AtriCure, Inc. (ATRC) Q1 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reflects a positive sentiment with reaffirmed revenue growth guidance, strong adoption of cryoSPHERE MAX, and significant growth potential in pain management. Despite challenges in the U.K. and APAC, other markets show strong growth. The Q&A reveals optimism with strong clinical outcomes and product adoption, despite some uncertainties. Given the market cap, the overall sentiment and strategic plans suggest a positive stock price movement of 2% to 8% over the next two weeks.

Key Financial Performance

Worldwide Revenue $141.2 million in Q1 2026, up 14.3% year-over-year (12.8% on a constant currency basis). Growth driven by adoption of new products in the U.S. and globally.

U.S. Revenue $116.2 million in Q1 2026, a 14.9% increase year-over-year. Growth fueled by adoption of EnCompass clamp and AtriClip FLEX-Mini and PRO-Mini devices.

Open Ablation Product Sales (U.S.) $39.1 million in Q1 2026, up 17.3% year-over-year. Growth driven by adoption of EnCompass clamp across new and existing accounts.

Appendage Management Product Sales (U.S.) $48.4 million in Q1 2026, up 14.9% year-over-year. Growth driven by adoption of AtriClip FLEX-Mini and PRO-Mini devices.

MIS Ablation Sales (U.S.) $6.4 million in Q1 2026, a decline of approximately 25% year-over-year. Decline attributed to headwinds in the minimally invasive ablation franchise.

Pain Management Sales (U.S.) $22.4 million in Q1 2026, up 29.5% year-over-year. Growth led by cryoSPHERE MAX probe, contributing approximately 70% of pain management sales.

International Revenue $25 million in Q1 2026, up 11.5% year-over-year (3.3% on a constant currency basis). Growth tempered by uncertainty in the U.K. and lower distributor sales in Asia, offset by growth in other geographies.

European Sales $16.1 million in Q1 2026, up 13.2% year-over-year. Growth driven by adoption across franchises.

Asia Pacific and Other International Market Sales $8.9 million in Q1 2026, up 8.4% year-over-year. Growth offset by lower distributor sales in Asia.

Gross Margin 77.4% in Q1 2026, up 246 basis points year-over-year. Increase driven by favorable product and geographic mix.

Operating Expenses $108.8 million in Q1 2026, up 10.3% year-over-year. Increase due to rapid enrollment in BoxX-NoAF clinical trial and increased headcount for product development.

Adjusted EBITDA $17.1 million in Q1 2026, up 95% year-over-year. Growth reflects balanced capital allocation and improved profitability.

Net Income Approximately $100,000 in Q1 2026, compared to a net loss of $6.7 million in Q1 2025. Improvement driven by revenue growth and operational leverage.

Earnings Per Share (EPS) $0.00 in Q1 2026, compared to a loss of $0.14 per share in Q1 2025. Reflects improved financial performance.

Cash and Investments $146 million at the end of Q1 2026. Slightly improved cash burn compared to Q1 2025, with expectations for positive cash flow for the full year.

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Operating Highlights

AtriClip FLEX-Mini and PRO-Mini devices: Strong adoption in the U.S. market, contributing significantly to appendage management revenue. FLEX-Mini accounted for approximately 40% of open appendage management revenue.

cryoSPHERE MAX probe: Primary driver of pain management sales, contributing roughly 70% of the segment's revenue. Recognized for time savings and clinical effectiveness.

cryoXT probe: Gaining traction for amputation procedures with positive feedback from surgeons. Expected to contribute more meaningfully in the latter half of 2026.

International expansion: Received CE Mark under EU MDR for AtriClip FLEX-Mini and PRO-Mini devices, with plans to launch in Europe later in 2026. Growth observed in Europe and Asia-Pacific regions despite some headwinds.

Revenue growth: Worldwide revenue reached $141.2 million in Q1 2026, a 14.3% increase year-over-year. U.S. revenue grew by 14.9%, driven by new product adoption.

Clinical trials: BoxX-NoAF trial enrollment is ahead of schedule, with approximately 300 patients enrolled. Expected to complete enrollment by the end of 2026, nearly a year ahead of plan.

Profitability: Adjusted EBITDA nearly doubled year-over-year to $17.1 million. Gross margin improved to 77.4%, driven by favorable product and geographic mix.

Focus on innovation: Continued investment in product development and clinical trials, including BoxX-NoAF and LeAAPS, to address unmet clinical needs and expand market opportunities.

Operational leverage: Disciplined cost management while accelerating R&D investments, particularly in clinical trials and product innovation.

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Risk or Challenges

Minimally Invasive Ablation Franchise: The minimally invasive ablation franchise faced headwinds in the first quarter, indicating challenges in adoption or market acceptance of this product line.

International Revenue Growth: International revenue growth was tempered by continued uncertainty in the U.K. and lower distributor sales in Asia, which could impact overall revenue performance in these regions.

Manufacturing Costs: The expansion of manufacturing facilities in the second half of 2026 is expected to increase manufacturing cost burden, potentially moderating gross margin improvements.

MIS Ablation Sales in the U.S.: U.S. MIS ablation sales declined approximately 25% compared to the first quarter of 2025, highlighting a significant challenge in this segment.

R&D Investment for BoxX-NoAF Clinical Trial: Accelerated enrollment in the BoxX-NoAF clinical trial has led to increased R&D investment, which could strain financial resources in the short term.

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Guidance & Outlook

Revenue Guidance for 2026: The company expects full-year revenue of $600 million to $610 million, reflecting growth of approximately 12% to 14% over full-year 2025 results.

Revenue Drivers: Performance is expected to be driven by pain management, appendage management, and open ablation franchises, partially offset by headwinds in the MIS ablation franchise and certain international markets.

Second Quarter 2026 Revenue Expectations: Anticipates mid-single-digit sequential growth due to typical seasonality.

Gross Margin Outlook: Expects modest improvement in full-year 2026 gross margin over 2025, with favorable product and geographic mix in the near term. However, expanded manufacturing facilities in the second half of 2026 will increase manufacturing costs, moderating the full-year gross margin outlook.

Adjusted EBITDA Guidance for 2026: Reiterates expectations for full-year adjusted EBITDA of $80 million to $82 million.

Net Income and Earnings Per Share Guidance: Expects full-year net income translating to earnings per share of approximately $0.00 to $0.04 and adjusted earnings per share of approximately $0.09 to $0.15.

R&D Spending Outlook: Anticipates increased R&D spending over the next three quarters due to accelerated enrollment in the BoxX-NoAF clinical trial, with slightly higher R&D spending in the second half of 2026 compared to 2025.

BoxX-NoAF Clinical Trial: Enrollment is expected to complete around the end of 2026, nearly one year ahead of schedule, with significant R&D investment planned to support this acceleration.

Product Launches and Market Expansion: Plans to launch AtriClip FLEX-Mini and PRO-Mini devices in Europe later in 2026 following CE Mark approval. New product launches in the U.S., Europe, China, and Japan are expected to drive growth in the appendage management franchise.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you talk about the progress you're making on PFA integration? Any milestones that we should be on the lookout for this year? And then can you talk quickly about the RF enhancements you're making to come with the next-generation catheter?

A:The company is making great progress on PFA integration, having completed the first in-human trials in Australia and starting additional trials in Europe with 30-40 patients. The submission to the FDA is expected later this year, with IDE acceptance and enrollment beginning in 2027. Regarding RF advancements, both RF and dual energy are embedded in the first-in-human playbooks, with trials expected next year.

Q:Can you talk about what you saw in the quarter from a growth perspective in terms of new accounts, existing accounts with cryoSPHERE MAX? And also on the ortho side of things, what contributions did you get from those different buckets?

A:The cryoSPHERE MAX has been adopted by about 70% of pain management accounts, with 10% growth in these accounts during the quarter. Surgeons are impressed by the quick freeze times and exceptional patient outcomes. The pain management business has significant growth potential across multiple areas, including thoracic, sternotomy, and below-the-knee amputation.

Q:Can you talk about any anecdotal feedback you're getting from clinicians as far as outcomes with BoxX-NoAF? And given the timeline for finishing enrollment, could we see data at ACC or HRS next year?

A:Clinicians have reported significant reductions in postoperative Afib using the EnCompass clamp and AtriClip, with some sites adopting the technology outside the trial due to good results. Enrollment is expected to finish by the end of the year, with data likely presented at AATS next year rather than ACC or HRS.

Q:Can you tell us a little bit more about what's going on with the U.K. and APAC distributor sales? And any visibility on when things might start to improve?

A:The U.K. market remains a drag, with performance similar to the end of 2025. Larger distributors in APAC experienced lumpy orders, but this is expected to be transient. Direct markets in Europe, Australia, and Canada showed strong growth, and new product launches are expected to drive further progress.

Q:Can you provide an update on the Convergent procedure market given the evolving PFA landscape?

A:The Convergent procedure market faces headwinds as patients are trying multiple PFA catheters before considering the Convergent platform. Despite this, the data remains strong, and those using the technology report benefits. The company continues to support the solution and engage with electrophysiologists.

Q:Why did you reiterate the revenue guidance despite beating on the top line? Are there any headwinds for the remainder of 2026?

A:The company maintained guidance to remain prudent, as it is still early in the year. Headwinds include international business challenges and hybrid ablation in the U.S., while strong growth is expected in pain management, open ablation, and appendage management franchises.

Q:Can you provide an overview of the portfolio in China and Japan and where it could be by the end of the year?

A:Both markets have basic RF ablation devices, but neither has EnCompass. AtriClip was recently launched in China, while Japan has expanded clearances for mini devices. The portfolio remains a subset of the U.S. market offerings, with launches tailored to economic considerations.

Q:How are new entrants affecting your appendage management sales?

A:Medtronic is the only current competitor, and its market share peaked last year. The FLEX-Mini and PRO-Mini products are gaining adoption, and the company maintains a dominant market share. Clinical evidence specific to the company's products and continued innovation are expected to sustain leadership despite competition.

Q:Can you elaborate on the FTS quality metric update and its potential impact?

A:The FTS quality metric aims to increase the percentage of Afib patients undergoing cardiac surgery who receive ablation from 35% to 70% or higher. It will take effect in 2027, with hospitals being measured on it. This is expected to drive significant growth in ablation adoption over the next 3-5 years.

Q:Can you discuss the adoption of FLEX-Mini versus prior generations in open appendage management and the current ASP for AtriClip in the U.S.?

A:FLEX-Mini accounts for about 40% of U.S. open appendage management revenue, up from 35% last year. ASPs range from $1,100 for the original AtriClip to $2,250 for FLEX-Mini, offering pricing flexibility based on surgeon preferences and economic considerations.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the progress of the PFA integration milestones beyond general updates and did not clarify the exact timing or specifics of the RF advancements. Additionally, they did not provide clear visibility on when the U.K. market or APAC distributor sales might improve, citing transient pressures and ongoing challenges. Similarly, the commentary on the Convergent procedure market lacked precise data on patient adoption rates or timelines for overcoming headwinds.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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The earnings call summary reveals strong financial performance, product development, and market expansion, particularly with the EnCompass Clamp and AtriClip devices. The Q&A section highlights challenges like U.K. budget issues but emphasizes strategic investments and clinical trials. Despite some softer Clip sales, the company's guidance remains optimistic, and increased R&D leverage is expected. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction of 2% to 8% over the next two weeks.

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AtriCure, Inc. (ATRC) Q1 2026 Earnings Call Transcript