AtriCure Q2 FY26 earnings call ATRC

AtriCure is making significant progress on two pivotal clinical trials. The Box NOAAF Clinical Study, investigating ablation and LAA management for patients without a history of atrial fibrillation, has surpassed 50% enrollment with over 500 patients and is on track to complete full enrollment of 960 patients by year-end 2026, ahead of schedule. Data readouts are anticipated in the first half of 2027. The LEAPS clinical trial, studying stroke reduction benefits of left atrial appendage management in cardiac surgery patients without AFib, continues to follow over 6,500 enrolled patients, nearing clinical outcomes. These trials are expected to be powerful catalysts for label expansion and market growth.

The pain management franchise delivered 27% worldwide growth, primarily driven by the Cryosphere Max probe. The company is expanding penetration into thoracic surgery and seeing traction in sternotomy procedures, with three of the top five cancer centers now making purchases. The new Cryo XT Probe for amputation procedures is showing promising early results, with positive surgeon feedback and increasing revenue contribution expected in the second half of the year. Cryosphere Max now accounts for approximately 75% of US pain management revenue.

The appendage management franchise grew 14% globally, fueled by the adoption of Atriclip Flex Mini and Pro Mini devices, which now represent 45% of total appendage management revenue. Open ablation revenue increased 11% worldwide, led by the Encompass clamp. Management anticipates further adoption due to new STS quality metrics on concomitant AFib treatment, which historically have been strong catalysts for surgical AFib ablation and LAA management.

The minimally invasive ablation business faced continued pressure in Q2, with sales declining to $6 million, attributed to the market's focus on PFA catheters. While hybrid AFib therapy referral patterns have stabilized in a small subset of accounts, broader stabilization is needed for franchise growth. International revenue growth was 9.6% reported, with specific softness noted in the UK and Germany, partly due to reimbursement challenges for the Cryosphere probe in the UK, though the Encompass clamp recently received more positive news there.

AtriCure acknowledges new entrants in the appendage management market, viewing it as validation of the market opportunity. The company asserts its leadership through three pillars: continuous innovation (smaller, easier-to-use products, with V-Clip Mini and a smaller Atriclip version planned), robust clinical science (LEAPS, Box NOAAF, over 100 peer-reviewed papers on 20,000+ patients), and extensive physician education and clinical support via a global field team of over 500 experts.

The company demonstrated significant profitability improvements, with adjusted EBITDA increasing 78% year-over-year to $27.3 million and gross margin expanding to 77.2%. This was driven by favorable product and geographic mix, along with manufacturing efficiencies. Operating expenses increased modestly, with R&D up 9% due to trial enrollment and product development, and SG&A up 5.3%, reflecting operating leverage and continued investment in growth initiatives. The company is ahead of its long-range plan for bottom-line performance.