AtriCure, Inc.

Good afternoon and welcome to HRCure's fourth quarter 2018 earnings conference call. At this time, all participants are on a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Lynn Lewis from the Gilmartin Group for a few introductory comments.

Thank you. But now you should have received a copy of the earnings press release. If you have not received a copy, please call 513-755-4136 to have one emailed to you. Before we begin today, let me remind you that the company's remarks include forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Adrecure's control, including risks and uncertainties described from time to time in Adrecure's SEC filing. Adrecure's results may differ materially from those projected. Adrecure undertakes no obligation to publicly update any forward-looking statements. Additionally, we refer to non-debt financial measures, specifically revenue reported on a constant currency basis, adjusted EBITDA, and adjusted loss per share. The reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our press release, which is available on our website. With that, I'd like to turn the call over to Mike Carroll, President and Chief Executive Officer. Mike?

Thanks, Lynn. Good afternoon, and thank you for joining us, everyone. We are pleased with our fourth quarter results and performance throughout 2018, and we continue our track record of strong, consistent revenue growth. We achieved many milestones and accomplishments in 2018. We completed enrollment in the Converge IDE trial, trained over 400 healthcare professionals worldwide, surpassed 170,000 Atroclip devices sold, launched the Atroclip FlexV device, established a dedicated pain management team, and raised over $80 million, strengthening our balance sheet and creating financial flexibility. 2018 was also a foundation-building year. We are maturing as a team with more than 150 people in the field, robust training and education programs, and a leverageable infrastructure across our entire organization so that we can efficiently scale. We believe the maturation of our teams is reflected in our performance this year, underpinned by our commitment to education, clinical science, and innovation as the cornerstones of our success. With this, and as previously announced, we expect full year 2019 revenue in the range of $220 to $228 million. Now turning to our fourth quarter performance. Total revenue for the fourth quarter of 2018 was approximately $53 million, reflecting growth of 15% over the fourth quarter of 2017. This was highlighted by U.S. revenue of $43 million and growth of 19% to Q4 of last year. Our top-line performance was driven by strong sales across our key ablation and appendage management products. Within our appendage management franchise, we believe we are seeing continued signs that the market opportunity remains strong. Surgeons and other clinicians are increasingly recognizing the need to manage the appendage. Our H or Clip products work effectively as they work consistently, becoming the go-to choice for many surgeons. We are also receiving steady positive feedback on our innovative approach to advancing products in this franchise to meet clinical needs. Our approach in conjunction with evolving market dynamics is collectively driving our confidence in this platform and its potential. We are seeing everything from the H-Equip FlexV device being used in open cases enabling more cabbage procedures to seeing greater uptake in conversion procedures. As a reminder, we originally thought the atrial clip attachment rate in conversion would be less than 5%. However, we currently believe it is over 30%. Turning to our open platform. Evolving guidelines and emerging clinical data are driving changing behavior. Patients live longer and do better with surgical ablation. It is that simple. This fact is making an impact. driving steady demand for training and increasing adoption. Throughout 2018, our courses were full, and we expect the same in 2019. As part of our commitment to developing clinical evidence, we are investing in the ICE-AFib clinical trial. ICE-AFib will evaluate the safety and effectiveness of the cryo-ICE ablation system for the treatment of persistent and longstanding persistent atrial fibrillation during concomitant cardiac surgery. The trial is a prospective multi-center single-arm study of up to 150 patients at up to 20 centers in the United States enrolling patients with persistent and long-standing persistent atrial fibrillation undergoing cardiac surgery procedures for heart valve repair or replacement and or coronary bypass procedures. Primary effectiveness is defined as freedom from AFib. atrial flutter and or atrial tachycardia lasting greater than 30 seconds and will be evaluated at 12 months after the procedure. Long-term effectiveness will be evaluated at three years post procedure. On that note, we are pleased to announce the first patient in the I-SAFE-VIP trial was enrolled in February this year. We view the I-SAFE-VIP trial as a unique opportunity to generate systematic clinical evidence on the safety and effectiveness for the treatment of AFib patients undergoing structural heart surgery. Within our MIS business, we had solid performance in Q4. More than 200 sites have now done convergent procedures in the United States. As a reminder, the convergent procedure is a multidisciplinary therapy in which a closed chest epicardial ablation is performed by a surgeon, complemented by an endocardial catheter performed by an electrophysiologist. The CONVERGE-IDE trial is the first of its kind evaluating the convergent approach against catheter ablation for patients who suffer from the most serious forms of AFib. As a reminder, we completed enrollment in the CONVERGE-IDE trial in August 2018. Our next milestone will be completion of one-year patient follow-up, which we expect in the second half of 2019, followed by a submission to the FDA for pre-market approval of the Atrocure Epicense system for the treatment of persistent AFib using the convergent approach. We expect to be in a position to disclose the data from the trial in 2020 in support of our anticipated FDA panel meeting as part of the PMA process. We are also pleased to announce that we have received approval from the FDA in the fourth quarter to expand our Deep AF IDE clinical trial to include an additional 40 patients The DEEP-AF trial provides another alternative for minimally invasive approaches, and we look forward to providing updates as the trial advances throughout 2019. Switching gears to pain management, we recently announced the launch of Cryo-ICE Cryosphere Probe in the United States. The Cryosphere Probe is the first device in the Cryo-ICE platform solely dedicated to blocking pain by ablating peripheral nerves, temporarily blocking the nerves from transmitting pain signals. The block typically lasts several months, during which time the nerve regenerates. Because of the nature of the therapy, physicians are adopting cryo-nerve block, or cryo-MB therapy, as a key part of their pain management strategies, offering a unique solution for patients undergoing cardiothoracic surgery. More than 80 cases have been performed with the cryosphere probe, and surgeons are noting remarkable improvement in postoperative recovery times, postoperative pain levels, and patient satisfaction. We believe that cryonerve block therapy with the cryosphere probe also has the potential to contribute to combating the opioid epidemic. One recent study showed that 14% of patients undergoing surgery for lung cancer become persistent opioid users. The cryosphere probe has the potential to reduce the need for long-term narcotic use postoperatively and thereby reduce the very real risk of addiction and abuse. Last year, we established a small dedicated thoracic team to support the cryo-nerve block therapy in select markets. We are seeing the early impact of these efforts, and in 2019, we will expand this team as we move forward with commercial launch of the CryoSphere Probe. Further, in support of this franchise, we are on track to complete enrollment in our FROST study in the near future. There are also other clinical studies being done by independent clinicians who are committed to developing the evidence for this novel therapy. Looking ahead in 2019 and beyond, we are excited about the opportunities across our entire product portfolio and are committed to continuing innovation to deliver benefits to patients worldwide. Internationally, our revenues were up 1% constant currency for the fourth quarter. Our overall growth rate outside the United States was impacted by the fact that we did not take an order from China in the fourth quarter. In Europe, we saw steady progress throughout the year, culminating in a top line of 18% growth in the fourth quarter with solid sales of the Epicense device across the region. We are very encouraged by the maturity and cohesion of the European team and look forward to maintaining this momentum in 2019. In Asia, we continue to experience strength in Japan, which we expect to transfer into 2019 with both the AtriClip and the CryoWise platforms established in the market. Our partnership with Baohiu Pharmaceutical Group in China is continuing to progress with several new sub-distributors on board. Turning finally to our investments in training and education. In 2018, we conducted a record number of training sessions both in the U.S. and Europe, training more than 400 healthcare professionals and providers worldwide. During the year, we also significantly increased our cadaver labs at the Mays IV courses to enable hands-on experiences. Through these courses, more than 100 cardiothoracic surgery fellows were trained, exceeding our expectations and target for the year. In January 2019, at the 24th Annual International AFib Symposium in Boston, we received overwhelmingly positive feedback. We also learned that our advanced ablation course has received endorsement from the Society of Thoracic Surgeons. We are confident in support from leading medical institutions and societies, coupled with education and awareness will lead to more patients getting access to care that extends and improves their lives. With that, I will now turn the call over to Andy Wade, our Chief Financial Officer, and we'll turn for comments at the end. Thanks, Mike.