AtriCure Inc.

05/06/2026 | Press release | Distributed by Public on 05/06/2026 10:32

Quarterly Report for Quarter Ending March 31, 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 contains 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 21F 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 amended 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
During the first quarter of 2026, we realized strong growth resulting from our strategic initiatives of product innovation, clinical science and physician education and training to expand awareness and adoption. Our worldwide revenue for the three months ended March 31, 2026 was $141,249, representing an increase of $17,629, or 14.3% (12.8% on a constant currency basis), over the first three months of 2025, highlighted by accelerated adoption in our pain management, appendage management, and open ablation product lines, where recent product innovation contributed to growth. There are limited competitors in our key markets; however, new entrants are developing competing products, procedures, and/or clinical solutions that may cause variability in our results.
Highlights of the strategic and operational advancements include:
PRODUCT INNOVATION. We continue to see growth from our most recent product innovations. 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 PRO-Mini® devices and expect to launch both products in Europe later this year.
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.
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 period of five years post procedure. In July 2025, we completed trial enrollment of 6,573 patients across 139 centers globally. Patient follow-up for a minimum of five years post procedure is required by the study protocol and 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 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 across 75 sites. Site initiation and enrollment is ongoing.
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 March 31, 2026 compared to three months ended March 31, 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
March 31,
2026 2025
Amount % of
Revenues 		Amount % of
Revenues
Revenue $ 141,249 100.0 % $ 123,620 100.0 %
Cost of revenue 31,938 22.6 30,992 25.1
Gross profit 109,311 77.4 92,628 74.9
Operating expenses:
Research and development expenses 24,235 17.2 22,528 18.2
Selling, general and administrative expenses 84,550 59.9 76,054 61.5
Total operating expenses 108,785 77.0 98,582 79.7
Income (loss) from operations 526 0.4 (5,954) (4.8)
Other expense, net (132) (0.1) (554) (0.4)
Income (loss) before income tax expense 394 0.3 (6,508) (5.3)
Income tax expense 286 0.2 239 0.2
Net income (loss)
$ 108 0.1 % $ (6,747) (5.5) %
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
March 31, 		Change
2026 2025 Amount %
Open ablation $ 39,080 $ 33,308 $ 5,772 17.3 %
Minimally invasive ablation 6,386 8,480 (2,094) (24.7)
Pain management 22,359 17,270 5,089 29.5
Appendage management 48,380 42,091 6,289 14.9
Total United States $ 116,205 $ 101,149 $ 15,056 14.9
Total International 25,044 22,471 2,573 11.5
Total revenue $ 141,249 $ 123,620 $ 17,629 14.3 %
Worldwide revenue increased 14.3% (12.8% on a constant currency basis). In the United States, we saw a 14.9% increase in revenue driven by key product lines: AtriClip® FLEX-Mini and PRO-Mini devices for appendage management, cryoSPHERE® MAX™ probe for post-operative pain management and EnCompass® clamp for open ablation. 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 11.5% (3.3% on a constant currency basis), with growth in appendage management, open ablation and pain management franchises. Additionally, we saw strong growth in most of our direct markets offset by distributor channels.
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 $946 reflecting higher sales volumes. Gross margin increased 246 basis points, driven primarily by favorable product and geographic mix.
Research and development expenses. Research and development expenses increased $1,707 or 7.6%, driven by an $818 increase in regulatory filing and submission costs as a result of timing of product development and clinical initiatives and $738 increase in personnel costs, including share-based compensation.
Selling, general and administrative expenses. Selling, general and administrative expenses increased $8,496, or 11.2%, driven by a $6,499 increase in personnel costs, including travel and share-based compensation, largely as a result of growth in headcount to support sales growth. Additional spending related to meeting costs increasing $788 and marketing and training costs increasing $679 driven by expanded tradeshow and training activities.
Other expense. Other expense consists primarily of net interest expense.
Liquidity and Capital Resources
As of March 31, 2026, we had cash and cash equivalents of $146,165 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 $240,502 and an accumulated deficit of $413,095 as of March 31, 2026.
Consolidated Cash Flows - For the three months ended March 31, 2026 and 2025
Cash flows used in operating activities. Net cash used in operating activities decreased $7,030 from 2025 to 2026, reflecting improved operating results of $6,855, driven by higher sales and improved operating margin. These improvements were offset by an increase of $1,855 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 $2,171 from 2025 to 2026, due to a $1,671 increase in purchases of property and equipment and $500 in capital grant proceeds received in 2025.
Cash flows used in financing activities. Net cash used in financing activities increased by $2,930 from 2025 to 2026. This increase was a result of $777 cash used to pay financing costs as part of the First Amendment to the ABL Facility, $865 paid to reduce outstanding borrowings and a $1,270 increase in shares repurchased for payment of taxes on stock awards.
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 March 31, 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 March 31, 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 the 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 May 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 06, 2026 at 16:32 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]