AtriCure, Inc.

Good afternoon and welcome to ATRIC Here's second quarter 2024 earnings comments call. This call is being recorded for replay purposes and at this time all participants are in listen-only mode. We will be facilitating a question and answer session following prepared remarks from ATRIC Here's management. I would now like to turn the call over to Marisa Beisch from the Gilmartin Group for a few introductory comments.

Great. Thank you, operator. 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 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 HHSR's control, including risks and uncertainties described from time to time in HHSR's SEC filings. These statements include, but are not limited to, financial expectations and guidance, expectations regarding the potential market opportunity for Atricure's franchises and growth initiatives, future product approvals, clearances, competition, reimbursement, and clinical trial outcomes. Atricure's results may differ materially from those projected. Atricure undertakes no obligation to publicly update any forward-looking statements. 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. And with that, I would like to turn the call over to Mike Carroll, President and Chief Executive Officer of HRECURE.

Great. Good afternoon, everyone, and thank you for joining us. I am pleased to highlight another strong quarter at HRECURE driven by our unwavering commitment to treatment of patients with atrial fibrillation and postoperative pain. We achieved total revenue of $116 million, reflecting over 15% growth, driven by increasing demand across our portfolio of technologies. Our results were underscored by accelerated growth in several areas of business, including U.S. pain management, U.S. open appendage management, and across our international franchises. We also continue our path towards sustained profitability generating nearly $8 million in positive adjusted EBITDA for the quarter. Additionally, we reached an exciting milestone with positive cash flow generation of over $8 million this quarter, and we plan to generate positive cash flow for the remainder of the year. Now turning to updates on our business and highlights in the quarter. Starting with Pay Management Franchise, which grew 25% in the second quarter of 2024. We drove remarkable acceleration in cryosphere sales with strength in international markets bolstered by the U.S., where we successfully launched the Cryosphere Plus probe. Physicians and patients are realizing the benefits of this enhanced technology with a 25% reduction in freeze time, which is generating more momentum in cryo-neuroblock therapy. We're also excited for the Cryosphere Max probe launching later this year. The Cryosphere Max builds upon the features of the Cryosphere Plus with a larger ball tip, bringing more efficiency to procedures through even greater reduction in ablation and procedure time. In parallel, we are exploring additional applications of crown nerve block therapy to expand our addressable markets and look forward to sharing those updates as we progress. Now, on to our franchises centered on the treatment of atrial fibrillation. Our open ablation franchise grew 15% worldwide, reflecting strength in our Encompass clamp in the United States, along with rising treatment rates in key international markets. Our Encompass clamp utilizes our Synergy ablation system for a simpler and faster surgical treatment of atrial fibrillation, and we see steady interest in treatment with Encompass as we introduce this innovative technology across our customer base. While the Encompass clamp is currently only available in the United States, we anticipate EU MDR approval and European launch in the back half of 2024. Next, our appendage management franchise achieved worldwide revenue growth of 15% with open chest devices outpacing our MIS devices. In the United States, our open appendage management devices saw an acceleration in revenue growth to nearly 17% for the quarter, despite competitive device activity. We continue to believe competition validates this tremendous market opportunity in front of us. More importantly, we are focused on leading the field with innovation and clinical evidence. And to that end, I am excited to share that we have just received FDA clearance of our newest generation Atroclip device, the Atroclip Flex Mini. Our Atroclip platform is widely recognized in the physician community for its ease of use, unparalleled safety, and outstanding closure results. And this latest innovation introduces a much smaller implant profile while maintaining the performance of our legacy platforms. Put simply, the H-Equip Flex Mini is a great new and differentiated device which we expect to achieve rapid adoption once fully launched later on this year. In addition, we are enrolling in our groundbreaking market-expanding LEAPS stroke reduction trial at a robust pace with over 2,900 patients enrolled as of today. We expect to complete co-enrollment of the 6,500 patients in the middle of 2025. This landmark and global clinical trial is expected to show a clear benefit to using atrial devices to manage the appendage in patients who undergo cardiac surgery without preoperative AFib diagnosis. a market of well over one million patients annually. And finally, we are continuing to drive adoption of our hybrid AF therapy globally. In the second quarter, we saw growth in procedure volumes and new accounts, although in certain hospitals in the United States, case volumes were impacted as EPs shifted their time to new PFA catheter devices. We understand and appreciate the benefits of these technologies, and our experience with the introduction of the PFA catheters in Europe several years ago tells us this diversion will eventually diminish. To that point, we have seen rapidly expanding interest and growth of our hybrid AF therapies in Europe over the last two years, leading to increasing treatment with our Epicense technology. We expect this to hold true in the U.S. for our U.S. hybrid therapy franchise, particularly as physician experience shows the limitations of these devices in treating longstanding, persistent AFib patients. In the meantime, we are bringing awareness to the differentiated benefits of hybrid AF. The wealth of data from our CONVERGE, CEASE-AF, and DEEP trials, as well as numerous other studies, repeatedly demonstrates better outcomes for advanced AFib patients using a hybrid approach. And this influenced guidelines to the positive worldwide. We believe the focus on more efficient endocardial ablation can serve as a tailwind for everyone in the market. And in the long run, H-Recruit will benefit from the growing funnel of patients. Considering the ongoing robust growth in our portfolio, but offset by relative softness in our MIS ablation and MIS appendage management sales, we're revising our full year guidance to $456 to $461 million, reflecting growth of approximately 15% over full year 2023. We also continue to manage our spending with the discretion and are reaffirming our guidance and our plans to deliver an adjusted EBITDA of $26 to $29 million. In closing, we are pleased with our first half performance, showing the breadth of our growth platforms. We also remain confident in our strategy to invest in growth and market expansion opportunities, leading to durable growth, expanding profitability, and cash flow generation. And with that, I will turn it over to our CFO, Angie Weirich.