AtriCure, Inc.

Good afternoon and welcome to our TreeCulture's third quarter 2023 earnings conference call. At this time, all participants are in 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 Marissa Feisch, the Bill Martin Group for a few introductory comments.

Great, thank you. By now, you should have received a copy of the earnings press release. If you have not received a copy, please call 513-644-4484 to have one emailed to you. Before we begin, 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 HRCURES control, including risks and uncertainties described from time to time in the company's SEC filings. These statements include, but are not limited to, financial expectations and guidance, expectations regarding the potential market opportunity for HRCURES franchises and growth initiatives, future product approvals, clearances, reimbursement, and clinical trial outcomes. HRCURES results may differ materially from those projected. Matricure undertakes no obligation to publicly update any forward-looking statement. Additionally, we refer to non-GAAP financial measures, specifically revenue reported on a constant currency basis, adjusted EBITDA, and adjusted loss per share. A 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 would like to turn the call over to Mike Carroll, President and CEO.

Good afternoon, and thank you for joining us. I am delighted to announce another strong quarter for AtriCure, once again demonstrating the broad-based activity in our business and global revenue drivers. In the third quarter, we achieved total revenue of $98 million, representing 18% year-over-year growth. Our team continues to promote awareness and adoption of our therapies for the treatment of atrial fibrillation, LEA management, and post-operative pain management. As we increase our patient impact in these markets, we are also driving sustainable profitability. In the third quarter, we achieved positive adjusted EBITDA of approximately $5 million, driven by our growth on the top line, strong gross margins, and disciplined approach to investing in the future. In light of our quarterly results and our confidence in the remaining of the year, we now forecast full year 2023 revenues of $394 to $396 million. reflecting a year-over-year increase of 19 to 20%. In addition, we now anticipate full year 2023 adjusted EBITDA to be approximately $18 to $20 million. As we reflect on our progress this year, there is still significant untapped opportunity in the large populations that we serve. We remain confident in our ability to continue to accelerate growth over the rates achieved in the preceding decade while expanding profitability. Now turning to a more detailed review of the business, starting with our open ablation franchise. Growth from the Encompass Clamp remains incredibly strong. Our Encompass Clamp leverages the proven technology of our Synergy ablation system to provide simpler and faster ablations in open heart procedures. Physician feedback is exceptional, with many underscoring the efficiency and ease of use of the device. For the second quarter in a row, Encompass sales exceeded $10 million, and along with our legacy platforms, drove 20% worldwide growth in our open ablation franchise. So much opportunity remains to treat AFib in combination with open cardiac surgery, and we are optimistic about the future of this franchise with our proven technology and the abundance of clinical data on our products. Shifting to appendage management, our products for both open heart and minimally invasive procedures continue to be critical growth catalysts for AtroCare, representing 40% of overall revenue in the quarter. Worldwide revenue for the franchise grew 18% over the prior year, reflecting robust adoption across geographies. Our growth is driven primarily by sales of our AtroClip Flex V device, which represents the latest innovation in our 20-year history of technology development expertise in LAA management. To complement our commercial progress, we are actively pursuing the expansion of our addressable markets with the LEAPS clinical trial to elevate patient care in cardiac surgery. Two-thirds of the more than one million cardiac surgery patients worldwide do not have preoperative AFib diagnosis, yet it is well understood that these patients have an increased risk of stroke and AFib following surgery. The LEAPS trial represents a meaningful opportunity to expand the benefits of AtriCures technology for these patients. The primary endpoint of the study is a demonstrated reduction in ischemic stroke and systemic arterial embolism defining a new market in stroke prevention. Excitement for the trial is compounding and we are continuing to expand site initiation worldwide. We're also enrolling well ahead of plan. At the same time, we're developing even less innovative and easier-to-use technologies to ensure that our H-O-Clip product line remains at the forefront of this rapidly expanding market. Turning now to hybrid AF therapy, where we saw 8% growth in this franchise globally year-over-year and a slight decline on a sequential basis largely due to seasonality. Recently, we have hosted several standing-room-only hybrid courses all around the globe and continue to hear from physicians and see clinical evidence that supports our belief that combining epicardial and endocardial ablation will unlock enormous benefits for millions of patients suffering from longstanding persistent atrial fibrillation. AtriCure holds a unique position in the broader AFib market with the only devices FDA approved for the treatment of longstanding persistent atrial fibrillation. We are frequently asked about the potential for pulse field ablation, or PFA, to impact AFib therapies. We believe innovation is of paramount importance in the medical device field, and we are encouraged by the activity and progress of PFA. The awareness it brings to the treatment of AFib encourages robust conversations on this topic, and the focus on more efficient endocardial ablation is a tailwind for everyone in the market. For HRCARE, these are all positives, and our hybrid approach remains complementary, much like it is shown with other energy sources used in endocardial procedures. Therefore, as we work to support this massive market opportunity, we are partnering with early adopters of our hybrid AF therapy to monitor their program development efforts while strengthening referral channels with the ultimate goal of building efficient and scalable workflows for a broader base of customers. We are making headway and remain optimistic that our activities are establishing the foundation for strong and durable growth of hybrid AF in the future. Finally, moving to our pain management franchise, where our Cryosphere probe is driving robust growth around the world. In the third quarter, worldwide revenue grew 24%, a record number of accounts adopting the therapy. We continue to see opportunities to drive penetration in thoracic procedures. We also began a limited rollout of cryo-neuroblock in sternotomy. While uptake in sternotomy procedures remains very modest, we are learning more about the points of differentiation in this new application and believe there is potential growth from here. We are also pleased to announce that our next generation cryosphere probe, which includes meaningful enhancements to our platform, was recently cleared by the FDA. We expect a track record of exceptional ease of use and outstanding patient outcomes from our first-generation cryosphere technology to showcase even more prominently in this new device and look forward to launching in the United States in 2024. Now I would like to shift my comments to an area that is top of mind for many investors in the broader stock market, which is GLP-1s. We are excited about the potential patient benefits, and yet there is more to learn about the long-term clinical and market impacts of this class of therapies. What we do know is that our core market of atrial fibrillation is a global epidemic today. In fact, there are over 37 million patients worldwide, and this population is growing rapidly. Anyone can develop AFib. It is a complex disease with many risk factors and triggers. AFib is also a progressive disease, becoming harder to treat and a more serious health risk as the disease progresses. Because the likelihood of AFib increases with age and people are living longer today, many researchers predict the number of AFib cases will rise dramatically in the coming years. And we agree. Another reason we feel confident in the durability of our end user markets is our focus on the hardest to treat AFib patients. These patients typically have multiple risk factors and comorbidities. making it more likely that their AFib will progress, regardless of other interventions or advancements in medicines. We have unique solutions for treatment of concomitant to cardiac surgery procedures, as well as standalone therapies for long-standing, persistent AFib. With millions of patients untreated, both markets remain substantially underpenetrated, and we envision a future where many hundreds of thousands of patients are treated each year. In addition to our specialization in AFib, there are many avenues of growth at AtroCure, including our cryo nerve block solution for managing post-operative pain, which was virtually nonexistent less than five years ago. We see a steady increase in underlying procedures in this market, with the majority arising from cancer and trauma cases. Penetration in thoracic and cardiothoracic procedure continues and remains low. Therefore, in each of our markets, we have a substantial potential for expansive growth. We are thoughtful about building a complimentary portfolio with diversified drivers, which is evident through our clinical trial investments, such as LEAPS and HEAL-IST, and emerging therapy research and pain management outside of the thoracic applications. In closing, we maintain strong conviction in our business, in the sustainability of our end-user markets, and in our unwavering commitment to profitable growth. Additionally, we see several exciting opportunities ahead for HREC here as our research and development efforts set the foundation for meaningful long-term profitable growth for all of our shareholders. I will now turn the call over to Angie Wyrick, our CFO, for more details regarding our financial performance.