AtriCure Inc.

11/04/2026 | Press release | Distributed by Public on 11/04/2026 13:03

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
(Dollar amounts referenced in this Item 2 are in thousands, except per share amounts.)
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and notes thereto contained in Item 1 of Part I of this Form 10-Q and our audited consolidated financial statements and notes thereto as well as the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" as of and for the year ended December 31, 2025 included in our Form 10-K filed with the Securities and Exchange Commission (SEC). This discussion and analysis are intended to provide an understanding of our results of operations, financial condition and cash flows and contain forward-looking statements reflecting current expectations that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those set forth under Item 1A "Risk Factors," the cautionary statement regarding forward-looking statements below and elsewhere in this Form 10-Q.
Forward-Looking Statements
This Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking information is inherently uncertain and actual results may differ materially from assumptions, estimates or expectations reflected or contained in the forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this quarterly report on Form 10-Q, and in our annual report on Form 10-K for the year ended December 31, 2025 as updated by our subsequent quarterly reports on Form 10-Q. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. Forward-looking statements often address our expected future business, financial performance, financial condition and results of operations, and often contain words such as "intends," "estimates," "anticipates," "hopes," "projects," "plans," "expects," "drives," "seek," "believes," "see," "focus," "should," "will," "would," "opportunity," "outlook," "could," "can," "may," "future," "predicts," "target," "potential," "forecast," "trend," "might" and similar expressions and the negative versions of those words, and may be identified by the context in which they are used. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements include, without limitation, statements that address activities, events, circumstances or developments that AtriCure expects, believes or anticipates will or may occur in the future, such as earnings estimates (including projections and guidance), other predictions of financial performance, launches by AtriCure of new products, developments with competitors and market acceptance of AtriCure's products. Such statements are based largely upon current expectations of AtriCure. Any forward-looking statement speaks only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Forward-looking statements are based on AtriCure's expectations, experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances and are subject to numerous risks and uncertainties, many of which are beyond AtriCure's control. In light of these risks, uncertainties and other factors, the forward-looking events and circumstances described may not occur and our financial condition and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. In other words, these statements are not guarantees of future performance and inherently involve a wide range of risks and uncertainties that are difficult to predict. Some of the factors that could cause actual results to differ from our expectations include regional, national, or global political, economic, business, competitive, market and regulatory conditions and the other factors included in our Form 10-K for the fiscal year ended December 31, 2025 in "Item 1A Risk Factors," "Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Item 7A Quantitative and Qualitative Disclosures About Market Risk" and subsequent Form 10-Q reports. These forward-looking statements speak only as of the date of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise unless required by law.
Overview
We are a leading innovator in surgical treatments and therapies for atrial fibrillation, left atrial appendage management and post-operative pain management. Our cardiac ablation and left atrial appendage management (LAAM) products are used by physicians during both open-heart and minimally invasive surgical procedures. In open-heart procedures, the patient is undergoing heart surgery for other conditions, such as a mitral or aortic valve repair or a coronary artery bypass, and our products are used by physicians in conjunction with (or "concomitant" to) such a procedure. Minimally invasive procedures are performed on a standalone basis and often include multi-disciplinary or "hybrid" approaches, combining surgical procedures using our ablation and LAAM products with catheter ablation performed by an electrophysiologist. Our pain management
solutions are used by physicians to freeze nerves during cardiac, thoracic or amputation surgical procedures. We anticipate that substantially all of our revenue for the foreseeable future will relate to products we currently sell or are in the process of developing.
We sell our products to medical centers through our direct sales force in the United States, Germany, France, the United Kingdom, the Benelux region, Australia and Canada. We also sell our products through distributors who in turn sell our products to medical centers in other markets. Our business is primarily transacted in U.S. Dollars; direct sales outside the United States are transacted in Euros, British Pounds, Australian Dollars or Canadian Dollars.
Recent Developments
Our strategic initiatives are primarily focused on product innovation, clinical science and physician education and training to expand awareness and adoption. In 2026, we have maintained growth across most of our key franchises and geographies, resulting from past and current investments in our strategic initiatives. Our worldwide revenue for the nine months ended September 30, 2026 was $449,303, representing an increase of $55,275, or 14.0% (13.4% on a constant currency basis), over the first nine months of 2025, highlighted by continued strength in pain management, appendage management, and open ablation product lines, where recent product innovation remained a key factor in driving revenue growth. We have limited competition today; however, our key markets are attracting competition from new entrants developing competing products, procedures, and/or clinical solutions. Increasing competition may lead to loss of market share in critical franchises, pricing and margin pressure, and increased costs, which could adversely affect our revenue and profitability.
PRODUCT INNOVATION. We continue to deliver growth from several product innovations, such as our EnCompass clamp, cryoSPHERE® MAX™ probe, AtriClip FLEX-Mini® and AtriClip PRO-Mini® devices, and our cryoXT device. We remain focused on sustaining this momentum by advancing our internal research and product development efforts with the objective of enhancing our existing portfolio and supporting the introduction of future products while pursuing regulatory approvals to market and sell globally across all franchises. In April 2026, we received CE mark approval under EU MDR in Europe for our AtriClip FLEX-Mini® and AtriClip PRO-Mini® devices and launched both products in Europe during October 2026. In October 2026, we received FDA 510(k) clearance for the 30 mm AtriClip FLEX-Mini device. The clearance expands the AtriClip FLEX-Mini product portfolio and provides an additional size option for surgeons performing left atrial appendage exclusion procedures. We expect to commercially launch the product before the end of 2026.
CLINICAL SCIENCE. We continue to invest in studies to expand labeling claims, support various indications for our products and gather and publish clinical data for therapies and procedures involving our products. Key trials include:
LeAAPS. The Left Atrial Appendage Exclusion for Prophylactic Stroke Reduction (LeAAPS) IDE clinical trial is designed to evaluate the effectiveness of prophylactic LAA exclusion using the AtriClip LAA Exclusion System for the prevention of ischemic stroke or systemic arterial embolism in cardiac surgery patients without pre-operative AF diagnosis who are at risk for these events. This prospective, multicenter, randomized trial evaluates safety at 30 days post-procedure to demonstrate no increased risk with LAA exclusion during cardiac surgery. In July 2025, we completed trial enrollment of 6,573 patients across 139 centers globally. The trial is event-driven, and patient follow-up for the protocol-required minimum of five years post-procedure remains ongoing.
BoxX-NoAF. The Box Lesion and Left Atrial Appendage EXclusion Procedure for the Prevention of New Onset of Atrial Fibrillation (BoxX-NoAF) IDE trial is a randomized trial to evaluate if prophylactic ablation using the EnCompass® clamp and exclusion of the Left Atrial Appendage with the AtriClip system at the time of other routine cardiac surgery can reduce the incidence of post operative AF (POAF) and clinical AF during long term follow up in patients who have not yet developed AF but are at risk. This prospective, multi-center, multi-national randomized trial evaluates safety and effectiveness at 30 days post-procedure for POAF and secondary effectiveness for Clinical AF through three years. The trial provides enrollment of up to 960 subjects across 75 sites. We expect to complete site initiation and enrollment during the fourth quarter of 2026.
TRAINING. Our professional education team conducts in-person and virtual training programs for physicians and other healthcare professionals to support continuing education and product and procedural awareness. Over the last year, we launched new training methods including virtual proctoring and observerships, peer-to-peer case-in-a-box reviews and expanded courses for Advanced Practice Providers, incorporating new content and workshops. We also launched our first physician-developed electronic manual outlining best practices in developing and growing a Hybrid Ablation Program. These offerings, together with our traditional on-demand, local and national training courses, provide collaborative, hands-on engagement. Most recently, we added a live streaming platform in which healthcare professionals can view the courses without needing to leave their practice. Our professional education courses are further enhanced by the use of simulation models or synthetic cadavers, known as CADets. These reusable CADets provide a sustainable and cost-effective alternative to cadaver specimens while improving education efficiency.
Results of Operations
Three months ended September 30, 2026 compared to three months ended September 30, 2025
The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of revenue:
Three Months Ended
September 30,
2026 2025
Amount % of
Revenues 		Amount % of
Revenues
Revenue $ 154,450 100.0 % $ 134,269 100.0 %
Cost of revenue 35,100 22.7 32,937 24.5
Gross profit 119,350 77.3 101,332 75.5
Operating expenses:
Research and development expenses 32,116 20.8 22,892 17.0
Selling, general and administrative expenses 82,881 53.7 78,232 58.3
Total operating expenses 114,997 74.5 101,124 75.3
Income (loss) from operations 4,353 2.8 208 0.2
Other income (expense), net (336) (0.2) (294) (0.2)
Income (loss) before income tax expense 4,017 2.6 (86) (0.1)
Income tax expense (47) - 181 0.1
Net income (loss)
$ 4,064 2.6 % $ (267) (0.2) %
Revenue. The following table sets forth, for the periods indicated, our revenue by product type and geography expressed as dollar amounts and the corresponding change in such revenues between periods, in both dollars and percentages:
Three Months Ended
September 30, 		Change
2026 2025 Amount %
Open ablation $ 43,003 $ 35,592 $ 7,411 20.8 %
Minimally invasive ablation 5,389 7,428 (2,039) (27.5)
Pain management 28,057 20,837 7,220 34.6
Appendage management 51,600 45,450 6,150 13.5
Total United States $ 128,049 $ 109,307 $ 18,742 17.1
Total International 26,401 24,962 1,439 5.8
Total revenue $ 154,450 $ 134,269 $ 20,181 15.0 %
Worldwide revenue increased 15.0% (15.1% on a constant currency basis). In the United States, we realized a 17.1% increase in revenue driven by key product lines: cryoSPHERE® MAX™ probe for post-operative pain management, EnCompass clamp for open ablation and AtriClip FLEX-Mini and AtriClip PRO-Mini devices for appendage management. Minimally invasive ablation sales declined during the quarter from continued reduction in Hybrid procedures as physicians adopt PFA catheters to treat patients. International sales increased 5.8% (6.1% on a constant currency basis), with growth in all franchises.
Revenue reported on a constant currency basis is a non-GAAP measure calculated by applying previous period foreign currency exchange rates, which are determined by the average daily exchange rate, to each of the comparable periods. Revenue is analyzed on a constant currency basis to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have a non-operating impact on revenue, we believe that evaluating growth in revenue on a constant currency basis provides an additional and meaningful assessment of revenue to both management and investors.
Cost of revenue and gross margin. Cost of revenue increased $2,163 reflecting higher sales volumes. Gross margin increased 180 basis points, driven primarily by favorable product and geographic mix.
Research and development expenses. Research and development expenses increased $9,224, or 40.3%, primarily driven by a $4,500 milestone payment for acquired IPR&D made in the third quarter of 2026; $3,038 increase in clinical activity costs, largely attributable to BoxX-NoAF trial enrollment; and $1,579 incremental investment in our product pipeline through new product development projects.
Selling, general and administrative expenses. Selling, general and administrative expenses increased $4,649, or 5.9%, due to $3,850 in higher personnel costs, including travel and share-based compensation, largely attributed to commercial headcount growth. The remaining increase was driven by other administrative costs, including IT, legal and professional expenses.
Other expense. Other expense consists primarily of net foreign currency transaction gains or losses and net interest expense.
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of revenue:
Nine Months Ended
September 30,
2026 2025
Amount % of
Revenues 		Amount % of
Revenues
Revenue $ 449,303 100.0 % $ 394,028 100.0 %
Cost of revenue 102,013 22.7 98,586 25.0
Gross profit 347,290 77.3 295,442 75.0
Operating expenses:
Research and development expenses 82,753 18.4 74,704 19.0
Selling, general and administrative expenses 249,993 55.6 232,676 59.1
Total operating expenses 332,746 74.1 307,380 78.0
Income (loss) from operations 14,544 3.2 (11,938) (3.0)
Other expense, net (707) (0.2) (585) (0.1)
Income (loss) before income tax expense 13,837 3.1 (12,523) (3.2)
Income tax expense 710 0.2 681 0.2
Net income (loss)
$ 13,127 2.9 % $ (13,204) (3.4) %
Revenue. The following table sets forth, for the periods indicated, our revenue by product type and geography expressed as dollar amounts and the corresponding change in such revenues between periods, in both dollars and percentages:
Nine Months Ended
September 30, 		Change
2026 2025 Amount %
Open ablation $ 122,968 $ 105,368 $ 17,600 16.7 %
Minimally invasive ablation 17,806 23,747 (5,941) (25.0)
Pain management 77,474 59,275 18,199 30.7
Appendage management 151,594 132,649 18,945 14.3
Total United States $ 369,842 $ 321,039 $ 48,803 15.2
Total International 79,461 72,989 6,472 8.9
Total revenue $ 449,303 $ 394,028 $ 55,275 14.0 %
Worldwide revenue increased 14.0% (13.4% on a constant currency basis). In the United States, we realized a 15.2% increase in revenue driven by EnCompass clamp for open ablation and cryoSPHERE MAX probe for post-operative pain management and new product launches AtriClip FLEX-Mini and AtriClip PRO-Mini devices for appendage management. Minimally invasive ablation sales declined from continued reduction in Hybrid procedures as physicians adopt PFA catheters to
treat patients. International sales increased 8.9% (5.5% on a constant currency basis), with growth in appendage management, pain management and open ablation franchises.
Cost of revenue and gross margin. Cost of revenue increased $3,427 reflecting higher sales volumes. Gross margin increased 232 basis points, driven primarily by favorable product and geographic mix.
Research and development expenses. Research and development expenses increased $8,049, or 10.8%, driven by $2,451 higher clinical activity costs from BoxX-NoAF enrollment in 2026 offset by the close of LeAAPS enrollment during 2025; a $2,382 increased investment in our product pipeline through new product development projects; $1,474 increased regulatory filing and submission costs, and $1,090 higher personnel costs, including share-based compensation and travel.
Selling, general and administrative expenses. Selling, general and administrative expenses increased $17,317, or 7.4%, driven by $12,577 higher personnel costs, including travel and share-based compensation, largely as a result of incremental headcount to support sales growth. Marketing and training costs increased $1,888 led by expanded training activities. IT expenses increased $1,240. Expense related to meeting costs increased $890, and continued operational growth drove the remaining increase.
Other expense. Other expense consists primarily of net foreign currency transaction gains or losses and net interest expense.
Liquidity and Capital Resources
As of September 30, 2026, we had cash and cash equivalents of $187,031 and outstanding debt of $61,000. We had unused borrowing capacity of $62,750 (see Note 6 - Borrowings and Financing Obligation for related discussion). All cash equivalents and most of our operating cash is held in United States financial institutions. A small portion of our cash is held in foreign banks to support our international operations. We had net working capital of $279,418 and an accumulated deficit of $400,076 as of September 30, 2026.
Consolidated Cash Flows - For the nine months ended September 30, 2026 and 2025
Cash flows provided by operating activities. Net cash provided by operating activities increased $11,211 from 2025 to 2026, reflecting improved operating results of $26,331, driven by higher sales and improved operating margin. These improvements were offset by an increase of $18,855 in working capital cash outflows primarily due to an increase in accounts receivable from increased sales as well as investments in inventory to support future growth.
Cash flows used in investing activities. Net cash used in investing activities increased by $6,558 from 2025 to 2026, driven by higher capital expenditures related to the facilities expansion on our corporate headquarters campus in Mason, Ohio.
Cash flows used in financing activities. Net cash used in financing activities increased by $9,097 from 2025 to 2026 and was driven primarily by the $6,250 non-recurring proceeds from the 2025 failed sale-and-leaseback transaction. Other increases included debt-related payments of $1,787 and shares repurchased for payment of taxes on stock awards of $1,364.
Credit facility. The Company's Credit Agreement with JPMorgan Chase Bank, N.A. and Silicon Valley Bank was amended as of January 9, 2026. The Credit Agreement provides for a $125,000 asset-based revolving credit facility, with an option to increase the revolving commitment by an additional $40,000. A portion of the ABL Facility, limited to $5,000, is available for the issuance of letters of credit. The Credit Agreement has a three-year term and expires January 9, 2029. Amounts available to be drawn from time to time under the ABL Facility are determined by calculating the applicable borrowing base, which is based upon applicable percentages of the values of eligible accounts receivable, eligible inventory, eligible liquid assets, less reserves as determined by the Administrative Agent, all as specified in the Credit Agreement. The borrowings bear interest at a rate per annum equal to, at the Company's election: (i) an alternate base rate (ABR) plus an applicable margin or (ii) a term secured overnight financing rate (SOFR) plus an applicable margin. As of September 30, 2026, the Company has borrowed $61,000, classified as noncurrent and had unused borrowing availability of $62,750.
Our corporate headquarters lease agreement requires a $1,250 letter of credit renewed annually and remains outstanding as of September 30, 2026.
For additional information on the terms and conditions, as well as applicable interest and fee payments, see Note 6 - Borrowings and Financing Obligation.
Uses of liquidity and capital resources. Our executive officers and Board of Directors review our funding sources and future capital requirements in connection with our annual operating plan and periodic updates to the plan. Our principal cash requirements include costs of operations, capital expenditures, debt service costs and other contractual obligations. Our future capital requirements depend on a number of factors, including, without limitation: market acceptance of our current and future products; investments in working capital; costs to develop and support our products, including professional training, clinical trials and contractual development costs; costs to expand and support our sales and marketing efforts; operating and filing costs relating to changes in regulatory policies or laws; costs for clinical trials and to secure regulatory approval for new products; costs to prosecute, defend and enforce our intellectual property rights; costs to defend against and/or resolve litigation or claims against us; maintenance and enhancements to our information systems and security; and possible acquisitions and joint ventures, including potential business integration costs. We continue to evaluate additional measures to maintain financial flexibility, and we will continue to closely monitor macroeconomic conditions including, but not limited to, inflationary pressures, changes in interest rates and fluctuations in currency exchange rates that may impact our liquidity and access to capital resources.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses and disclosures of contingent assets and liabilities at the date of the financial statements. On a periodic basis, we evaluate our estimates, including those related to sales returns and allowances, inventories, share-based compensation and income taxes. We use authoritative pronouncements, historical experience and other assumptions as the basis for making estimates. Actual results could differ from those estimates under different assumptions or conditions. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 includes additional information about the Company, our operations, our financial position and our critical accounting policies and estimates and should be read in conjunction with this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, refer to Note 1 - Description of Business and Summary of Significant Accounting Policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC. There have been no new accounting pronouncements issued or adopted during the interim period that are expected to have a material impact on our consolidated financial statements.
AtriCure Inc. published this content on November 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 04, 2026 at 19:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]