AtriCure Inc.

02/19/2026 | Press release | Distributed by Public on 02/19/2026 11:40

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollar and share amounts referenced in this Item 7 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 Consolidated Financial Statements and notes thereto contained in Item 8, "Financial Statements and Supplementary Data," to provide an understanding of our results of operations, financial condition and cash flows. This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ 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 at the beginning of Part I and elsewhere in this Form 10-K.
Year Ended December 31, 2024 compared to December 31, 2023
For a comparison of our results of operations for the years ended December 31, 2024 and December 31, 2023, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 14, 2025.
Overview
We are a leading innovator in treatments for atrial fibrillation, left atrial appendage management and post-operative pain management. Our ablation and left atrial appendage management products are used by physicians during both open-heart and minimally invasive surgical procedures. In open-heart procedures, the physician performs heart surgery for other conditions, and our products are used 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 AtriCure ablation and LAAM products with catheter ablation procedures performed by electrophysiologists. Our pain management devices are used by physicians to ablate peripheral nerves, providing pain relief in cardiac, thoracic and amputation 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 to distributors who in turn sell our products to medical centers in other markets. Our business is primarily transacted in U.S. Dollars; direct international sales transactions are transacted in Euros, British Pounds, Australian Dollars or Canadian Dollars.
In 2025, we realized global revenue growth resulting from our strategic initiatives of product innovation, clinical science and physician education and training to expand awareness and adoption. Our worldwide revenues for the year ended December 31, 2025 of $534,528 increased by 14.9% over the prior year, driven by expanding adoption of our pain management, open ablation and appendage management product lines. Our recent product launches, including our cryoSPHERE MAX probe, AtriClip FLEX-Mini device and EnCompass clamp meaningfully contributed to our growth in 2025. There are limited competitors in our key markets; however, new entrants are developing and marketing competing products, procedures, and/or clinical solutions that may cause variability in our results.
Highlights of the strategic and operational advancements in 2025 include:
PRODUCT INNOVATION.We continue to invest in research and development of new products and pursue regulatory approvals to market and sell globally across all franchises.
Appendage management. During the first quarter of 2025, FDA granted 510(k) clearance for the AtriClip®PRO-Mini™LAA Exclusion System. The device is built on the existing AtriClip platform, preloaded with the smallest surgical LAA management implant available in the market. The size reduction provides surgeons with enhanced visualization for precise, secure exclusion of the LAA during minimally invasive procedures. The AtriClip PRO-Mini device was launched in the United States during the second half of 2025.
Pain management. During the second quarter of 2025, FDA granted 510(k) clearance for the cryoICE®cryoXT™ probe, a cryoablation device designed specifically for Cryo Nerve Block therapy to alleviate pain in amputation patients. This device temporarily stops pain by freezing target peripheral nerves, blocking the conduction pathway at the site of amputation. During the third quarter of 2025, this device was launched in the United States.
Dual energy platform. During the fourth quarter of 2025, we executed successful first-in-human treatments using our novel dual energy platform that integrates Pulsed Field Ablation (PFA) with Advanced Radiofrequency Ablation (Advanced RFA). The new platform delivers the benefits of both technologies, combining the proven safety and
effectiveness of radiofrequency (RF) ablation with the efficiency of PFA. The Advanced RFA and PFA technologies are not yet approved for use in any market. We expect to initiate a clinical trial in the coming year, marking a key milestone in our product development pipeline.
CLINICAL SCIENCE. We invest in studies to expand labeling claims, support various indications for our products and publish clinical data for therapies and procedures involving our products. During 2025, we supported the publication of 13 articles and 15 congress abstracts featuring clinical studies with our products.
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, and efficacy over a minimum follow-up of five years post procedure. In July 2025, we completed trial enrollment of 6,573 patients across 139 centers globally. Patient follow-up remains ongoing.
BoxX-NoAF. The BoxLesion and Left Atrial Appendage EXclusion Procedure for the Prevention of New Onset of Atrial Fibrillation (BoxX-NoAF) IDE trial evaluates the impact of concomitant ablation using the EnCompass clamp and LAA exclusion with the AtriClip system in non-AF patients for the reduction of post-operative AF (POAF) and Clinical AF. This prospective, multi-center, multi-national randomized trial evaluates safety 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 at up to 75 sites globally. FDA approved the trial protocol during the fourth quarter of 2024 and during October 2025, we completed the first patient enrollment. Site initiation and enrollment is ongoing.
TRAINING.Our professional education team conducts a variety of in-person and virtual training programs for physicians and other healthcare professionals. These training methods ensure access to continuing education and awareness of our products and related procedures. During 2025, we launched new and innovative training methods for physicians that include virtual proctoring and observerships as well as the ability to review case-in-a-box on a peer-to-peer basis. We have also extended our courses for Advanced Practice Providers, incorporating new content and workshops. We also recently launched our first electronic manual created by physicians for physicians that provides an outline for best practices in developing and growing a Hybrid Ablation Program. These new training events along with our traditional on-demand, local and national training courses allow for collaborative, hands-on engagement with our physician partners and other healthcare professionals. Additionally, our professional education courses continue to be enhanced by the use of simulation models or synthetic cadavers, known as CADets. These reusable CADets provide a sustainable alternative to the use of cadaver specimens, in addition to increasing the efficiencies of education and more cost effective training alternatives.
Results of Operations
Year Ended December 31, 2025 compared to December 31, 2024
The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of total revenue:
Year Ended December 31,
2025 2024
% of % of
Amount Revenue Amount Revenue
Revenue $ 534,528 100.0 % 465,307 100.0 %
Cost of revenue 133,749 25.0 117,783 25.3
Gross profit 400,779 75.0 347,524 74.7
Operating expense:
Research and development expenses 99,209 18.6 96,178 20.7
Selling, general and administrative expenses 311,017 58.2 291,359 62.6
Total operating expenses 410,226 76.8 387,537 83.3
Loss from operations (9,447) (1.8) (40,013) (8.6)
Other expense, net (716) (0.1) (3,661) (0.8)
Loss before income tax expense (10,163) (1.9) (43,674) (9.4)
Income tax expense 1,285 0.2 1,024 0.2
Net loss $ (11,448) (2.1) % $ (44,698) (9.6) %
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:
Year Ended December 31, Change
2025 2024 Amount %
Open ablation $ 143,847 $ 123,647 $ 20,200 16.3 %
Minimally invasive ablation 31,475 45,737 (14,262) (31.2) %
Pain management 81,923 61,844 20,079 32.5 %
Appendage management 178,127 151,588 26,539 17.5 %
Total United States 435,372 382,816 52,556 13.7 %
Total International 99,156 82,491 16,665 20.2 %
Total Revenue $ 534,528 $ 465,307 $ 69,221 14.9 %
Worldwide revenue increased 14.9% as reported (14.4% on a constant currency basis). We experienced significant growth in our open ablation, appendage management and pain management product lines as a result of deepening market penetration, continuing physician adoption and several new product launches. Minimally invasive ablation sales declined from continued reduction in Hybrid procedures as physicians adopt PFA catheters to treat patients. Key products contributing to the increase in revenue in the United States were EnCompass clamp in open ablation, cryoSPHERE MAX probe for post-operative pain management and AtriClip FLEX-Mini device for appendage management in open chest procedures. International revenue increased 20.2% as reported (17.5% on a constant currency basis), across all franchises and major geographic regions.
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 $15,966 primarily reflecting higher sales volumes. Gross margin increased by 29 basis points driven by more favorable product mix, offsetting increasing product costs as well as less favorable geographic mix.
Research and development expenses.Research and development expenses increased $3,031, or 3.2%. Personnel costs increased $5,948 as a result of headcount growth and higher variable and share-based compensation. Clinical trial expenses increased $3,498, primarily due to enrollment and follow-up activities for our LeAAPS trial and site initiation and patient enrollment expenses for the BoxX-NoAF trial. These increases were partially offset by a $6,000 decrease in pulsed-field ablation (PFA) co-development agreement payments. See Note 3 - Asset Acquisition for further information.
Selling, general and administrative expenses.Selling, general and administrative expenses increased $19,658, or 6.7%. Personnel costs, including travel and share-based compensation, increased $18,331 as a result of headcount growth and higher variable and share-based compensation. Operational growth resulted in an additional $1,629 in IT and corporate expenses.
Other income and expense. Other expense declined by $2,945, primarily due to the $1,362 loss on debt extinguishment in the first quarter of 2024. Net foreign currency transaction gain increased $975 and net interest expense decreased $574 from lower borrowing costs.
Liquidity and Capital Resources
As of December 31, 2025, we had cash and cash equivalents of $167,428 and unused borrowing capacity of approximately $61,885 under our asset-backed credit agreement with JPMorgan Chase Bank, N.A. In connection with the amended credit agreement entered into on January 9, 2026, the Company paid down $865 of borrowings and had $62,750 available borrowing capacity under the amended asset-based revolving credit facility (ABL Facility). All cash equivalents and most of our operating cash are held in United States financial institutions. A minor portion of our cash is held in foreign banks to support our international operations. We had net working capital of $240,997 and an accumulated deficit of $413,203 as of December 31, 2025.
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 required by 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, changing interest rates, and fluctuations in currency exchange rates that may impact our liquidity and access to capital resources.
Credit facility.As of December 31, 2025, we had an asset-based credit agreement with JPMorgan Chase Bank, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A. and Silicon Valley Bank, a division of First-Citizen Bank and Trust Company, as Joint Lead Arrangers and Joint Bookrunners (Credit Agreement) that provides for a $125,000 ABL 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. As of December 31, 2025, our outstanding debt was $61,865 and we had unused borrowing availability of approximately $61,885.
As of January 9, 2026, we entered into the First Amendment to Credit Agreement and Security Agreement. The First Amendment provides a three-year extension of the Credit Agreement, expiring on January 9, 2029, reduces the overall interest rate on the loans under the ABL Facility and removes the minimum utilization financial covenant in addition to certain other loan administration updates. Amounts available to be drawn from time to time under the amended 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. The applicable margin on borrowings will adjust ranging from 1.25% to 1.50% per annum for ABR borrowings and from 2.25% to 2.50% per annum for SOFR term borrowings determined by the
average historical excess availability. The First Amendment was treated as a debt modification. Borrowings outstanding under the existing Credit Agreement have been classified as long-term in the Consolidated Balance Sheet as of December 31, 2025.
Our corporate headquarters lease requires a $1,250 letter of credit which renews annually and remains outstanding as of December 31, 2025.
For additional information on the terms and conditions, as well as applicable interest and fee payments, see Note 8 - Borrowings and Financing Obligation.
Capital Expenditures. We incur capital expenditures on an ongoing basis to continue investment in our growth and our ability to better serve our customers. In recent years, we have expanded the manufacturing and engineering facilities in our Mason, Ohio campus and expect to continue to invest in facilities to support our growth.
Other Contractual Obligations. In 2022, the Company entered into a clinical trial management agreement for the LeAAPS clinical trial. The terms of the agreement require payments upon achievement of various enrollment and project milestones over the estimated ten-year term, yet the agreement may be terminated early for any reason. Furthermore, we incur additional variable costs, including pass through costs from clinical trial sites. We expect to disburse between $10,000 and $12,000 of fixed and variable costs based on estimated achievement of milestone payments within the next twelve months.
In 2024, we entered into an exclusive licensing agreement to co-develop and commercialize equipment incorporating PFA technology. The agreement requires that we pay additional contingent consideration in cash upon achievement of specified developmental and regulatory approval milestones within defined periods over the ten-year term. We expect to disburse between $6,000 and $8,000 based on estimated achievement of milestone payments within the next twelve months. For additional information, see Note 3 - Asset Acquisition.
We have operating and finance leases primarily for our offices, manufacturing and warehouse facilities and automobiles. Our finance leases consist primarily of principal and interest payments related to our Mason, Ohio headquarters building. As of December 31, 2025, current finance lease obligations are $1,306 and long-term obligations are $5,975. Our operating leases for office and warehouse space include current obligations of $1,734 and long-term obligations of $5,541 as of December 31, 2025. For additional information, see Note 9 - Leases.
In 2025, the Company transferred legal ownership of a building and certain real property on its corporate headquarters campus in Mason, Ohio for cash consideration of $6,250. Simultaneously, the Company entered into a contract to lease back the existing building and real property, as well as the planned building expansion space from the buyer-lessor. The buyer-lessor is financing the development and construction of the expansion of additional manufacturing and office space. During construction of the expansion, the Company will maintain occupancy and pay rent for the existing building. The lease of the existing building and certain real property sold is a failed sale-and-leaseback as a result of finance lease classification. The Company recorded a financing obligation equal to the $6,250 cash proceeds received. The financing obligation includes a current obligation of $81 and long-term obligation of $6,154. For additional information, see Note 8 - Borrowings and Financing Obligation.
We have a contractual obligation for a contingent consideration payment under the SentreHEART merger agreement that would be paid in cash and AtriCure common stock, up to a specified maximum number of shares. As of December 31, 2025, we believe the likelihood of payment is remote, and the estimated fair value of the contingent consideration is $0. See Note 2 - Fair Value.
Sources of liquidity. We believe that our current cash and cash equivalents, along with the cash we expect to generate or use for operations or access via our Credit Agreement, will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next twelve months. However, we have a shelf registration statement on file with the SEC which allows us to sell any combination of debt securities, common stock, preferred stock, warrants, depository shares and units in one or more offerings should we choose to do so in the future. We expect to maintain the effectiveness of the shelf registration statement for the foreseeable future.
If our sources of cash are insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or debt securities or obtain a revised or additional credit facility. The sale of additional equity or convertible debt securities could result in dilution to our stockholders. If additional funds are raised through the issuance of debt securities, these securities would have rights senior to those associated with our common stock and could contain covenants that would restrict our operations. Finally, our Credit Agreement requires compliance with certain financial and other covenants. If we
are unable to maintain these financing arrangements, we may be required to reduce the scope of our planned research and development, clinical activities and selling, training, education and marketing efforts.
Historical Cash Flow Activity. The following table summarizes our consolidated cash flow activities:
Cash flows provided by operating activities.Net cash provided by operating activities increased $45,130 in 2025 as compared to 2024, primarily reflecting the improvement in operating results of $33,250. This improvement includes $6,000 reduction in the acquired IPR&D milestone payments in 2025 in comparison to 2024, and cash used for working capital and other assets and liabilities decreased $14,072 due to moderating investments in inventory. Offsetting these improvements, our non-cash expenses, including depreciation, amortization and share-based compensation increased $3,808 in 2025.
Cash flows used in investing activities. Net cash used in investing activities increased by $44,784 in 2025 compared to 2024. This increase in cash used is attributable to a $53,668 decrease in sales and maturities of available-for-sale securities, while acquired IPR&D milestone payments declined $6,000 in 2025.
Cash flows provided by financing activities. Net cash provided by financing activities increased by $4,779 in 2025 compared to 2024, driven by $6,250 in proceeds from the August 2025 sale-and-leaseback arrangement and a $1,204 increase in proceeds from stock option exercises and the employee stock purchase plan. These inflows were offset by a $4,212 increase in shares repurchased for payment of taxes on stock awards.
Inflation
Inflationary pressures may have an adverse impact on our results of operations or financial condition in the foreseeable future. Inflation has impacted our operating costs throughout 2025 and 2024. Continued increases in our cost of revenue may affect our ability to maintain our gross margin if selling prices of our products do not increase commensurately, while continued increases in our operating expenses may adversely affect our operating results and the ability to make discretionary investments. We will continue to monitor the impact of inflation on our cost of revenue and operating expenses.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of consolidated 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, using authoritative pronouncements, historical experience and other assumptions as the basis for making estimates. We have described our significant accounting policies in Note 1 - Description of Business and Summary of Significant Accounting Policies to our Consolidated Financial Statements included in this Form 10-K.
We believe the following critical accounting policies involve a significant level of estimation uncertainty and judgments that are reasonably likely to have a material impact on our Consolidated Financial Statements. We base our judgments and estimates on historical experience, current conditions and other reasonable factors. Actual results could differ from those estimates under different assumptions or conditions.
Revenue Recognition-Revenue is generated from the sale of medical devices. We recognize revenue in an amount that reflects the consideration we expect to be entitled to in exchange for those devices when control of promised devices is transferred to customers. We account for revenue in accordance with FASB ASC 606, "Revenue from Contracts with Customers". Significant judgments and estimates involved in the Company's recognition of revenue include the estimation of a provision for returns. We estimate the provision for sales returns and allowances using the expected value method based on historical experience and other factors that we believe could impact our expected returns, including defective or damaged products and invoice adjustments. In the normal course of business, we are not obligated to accept product returns unless a product is defective as manufactured, and we do not provide customers with the right to a refund.
Inventories-Our inventories are stated at the lower of cost or net realizable value based on the first-in, first-out cost method (FIFO) and consist of raw materials, work in process and finished goods. Our industry is characterized by rapid product development and frequent new product introductions. Uncertain timing of product approvals, variability in product launch strategies and variation in product sales all impact inventory reserves for excess, obsolete and expired products. An increase to inventory reserves results in a corresponding increase in cost of revenue. Inventories are written off against the reserve when they are physically disposed.
Share-Based Employee Compensation-We estimate the fair value of performance share awards with a performance condition initially based on the closing stock price on the date of grant assuming the performance goal will be achieved. Such performance share awards have specified performance targets over a three-year performance period based on the compound annual growth rate (CAGR) of our revenue and percentage increase in Adjusted EBITDA over the base year. Adjusted EBITDA is calculated as net income/loss before other income/expense (including interest), income tax expense, depreciation and amortization expense, share-based compensation expense and non-recurring charges that are not reflective of the operational results of the Company's core business and may affect comparability of results period-over-period. Adjusted EBITDA specifically excludes PFA co-development upfront and milestone payments. With respect to these performance share awards, the number of shares that vest and are issued to the recipient is based upon revenue and Adjusted EBITDA performance over the performance period. We may adjust the expense over the performance period based on changes to estimates of performance target achievement. If such goals are not met or service is not rendered for the requisite service period, no compensation cost is recognized, and any recognized compensation cost from prior periods will be reversed.
Income Taxes-Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases along with operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities from changes in tax rates is recognized in the period that includes the enactment date.
Our estimate of the valuation allowance for deferred tax assets requires significant estimates and judgments about our future operating results. Deferred income tax assets are reduced by valuation allowances if, based on the consideration of all available evidence, it is more-likely-than-not that a deferred tax asset will not be realized. Significant weight is given to evidence that can be objectively verified. We evaluate deferred income tax assets on an annual basis to determine if valuation allowances are required by considering all available evidence. Deferred income tax assets are realized by having sufficient future taxable income to allow the related tax benefits to reduce taxes otherwise payable. The sources of taxable income that may be available to realize the benefit of deferred tax assets are future taxable income, future reversals of existing taxable temporary differences, taxable income in prior carryforward years and tax planning strategies that are both prudent and feasible. In evaluating the need for a valuation allowance, the existence of cumulative losses in recent years is significant objectively verifiable negative evidence that must be overcome by objectively-verifiable positive evidence to avoid the need for a valuation allowance. Our valuation allowance offsets substantially all net deferred income tax assets as it is more-likely-than-not that the benefit of such deferred income tax assets will not be recognized in future periods.
Recent Accounting Pronouncements
See Note 1 - Description of Business and Summary of Significant Accounting Policies to the Consolidated Financial Statements in Item 8 of Part II for more information regarding recent accounting pronouncements.
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