AtriCure Inc (ATRC) Q4 2024 Earnings Call Highlights: Strong Revenue Growth and Strategic ...

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Thu, Feb 13, 2025, 12:16 AM 4 min read

Revenue: $465 million for 2024, a 17% growth.
Adjusted EBITDA: Increased from $19 million in 2023 to $31 million in 2024.
Fourth Quarter Revenue: $124.3 million, a 16.6% increase from Q4 2023.
US Revenue: $101.6 million in Q4 2024, a 14.4% increase from Q4 2023.
International Revenue: $22.7 million in Q4 2024, up 27.7% from Q4 2023.
Gross Margin: 74.5% in Q4 2024, a decrease of 39 basis points from Q4 2023.
Research and Development Expenses: Increased by 68.1% in Q4 2024.
SG&A Expenses: Increased by 6.6% in Q4 2024.
Adjusted Loss Per Share: $0.08 in Q4 2024, compared to $0.21 in Q4 2023.
Full Year US Sales: $382.8 million, a 14.8% increase.
Full Year International Sales: $82.5 million, a 25.6% increase.
Cash and Investments: $122.7 million at the end of 2024.
2025 Revenue Guidance: $517 million to $527 million.
2025 Adjusted EBITDA Guidance: $42 million to $44 million.

Warning! GuruFocus has detected 3 Warning Sign with ATRC.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

AtriCure Inc (NASDAQ:ATRC) achieved a 17% revenue growth in 2024, reaching $465 million, with strong performance in pain management, open appendage management, and open ablation franchises.
The company expanded its adjusted EBITDA from $19 million in 2023 to $31 million in 2024, indicating improved profitability.
AtriCure Inc (NASDAQ:ATRC) launched several new products, including the cryoSPHERE+ and cryoSPHERE MAX probes, which have been well-received and contributed to a 32% growth in the pain management franchise.
The EnCompass Clamp saw over 50% growth, contributing to a 16% increase in the open franchise for atrial fibrillation treatment.
AtriCure Inc (NASDAQ:ATRC) received FDA approval for the BoxX-NoAF trial, which could expand their market by demonstrating the benefits of prophylactic ablation for post-operative Afib reduction.

Negative Points

The minimally invasive hybrid AF therapy in the US experienced only 3% growth, facing pressure from the adoption of PFA technologies.
Gross margin decreased by 39 basis points in Q4 2024 compared to the previous year, primarily due to less favorable geographic and product mix.
Research and development expenses increased significantly by 68.1% in Q4 2024, partly due to a $12 million payment for a PFA technology licensing agreement.
The company anticipates continued pressure on its minimally invasive ablation and MIS appendage management franchises in 2025, with expected revenue declines.
International revenue growth, while strong, contributes to a lower gross margin compared to domestic sales, posing a challenge to overall profitability.

Q & A Highlights

Q: Where does AtriCure stand in the conversion from legacy products to EnCompass, and how long can growth in the open business continue? A: Michael Carrel, President and CEO, stated that the conversion from legacy products to EnCompass is largely complete. The growth from EnCompass is now driven by net new users or expanded use within existing accounts, particularly targeting the coronary bypass market where patients had Afib going into cardiac surgery.

Q: How are PFA dynamics affecting the MIS side of things in Europe, and what is expected in the US? A: Michael Carrel explained that in Europe, PFA dynamics have stabilized, and programs are now expanding their treatment algorithms to include AtriCure's technology. This has led to over 20% growth in the Convergent area. The US is expected to follow a similar trajectory, with pressure anticipated in 2025 but potential growth in 2026 as sites begin to adopt similar approaches.

Q: What is the status of the EnCompass OUS rollout and the cryo+ and MAX in the US, and why was EBITDA guidance increased? A: Michael Carrel noted that the EnCompass OUS rollout is in early stages, with growth expected to pick up in the latter half of the year. The cryo+ and MAX launches in the US are also in early stages but have shown promising progress. Angela Wirick, CFO, mentioned that the EBITDA guidance was increased due to better-than-expected bottom-line performance and efficiencies throughout the business.

Q: Can you provide more details on the revenue outlook for 2025 and the impact of new product launches? A: Angela Wirick stated that the majority of growth is expected to be volume-based, with potential upside from new product launches like FLEX-Mini and cryoSPHERE MAX. The revenue guidance assumes a decline in US hybrid ablation and MIS AtriClip devices, with international growth expected to outpace US growth.

Q: What is the expected impact of the LeAAPS trial on revenue, and will there be interim looks at the trial data? A: Michael Carrel clarified that the LeAAPS trial is not expected to impact revenue significantly, as half of the patients will not receive an AtriClip. The trial is event-driven, with interim looks possible at 50% and 75% of events, but the full impact is expected at the final follow-up.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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