reflect Earlier, therapy. long-term launch. AF from for incredible the Hybrid the fully in opportunity noted quarter’s EPi-Sense Mike in us, remain does indications

Let metric. following the me answer

which from our of beginning year a progress is quarter’s EPi-Sense volume, anniversary This has first pre-pandemic approval revenue XXXX we or just convincing as improved and average the the in pre-PMA this believe we XX% quarterly of signs quarter. passed

$XX.X over was which up XX.X% to on by on unfavorable XX% a the the constant for revenue, partially reported in slower driven the European Germany. XXXX. international and offset volumes rates and up to a basis million, activity rebounding procedure increased as United compared of the million, currency Turning XX.X% sales year, $X.X and basis in quarter second accounted by Netherlands Kingdom, activity prior and exchange

Asia in over international appendage $X.X XX.X% the increase other on and XXXX. devices, international in same of period in international million strength Overall, XX.X% for accounted an up AtriClip markets were revenue in second and of growing adoption Japan. year management sales, fueled in by quarter of in prior markets the Australia resulting the

quarter well of basis the mix key inflationary encouraged Despite points from margin and by resulting gross mix. reflects are XX Turning product quarter quarter for gross current decline U.S. XXXX. as chain balance and in our second XXXX, With of of to shifts focus and quarter teams. as the supply of similar operating second results geographic operations the our each down pressures quality in the primarily for metric environment, increases the was we the cost margin from the another XX.X%, continued

spending selling, operating Moving operating quarter and in costs, increased million the in of in leverage our for over physician is as of to maintained XXXX. of and administrative investments drive second development each quarter detail to level and million pipeline XX.X% quarter, the in in-person and increasing the expenses and driver general prior In total, second travel of significant development increased XX% investment on research adoption. XXXX meetings programs, change despite $XX.X quarter awareness to and our resumption of trade this team gained revenue shows million expenses year or a product costs activities the of costs. regulatory $XX.X we related expansion approximately from at as A of the additional and training the well in the $X our

quarter EBITDA second for compared the to EBITDA of negative year-over-year, the of $X.X expenses operating adjusted Adjusted to the a million $X.X charge XXXX comparing of was when included reminder, a quarter As negative million consideration $X.X XXXX. related contingent a second liability. million

in XXXX while the second each adjusted in quarter was period respectively. Our loss loss $X.XX $X.XX share per $X.XX of a of second share share was $X.XX the compared quarter per loss the to XXXX, per and

the end quarter, is and balance million in investments. with we As $XXX sheet strong our cash

finally, Give now the results expect our to in for an for the approximately XXXX. Now XX%. quarter, to XX% revenue approximately business outlook growth strength and of we turning for our to $XXX $XXX million to million across second year, reflecting achieve ongoing

MIS for the procedures revenue. With do in top the pressure we the of range outlook environment, guidance for to remainder elective last end expect our current modest influencing year, the ablation the of and

of an acceleration many historical results, combination overall However, the is over of catalysts. growth growth business reflecting the our our rate

we As be the trend the moderated XXXX, by expansion to therapy to building sequential normal slightly the to growth from acceleration an we fourth to the quarter. look experienced by next momentum seasonality quarter followed of similar anticipate the into the return second third we for quarter, to

full gross expect margin to costs increasing potential comparable varying impacts for with to XXXX the continue XXXX from be mix. year We and to the

across our maintaining development are product site on development research clinical investment activities We our spending level initiatives in of and platform. and with

improvement approximately an adjusted for be expansion Additionally, for of $X line training XXXX EBITDA loss quarterly adjusted EBITDA. to we top $X.XX. call realize team, loss our share our thoughtful and million full activity. Mike in to half to the the second now the market per to With the continue of programs comments. approximately $X.XX for to awareness and of we back will to plans development a along improvements corresponding And year $X turn anticipate with in XXXX, million expect to Therefore, adjusted of closing commercial year, I the should a

Mike Carrel

of and advance showing our is standard The There beginning franchise Thank globally. has of XXXX many care millions exceptional, patients truly been each establish you, for of in growth. progress Angie. platforms we breadth of measurable the as of

as us in early continue the therapy, focused remains an the by be our AF drive persistent held opportunity hybrid for analyst our conclude of patients. would to by to it AF and and be of the announcing days AF only we and investor I webinar EPi-Sense to excited September. Hybrid solution Convergent of While long-standing like greater vast on to therapy in ahead adoption

hospital will substantial we of We the have be leaders for adoption. lead program opinion discuss hosting as who this our development key to to and benefits been intimately efforts involved therapy impact in EPi-Sense scale

be in can again shortly, the your will you today. us. and that call you information participating hope for Additional Thank we join support and available

questions we Our will future to soon, is Talk and for bright. up open now. you

Operator

Robbie Thank you. question comes [Operator Marcus Instructions] Our from of the JPMorgan. first line with

ahead. Your line is Please go open.

Robbie Marcus

on assume the MIS. that it’s the congrats commentary are procedure. extra the appreciate I of good the questions CONVERGE to all sales taking the We bulk from a Great. – Thanks for and start, quarter. all Maybe on just

So it forward, start was really do growth I wondering, to that’s it’s such important company driver like well. up of an think you sounds in since going how might that the fourth tick about of but and just thinking dollar-wise fourth sequentially quarter? third I don’t third qualitatively, be for and moving terms we you overall should business up quarter specifically, guide that know MIS? doing

Mike Carrel

you. the sequentially. good And progress about I we great growth of we’re do making on – Well, a it’s rate with that question. the really think a CONVERGE Thank feel XX%

we half quarter in seasonality probably every see kind well. much overall. looking you third the good in with it pretty the that would effects next franchises feel do in you’ll then of franchise into in will of we – anticipate is of a There back As year, you’re big one that that uptick the our about as we well and quarter that the in as fourth see year the

as their then to sites them back then sites are program. will start some – you year and many the are So start their and per that as into we’re and well. programs, in this of more new to send of start get half country getting see just we some the a And we’ve got beginning to year of just heard, to experience, that patients net around programs next beginning lot of top

and So hopefully, that gives you some help. guidance

Robbie Marcus

know Yes, top guidance. back calls, it’s a a the to I the not see pretty certainly. half And healthy on mind of year. of you’re the I’m implies glad holding EBITDA It usually but adjusted

sure we and a think and about trend the Thanks. XXXX into on rest as that make of want positive Just EBITDA, beyond? that to the should should year is adjusted continue being

Angie Wirick

we good a pretty really positive couple maintaining some our process activities, be training think in with starting that as to well it’s where call when platform, expansion on assumption thought continue That’s of awareness and the incremental HEAL-IST of totality. ablation relative for are the that clinical the of as R&D half then the our in talked we’re key the some we kind of to be of technology you to clip the investments leverage continue thoughtful and second and our of half our to makes about really which Robbie, team, good to with kind expansion second spending, namely where a about areas up Mike commercial focusing part investment. that see investments. on year the within making programs, an team, We team disciplined of and

seen you’ve the project-related to year is costs out of occur, continue that of leverage should transitory the saw which the the the past. costs we that which in P&L, that what think see will first some in are I half of

that of growth our over the money really and enhance many think going to where we’re these help areas spending to one about investments, think you when years are focusing come. in really are I each these

We progress lost the have too. the bottom on line year made comparing last

EBITDA this million close a that good the strong I profitability pretty And We’re profitability. towards year. think at the to million balance $X best fund really to is to progress really sheet $X.X range news

Robbie Marcus

Thank you. Great.

Operator

Wise of next And you. from line our Rick with Thank the question comes Stifel.

Your line is Please open. go ahead.

John McAulay

John Hi, Mike. Hi, actually Angie. Rick for on This is today.

and the noted a of kind more for heard half it’s June of back of or And looking kind anything to guidance throughout so building but issue that companies kind year far from half has has year, in the that? of later one feel you of seen you quarter, kind the staffing in have several the July. on been in procedures Have the of impact regard? are we about that any me headwind of larger for for how First do become second your just kind been of insulated into you

Mike Carrel

our guidance, – I items staffing, there gone not at It’s and away. look say to would there. COVID-related that completely you When continue of definitely we are be kind even definitely

still I comments, was my there that in still it definitely talked – have the about is it. still you’re think quarter. I in a of going effects in and the way of variance guidance kind have lot it, gave aspect to of you that of the If that’s back definitely better out obviously first than you year. it’s But And terms our some have we you half happening. And some that in have impact the of the throughout

happens. of that normality on have really of really the As guidance, back and top return kind end end the the would mean, the end and have of think you assume that. to guidance none of complete assume end example, the that bottom that a happens, if an bottom the would then obviously, that a about I snap you And the guidance high of you that something kind of

John McAulay

Block one really segment Thanks. tracking product-specific has management super growth. with That’s been then And cryoSPHERE, Nerve pain strong Cryo question. your helpful.

utilization I’d like grew do not to love I it’s to quarter. end I like the at so it is think some this come more But at quick docs it’s that. color growth ‘XX? exactly first sequentially of of some it you looks like this if that’s math more U.S. this see sales XX% of going or on even a utilization sure XX% potentially little pathway And over I’m or this it – at or quarter year point be much, a that trained? it if And the increased U.S. seemed to trained. helping quarter. XX% was sales this just do if going docs from just rate, in utilization more

Mike Carrel

give Actually, sales, Nerve a that. back the Cryo color a and think, that’s more excitement as in maybe hopeful specifically as know years. can Block longer-term, of the kind pinpoint also going on that not it you several that for has little to have of of going us I’m because I’m the Block I our conversion I’ll general business some about the to don’t about next out things therapy percentage But – I What obviously to that us. growth expect been impact an get we out to fantastic look hybrid Cryo over Nerve degree I

in U.S. just thoracic of internationally. is double access you the to scratching when in surface look U.S. that procedures the still into market. are terms or over there XXX,XXX We’re market. the start There so

And so we’ve about X,XXX so patients. treated far year, this maybe or

we’re just the So surface. scratching

not penetrated. We’re

of annualize less XX% overall or We’re XX% you terms the those numbers. penetration that in than around

the way is we’ve go, we’re long to great. I think got feedback and getting a

in sites XXX already. United States over in We’re the

outside that possibly the doesn’t as occur the where include to the we into traction TAM be Block of used. get We’re other And starting expansion United that Nerve get Cryo States. areas can can of

it and been If on of patient, people right explain to sure hesitant the relative work it doing effectively. or we about we sure about areas are the make we to called safe TAM enough this I’ve took confidence and and other before, how wanted care talk make to are therapy to expansion call through because of get you’ve the

Cryo other Nerve revenue do to that anticipate impact we’re should and starting so Block used. areas And be And can future look sternotomy that, in I at where years.

John McAulay

questions. Super taking Thanks helpful, for my Mike.

Operator

BTIG. question next the of Marie comes our And Thibault you. with from Thank line

open. is line Your

Marie Thibault

and ask congrats on wanted taking strong business. question minimally a the on invasive the I ablation questions first quarter. here Hi, Mike. my Thanks to legacy Hi, Angie. for really

was it do I something dynamic the Is mentioned You there? that levels, to happening back levels? Or that think What’s could it which. XX% expect of that forget I get versus think, to year-over-year down, pre-pandemic you continue? or sort pre-pandemic eventually you

Mike Carrel

because good Marie, the That’s with question, the disease. most of part good that It’s the out a elective of because places of the business is CONVERGE. MIS adopt procedure impacted our to nature that incredibly really the really are most It a of help not works complex the work do of forms group legacy. customers patients well and they will

probably or that procedure. that back. it under that Most are So pressure some at they now. them we’re by anticipate of at I still do or time for about We think them staffing hit come issues it the definitely get of looking or major most of they are it, will COVID. the issues were short excited when be period right will But most. hit were hit of the or procedure – elective probably most They staffing COVID definitely the

Angie Wirick

Marie, trending to it’s that level below follow-up, that said, for of to that’s still run And kind being Yes. just rate But that’s that business. decline year-over-year. at pre-pandemic a leads our revenue a XX%

Marie Thibault

Okay.

be the some there levels to and essentially? try way XXXX to of plus from is CONVERGE any would what revenue about back go CONVERGE increase to one sort triangulate to So coming think

Angie Wirick

way think it. about a I to think that’s fair

Mike Carrel

Yes.

Marie Thibault

beneficial U.S. more margins, which have margins that not? influencing remind that. us gross some you products gross versus Okay. I then, you That’s on mix really was product helpful. Can mentioned And of Angie, think

Angie Wirick

in our beneficial quarter, see the impact revenues of the product where of Yes. it franchise. new that’s you out. we bigger probably themselves lead quarter more revenue expect our the I’d standard full year would first as say see year, – meaningful product the ablation lift first I’d we work launch costs AtriClip say of that that first to becoming we uptick production, But the of to is of through to is margins margin. this that with products, below portfolio. the with a had contribution an This felt those face any lotion fully margin EnCompass as kind of and really then our in for are very open product the EPi-Sense quarter a that’s rest a

Marie Thibault

Okay, the that’s Congrats Thanks. broad-based on here. again strength helpful. very

Mike Carrel

Thank you.

Operator

the question line William And from our next comes of with Plovanic Canaccord.

is Your ahead. go open. Please line

William Plovanic

Great, hear evening. Can thanks. Good you okay? me,

Mike Carrel

Yes.

William Plovanic

taking for Thanks my Excellent. question.

types a of maybe So couple different questions. of

LEAPS and the patients, that trial, lot customers start device? it’s you by gets an paid along the the for moving will of be device the considering already As FDA-approved

Mike Carrel

Yes. device for, device yes. be The – be will will the paid

We’re there. not we paying out for be have obviously for XXX(k) already will because a paying the product the device device. sites The

that in we both paying going the so U.S., And U.S. and/or anticipate they are to be for.

Angie Wirick

This a is time. won’t all to take the trial, multiyear X,XXX with randomized then get will patients necessarily bill any And that also slip.

So year don’t added X,XXX the you expect be to in volume. the next in terms of

William Plovanic

the don’t of we in up. anything know, jump on jump. percent little. of it big then a down the next pretty influence big was quarters? is on was one-time a curious, might of But have had But on it about couple I pretty as think it sales you. spend, I of a a basis, nature just I And was I’m there know understand, kind that thank a kind conferences, SG&A dollar that

Angie Wirick

quarter. Yes, there are the that conferences happen in second

in I the what half step-up in the resuming the than see which year, you the year, of year. growth tend the is is EBITDA format the the general, seen a turn the think bottom we’ve in second that virtual of or have the seen of past line an just step second for revenue balance into of those activities of in-person first leverage in to when will When be And years. to we about you you more than more you really the see think of year. better the front-loaded couple would in the decent in typically how we compared kind down about your half think the kind SG&A and to to expenses profitability of calculus part

William Plovanic

how me. But quarter to start that thoughts commentary then into – it? case, that hit this with And adoption taking I in fourth between out I’m should a you, that correct as – just see to that’s and acceleration questions. of were now is of clarify we then? on and into thanks And And kind growth. in and the the my what’s this year the it the if going we kind change paraphrasing think XXXX, your there year now, for Is should of please Okay. that CONVERGE we about want for you’ve to because so been

Mike Carrel

other in that really to heavy aspects year. actually starting of are the That the in hit see to education of more centers is from we’ve end combination converting and net much did continues programs the didn’t accelerate number got already included. as but lot large things. we we’re affected But are them and it COVID it aware and looked then and we XX% involved. this Two you’re major is think getting new ability increase of to getting at that of. even liked quarter, into QX, a kind actually a terms One trained lot some treat training into this a longer-term. level QX out sites to that did lot of at as think of going a last before. we had of and that anticipate took. of sites of We’ve of would got came of ever that I I than patients And we helping quarter ourselves these and a – maybe as programs have accelerate, everybody as – our we when accelerate we

are and and adding getting than have adoption we of attachment had a clip are We the greater ever we’ve rates before.

see to things and year, combine start sure. continue begin that all and of to again, for to to fourth start quarter into accelerate, next You

William Plovanic

Thanks taking my Great. for questions.

Operator

question our And Needham. Saxon from you. with of line comes next Thank the David

Your is go line ahead. Please open.

David Saxon

Hey is Yes. guys. the mean more a taking the least Congrats like I in Maybe questions. for on thanks EPi-Sense, AtriCure, and significant driver seems it on emerging at cryoSPHERE, maybe for as quarter near-term. the cryoSPHERE

months outpace the XX you expect adoption over you do can next to or kind of do excess So, that maybe think revenue cryoSPHERE? or and continue, XX contribution months,

Mike Carrel

Nerve will Adoption Cryo grow Block are continue both at continues. going to very think fast. I a grow fast to pace.

the over markets as double XX about ago XX look next so. are field new we They well XX well. other maybe as or out the were into and are several trained today, in almost we or up people now have people where – years we expanding We from almost so months

in to we mentioned, begin Bill to see you that But them to think to the Block anticipate major area. to that’s been those I the to continued you business deeper to going that. are get trainings And So, penetration on, contributor referring also become accelerate. a that based continue CONVERGE the more as are believe see earlier, we I progress come online to Cryo going that and physician Nerve to is just sites within to watching base, market their and have then start to sites going from those areas, start going more I doing to

few and of large care. we examples to that a fact, want the really the reasons standard in years how kind has show with cascaded of that September kind in hybrid they they of a and sites and then is core terms one into In their of therapy of part of over developed sites of started part are we this have the several of how session that it’s their where a practice hosting

are and West and East known, well-recognized sites, the EPs And from so going they Coast. to both well be

Nerve long-term think Hybrid also I us is for contributor going I us why to kind a that’s So, confident to Block am And on for front continue great, as it’s kind be well. of you big a but going going of the that be to Cryo around Convergent a for is real good feel really big show yes, how that. country to driver give and to broad you in

David Saxon

you. the Okay. That’s on sinus HEAL-IST. just for market. helpful. market Maybe we about And tachycardia. seems like to around for that in look we potentially do September. tried It forward you session will prevalence opportunity is talk just Maybe I a can work follow-up it and sizing significant be to very have some mean could inappropriate my that

Thanks maybe market about from a dollar are some basis? how you but just population thinking also on So, perspective, a so color on much. that patient

Mike Carrel

Yes.

you are right. think I

ave get That’s correctly, that everybody Those said, they effectively. we both The patients, success, make sure core also being the things slow the been the procedure have it we for relative we from be we actually very centers the around months We took it this. much Cryo globe sinus and this at potential to patients the critical the focus trained they we single as the that like that done data but could seen in is results That tachycardia, our the very clinical then think market, XX next to of we get safe. have and a We a or do large and right does the getting have procedure took seen prevalence have benefit want I to them effectively. like Nerve millions way it’s running. sure incredible it the procedure Block safely really where XX two as of over get are make that to has first. to this inappropriate things. trial months

And we once to able type $XXX long-term that clinical the for this so talk out a meaningful going you do see believe million to data, are that to prove procedure. million $XXX with TAM are to start I

patients, develop a you the and we next up-front, see we data to did start think something will and to get going to as millions obviously begin how look get some similar then to say you have half over you you Block in uptick the of Nerve years train not And see kind will Cryo I If that to get the But larger. right trial lot there, that. would of Obviously, X the of out I got years are you educate. this that it’s back X that. at and

David Saxon

Great. Thank you.

Operator

from the comes question next our Oppenheimer. And line Kalia Suraj of with

Your go is Please open. line ahead.

Suraj Kalia

hear Hi alright? can Mike, me, Angie, you

Mike Carrel

Yes. Suraj. Hey

Suraj Kalia

seems or call the the if give Mike, Maybe you Angie, utilization should the a the some information it hey think sites. cryoSPHERE, on growth quarter. of of the number just Obviously, on the we guidepost missed about on be lot standout I for in to call. trajectory us cryoSPHERE? How provided So, us could provide

Mike Carrel

on in XXX and sites we in well Europe. of United but more did not in over a previously, are the are centers thoracic talked call, number about sites this centers We cardiothoracic There we the than in United States specific give just started today, getting are we States.

So, there are, call centers, it, surgery X,XXX cardio or centers. cardiac so

got XXX pediatrics, so are about You thoracic doing that another sites probably etcetera. to XXX or or

we adding to get that are standpoint sites. from but right we about right in to of because now, the are easy so So, that now, importantly, starting numbers sites have I easy of of And we more of getting in we It’s But over within kind so. within surgeons adds is getting surgeons. their just are these kind sites, people And you see for mouth additional train. that we of is word are are deeper that XXX are to hospitals adaptation – new very are what fellow we to think actually in adopting. can terms we the probably that – beginning both very this talk to or

been up we quickly, the adopt done that’s country. why surgeons it fast. a it, able They can that very with Now of and to we so have know lot it’s it around pick

Suraj Kalia

of CONVERGE asked me ask again. it. sites just release. Mike, number Roughly have way. been Got were XXX questions it CONVERGE. slightly CONVERGE let pre-data know a different And a Maybe I on doing

a lot of sites. about You deeper going into talked the

how of is look but utilization we ‘XX, right, up. at down, picking tie for do should FY going this ‘XX. a part CONVERGE if about can ask so my is or ‘XX? you are the these am Folks, for utilization different two about how characterize all for half of taking is MIS, I exit in we that I will how of there But we sites? for just line think not second As is reason outlook – also should you us, FY think And MIS in CONVERGE legacy item like together buckets, the we incorporated look terms how could questions. triangulate what if thanks exiting you sure

Angie Wirick

Yes. a very question. fair It’s

continue expand number the We of sites. to

and year to site. go more for whether CONVERGE, than pre-PMA as quite we we into more anticipate getting obviously by we well. build which per get We acceleration would deeper as numbers the sites doing So, kind we those into were to this sites both are next cases within those progress throughout up in year, today bit, are of a of

of doing in we We are done of sites, doing number more per quarter pre-PMA, than terms and site. we have per are more

the on side. are those CONVERGE – that’s So,

some side, elective that that’s most that’s really it legacy the MIS we kind we We there. procedures. slight about move getting I There is anticipate any be would of to pressure down it’s at On on don’t a may growth part area anticipate look as as of thinking of that But would kind say slightly flat business on the the forward. go-forward basis. how of business kind

Suraj Kalia

you. Thank

Operator

from comes question next Matthew PSC. O’Brien with line our And the of

is Your Please open. line go ahead.

Matthew O’Brien

and Hi. these Thanks for the figure questions lines. taking phone out

you beat than follow-up kind mean asking versus pretty else this people QX [ph], mean about QX, just vu what Mike Angie, déjà what softer everybody MIS were I is much I of to was modeling. the So, is on here. board. and across

specific maybe just got… QX far can are as over that we from some COVID QX staffing, be carrying on as – what of headwinds more you you So, the into

Marissa Bych

can you connection, hear? lost we think I

Operator

PSC O’Brien I with Matthew can we have And ma’am. question. a asking

Matthew O’Brien

Angie, you hear Hello. me? Mike, can

Operator

just them to reconnected. give get a O’Brien, moment Mr. so

Matthew O’Brien

Okay.

Mike Carrel

Sorry everybody. We connection, somehow lost so our my apologies.

Operator

O’Brien, ahead your Mr. question sir. Alright with Mr. Carrel. go

Mike Carrel

Matt. Sorry

Matthew O’Brien

okay. you Okay. It’s me? worries. hear No Can

Mike Carrel

I my can lost hear you. so connection, I apologies.

Matthew O’Brien

did love déjà side this right, versus comments the vu Pipe of bell I what phone is now, right kind all QX, QX. our worth. So, we from But pair but for on a it’s friends so,

the exception MIS across board You on top the of line. with beat the

to Everybody going with launch. going is focus are so here. going And is of They on something on lot stuff say to is there the wrong MIS. good a

the the it’s give ‘XX. are is have that give percentage into this year headwind, to a talking did new So, the half hospital of of if And staffing, there getting the Convergent, or coordinate those be to things about shooting like all talk Are then and lines on in How got of people in late much come launch here a can everybody. folks feel? these a in to to centers this you pandemic out the you utilization, figures year? still little you feeling? going that bit last are Convergent about year growth kind training year, new really numbers, know you isn’t just it of more utilization of centers quantitative that confidence a year, way or you failed of can something to at carried and end were confident don’t talk things a this some half you specifically about any little along a into specifically over the next more bit back on into I through that training first that

Mike Carrel

Yes. think I use don’t may I personally. I it’s I déjà vu guess language, different mean

we QX. sequentially, grew XX% I Matt, think that from to QX

actually So, very off procedures. of elective the I of feel good most It coming it. is

talked things you are the exactly. So, about

have You got staffing.

centers from and some COVID the really saw You have good up QX degree area of most it. in to linger to But elective of COVID continue within again, those across growth dramatically QX back to get a make good and to to did board, centers the got we those kind hit after progress running. quite QX really

launch failed So, all. at I don’t think it’s a

the of have data technology a got back going pandemic. pushing we this not we view this And with in need in I to their trying data. in are launching to and just are the rock mean on a really pandemic. is time we incredible is great of that centers think It are disruptive, centers. the get way middle absolutely I have and launch we middle takes solid, the to it the

this I think great made we quarter. progress

when many feel nurses, other and talked get to that the that particular centers were of more types community-based on we of trained up deeper had really I also at and getting on have across look front progress as lots well centers like in running are into. top of on mentioned my you comments, that the just we electrophysiologists XXX surgeons accounts and include now and we over good that well board, and are strength within that. kind board, [ph] ABBs easier got coming making you And always about in are the have have We and when we and of I have we think cardiac

Hopkins, Mayo getting major are of and great up just marketing major that programs Clinic, referring and We actually are running, base. they getting are Convergent Northwestern of as have few mentioned, involved Cleveland Clinic, Johns to and made progress, I a the their centers centers, getting UCLA the

got of So, that. relative lots we to have confidence

fact I is that are COVID. with think we elective have the got to we procedure and faced an it’s yes, – by affected

I feel going this down long-term So, when But a with back is and come to to care complete that. me the standard in with why is in down of made indicate are like the in coming COVID, this people cancel come us, COVID to that or there they not and that year because over years. the of definitely nothing we cases, have and be the normal middle progress that back of staff that isn’t we are great has will both the have that’s which trying you affecting launch half to

Matthew O’Brien

as a be with XX% of your couple Can Okay. XX% a better doesn’t you, And line But next Convergent, do grower say know then get put Thanks. are the I kind centers going plus top remaining strength And seeing put even it’s still with here, you management, thought I this. going. to is in and just headwinds lot the difficult say point XX% process. through pain the years because a growth? that that then another it’s up the open you disagree to on we if just say, these MIS clip of to legacy you all finer think get just don’t side. and the than business Mike, MIS you what on CONVERGE grower,

Mike Carrel

not I what-if mean scenarios play I am on going to conversion.

this business. going to north grow it’s of think long-term about talking you I are what significantly for

levels. I of of So, our feel really to in kind grow those ability at confident kinds

any on I front. have so And that don’t concerns

all raising going very are accelerating the years for guidance proven have we that we XX% about now to averages, we We above XX%, rate being to have growth many across the the strong come and which anticipate and year, to growth historical this the talked to have platforms.

but very rate confidence confident strong in feel of at in I growth all have also yes, ours, as growing well. So, I a really great CONVERGE

Matthew O’Brien

you. Got it. Thank

Operator

And conclude to over this today’s conference further you. back I Thank does any session. Carrel turn the And remarks. for to like would Mike question-and-answer

Mike Carrel

again, We apologize there got for cut phone Great. issue Well, I for of a kind great a quarter. moment. the but off,

are all progress business. across proud have the that made of fronts We really the we of

we in both for end growth to bottom are and XXXX. raising mentioned, the year the feel of XX% top guidance and we really year and our As of into we about line, roll on good that XX% going terms how guidance, both to

you great for support, the to your Bye look we night. call. and on forward Have next conference a thank talking So, you to now.

Operator

concludes This conference Thank call. for today’s you participating.

have a good Everyone, may You disconnect. evening. now

AtriCure (ATRC) 3 Aug 222022 Q2 Earnings call transcript