AtriCure Inc (ATRC) Q1 2024 Earnings Call Transcript Highlights: Strong Revenue Growth and ...
Total Revenue: $109 million in Q1 2024, up 16% from Q1 2023.
Gross Margin: Improved in Q1 2024; nearly 50% increase in adjusted EBITDA.
Adjusted EBITDA: Nearly 50% increase in Q1 2024 compared to Q1 2023.
Full Year Revenue Forecast: Expected to be between $459 million to $466 million.
Full Year Adjusted EBITDA Forecast: Projected to be between $26 million to $29 million.
Net Income: Adjusted loss per share of $0.25 in Q1 2024.
Product Line Performance: Open ablation product sales up 16.5%; U.S. sales of appendage management products up 11%.
International Revenue: $18.6 million, up 21.5% on a reported basis from Q1 2023.
Research and Development: Increased approximately 29% from Q1 2023.
Cash and Investments: Ended Q1 2024 with $106 million.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
AtriCure Inc (NASDAQ:ATRC) reported a strong start to 2024 with total revenue of $109 million, reflecting a 16% growth from the first quarter of 2023.
Adjusted EBITDA increased nearly 50% in Q1 2024 compared to Q1 2023, indicating improved profitability.
The company is seeing robust adoption of its EnCompass clamp, driving growth in open ablation product sales which were up 16.5% over Q1 2023.
AtriCure Inc (NASDAQ:ATRC) is expanding its global impact with international revenue up 21.5% on a reported basis and 21.1% on a constant currency basis compared to Q1 2023.
The company is actively investing in innovation, with new product launches like cryoSPHERE Plus and upcoming AtriClip Flex Mini expected to be significant growth drivers.
Negative Points
Despite overall growth, the company's minimally invasive appendage management products saw a decline, primarily due to a reduction in LARIAT system sales.
AtriCure Inc (NASDAQ:ATRC) faces increasing competition in the market, which could impact market share and pricing power.
The company reported a loss per share of $0.28 in Q1 2024, compared to a loss per share of $0.14 in Q1 2023.
There are ongoing trials and new product introductions which, while potentially beneficial, also add uncertainty and risk to the company's future performance.
The need for extensive clinical trials and regulatory approvals for new products like the AtriClip Flex Mini and PFA technologies can delay market entry and impact short-term growth.
Q & A Highlights
Q: Congrats on a good quarter here. Maybe I could start on the guidance. You beat revenue versus The Street by $2 million. Looks like missed EBITDA just slightly by $1 million yet kept guidance on the top line reiterated for the year. So maybe just walk us through the thought process there and how you're thinking about the guidance in light of the first quarter. A: Angela L. Wirick (CFO, AtriCure, Inc.): Thanks, Robbie. I'd say it's still pretty early in the year. And while we're really pleased with the results of the first quarter, I felt like it was prudent to keep the guide in place. Mike walked through several new product introductions in his comments as well as increasing penetration of the market throughout the year as really the big growth drivers as we operate through the remainder of 2024, and we're seeing really robust momentum in our international business as well, which gives us good confidence in the ability to deliver and perform for the remainder of the year. So it just felt like it was early in the year and going to keep the guide where we were at.
Q: You talked a bit about AtriClip and the competitor out in the market. I was hoping you could go into that a little more. When I look at the results, it's the one line item where you didn't beat in the first quarter, there is obviously a lot of concern out in the market. So I was hoping you could walk through your expectations for that line item for the rest of the year and what you're seeing competitively out in the market. A: Michael H. Carrel (CEO, President & Director, AtriCure, Inc.): Yes, I think we're going to tag team that one, Robbie. So I appreciate the question. I know that it's top of mind for a lot of investors. I'll start with just kind of what we're seeing out in the field. As I mentioned in my comments, we definitely see the competition in a lot of sites trialing the competition out there. We're not seeing any kind of massive shift in any kind of market share from that standpoint, but we definitely see them in the field. Our team has done a really nice job of understanding what's happening at every one of the accounts. But they've also got relationships at a variety of different accounts around the country.
Q: Yes. I was wondering just a little bit more on the LARIAT, I think [that's been a] business. Have you discontinued that product in the U.S.? Is that going away? Or is that a one quarter kind of deal? And then just competitively, have you seen any change in pricing or bundling strategy in terms of the (inaudible) device? And then just since we're around that, Mike, how do you think about long-term growth in the LAA market today? Is this going to be a 50% grower at 20% -- 15% growth, 20% growth? I'm talking about the U.S. A: Michael H. Carrel (CEO, President & Director, AtriCure, Inc.): Yes. I'll start on the first one. So -- because I think there are three different questions in there. So the first was about LARIAT. As you know, back several years ago, when we did the readout on the trial, while the device actually worked incredibly well for closure, it actually had better closure than any percutaneous device on the market today and also had a great safety record in the trial. And if you recall, it [was a 600-patient trial,] it did not meet the endpoint of reducing Afib. It reduced Afib by 4.3%, and we needed to hit about 8% in order to win the trial and have superiority.
Q: Mike, Angie, this is John on for Rick today. First question, just curious about price in the quarter and also in the year ahead, you have several product launches. Just curious how it might have factored into growth here and how you're looking at it for the rest of the year? A: Angela L. Wirick (CFO, AtriCure, Inc.): John, when you think about a couple of the product launches that we outlined on the call, I think we've said the cryoSPHERE Plus, the newest technology that we're in the process of a limited launch currently in our pain management business, we would expect that to launch at similar pricing to the device that's on the market today.
Q: I want to revisit the LARIAT and AtriClip discussion, just to try to triangulate some of the numbers you offered us. It looks like LARIAT and minimally invasive AtriClip were flat growth year-over-year at about $9 million of the U.S. appendage management revenue this quarter. And then AtriClip in the open setting, which is where we're seeing the competition was about $27 million, which [grew 5.5% you said]. Do those numbers sound about right to you? A: Angela L. Wirick (CFO, AtriCure, Inc.): Marie, you are directionally correct on the revenue components. The open AtriClip business just under $28 million in the MIS appendage management business, a little over $1 million for the quarter at the -- close to $36 million for the quarter. We did actually see our MIS appendage management business go down. That is largely driven by the LARIAT product or Q1 of last year was kind of an outsized quarter, and we have just very few customers. So activity within a pretty small base of customers can skew the results there. And following a pretty strong fourth quarter for our MIS AtriClip, we saw a bit of softness in that area of the business in the first quarter.
Q: This is (inaudible). First, if we could ask a little bit more about the guidance and what that implies for the rest of the year? And then also maybe what we can expect sequentially throughout the rest of '24? A: Angela L. Wirick (CFO, AtriCure, Inc.): [Sam], we caught the back part of your question. Can you repeat the first part? Like we said in my prepared comments, our expectation is just give the stability that we're seeing in end user markets, both in the U.S. and internationally, but some [of the historic one that you've] seen in the business in the past to be present when you think about sequential growth. So that means kind of mid- to upper single-digit growth from the first to the second quarter of 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
