AtriCure's Q3 2025: Contradictions Emerge in PFA Timelines, CryoXT Launch, and U.S. MIS Recovery

Date of Call: October 29, 2025

Financials Results

• Revenue: $134.3M, up 15.8% reported and 15.1% constant currency YOY
• EPS: $0.01 loss per diluted share (basic, diluted and adjusted), compared to $0.17 loss in Q3 2024
• Gross Margin: 75.5%, up 59 basis points YOY

Guidance:

• Full year 2025 revenue expected to be approximately $532M to $534M (~14%–15% growth vs 2024).
• Full year gross margin expected to be slightly higher than 2024 (subject to geographic and product mix).
• Raising adjusted EBITDA outlook to approximately $55M to $57M for full year 2025.
• Adjusted loss per share expected to be approximately $0.23 to $0.26 for full year 2025.
• Expect positive cash generation in the first quarter and continued cash generation.

Business Commentary:

* Revenue Growth and Profitability: - AtriCure reported record total revenue of $134 million for Q3 2025, reflecting a 16% increase year-over-year. - This growth was driven by strong adoption of therapies across key franchises and a substantial improvement in profitability, with nearly $18 million in adjusted EBITDA and over $30 million in cash generated.

• Product Innovation and Market Penetration:
• The company's appendage management and open ablation franchises showed strong growth with over 20% and over 18% increases, respectively.

• This was attributed to the success of new product launches like AtriClip FLEX-Mini and EnCompass Clamp, as well as ongoing clinical trial enrollments and market expansions, such as in Japan.

• Pain Management Expansion:

• AtriCure's pain management franchise achieved 28% growth in Q3, driven by sales of cryoSPHERE MAX and cryoSPHERE+ probes, primarily in thoracic procedures.

• The launch of the cryoXT device further expanded opportunities in lower limb amputation procedures, with promising patient outcomes contributing to market penetration.

• Geographic Growth and International Sales:

• International revenue increased by 22%, with significant growth in Europe and Asia Pacific markets.
• This was driven by product mix improvements and strong adoption of innovative technologies such as EnCompass Clamp in Europe.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted strong Q3 results: $134.3M revenue (+15.8% YOY), $17.8M adjusted EBITDA (13.3% margin), and $30.1M cash generated. They raised full-year revenue and adjusted EBITDA guidance and emphasized product-led growth and record cash generation as evidence of momentum.

Q&A:

• Question from John Young (Canaccord Genuity Corp.): Do you believe the CMS proposal to move ablations into the ASC setting and decreased strain on hospital cath labs can lead to a rebound in the EPi-Sense business?
  Response: ASC shift alone unlikely to materially affect EPi‑Sense; growth will come from referrals of PFA non-responders—early site-level breakthroughs observed but not yet driving material revenue.

• Question from John Young (Canaccord Genuity Corp.): Is there any way to quantify the opportunity in Japan given those approvals that you got there?
  Response: Japan has ~40,000 cardiac surgeries annually; AtriClip is already market leader there, approvals received, rollout planned next year, but no material near-term revenue expected as market prep continues.

• Question from Lilia-Celine Lozada (JPMorgan Chase & Co.): What is driving the acceleration in open ablation growth and how long can this level of growth persist?
  Response: Acceleration driven by CABG surgeons adopting EnCompass due to ease and ~30‑minute procedure time savings; penetration remains low (roughly ~10% of CABG patients treated), so significant runway remains.

• Question from Lilia-Celine Lozada (JPMorgan Chase & Co.): Can you clarify margin strength and why guidance implies a sequential step down in adjusted EBITDA for Q4?
  Response: Gross margin expansion from favorable mix, new product uptake and manufacturing efficiencies; Q4 guide reflects conservatism plus anticipated R&D ramp (BoxX‑NoAF) which will increase spend.

• Question from Marie Thibault (BTIG, LLC): How sustainable is high‑20s growth in the Open Clip segment and how far along is the FLEX‑Mini rollout?
  Response: Large opportunity with <30% of US sites using the product; FLEX‑Mini accounted for ~30% of US Open Clip growth this quarter and rollout has a long runway.

• Question from Marie Thibault (BTIG, LLC): You're ahead of schedule on adjusted EBITDA targets—how should we think about the long‑term cadence?
  Response: Ahead of the LRP targets and expect continued bottom‑line improvement into 2026, but management will not provide 2026 guidance yet.

• Question from John McAulay (Stifel, Nicolaus & Company): Any dynamics we should consider for Q4 revenue given implied deceleration versus year‑to‑date mid‑teens growth?
  Response: Management is confident in the conservative Q4 guide; hybrid softness is small in revenue mix and last year's Q4 comps included several product launches.

• Question from John McAulay (Stifel, Nicolaus & Company): Any update on the PFA program timelines and next steps?
  Response: Preclinical testing completed; first‑in‑human planned by year‑end/early next year (end 2025/early 2026 window), with clinical trials likely starting in early 2027.

• Question from Joseph Conway (Needham & Company, LLC): Is cryoXT in a limited launch and will it contribute to 2025 pain management growth? How much of the pain portfolio is in Europe?
  Response: cryoXT is being launched in a focused manner with minimal 2025 revenue expected; meaningful contribution anticipated in 2026; cryoSPHERE is available throughout Europe and Australia.

• Question from Joseph Conway (Needham & Company, LLC): Physicians claim cryo nerve block can add lifetime benefit—what feedback are you hearing on opioid alternatives and patient outcomes?
  Response: Clinicians report faster recovery, reduced acute and phantom limb pain, earlier mobilization and quicker prosthetic fitting, suggesting potential opioid‑reduction benefits; outcome registries and studies are underway.

• Question from Danielle Antalffy (UBS Investment Bank): What drives sustainability of mid‑to‑high teens open ablation growth—PFA, training, utilization, or product iteration?
  Response: Primary drivers are awareness and evidence (publications) for EnCompass and concomitant approaches; expanding indications like prophylactic treatment (BoxX‑NoAF) will materially enlarge the addressable market.

• Question from Danielle Antalffy (UBS Investment Bank): Could upcoming WATCHMAN data boost the entire appendage management market and help AtriClip?
  Response: WATCHMAN and prior trials (LAAOS III) already boosted awareness; LeAAPS is expected to further expand the market prophylactically and materially increase AtriClip volumes when results are available.

• Question from Anna (Piper Sandler): How defensible is AtriClip versus potential future entrants and what's the moat?
  Response: AtriClip differentiation rests on extensive clinical evidence (95+ peer‑reviewed papers, published V data), continuous product innovation (FLEX‑Mini/FLEX‑V) and the unique LeAAPS trial validating prophylactic stroke reduction.

• Question from Anna (Piper Sandler): Hybrid business has been soft—when might it bottom and inflect?
  Response: Hybrid is pressured by PFA adoption but early signs show cases returning as PFA non‑responders emerge; management expects an eventual recovery but gave no definitive timing.

Contradiction Point 1

PFA Program Timelines

It involves the timeline for the PFA program, which is crucial for strategic planning and investor expectations regarding product development and market entry.

Can you update us on the PFA program's timeline and progress? - John McAulay (Stifel, Nicolaus & Company, Incorporated, Research Division)

2025Q3: Preclinical testing is complete, and first-in-human trials are expected by the end of this year or early next year, followed by clinical trials likely in early 2027. - Michael H. Carrel(CEO)

How do you discuss PFA failures with EPs? How are you managing those discussions? - Unidentified Analyst (Canaccord Genuity)

2025Q2: With PFA, we are in the preclinical phase with animal trials, and we expect to get into human trials probably toward the end of this year. - Michael H. Carrel(CEO)

Contradiction Point 2

CryoSPHERE XT Launch

It involves the timeline and expectations for the CryoSPHERE XT launch, which impacts financial forecasts and market positioning for the company's product portfolio.

What is the current status of cryoXT and its 2025 growth contribution timeline? - Joseph Conway (Needham & Company, LLC, Research Division)

2025Q3: The launch is focused initially, with limited revenue expected in the current quarter. Contributions are anticipated in 2026 as the product gains traction. - Michael H. Carrel(CEO)

Is the cryoSPHERE XT launch excluded from your outlook, and what steps are needed to prepare for it? - Marie Yoko Thibault (BTIG)

2025Q2: cryoSPHERE XT is not included in our 2025 guidance, with significant contributions expected thereafter. Preparation includes training and leveraging feedback from the first use cases to refine our approach. - Angela L. Wirick(CFO)

Contradiction Point 3

PFA Dynamics and Market Trajectory

It involves differing perspectives on the dynamics of PFA in Europe and its potential trajectory in the U.S., which could impact expectations for AtriCure's business performance.

Will reduced strain on hospital cath labs drive a rebound in the EPi-Sense business? - John Young(Canaccord Genuity Corp., Research Division)

2025Q3: We expect the PFA dynamics in Europe to continue to stabilize, but we still think the U.S. will follow a similar trajectory that we might see improvement by late 2025 or early 2026, but it's still going to be a slow ramp in the U.S. - Michael H. Carrel(CEO)

Can the sustained growth of the open business continue? What is the conversion rate from legacy products? Can you explain PFA dynamics in Europe and whether the U.S. will follow a similar trajectory? - Lily Lozada(JPMorgan)

2024Q4: We are seeing an uptick in the use of AtriCure's technology. We expect the U.S. to follow a similar trajectory, potentially seeing improvement by late 2025 or early 2026. - Michael Carrel(President and CEO)

Contradiction Point 4

Cryo Device Market Dynamics

It involves differing perceptions on the rollout and market penetration of cryo products, which could impact revenue expectations and strategic focus.

What is the status of the cryoXT launch, and when will it drive 2025 growth? - Joseph Conway(Needham & Company, LLC, Research Division)

2025Q3: The cryoXT launch is focused initially, with limited revenue expected in the current quarter. - Michael H. Carrel(CEO)

What is the rollout status for EnCompass OUS, cryo+, and MAX in the U.S.? - William Plovanic(Canaccord)

2024Q4: cryoSPHERE+ and MAX launches are at early stages and progressing well in terms of account penetration. - Michael Carrel(President and CEO)

Contradiction Point 5

U.S. Minimally Invasive Business Recovery

It involves differing expectations for the recovery of the U.S. minimally invasive business, which faces pressure from PFA.

Can reduced strain on hospital cath labs trigger a rebound in the EPi-Sense business? - John Young (Canaccord Genuity Corp., Research Division)

2025Q3: We expect some of the pressure to subside as we get through 2025. We expect the use of MIS to stabilize in 2026 and beyond. - Michael H. Carrel(CEO, President & Director)

What drove the sequential decline in the U.S. MIS business, and how confident are you in a potential improvement? - John McAulay (Stifel, Nicolaus & Company, Incorporated, Research Division)

2025Q1: We're seeing pressure from PFA, but some accounts that referred fewer patients are now seeing failures and are considering converged procedures. We expect some improvement in the second quarter, with more stabilization expected in the following quarters. - Michael Carrel(President and CEO)