AtriCure (NASDAQ:ATRC) said it is seeing continued growth across its atrial fibrillation, left atrial appendage management and postsurgical pain-management businesses, supported by new product adoption, expanding procedure volumes and progress in clinical trials.
Speaking at the Canaccord Genuity Global Growth Conference, President and CEO Mike Carrel said the company focuses on treating complex atrial fibrillation, or AFib, and pain after surgery. Its portfolio includes ablation products, AtriClip devices for managing the left atrial appendage to reduce stroke risk, and cryoablation technology designed to temporarily block pain signals after invasive procedures.
Pain-management franchise drives volume growth
CFO Angela Wirick said thoracic procedures remained the primary growth driver in AtriCure’s U.S. pain-management business during the second quarter. The launch of the cryoSPHERE MAX product, which cuts freeze time for certain procedures in half, has accelerated procedure volumes, she said.
Wirick said pain-management volume rose about 25% during the quarter, while the number of accounts grew approximately 12%, indicating that surgeons are using the technology in more procedures within existing accounts. She said market penetration is around 20% in thoracic procedures and remains substantially lower in sternotomy and amputation applications.
Carrel said the company has more than 2,000 systems installed in thoracic centers across the U.S. and more than 100 field personnel across clinical and sales roles supporting the pain business. He said the company views its installed infrastructure, clinical knowledge and field presence as competitive barriers, alongside its ability to manufacture systems at scale.
The company is also expanding cryotherapy into amputations through its cryoXT device. Carrel described the amputation opportunity as being in its early stages, while Wirick said AtriCure sees favorable momentum across pain-management applications.
Margins supported by product mix
Wirick said product mix was the largest contributor to the company’s 77% gross margin in the latest quarter, as newer U.S. product launches represented a higher share of revenue and carried favorable margins. Geographic mix also contributed, she said, as U.S. margins are higher than those generated in international markets.
She said a new manufacturing facility is expected to come online during the current quarter, which could bring gross margin back toward the 76% range in the near term. Still, Wirick said AtriCure believes it has a path to continued margin improvement through the rest of the decade as it introduces new products and pursues manufacturing efficiencies.
While the company expects higher research and development spending in the second half of the year due to clinical-trial costs, Wirick said management continues to see a path to improved adjusted EBITDA. The company also expects only incremental sales-force investments as it prepares for potential market expansion from trial data, rather than a major increase in headcount.
Clinical trials could expand addressable market
Carrel highlighted two major cardiac-surgery trials: LeAAPS, evaluating stroke reduction through prophylactic left atrial appendage management, and BoxX-NoAF, studying whether ablation can reduce postoperative AFib in cardiac-surgery patients.
LeAAPS enrolled 6,573 patients and is event-driven. Carrel said the study has passed 50% of its targeted events and is tracking ahead of the company’s original expectations, although he said AtriCure cannot provide a specific timing estimate for efficacy data. The company expects data by the end of the decade and said safety results have included zero device-related events in the trial.
BoxX-NoAF, a 1,000-patient trial, enrolled about 50% faster than expected, according to Carrel. AtriCure now expects full enrollment by the end of the year and data by the middle of next year. Carrel said positive results on the trial’s postoperative AFib endpoint could change usage patterns and support a label change, citing the clinical and hospital-resource burden associated with postoperative AFib.
Carrel said AtriCure estimates it has penetrated around one-third or less of the U.S. cardiac-surgery market for AtriClip, leaving substantial room for expansion if LeAAPS data are favorable. He said international penetration is below 15%.
Competition and capital allocation
On potential competition from larger medical-device companies, Carrel said their interest in the left atrial appendage market validates the size of the opportunity. He said AtriCure’s differentiation includes product innovation, a large body of clinical evidence and an established field organization focused on AFib and cardiac surgery.
Wirick said the company’s capital-allocation priorities are to strengthen its balance sheet and fund organic investments, including R&D and commercial opportunities. She said mergers and acquisitions are not a high priority because management sees significant internal growth opportunities.
About AtriCure (NASDAQ:ATRC)
AtriCure, Inc is a medical device company focused on the development, manufacture and marketing of innovative therapies to treat atrial fibrillation (AF) and related conditions. Founded in 2000 and headquartered in Mason, Ohio, AtriCure has established itself as a leader in surgical ablation devices designed to interrupt the errant electrical pathways that cause AF. The company’s solutions are used by cardiac surgeons and electrophysiologists to reduce the risk of stroke and improve patient outcomes in the treatment of both paroxysmal and persistent AF.
The company’s product portfolio centers on its Synergy Surgical Ablation System, which delivers controlled radiofrequency energy in a minimally invasive format, and the cryoICE Cryoablation System, which offers an alternative ablation modality using precise freezing techniques.
